Distinguishes Ron Engineering

Distinguishes Ron Engineering.

FOR EDUCATIONAL USE ONLY 1995 CarswellNS 106 144 N.S.R. (2d) 182, 416 A.P.R. 182

McManus v. Nova Scotia (Attorney General)

Blais McManus, Plaintiff v. The Attorney General of Nova Scotia, representing Her Majesty the Queen in right of the Province of Nova Scotia, Thorne Riddell Inc. and its successors, Thorne Ernst & Whinney Inc. and Peat Marwick Thorne Inc., bodies corporate, Defendants

Nova Scotia Supreme Court

Palmeter A.C.J.S.C.

Judgment: September 11, 1995 Docket: Doc. S.H. 67632/89

Counsel: Kenzie MacKinnon, Esq. and Lloyd MacNeil, Esq., for the Plaintiff. Fern M. Greening and Elizabeth R. Butt, for the Defendants.

Subject: Corporate and Commercial; Contracts; Civil Practice and Procedure

Auctions and Auctioneers --- Conduct of auction -- Bidding.

Contracts --- Formation of contract -- Acceptance -- Requirement of unconditional acceptance.

Practice --- Costs.

Auction advertised as unreserved -- Auctioneer verbally stating that bids subject to receiver's approval -- Bidder arguing auctioneer required to accept highest bid.

Province placed company into receivership and put company's assets up for auction. The auction was advertised as an unreserved auction. However, bidding cards handed out at the auction stated that the auctioneer reserved the right to refuse any bid. As well, the auctioneer announced that all bids on company's railroads were subject to approval of receiver. Bidder attended the auction and offered the highest bid for a railroad. However, receiver later rejected the bid and sold the railroad to another buyer. Bidder had heard that railroad bids were subject to receiver's approval. However, he argued that province's unreserved auction announcement constituted a unilateral contract offer, which required province to sell to the highest bidder at the auction, and that the auctioneer's verbal statements regarding the need for receiver's approval did not derogate from the written auction terms. Bidder brought an action against province for breach of contract. Held, the action was dismissed. An advertisement for an auction, even if it was for an unreserved auction, was no more than a notification or statement of intention to hold an auction. The printed conditions of sale on the bidding cards were inconsistent with an unreserved auction. The auctioneer had the authority to change the auction terms and make the sale conditional on receiver's approval. The buyer was made aware of the need for receiver's approval and there had only been conditional acceptance of his bid. There was therefore no contract to sell the railroad to bidder.

Province placed company into receivership and put company's assets up for auction. The auction was advertised as an unreserved auction. However, bidding cards handed out at the auction stated that the auctioneer reserved the right to refuse any bid. As well, the auctioneer announced that all bids on company's railroads were subject to approval of receiver. Bidder attended the auction and offered the highest bid for a railroad. However, receiver later rejected the bid and sold the railroad to another buyer. Bidder had heard that railroad bids were subject to receiver's approval. However, he argued that province's unreserved auction announcement constituted a unilateral contract offer, which required province to sell to the highest bidder at the auction, and that the auctioneer's verbal statements regarding the need for receiver's approval did not derogate from the written auction terms. He brought an action against province for breach of contract. Held, the action was dismissed. An advertisement for an auction, even if it was for an unreserved auction, was no more than a notification or statement of intention to hold an auction. The printed conditions of sale on the bidding cards were inconsistent with an unreserved auction. The auctioneer had the authority to change the auction terms and make the sale conditional on receiver's approval. The buyer was made aware of the need for receiver's approval and there had only been conditional acceptance of his bid. There was therefore no contract to sell the railroad to bidder.

Auction advertised as unreserved -- Auctioneer stating that bids being subject to receiver's approval -- Bidder arguing that auctioneer required to accept highest bid.

