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Trooping the Colour: Horses, Racing and the Law
What area(s) of law does this episode consider? | Equine law. |
Why is this topic relevant? | Few nations on earth stop for a horse race; but every November Australia does just that. Billed as the “race that stops the nation”, the Melbourne Cup is a national – perhaps even international – icon. But our national love for horses goes far beyond just racing. The Light Horse Brigades are an important part of Australia’s wartime history, the brumby is a controversial but beloved modern symbol of the Australian Alps, and did you know the Mounted Unit of the NSW Police is the oldest continually operating mounted unit in the world? Beating out both the Met Police in London and the Mounties in Canada. No surprise then that our national love of horses crosses into legal practice. What may not have crossed your mind is the complex way in which horses are owned, stabled, raced, and even bred is the subject of webs of legal arrangements often requiring specialist legal knowledge to understand and construct. |
What legislation is considered in this episode? | Personal Property Securities Act 2009 (Cth) (PPSA), s 86 |
What are the main points? |
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What are the practical takeaways? |
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DT = David Turner; DM = Daniel Morgan; RD = Ross Davis
00:00:00 | DT: | Today on Hearsay we’re talking about the surprising connections between the law and the world of horse breeding and racing. There are few nations on earth that stop for a horse race, but every November, Australia does just that.
Billed as the race that stops the nation, the Melbourne Cup is a national – perhaps even international icon – but our national love for horses goes far beyond just racing. For example, the Light Horse Brigades are an important part of Australia’s wartime history. The brumby is a controversial but beloved modern symbol of the Australian Alps. And did you know that the mounted unit of the NSW Police is actually the oldest continually operating mounted unit of police in the world? Beating out both the Met Police in London and the Mounties in Canada.
So it’s no surprise then that our national love of horses crosses into legal practice. What may not have crossed your mind is the complex way that horses are owned, stabled, raced, and even bred. And that’s the subject of complicated webs of legal arrangements often requiring specialist legal knowledge to understand and construct.
With a deep understanding of the unique challenges faced by those involved in the thoroughbred industry, our guest today, Daniel Morgan from Morgan + English, has carved out a niche in the equine legal landscape, ensuring that the rights and interests of both human stakeholders and the horses in their care are respected. Daniel is a founding partner of Morgan + English and a recent recipient of the President’s Award from the Hunter Thoroughbred Breeders Association for his years of dedication and service to thoroughbred breeding, research, and education.
Daniel, thank you so much for joining me today on Hearsay!
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00:02:10 | DM: | Good morning. It’s great to be here.
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00:02:11 | DT: | Now, before we get into the horse and the law, I wanted to say I have here in my office a textbook called The Horse and the Law – it’s actually followed me through my legal profession. I remember it being on the bookshelf at Norton Rose when I was working at a large law firm. It followed me to the bar and then here in boutique legal practice. I’ve always wondered what it would be like to have the horse and the law, the content of that textbook, as your primary area of practice, something that you really work deeply in and specialise in. I’m really excited to actually learn about this area in some greater detail today.
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00:02:48 | DM: | Well, it’s a quintessential text written by Pannam that I grew up with as well, and I had on my bookshelf. Unfortunately, now it’s a little out of date, so we need to apply much more recent case law and much more recent statutes. But it’s up for a new edition if you’d like to take it on board.
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00:03:05 | DT: | The one that’s followed me over the past 10 years is definitely out of date. But maybe we should talk after the show about the new edition.
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00:03:11 | DM: | We did think about rewriting it, but I think work got in the way of academic scholarship.
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00:03:16 | DT: | Oh, look, it always does. Tell me a bit about how you got into this area of the law and I suppose how you got into the legal profession more generally because you actually had a very passionate interest in the thoroughbred industry before you were a lawyer.
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00:03:30 | DM: | Yes, and I think that’s what has led me to practising in the thoroughbred industry was that I grew up in the Hunter Valley in Scone, which is the home of the thoroughbred and it is the largest breeding area of thoroughbred racehorses in the southern hemisphere. So there are other areas in the world such as Kentucky, and Newmarket in England, and Duval around in France where they breed a lot of racehorses. So the Hunter Valley and those other areas are the prime locations throughout the world where the best thoroughbreds are bred. And so having grown up in that area, my father was an equine veterinary surgeon and he was involved in the breeding industry. So I used to go out with him as a child, and I would go on his rounds a bit like James Herriot, and I would watch him work with these animals and assist him as much as I could. My mother was also a very accomplished equestrian rider, so they really fostered that love for horses and I was able to be lucky enough to start a pony club, learn how to ride and then work through a lot of different equine disciplines, show jumping, equestrian riding, three-day eventing, camp drafting. So I basically as a youngster, even when I was at university, was able to compete in the horse industry.
