Ebay Wirraway case resolved...
Fri Aug 03, 2007 8:34 am
Fri Aug 03, 2007 8:40 am
I hope it helps to show those people who act like that on Ebay that it is not a game where you can do what you like.
Jerry
Jerry
Fri Aug 03, 2007 8:55 am
agreed I have hag dealings like that 
but not a Airplane 
but not a Airplane
Fri Aug 03, 2007 10:44 am
Justice on ebay? Maybe there is hope for the world after all...
That's great news, IMHO.
gv
That's great news, IMHO.
gv
Fri Aug 03, 2007 7:12 pm
uuuuummmmmm - i wonder if ebay were involved with this as they don't like the publicity. I've had some bad dealings on ebay, and the image that i got is that in general they don't give a stuff!
Was this a private case brought on by the bidder? I can't see ebay wanting to get it's hands soiled! Ebay harps on about policing its sites, but to me, its bark is a lot worse than its bite - bit like the U.N !!
tim
Ebay Wirraway dispute
Fri Aug 03, 2007 11:23 pm
Found the NSW Supreme Court Rulling and summary of the matter. I think it explains very clearly who the more believable party was in this matter. It didn't address why this aircraft had an export permit though???
New South Wales
Supreme Court
CITATION : Peter Smythe v Vincent Thomas [2007] NSWSC 844
HEARING DATE(S) : 27 July 2007, 1 August 2007
JUDGMENT DATE :
3 August 2007
JURISDICTION : Equity Division
JUDGMENT OF : Rein AJ
DECISION : See [77].
CATCHWORDS : Contract for sale of goods (aircraft) - whether eBay "online auction" an auction - whether agreement concluded - whether statements made promissory in nature - implication of a term as to payment of the balance of purchase price within a reasonable period - availability of specific performance
LEGISLATION CITED : Property, Stock and Business Agents Act 2002
Sale of Goods Act 1923, ss 8, 32, 60
Sale of Goods Act 1893 (UK), ss 3, 57
CASES CITED : Adderley v Dixon (1824) 1 Sim & St 607; 57 ER 239
Azzi (Automobiles) Pty Ltd v Volvo Car Australia Pty Ltd [2006] NSWSC 249
Chambre National des Commissaires Priseurs v NART SAS [2001] ECC 24
Chelmsford Auctions Ltd v Poole [1973] QB 542; [1973] 1 All ER 810
Commonwealth v Verwayen (1990) 170 CLR 394; 95 ALR 321
Craine v Colonial Mutual Fire Insurance Co Ltd (1920) 28 CLR 305; [1920] HCA 64
Ebay Inc v Bidder’s Edge Inc (2000) 100 F Supp 2d 1058
eBay International AG v Creative Festival Entertainment Pty Ltd (2006) Aust Contract R 90-248; [2006] FCA 1768
Elder Smith Goldsbrough Mort Ltd v McBride & Palmer [1976] 2 NSWLR 631
Ellul v Oakes (1972) 3 SASR 377
Evans Marshall & Co Ltd v Bertola SA [1973] 1 All ER 992; [1973] 1 WLR 349
Harnett v Yielding (1805) 2 Sch & Lef 549
Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41; 55 ALR 417
JJ Savage & Sons Pty Ltd v Blakney (1970) 119 CLR 435
Port Jackson Stevedoring Pty Ltd v Salmond & Spraggon (Australia) Pty Ltd (1978) 139 CLR 231
Trident General Insurance Co Ltd v McNiece Bros Pty Ltd (1988) 165 CLR 107
Wedgwood v Adams 6 Beav 600; 49 ER 958
Wilson v Kingsgate Mining Industries Pty Ltd [1973] 2 NSWLR 713
Wilson v Northampton & Banbury Junction Railway Company (1874) LR 9 Ch App 279
PARTIES : Peter Smythe (Plaintiff)
Vincent Thomas (Defendant)
FILE NUMBER(S) : SC 4620/06
COUNSEL : B Kasep (Plaintiff)
D M Loewenstein (Defendant)
SOLICITORS : Hall Partners Pty Ltd (Plaintiff)
Timothy Hemsley & Associates (Defendant)
IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
Rein AJ
3 August 2007
4620/06 - Peter Smythe v Vincent Thomas
JUDGMENT
1 HIS HONOUR: The defendant, a registered eBay user, is the owner of a Wirraway Australian Warbird aircraft, serial no A20-652, registration VH-WIR (“the Wirraway”). The Wirraway was listed on eBay with a notation of a “minimum bid” of $150,000 for 10 days in August 2006 (from 15 August to 25 August 7.31 pm).
2 On 25 August 2006, the plaintiff, also a registered eBay user, made a bid in accordance with eBay rules for $150,000. The plaintiff and defendant received a notification from eBay to the effect that the plaintiff had “won” the Wirraway. eBay’s notice is found at Annexure B to the affidavit of Mr Khosravi, the plaintiff’s solicitor, of 4 September 2006. Neither side has a copy of the screen as it appeared before the plaintiff’s bid but a copy of the screen after the bid is found as Annexure A to the plaintiff’s affidavit of 14 September 2006. The Wirraway was described as manufactured in 1944, flown by RAAF in a non-combat role, restored in 1986, that the seller would arrange for “local pickup only (no postage)” and:
“Present Situation:
- Fresh P & W 1234 engine Low TT airframe – Always hangared
- New fabric to side cowls, ready for paint scheme of choice
- Refurbished interior
- Featured in numerous articles and books
- History known since new
- One of very few remaining flying Wirraways existing
- More exclusive than comparable Harvard, T-6, SNJ”
3 On 23 August 2006, prior to the plaintiff’s bid, the plaintiff and defendant had a telephone conversation, the terms of which are disputed.
4 The plaintiff claims that as a result of his having been the highest bidder and his bid meeting the description of the minimum bid, a contract for the sale of goods was entered into between himself and the defendant. The defendant disputes that a contract was formed.
5 Mr B Kasep of counsel appears for the plaintiff and Mr D M Loewenstein of counsel appears for the defendant.
6 Fortunately there is agreement that the relevant law to which regard must be had is New South Wales law. There is agreement that the terms and conditions of eBay are those found as Annexure C to the affidavit of Mr Khosravi, as expanded by Annexure E.
7 The relevant terms of the eBay terms and conditions which both parties accepted as registered users (a requirement for bidding on eBay) are the following:
“1. Membership Eligibility.
Our services are available only to, and may only be used by, individuals who can form legally binding contracts under applicable law. Without limiting the foregoing, our services are not available to persons under 18 years of age or to temporarily or indefinitely suspended eBay members. If you do not qualify, please do not use our services. Further, your eBay account (including feedback) and User ID may not be transferred or sold to another party.
…
3. eBay is not an Auctioneer.
3.1 Online Auctions. Although we are commonly referred to as an online auction web site, it is important to realise that we are not a traditional "auctioneer". Instead, our Site acts as a venue to allow members to offer, sell, and buy just about anything, at anytime, from anywhere, in a variety of formats, including a fixed price format and an auction-style format commonly referred to as an "online auction". We are not involved in the actual transaction between buyers and sellers. As a result, we have no control over the quality, safety or legality of the items or content posted by users on the Site, the truth or accuracy of the listings, the ability of sellers to sell items or the ability of buyers to buy items. We cannot ensure and do not guarantee that a buyer or seller will actually complete a transaction or act lawfully in using our Site.
…
4. Bidding and Buying.
You are obligated to complete the transaction with the seller if you purchase an item through one of our fixed price formats or are the highest bidder as described below, unless the transaction is prohibited by law or this User Agreement. If you are the highest bidder at the end of an auction (meeting the applicable minimum bid or reserve requirements) and your bid is accepted by the seller, you are obligated to complete the transaction with the seller, unless the item is listed in a category under the Non-Binding Bid Policy (at http://pages.ebay.com.au/help/policies/non-payment.html) or the transaction is prohibited by law or by this Agreement. By bidding on an item you agree to be bound by the conditions of sale included in the item's description so long as those conditions of sale are not in violation of this Agreement or unlawful. Bids are not retractable except in exceptional circumstances such as when the seller materially changes the item's description after you bid, a clear typographical error is made, or you cannot authenticate the seller's identity. If you choose to bid on items similar to those described on our mature audience page (located at http://pages.ebay.com.au/help/policies/ ... ences.html), you are certifying that you have the legal right to purchase such items (suitable only for persons aged 18 years or over in Australia).
5. Listing and Selling.
5.1 Listing Description. You must be legally able to sell the item(s) you list for sale on our Site. You must describe your item and all terms of sale on the listing page of our Site. Your listings may only include text descriptions, graphics, pictures and other content relevant to the sale of that item. All listed items must be listed in an appropriate category. All Dutch auction items must be identical. At any one time you may not promote identical items in more than ten (10) online auction listings (whether Dutch or Regular auction-style) on our Site.
5.2 Binding Bids. Except for items to which the Non-Binding Bid Policy (located at: http://pages.ebay.com.au/help/policies/non-payment.html) applies, if you receive at least one bid at or above your stated minimum price (or in the case of reserve auctions, at or above the reserve price), you are obligated to complete the transaction with the highest bidder upon the item's completion, unless there is an exceptional circumstance, such as:
1. the buyer fails to meet the terms of your listing (such as payment method); or
2. you cannot authenticate the buyer's identity.
…
18.4 Our Non-Binding Bid Policy is available at
http://pages.ebay.com.au/help/policies/ ... g-bid.html. We may change the Non-Binding Bid Policy from time to time and our changes are effective after we provide you with notice of the changes by posting the changes on the Announcement Board.” (emphasis in cl 5.2 in original)
8 The non-binding bid policy to which reference is made states:
“Certain types of items cannot be sold through the auction or fixed price format on our site. Therefore, we have a separate policy for those types of items where placing a bid neither constitutes a legally binding contract or obligates the seller to sell the item. The high bidder is not obligated to purchase the item either. If you list these types of items on eBay, the listing cannot result in a binding contract to buy and sell the item, but is merely a means of introducing interested potential sellers to interested potential buyers. Furthermore, insincere bidding is not permitted.
Violations of this policy may result in a range of actions, including:
- Limits on account privileges
- Account suspension
- Forfeit of eBay fees on cancelled listings
- Loss of PowerSeller status”
9 The notification to the plaintiff from eBay of 25 August 2006, to which I have earlier referred, was in the following terms:
“Congratulations, the item is yours. Please pay now!
Wirraway Australian Warbird Aircraft
Sale Price
View Item 1 Co to My eBay
Details for Item number: 300017903216
…
Payment details: Payment and Delivery arrangements to be negotiated.” (emphasis added)
10 It also contained:
“Get your Item
Pay Now
Click to confirm total price and a payment.” (emphasis added)
11 It had a header:
“You won eBay Item: Wirraway Australian Warbird Aircraft 300017903216”
12 The plaintiff wrote to the defendant on 25 August 2006:
“Hi Vin
As per our telephone conversation on Thursday I’ll arrange a $10,000AUD deposit be paid to you within 7 days of the end of the auction and that the final outstanding amount of $140,000AUD be paid within 6 weeks.
I’d like to say thanks for giving me the opportunity to purchase this wonderful piece of Australian aviation and look forward to meeting you in the near future.
cheers
Peter”
and on 26 August 2006 sent a copy of the email he had received from eBay.
13 The defendant wrote back on 27 August 2006 saying:
“As you know, I told you during our phone communication that I certainly would not accept a payment of only $150,000 for my Wirraway and you were to inspect before purchase. I suggest therefore that you do not attempt to send me any payment because I will simply not accept it. eBay have already been notified of this. It will be indeed unfortunate if we need to undertake legal action about this.”
14 The plaintiff replied on 29 August 2006 by email:
“I have also notified eBay. EBay is a legally binding auction and is covered by all Australian legal jurisdictions. I acted in good faith when I placed a bid that was within your own parameters.”
15 When these proceedings were commenced the plaintiff paid the deposit of $15,000 into Court.
16 In support of the plaintiff’s case his affidavits of 14 September 2006 and 7 December 2006 were read together with Mr Khosravi’s affidavit of 4 September 2006. The plaintiff was cross examined.
17 The defendant’s affidavit of 3 November 2006 was read in his case, and he was cross examined.
18 I accept the plaintiff’s version of the disputed conversation in preference to that of the defendant and for the following reasons:
(1) The plaintiff had a contemporaneous note of his conversation with the defendant, the authenticity of which was not challenged. His affidavit evidence was not inconsistent with what was in the note.
