Krajsic v eBay Marketplaces GmbH

Jurisdiction

1. The starting point for determination of jurisdiction of the Tribunal is Part 6A of the Fair Trading Act 1987 (NSW) (FTA).
2. Sections 79B to 79X of the FTA confer jurisdiction on the Tribunal with respect to consumer claims. Section 79J provides that the Tribunal has jurisdiction to hear and determine a "consumer claim". Under s 79I of the FTA, a "consumer" may apply to the Tribunal in respect of a "consumer claim".
3. Under s 79D(c) of the FTA, "consumer" includes an individual to whom a supplier has supplied or agreed to supply goods or services, whether under a contract or not. The applicant meets this description.
4. Under Section 79H of the FTA, a person or body is presumed to be a "consumer" until the contrary is proved, and the other party bears the onus of proving the applicant is not a "consumer". In this matter, eBay did not submit that the applicant was not a "consumer" within the meaning of Part 6A of the FTA.
5. "Consumer claim" is defined in s 79E of the FTA as a claim by a consumer, for one or more of a number of remedies (including the payment of a specified sum of money, or the supply of specified services) that arises from a supply of goods or services by a supplier to the consumer (whether or not under a contract).
6. Under s 79G of the FTA, "supply" includes the supply of goods by way of sale, lease or exchange, and the supply of "services". Under s 79F(1)(i) of the FTA, "services" includes "rights… benefits, privileges, or facilities that are, or are to be, provided, granted or conferred in trade or commerce". "Trade or commerce" is defined in s 4 of the FTA as including "any business or professional activity".
7. The consumer is located in NSW and the service was supplied to him in this jurisdiction as required by s 79K. Additionally or alternatively, the Agreement was made in this jurisdiction (s 79K). The claim has been brought within the time period allowed (three years from when the cause of action arose) as required under s 79L.
8. The applicant's claim which includes relief by way of payment of a specified sum of money, namely $40,000.00, is within the jurisdictional limit conferred by s 79S of the FTA. In Lam v Steve Jarvin Motors Pty Ltd [2016] NSWCATAP 186 (at 130-131) it is clear that the term "specified sum" in s 79E(1)(a) is to be construed so that it is not merely liquidated damages or a debt, but includes unliquidated damages for negligence. Whilst the sum of $40,000.00 has not been quantified by the applicant (as discussed below) and would seem to have been nominated so as to fall within the jurisdictional limit, the amount has been specified by the applicant in the application and thus satisfies the requirements of s 79E(1)(a) to be a "consumer claim".
9. I am therefore satisfied that the Tribunal has jurisdiction in the matter.

Other orders sought

1. In addition to a monetary amount, the applicant has also sought orders which are akin to specific performance, or varying the terms of the Agreement. Those orders sought are: 1. eBay shall immediately re-instate two of the applicant's listings and ensure those listings re-appear at the top of all searches as at the time of removal. 2. eBay shall take no action to hide and/or reduce the visibility of the applicant's current and/or any future listings. 3. eBay shall not engage in similar conduct in the future. 4. eBay and/or any related entity shall issue all notices during normal business hours. 5. eBay and/or any related entity when issuing notices: 1. shall provide a full and detailed explanation of any breach and/or penalty; 2. shall allow sellers fair and reasonable time to remedy and/or seek advice about any breach before imposing sanctions.
2. The orders which the Tribunal may make in an applicant's favour are set out in s 79N (a) - (h) of the FTA and include: (a) an order for money to be paid; (b) an order to fix defective goods or services; (c) an order for services to be provided. If a contravention is established, it will be necessary for the Tribunal to determine if the other orders sought fall within s 79N.
3. The orders which the Tribunal may make in eBay's favour are set out in s 79O and include an order dismissing the claim or part of the claim.
4. Finally, it is necessary to mention s 79U which provides that when making orders, the Tribunal must be satisfied that the orders will be fair and equitable to all the parties to the claim. The Tribunal can consider matters such as whether or not there was any material inequality in bargaining power between the parties to the claim.