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00:04:44 | DT: | And your studies originally were in this area as well. I think your thesis for your undergraduate degree was on the industry.
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00:04:52 | DM: | Yes, I commenced an Arts degree at Sydney University and I was initially a classicist and enjoyed philosophy and ancient history. But as I proceeded through my arts degree, I really had a love for Australian history and Australian archaeology. So at that time, there were quite a few digs that were happening around Penrith from the first settlers. There were courses in Western Australia on marine archaeology. So that was really my space and I finished my degree by doing an honours year in history. And that was where I followed the early colonial society and how it developed. And it really developed in the country areas around the local hoteliers who were the entrepreneurs and the squatters who had been granted the land. And in order to have social functions, it was racing that was really the first social function that made that fabric and knitted the community together. And I think, as you said in your introduction, that really does flow through to our society today. Even if it is only at the Melbourne Cup that stops the nation once a year, I think racing is something that people still enjoy and I think it could well be inbred into the DNA of Australians.
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00:06:04 | DT: | Yeah, there’s certainly something about at least that race that captures our attention. Now, how did you go from that interest as a competitor, as a historian, to a legal professional?
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00:06:17 | DM: | So once I’d finished my Arts degree, I then commenced my Law degree at Sydney University. And it was always my intention when I was studying to try and work in the horse industry. And I was lucky enough because of my connections and people that I knew in the industry that I met a number of lawyers that were also heavily involved in the breeding industry and the racing industry. And they were prepared to take me under their wing and give me some mentoring. So I initially met Michael Ryan, who was one of the founding partners of McClellands, and they were very much a right wing of the Labor Party firm.
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00:06:54 | DT: | Affiliated with Jim McClelland?
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00:06:55 | DM: | Diamond Jim McClelland was their founder. And that was my first job whilst I was at university. I worked for them as a clerk. And then on graduation, I took up a position working with them in industrial law and in the workers’ compensation space.
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00:07:08 | DT: | And that practice area, I suppose, followed you into your own practice.
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00:07:12 | DM: | Yeah, it’s interesting. When you finish university, you have an idea of what you’d like to do. There wasn’t a practice area in any firms that did equine law. So I really had to hone my skills. And working in that environment involved going to court every day, briefing counsel, taking detailed instructions, mediating and being able to resolve matters. And I think those skills have really followed me through in the commercial space and allowed me to develop as a lawyer. So it was a great grounding. It was pretty hectic.
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00:07:44 | DT: | That would have been a pre-tort law reform, right? So that would have been a very busy time to be working in workers’ compensation and personal injury.
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00:07:53 | DM: | Tort law at its highest.
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00:07:54 | DT: | Yeah.
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00:07:54 | DM: | Yeah, and some very sympathetic judges in the Supreme Court as well. We ran a lot of matters, worked in the catastrophic space. So brain injury, quadriplegia, paraplegia. And it was exciting. And it was a great grounding to develop your legal skills.
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00:08:08 | DT: | After working in that firm, you moved back to the Hunter Valley to start your own practice.
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00:08:12 | DM: | Yeah, we were living in the inner city. I married my partner, Annette English, who at that time was working for Blake Dawson Waldron. And it wasn’t long after we were married that we had our first child. And we were both litigators. And we’d be phoning each other at the end of a workday saying, who’s going to go and pick up the baby? There was an occasion we were working on Elizabeth Street over the road from Hyde Park. And there’s a childcare centre there. And I received a phone call from the childcare centre saying; “We’re closing. Are you going to pick Emily up?”. The pressures of both of us being litigators didn’t really lead to being successful parents. So we made a decision. It was very much off-the-cuff. We went back to the Hunter Valley for a weekend and we saw a lovely house that we could probably buy in Hunters Hill or Bellevue Hill in five houses time, as we used to do a bit of renovating and doing the houses up. And we decided to buy a property. And we didn’t have a job, but we knew that once word got out that there were lawyers coming back to town, that we’d get some phone calls. And that’s how that developed.