(2) The plaintiff by his manner and demeanour appeared to me to be truthful in his answers. There was one area of difficulty in the plaintiff’s evidence when he seemed to assert that the defendant had actually agreed to six weeks for payment of the balance of the purchase price but he did concede that his note pointed to a lack of agreement on that point – the note confirms what is contained in para 5(1) of the plaintiff’s second affidavit and the plaintiff can be understood as saying that he knew that the defendant wanted the balance after a further six weeks and that did not trouble the plaintiff. It did not lead me to doubt the general veracity of the plaintiff.
(3) The defendant in his affidavit said nothing about having received an offer from the plaintiff for $150,000 (the plaintiff on his evidence made no such offer in the telephone conversation). It was not put to the plaintiff that he had made an offer to the defendant or that the defendant had rejected it. The defendant swore in the witness box however that it had been said in an answer in cross examination (see T35.7). Given that that was his explanation for why the plaintiff was not entitled as highest bidder, I found his failure to refer to it in his affidavit surprising and his evidence on this point difficult to accept.
(4) The plaintiff said that when he spoke to the defendant, the defendant told him that the Wirraway had a current airworthiness certificate. The defendant when cross examined on this said that the airworthiness certificate had expired in July 2006. He said he did not recall if he told the plaintiff that there was a current airworthiness certificate.
(5) The defendant’s version of events, which involved him saying that he would not agree to sell the aircraft unless the buyer inspected it, is not credible and particularly so since he listed the aircraft on eBay for sale without any indication that the buyer should inspect first.
(6) Further the defendant had also listed the Wirraway on the “Buy now” section of eBay for $275,000, and claimed that had anyone clicked on that he would not have sold if the Wirraway had not been inspected (T40-T41), which further diminished his credibility.
(7) The defendant himself had purchased many items (including Vintage car parts) on eBay and knew that he was entitled to the items when he had been the highest bidder (T34.18, T46), and I found his assertion that he did not understand that he was committed to sell as somewhat surprising.
19 I therefore proceed on the basis that the plaintiff’s version of the conversation accurately describes what occurred and that the defendant told the plaintiff:
(1) that the aircraft had been totally restored in 1986 and flown regularly up until 2001;
(2) that the aircraft had had to have an engine replacement and since that replacement had flown only four hours in total;
(3) that the aircraft was as described on the eBay site;
(4) that the aircraft was “currently undergoing a 100 hour overhaul. It has all its current airworthiness certificates, and it requires a new paint job because the new owner would probably want to paint it according to whatever scheme they want it”;
(5) that he said the aircraft would be ready to fly from Albury to Adelaide by the time of delivery (inferentially on completion of the 100 hour inspection);
(6) that there was then the following conversation (p 4 of plaintiff’s affidavit sworn 14 September 2006):
Pl: “Look Vin, I am interested in purchasing this aircraft. If I was the winning bidder in accordance with the description on the eBay website, would you be happy to accept a $10,000 deposit to be paid within 7 days of the end of the auction?”
Def: “Yes I am happy with that, I am negotiable with the time frame on the finalisation of payment. I have had an expression of interest from Queensland and they have expressed an interest in purchasing the aircraft for $220,000. I would like to get $250,000 for the aircraft.”
Pl: “Well, I will see how the auction goes and if I am still interested, I will place a bid.”
Def: “Ok. Thanks for calling.”
(7) that as part of the conversation the defendant told the plaintiff he would like the purchase completed within six weeks of payment of the deposit, but that aspect was negotiable: see para 5(1) of the plaintiff’s affidavit of 7 December 2006 and see T25-T27 and Exhibit “C”.
20 There was one other communication to the plaintiff from the defendant prior to the close of bidding containing the following:
“Well known Wirraway as in ad. Engine 4 hrs since fresh in 2001. Prop and airframe 309 hrs since o/h. Mustang brakes. Dittel VHF. T-6 eddy current inspection carried out … no defect.
Engine run regularly since o?h in 2001 in accordance with P&W recommendations. A/c is undergoing annual now.
Contact engineer Steve Death at Hazair Albury on [phone number] or myself [phone number] for further details”
21 There is no dispute that the Wirraway falls within the definition of “goods” in the Sale of Goods Act 1923 (“SGA”). There was agreement that the only legislation dealing specifically with auctions of goods is s 60 of the SGA. The Property, Stock and Business Agents Act 2002 deals with auctions of real estate and livestock and, it was agreed, had no relevance.
22 The defendant accepts that both he and the plaintiff accepted, by clicking on an “accept” button, the terms and conditions of eBay but the defendant’s argument is that there was no binding and enforceable agreement as between the plaintiff and the defendant. The consequence of the breaches by the defendant of the eBay terms and conditions, it was submitted by the defendant, was only that eBay could remove the defendant as a registered user which, I was informed, has occurred. The defendant’s argument has four alternative components:
(1) The only contracts in existence were between eBay and the plaintiff and eBay and the defendant. Those parallel contracts never crossed over into an agreement between the plaintiff and the defendant.
(2) The placement of an advertisement for sale by the defendant on eBay was no different to the placement of an advertisement in the classified advertisement section of the Sydney Morning Herald, the Trading Post or the Wentworth Courier. It should be characterised as no more than that and what the plaintiff did was no more than make an invitation to treat.
(3) Even if what occurred could otherwise be viewed as an offer and acceptance, the time for payment was to be negotiated and hence there was no complete agreement.
(4) The plaintiff waived his right to bid at the auction.
23 A fifth argument to the effect that the plaintiff had engaged in misleading and deceptive conduct was abandoned in the course of submissions.
Online auction
24 The first and second issues relate to the nature of the online auction. I consider this aspect leaving to one side the further problem of the time for payment.
25 The plaintiff disputes the characterisation of what occurred presented by the defendant’s submissions, and contends that what occurred in August 2006 was an auction with considerable similarities to a traditional auction.
26 Mr Kasep, in detailed written submissions drew my attention to several cases in which online auctions have been described:
(1) In Chambre National des Commissaires Priseurs v NART SAS [2001] ECC 24 at [22]-[24] the Tribunal de Grande Instance (apparently a District Court) observed per Gomez P, Marcus VP and Dallery J:
“22 In reality, an online auction presents all the characteristics of a public auction because it is open to all interested Internet users as long as they register beforehand and agree to the contractual clause governing online sales.
23 The registration has as its sole object the identification and individualisation of the bidder.
24 This object is necessary and achieved, albeit in another way, in traditional sales in an auction room.
25 Furthermore, for the purpose of organizing and carrying out an auction, the Internet consists of a vast auction room extending to infinity and able to change in order to take account of the changes in physical space in which the offers of auctions are distributed.”
(2) In eBay International AG v Creative Festival Entertainment Pty Ltd (2006) Aust Contract R 90-248; [2006] FCA 1768 (a case in which eBay claimed that a condition contained on the reverse of tickets sold by Creative conveyed representations that constituted misleading and deceptive conduct on the part of Creative), Rares J described eBay as follows:
“[4] eBay is a Swiss corporation which operates a website in Australia as well as other websites in various places in the world. eBay’s websites are part of an online global market place which the eBay group operates. Registered users of eBay websites, known as members, are able to buy and sell many types of goods and services online. eBay charges fees for sellers to advertise and offer items for sale on the eBay website. No fees are payable by buyers or bidders. Tickets to concerts and music festivals such as the Big Day Out are offered by eBay’s members to others who wish to purchase on the eBay website.
[5] A member who meets eBay’s requirements for listing items for sale can use one, or a combination, of two different formats for sale, namely an auction format or a fixed price format known as ‘buy it now’. These formats operate in the following way. In the auction format listing, the seller offers the relevant item or items, by describing it or them, setting a starting price and identifying the duration of the listing. Potential buyers or bidders search or browse the eBay website, visit the listing and place bids on the item. At the expiry of the listing the highest bidder is obliged, in accordance with the terms of eBay’s user agreement, to buy the item from the seller for the price specified in the highest bid. In the fixed price format listing, the seller offers an item or items by again describing it or them, stating the fixed price and the duration of the listing. Buyers again search or browse the eBay website. If someone is interested in buying the item, there is no bidding involved. The buyer simply clicks on a webpage button ‘buy it now’ to purchase at the fixed price. The listing then expires.”
(3) In Ebay Inc v Bidder’s Edge Inc (2000) 100 F Supp 2d 1058 at 1060, Whyte USDJ described eBay in the following terms:
“eBay is an Internet-based, person-to-person trading site. eBay offers sellers the ability to list items for sale and prospective buyers the ability to search those listings and bid on items. The seller can set the terms and conditions of the auction. The item is sold to the highest bidder. The transaction is consummated directly between the buyer and seller without eBay’s involvement. A potential purchaser looking for a particular item can access the eBay site and perform a key word search for relevant auctions and bidding status. eBay has also created category listings which identify items in over 2500 categories, such as antiques, computers, and dolls. Users may browse these category listing pages to identify items of interest. (references omitted)”
Whyte USDJ also noted that “Users agree to the seven page user agreement by clicking on an ‘I accept’ button located at the end of the User Agreement”. He observed at 1060:
“eBay currently has over 7 million registered users. Over 400,000 new items are added to the site every day. Every minute, 600 bids are placed on almost 3 million items. Users currently perform, on average, 10 million searches per day on eBay’s database. Bidding for and sales of items are continuously ongoing in millions of separate auctions. (references omitted)”
27 Mr Kasep drew attention to a passage in G T Morice, “Sale by Auction in Holland” (1915) 32 South African Law Journal 140 at 141 in the following terms:
“Another mode of holding an auction which is referred to by the Dutch writers, was bij de brandende kaars, or, as it was called in England – by inch of candle. After the conditions of sale had been read out, a piece of candle was lighted, and would-be buyers commenced bidding against one another. The last bid before the candle burnt out won the day. (Fockema Andreae’s Oud-Neder. Burgerlijk Recht II, p. 28). In this form of auction the system of bidding must have been one of raising the price, the going out of the candle corresponding to the fall of the hammer in a modern auction.”
28 There are some differences between what transpires at a traditional auction and an online auction and they are:
(1) at a traditional auction there is of course a human agent in the form of the auctioneer;
(2) the auctioneer is the agent of the seller (see “Benjamin’s Sale of Goods” (2006) 7th ed, London: Sweet & Maxwell, para 2-004) and the auctioneer has the authority to execute a contract on behalf of the seller and buyer: see Wright v Madden [1992] 1 Qd R 343 at 346;
(3) in a traditional auction the seller can at any time before the hammer is lowered withdraw his goods from sale: in “Benjamin’s Sale of Goods” it is stated “Each bid is an offer which the auctioneer as agent for the seller, is free to accept or reject” (para 2.004).
29 There is no human agent and eBay by its terms and conditions eschews any role as auctioneer: see clause 3.1 of the eBay terms and conditions, nor does eBay have authority to execute a contract. There does not appear to be any provision for withdrawal of the goods from sale at the auction.
30 There may be further differences beyond the physical, for example at least in the case of real estate auctions, contracts are drafted ahead of the bidding and the bid is taken as being based on the contract unless by earlier correspondence the seller has agreed to alter the terms if the person seeking changes is the successful bidder.
31 Section 60 of the SGA is in the following terms:
“60 Auction sales
In the case of a sale by auction:
(1) where goods are put up for sale by auction in lots, each lot is prima facie deemed to be the subject of a separate contract of sale,
(2) a sale by auction is complete when the auctioneer announces its completion by the fall of the hammer or in other customary manner: until such announcement is made any bidder may retract his or her bid,
(3) where a sale by auction is not notified in the conditions of sale to be subject to a right to bid on behalf of the seller, it shall not be lawful for the seller to bid or to employ any person to bid at the sale, or for the auctioneer knowingly to take any bid from the seller or any such person: any sale contravening this rule may be treated as fraudulent by the buyer,
(4) a sale by auction may be notified in the conditions of sale to be subject to a reserved price, and a right to bid may also be reserved expressly by or on behalf of the seller,
(5) where a right to bid is expressly reserved, but not otherwise, the seller, or any one person on the seller’s behalf, may bid at the auction.”
32 These provisions are the same as those found in s 57 of the Sale of Goods Act 1893 (UK).
33 Section 8 of the SGA (which is the same as s 3 of the UK Sale of Goods Act) provides:
“8 Contract of sale how made
Subject to the provisions of this Act and of any statute in that behalf, a contract of sale may be made in writing (either with or without seal), or by word of mouth, or partly in writing and partly by word of mouth, or may be implied from the conduct of the parties:
Provided that nothing in this section shall affect the law relating to corporations.”