The province placed a company into receivership and put the company's assets up for auction. The auction was advertised as being unreserved. The bidding cards handed out at the auction provided that the auctioneer reserved the right to refuse any bid. As well, the auctioneer announced that all bids on the company's railroads were subject to the approval of the receiver. The bidder attended the auction and offered the highest bid for a railroad. The receiver rejected the bid and sold the railroad to another buyer. The bidder had heard that the railroad bids were subject to the receiver's approval. He argued, however, that the province's unreserved auction announcement constituted a unilateral contract offer, which required the province to sell to the highest bidder at the auction, and that the auctioneer's verbal statements regarding the need for the receiver's approval did not derogate from the written auction terms. He brought an action against the province for breach of contract. Held, the action was dismissed. An advertisement for an auction, even if it was for an unreserved auction, was no more than a notification or statement of intention to hold an auction. The printed conditions of sale on the bidding cards were inconsistent with an unreserved auction. The auctioneer had the authority to change the auction terms and make the sale conditional upon the receiver's approval. The bidder knew of the need for the receiver's approval and only conditional acceptance of his bid had been made. Therefore, no contract to sell the railroad to the bidder existed.

The province placed a company into receivership and put the company's assets up for auction. The auction was advertised as being unreserved. Bidding cards handed out at the auction provided that the auctioneer reserved the right to refuse any bid. As well, the auctioneer announced that all bids on the company's railroads were subject to the approval of the receiver. The bidder attended the auction and offered the highest bid for a railroad. The receiver rejected the bid and sold the railroad to another buyer. The bidder had heard that the railroad bids were subject to the receiver's approval. He argued, however, that the province's unreserved auction announcement constituted a unilateral contract offer, which required the province to sell to the highest bidder at the auction, and that the auctioneer's verbal statements regarding the need for the receiver's approval did not derogate from the written auction terms. He brought an action against the province for breach of contract. Held, the action was dismissed. An advertisement for an auction, even if it was for an unreserved auction, was no more than a notification or statement of intention to hold an auction. The printed conditions of sale on the bidding cards were inconsistent with an unreserved auction. The auctioneer had the authority to change the auction terms and make the sale conditional upon the receiver's approval. The bidder knew of the need for the receiver's approval and only conditional acceptance of his bid had been made. Therefore, no contract to sell the railroad to the bidder existed.

Palmeter, A.C.J.:

1 This matter was heard by me on August 29th, 30th and 31st, 1995 and adjourned for decision. The claim involved an alleged breach of contract by the Defendants in failing to sell certain marine railroads and accessories ("railroads"), pursuant to a bid made by the Plaintiff at a public auction.

Facts:

1. Breton Industrial and Marine Limited ("Breton") was placed in receivership by the Province of Nova Scotia ("Province") on February 12th, 1986.

2. Peat, Marwick, Thorne Inc. ("Receiver") or its predecessor companies was appointed the Receiver.

3. A public auction of the assets of Breton was held on the company premises at Point Tupper, Nova Scotia, by Mr. George Miller of Eastern Industrial Auctioneers ("Auctioneer") on January 24th, 1989.

4. Notice of the auction indicating that it was an "unreserved auction" was placed in newspapers, and was mailed by the Auctioneers and the Receiver to many interested parties including the Plaintiff.

5. The Plaintiff attended the auction either on his own behalf or on behalf of his company Troy Marine Limited, and registered as a bidder.

6. The Plaintiff had also been employed by Mr. Miller for a couple of weeks prior to the auction at the premises at Point Tupper, to help get all the rolling stock in operating condition for the auction.

7. Conditions of sale relating to the auction were posted throughout the premises at Point Tupper on the day of the auction, and were also reproduced on the back of the bid card given to the Plaintiff when he registered.

8. The Plaintiff admitted he was aware of the conditions of sale and that they were part of the conditions of the auction.

9. The second condition on the Conditions of Sale read as follows:

SECOND - The advance in the bidding to be regulated by the auctioneer and the auctioneer reserves the right either by himself or through a nominee to bid on behalf of the vendor, to refuse any bid, withdraw, consolidate or divide lots without any previous notice or reason.

10. One of the items to be auctioned was two marine railroads with winch equipment. This item was listed in the notice of the auction but it did not appear in the catalogue prepared by the Auctioneer. 11. Apparently the auctioning off of the railroads was put off until later in the day, early evening in fact, as the item had been overlooked until it was brought to the Auctioneer's attention.

