Barry v Davies (t/a Heathcote Ball & Co) and Others
| Jurisdiction | England & Wales |
| Judge | SIR MURRAY STUART-SMITH |
| Judgment Date | 27 July 2000 |
| Judgment citation (vLex) | [2000] EWCA Civ J0727-13 |
| Docket Number | 1999/0975/B2 |
| Court | Court of Appeal (Civil Division) |
| Date | 27 July 2000 |
[2000] EWCA Civ J0727-13
lord Justice Pill and
Sir Murray Stuart-smith
1999/0975/B2
In the supreme Court of Judicature
Court of appeal (civil Division)
On appeal from THE Northampton
County court (His Honour Judge CHARLESHARRIS QC)
Royal Courts of Justice
Strand
London WC2A 2LL
Mr V. Moran (instructed by Messrs Woolley & Co, Northampton) appeared on behalf of the Appellant
Mr A. Iles (instructed by Messrs Borneo Linnells, Milton Keynes) appeared on behalf of the Respondent
This is an appeal from a judgment of H H Judge Harris given at Northampton County Court on 6 August 1999 in which he gave judgment for the Claimant for £27,600 against the Defendants. The appeal raises a point of some general interest and importance as to the effect of a sale by auction which is expressed to be "without reserve".
The auction was held on 25 June 1997 at the Defendants' Auction Room in Northampton. Mr Cross was the auctioneer. One of the lots for sale consisted of two Alan Smart engine analysers. They were new machines being sold by Customs and Excise because of some liability that the manufacturers had incurred over VAT payment. The price of new machines from the manufacturers was £14,521 each. Customs and Excise had instructed Mr Cross that the machines were to be sold without reserve and he accepted them for sale on that basis.
The Claimant runs a car tuning business. He saw the machines being delivered to the auction house on 20 June. He returned on the viewing day and spoke to Mr Cross who said that they would be sold at noon on 25 June without reserve. The Claimant decided they would be useful in his business and decided to bid for them.
The Claimant attended the auction house a few minutes before noon. When it came to the lots in question Mr Cross said that the machines were to be 'sold that day' on behalf of the VAT office, that each was worth £14,000, 'ready to plug in and away you go'. He tried to obtain a bid of £5,000 to start with; there was no bid; he tried £3,000; still no response. He then asked what bids there were for the machines, and the Claimant bid £200 for each. No other bid was made. In fact Mr Cross had received a bid from his son-in-law for £400 each; but he made no mention of this.
Mr Cross then withdrew the machines from the sale. His explanation was: "I could not see how I could sell for as little as this, even though it was without reserve. I think I am justified in not selling at an auction without reserve if I think I could get more in some other way later. I did not take up [the offer of] £400. I thought they were worth more". He told those present that he was not prepared to sell the machines for £200. They were sold a few days later for £1,500 (£750 each) after advertisement in a magazine.
The Claimant claimed damages on the basis that he was the highest bidder. The particulars of the damage claimed was the difference between the value of the machines, said to be £28,000 and the bid of £400.
The judge held that it would be the general and reasonable expectation of persons attending at an auction sale without reserve that the highest bidder would and should be entitled to the lot for which he bids. Such an outcome was in his view fair and logical. As a matter of law he held that there was a collateral contract between the auctioneer and the highest bidder constituted by an offer by the auctioneer to sell to the highest bidder which was accepted when the bid was made. In so doing he followed the views of the majority of the Court of Exchequer Chamber in Warlow v Harrison [1859] 1 E & E 309.
He also held that this was the effect of condition 1 of the conditions of sale which was in these terms:
"The highest bidder to be the purchaser; but should any dispute arise between two or more bidders the same shall be determined by the auctioneers who shall have the right of withdrawing lots."
The judge concluded that the first sentence meant what it said and the right of withdrawal was conditioned on there being a dispute between bidders, and there was none.
Mr Moran on behalf of the Appellant criticises this conclusion on a number of grounds. First he submits that the holding of an auction without reserve does not amount to a promise on the part of the auctioneer to sell the lots to the highest bidder. There are no express words to the effect, merely a statement of fact that the vendor has not placed a reserve on the lot. Such an intention, he submits is inconsistent with two principles of law, namely that the auctioneer's request for bids is not an offer which can be accepted by the highest bidder ( Payne v Cave (1789) 3 TR 148) and that there is no completed contract of sale until the auctioneer's hammer falls and the bidder may withdraw his bid up until that time (Sale of Goods Act 1979 S57(2) which reflects the common law). There should be no need to imply such a promise into a statement that the sale is without reserve, because there may be other valid reasons why the auctioneer should be entitled to withdraw the lot, for example if he suspected an illegal ring or that the vendor had no title to sell.
Secondly Mr Moran submits that there is no consideration for the auctioneer's promise. He submits that the bid itself cannot amount to consideration because the bidder has not promised to do anything, he can withdraw the bid until it is accepted and the sale completed by the fall of the hammer. At most the bid represents a discretionary promise, which amounts to illusory consideration, for example promising to do something 'if I feel like it'. The bid only had real benefit to the auctioneer at the moment the sale is completed by the fall of the hammer. Furthermore the suggestion that consideration is provided because the auctioneer has the opportunity to accept the bid or to obtain a higher bid as the bidding is driven up depends upon the bid not being withdrawn.
