Walker v Sell

Case [2016] FCA 1259

FEDERAL COURT OF AUSTRALIA

Walker v Sell [2016] FCA 1259

Appeal from: 

Cross-appeal from:

Walker v Sell [2016] FCCA 452

Walker v Sell (No.2) [2016] FCCA 654

File number: NSD 409 of 2016
Judge: BROMWICH J
Date of judgment: 27 October 2016
Catchwords:

SALE OF GOODS – appeal from Federal Circuit Court – advertisement of private sale of particular model of collectable car on Gumtree – application of ss 18 and 61 of the Goods Act 1958 (Vic) – meaning of “sale by description” – inspection of car by purchaser – contract for private sale of collectable car – common mistake that car was particular model – post-settlement inspection revealed car was a different model and worth $110,000 less than purchase price – whether vendor or purchaser shoulders risk of the transaction – whether purchaser’s inspection was reasonable – where purchaser had opportunity for expert inspection during one year settlement period – held purchaser shoulders risk – held sale not “by” description –appeal dismissed with costs

CONSUMER LAW – whether private sale advertised on Gumtree is in “trade or commerce” – held not in trade or commerce – whether accrued federal jurisdiction still enlivened if private sale is not in “trade and commerce” – whether consumer claim brought under State or federal jurisdiction – held claim brought under State jurisdiction per s 18 of the Australian Consumer Law (Victoria) – held direct federal jurisdiction not engaged – held accrued federal jurisdiction still enlivened as absence of engagement of direct federal jurisdiction not “colourable”

CONTRACTS – whether particular model of car was express or implied term of the contract for sale – nature of legal relations characterised by objective intention and conduct of the parties as per Toll v Alphapharm – held model of car not an express or implied term – whether oral term of the contract allowed purchaser to rescind on expert valuation – held that oral term allowed purchaser to rescind, but no expert valuation and therefore no rescission

COSTS – cross-appeal to seek to increase fixed costs sum awarded in Federal Circuit Court – interlocutory application seeking to adduce fresh evidence on costs to support increased award of costs – where letter of compromise not put before primary judge – held no error in primary judge’s exercise of discretion to award fixed costs where offer of compromise was not put before primary judge – held cross-appeal and interlocutory application dismissed with costs

Legislation:

Australian Consumer Law and Fair Trading Act 2012 (Vic)

Australian Consumer Law (Victoria), s 18

Competition and Consumer Act 2010 (Cth), Sch 2

Evidence Act 1995 (Cth), ss 191, 191(2)(b)

Federal Circuit Court Rules 2001 (Cth), Sch 1

Federal Court Rules 2011 (Cth), rr 1.32, 1.34, 1.35, 25.01, 25.03

Goods Act 1958 (Vic), ss 18, 61

Legal Profession Uniform Law (NSW), s 172

Sale of Goods Act 1923 (NSW), s18

Cases cited:

Ashington Piggeries Ltd v Christopher Hill Ltd [1972] AC 441

Australian Knitting Mills Limited v Grant (1933) 50 CLR 387

Beale…

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Details
AGLC
Walker v Sell [2016] FCA 1259
Case
[2016] FCA 1259
Decision Date

CaseChat Overview and Summary

In Walker v Sell, the plaintiff, Walker, sought to challenge the sale of a collectable car that he had purchased from the defendant, Sell, on the basis that the car was not the model it was advertised to be. The case was initially heard in the Federal Circuit Court, but Walker appealed to the Federal Court, which dismissed his appeal. Sell then cross-appealed and sought to increase the costs awarded in the Federal Circuit Court. The Court dismissed the cross-appeal and interlocutory application for fresh evidence, and awarded costs against Walker.

The central issue in the case was whether the sale of the car was governed by state or federal consumer protection laws. Walker argued that the sale was in "trade or commerce" and thus fell within the scope of the Australian Consumer Law, which is a federal statute. Sell contended that the sale was a private transaction and thus outside the scope of the Australian Consumer Law. The Court held that the sale was not in "trade or commerce" because it did not have a commercial character, and therefore the sale was governed by state consumer protection laws. The Court further held that the absence of federal jurisdiction did not vitiate any accrued federal jurisdiction, meaning that the case could still be heard under federal consumer protection laws if it met the necessary criteria.

Another issue in the case was whether the sale was "by description," which would have made Sell liable for selling a car that did not match its description. The Court held that the sale was not "by description" because the car was sold by inspection rather than by a written or spoken description. The Court also held that the car model was not an express or implied term of the contract, and that an oral term allowing Walker to rescind the contract if an expert valuation showed the car to be worth less than its purchase price was unenforceable because Walker did not obtain such a valuation.

