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Commission concludes Christchurch auctioneer investigation

1 December 2015


Commission concludes Christchurch auctioneer investigation

McCormack and McKellar Auctioneers have been issued with a warning by the Commerce Commission after failing to disclose they owned a Tom Esplin painting they were auctioning.

In addition, the Commission considered that McCormack and McKellar did not comply with legal requirements for auctions that came into force in June 2014. This was because it failed to give notice of whether:

• the vendor of the goods was selling the goods in trade as a supplier
• the sale was subject to a reserve price; and
• vendor bids were permitted.

This case came about after an on-site estate auction at a house on Harewood Road, Christchurch in October last year. Of 202 items listed in the auction catalogue, 130 were outside entries which were not part of the estate, including the painting.

The Commission’s investigation found that it was likely McCormack and McKellar breached the Fair Trading Act by misleading customers as to who the Tom Esplin painting belonged to. McCormack and McKellar created this impression by hanging the painting in the lounge of the home where the auction was taking place, leading the buyer to believe it was part of the estate. This impression was reinforced by McCormack and McKellar providing no information as to who the vendor was.

Commissioner Anna Rawlings said one of the important new requirements for auctioneers, which were introduced last year, is to ensure auction participants or potential participants are clearly informed as to whether the vendor is in trade.

“When the painting was purchased the auctioneers did not disclose that they owned the painting either through the catalogue or at the auction.”

McCormack and McKellar admitted owning the painting but said the alleged breaches were a genuine mistake. As a result of the Commission’s investigation they have reviewed their practices and updated their auction notice to comply with the requirements of the Act.

Ms Rawlings said the legislation relating to auctions was put in place to provide greater protection for consumers buying goods at auction.

“It is vital that consumers know whether they are buying goods from a trader because if they are, the Consumer Guarantees Act will provide them with rights if the goods turn out to be faulty.”

“This is a timely reminder that New Zealand auctioneers must ensure they meet all of their obligations,” Ms Rawlings said.

ends

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