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00:09:07 | DT: | Fantastic. Now, let’s get into equine law. Let’s talk about the subject of today’s episode. I think we all appreciate, both us in the room and those listening, that there’s a connection in common law jurisdictions between law and culture, law and politics. We’ve already talked about how there’s this deep-rooted connection to the horse in Australian culture and Australian history. Do you think that cultural attachment is reflected in some of the legal principles of the legal landscape around horses?
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00:09:36 | DM: | It’s certainly reflected in how the horse industry operates and how you would operate as a lawyer. I think generally, historically, back in the noughties, people that were involved in the horse industry had other successful businesses. And this was a love that they had. And it became their passion and their hobby that they could build into a business. But what we used to find was that they weren’t really interested in having their horse business tied up with the legal red tape or the corporate governance that would be required. It was all done on a handshake and word of mouth. And people wanted to have fun. So it was quite a difficult task to get people to think commercially about protecting themselves on a contractual basis or deal with disputes and have enough evidence to be able to deal with that. That’s certainly changed now because of the value of the horses. A successful thoroughbred colt that can win the Golden Slipper can be worth north of $40 million. So the industry now has taken on board those commercial lessons and is run with much more corporate governance and on a much more commercial scale.
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00:10:42 | DT: | I suppose it’s always challenging to introduce that level of legal rigour in any industry where those relationships are longstanding. Because sometimes there is this perception that formality, contractual formality, and trust between longstanding business partners or business colleagues are at opposite ends of the spectrum. If you trust me, why do we need to slow this transaction down?
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00:11:05 | DM: | And I think that’s the challenge for lawyers is that we’re always faced with the client saying; “I don’t want you to slow this transaction down. I don’t want you to make it more complicated than what it should be”. Countless times I’ve had clients say to me; “I just want it recorded on one single sheet of paper”, which we all know is almost an impossibility.
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00:11:23 | DT: | Yeah, absolutely. Now, as I said at the top of the show, I’ve always understood that this was a specialist area of practice because from the start of my career, I’d seen this textbook on the shelf in the firm and it’s followed me through my career. But I imagine a lot of listeners might not appreciate that there are transactions involving horses that might require an expert in these sorts of transactions, both in the way they’re documented and as we were saying earlier, some of the principles and authorities that might apply to them. What are some of the situations where having the knowledge of a specialist legal practitioner in equine law or looking a little bit deeper than your commercial law fundamentals at least might help?
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00:12:02 | DM: | Yes. Well, there are a myriad of areas where you need specific knowledge of the horse industry to be able to advise your client. So I think basically from the beginning, from contractual negotiations, there’s a multitude of sale and purchase contracts, stallion service agreements where a stallion will cover a mare, agistment agreements, dealing with standing rights, racing management, licence agreements, foal share agreements. So they are very bespoke and very specific to the horse industry.
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00:12:33 | DT: | There’s one there I haven’t heard of. What’s a foal share agreement?
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00:12:35 | DM: | A foal share agreement is where if you’re lucky enough to have a nice mare or a filly that’s won some black type or group races, you would be able to offer that mare to a stallion owner and say; “could we use your stallion to cover the mare?”. And the resultant foal would be shared between the parties. So it’s a way of a person being involved in the industry if they have nice breeding stock, not having to fork out the fees for the stallion service fees. Some of the leading stallions in Australia at the moment are standing at $300,000, $200,000. So if you can do a foal share, that’s the fee for the cover. So if you can do a foal share, you then look after that mare from the time that it’s covered by the stallion until its resultant foal is sold probably 18 months later.
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00:13:23 | DT: | So it’s a bit like a joint venture really. You’re both bringing an asset to the venture and producing a valuable asset that in the future will produce a return for both of you.
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00:13:31 | DM: | And we’re hoping it’s a valuable asset, but we obviously need to set out what the agreement is, what the parties have agreed to and how the horse is sold. If for some reason it’s not going to have a racing career, it’s still got to be passed on and be dealt with.
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00:13:45 | DT: | I think one thing I’d like to point out for our listeners is that you don’t necessarily have to be involved in the thoroughbred industry for these sorts of issues to come up in your practice. I’ve always practiced in Sydney as a commercial lawyer, but several times in my career working for banks and non-bank lenders in the insolvency space enforcing security interests in horses. I’ve had to negotiate and secure agistment contracts for those lenders who have the security interest in the horses, who’ve taken possession of them but plainly don’t have someone on staff who’s going to look after the horses while they’re awaiting sale.
