Auction sale error - John Deere 4640 goes for $1,800 - Court fixes mistake

The Provincial Court of Saskatchewan has granted judgment to an auctioneer to correct a 10x mistake in the price paid for a John Deere 4640 tractor at auction.  Evidence from attendees at farm auction testified that the winning bid for the tractor was $18,000, but the successful bidder paid only $1,800 to the auctioneer.  The clerk for the auctioneer had made a clerical error and listed $1,800 on the invoice issued to the successful bidder, who provided payment in that amount and took possession of the tractor. 

Although the successful bidder was contacted by the farm owners about the mistake, he refused to pay the difference between the $18,000 bid and the $1,800 had had already paid.  At trial, the successful bidder called no evidence, but did cross-examine the witnesses from the auctioneer "in an apparent effort to challenge their credibility".  During his testimony, the auctioneer explained that he had paid out the $18,000 to the farm owners after the mistake made by his clerk was discovered.

The Court found that there was a clerical error made, the purchase price of the tractor was actually $18,000, and the successful bidder "seized on the mistake, to obtain a benefit he knew or ought to have known that he was not entitled in law to have."

Read the decision at: Ukrainetz (Ukrainetz Auctioneering) v Borowski.

Appeal Court agrees auctioneer not liable for selling cattle subject to security agreement

The Saskatchewan Court of Appeal has upheld the dismissal of a claim against an auctioneer for the tort of conversion for selling livestock that was subject to a security interest.  A secured creditor, Lloydminster Credit Union Limited, brought an action against an auction company, 324007 Alberta Ltd., which operates Heartland Livestock Services. The Credit Union had a security agreement, securing demand and other loans on livestock, with Robert Burroughs, a farmer.   Mr. Burroughs sold the livestock, using Heartland’s auction services, and did not account for the proceeds to the Credit Union.  The Credit Union sued Heartland in conversion.

Following a trial to resolve the dispute, Justice Pritchard of the Court of Queen’s Bench found that Heartland acted as an agent or intermediary between Mr. Burroughs and the buyers at the auction sale and could not be found liable for conversion in an action brought by the Credit Union.  Justice Pritchard held, in the alternative, that the Credit Union was unable to sustain an action in conversion against the auctioneer because the Credit Union was not entitled to immediate possession of the livestock covered by the security agreement.  As part of this latter proposition, the learned trial judge found that the Credit Union had consented to the sale of the livestock, albeit on the condition that the proceeds be deposited with it.

The Appeal Court upheld the trial judge's decision, but only on the basis that the Credit Union had consented to the sale of the livestock.  Where consent to the disposition of property can be proven, no liability in conversion can be found.  Conversion is an intentional tort (converting someone else's property to your use), and consent is often referred to as a "defence" because the defendant typically bears the burden of proving that the plaintiff had consented to the interference with the property. 

Read the decision at: Lloydminster Credit Union Limited v 324007 Alberta Ltd.

Federal Court of Appeal overturns cattle tag decision in Denfield Livestock Sales case

A three-judge panel of the Federal Court of Appeal sitting in Montreal has overturned a decision of the Canada Agricultural Review Tribunal that found Denfield Livestock Sales Limited (DLS) not guilty of having moved cattle without a proper CFIA tag. The Tribunal had ruled that DLS, as auctioneer, did not take ownership and control over the cattle and, therefore, did not cause the movement of the cattle from its facilities to the purchaser's farm. The Attorney-General of Canada decided to seek the judicial review of this decision mainly on the basis that the Tribunal was wrong when it determined that DFS did not have sufficient power and control over the animals to be required by the regulations to ensure that they were properly tagged. The Court of Appeal agreed.

In arriving at its decision, the Court of Appeal analyzed the contractual relationship between vendor, auctioneer and purchaser. Although the auctioneer takes no part in the contract of sale directly between vendor and purchaser, the auctioneer is entrusted by the vendor with possession of the goods being sold, and the auctioneer cannot give up the goods to the purchaser until the purchaser has paid the purchase price. In this way, the Court decided, the Tribunal decision was incorrect in finding that the auctioneer did not have power and control over the animals.

The Court of Appeal has now sent the case back to the Tribunal to be reconsidered on the basis that DFS did have care and control of the animals sufficient to create a duty to tag under the regulations.

The decision of the Federal Court of Appeal is available (but only in French) at:
http://www.canlii.org/fr/ca/caf/doc/2010/2010caf36/2010caf36.html

The original decision of the Canada Agricultural Appeal Tribunal is available at:
http://cart-crac.gc.ca/index_e.php?s1=decisions&page=a60328