34 As Mr Kasep point out, “auction” is not defined in the SGA.
35 The tribunals to which I have referred appear to have no difficulty in regarding online auctions as a species of auction, and with respect I think that approach is the correct one. In circumstances where both the buyer and seller agree to accept the terms and conditions of eBay I see no difficulty in treating the parties as having accepted that the online auction will have features that are both similar and different to auctions conducted in other forums. A live auction may require registration of bidders, and may specify the means by which payment can be made eg “personal cheques not accepted”, or that bids of a certain type will be accepted eg “phone bids accepted”. The parties have agreed to allow eBay, or its computer, to automatically close the bidding at a fixed time and have accepted that eBay will have no personal liability to either buyer or seller. The automatic close of bidding at a fixed time and the generation of an eBay advice headed “won” appear to have been accepted by the parties to an eBay auction as the equivalent of the fall of the hammer. As Mr Morice pointed out in the passage quoted in [27] above, the fall of the hammer equated to the going out of the candle, demonstrating that customs can change. Section 60(2) of the SGA contemplates modes of completion other than the fall of the hammer. The non-binding bid policy recognises that there are some items which by their nature cannot or ought not be sold over the internet, but there was no suggestion by the defendant here that the non-binding bid policy had any application to this case.
36 The online auction, whether conducted by eBay or by any other organisation, provides a means by which products of almost every description can be bought and sold, and utilises the exceptional breadth of the internet to expand the horizons of commerce, perhaps just as the invention of the printing press in the 16th century permitted wider publication of items for sale than the town or village square. Two matters which commerce has always cherished, access and certainty, are achieved by the combination of internet technology and acceptance by prospective buyers and sellers of the conditions for use of the particular site and its facilities.
37 I do not accept the defendant’s contention that arising out of the registration and bidding process I have described, there were contracts only between eBay and the buyer and between eBay and the seller. It has been recognised even in relation to traditional auctions that existence of a contract between vendor and auctioneer can sit together with a contract between the vendor and purchaser (and between the auctioneer and purchaser): see Elder Smith Goldsbrough Mort Ltd v McBride & Palmer [1976] 2 NSWLR 631, following Chelmsford Auctions Ltd v Poole [1973] QB 542; [1973] 1 All ER 810. The eBay terms and conditions created a framework for the auction in which the plaintiff and defendant were willing participants.
38 Online auctions are not the only commercial environment in which parties come together pursuant to agreed guidelines and are able to form contracts in a different way to the usual fashion of formal offer and acceptance. “Scratching the slip” at Lloyds as explained in M A Clarke, “The Law of Insurance Contracts” (2006) 5th ed, London: informa, para [11-3A], is but one example of such a process.
39 In my view, the seller, by listing the Wirraway on eBay’s site with an effective disclosed reserve of $150,000 offered to sell the Wirraway to that bidder who:
(a) bid within the specified time period;
(b) made a bid of at least $150,000;
(c) was the highest bidder of those who made bids in accordance with (a) and (b); and
(d) did not qualify or seek to impose a qualification on his bid to which the seller had not previously indicated his willingness to consent.
40 I can see no reason in principle why a buyer who did wish to impose a condition of sale that was not implied by relevant legislation, could not, prior to making his bid, seek agreement from the seller that the seller would accept a bid from the buyer on particular terms just as occurs in real estate transactions. If that course is adopted it would be wise for the buyer to obtain from the seller in advance confirmation in writing of such agreement, to avoid any argument as to what was said. It is clear too that a seller who lists his product on eBay would better protect himself by specifying all elements of the sale that are important to him – method of payment, time for payment, and where appropriate the exclusion of warranties where such exclusion is permitted by law. As this case itself demonstrates, the absence of details can be productive of difficulty, a point to which I shall return.
41 No argument was advanced by the defendant that the eBay terms, on their proper construction, did not require the defendant to sell if a bid of at least $150,000 was made in accordance with the minimum bid requirement, so I do not need to consider whether there is a tension or even inconsistency between clause 4, which uses the words “and your bid is accepted by the seller”, and clause 5.
42 In his article entitled “E-auctions: who will protect the consumer?” (2002) 18 JCL 75, which article had been cited to me by Mr Loewenstein, Mr Adam Reynolds makes reference to two German decisions, one of the Regional Court (LG) Munster MMR 2000, 280 (21 January 2000), and one of the Regional Appeal Court (OLG) Hamburg MMR 2000, 278 (14 December 2000) – the latter being an appeal which overturned the first mentioned decision. I shall refer to the case as the Munster case.
43 An article entitled “Online Auctions – Germany Online Auctions under German Contract Law” by Jan-Malte Niemann in Computer Law & Security Report Vol 17 No 2 2001, referred to in Mr Reynolds’ article, provides a synopsis of the Munster case both at first instance and on appeal, and seeks also (as does Mr Reynolds’ article) to examine whether online auctions are really auctions at all. Obviously the decisions concern German law (and nor did they concern an eBay site) but the conclusion of the higher court was (according to the article) that the “opening of the offer page to the public was a legally binding offer rather than a mere invitation to treat” in part because (citing from the article at p 117):
“acknowledgment by all participants of the auction house’s terms and conditions was a mandatory requirement for participation in the auction. In doing so both seller and buyer declared the intention to contract subject to these terms only – not merely in relation to the auction house but also amongst each other! Thus the terms built part of the contractual basis irrespective of their exact legal classification as between the parties.”
44 In the Munster case a motor dealer had placed a new Volkswagen for sale on the auction house site, with no minimum bid stated. The dealer had hoped to generate a great deal of interest by placing a starting bid of 10 DM for a vehicle worth 57,000 DM, and permitting bids in increments of only 50 DM. The small bids seem to have had the opposite effect to that intended because interest waned and the highest bid received within the specified time was 26,350 DM.
45 Mr Niemann summarised what he described as the “pragmatic and convincing arguments” of the OLG as follows:
“- The vendor used the Internet auction as an advertising event consciously putting up with the risk of selling the item at an outrageously low price.
- The risk of financial loss is typically involved in an auction, a form of transaction the seller deliberately chose.
- The seller knowingly did without establishing a minimum final price.
- Self-responsibility is always the other side to party autonomy which does not protect against unwise decisions.”
46 The author having expressed his own view that the decision at first instance was “plainly wrong and as having caused unnecessary turmoil because the binding character of online auctions can easily be established under German private law and the terms and conditions at work – as long as these rules are not undermined by dubious contractual construction”, noted that an appeal had been lodged to the Federal High Court of Justice. Whether the appeal was prosecuted and if it was, with what result, has not been made known to this Court.
47 The approach which I have identified in [43] above, I think, offers some support for the conclusion to which I have come.
48 In the course of submissions I raised the question of whether, if the defendant’s contention that there was a contract only between him and eBay but not with the plaintiff was accepted, the plaintiff would have any rights to enforce the contract between eBay and the defendant in some fashion akin to the law relating to bills of lading: Port Jackson Stevedoring Pty Ltd v Salmond & Spraggon (Australia) Pty Ltd (1978) 139 CLR 231. Mr Loewenstein, in his written submissions, sought to answer that possibility and made reference as well to Trident General Insurance Co Ltd v McNiece Bros Pty Ltd (1988) 165 CLR 107, in which the High Court in the field of insurance carved out an exception to the rule precluding third party enforcement of contracts, but he also pointed out that no case of that kind had been mounted by the plaintiff. Mr Kasep made it quite clear in his further submissions that the plaintiff does not seek to enforce the agreement between eBay and the defendant, but rather relies on its terms only as setting the framework for the online auction. I need therefore say no more about that issue.
Time for payment
49 In my view, the discussion between the parties concerning the payment of a deposit was sufficient to enable that aspect of payment to be incorporated as a matter agreed upon should the plaintiff bid online and be the successful bidder. That the aircraft was to be collected by the buyer is clear from the listing details. Capacity to be flown and airworthiness certificates were also discussed and for reasons which I explain below, I am of the view that those matters can also be determined from the content of the conversation when coupled with the written material. Thus all details of the sale were determined, but for the time for payment of the balance of the purchase price.
50 Had nothing been said concerning time for payment, Mr Loewenstein accepted, delivery (by collection by the buyer) and payment would be required to take place within a reasonable period of time. Sections 31 and 32 of the SGA, “Benjamin’s Sale of Goods” at para 8-037 and Sutton’s “Sales and consumer law” at para 19.4, point to the concession being correctly made. However Mr Loewenstein point to the fact that what the defendant said was that he wanted the purchase “to be completed within six weeks of payment of the deposit but that is negotiable” (emphasis added).
51 Mr Loewenstein relies on what was said by Gleeson CJ (when he was Chief Justice of NSW) in Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540:
“To say that parties to negotiations have agreed upon sufficient matters to produce the consequence that, perhaps by reference to implied terms or by resort to considerations of reasonableness, a court will treat their consensus as sufficiently comprehensive to be legally binding, is not the same thing as to say that a court will decide that they intended to make a concluded bargain. Nevertheless, in the ordinary case, as a matter of fact and commonsense, other things being equal, the more numerous and significant the areas in respect of which the parties have failed to reach agreement, the slower a court will be to conclude that they had the requisite contractual intention.”
52 Mr Loewenstein submits that in the discussions between the parties neither price nor time for payment was agreed, and hence that “there is no room left to import a concluded contract”: see para 14 of the defendant’s supplementary submissions. In oral submissions Mr Loewenstein expanded on that to say that (at T68.10-20):
“by saying specifically that time is to be negotiated it has been agreed that formation will not take place until the time for payment has been specifically agreed to. It demonstrates that the contract had not been concluded by agreement not to conclude the contract.”
The parties, he said, had agreed “that there would be no concluded agreement until something else was done”.
53 The telephone discussion between the parties clearly did not constitute a contract of sale. There is in that context no need to consider whether the parties agreed that there was to be no agreement. The absence of agreement on price was resolved by the process of online bidding as I have described. As at the point that the notional hammer fell, all terms bar one had been determined, ie time for payment, and that one remaining term had been partially concluded by the earlier discussion because the defendant had indicated he would accept 10 per cent of the purchase price within seven days. That left only the question of time for payment of the balance as the one outstanding matter.
54 It will be observed that Gleeson CJ pointed out that the number of matters remaining unresolved is an important aspect. I therefore regard it as of considerable significance that the only outstanding matter here was part only of the payment provisions, ie the time for payment of the balance.
55 In forming a view as to whether resort can be had to an implied term I also take into account the following matters:
(1) the context of the matter is an online auction in which bids are sought and pursuant to which a seller is required to sell to the highest bidder (whose bid is equal to or exceeds the minimum bid if specified);
(2) the minimum bid sought was a significant amount of money emphasising the seriousness of the bidding endeavour;
(3) the buyer (only as prospective bidder at that stage) took the trouble to ascertain what deposit would be acceptable (none having been specified in the listing) and to ascertain the seller’s wishes in respect of payment of the balance;
(4) the seller indicated that he wanted completion within six weeks of the payment of the deposit;
(5) there is a tension between what I have referred to in (1) and (2) on the one hand, and on the other the fact that the website indicated that the payment and delivery were to be negotiated.
56 Having regard to the matters to which I have referred, I do not accept that the parties had agreed that there would be no binding agreement until they had a concluded agreement on the time for payment of the balance, nor that because the defendant said that he wanted the balance to be paid in six weeks but was negotiable on that time, that it is not appropriate to imply a term.
Airworthiness
57 There is another issue which has arisen, which I have labelled airworthiness, and that is whether or not it was a term of the contract that the Wirraway, on delivery, would be able to be flown from Albury to South Australia and would have all necessary certificates to permit that to occur.
58 The question of whether or not the aircraft was to be capable of being flown at the time of delivery (and for which all relevant current airworthiness certificates would be held) is one which has, it was agreed, limited financial significance, both parties accepting that if the Wirraway was not able to fly, expenditure of between $8000 and $10,000 would bring it into that condition.
59 The listing on eBay described the Wirraway as one of the few flying Wirraways in Australia. The defendant’s statement that the aircraft had all relevant airworthiness certificates and would be able to be flown from Albury to South Australia on delivery reinforced what had been said in the eBay listing.