Finally, the Court considered Sell's cross-appeal and interlocutory application seeking to increase the costs awarded in the Federal Circuit Court. The Court held that there was no error in the primary judge's exercise of discretion to award fixed costs where an offer of compromise was not put before the primary judge. The Court dismissed the cross-appeal and interlocutory application, and awarded costs against Walker.

Orders

Orders of the court

1. The appeal be dismissed with costs.

2. The respondent/cross-appellant’s interlocutory application be dismissed with costs.

3. The cross-appeal be dismissed with costs.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

In the proceedings before the primary judge a statement of agreed facts and issues was filed in the following terms:Agreed Facts1.In or about August 2013, the Respondent advertised for sale on the Gumtree website a vehicle described as a ‘1970 Ford GTHO Falcon Sedan’ (the Vehicle).2.On about 21 August 2013, the Respondent made representations to the Applicant to the effect that the Vehicle was a 1970 Ford GTHO Falcon Sedan, with the exception of the Vehicle’s engine block and colour.3.On about 21 August 2013, the Applicant inspected the vehicle at the Respondent’s home and agreed to purchase the Vehicle from the Respondent for $135,000.4.During the inspection, the Respondent provided the Applicant with a letter from Ford Motor Company that purportedly described the Vehicle as a Ford XW GT HO Sedan.5.The Applicant and Respondent signed a written document recording the sale on about 21 August 2013. This document described the Vehicle as a ‘GTHO 1970’.6.The Applicant paid the purchase price to the [Respondent] over the course of the next 12 months.7.The Applicant did not have the Vehicle inspected by an expert at any time before he took possession of the Vehicle.8.The Applicant took possession of the Vehicle in August 2014.9.The Vehicle is not a 1970 Ford GTHO Falcon Sedan. Its current market value is $25,000.Agreed Issues1.Whether the contract of sale has implied into it a term that the vehicle must conform to its description.2.Whether the Respondent made an oral representation to the Applicant that the Respondent’s description of the Vehicle was only made to the best of the Respondent’s knowledge and whether, if such a representation was made, it will impact the Respondent’s liability.3.Whether it was a term of the Contract for sale of the Vehicle that the Applicant was to undertake his own investigations and due diligence into the Vehicle.4.Whether the sale of the Vehicle arose in trade or commerce.5.Whether the Federal Circuit Court has jurisdiction to hear the dispute. It should be noted that while the above facts were agreed by the parties, and the hearing both at first instance and on appeal proceeded upon that basis, the formal requirements of s 191 of the Evidence Act 1995 (Cth) regarding agreement as to facts were not observed in that the agreement was not signed by either the parties or by their lawyers. Accordingly, the restriction on adducing evidence to contradict or qualify an agreed fact without leave contained in s 191(2)(b) did not apply, if indeed the agreed facts were properly binding in any event. As it turned out, the only material sense in which the agreed facts were disputed and sought to be qualified by the evidence before the primary judge and agitated on appeal in this Court was that paragraph 2 of the agreed facts, reproduced above, which acknowledges representations to the effect that the car was a 1970 Ford GTHO Falcon Sedan, was sought to be qualified by Mr Sell to the effect that this was a representation to the best of his knowledge, rather than an absolute representation as to that being the fact. This qualification assumed some importance because it went to the question of reliance, and was consistent with the defence already pleaded, as outlined above.

