On 18 December 2006, the Federal Court of Australia released its decision in eBay International AG v Creative Festival Entertainment Pty Limited. The case has great importance for those any business which sells tickets, as well as for ticket purchasers and consumers at large.
Justice Rares agreed with the applicant eBay that Big Day Out promoter Creative Festival Entertainment (“Creative”) had contravened section 52 of the Trade Practices Act 1974 (Cth) by engaging in misleading and deceptive conduct. On the back of the ticket for the 2007 Big Day Out, Creative had included a condition of sale stating that every ticket resold for profit “will be cancelled and the holder will be refused entry”. The condition specifically prohibited ticket resale through online market or auction sites.
EBay, which profits from the online reselling of tickets, sued Creative after changes were made to the conditions on tickets issued for the 2007 Big Day Out music festival.
The 2007 condition of sale differed from the condition used in previous years. In previous years, Big Day Out tickets had stated that the ticket “will become voidable and the holder may be refused entry” if it was resold for profit. About 41% of Big Day Out tickets were purchased online through he Big Day Out website. All Big Day Out tickets were sold on 13 October 2006. Until 8 November 2006, the portion of the Big Day Out website directed at online ticket sales included the old condition of sale. The website was only changed after eBay commenced proceedings against Creative and identified the discrepancy.
Another 20% of Big Day Out tickets were sold online through independent ticket seller Ticketmaster. In the case of those ticket sales, purchasers were not informed at the time of the transaction about the condition of sale prohibiting resale for profit. Purchasers would not see the condition of sale until receiving the ticket by mail, approximately six weeks after the transaction. The Ticketmaster website contained a vague reference to terms being on the tickets. The court found that this general reference in Ticketmaster’s purchaser policy could not substitute for the necessity of specifically drawing purchasers’ attention to unusual or significant terms affecting the proposed relationship. This was particularly important given that the conditions of sale were not otherwise available to purchasers.
The Court found that similar circumstances existed with respect to direct over the counter ticket sales at Ticketmaster, which had accounted for about 14% of sales. The Court noted that there was no material in Ticketmaster’s offices and there had been no attempts by Ticketmaster employees to draw attention to special provisions of the ticket, including the presence of the new condition of sale. Justice Rares found that the transaction would have concluded prior to the customer receiving the ticket upon which the conditions of sale were printed.
Justice Rares noted that the ticket itself also contained a further provision stating that no refunds would be made after the purchase and criticised Creative for suggesting that the purchaser could ignore the wording of this provision and seek a refund in the event they were dissatisfied with the condition prohibiting resale.
Justice Rares found that the existence of the numerous potential contractual relationships between Creative and its purchasers overlaid with the uncertainty as to the application of the old and new condition of sale demonstrated that Creative had engaged in misleading and deceptive conduct by claiming that the new condition of sale was enforceable. The Court found that the new condition of sale conveyed a representation that falsely asserted that tickets resold for profit would invariably be cancelled.
Justice Rares therefore agreed with eBay, finding that Creative had engaged in misleading and deceptive conduct because Creative had represented that:
- all tickets to the Big Day Out which were resold for profit would be cancelled;
- the holder of any such ticket would be refused entry to the festival;
- Creative had adequate means to detect which tickets had been resold to support an assertion of inevitability of cancellation and refusal of entry; and
- Creative had the means to cancel each and every ticket resold for profit and refuse the ticket holder entry.
Justice Rares found that eBay was entitled to a declaration and an injunction to prevent Creative from making misleading representations. Justice Rares described the result of his decision as “unfortunate” and noted that Creative’s new condition had been intended to protect the market from cynical exploitation by scalpers who created an artificial scarcity of tickets. He noted that “most sales on eBay were by scalpers preying on the desire of music fans to attend an event which was sold out early to scalpers.” As a result, Justice Rares declined to order Creative to engage in corrective advertising, fearing that it could encourage scalpers.