Australian Consumer Law

1. The applicant claims that eBay: 1. treated him differently compared to hundreds of other sellers using the Platform; 2. engaged in unfair and heavy handed business practices; 3. engaged in conduct that was discriminatory, grossly unfair and unconscionable.
2. The Australian Consumer Law (ACL) provides consumers with a number of general protections in consumer transactions, including protection from unconscionable conduct in connection with goods or services (section 21).
3. Section 28 of the FTA makes the ACL part of the law of NSW. However, for the provisions of the ACL to apply in the exercise of the Tribunal's jurisdiction under the FTA, the applicant's claim must also fall within the ACL's jurisdiction. The consumer claim jurisdiction under the ACL is narrower than that which pertains under Part 6A of the FTA. Under s 3(3) of the ACL, a person is taken to have acquired services as a "consumer" if the amount paid or payable for the services does not exceed $40,000.00 or the service was of a kind ordinarily acquired for personal, domestic or household use or consumption.
4. In this matter, there was no evidence before me of the total value of services under the Agreement. No evidence has been presented to me that the Agreement has been terminated, so presumably it is still on foot. The applicant said he paid fees to eBay of $12,136.88 for the year he is claiming a loss, being 30 June 2017 to 1 July 2018 (Loss Claimed Period). eBay says the correct amount of fees paid during the Loss Claimed Period is $12,687.36, which comprises listing fees ($1,877.43), final value fees (paid when an item is sold - $10,595.39), store fees ($356.85) and credits of $142.31. In any event, both amounts are under the jurisdictional limit. If, however the fees are to be calculated for the entire period of the Agreement to the date of filing the application, and given the Agreement commenced in 2015 (there is no evidence of the exact start date), then doing the best I can on the evidence available, I estimate that the fees are $12,000.00 per year, totalling $36,000.00. This is still within the ACL's jurisdictional limit for consumer claims.
5. Alternatively, to fall within the ACL's consumer claim jurisdiction, the type of services that the applicant acquired must be for personal or domestic use and not business use.
6. The legal test that applies in determining if goods are acquired for personal, domestic, or household use or consumption was reiterated by the Appeal Panel of this Tribunal in Safi v Heartland Motors Pty Ltd trading as Heartland Crysler [2016] NSWAP 80 at [62] to [65] relying on the decision of the Federal Court of Australia in Bunnings Group Limited (formerly Bunnings Pty Ltd) v Laminex Group Limited [2006] FCA 682 at [81] to [108]. It requires the Tribunal to consider, inter alia, what the goods [or services] are "commonly" or "regularly" used for (not "exclusively" or "predominantly"), having regard to the "essential character" of the goods [or services] which should be determined objectively, but also having regard to the "design, marketing, pricing and potential uses of the type of goods [or services] in question."
7. There is nothing to suggest that online marketplace services are ordinarily acquired for commercial or business purposes. They could be used for domestic purposes, such as buying and selling household goods. Presumably the service is also used by the applicant for his personal use. I am therefore satisfied that the service, although used for the purpose of the applicant earning an income, is a type of service commonly acquired for personal and domestic use. The provisions of the ACL therefore apply to the applicant's claim.
8. In any event, similar to s 79H of the FTA, under s 3(10) of the ACL, a person is presumed to be a consumer unless proven otherwise and in this case, eBay has not challenged the jurisdiction of the Tribunal based upon the applicant not being a "consumer" under s 3(3) of the ACL.
9. The term "unconscionable conduct" is not defined in the ACL. It is a term of broad import. Its ordinary meaning includes conduct that is not right or reasonable, which is seriously unfair, and which is indefensible.
10. The prohibition against unconscionable conduct under section 21 of the ACL extends to a broader range of conduct than what the general law has traditionally considered to be unconscionable. The ACL sets out at s 22 a number of matters the Tribunal may consider in determining whether conduct in connection with the supply of goods or services is unconscionable. These factors include:
11. the extent to which the supplier's conduct with the customer was consistent with the supplier's conduct in similar transactions between the supplier and similar customers;
12. the relative strengths of the bargaining positions of the supplier and customer;
13. whether the customer was able to understand any documents relating to the supply or possible supply of the goods or services.
14. If a contravention of s 21 is established, the applicant is entitled to damages under s 236 of the ACL, supplementing any orders obtainable under 79N of the FTA.