60 Little was said about this aspect in submissions. The case of Ellul v Oakes (1972) 3 SASR 377 at 387 deals with the question of when statements are promissory in nature, and see also JJ Savage & Sons Pty Ltd v Blakney (1970) 119 CLR 435 at 442 in which it is made clear that the fact that without a statement to the effect made the contract would not have been entered into, was not alone sufficient to make the statement promissory. In Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41; 55 ALR 417 the majority agreed with the conclusion of the trial judge (and that of the Court of Appeal) that statements made by the distributors were promissory. Gibbs CJ disagreed but did note at 61-62:
“A representation made in the course of negotiations which result in a binding agreement may be a warranty — i.e., it may have binding contractual force — in one of two ways: it may become a term of the agreement itself, or it may be a separate collateral contract, the consideration for which is the promise to enter into the main agreement. In either case the question whether the representation creates a binding contractual obligation depends on the intention of the parties. In J. J. Savage & Sons Pty. Ltd. v. Blakney, at p. 442 and Ross v. Allis-Chalmers Australia Pty. Ltd. at pp. 565, 567, it was said that a statement will constitute a collateral warranty only if it was "promissory and not merely representational", and it is equally true that a statement which is "merely representational" — i.e., which is not intended to be a binding promise — will not form part of the main contract. If the parties did not intend that there should be contractual liability in respect of the accuracy of the representation, it will not create contractual obligations. In the present case Mr. Blackman, who made his statements fraudulently, had, of course, no intention that they should amount to contractual undertakings, but he could not rely on his secret thoughts to escape liability, if his representations were reasonably considered by the persons to whom they were made as intended to be contractual promises, and if those persons intended to accept them as such. The intention of the parties is to be ascertained objectively; it "can only be deduced from the totality of the evidence": Heilbut, Symons & Co. v. Buckleton, at p. 51. In other words, as Lord Denning said in Oscar Chess Ltd. v. Williams, at p. 328:
"The question whether a warranty was intended depends on the conduct of the parties, on their words and behaviour, rather than on their thoughts. If an intelligent bystander would reasonably infer that a warranty was intended, that will suffice."
The intelligent bystander must however be in the situation of the parties, for "what must be ascertained is what is to be taken as the intention which reasonable persons would have had if placed in the situation of the parties": Reardon Smith Line v. Hansen-Tangen, at p. 574.” [footnotes omitted]
61 In my view the defendant’s statements that the plane would be able to be flown from Albury to South Australia and had (and inferentially would have) a current airworthiness certificate on completion of the 100 hour inspection, were promissory in nature and should be treated as part of the contract for sale. The statements were matters upon which the defendant alone had the relevant information and would in my view objectively be regarded as important by a purchaser, particularly where it was intended to fly the aircraft from Albury to South Australia.
62 I should note that Mr Loewenstein argued that there was an inconsistency in the plaintiff’s position because he wanted to take advantage of the conversation prior to the bid and the fact of an online bid.
63 It is true that the plaintiff seeks to incorporate the terms of payment of a deposit of 10 per cent within seven days and the capacity of the aircraft for flight (and holding of airworthiness certificates) from the conversation and add this to the fact of the bid and bid process online. I have made mention of the practice in real estate transactions of seeking agreement to changes in the contract which precede the bidding and fall of the hammer. Provided that the statements made by the seller can be established and that they are promissory in nature, I do not think that there is any reason in principle why the contract concluded by the bidding process online cannot incorporate additional matters that have been agreed or the subject of representations in advance of acceptance of the bid.
64 It was suggested in the defendant’s earlier written submissions that the absence of inspection of the aircraft by the plaintiff and the absence of an engineer’s report pointed to the absence of any firm agreement. The plaintiff said that he was well informed about the history and appearance of the aircraft and accepted the defendant’s description of its airworthiness, but in any event there is no substance in the point. A plaintiff is not required to inspect or obtain a report in respect of any item for sale and if he chooses not to do so (whether imprudently or not), the need for inspection could not be implied as a precondition of formation of a contract if agreement would otherwise appear objectively to have been reached.
Waiver
65 The defendant argues that on the basis of his conversation with the plaintiff (either in the form for which he contends or in the form for which the plaintiff contends) the plaintiff waived his right to bid for the plane. As I have indicated I accept the plaintiff’s version of what occurred and I do not accept that the plaintiff offered $150,000 in that conversation or that the defendant rejected it. There is agreement between the parties that the defendant did mention that he had a Queensland buyer interested in paying $220,000 and according to the plaintiff the defendant told the plaintiff that he was hoping to obtain $250,000 for the aircraft: see para 4 of the plaintiff’s affidavit of 14 September 2006.
66 Mr Loewenstein referred to Commonwealth v Verwayen (1990) 170 CLR 394 at 406. At 406-407 Mason CJ said:
“According to its strict legal connotation, waiver is an intentional act done with knowledge whereby a person abandons a right by acting in a manner inconsistent with that right: Craine v Colonial Mutual Fire Insurance Co Ltd [(1920) 28 CLR 305, at p 326.]; Grundt v Great Boulder Pty Gold Mines Ltd [(1937) 59 CLR 641, at p 658.] However, the better view is that, apart from estoppel and new agreement, abandonment of a right occurs only where the person waiving the right is entitled to alternative rights inconsistent with one another, such as the right to insist on performance of a contract and the right to rescind for essential breach: see Kammins [[1971] AC, at p 883.] This category of waiver is an example of the doctrine of election.
Another category of waiver is one in which a person is prevented from asserting, in response to a claim against him, a particular defence or objection which would otherwise have been available. Here waiver is said to arise when the person agrees not to raise the particular defence or so conducts himself as to be estopped from raising it: see Kammins [[1971] AC, at p 883.].”
67 Mr Loewenstein eschewed any reliance on estoppel so to succeed on this point he must bring himself within the principles of election. There are two fundamental obstacles to any waiver. First, as both parties acknowledge, as at the time of the conversation no contract had been formed between the parties, so there were at that time no rights in the plaintiff to be waived. Secondly the discussion that the plaintiff had with the defendant (on my findings or even on the defendant’s version) was not inconsistent with the plaintiff bidding online. The plaintiff was not, to use the language of Isaacs J in Craine v Colonial Mutual Fire Insurance Co Ltd (1920) 28 CLR 305; [1920] HCA 64, taking up two inconsistent positions, nor was he attempting to approbate and reprobate. There was a further argument advanced by Mr Kasep to the effect that election requires some change in position on the part of the other party based on what was said in Wilson v Kingsgate Mining Industries Pty Ltd [1973] 2 NSWLR 713 (see also Azzi (Automobiles) Pty Ltd v Volvo Car Australia Pty Ltd [2006] NSWSC 249 at [32]) which given my conclusions on the other two points I do not need to address.
Availability of specific performance
68 In the course of submissions I raised with counsel the question of the availability of the remedy of specific performance. The issue assumed particular significance in the light of the defendant’s evidence that the Wirraway remains in a hangar at Albury airport and that the 100 hour maintenance check or overhaul which it was said by the defendant to be receiving in August last year has not been completed. I was informed by both counsel that the hangar is not owned or rented by the defendant. If that is correct then the goods the subject of the sale agreement are in the hand of a third party. Section 32(3) of the SGA provides:
“(3) Where the goods at the time of sale are in the possession of a third person, there is no delivery by seller to buyer unless and until the third person acknowledges to the buyer that the third person holds the goods on the buyer’s behalf:
Provided that nothing in this section shall affect the operation of the issue or transfer of any document of title to goods.”
69 According to “Benjamin’s Sale of Goods” para 8.012:
“This subsection is declaratory of the common law, and means that a bailee or other third person in possession of the goods must attorn to the buyer before delivery will be held to have taken place. One effect of such an acknowledgement is that the third person thenceforth ceases to hold the goods on behalf of and to the order of the seller and instead holds them on behalf of and to the order of the buyer. The acknowledgment by the third person must be given with the consent of both the buyer and the seller, and each party to the contract of sale must do all that is necessary, so far as it depends on him, to obtain it.” (footnotes omitted)
70 KCT Sutton in “Sales and consumer law” (1995) 4th ed, LBC Information Services, points out at para 19.2 that:
“Where the seller is not obliged to send the goods to the buyer, it is enough if the seller has put it in the buyer’s power to take away the goods him or herself. Hence, when the documents of title to goods warehoused by a third person are handed to the buyer duly indorsed, the seller has done his or her part and it is incumbent on the buyer to accept or reject the goods within a reasonable time of the documents being handed to him or her.”
71 There appears to be some room for argument as to how the test for whether the Court should grant specific performance is to be formulated: see [20-030] of Meagher, Gummow & Lehane, “Equity: Doctrines & Remedies” (2002) 4th ed, LexisNexis Butterworths; Jones & Goodhart, “Specific Performance” (1996) 2nd ed, Butterworths; Spry, “Equitable Remedies” (2007) 7th ed, LawBook Co at 638; Wilson v Northampton & Banbury Junction Railway Company (1874) LR 9 Ch App 279 at 284; Wedgwood v Adams 6 Beav 600 at 605; 49 ER 958 at 960; Harnett v Yielding (1805) 2 Sch & Lef 549 at 553; Adderley v Dixon (1824) 1 Sim & St 607; 57 ER 239. Whether the test to be applied is “would damages constitute a complete remedy” (Adderley) or are damages “necessarily commensurate to the injury sustained” (Harnett), “is it just in all the circumstances for the plaintiff to be confined to his remedy in damages” (Evans Marshall & Co Ltd v Bertola SA [1973] 1 All ER 992 at 1005; [1973] 1 WLR 349 at 379-380), in my view the nature of the subject of the bargain, which is not only a fine looking aircraft (see Exhibit “A”) but is a vintage and unusual item, leads me to conclude that the case is one in which, subject to two matters, the relief of specific performance of the contract sought should be granted.
72 The first issue is that the Wirraway is not presently in flying condition, it having been left in a partially dismantled state and it is not the subject of current certificates of airworthiness.
73 The second issue is that it is not currently in the possession of the defendant but rather is in a hangar owned by a third party.
74 So far as the first point is concerned, there is evidence from the defendant that the amount of work necessary to complete the 100 hour maintenance work is not that substantial – in the order of between $8000 and $10,000. That and the evidence of the degree of dismantling of which the defendant advised the plaintiff points to a relatively small amount of work to be done. The obligation to ensure that the work is done and that all necessary certificates are obtained rests on the defendant. So far as the second point is concerned it is also necessary for the defendant to ensure that anything necessary to be done (ie payment of moneys due to the third party) is completed: see [69] and [70] above.
75 Mr Kasep indicated that even if the Wirraway is not repaired under instructions from and at the expense of the defendant (as in my view it ought to be) the plaintiff, if he received title to the Wirraway, would have it repaired by the same third party as he is one of only two authorised mechanics for the Wirraway in Australia. The plaintiff would then seek damages for breach of contract by the defendant.
76 Whilst I think there may be a need to obtain further information to enable orders to be drawn in an appropriate form I do not think the matters to which I have adverted present an obstacle to the order for specific performance. Nor do I think there is a problem of continuing supervision or need for indefinite series of rulings of the type that can preclude a grant of specific performance: see JC Williamson Ltd v Lukey (1931) 45 CLR 282; [1931] ALR 157; see Meagher, Gummow and Lehane (supra) at [20-065] citing Co-operative Insurance Society Ltd v Argyll Stores (Holdings) Ltd [1998] AC 1; [1998] ANZ ConvR 470, and see generally [20-055]-[20-080] of Meagher, Gummow and Lehane.
Conclusion
77 It follows that in my view a binding contract was formed between the plaintiff and the defendant and that it should be specifically enforced.
78 It was agreed by counsel for both parties that should I come to the view that the contract be specifically performed it would be appropriate to permit the parties time to endeavour to reach agreement on the precise form of orders including dealing with the $15,000 paid into Court by the plaintiff, and to list the matter before the duty judge next week to enable agreed short minutes to be then handed up, or failing that, any argument on the form of the orders to be ventilated.
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New South Wales
Supreme Court
CITATION : Peter Smythe v Vincent Thomas [2007] NSWSC 844
HEARING DATE(S) : 27 July 2007, 1 August 2007
JUDGMENT DATE :
3 August 2007
JURISDICTION : Equity Division
JUDGMENT OF : Rein AJ
DECISION : See [77].