12. At this time only a small percentage of the original bidders registered were in attendance and there was some concern over an apparent lack of interest in the railroads.

13. After a discussion with Mr. Paul Goodman, representative of the Receiver, and prior to calling for bids on the railroads, Mr. Miller announced to all those present to the effect that all bids on the railroads would be subject to the approval of the Receiver.

14. The Plaintiff admitted that he heard the announcement, understood what it meant and that any bids were subject to the approval of the Receiver. The Plaintiff or anyone else in attendance did not comment or object to the condition.

15. Mr. Miller commenced the bidding at a certain figure and successively lowered the bidding to $2,000.00. There were no bids and Mr. Miller said words to the effect "there appears to be no interest, let's move on", meaning move to the next item to be auctioned.

16. At that point, the Plaintiff said something like "I'll give you $2,000.00." Mr. Miller said he would accept the Plaintiff's bid subject to the approval of the Receiver, indicating Mr. Goodman, who did not indicate approval. There were no other bids and the Auctioneer sold the railroads to the Plaintiff subject to the approval of the Receiver.

17. A bid receipt was prepared indicating "Railroads and draw works. (Sale subject to the Receiver's Approval.)"

18. On two occasions within an hour after the conclusion of the bid on the railroads, the Plaintiff approached Mr. Goodman to see if his bid was accepted. I will refer to these conversations shortly.

19. Shortly after the bid on the railroads Mr. Goodman was approached by Mr. Ernest Theriault, of A.F. Theriault & Son Limited ("Theriault") who was interested in the railroads but had not been present at the time the item was put up. Mr. Theriault offered Mr. Goodman the sum of $20,000.00 for the railroads.

20. Over the next two days negotiations were carried on between Theriault and the Receiver which culminated in the sale of the railroads to Theriault on January 27th, 1989 for $25,000.00.

21. Mr. Goodman did not personally get back to the Plaintiff, but on January 31st, 1989 the Plaintiff did get Mr. Goodman by telephone and was told the railroads were sold.

3 The facts in dispute involve just what was said between Mr. Goodman and the Plaintiff at the two short meetings just after the auction. Basically, the Plaintiff testified that Mr. Goodman committed to get back to him after he checked with the Province. On the other hand, Mr. Goodman testified that at the first meeting he told the Plaintiff that his bid was too low and would discuss it later. At the second meeting at the cash shack, Mr. Goodman said he told the Plaintiff that he would discuss his bid with the Province but to assume the bid was not accepted unless he heard otherwise.

4 After hearing the evidence adduced I accept the testimony of Mr. Goodman as to just what was said on these occasions. I find that Mr. Goodman did not commit to get back to the Plaintiff and that the bid of the Plaintiff in the amount of $2,000.00 was not approved or accepted.

5 Quite frankly, I have some difficulty with the testimony of the Plaintiff. On occasions he was evasive, appeared to have a somewhat selective memory, and I find his recollection as to what was said and done at various times was less than satisfactory.

6 After hearing all of the evidence and submissions I find:

(i) Mr. Miller clearly indicated the conditions relating to any bid on the railroads;

(ii) The Plaintiff heard the announcement and understood what it meant;

(iii) The Plaintiff did not expect to purchase the railroads for $2,000.00;

(iv) The Plaintiff did not expect the Receiver or the Province to accept his bid of $2,000.00, and

(v) I accept the submission of counsel for the Defendants to the effect that the Plaintiff's major complaint was that they refused to negotiate further with him on the possible sale of the railroads. There is no evidence or law before me to substantiate the allegation that there was any obligation on the Receiver or the Province to negotiate further with the Plaintiff.

Issues:

7 After hearing all of the evidence adduced and submissions of the parties, I find the issues to be as follows:

Issue 1: Did the Defendants breach a contract with the Plaintiff by not approving his bid and in refusing to sell the railroads to him, and,

Issue 2: If there was a breach of contract, to what amount of damages is the Plaintiff entitled?

8 This is a civil case and the civil burden of proof exists. That is, the Plaintiff must establish his claim on a balance of probabilities by a preponderance of evidence.