Negligence

1. The applicant has not brought a case for breach of the consumer guarantees (for instance ss 60-61 of the ACL: a failure to provide services with due care and skill and/or that they be fit for any specified purpose).
2. The applicant has instead brought a claim in negligence - framed as a breach of duty by eBay for failing to provide a safe and equitable market place.
3. At common law a duty of care will generally arise when a respondent should have foreseen that their conduct could result in injury to the applicant (see Donoghue v Stevenson [1932] AC 562).
4. There are recognised categories of relationship which give rise to a duty of care, which include the supplier of services to a consumer.
5. The applicant must show that eBay breached that duty by failing to meet the standard of care required by the law and he suffered damage because of the breach of duty.
6. The applicant is within the three year time limit to bring this claim.
7. The Tribunal has the jurisdiction to apply common law principles pertaining to the law of negligence and the ACL does not limit or prohibit a consumer from bringing a consumer claim based on negligence (or for breach of contract): Lam (at 104).
8. In order to succeed in his application, the applicant bears the onus of establishing his factual contentions to the civil standard of proof on the balance of probabilities.

Procedural

1. The evidence and submissions before the Tribunal comprise the material filed by the applicant on 18 October 2018 (applicant's bundle) and that filed by eBay on 16 November 2018 (eBay's bundle).
2. At the hearing, the applicant handed up two additional documents with Ms Pace's consent. One is a PayPal sales graph, which I have marked exhibit 'A'. The other is a bundle of emails dated between 10 May 2018 and 13 May 2018 between the applicant and eBay regarding hidden listings, which I have marked exhibit 'B'. The applicant attempted to hand up two other documents which eBay objected to and they were not pressed by the applicant.
3. The applicant gave oral evidence, as did Ms Nikki Pace, eBay's authorised representative.

Findings of fact

1. In 2015, the applicant registered as an eBay user and commenced listing items for sale such as mobile phone wall chargers and cables on eBay's Platform.
2. Upon registering as a user, the applicant agreed to the terms of the Agreement.
3. Whilst a copy of the Agreement which the applicant accepted in 2015 was not tendered as evidence by either party, eBay provided to the Tribunal a copy of the current version of the Agreement dated 30 October 2018 (annexure A of eBay's bundle) which had superseded earlier versions and which was to become effective for all users from 28 November 2018 and made reference to it, which the applicant did not oppose.
4. The applicant paid selling fees (also known as final values fees) and listing fees to eBay pursuant to clause 5 of the Agreement.
5. The Agreement incorporated various policies (Policies) (clause 24), some of which are included in eBay's bundle as follows: 1. Replicas, counterfeit items and unauthorised copies Policy (annexure H) 2. Duplicate Listings Policy (annexure K) 3. Item Description Policy (Endorsement Policy) (annexure O).
6. The Agreement included terms as follows: 1. The applicant is responsible for ensuring that his listing and selling are lawful and to comply with the Agreement and the Policies (clause 7). 2. the applicant will not list items that infringe the intellectual property of a third party. To this end, eBay has in place a Verified Rights Owner program (VeRO) to ensure listed items do not infringe upon the copyright, trade mark or other intellectual property rights of third parties. 3. eBay can without notice and in its discretion remove, delete, modify or not display listings for contraventions of the Agreement (clauses 4 and 9). 4. eBay is not contractually liable for the actions of individual buyers or sellers who trade on its platform (clause 7). 5. eBay is not an agent of the applicant (clause 21).
7. During the 12 month period to July 2018, the applicant listed approximately 6,000 items for sale on the Platform and paid fees to eBay of approximately $12,600.00.

Disruption of applicant's business by suspicious buyers

1. Commencing on or about 3 December 2017 and up until about 27 January 2018, the applicant's online business was undermined by two buyers associated with three eBay account holders/users who sold similar mobile phone accessories to the applicant. The two buyers placed multiple orders with the applicant for phone chargers and then made spurious claims for refunds for alleged non-delivery of good and/or faulty goods. The buyers also left negative feedback on the applicant's eBay account.
2. The applicant placed the two buyers on his 'blocked buyer list'.
3. eBay says that the applicant notified eBay of these matters on or about 27 December 2017.
4. During the period 27 December 2017 to 11 February 2018, eBay investigated the applicant's complaint.
5. At the applicant's request, eBay removed the negative feedback from the applicant's account.
6. On or about 11 February 2018, eBay notified the applicant that it has shut down the two buyer's eBay accounts and it would monitor the three related accounts involved in the suspicious activity.