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00:14:23 | RD: | TIP: David just mentioned agistment. In simple terms, an – ideally qualified – landowner will take care of livestock owned by someone else for a specified period in exchange for payment.
These arrangements can be more intricate than just feed and shelter, and can potentially include breeding services. Livestock owners sometimes turn to agistment agreements when their own property cannot adequately support their animals but in the case of lenders like David just mentioned, they don’t typically have paddocks to store horses in – thus an agistment contract may be necessary.
An agistment agreement usually specifies: ● The date and duration. ● Details of the involved parties. ● A description of the livestock. ● Financial arrangements. ● The responsibilities of both parties. ● Insurance provisions. ● Rights granted to the landowner in respect of a failure to pay. ● And termination terms.
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00:15:19 | DT: | So these sorts of issues can come up for you even if you’re not an industry insider.
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00:15:23 | DM: | Yes, we’re dealing with liquidators all the time in the unfortunate situation. If one of the breeding ventures isn’t successful, and that often comes from, again as I said previously, the core business that the person is operating is failing, therefore their thoroughbred business is failing as well. So you get stuck with a situation where you have a liquidator who isn’t involved in the horse industry and then has to very quickly come up to speed with the welfare issues in relation to caring for the horses and what the requirements are. There are very short specific timeframes within the industry when you can breed. So that starts from the 1st of September and finishes about at the end of December. There are only certain times when you can sell the horses at auction. So the jewel in the crown sales happen in January and Easter. So there’s quite a lot of intricacies that you need to understand. But from the application of the Personal Property Securities Act, that’s been a game changer in relation to how we deal with failing businesses and how we secure the interests of the farms and our clients. There is Section 86 of the Personal Property Securities Act, which if you feed and develop livestock, then you get a preferential interest over and above somebody who has registered earlier. So that again is something that’s not well known.
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00:16:43 | DT: | Well, I mean, I’ve worked with the PPSA since it’s become legislation. I’ve worked with it since 2012 – I didn’t know that!
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00:16:51 | RD:
| TIP: Section 86 of the PPSA states that:
“A perfected security interest (the priority interest) that is granted by a grantor in livestock or the proceeds of livestock has priority over any other security interest (other than a purchase money security interest) that is granted by the same grantor in the same livestock or proceeds if:
(a) the priority interest is granted for value; and
(b) the priority interest is granted to enable the livestock to be fed or developed; and
(c) either [of]:
(i) the livestock are held by the grantor at the time the security agreement providing for the priority interest is made; or
(ii) the livestock are acquired by the grantor during the period of 6 months after the day the security agreement providing for the priority interest is made.”
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00:17:40 | DM: | So you can imagine walking into an informal settlement conference with the bank as to how we’re going to deal with this and the bank has a security agreement or a fixed and floating charge over the business and thinks it has the best interest and all of a sudden that’s pointed out to them. So some interesting conversations in relation to negotiating how we deal with that livestock and who does get the proceeds once they’re sold.
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00:18:00 | DT: | Yeah, those sorts of unusual or really industry specific security interests I think can sometimes throw you. Not on the topic of equine law, but I had a matter a few years ago where we were surprised to learn about the priority of a captain’s lien over the sale proceeds of a vessel that they captain, which is another interesting and surprising priority position for secured lenders. But tell us a little bit more about how the PPSA has changed the way you practice with horses because they’re a little bit like serial numbered property.
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00:18:29 | DM: | It’s interesting you mentioned vessels because an aeroplane and a motor vehicle and a boat have their own specific identification numbers. So obviously when we’re registering an interest over a car, we registered over the VIN and that is a way of identifying the vehicle and then if you wish to buy that car, you can undertake the search and determine whether there’s any secured interest. A horse has the same individual ID and their DNA tested at birth to make sure that the mother and the father match. Often that may not be the case if someone’s made a mistake, that’s another interesting area that you’re faced with. If your mare was covered by the wrong stallion or the stallion owner sent the wrong mare to the stud or if the mare’s in the paddock swap foals, it’s been known that they can be very similar looking and nobody actually realises that it’s happened until you go to register the horse as a racehorse two years later. But in respect to the Personal Property Securities Act, you can’t register that individual ID number on the register at the moment. So that’s a bit of a failing of the system. You can register vessels, aeroplanes, cars. So you actually have to register against the owner of the horse. And again, it can sometimes be a bit difficult to determine exactly how many – you can have up to 20 registered owners with the stud book and with Racing Australia. So it can be a bit of a laborious process, but also just really identifying who the owners are is really one of the bugbears with the current system. So if we could register just against the horse, it would be much easier and better for everybody moving forward, I would suggest.