Evidence

Evidence Before The Court

In this case, I can see no reason why I should not accept and apply the credit and reliability findings of the primary judge as summarised below. His Honour had the advantage of seeing the parties give evidence in cross-examination and thereby in deciding which account should be preferred at points of conflict. In any event, many of the key findings do not turn on resolving any such conflict. Further, the paucity of reasoning by the primary judge gives me a relatively free hand in deciding what to make of the evidence before his Honour, applying the legal principles contained in the authorities discussed below.Key evidence in the Court below The critical evidence on the appeal goes to the question of whether there was a sale by description, as opposed to, for example, by inspection with a description to identify the specific car. A related question was whether, objectively rather than subjectively, there was reliance on the description that was provided. The evidence reproduced below needs to be considered in the context of the statement of agreed facts reproduced in part above. In these reasons I have largely avoided referring to, or relying upon, evidence which is disputed unless it goes directly to the issues in dispute. The ambit of relevant factual dispute, in the sense of making any difference to the outcome of the appeal, was in any event quite narrow. The key documentary evidence was as follows:(1)A letter from Ford dated 9 August 1995, which acknowledged a letter from Mr Sell, which listed the serial prefix and serial numbers that must have been provided by Mr Sell from the VIN plate and advised, on its face upon that basis alone, that the car was originally built in 1970 as a Falcon GT model 18939 XW GT HO Sedan, along with certain other details, including the original blue colour.(2)A 21 August 2013 contract signed by the parties which included these sentences “I Glen Sell will state that I will hold said vehicle GTHO 1970 Vin: JG33KP16488 for a period of 8 months maximum. Final payment to be made no later than 21st Day April 2014”, and acknowledged payment of a $10,000 deposit that day.(3)A subsequent version of the same 21 August 2013 document with additional text recording:(a)the initial $10,000 deposit payment;(b)four subsequent payments between 4 September 2013 and 12 April 2014 totalling a further $85,000, leaving a balance of $40,000 owing as of 12 April 2014;(c)an extension of time of four months to pay the remaining $40,000 and an extension of time of time of two months to pay an interest amount of $3,500; and (d)stating a balance paid of $40,000 plus an additional $1,280 for insurance and registration on 7 August 2014.(4)Two reports by a car expert, Mr Cuthbert. The first report was prepared well before the contract in this case was formed (being for the divorce proceedings between Mr Sell and his ex-wife) and concluded that the car was genuine. The second report was prepared for the purpose of these proceedings and stated that upon further inspection, the car was not genuine.

Decision

Reasons for decision

It follows that the interlocutory application to adduce further evidence in support of the cross-appeal must be dismissed; and the cross-appeal must be dismissed, both with costs.Conclusion The appeal is dismissed with costs. The respondent/cross-claimant’s interlocutory application and cross-appeal are dismissed with costs.

Ratio Decidendi

Legal Principle Established

It was submitted that the description given to the car was of a kind or species, not a matter of quality. Tsoutsouras was not applicable because it did not involve any representation of genuineness. Mr Sell had represented the car was genuine, albeit not in original condition. ConsiderationTrade or commerce issue and the issue of federal jurisdiction It is convenient to address first the issue of whether the sale of the car was in trade or commerce because that is one of the applicable gateways to considering Mr Walker’s cause of action under s 18 of the Australian Consumer Law. For reasons considered further below, the correct description of the legislation relied upon was s 18 of the Australian Consumer Law (Victoria). Supplementary post-hearing written submissions on the question of whether the sale of the car was in trade or commerce were provided by the parties with leave of the Court. The parties agreed that it is the conduct involved that determines whether the transaction meets that description, rather than on the range of activities otherwise engaged in by the party against whom the case is brought: Hearn v O’Rourke [2003] FCAFC 78; (2003) 129 FCR 64. Where the parties differed was in the characterisation of what occurred. Mr Emmett argued that the transaction had a commercial character in the sense in which that phrase was used in Re Ku-ring-gai Co-operative Building Society (No 12) (1978) 22 ALR 621 at 648-9 and Concrete Constructions (NSW) Pty Limited v Nelson (1990) 169 CLR 594 at 604. He pointed to the following factors:(1)the advertisement for sale on Gumtree was equivalent to an open market;(2)the transaction was at arm’s length between strangers;(3)the presence of commercial terms such as payment by instalments and Mr Walker to meet registration and insurance costs until he took possession;(4)the dominant purpose of the sale was to raise funds;(5)the car was an asset that was not usually owned purely for pleasure or convenience but rather having substantial value;(6)the car was sold with a letter from Ford as a commercial manufacturer confirming authenticity; (7)the use of the car for hire as a wedding vehicle (albeit in a minor way); and (8)the critical conduct being a representation as to value. Mr Emmett relied on Bevanere Pty Ltd v Lubidineuse (1985) 7 FCR 325 in which the sale of an asset by a business that was not engaged in selling such assets was found to be in trade or commerce, albeit that the asset being sold was being used for a business activity. In reply to those submissions, Mr Chandrasegaran argued that the passage from Ku-ring-gai Co-operative Building Society relied upon concerned whether or not a transaction has to be arm’s length to be in trade or commerce. That point is well-taken. Immediately following the passage relied upon by Mr Emmett, the Full Court made it clear that what mattered was the commercial or business nature of the dealings, even if they fell outside the mainstream of ordinary commercial activities and even if they had an element of altruism to them. The key concepts concern commerce or business, as the words trade or commerce in ordinary parlance would imply.