PayPal suspension

1. On 12 February 2018, PayPal temporarily suspended the applicant's access to its [eBay account] for breaching PayPal's Acceptable Use Policy due to the improper marketing for sale of "Genuine Apple iPhone Wall chargers" and other items via eBay.

(i) Breach of third party's trade mark

1. In March 2018, a third party (Apple) lodged a notice of infringement (NoCI) with eBay, claiming the applicant had infringed its trademark in two listed items (wall chargers).
2. After investigating, eBay removed the two listings in March 2018. Following two further NoCI's by Apple, eBay removed another two listings, one on 10 May 2018 (which had been removed on 24 April 2018 for a different breach) and another on 18 August 2018.
3. On 11 June 2018, eBay removed further two further listings for trade mark violation.
4. On 18 September 2018, eBay removed a further listing for trade mark violation and suspended his account for 7 days.

(ii) Breach of Duplicate Listings Policy

1. In 2016, the applicant created 'duplicate listings' to increase his sales, in breach of the Agreement.
2. On or about 24 April 2018, eBay identified and removed three duplicate listings and warned the applicant about consequences should he continue to breach the Duplicate Listings Policy.
3. On or about 6 May 2018, eBay took action against two further duplicate listings by removing them and by hiding all listings from searches for 7 days and suspending the applicant's account for 7 days (later reduced to 2 days).

(iii) Display of unauthorised endorsements

1. On 5 May 2018, eBay notified the applicant he had breached its Items Description Policy. eBay took no action against the applicant, instead requesting he remedy the breach.

Failure to detect and failure to promptly respond to suspicious activity - breach of duty of care

1. Both parties submitted into evidence a series of emails between them dated 15 January 2018 to 11 February 2018.
2. The applicant contends that it took two months for eBay to action his complaints, which was unacceptable and caused his business to be detrimentally affected. eBay disputes this. The applicant has said that he first became aware of suspicious activity on or about 3 December 2017. It is unclear on the applicant's evidence the exact date when the applicant notified eBay of the suspicious activity of the first buyer. eBay states in its submissions that it was "on or around 27 December 2017". This is three weeks after the suspicious activity was first detected by the applicant.
3. The applicant contends that eBay did not remove negative feedback at all or in a timely fashion. eBay says it removed negative feedback on 9 January 2018. It confirmed this in an email to the applicant dated 18 January 2018.
4. The applicant says that further negative feedback was left. This was ultimately removed by eBay and after investigations by eBay, the buyer's accounts were closed on 11 February 2018.
5. Ms Pace submitted that eBay has millions of listings and it would be impossible to detect all suspicious activity. She gave evidence that eBay had in place numerous policies and procedures to monitor and enforce non-compliant activity. She said eBay's compliance procedures were of both a proactive and reactive nature. Whilst eBay had filters in place to pick up suspicious buying and selling, there was no "sweep of the site".

Applicant's breach of eBay's Policies - the removal of listings by eBay due to breach of policies by the applicant was unconscionable, discriminatory, unfair and heavy handed

1. eBay alleges that the applicant breached three of its Polices, namely its Replicas, Counterfeit Items and Unauthorised Copies Policy, its Duplicate Listings Policy and its Item Description Policy (Endorsement Policy). As a result, eBay removed the applicant's non-compliant listings, which the applicant was able to amend and have re-listed. The applicant says that he was unfairly targeted by eBay.