CATCHWORDS : Contract for sale of goods (aircraft) - whether eBay "online auction" an auction - whether agreement concluded - whether statements made promissory in nature - implication of a term as to payment of the balance of purchase price within a reasonable period - availability of specific performance
LEGISLATION CITED : Property, Stock and Business Agents Act 2002
Sale of Goods Act 1923, ss 8, 32, 60
Sale of Goods Act 1893 (UK), ss 3, 57
CASES CITED : Adderley v Dixon (1824) 1 Sim & St 607; 57 ER 239
Azzi (Automobiles) Pty Ltd v Volvo Car Australia Pty Ltd [2006] NSWSC 249
Chambre National des Commissaires Priseurs v NART SAS [2001] ECC 24
Chelmsford Auctions Ltd v Poole [1973] QB 542; [1973] 1 All ER 810
Commonwealth v Verwayen (1990) 170 CLR 394; 95 ALR 321
Craine v Colonial Mutual Fire Insurance Co Ltd (1920) 28 CLR 305; [1920] HCA 64
Ebay Inc v Bidder’s Edge Inc (2000) 100 F Supp 2d 1058
eBay International AG v Creative Festival Entertainment Pty Ltd (2006) Aust Contract R 90-248; [2006] FCA 1768
Elder Smith Goldsbrough Mort Ltd v McBride & Palmer [1976] 2 NSWLR 631
Ellul v Oakes (1972) 3 SASR 377
Evans Marshall & Co Ltd v Bertola SA [1973] 1 All ER 992; [1973] 1 WLR 349
Harnett v Yielding (1805) 2 Sch & Lef 549
Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41; 55 ALR 417
JJ Savage & Sons Pty Ltd v Blakney (1970) 119 CLR 435
Port Jackson Stevedoring Pty Ltd v Salmond & Spraggon (Australia) Pty Ltd (1978) 139 CLR 231
Trident General Insurance Co Ltd v McNiece Bros Pty Ltd (1988) 165 CLR 107
Wedgwood v Adams 6 Beav 600; 49 ER 958
Wilson v Kingsgate Mining Industries Pty Ltd [1973] 2 NSWLR 713
Wilson v Northampton & Banbury Junction Railway Company (1874) LR 9 Ch App 279
PARTIES : Peter Smythe (Plaintiff)
Vincent Thomas (Defendant)
FILE NUMBER(S) : SC 4620/06
COUNSEL : B Kasep (Plaintiff)
D M Loewenstein (Defendant)
SOLICITORS : Hall Partners Pty Ltd (Plaintiff)
Timothy Hemsley & Associates (Defendant)
IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
Rein AJ
3 August 2007
4620/06 - Peter Smythe v Vincent Thomas
JUDGMENT
1 HIS HONOUR: The defendant, a registered eBay user, is the owner of a Wirraway Australian Warbird aircraft, serial no A20-652, registration VH-WIR (“the Wirraway”). The Wirraway was listed on eBay with a notation of a “minimum bid” of $150,000 for 10 days in August 2006 (from 15 August to 25 August 7.31 pm).
2 On 25 August 2006, the plaintiff, also a registered eBay user, made a bid in accordance with eBay rules for $150,000. The plaintiff and defendant received a notification from eBay to the effect that the plaintiff had “won” the Wirraway. eBay’s notice is found at Annexure B to the affidavit of Mr Khosravi, the plaintiff’s solicitor, of 4 September 2006. Neither side has a copy of the screen as it appeared before the plaintiff’s bid but a copy of the screen after the bid is found as Annexure A to the plaintiff’s affidavit of 14 September 2006. The Wirraway was described as manufactured in 1944, flown by RAAF in a non-combat role, restored in 1986, that the seller would arrange for “local pickup only (no postage)” and:
“Present Situation:
- Fresh P & W 1234 engine Low TT airframe – Always hangared
- New fabric to side cowls, ready for paint scheme of choice
- Refurbished interior
- Featured in numerous articles and books
- History known since new
- One of very few remaining flying Wirraways existing
- More exclusive than comparable Harvard, T-6, SNJ”
3 On 23 August 2006, prior to the plaintiff’s bid, the plaintiff and defendant had a telephone conversation, the terms of which are disputed.
4 The plaintiff claims that as a result of his having been the highest bidder and his bid meeting the description of the minimum bid, a contract for the sale of goods was entered into between himself and the defendant. The defendant disputes that a contract was formed.
5 Mr B Kasep of counsel appears for the plaintiff and Mr D M Loewenstein of counsel appears for the defendant.
6 Fortunately there is agreement that the relevant law to which regard must be had is New South Wales law. There is agreement that the terms and conditions of eBay are those found as Annexure C to the affidavit of Mr Khosravi, as expanded by Annexure E.
7 The relevant terms of the eBay terms and conditions which both parties accepted as registered users (a requirement for bidding on eBay) are the following:
“1. Membership Eligibility.
Our services are available only to, and may only be used by, individuals who can form legally binding contracts under applicable law. Without limiting the foregoing, our services are not available to persons under 18 years of age or to temporarily or indefinitely suspended eBay members. If you do not qualify, please do not use our services. Further, your eBay account (including feedback) and User ID may not be transferred or sold to another party.
…
3. eBay is not an Auctioneer.
3.1 Online Auctions. Although we are commonly referred to as an online auction web site, it is important to realise that we are not a traditional "auctioneer". Instead, our Site acts as a venue to allow members to offer, sell, and buy just about anything, at anytime, from anywhere, in a variety of formats, including a fixed price format and an auction-style format commonly referred to as an "online auction". We are not involved in the actual transaction between buyers and sellers. As a result, we have no control over the quality, safety or legality of the items or content posted by users on the Site, the truth or accuracy of the listings, the ability of sellers to sell items or the ability of buyers to buy items. We cannot ensure and do not guarantee that a buyer or seller will actually complete a transaction or act lawfully in using our Site.
…
4. Bidding and Buying.
You are obligated to complete the transaction with the seller if you purchase an item through one of our fixed price formats or are the highest bidder as described below, unless the transaction is prohibited by law or this User Agreement. If you are the highest bidder at the end of an auction (meeting the applicable minimum bid or reserve requirements) and your bid is accepted by the seller, you are obligated to complete the transaction with the seller, unless the item is listed in a category under the Non-Binding Bid Policy (at http://pages.ebay.com.au/help/policies/non-payment.html) or the transaction is prohibited by law or by this Agreement. By bidding on an item you agree to be bound by the conditions of sale included in the item's description so long as those conditions of sale are not in violation of this Agreement or unlawful. Bids are not retractable except in exceptional circumstances such as when the seller materially changes the item's description after you bid, a clear typographical error is made, or you cannot authenticate the seller's identity. If you choose to bid on items similar to those described on our mature audience page (located at http://pages.ebay.com.au/help/policies/ ... ences.html), you are certifying that you have the legal right to purchase such items (suitable only for persons aged 18 years or over in Australia).
5. Listing and Selling.
5.1 Listing Description. You must be legally able to sell the item(s) you list for sale on our Site. You must describe your item and all terms of sale on the listing page of our Site. Your listings may only include text descriptions, graphics, pictures and other content relevant to the sale of that item. All listed items must be listed in an appropriate category. All Dutch auction items must be identical. At any one time you may not promote identical items in more than ten (10) online auction listings (whether Dutch or Regular auction-style) on our Site.
5.2 Binding Bids. Except for items to which the Non-Binding Bid Policy (located at: http://pages.ebay.com.au/help/policies/non-payment.html) applies, if you receive at least one bid at or above your stated minimum price (or in the case of reserve auctions, at or above the reserve price), you are obligated to complete the transaction with the highest bidder upon the item's completion, unless there is an exceptional circumstance, such as:
1. the buyer fails to meet the terms of your listing (such as payment method); or
2. you cannot authenticate the buyer's identity.
…
18.4 Our Non-Binding Bid Policy is available at
http://pages.ebay.com.au/help/policies/ ... g-bid.html. We may change the Non-Binding Bid Policy from time to time and our changes are effective after we provide you with notice of the changes by posting the changes on the Announcement Board.” (emphasis in cl 5.2 in original)
8 The non-binding bid policy to which reference is made states:
“Certain types of items cannot be sold through the auction or fixed price format on our site. Therefore, we have a separate policy for those types of items where placing a bid neither constitutes a legally binding contract or obligates the seller to sell the item. The high bidder is not obligated to purchase the item either. If you list these types of items on eBay, the listing cannot result in a binding contract to buy and sell the item, but is merely a means of introducing interested potential sellers to interested potential buyers. Furthermore, insincere bidding is not permitted.
Violations of this policy may result in a range of actions, including:
- Limits on account privileges
- Account suspension
- Forfeit of eBay fees on cancelled listings
- Loss of PowerSeller status”
9 The notification to the plaintiff from eBay of 25 August 2006, to which I have earlier referred, was in the following terms:
“Congratulations, the item is yours. Please pay now!
Wirraway Australian Warbird Aircraft
Sale Price
View Item 1 Co to My eBay
Details for Item number: 300017903216
…
Payment details: Payment and Delivery arrangements to be negotiated.” (emphasis added)
10 It also contained:
“Get your Item
Pay Now
Click to confirm total price and a payment.” (emphasis added)
11 It had a header:
“You won eBay Item: Wirraway Australian Warbird Aircraft 300017903216”
12 The plaintiff wrote to the defendant on 25 August 2006:
“Hi Vin
As per our telephone conversation on Thursday I’ll arrange a $10,000AUD deposit be paid to you within 7 days of the end of the auction and that the final outstanding amount of $140,000AUD be paid within 6 weeks.
I’d like to say thanks for giving me the opportunity to purchase this wonderful piece of Australian aviation and look forward to meeting you in the near future.
cheers
Peter”
and on 26 August 2006 sent a copy of the email he had received from eBay.
13 The defendant wrote back on 27 August 2006 saying:
“As you know, I told you during our phone communication that I certainly would not accept a payment of only $150,000 for my Wirraway and you were to inspect before purchase. I suggest therefore that you do not attempt to send me any payment because I will simply not accept it. eBay have already been notified of this. It will be indeed unfortunate if we need to undertake legal action about this.”
14 The plaintiff replied on 29 August 2006 by email:
“I have also notified eBay. EBay is a legally binding auction and is covered by all Australian legal jurisdictions. I acted in good faith when I placed a bid that was within your own parameters.”
15 When these proceedings were commenced the plaintiff paid the deposit of $15,000 into Court.
16 In support of the plaintiff’s case his affidavits of 14 September 2006 and 7 December 2006 were read together with Mr Khosravi’s affidavit of 4 September 2006. The plaintiff was cross examined.
17 The defendant’s affidavit of 3 November 2006 was read in his case, and he was cross examined.
18 I accept the plaintiff’s version of the disputed conversation in preference to that of the defendant and for the following reasons:
(1) The plaintiff had a contemporaneous note of his conversation with the defendant, the authenticity of which was not challenged. His affidavit evidence was not inconsistent with what was in the note.
(2) The plaintiff by his manner and demeanour appeared to me to be truthful in his answers. There was one area of difficulty in the plaintiff’s evidence when he seemed to assert that the defendant had actually agreed to six weeks for payment of the balance of the purchase price but he did concede that his note pointed to a lack of agreement on that point – the note confirms what is contained in para 5(1) of the plaintiff’s second affidavit and the plaintiff can be understood as saying that he knew that the defendant wanted the balance after a further six weeks and that did not trouble the plaintiff. It did not lead me to doubt the general veracity of the plaintiff.
(3) The defendant in his affidavit said nothing about having received an offer from the plaintiff for $150,000 (the plaintiff on his evidence made no such offer in the telephone conversation). It was not put to the plaintiff that he had made an offer to the defendant or that the defendant had rejected it. The defendant swore in the witness box however that it had been said in an answer in cross examination (see T35.7). Given that that was his explanation for why the plaintiff was not entitled as highest bidder, I found his failure to refer to it in his affidavit surprising and his evidence on this point difficult to accept.
(4) The plaintiff said that when he spoke to the defendant, the defendant told him that the Wirraway had a current airworthiness certificate. The defendant when cross examined on this said that the airworthiness certificate had expired in July 2006. He said he did not recall if he told the plaintiff that there was a current airworthiness certificate.
(5) The defendant’s version of events, which involved him saying that he would not agree to sell the aircraft unless the buyer inspected it, is not credible and particularly so since he listed the aircraft on eBay for sale without any indication that the buyer should inspect first.
(6) Further the defendant had also listed the Wirraway on the “Buy now” section of eBay for $275,000, and claimed that had anyone clicked on that he would not have sold if the Wirraway had not been inspected (T40-T41), which further diminished his credibility.
(7) The defendant himself had purchased many items (including Vintage car parts) on eBay and knew that he was entitled to the items when he had been the highest bidder (T34.18, T46), and I found his assertion that he did not understand that he was committed to sell as somewhat surprising.
