Krajsic v eBay Marketplaces GmbH - [2019] NSWCATCD 7 - NSWCATCD 2018 case summary — Zoe

NSWNSWCATCD

Krajsic v eBay Marketplaces GmbH

[2019] NSWCATCD 7

NCAT Consumer and Commercial|2018-11-26

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At a glance

Source facts

Court

NCAT Consumer and Commercial

Decision date

2018-11-26

Catchwords

Consumer claim - unconscionable conduct - negligence Legislation Cited: Australian Consumer Law

Source

Original judgment source is linked above.

Catchwords

Consumer claim - unconscionable conduct - negligence Legislation Cited: Australian Consumer Law

Judgment (23 paragraphs)

[1]

Summary and orders sought

This is an application filed on 24 July 2018 by Stefan Krajsic trading as Crystal & More (applicant) to be paid $40,000.00 for economic loss suffered due to an alleged breach of duty by the respondent, eBay Marketplaces GmbH (ABN 64 652 016 681) (eBay) and eBay's unconscionable and discriminatory conduct. The applicant also seeks various specific performance orders.
eBay is a foreign company registered in Australia carrying on business in Australia as an online service provider and is represented locally by its agent, Corrs Chambers Westgarth Sydney. It is thus able to sue and be sued.
Pursuant to a User Agreement entered into between the applicant and eBay which commenced in 2015 and was superseded from time to time by various updated user agreements (Agreement), eBay provided an online marketplace or platform via its website, ebay.com.au (Platform) which allowed the applicant to list items for sale for a fee (and to bid on items free of charge).
The applicant's complaints are twofold. Firstly, he alleges that when his eBay account was sabotaged by other eBay users, eBay took no action or failed to act promptly against the perpetrators. Secondly, he says that eBay singled him out when it claimed he had breached the Agreement, ignoring other users whom he claims engaged in similar breaches.
eBay disputes it owes a duty and further says that any liability is excluded under the Agreement. It also submits that the Tribunal lacks the powers to make many of the orders sought and that the applicant's loss is not quantified, nor has it been caused by any conduct of eBay.

[2]

Jurisdiction

The starting point for determination of jurisdiction of the Tribunal is Part 6A of the Fair Trading Act 1987 (NSW) (FTA).
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".
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.
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.
"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).
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".
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.
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".
I am therefore satisfied that the Tribunal has jurisdiction in the matter.

[4]

Australian Consumer Law

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.
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).
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.
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.
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.
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."
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.
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.
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.
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:
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;
the relative strengths of the bargaining positions of the supplier and customer;
whether the customer was able to understand any documents relating to the supply or possible supply of the goods or services.
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.

[7]

Findings of fact

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.
Upon registering as a user, the applicant agreed to the terms of the Agreement.
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.
The applicant paid selling fees (also known as final values fees) and listing fees to eBay pursuant to clause 5 of the Agreement.
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).
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).
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.

[15]

(i) Breach of intellectual property

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.
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).
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.
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).
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.

[20]

Unconscionability and unfair business practices

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).
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.
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.

Krajsic v eBay Marketplaces GmbH

At a glance

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Decision date

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Catchwords

Judgment (23 paragraphs)

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Legislation Cited (1)

Cases Cited (2)