(i) Breach of intellectual property

1. The applicant gave evidence that the two wall charger listings removed by eBay in March 2018 were his two best sellers and that eBay had singled him out and had selectively targeted his account for breach. He said that he had sold nearly 8000 of these items and his sales decreased following the complaint. He said that there were "1000 identical listings on eBay's Platform that contained the word Apple" which had not been targeted, plus he had three other identical listings that Apple did not complain about. The applicant ultimately amended these two listings so as to be compliant and they were reinstated by eBay.
2. Ms Pace gave evidence that eBay did not proactively remove listings for infringement of a third party's copyright. Upon receipt of a complaint by a third party, eBay's usual practice was to make inquiries with the rights owner to ascertain the nature of the alleged infringement. If there was insufficient evidence of breach, no action would be taken. eBay wrote to the applicant to explain this at the time (on 12 March 2018).
3. Ms Pace said that eBay's VeRO program was in place to ensure listed items did not infringe upon the copyright, trademark or other intellectual property of third parties.
4. Ms Pace said that the applicant was also able to lodge his own complaint if he noticed breaches by other users and indeed he did so; he lodged a copyright complaint with VeRO against one of the users who had undermined his account. Following VeRO's investigation, this was resolved in the applicant's favour and on or about 23 April 2018, eBay removed the listing (annexure J to application).
5. The applicant submits that his wall charger listing (no. 162984028567) that he was informed had been removed by eBay on 10 May 2018 in response to Apple's NoCI (annexure T) had already been removed by eBay on 24 April 2018 for being a non-compliant duplicate listing. The applicant contends that this demonstrates that eBay failed to check if his listings were active and/or complied with policies before removing them. eBay has not had a chance to consider this submission as it was made in an email sent by the applicant to the Tribunal's registry after the hearing had concluded. The email was not copied by the applicant to eBay. Accordingly, it would be prejudicial to eBay for the Tribunal to consider the submission now the hearing has finished. However, I do not consider this to be proof that eBay failed to check if listings were active and/or complied with policies before removing them.

Applicant's PayPal account suspended

1. The applicant contends that he also suffered loss when PayPal suspended his account for improper marketing of 'Apple' products and required him to change the description of some of his listings such as "genuine apple iPhone wall charger" to "wall charger used for Apple iPhone". The applicant admitted he did this because other users did it and to increase sales. He said he received no notice from PayPal and changed his descriptions as requested and asked PayPal to compel other users to similarly abide by the policy.
2. eBay submitted that PayPal is an unrelated entity to it and it has no control over, nor can it be liable for, any restriction placed on the applicant's PayPal account.

(ii) Duplicate listings

1. Ms Pace stated that eBay prohibits duplicate listings to ensure that buyers see a wide variety of options from a variety of sellers when they search for an item.
2. The applicant admitted that in 2016 he had duplicated his listings so as to increase his sales, in breach of eBay's Duplicate Listing policy. He explained that he felt justified in doing this because, "he noticed hundreds of other sellers doing the same." He also said that he was given no notice he was in breach. However, he gave oral evidence that he had read the policies at the time he accepted the Agreement and presumably understood them.
3. Ms Pace said that the applicant was first warned by email on 24 April 2018 that the applicant was in breach of duplicate listings. Whilst three duplicate listings were removed (with fees refunded to the applicant), the applicant was given 7 days to make all his listings compliant, failing which action would be taken, including that his account would be suspended and any offending duplicate listings would be hidden from view. Ms Pace said that despite this warning, the applicant continued to breach the Duplicate Listings Policy, which resulted in a 7-day suspension on 6 May 2018 (reduced to 2 days).
4. The applicant relies on correspondence between the parties between 10 and 13 May 2018 concerning listings that remained hidden after the applicant's suspension was lifted. An email from eBay dated 12 May 2018 (exhibit B, page 2) states: "I have checked all the items you have provided and they all appear active on the AU site." Given the applicant has admitted to breaching the Duplicate Listing Policy for his own gain and given the period the listings remained hidden after the suspension on 6 May 2018 is not lengthy, I do not attach great weight to this complaint.

(iii) Display of unauthorised endorsements

1. eBay prohibits sellers from using the eBay logo 'top rated seller' in their listing descriptions without the consent of eBay. Ms Pace says that the applicant did this without eBay's consent.
2. eBay gave evidence that whilst it identified several of the applicant's listings that incorporated eBay's logo, it did not remove the listings, but asked the applicant to amend their descriptions by removing the logo, which presumably the applicant did, as no further action was taken.