19 I therefore proceed on the basis that the plaintiff’s version of the conversation accurately describes what occurred and that the defendant told the plaintiff:
(1) that the aircraft had been totally restored in 1986 and flown regularly up until 2001;
(2) that the aircraft had had to have an engine replacement and since that replacement had flown only four hours in total;
(3) that the aircraft was as described on the eBay site;
(4) that the aircraft was “currently undergoing a 100 hour overhaul. It has all its current airworthiness certificates, and it requires a new paint job because the new owner would probably want to paint it according to whatever scheme they want it”;
(5) that he said the aircraft would be ready to fly from Albury to Adelaide by the time of delivery (inferentially on completion of the 100 hour inspection);
(6) that there was then the following conversation (p 4 of plaintiff’s affidavit sworn 14 September 2006):
Pl: “Look Vin, I am interested in purchasing this aircraft. If I was the winning bidder in accordance with the description on the eBay website, would you be happy to accept a $10,000 deposit to be paid within 7 days of the end of the auction?”
Def: “Yes I am happy with that, I am negotiable with the time frame on the finalisation of payment. I have had an expression of interest from Queensland and they have expressed an interest in purchasing the aircraft for $220,000. I would like to get $250,000 for the aircraft.”
Pl: “Well, I will see how the auction goes and if I am still interested, I will place a bid.”
Def: “Ok. Thanks for calling.”
(7) that as part of the conversation the defendant told the plaintiff he would like the purchase completed within six weeks of payment of the deposit, but that aspect was negotiable: see para 5(1) of the plaintiff’s affidavit of 7 December 2006 and see T25-T27 and Exhibit “C”.
20 There was one other communication to the plaintiff from the defendant prior to the close of bidding containing the following:
“Well known Wirraway as in ad. Engine 4 hrs since fresh in 2001. Prop and airframe 309 hrs since o/h. Mustang brakes. Dittel VHF. T-6 eddy current inspection carried out … no defect.
Engine run regularly since o?h in 2001 in accordance with P&W recommendations. A/c is undergoing annual now.
Contact engineer Steve Death at Hazair Albury on [phone number] or myself [phone number] for further details”
21 There is no dispute that the Wirraway falls within the definition of “goods” in the Sale of Goods Act 1923 (“SGA”). There was agreement that the only legislation dealing specifically with auctions of goods is s 60 of the SGA. The Property, Stock and Business Agents Act 2002 deals with auctions of real estate and livestock and, it was agreed, had no relevance.
22 The defendant accepts that both he and the plaintiff accepted, by clicking on an “accept” button, the terms and conditions of eBay but the defendant’s argument is that there was no binding and enforceable agreement as between the plaintiff and the defendant. The consequence of the breaches by the defendant of the eBay terms and conditions, it was submitted by the defendant, was only that eBay could remove the defendant as a registered user which, I was informed, has occurred. The defendant’s argument has four alternative components:
(1) The only contracts in existence were between eBay and the plaintiff and eBay and the defendant. Those parallel contracts never crossed over into an agreement between the plaintiff and the defendant.
(2) The placement of an advertisement for sale by the defendant on eBay was no different to the placement of an advertisement in the classified advertisement section of the Sydney Morning Herald, the Trading Post or the Wentworth Courier. It should be characterised as no more than that and what the plaintiff did was no more than make an invitation to treat.
(3) Even if what occurred could otherwise be viewed as an offer and acceptance, the time for payment was to be negotiated and hence there was no complete agreement.
(4) The plaintiff waived his right to bid at the auction.
23 A fifth argument to the effect that the plaintiff had engaged in misleading and deceptive conduct was abandoned in the course of submissions.
Online auction
24 The first and second issues relate to the nature of the online auction. I consider this aspect leaving to one side the further problem of the time for payment.
25 The plaintiff disputes the characterisation of what occurred presented by the defendant’s submissions, and contends that what occurred in August 2006 was an auction with considerable similarities to a traditional auction.
26 Mr Kasep, in detailed written submissions drew my attention to several cases in which online auctions have been described:
(1) In Chambre National des Commissaires Priseurs v NART SAS [2001] ECC 24 at [22]-[24] the Tribunal de Grande Instance (apparently a District Court) observed per Gomez P, Marcus VP and Dallery J:
“22 In reality, an online auction presents all the characteristics of a public auction because it is open to all interested Internet users as long as they register beforehand and agree to the contractual clause governing online sales.
23 The registration has as its sole object the identification and individualisation of the bidder.
24 This object is necessary and achieved, albeit in another way, in traditional sales in an auction room.
25 Furthermore, for the purpose of organizing and carrying out an auction, the Internet consists of a vast auction room extending to infinity and able to change in order to take account of the changes in physical space in which the offers of auctions are distributed.”
(2) In eBay International AG v Creative Festival Entertainment Pty Ltd (2006) Aust Contract R 90-248; [2006] FCA 1768 (a case in which eBay claimed that a condition contained on the reverse of tickets sold by Creative conveyed representations that constituted misleading and deceptive conduct on the part of Creative), Rares J described eBay as follows:
“[4] eBay is a Swiss corporation which operates a website in Australia as well as other websites in various places in the world. eBay’s websites are part of an online global market place which the eBay group operates. Registered users of eBay websites, known as members, are able to buy and sell many types of goods and services online. eBay charges fees for sellers to advertise and offer items for sale on the eBay website. No fees are payable by buyers or bidders. Tickets to concerts and music festivals such as the Big Day Out are offered by eBay’s members to others who wish to purchase on the eBay website.
[5] A member who meets eBay’s requirements for listing items for sale can use one, or a combination, of two different formats for sale, namely an auction format or a fixed price format known as ‘buy it now’. These formats operate in the following way. In the auction format listing, the seller offers the relevant item or items, by describing it or them, setting a starting price and identifying the duration of the listing. Potential buyers or bidders search or browse the eBay website, visit the listing and place bids on the item. At the expiry of the listing the highest bidder is obliged, in accordance with the terms of eBay’s user agreement, to buy the item from the seller for the price specified in the highest bid. In the fixed price format listing, the seller offers an item or items by again describing it or them, stating the fixed price and the duration of the listing. Buyers again search or browse the eBay website. If someone is interested in buying the item, there is no bidding involved. The buyer simply clicks on a webpage button ‘buy it now’ to purchase at the fixed price. The listing then expires.”
(3) In Ebay Inc v Bidder’s Edge Inc (2000) 100 F Supp 2d 1058 at 1060, Whyte USDJ described eBay in the following terms:
“eBay is an Internet-based, person-to-person trading site. eBay offers sellers the ability to list items for sale and prospective buyers the ability to search those listings and bid on items. The seller can set the terms and conditions of the auction. The item is sold to the highest bidder. The transaction is consummated directly between the buyer and seller without eBay’s involvement. A potential purchaser looking for a particular item can access the eBay site and perform a key word search for relevant auctions and bidding status. eBay has also created category listings which identify items in over 2500 categories, such as antiques, computers, and dolls. Users may browse these category listing pages to identify items of interest. (references omitted)”
Whyte USDJ also noted that “Users agree to the seven page user agreement by clicking on an ‘I accept’ button located at the end of the User Agreement”. He observed at 1060:
“eBay currently has over 7 million registered users. Over 400,000 new items are added to the site every day. Every minute, 600 bids are placed on almost 3 million items. Users currently perform, on average, 10 million searches per day on eBay’s database. Bidding for and sales of items are continuously ongoing in millions of separate auctions. (references omitted)”
27 Mr Kasep drew attention to a passage in G T Morice, “Sale by Auction in Holland” (1915) 32 South African Law Journal 140 at 141 in the following terms:
“Another mode of holding an auction which is referred to by the Dutch writers, was bij de brandende kaars, or, as it was called in England – by inch of candle. After the conditions of sale had been read out, a piece of candle was lighted, and would-be buyers commenced bidding against one another. The last bid before the candle burnt out won the day. (Fockema Andreae’s Oud-Neder. Burgerlijk Recht II, p. 28). In this form of auction the system of bidding must have been one of raising the price, the going out of the candle corresponding to the fall of the hammer in a modern auction.”
28 There are some differences between what transpires at a traditional auction and an online auction and they are:
(1) at a traditional auction there is of course a human agent in the form of the auctioneer;
(2) the auctioneer is the agent of the seller (see “Benjamin’s Sale of Goods” (2006) 7th ed, London: Sweet & Maxwell, para 2-004) and the auctioneer has the authority to execute a contract on behalf of the seller and buyer: see Wright v Madden [1992] 1 Qd R 343 at 346;
(3) in a traditional auction the seller can at any time before the hammer is lowered withdraw his goods from sale: in “Benjamin’s Sale of Goods” it is stated “Each bid is an offer which the auctioneer as agent for the seller, is free to accept or reject” (para 2.004).
29 There is no human agent and eBay by its terms and conditions eschews any role as auctioneer: see clause 3.1 of the eBay terms and conditions, nor does eBay have authority to execute a contract. There does not appear to be any provision for withdrawal of the goods from sale at the auction.
30 There may be further differences beyond the physical, for example at least in the case of real estate auctions, contracts are drafted ahead of the bidding and the bid is taken as being based on the contract unless by earlier correspondence the seller has agreed to alter the terms if the person seeking changes is the successful bidder.
31 Section 60 of the SGA is in the following terms:
“60 Auction sales
In the case of a sale by auction:
(1) where goods are put up for sale by auction in lots, each lot is prima facie deemed to be the subject of a separate contract of sale,
(2) a sale by auction is complete when the auctioneer announces its completion by the fall of the hammer or in other customary manner: until such announcement is made any bidder may retract his or her bid,
(3) where a sale by auction is not notified in the conditions of sale to be subject to a right to bid on behalf of the seller, it shall not be lawful for the seller to bid or to employ any person to bid at the sale, or for the auctioneer knowingly to take any bid from the seller or any such person: any sale contravening this rule may be treated as fraudulent by the buyer,
(4) a sale by auction may be notified in the conditions of sale to be subject to a reserved price, and a right to bid may also be reserved expressly by or on behalf of the seller,
(5) where a right to bid is expressly reserved, but not otherwise, the seller, or any one person on the seller’s behalf, may bid at the auction.”
32 These provisions are the same as those found in s 57 of the Sale of Goods Act 1893 (UK).
33 Section 8 of the SGA (which is the same as s 3 of the UK Sale of Goods Act) provides:
“8 Contract of sale how made
Subject to the provisions of this Act and of any statute in that behalf, a contract of sale may be made in writing (either with or without seal), or by word of mouth, or partly in writing and partly by word of mouth, or may be implied from the conduct of the parties:
Provided that nothing in this section shall affect the law relating to corporations.”
34 As Mr Kasep point out, “auction” is not defined in the SGA.
35 The tribunals to which I have referred appear to have no difficulty in regarding online auctions as a species of auction, and with respect I think that approach is the correct one. In circumstances where both the buyer and seller agree to accept the terms and conditions of eBay I see no difficulty in treating the parties as having accepted that the online auction will have features that are both similar and different to auctions conducted in other forums. A live auction may require registration of bidders, and may specify the means by which payment can be made eg “personal cheques not accepted”, or that bids of a certain type will be accepted eg “phone bids accepted”. The parties have agreed to allow eBay, or its computer, to automatically close the bidding at a fixed time and have accepted that eBay will have no personal liability to either buyer or seller. The automatic close of bidding at a fixed time and the generation of an eBay advice headed “won” appear to have been accepted by the parties to an eBay auction as the equivalent of the fall of the hammer. As Mr Morice pointed out in the passage quoted in [27] above, the fall of the hammer equated to the going out of the candle, demonstrating that customs can change. Section 60(2) of the SGA contemplates modes of completion other than the fall of the hammer. The non-binding bid policy recognises that there are some items which by their nature cannot or ought not be sold over the internet, but there was no suggestion by the defendant here that the non-binding bid policy had any application to this case.
36 The online auction, whether conducted by eBay or by any other organisation, provides a means by which products of almost every description can be bought and sold, and utilises the exceptional breadth of the internet to expand the horizons of commerce, perhaps just as the invention of the printing press in the 16th century permitted wider publication of items for sale than the town or village square. Two matters which commerce has always cherished, access and certainty, are achieved by the combination of internet technology and acceptance by prospective buyers and sellers of the conditions for use of the particular site and its facilities.