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00:20:03 | DT: | Yeah. I suppose this is a good sort of takeaway for anyone dealing with the PPSA, whether they’re registering an interest over a horse or not, is that when you’re registering an interest in specific goods, even if they’re not serial numbered property, it’s important to identify the goods with a degree of particularity. And so it always helps to register that identification number, even if it’s not regarded as a serial number for the purposes of the legislation, because it will still help to identify those goods in the event that there’s some identification issue later on.
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00:20:30 | DM: | But you’ve also got the added twist is that you’re registering over an unborn progeny. So the foal is still inside the mare and you’ve provided the service for that. So again, you’ve got to take the next step. So that’s a trap for young players as well.
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00:20:45 | DT: | I imagine you come across a lot of interesting personalities in this industry. You mentioned that some people sometimes have a thoroughbred business on the side of a core business that might be quite successful or maybe sometimes isn’t going so well. Can you tell us a memorable case from your time in the thoroughbred industry?
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00:21:02 | DM: | I mean, there are some great characters. I think the racing industry itself, if you leave Pannam aside on the bookshelf and read some histories of the turf and read about the colourful racing identities that have been in Australian racing history, they still continue. John Singleton’s been in the industry for a long time and being a larger-than-life character fighting with his trainer, Gai Waterhouse. He was in partnership with Gerry Harvey and they raced a lot of horses together. So you have some of the leaders of industry working and following as their passion. We’ve been involved with syndicating a number of very successful racehorses. So the main race in Australia is the Golden Slipper and that’s two-year-old racing. So Australia’s really skewed its breeding and racing towards two-year-old racing and sprint racing as opposed to the more traditional distance races like the Melbourne Cup. So once those horses start showing a bit of ability, which is what’s happening now, two-year-olds are just trialling at the moment. So they trial in September and then the Golden Slipper will be in March next year. Quite a lot of manoeuvring and negotiation in relation to those horses. So being involved in whether it’s a silent auction in relation to the right to purchasing those stallions or just being involved in the deals, it’s high paced and it happens very quickly. and because there are only a few players within the industry, you sort of understand how that operates.
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00:22:29 | DT: | You know, one thing that occurs to me is that an interest in a horse or maybe even ownership of a thoroughbred horse in its entirety is one of these sort of luxury assets in the category of a super yacht that the wealthy, the rich and the powerful might have an interest in acquiring, but they might not have a background in the industry. Do you sometimes find that you’re playing the role as much as lawyer as a kind of advisor on how the industry works to someone who’s maybe entering it for the first time and doesn’t have that background?
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00:22:58 | DM: | Yes. I mean, if you’re going to be involved in the industry as a business, it’s a rapid learning curve. I think the interesting thing is that you can, if you’re lucky enough to have a racehorse that’s successful, you can bathe in that glory yourself. I think often some people are then in the position where they think it was their knowledge that got it there, but perhaps it was their blood stock agent that bought the horse or the trainer or just being lucky. So you do have people coming into the industry that do require some navigation through the complexities, but there’s also the opportunity for people to buy very small shares in horses now. So the syndication business is a business that’s really rocketed in success in Australia. Australia probably is the leader in the world in relation to syndication. So you can purchase a very well-bred horse and you can buy a 5 or 10% share or alternatively, you can go into a micro scheme where you can buy a one thousandth of a share in the horse and give it to your dad for Father’s day. And then your father can feel like he’s involved in the industry. So they have racing leagues, but they also have syndicates where you can buy a 5 or 10% share. So those businesses are governed by the Corps Act and by ASIC and the managed investment scheme rules. So again, you need to have a good understanding of when you need to be registered, when you need to be licensed and how that operates. So we’re involved in advising a number of different businesses in relation to their PDS and how they should operate as a managed investment scheme.
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00:24:35 | DT: | Surprises me just how much of an overlap practice in equine law has with corporate advisory practice or insolvency practice. You’re really covering pretty large swathes of the Corporations Act, of the PPSA. I hadn’t really even thought about the intersection between syndication and managed investment schemes, but it makes a lot of sense.