Loss

1. The applicant states in his application that in December 2017, his sales were averaging $2,600.00 per week, with profits of $850.00 plus per week. He claims the gross value of sales for the period 1 July 2017 to 30 June 2018 was $97,652.00. This is disputed by eBay who claims the gross sales were $83,816.60.
2. The applicant relies on a graph supplied by PayPal to support his calculation of loss. He says that as a result of the eBay's conduct, his sales were reduced by 60% from $12,000.00 a month in December 2017 to below $4,000.00 a month in June 2018. He thus claims a loss of $8,000.00 per month for a nine-month period from January 2018 and extending to September 2018, totalling $72,000.00, however he only seeks $40,000.00 from the Tribunal, presumably to remain within the jurisdictional threshold. The loss is not otherwise quantified by a profit and loss schedule.

Unconscionability and unfair business practices

1. Given that the applicant conceded that he had breached the Agreement, specifically the duplicate listing policy, I find that eBay was justified in removing those particular duplicate listings when it did. It is no excuse for the applicant to say that other users similarly breached eBay's policies as that does not change his contractual obligations to eBay. I also accept eBay's evidence that he was given warnings in various instances (despite not being required to do so under the Agreement).
2. The applicant has not established that eBay acted in an unconscionable or discriminatory manner or targeted the applicant or engaged in unfair business practices in removing any of the listings or temporarily suspending his account. eBay was not the instigator of third party intellectual property complaints, nor the action of PayPal. There is evidence that another user's listing was similarly removed for intellectual property breaches, which demonstrates that the applicant's account was not 'targeted' by eBay. The applicant was also able to relist non-compliant listings once he had corrected them to make them compliant. He was also in various instances given a refund of his fees for listings that were removed as a result of his own breaches.
3. I find that the actions eBay took in response to the applicant's breaches of its policies were in accordance with its terms of use and reasonable and proportionate to the risk posed to it by the applicant's breaches. Of the applicant's 6000 odd listings in the period June 2017 to July 2018, only 11 were removed. I do not find the actions by eBay to be unfair, unconscionable, unreasonable or disproportionate in the scheme of things. Having regard to the matters in s 22 of the ACL, I do not find that undue influence, pressure or unfair tactics were used against the applicant. The applicant did not give evidence he did not understand the Agreement. The fact the eBay, after investigation, removed listings of other sellers whom the applicant claimed to be in breach, demonstrates that eBay sought to act fairly and consistently in relation to similar customers.

Negligence

1. In relation to the allegation of negligence, whilst a duty may be said to exist by eBay to the applicant as consumer, I find that the applicant has not established that the duty has been breached by reference to any relevant standard of care.
2. It would be unduly onerous to place such a burden on eBay to monitor every seller and buyer and detect each and every suspicious activity that occurs on its Platform. eBay has policies and procedures in place to monitor suspicious activity. I accept the evidence of eBay that as soon as the applicant notified it of the suspicious buyers (on or about 27 December 2017), it commenced an investigation and acted upon the complaints. Based on the evidence before me, the buyer's accounts were closed by eBay (on 11 February 2018) within a period of some five weeks from eBay being notified. I do not find this to be undue delay. The respondent is not entitled to close down another user's account without a proper investigation. Negative feedback was placed on the applicant's account at various times in December 2017 and January 2018 and was removed by eBay as and when it was notified of it at the applicant's request.
3. The applicant has the legal burden of proving a breach of duty and a contravention of the ACL by eBay. In the circumstances, I find that the applicant has not established the legal grounds to justify the orders he seeks from the Tribunal.
4. Given I have found no contravention of the ACL or negligence by eBay, there are no losses which flow entitling the applicant to the relief sought. Accordingly, it is not necessary to consider whether the applicant has properly quantified his loss or could claim any of the additional orders sought as a consequence.
5. In the circumstances it is open to the Tribunal to make orders in favour of eBay and to dismiss the claim under s 79O of the FTA.

Orders

1. It follows that the appropriate order is as follows: 1. The application is dismissed.

I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 10 April 2019