37 I do not accept the defendant’s contention that arising out of the registration and bidding process I have described, there were contracts only between eBay and the buyer and between eBay and the seller. It has been recognised even in relation to traditional auctions that existence of a contract between vendor and auctioneer can sit together with a contract between the vendor and purchaser (and between the auctioneer and purchaser): see Elder Smith Goldsbrough Mort Ltd v McBride & Palmer [1976] 2 NSWLR 631, following Chelmsford Auctions Ltd v Poole [1973] QB 542; [1973] 1 All ER 810. The eBay terms and conditions created a framework for the auction in which the plaintiff and defendant were willing participants.
38 Online auctions are not the only commercial environment in which parties come together pursuant to agreed guidelines and are able to form contracts in a different way to the usual fashion of formal offer and acceptance. “Scratching the slip” at Lloyds as explained in M A Clarke, “The Law of Insurance Contracts” (2006) 5th ed, London: informa, para [11-3A], is but one example of such a process.
39 In my view, the seller, by listing the Wirraway on eBay’s site with an effective disclosed reserve of $150,000 offered to sell the Wirraway to that bidder who:
(a) bid within the specified time period;
(b) made a bid of at least $150,000;
(c) was the highest bidder of those who made bids in accordance with (a) and (b); and
(d) did not qualify or seek to impose a qualification on his bid to which the seller had not previously indicated his willingness to consent.
40 I can see no reason in principle why a buyer who did wish to impose a condition of sale that was not implied by relevant legislation, could not, prior to making his bid, seek agreement from the seller that the seller would accept a bid from the buyer on particular terms just as occurs in real estate transactions. If that course is adopted it would be wise for the buyer to obtain from the seller in advance confirmation in writing of such agreement, to avoid any argument as to what was said. It is clear too that a seller who lists his product on eBay would better protect himself by specifying all elements of the sale that are important to him – method of payment, time for payment, and where appropriate the exclusion of warranties where such exclusion is permitted by law. As this case itself demonstrates, the absence of details can be productive of difficulty, a point to which I shall return.
41 No argument was advanced by the defendant that the eBay terms, on their proper construction, did not require the defendant to sell if a bid of at least $150,000 was made in accordance with the minimum bid requirement, so I do not need to consider whether there is a tension or even inconsistency between clause 4, which uses the words “and your bid is accepted by the seller”, and clause 5.
42 In his article entitled “E-auctions: who will protect the consumer?” (2002) 18 JCL 75, which article had been cited to me by Mr Loewenstein, Mr Adam Reynolds makes reference to two German decisions, one of the Regional Court (LG) Munster MMR 2000, 280 (21 January 2000), and one of the Regional Appeal Court (OLG) Hamburg MMR 2000, 278 (14 December 2000) – the latter being an appeal which overturned the first mentioned decision. I shall refer to the case as the Munster case.
43 An article entitled “Online Auctions – Germany Online Auctions under German Contract Law” by Jan-Malte Niemann in Computer Law & Security Report Vol 17 No 2 2001, referred to in Mr Reynolds’ article, provides a synopsis of the Munster case both at first instance and on appeal, and seeks also (as does Mr Reynolds’ article) to examine whether online auctions are really auctions at all. Obviously the decisions concern German law (and nor did they concern an eBay site) but the conclusion of the higher court was (according to the article) that the “opening of the offer page to the public was a legally binding offer rather than a mere invitation to treat” in part because (citing from the article at p 117):
“acknowledgment by all participants of the auction house’s terms and conditions was a mandatory requirement for participation in the auction. In doing so both seller and buyer declared the intention to contract subject to these terms only – not merely in relation to the auction house but also amongst each other! Thus the terms built part of the contractual basis irrespective of their exact legal classification as between the parties.”
44 In the Munster case a motor dealer had placed a new Volkswagen for sale on the auction house site, with no minimum bid stated. The dealer had hoped to generate a great deal of interest by placing a starting bid of 10 DM for a vehicle worth 57,000 DM, and permitting bids in increments of only 50 DM. The small bids seem to have had the opposite effect to that intended because interest waned and the highest bid received within the specified time was 26,350 DM.
45 Mr Niemann summarised what he described as the “pragmatic and convincing arguments” of the OLG as follows:
“- The vendor used the Internet auction as an advertising event consciously putting up with the risk of selling the item at an outrageously low price.
- The risk of financial loss is typically involved in an auction, a form of transaction the seller deliberately chose.
- The seller knowingly did without establishing a minimum final price.
- Self-responsibility is always the other side to party autonomy which does not protect against unwise decisions.”
46 The author having expressed his own view that the decision at first instance was “plainly wrong and as having caused unnecessary turmoil because the binding character of online auctions can easily be established under German private law and the terms and conditions at work – as long as these rules are not undermined by dubious contractual construction”, noted that an appeal had been lodged to the Federal High Court of Justice. Whether the appeal was prosecuted and if it was, with what result, has not been made known to this Court.
47 The approach which I have identified in [43] above, I think, offers some support for the conclusion to which I have come.
48 In the course of submissions I raised the question of whether, if the defendant’s contention that there was a contract only between him and eBay but not with the plaintiff was accepted, the plaintiff would have any rights to enforce the contract between eBay and the defendant in some fashion akin to the law relating to bills of lading: Port Jackson Stevedoring Pty Ltd v Salmond & Spraggon (Australia) Pty Ltd (1978) 139 CLR 231. Mr Loewenstein, in his written submissions, sought to answer that possibility and made reference as well to Trident General Insurance Co Ltd v McNiece Bros Pty Ltd (1988) 165 CLR 107, in which the High Court in the field of insurance carved out an exception to the rule precluding third party enforcement of contracts, but he also pointed out that no case of that kind had been mounted by the plaintiff. Mr Kasep made it quite clear in his further submissions that the plaintiff does not seek to enforce the agreement between eBay and the defendant, but rather relies on its terms only as setting the framework for the online auction. I need therefore say no more about that issue.
Time for payment
49 In my view, the discussion between the parties concerning the payment of a deposit was sufficient to enable that aspect of payment to be incorporated as a matter agreed upon should the plaintiff bid online and be the successful bidder. That the aircraft was to be collected by the buyer is clear from the listing details. Capacity to be flown and airworthiness certificates were also discussed and for reasons which I explain below, I am of the view that those matters can also be determined from the content of the conversation when coupled with the written material. Thus all details of the sale were determined, but for the time for payment of the balance of the purchase price.
50 Had nothing been said concerning time for payment, Mr Loewenstein accepted, delivery (by collection by the buyer) and payment would be required to take place within a reasonable period of time. Sections 31 and 32 of the SGA, “Benjamin’s Sale of Goods” at para 8-037 and Sutton’s “Sales and consumer law” at para 19.4, point to the concession being correctly made. However Mr Loewenstein point to the fact that what the defendant said was that he wanted the purchase “to be completed within six weeks of payment of the deposit but that is negotiable” (emphasis added).
51 Mr Loewenstein relies on what was said by Gleeson CJ (when he was Chief Justice of NSW) in Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540:
“To say that parties to negotiations have agreed upon sufficient matters to produce the consequence that, perhaps by reference to implied terms or by resort to considerations of reasonableness, a court will treat their consensus as sufficiently comprehensive to be legally binding, is not the same thing as to say that a court will decide that they intended to make a concluded bargain. Nevertheless, in the ordinary case, as a matter of fact and commonsense, other things being equal, the more numerous and significant the areas in respect of which the parties have failed to reach agreement, the slower a court will be to conclude that they had the requisite contractual intention.”
52 Mr Loewenstein submits that in the discussions between the parties neither price nor time for payment was agreed, and hence that “there is no room left to import a concluded contract”: see para 14 of the defendant’s supplementary submissions. In oral submissions Mr Loewenstein expanded on that to say that (at T68.10-20):
“by saying specifically that time is to be negotiated it has been agreed that formation will not take place until the time for payment has been specifically agreed to. It demonstrates that the contract had not been concluded by agreement not to conclude the contract.”
The parties, he said, had agreed “that there would be no concluded agreement until something else was done”.
53 The telephone discussion between the parties clearly did not constitute a contract of sale. There is in that context no need to consider whether the parties agreed that there was to be no agreement. The absence of agreement on price was resolved by the process of online bidding as I have described. As at the point that the notional hammer fell, all terms bar one had been determined, ie time for payment, and that one remaining term had been partially concluded by the earlier discussion because the defendant had indicated he would accept 10 per cent of the purchase price within seven days. That left only the question of time for payment of the balance as the one outstanding matter.
54 It will be observed that Gleeson CJ pointed out that the number of matters remaining unresolved is an important aspect. I therefore regard it as of considerable significance that the only outstanding matter here was part only of the payment provisions, ie the time for payment of the balance.
55 In forming a view as to whether resort can be had to an implied term I also take into account the following matters:
(1) the context of the matter is an online auction in which bids are sought and pursuant to which a seller is required to sell to the highest bidder (whose bid is equal to or exceeds the minimum bid if specified);
(2) the minimum bid sought was a significant amount of money emphasising the seriousness of the bidding endeavour;
(3) the buyer (only as prospective bidder at that stage) took the trouble to ascertain what deposit would be acceptable (none having been specified in the listing) and to ascertain the seller’s wishes in respect of payment of the balance;
(4) the seller indicated that he wanted completion within six weeks of the payment of the deposit;
(5) there is a tension between what I have referred to in (1) and (2) on the one hand, and on the other the fact that the website indicated that the payment and delivery were to be negotiated.
56 Having regard to the matters to which I have referred, I do not accept that the parties had agreed that there would be no binding agreement until they had a concluded agreement on the time for payment of the balance, nor that because the defendant said that he wanted the balance to be paid in six weeks but was negotiable on that time, that it is not appropriate to imply a term.
Airworthiness
57 There is another issue which has arisen, which I have labelled airworthiness, and that is whether or not it was a term of the contract that the Wirraway, on delivery, would be able to be flown from Albury to South Australia and would have all necessary certificates to permit that to occur.
58 The question of whether or not the aircraft was to be capable of being flown at the time of delivery (and for which all relevant current airworthiness certificates would be held) is one which has, it was agreed, limited financial significance, both parties accepting that if the Wirraway was not able to fly, expenditure of between $8000 and $10,000 would bring it into that condition.
59 The listing on eBay described the Wirraway as one of the few flying Wirraways in Australia. The defendant’s statement that the aircraft had all relevant airworthiness certificates and would be able to be flown from Albury to South Australia on delivery reinforced what had been said in the eBay listing.
60 Little was said about this aspect in submissions. The case of Ellul v Oakes (1972) 3 SASR 377 at 387 deals with the question of when statements are promissory in nature, and see also JJ Savage & Sons Pty Ltd v Blakney (1970) 119 CLR 435 at 442 in which it is made clear that the fact that without a statement to the effect made the contract would not have been entered into, was not alone sufficient to make the statement promissory. In Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41; 55 ALR 417 the majority agreed with the conclusion of the trial judge (and that of the Court of Appeal) that statements made by the distributors were promissory. Gibbs CJ disagreed but did note at 61-62:
“A representation made in the course of negotiations which result in a binding agreement may be a warranty — i.e., it may have binding contractual force — in one of two ways: it may become a term of the agreement itself, or it may be a separate collateral contract, the consideration for which is the promise to enter into the main agreement. In either case the question whether the representation creates a binding contractual obligation depends on the intention of the parties. In J. J. Savage & Sons Pty. Ltd. v. Blakney, at p. 442 and Ross v. Allis-Chalmers Australia Pty. Ltd. at pp. 565, 567, it was said that a statement will constitute a collateral warranty only if it was "promissory and not merely representational", and it is equally true that a statement which is "merely representational" — i.e., which is not intended to be a binding promise — will not form part of the main contract. If the parties did not intend that there should be contractual liability in respect of the accuracy of the representation, it will not create contractual obligations. In the present case Mr. Blackman, who made his statements fraudulently, had, of course, no intention that they should amount to contractual undertakings, but he could not rely on his secret thoughts to escape liability, if his representations were reasonably considered by the persons to whom they were made as intended to be contractual promises, and if those persons intended to accept them as such. The intention of the parties is to be ascertained objectively; it "can only be deduced from the totality of the evidence": Heilbut, Symons & Co. v. Buckleton, at p. 51. In other words, as Lord Denning said in Oscar Chess Ltd. v. Williams, at p. 328:
"The question whether a warranty was intended depends on the conduct of the parties, on their words and behaviour, rather than on their thoughts. If an intelligent bystander would reasonably infer that a warranty was intended, that will suffice."