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00:24:51 | DM: | Well, we have 40 people that work for us and all of those people will do something within the horse industry. So we need to have that specific knowledge within our practice areas. I mean, at the heart of it, if you’re breeding horses, you’re a farmer. So there are issues that deal with real property, with water rights. We’ve got a lot of pressure in the Hunter Valley from coal mines, from electricity lines. So there’s an environmental aspect as well. We have the Hunter gas pipeline that’s coming up through the Hunter Valley at the moment, and that will go across some of the land where there are some very intensive horse breeding activities happening. So yeah, it really does cross over all of the different areas of law. We do a lot of work with HR and IR matters in relation to employment and dealing with work health and safety. We have a separate standalone work health and safety business called Safe Industries Australia, which had its genesis in the horse industry, where a childhood friend of mine who I went to preschool with had worked in the horse industry. And I found as a lawyer, I was giving lots of advice about competencies and safe work method statements. And one, I wasn’t insured to do that, but it really wasn’t my sandbox. So we commenced that business 10 years ago, and that now has an online induction platform in thoroughbred breeding and racing. And so we’re in the leading studs and racehorse trainers, and we provide that service as well in order to avoid workplace accidents and to avoid workplace prosecutions.
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00:26:23 | DT: | Fantastic. I want to go back to the insolvency scenario now and talk about some of the unique aspects of managing an insolvent thoroughbred business, how a liquidator or voluntary administrator might get up to speed on what’s happening in that business, and some of the unique issues around priorities for creditors. Tell me a bit about the insolvency situations that you’ve seen in the thoroughbred industry in your practice.
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00:26:45 | DM: | The main difficulty in relation to dealing with insolvency practitioners that don’t have an understanding of the horse industry is really getting people up to speed very quickly as to the time limits in relation to when things can be done, and dealing with the multiple entities that may have a secured interest in relation to the horses. So for example, the first thing on the agenda of the liquidator is the liquidator’s fees. The first thing that we need to deal with is whoever has care and control of that horse has to be guaranteed that they’re going to get paid. So that’s number one. So we would be representing the interests of the horse farm and we would be then informing the liquidator as to what the costs are, what the timeframes are, whether there are any veterinary issues with the horses that we’re going to require, extra expenses, because again, horses are very flighty, prone to injury, and can be expensive to look after.
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00:27:40 | DT: | Let’s talk some more about those welfare issues. You mentioned earlier that they can be quite time sensitive. Tell us a little bit about the legislation that governs horse welfare in New South Wales at least, and some of those time sensitive issues.
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00:27:54 | DM: | Racing Australia and Racing New South Wales have really come to the forefront in relation to welfare issues. So the welfare of ownership and management of horses is overseen and supervised by Racing Australia, but also with the local PRAs. So for example, in New South Wales, that would be Racing New South Wales. So they have the local rules of racing. So we have Australian rules of racing and local rules of racing as well, which look after the care of horses and the welfare that crosses over obviously with the RSPCA and ensuring that the horses are properly looked after. I find in the industry that people are in the industry because they love horses. So it’s the welfare aspect from a legislative position. It’s not one that I have to delve into too often. There are incidents where people are charged by Racing New South Wales, and if they’re found guilty of that, then they will be disqualified for recently quite lengthy period.
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00:28:53 | DT: | So you’ve got two sources of law there. You’ve got the rules for the industry associations, which effectively governs your ability to participate in the racing or the thoroughbred industry. And then you also have the legislation, I suppose it’s the Prevention of Cruelty to Animals Act in New South Wales. And I suppose the profession has a lot to contribute in terms of upholding, advancing, maintaining those welfare standards in the industry as well as the sort of custodians of compliance with those rules and that legislation. Can you tell me a little bit about what the legal profession in the thoroughbred industry is doing in terms of welfare?
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00:29:29 | DM: | Yes, it’s important to be proactive. There are some negative voices in relation to cruelty to animals – the use of whips and various other areas where activists have been involved. And I think it’s important to get the story right. And I think for a long time, the activists have dominated that conversation. But recently, it’s probably a result of the type of people that are in the industry. We’re dealing with people who mind their own business, don’t want to yell out to the wind, are basically farmers. So at the end of the day, what has happened recently is that a number of young professionals, including lawyers, have been involved in a group called Kick Up for Racing. And they have made a big effort in getting information and real facts about racing out to the community. And racing and breeding and the associated roles, growing fodder, transport, veterinarians, it’s a big industry. It’s one of the main ag businesses. One person can look after about three race horses. So it’s a business that generates employment and has a large web of commercial activities that fall behind it. And I think it’s important for the industry to put itself out in a good light.