Issue 1: Breach of Contact:

9 The position of the Plaintiff is very succinctly set forth on page 14 of the Defendants' Pre-Trial Memorandum as follows:

The Plaintiff's position is that the Receiver extended a 'unilateral contract offer' to all potential bidders in the auction brochure and newspaper advertisement of its intention to conduct an unreserved public auction. The Plaintiff defines the terms of the Receiver's unilateral contract offer as including the printed conditions of sale, but not the Auctioneer's verbal announcement to the bidders.

The Plaintiff claims he accepted the Receiver's offer by placing the highest and the only bid on the two marine railroads. The Plaintiff's bid was accepted by the Auctioneer as the highest bid when he closed the auction of the marine railroads by stating 'sold, subject to the Receiver's approval'. The Auctioneer's acceptance of the Plaintiff's bid completed the sale of the marine railroads to the Plaintiff. The Plaintiff claims the Receiver and Auctioneer had no authority to amend the terms of the written contract offer (the brochure, advertisement and printed conditions of sale) by verbally notifying the bidders that all bids on the railroads were subject to the Receiver's approval. The Plaintiff takes the position that the condition on acceptance of bids on the railroads was contrary to the written terms of the Receiver's unilateral contract offer.

The Plaintiff argues Receiver's unilateral contract offer bound the Auctioneer and the Receiver to sell the railroads without reserve, obligating them to accept his bid of $2,000.00 and to deliver the railroads to him on payment of the bid amount.

10 On the other hand, the Defendants take the position that the Plaintiff's position is inconsistent with established common law and statutes or provisions governing auctions in Nova Scotia.

11 The auction brochure and the newspaper advertisement described the auction as an "unreserved public auction". At an unreserved public auction there shall be no bidding by or on behalf of the vendor, no withdrawal of property and no reserved price. The vendor is bound to sell to the highest bidder. see: Proctor v. Almansask Distributors Ltd. and Welsh (1984), 37 Alta. L.R. (2d) 164, (Alta. Prov. Ct.) at p. 167.

12 In this case there is no doubt that the printed conditions of sale reserved to the Auctioneer rights inconsistent with those of an unreserved auction, and in particular the second condition.

13 In my opinion two of the cases submitted by the Plaintiff relating to unreserved public auctions can be readily distinguished from the case before me. These are the cases of Warlow v. Harrison (1859), 120 E.R. 925 (Ex. Ct.) and the Proctor case, supra. In Warlow, the auction was advertised "without reserve" but there were no contrary conditions applied prior to the bidding. In Proctor, the auction was advertised as "completely unreserved" and there were no conditions of sale. In both these cases there was no change in the advertised term that the sale would be without reserve before the Auctioneer put the goods up for auction, either expressed in the conditions of sale or by a separate announcement prior to putting the goods up for auction as in the present case. I find these precedents of little help.

14 The Plaintiff argues the unilateral contract theory, or perhaps the "two- contract" theory by analogy to the law relating to bidding by tender. The Supreme Court of Canada case of R. v. Ron Engineering & Construction Eastern Ltd. (1981), 119 D.L.R. (3d) 267 is cited. In Ron Engineering, Estey, J. held that the terms and conditions of a tender will constitute an offer from the Province of Ontario and that a preliminary contract arose between it and the tenderer upon the submission of a tender. A principal term of this preliminary contract was the obligation of the Province to enter into a second contract with the tenderer whose bid was accepted consistent with the agreement expressed in the preliminary contract.

15 This is rather a novel analogy and the Plaintiff also refers to the cases of R. v. Canamerican Auto Lease & Rental Ltd. (1987), 37 D.L.R. (4th) 591, and Zutphen Brothers Construction Limited v. The Attorney General of Nova Scotia (1993), 125 N.S.R. (2d) 34 (.S.C), as support for the reasoning in Ron Engineering.

16 With deference, I have considerable difficulty in accepting this analogy because in my opinion the considerations relating to the law of bidding by tender and the law relating to bidding at auctions are different. The Defendants submit that the Plaintiff's definition of the brochure, advertisement and printed conditions of sale as the "offer to sell", and his bid as "acceptance" of the Receiver's offer is inconsistent with the established law and statutory provisions governing auctions in Nova Scotia, and with that submission I am in agreement.