The intelligent bystander must however be in the situation of the parties, for "what must be ascertained is what is to be taken as the intention which reasonable persons would have had if placed in the situation of the parties": Reardon Smith Line v. Hansen-Tangen, at p. 574.” [footnotes omitted]
61 In my view the defendant’s statements that the plane would be able to be flown from Albury to South Australia and had (and inferentially would have) a current airworthiness certificate on completion of the 100 hour inspection, were promissory in nature and should be treated as part of the contract for sale. The statements were matters upon which the defendant alone had the relevant information and would in my view objectively be regarded as important by a purchaser, particularly where it was intended to fly the aircraft from Albury to South Australia.
62 I should note that Mr Loewenstein argued that there was an inconsistency in the plaintiff’s position because he wanted to take advantage of the conversation prior to the bid and the fact of an online bid.
63 It is true that the plaintiff seeks to incorporate the terms of payment of a deposit of 10 per cent within seven days and the capacity of the aircraft for flight (and holding of airworthiness certificates) from the conversation and add this to the fact of the bid and bid process online. I have made mention of the practice in real estate transactions of seeking agreement to changes in the contract which precede the bidding and fall of the hammer. Provided that the statements made by the seller can be established and that they are promissory in nature, I do not think that there is any reason in principle why the contract concluded by the bidding process online cannot incorporate additional matters that have been agreed or the subject of representations in advance of acceptance of the bid.
64 It was suggested in the defendant’s earlier written submissions that the absence of inspection of the aircraft by the plaintiff and the absence of an engineer’s report pointed to the absence of any firm agreement. The plaintiff said that he was well informed about the history and appearance of the aircraft and accepted the defendant’s description of its airworthiness, but in any event there is no substance in the point. A plaintiff is not required to inspect or obtain a report in respect of any item for sale and if he chooses not to do so (whether imprudently or not), the need for inspection could not be implied as a precondition of formation of a contract if agreement would otherwise appear objectively to have been reached.
Waiver
65 The defendant argues that on the basis of his conversation with the plaintiff (either in the form for which he contends or in the form for which the plaintiff contends) the plaintiff waived his right to bid for the plane. As I have indicated I accept the plaintiff’s version of what occurred and I do not accept that the plaintiff offered $150,000 in that conversation or that the defendant rejected it. There is agreement between the parties that the defendant did mention that he had a Queensland buyer interested in paying $220,000 and according to the plaintiff the defendant told the plaintiff that he was hoping to obtain $250,000 for the aircraft: see para 4 of the plaintiff’s affidavit of 14 September 2006.
66 Mr Loewenstein referred to Commonwealth v Verwayen (1990) 170 CLR 394 at 406. At 406-407 Mason CJ said:
“According to its strict legal connotation, waiver is an intentional act done with knowledge whereby a person abandons a right by acting in a manner inconsistent with that right: Craine v Colonial Mutual Fire Insurance Co Ltd [(1920) 28 CLR 305, at p 326.]; Grundt v Great Boulder Pty Gold Mines Ltd [(1937) 59 CLR 641, at p 658.] However, the better view is that, apart from estoppel and new agreement, abandonment of a right occurs only where the person waiving the right is entitled to alternative rights inconsistent with one another, such as the right to insist on performance of a contract and the right to rescind for essential breach: see Kammins [[1971] AC, at p 883.] This category of waiver is an example of the doctrine of election.
Another category of waiver is one in which a person is prevented from asserting, in response to a claim against him, a particular defence or objection which would otherwise have been available. Here waiver is said to arise when the person agrees not to raise the particular defence or so conducts himself as to be estopped from raising it: see Kammins [[1971] AC, at p 883.].”
67 Mr Loewenstein eschewed any reliance on estoppel so to succeed on this point he must bring himself within the principles of election. There are two fundamental obstacles to any waiver. First, as both parties acknowledge, as at the time of the conversation no contract had been formed between the parties, so there were at that time no rights in the plaintiff to be waived. Secondly the discussion that the plaintiff had with the defendant (on my findings or even on the defendant’s version) was not inconsistent with the plaintiff bidding online. The plaintiff was not, to use the language of Isaacs J in Craine v Colonial Mutual Fire Insurance Co Ltd (1920) 28 CLR 305; [1920] HCA 64, taking up two inconsistent positions, nor was he attempting to approbate and reprobate. There was a further argument advanced by Mr Kasep to the effect that election requires some change in position on the part of the other party based on what was said in Wilson v Kingsgate Mining Industries Pty Ltd [1973] 2 NSWLR 713 (see also Azzi (Automobiles) Pty Ltd v Volvo Car Australia Pty Ltd [2006] NSWSC 249 at [32]) which given my conclusions on the other two points I do not need to address.
Availability of specific performance
68 In the course of submissions I raised with counsel the question of the availability of the remedy of specific performance. The issue assumed particular significance in the light of the defendant’s evidence that the Wirraway remains in a hangar at Albury airport and that the 100 hour maintenance check or overhaul which it was said by the defendant to be receiving in August last year has not been completed. I was informed by both counsel that the hangar is not owned or rented by the defendant. If that is correct then the goods the subject of the sale agreement are in the hand of a third party. Section 32(3) of the SGA provides:
“(3) Where the goods at the time of sale are in the possession of a third person, there is no delivery by seller to buyer unless and until the third person acknowledges to the buyer that the third person holds the goods on the buyer’s behalf:
Provided that nothing in this section shall affect the operation of the issue or transfer of any document of title to goods.”
69 According to “Benjamin’s Sale of Goods” para 8.012:
“This subsection is declaratory of the common law, and means that a bailee or other third person in possession of the goods must attorn to the buyer before delivery will be held to have taken place. One effect of such an acknowledgement is that the third person thenceforth ceases to hold the goods on behalf of and to the order of the seller and instead holds them on behalf of and to the order of the buyer. The acknowledgment by the third person must be given with the consent of both the buyer and the seller, and each party to the contract of sale must do all that is necessary, so far as it depends on him, to obtain it.” (footnotes omitted)
70 KCT Sutton in “Sales and consumer law” (1995) 4th ed, LBC Information Services, points out at para 19.2 that:
“Where the seller is not obliged to send the goods to the buyer, it is enough if the seller has put it in the buyer’s power to take away the goods him or herself. Hence, when the documents of title to goods warehoused by a third person are handed to the buyer duly indorsed, the seller has done his or her part and it is incumbent on the buyer to accept or reject the goods within a reasonable time of the documents being handed to him or her.”
71 There appears to be some room for argument as to how the test for whether the Court should grant specific performance is to be formulated: see [20-030] of Meagher, Gummow & Lehane, “Equity: Doctrines & Remedies” (2002) 4th ed, LexisNexis Butterworths; Jones & Goodhart, “Specific Performance” (1996) 2nd ed, Butterworths; Spry, “Equitable Remedies” (2007) 7th ed, LawBook Co at 638; Wilson v Northampton & Banbury Junction Railway Company (1874) LR 9 Ch App 279 at 284; Wedgwood v Adams 6 Beav 600 at 605; 49 ER 958 at 960; Harnett v Yielding (1805) 2 Sch & Lef 549 at 553; Adderley v Dixon (1824) 1 Sim & St 607; 57 ER 239. Whether the test to be applied is “would damages constitute a complete remedy” (Adderley) or are damages “necessarily commensurate to the injury sustained” (Harnett), “is it just in all the circumstances for the plaintiff to be confined to his remedy in damages” (Evans Marshall & Co Ltd v Bertola SA [1973] 1 All ER 992 at 1005; [1973] 1 WLR 349 at 379-380), in my view the nature of the subject of the bargain, which is not only a fine looking aircraft (see Exhibit “A”) but is a vintage and unusual item, leads me to conclude that the case is one in which, subject to two matters, the relief of specific performance of the contract sought should be granted.
72 The first issue is that the Wirraway is not presently in flying condition, it having been left in a partially dismantled state and it is not the subject of current certificates of airworthiness.
73 The second issue is that it is not currently in the possession of the defendant but rather is in a hangar owned by a third party.
74 So far as the first point is concerned, there is evidence from the defendant that the amount of work necessary to complete the 100 hour maintenance work is not that substantial – in the order of between $8000 and $10,000. That and the evidence of the degree of dismantling of which the defendant advised the plaintiff points to a relatively small amount of work to be done. The obligation to ensure that the work is done and that all necessary certificates are obtained rests on the defendant. So far as the second point is concerned it is also necessary for the defendant to ensure that anything necessary to be done (ie payment of moneys due to the third party) is completed: see [69] and [70] above.
75 Mr Kasep indicated that even if the Wirraway is not repaired under instructions from and at the expense of the defendant (as in my view it ought to be) the plaintiff, if he received title to the Wirraway, would have it repaired by the same third party as he is one of only two authorised mechanics for the Wirraway in Australia. The plaintiff would then seek damages for breach of contract by the defendant.
76 Whilst I think there may be a need to obtain further information to enable orders to be drawn in an appropriate form I do not think the matters to which I have adverted present an obstacle to the order for specific performance. Nor do I think there is a problem of continuing supervision or need for indefinite series of rulings of the type that can preclude a grant of specific performance: see JC Williamson Ltd v Lukey (1931) 45 CLR 282; [1931] ALR 157; see Meagher, Gummow and Lehane (supra) at [20-065] citing Co-operative Insurance Society Ltd v Argyll Stores (Holdings) Ltd [1998] AC 1; [1998] ANZ ConvR 470, and see generally [20-055]-[20-080] of Meagher, Gummow and Lehane.
Conclusion
77 It follows that in my view a binding contract was formed between the plaintiff and the defendant and that it should be specifically enforced.
78 It was agreed by counsel for both parties that should I come to the view that the contract be specifically performed it would be appropriate to permit the parties time to endeavour to reach agreement on the precise form of orders including dealing with the $15,000 paid into Court by the plaintiff, and to list the matter before the duty judge next week to enable agreed short minutes to be then handed up, or failing that, any argument on the form of the orders to be ventilated.
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Mon Aug 27, 2007 8:13 am
Apparently the court HAS ruled against Vin Thomas here, I got a copy of a newspaper article emailed to me this evening.
Truely gutted for him and I hope he appeals, this may set an omonous precedent for the future. Admittedly, putting your warbird on eBay isn't the best idea.
Getting yourself a bargain is one thing, but taking a Wirraway off someone for $150K is robbery
Truely gutted for him and I hope he appeals, this may set an omonous precedent for the future. Admittedly, putting your warbird on eBay isn't the best idea.
Getting yourself a bargain is one thing, but taking a Wirraway off someone for $150K is robbery
Last edited by JägerMarty on Mon Aug 27, 2007 8:43 am, edited 1 time in total.
Mon Aug 27, 2007 8:20 am
Then he should have placed a min on it. It is his own fault.
Mon Aug 27, 2007 8:31 am
Nice attitude 
Mon Aug 27, 2007 8:31 am
agree the seller is a idiot. if he sells on ebay and doesnt withdraw the sale in time and it sells for x he is bound to sell to whatever the price is.
???
Mon Aug 27, 2007 9:24 am
The seller set the price and the terms and buyer met them. Done Deal!
If the seller was has you say gutted then it was during his labotomy
years ago. He has no grounds for a appeal IMHO!
If the seller was has you say gutted then it was during his labotomy
years ago. He has no grounds for a appeal IMHO!
Mon Aug 27, 2007 9:36 am
JägerMarty wrote:Nice attitude
Well, if you ever used Ebay, and you dont use a reserve, then again, it is your own fault. You cannot assume that everyone will bid it up above your personal reserve, when you don't place it on the bid.
Mon Aug 27, 2007 11:01 am
A little learning is a dangerous thing...
Alexander Pope
Alexander Pope
Mon Aug 27, 2007 5:36 pm
The whole thing stinks.
I've said my piece. There are foolish ppl in the warbird scene obviously like the vendor, and ......
I've said my piece. There are foolish ppl in the warbird scene obviously like the vendor, and ......
Last edited by JägerMarty on Tue Aug 28, 2007 1:14 am, edited 1 time in total.
???
Mon Aug 27, 2007 6:46 pm
The whole thing stinks
I just don't get you're viewpoint here. Unless you're closer to
this issue than you let on.
It's so simple. The seller placed the item up for auction and set
up his reserve price. The buyer met the terms. Game over.
I hope he removes everything he can
Sabotaging a aircraft is probably not a good idea. Lets see here,
plane crashes prople die and he get sued up his ying-yang and
goes to prision.