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00:30:48 | RD: | TIP: Animal welfare is a key point of contention in industries like horse racing and in agriculture more generally. With regard to horse racing, the RSPCA is most concerned about the use of whips during racing and otherwise with the use of tongue ties and with overbreeding.
On the issue of overbreeding, there is likely a bit of common ground here between the industry and the RSPCA. Daniel mentioned earlier that all thoroughbreds are given a unique ID number, but that this ID number can’t be registered on the PPSR. On its site in relation to horse racing, the RSPCA calls for “the development of a national identification and traceability system for racehorses”.
Conceptually at least, there is a bit of overlap between the two positions. In regard to the welfare of retired race horses, Daniel will continue on the topic in a moment.
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00:31:42 | DM: | There’s been a number of different initiatives. Racing NSW put forward some welfare programs of late. And there’s a new racing initiative called Equimillions, where retired race horses are taken on by keen equestrian enthusiasts and are retrained to be dressage horses or show jumping horses. And a lot of the people that are involved in the industry are doing that themselves anyway. You might have a job for a horse trainer and ride track work, but you’ll be also competing with ex-race horses. So that’s an exciting thing to see that happening and to be able to track the life of your ex-race horse. I get photographs continually from the veterinary surgeon that’s taken on one of our racehorses and teaching him to be a show jumper. And she’s so proud of the fact of what she’s been able to teach this ex-race horse to do. And he’s got a new career and he loves the show jumping as much as what he enjoyed the racing.
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00:32:34 | DT: | That’s fantastic, and I think it’s great to talk about some of those initiatives because as you say, it can be an industry that doesn’t publicise a lot of this stuff outside of its own four corners. And that can make some of this information more difficult to discover for the general public. Speaking of retired race horses with new professions, I think you’ve got an interesting story to tell us about a pretty well-known client of yours, I suppose, who had a race horse with a new profession now and probably demonstrates… well, we talked about the crossover with financial services law, with insolvency law. This is a sort of international law crossover, isn’t it?
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00:33:12 | DM: | Yeah, I was lucky enough to be introduced to Lord Andrew Lloyd-Webber through one of my connections here in Australia. He had a very successful race horse called Too Darn Hot who raced in England and France and suffered an injury and then was retired to stud to stand as a stallion. So the Lloyd-Webbers have a farm in England called Watership Downs, named after the book, and they are very successful breeders. Lady Madeleine Lloyd-Webber has been very successful in having a core group of blue hen mares that she’s been able to successfully breed racehorses with. But Too Darn Hot, they determined that he could shuttle to the southern hemisphere to stand as a stallion. So he would stand in the northern hemisphere during their breeding season and then he would stand in the southern hemisphere in Australia for our breeding season. So we then had to negotiate the rights for him to come down and he stood at a stud owned by Sheikh Mohammed called Darley in the Hunter Valley. So we worked with the Lloyd-Webber team to bring him down here and negotiate that deal. And we were then lucky enough to be invited to the premiere of the Phantom of the Opera, which was done in London. We were introduced to Andrew Lloyd-Webber and to Lady Lloyd-Webber and we were able to speak with them, not only about horses, but also have a discussion about my favorite production that he did, which was Starlight Express that I saw in London when I was over there as a student. So you do have access to some very successful but very genuine people as well. I find the people in the horse industry are very genuine, but they are also extremely passionate. It’s allowed us to travel overseas. We’ve been invited to go to the Kentucky Derby in Lexington, to Royal Ascot in England, which more and more Australians are going to. We’ve got horses that are able to compete at that international level, but also to just be invited to go to various horse sales and racing around Australia and be able to attend cup meetings. I was on the board of the Scone Race Club for 20 odd years and served as their chairman. Basically, the cup meetings in country towns are really the lifeblood of the community. We have 8,000 people turning up to a race meeting in Scone, which is an amazing turnout. Going to those meetings and being able to enjoy the excitement, but just also meet like-minded people that love racing in a social environment.