17 The Defendants make reference to the case of Bishop v. Coster (1937), 12 M.P.R. 17 (Ch. Div.), where the New Brunswick Supreme Court cited Harris v. Nickerson (1873), L.R. 8 Q.B. 286, in holding that an advertisement of an action sale, whether it is to be with or without reserve, is ordinarily no more than a notification or statement of intention to hold the auction.

18 Usually at an ordinary auction the Auctioneer's call for bids on a particular item is an invitation to those present to make offers to buy the item. The Auctioneer accepts the bidder's offer by the fall of his hammer or in any other customary manner. In British Car Auctions Ltd. v. Wright, [1972] 3 All E.R. 462 (Q.B.) Widgery C.J. states at p. 466:

... [T]he auctioneer when he stands in his rostrum does not make an offer to sell the goods on behalf of the vendor; he stands there making an invitation to those present at the auction themselves to make offers to buy. In the strict law of contract there is no doubt whatever that has always been the law, that when an auction sale takes place, the offer comes from the bidder in the body of the hall and the acceptance is communicated by the fall of the auctioneer's hammer. It is technically incorrect to describe an auctioneer as offering the goods for sale for that reason.

19 In Payne v. Cave, [1775-1802] All E.R. Rep. 492 (K.B.), it was held that in a sale by auction on the usual condition that the highest bidder shall be the purchaser, the bid is the offer. There is no contract of sale until the Auctioneer signifies his acceptance by the fall of the hammer, or presumably any other customary manner. A bidder has the right at any time before acceptance to withdraw his bid. This is a major difference when considering the law of bidding by tender and the law of bidding at auction. A p. 493 the Court stated:

An auction is not unaptly called locus poenitentiae. Every bidding is nothing more than an offer on one side which is not binding on either side till it is assented to.

20 In the Sale of Goods Act, R.S.N.S. 1989 c. 408, the statute deals with sales by auction and embodies the common law. Section 59(b) provides:

59 In the case of sale by auction,

. . . . .

(b) a sale by auction is complete when the Auctioneer announces its completion by the fall of the hammer, or in any other customary manner and, until such announcement is made, any bidder may retract his bid.

21 I accept the submission by the Defendants that the advertisement of the auction in the brochure was merely a statement of the Receiver's intention to hold an auction sale of various items, including the marine railroads. The conditions of sale were clearly communicated to all bidders including the Plaintiff. The conditions of bidding on the railroads were clearly communicated to all bidders, including the Plaintiff, before the railroads were put up for bid. I accept that the Plaintiff's bid on the railroads was the offer, conditionally accepted by the Auctioneer and subject to the Receiver's approval. The Receiver did not give its approval and accordingly the contract was never concluded.

22 There was some argument as to whether the auction advertisement and printed conditions of sale gave the Auctioneer and Receiver the right to refuse the Plaintiff's bid. I find that the Auctioneer and the Receiver had the right to refuse a bid because this right was contained in the conditions of sale which were known and accepted by the Plaintiff. In the Plaintiff's argument he acknowledges the printed conditions of sale formed part of what he considers to be an "unilateral contract offer" on the part of the Receiver. The Plaintiff admits that he was bound by the conditions of sale by attending and registering at the auction and placing a bid.

23 The right to refuse a bid is in my opinion broad enough to include imposing a condition on the acceptance of a bid. No other logical conclusion can be reached in my opinion.

24 The Plaintiff submits that the Receiver and Auctioneer did not have the right to impose a condition on the acceptance of the Plaintiff's bid. With deference I disagree. The verbal announcement of the condition was made to all bidders including the Plaintiff and there were no objections. The Plaintiff was fully aware of the condition attached to any bid. The right to refuse a bid also included the right to impose a condition on the bid.

