The Court of Appeal, composed of Chief Justice Silvio Camilleri, Mr Justice Giannino Caruana Demajo and Mr Justice Noel Cuschieri, on December 5, 2014, in the case Albert Rizzo (and by decree of August 5, 2008 and September 25, 2008 the case was continued by Mary Rizzo after Albert Rizzo’s death) v Eden Leisure Group Limited, held, among other things, that an auctioneer was not entitled to his commission if the lots were withdrawn before public viewing.
The facts in this case were as follows:
In October 1988, Eden Leisure Group Ltd appointed Albert Rizzo to auction furniture and objects of the Eden Beach Hotel. Albert Rizzo had made a number of preparations for the auction but, before the date scheduled for public viewing, the company had sold most of the items privately to a third party and, as a result, the auction was cancelled.
Rizzo claimed to have suffered considerable damage and loss of revenue by the cancellation of the public auction.
The company, on the other hand, argued that Rizzo was never definitively engaged. There were only negotiations, it said, and there was no agreement on the conditions which the company wished to impose as to the reserved price on each object.
Faced with this situation, Rizzo proceeded to file legal proceedings against the company requesting the court.
• to declare that it was responsible for the cancellation of the auction as well as for damages to cover the loss of fees, loss of clients;
• to liquidate the damages and to condemn the company to pay the damages as liquidated by the court.
The company, in reply, maintained that it did not appear that there were good prospects that the auction would be successful, as the items for sale were too specialised. Nor should it be held responsible for the cancellation of the auction when it was obliged to find the best price for the objects.
In addition, they said that Rizzo did not suffer any damages or losses and, if at all, he should request a re-imbursement of the costs incurred.
The court noted that, according to Chapter 342, the commission due to an auctioneer was 10 per cent on all items listed in the catalogue. As the court case was filed in 2001, the tariff was per legal notice 69 of 1991; legal notice 424 of 2007 was not yet applicable at the time this lawsuit was filed.
There was no obstacle at law for there to be an agreement between the auctioneer and the seller as regards the amount of the fees or the conditions to be imposed by the auctioneer: Arthur Leone Enriquez v Hon. Eustrachio Petrocchino et noe dated May 13, 1944.
In Ulisse Azzopardi v May Milazzo, dated January 13, 1946, it was held that in an auction the auctioneer acted as mandatory of the seller and that the seller could freely revoke his appointment. However, the auctioneer could seek damages.
The first court said that Rizzo was not definitively engaged by the company. They were only in negotiation which did not develop. In this respect, the first court found that Rizzo was not entitled to his commission as it did not result that he did anything.
The court was not satisfied with the proof as to the damages allegedly suffered. It was not proven that Rizzo suffered damages; that he lost clients; and how much he paid for the work performed.
Aggrieved by the decision of the first court, Rizzo entered an appeal, and raised three grievances. He submitted that:
• the first court made a wrong appreciation of the facts when it said that Rizzo was not properly appointed;
• the company was responsible for cancelling the auction; and
• the first court failed to liquidate arbitrio bono viri the damages suffered as a result of the cancellation of the auction.
The court observed that nearly all the items in the catalogue were withdrawn from the auction the day before public viewing as they had been sold privately to a third party and it could not be said therefore that the items had been exposed to public viewing
The court maintained that Albert Rizzo had been engaged as auctioneer. He had prepared a catalogue but, a day before public viewing of the lots, his appointment was withdrawn, without valid reason.
He was allowed to carry out all preparations to organise an auction, while the company, without his knowledge, sold most of the things privately a day before viewing by the public.
With regard to damages, Rizzo mentioned that these amounted to Lm17,300 in his written submissions. He was obliged to prove his allegations but failed to do so, pointed out the court.
The Court of Appeal did not feel that it should compute damages arbitrio bono viri, once Rizzo did not bring any evidence in this regard.
In addition, it was noted that, according to law, the seller was free to withdraw items until the last day before public viewing. Once the items were exhibited to the public, the seller had to pay theauctioneer’s full fee.
In this case the court observed that nearly all the items in the catalogue were withdrawn from the auction the day before public viewing as they had been sold privately to a third party and it could not be said therefore that the items had been exposed to public viewing.
The fact that on the day of public viewing many objects had already been sold meant that they had been withdrawn by the seller.
Under Regulation 14 of legal notice 69 of 1991, the auctioneer was entitled to a commission of 10 per cent from the seller and five per cent from the buyer on the lots sold in the auction. As the lots were withdrawn, Rizzo was not entitled to his full commission.
As regards the quantum, the court noted there was no evidence to prove costs which Rizzo incurred.
The Appeals Court maintained, however, that Rizzo had a right to be paid for the work which he carried out. In view of the number of lots listed in the catalogue, the court felt that he should be awarded €5,000 compensation.
For these reasons, on December 5, 2014, the Court of Appeal gave judgment by accepting the appeal limitedly, and by condemning the company to pay the heirs of Albert Rizzo,€5,000 in compensation.
Dr Karl Grech Orr is apartner at Ganado Advocates.