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More legal advice on selling your horse

Q: Last year I sent my dressage horse to a reputable horse dealer to be sold for £13,000. Three months later, the horse was still not sold, so I asked if I could collect him.

However, when we arrived, we discovered the horse dealer had left the premises. No phone calls were returned, and I later found out he’d changed his name.

I then received a letter from his solicitor stating he had gone bankrupt and that I was listed as a creditor as he had sold our horse for the agreed amount.

After searching for the horse, we discovered he’d been sold through another horse dealer. Do we have any right to claim the horse back or do we just have to wait and hope that we receive the £13,000 through the administration process?
JG, Dorset

In this situation, it would appear you have a claim attached to the proceeds of your horse’s sale.

“It seems from your question that the horse was actually sold before you attempted to terminate the agency relationship, so the onward sale is probably a red herring,” said Mike Pavitt of solicitors Blake Lapthorn. “In any event, you cannot recover the horse from an innocent purchaser. Your claim attaches to the proceeds of sale.

“On the face of it — subject to the terms of your agency agreement — the horse dealer held the proceeds (net of commission) upon trust for you. You may therefore be able to claim that money if it can still be identified, and has not been mixed with other funds.

“The horse dealer’s insolvency does not necessarily mean the office holder has no funds, just that creditor claims exceed those funds,” said Mike. “If the funds have gone or been mixed, you will have to stand in line as an unsecured creditor. We therefore suggest you take specific legal advice.”

How do I claim my money?

In cases of bankruptcy, there is a hierarchy of fund allocation, with secured creditors who have a claim on collateral, for example the dealer’s mortgage provider, being first in line.

When a third party sells a horse for you, as in this case, it is vital to get a formal agreement in place.

In the event of making a claim as a creditor, the claimant would need to show they had a “fiduciary relationship” with the insolvent person, meaning they were accountable to you in terms of any sale proceeds. A signed agreement would be proof of this relationship.

Anyone who thinks they are a creditor in cases of bankruptcy or liquidation should contact the official receiver at the Insolvency Service to make sure they are listed as a creditor.

The Insolvency Service website has further details of what to do when an individual who owes you money goes bankrupt.

Information

Blake Lapthorn, tel: 02380 857028 www.bllaw.co.uk

Insolvency Service www.insolvency.gov.uk

This Q&A was first published in Horse & Hound (30 April, ’09)

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