25 I agree that the Proctor case, supra, cited by the Plaintiff to support his unilateral contract theory is not authority for the preposition that an Auctioneer has no right to change the conditions of sale before the offer is made. At p. 168 Brand, Prov. J. states:

If no different conditions are announced, the conditions set out in the advertisement will apply by implication. and also at p. 168:

... if the conditions specify a sale without reserve, the auctioneer's call for bids amounts to an offer to sell to the highest bone fide bidder as determined in accordance with the conditions of sale.

This decision in my opinion allows for conditions different from those in the auction advertisement to be announced before the offer, being the putting up of and call for bids on the property.

26 In the case of Craig v. Miller (1872), 22 U.C.C.P. 348, Gwynne J. stated at pp. 350- 351:

Now the question here is, wherein, in the absence of a written contract, is the contract of sale to be found? The actual sale took place at the auction, the terms of which, according to the evidence and the finding of the jury, were fairly and openly announced at the opening of the sale, that there would be no warranty. ... This was a plain declaration by the seller of the terms upon which he intended to contract, notwithstanding anything which there might be in the catalogues distributed announcing the intended sale.

It appears to me, under these circumstances, that the contract must be taken to have commenced when the terms of the sale were announced to the general public by the auctioneer, at the commencement of the auction, and ended, insofar as this particular beast is concerned, when it was knocked down to the plaintiff.

27 I accept that an Auctioneer has the authority to change any of the terms and conditions of an auction sale at any time before a particular lot is put up for auction and the Auctioneer calls for bids on that lot. Section 59(a) of the Sale of Goods Act, supra, provides:

59. In the case of sale by auction, (a) where goods are put up for sale by auction in lots, each lot is prima facie deemed to be the subject of a separate contract of sale.

28 In McManus & Fortesque [1907] 2 K.B. (C.A.) cited by the Defendants, the sale was declared subject to a reserve price but the Auctioneer inadvertently knocked the item down at a lower price. In holding no sale resulted, the Court stated the putting up of the property and the fall of the hammer was subject to the reserve being reached and held that conditional acceptance does not result in a binding contract for a sale by auction. At p. 5, Collins, N.R. stated:

No authority has been cited to show that the fall of the hammer could do away with a condition expressly stipulated for by the conditions of sale.

Here the condition that any bid would be subject to the Receiver's approval was expressly stipulated.

29 I find that the foregoing precedents and the statutory authority support my finding that the bid by the Plaintiff was the "offer" and that the offer was conditionally accepted by the Auctioneer. The bid was not approved by the Receiver and accordingly there was no contract of sale. I have considered the American case of Fontenot v. Garland, 352 So. 2d 251 (1977) submitted by the Plaintiff, but I do not accept the reasoning as outlined in that case.

30 I accordingly find that the Plaintiff has not proven his case against the Defendants on a balance of probabilities by a preponderance of evidence. The action will be dismissed.

Issue 2: Damages

31 It is not necessary for me to go into the question of damages other than to indicate that if I had to assess damages the figure of $25,000.00 would be the best evidence of the then value of the railroads being the actual sale to Theriault, and I would have used this figure, less the bid put in by the Plaintiff of $2,000.00.

Costs:

32 The Defendants will have their costs in this action and they have asked to be heard on costs. Normally I would award costs under Tariff A, Scale 3, based on an amount of $25,000.00 together with costs on certain unsuccessful applications made by the Plaintiff. I will take submissions from the parties in writing as to costs. The Defendants' submission to be forwarded to me within two weeks from the date hereof and the Plaintiff's submission within one week of the Defendants' submission.

END OF DOCUMENT

History (Showing 3 documents)

Direct History

1 KeyCited Citation: McManus v. Nova Scotia (Attorney General), 144 N.S.R. (2d)

182, 1995 CarswellNS 106, 416 A.P.R. 182 (N.S. S.C. Sep 11, 1995) Additional reasons in 2 McManus v. Nova Scotia (Attorney General), 147 N.S.R. (2d) 318, 1995 CarswellNS 210, 426 A.P.R. 318 (N.S. S.C. Oct 16, 1995) AND Affirmed by 3 McManus v. Nova Scotia (Attorney General), 156 N.S.R. (2d) 159, 1996 CarswellNS 513, 461 A.P.R. 159 (N.S. C.A. Dec 11, 1996)