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00:35:42 | DT: | Yeah, I mean it is an international industry. We’ve spoken a lot about the connection that your practice has to the Hunter Valley and to practice in New South Wales, but it’s an international industry. How do some of those international aspects affect practice in equine law? Are there international standards that might govern something like a shuttle agreement between the Northern and Southern Hemispheres?
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00:36:02 | DM: | Yeah, I mean there are horses shuttling from America, the UK and France into Australia every year. It’s important to determine the jurisdiction where the contract was made. I think that’s number one. You would then be applying the local laws and regulations. For example, if one of our horses travels over to the UK, then you’ve got to head around what’s going to happen there from a local perspective, but also the dispute resolution clauses as well. Where is the ideal place to have any disputes resolved and how are you going to do that, whether it’s in the jurisdiction where the contract was formed or whether it’s where the services are being provided or whether you choose somewhere independent such as Singapore.
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00:36:41 | DT: | Yeah, is there a preference for a particular jurisdiction, for example, the United Kingdom and Singapore are common jurisdictions to select for dispute resolution arbitration?
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00:36:50 | DM: | Yeah, from my perspective, I’d always like it to be wherever I am. But Singapore is a good option. Again, it’s not something that a lot of people will think about because generally this is when the deal has gone south. So it’s up to the lawyers to really draft those clauses that are bespoke enough for the deal that you’re doing. So it’s not really one size fits all. Each deal that you are doing is very specific depending on the age of the horse. I mean, we recently did a deal for a horse who is 20 years old, but it’s taken him all of that 20 years to become a very successful stallion. He initially stood for a service fee of $7,000 and this year he’s standing at a service fee of $250,000. So when you’re dealing with the DD that you need to do from a veterinary perspective and a legal perspective on a horse that’s been around for a long time, it’s much greater than one that’s younger.
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00:37:44 | DT: | I suppose a lot of the time those governing law and choice of forum, choice of jurisdiction, clauses are determined by the presence of a specialist arbitration or dispute resolution body in that jurisdiction that might be particularly well suited to disputes of that kind. Is there a jurisdiction that has that for equine matters that sort of has that experience with the industry to make good decisions?
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00:38:08 | DM: | No, there isn’t. So it’s quite important to be able to identify who you’re going to appoint and that’s what we spend a lot of time on in negotiating if there is something that we can’t resolve. And to be fair, the majority of matters don’t proceed to any formal arbitration or mediation. They can pretty much be dealt with informally because everyone wants to get a commercial outcome. So if you can’t resolve it, then it looks like you’re going to end up in court.
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00:38:37 | DT: | Daniel, we’re nearly out of time but before we leave our listeners, for anyone listening who wants to follow the path that you did and practice in the industry, learn a little bit more about how it works, where would you suggest they go?
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00:38:50 | DM: | Well, I think the first thing that anyone needs if they’re going to work in the racing or breeding industry is a passion for horses and getting experience is really important. I find that we employ quite a number of junior lawyers and people within our businesses that have worked on horse farms and have got hands-on experience. So they’re not necessarily from the country but the majority of them are at the minute. I think having knowledge of how the industry works is really important. It’s not like you can work in the finance section of a big firm and do one agribusiness deal in the Northern Territory and say, you’re an agribusiness lawyer. You’ll be found out reasonably quickly but there are some good pathways. Godolphin have a pathway for postgraduate students where you can do an MBA out of a university in America and that’s a two-year program that you can apply for. They only take about 20 people and it’s very difficult to be chosen but they want to encourage people to – whether they’re lawyers or whether they’re accountants or whether they want to be horse trainers, to follow that path. So there are some good postgraduate paths. I think getting a mentor is really important. Get someone in the industry who can give you pointers, who can introduce you to people and help you on your path which is what I was lucky enough to have as a young student.
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00:40:11 | DT: | Absolutely. I think in an industry where so much turns on connection, on networks, on an understanding of custom, having that personal introduction is so valuable.
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00:40:21 | DM: | Yeah and if you’ve got the passion for it then there is a capacity to be able to carve out a career in the industry which is really exciting.
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00:40:29 | DT: | Absolutely. Well Daniel Morgan, thank you so much for joining me today on Hearsay.
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00:40:33 | DM: | Lovely, thank you for having me.
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00:40:44 | RD: | As always, you’ve been listening to Hearsay the Legal Podcast. I’d like to thank today’s guest, Daniel Morgan. for being a part of it.
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