Finally Mr Moran submits that where an agent is acting for a disclosed principal he is not liable on the contract (Bowstead and Reynolds on Agency 16 th Ed para 9–001 and Mainprice v Westley (1865) 6 B&S 421). If therefore there is any collateral contract it is with the principal and not the agent.
These submissions were forcefully and attractively argued by Mr Moran. The authorities, such as they were, do not speak with one voice. The starting point is S57 of the Sale of Goods Act 1979, which re-enacted the 1893 Act, itself in this section a codification of the common law. I have already referred to the effect of subsection (2). Subsections (3) and (4) are also important. They provide:
"(3) A sale by auction may be notified to be subject to a reserve or upset price, and a right to bid may also be reserved expressly by or on behalf of the seller.
(4) Where a sale by auction is not notified to be subject to the right to bid by or on behalf of the seller, it is not lawful for the seller to bid himself 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."
Although the Act does not expressly deal with sales by auction without reserve, the auctioneer is the agent of the vendor and unless subsection (4) has been complied with, it is not lawful for him to make a bid. Yet withdrawing the lot from the sale because it has not reached the level which the auctioneer considers appropriate is tantamount to bidding on behalf of the seller. The highest bid cannot be rejected simply because it is not high enough.
The judge based his decision on the reasoning of the majority of the Court of Exchequer Chamber in Warlow v Harrison. The sale was of 'the three following horses, the property of a gentleman, without reserve'. The Plaintiff bid sixty guineas for one of the horses; another person, who was in fact the owner, immediately bid sixty one guineas. The Plaintiff, having been informed that the bid was from the owner declined to bid higher, and claimed he was entitled to the horse. He sued the auctioneer; he based his claim on a plea that the auctioneer was his agent to complete the contract on his behalf. On that plea the Plaintiff succeeded at first instance; but the verdict was set aside in the Court of Queen's Bench. The Plaintiff appealed. Although the Court of Exchequer Chamber upheld the decision on the case as pleaded, all five members of the Court held that if the pleadings were appropriately amended, the Plaintiff would be entitled to succeed on a retrial. Martin B gave the judgment of the majority consisting of Byles and Watson BB. At p 316 he said this:
"Upon the facts of the case, it seems to us that the plaintiff is entitled to recover. In a sale by auction there are three parties, viz. the owner of the property to be sold, the auctioneer, and the portion of the public who attend to bid, which of course includes the highest bidder. In this, as in most cases of sales by auction, the owner's name was not disclosed: he was a concealed principal. The name of the auctioneers, of whom the defendant was one, alone was published; and the sale was announced by them to be 'without reserve.' This, according to all the cases both at law and equity, means that neither the vendor nor any person in his behalf shall bid at the auction, and that the property shall be sold to the highest bidder, whether the sum bid be equivalent to the real value or not; Thornett v. Haines (a). We cannot distinguish the case of an auctioneer...
To continue reading
Request your trial
-
Air Studios (Lyndhurst) Ltd T/A Air Entertainment Group v Lombard North Central Plc
...equipment, either new or second-hand, does not mean that it has suffered no loss. As Sir Murray Stuart-Smith said in Barry v. Davies (trading as Heathcote Ball & Co) [2000] 1 WLR 1962 at 1969, albeit by reference to section 51(3), "It is not necessary that the purchaser actually goes into t......
-
First Caribbean International Bank (barbados) Ltd formerly Cibc (caribbean) Ltd Applicant/ Judgment Creditor v (1) Jacob Morille Respondent/ Judgment Debtor (2) Anthony Du Boulay Respondent/ Purported Purchaser (3) Arthur Isidore Respondent/ Sheriff of the High Court [ECSC]
...or any other bid for reasons of insufficiency or inadequacy. This issue arose for consideration in the case ofBarry v Davies and others [2001] 1 All ER 9445.In that case, the auctioneer withdrew items from the sale, believing that he could obtain a higher sum later by other means. The claim......
-
Ids Services (Malaysia) Sdn. Bhd. v Gm Healthcare Sdn. Bhd., 29-09-2010
...and Fylde Aero Coub Ltd v. Blackpool Borough Council (1990) 1 WLR 1195; Barry v. Heathcote Ball & Co (Commercial Auctions) Ltd (2001) 1 All ER 944 and Clarke v. The Earl Dunraven and Mount-Earl (1896) A.C 59. The case of Blackpool is authority for the proposition that an express request for......
-
First Caribbean International Bank (barbados) Ltd Formerly Cibc (caribbean) Ltd v Morille et Al
...other bid for reasons of insufficiency or inadequacy. This issue arose for consideration in the case of Barry v. Davies and others [2001] 1 All E.R. 944. In that case, the auctioneer withdrew items from the sale, believing that he could obtain a higher sum later by other means. The claiman......
-
Offer and Acceptance
...an implied rejection of the previous highest bid. 54 Harris v Nickerson (1873), LR 8 QB 286 [ Harris ]. 55 See Barry v Davies , [2000] 1 WLR 1962 (CA), confirming dicta to the same effect in the much earlier authority, Warlow v Harrison (1858), 1 El & El 309, 120 ER 925 (Ex). See also Harr......
-
What Price Auctions Without Reserve?
...of Birmingham. The advice and assistance of my colleagues GeorgeApplebey, Richard Goldberg and John Miller is gratefully acknowledged1 [2000] 1 WLR 1962.2 (1859) 1 E & E 309.3ibid them go at that price and withdrew them from the sale. His evidence was that hethought he was ‘justified in not......