Cheryl Foster v Mahamudur Rahman t/as Smarty Web Solutions
[2014] NSWCATCD 17
•17 January 2014
NSW Civil and Administrative Tribunal
New South Wales
Medium Neutral Citation: Cheryl Foster v Mahamudur Rahman t/as Smarty Web Solutions [2014] NSWCATCD 17 Hearing dates: 15 November 2013 Decision date: 17 January 2014 Jurisdiction: Consumer and Commercial Division Before: G Bassett, General Member Decision: On or before 6 February 2014, the respondent is to pay the applicant $2,212.00.
Catchwords: Services, delay, due skill and care Legislation Cited: Consumer Claims Act
Section 28 Fair Trading Act 1987 NSW
Section 56 Competition and Consumer Act 2010Category: Principal judgment Parties: Cheryl Foster (Applicant)
Smarty Web Solutions (Respondent)File Number(s): GEN 13/6686
reasons for decision
APPLICATION
The application was lodged on 30 January 2013. A significant number of documents were attached to the application.
The matter came before me on 12 March 2013. There was no appearance by the respondent. The matter was adjourned for hearing and orders made in relation to lodgement of documents. The registered office of the respondent in Melbourne was added as an address for service.
At the next hearing on 23 May 2013 it became clear that the respondent may not have been served with a Notice of Hearing. The matter was adjourned.
At the next hearing on 1 August the respondent contacted the Tribunal and said he had not received a copy of the application or the supporting documents. The matter was further adjourned to allow this to take place. The respondent was also given leave to appear by telephone. He was again given the opportunity to supply documents on which he intended to rely.
On 24 October 2013 the respondent appeared by telephone. The registry had not sent the application and the supporting documents to the respondent. The matter was transferred to Tweed Heads from Lismore as this was more convenient to the applicant.
ADJOURNMENT APPLICATION
At the hearing on 15 November 2013, the respondent said he did not receive the Notice of Hearing. However, a telephone conference had been organised and he had provided a telephone number on which to be contacted. The respondent's application for adjournment was refused. He indicated he had access to his documents for his telephone hearing.
JURISDICTION
The applicant is a consumer and the respondent is a supplier of goods as defined in the Act. The matter is a consumer claim in that the applicant seeks refund of fees she paid for the supply of services.
By virtue of section 28 of the Fair Trading Act 1987, the Australian Consumer Law ("ACL") applies to NSW jurisdiction. The ACL is set out in a schedule of the Competition and Consumer Act 2010.
At section 60, the ACL provides a consumer guarantee:
60 Guarantee as to due care and skill
If a person supplies, in trade or commerce, services to a consumer, there is a guarantee that the services will be rendered with due care and skill.
The Act also provides a guarantee that services will be fit for a particular purpose made known:
61 Guarantees as to fitness for a particular purpose etc.
(1) If:
(a) a person (the supplier ) supplies, in trade or commerce, services to a consumer; and
(b) the consumer, expressly or by implication, makes known to the supplier any particular purpose for which the services are being acquired by the consumer;
there is a guarantee that the services, and any product resulting from the services, will be reasonably fit for that purpose.
(2) If:
(a) a person (the supplier ) supplies, in trade or commerce, services to a consumer; and
(b) the consumer makes known, expressly or by implication, to:
(i) the supplier; or
(ii) a person by whom any prior negotiations or arrangements in relation to the acquisition of the services were conducted or made;
the result that the consumer wishes the services to achieve;
there is a guarantee that the services, and any product resulting from the services, will be of such a nature, and quality, state or condition, that they might reasonably be expected to achieve that result.
(3) This section does not apply if the circumstances show that the consumer did not rely on, or that it was unreasonable for the consumer to rely on, the skill or judgment of the supplier.
(4) This section does not apply to a supply of services of a professional nature by a qualified architect or engineer.
As to time of supply, section 62 provides a further guarantee:
62 Guarantee as to reasonable time for supply
If:
(a) a person (the supplier ) supplies, in trade or commerce, services to a consumer; and
(b) the time within which the services are to be supplied:
(i) is not fixed by the contract for the supply of the services; or
(ii) is not to be determined in a manner agreed to by the consumer and supplier;
there is a guarantee that the services will be supplied within a reasonable time.
The claim is under the jurisdictional limit of $30,000.00 and the transaction occurred in the last three years. The Tribunal has jurisdiction to hear the matter.
ISSUES
The main issues in this matter are whether the respondents provided web site development services with due care and skill. Further, if the applicant made known to the respondent the particular purpose for which the services were being acquired, were those services reasonably fit for that purpose and did they achieve the result the consumer made known?
APPLICANT'S EVIDENCE
The applicant relied on the following documents:
(a) a written statement dated 25 January 2013;
(b) various invoices from the respondent for work done;
(c) transaction account records and bank payment stubs showing payments;
(d) timeline of events;
(e) numerous emails between the parties;
(f) Tittle and Tat Web Development Brief document ("the brief")
(g) respondent's quotation dated 7 February 2011 ("the quotation");
(h) screen printout of what the applicant said the web site was supposed to look like.
The applicant also gave oral evidence.
The brief and the quotation indicated the Tittle & Tat web site was designed to support emerging designers, crafts persons and home workers creating handmade, individually designed products for children related to pregnancy and childbirth. The aim was to provide sellers with a mechanism to upload their wares for sale and to give the opportunity to consumers to purchase them through an e-commerce site. The site was to be similar to an online classified system bringing the seller and the buyer together. Sellers could use this site for sales without needing to develop their own site.
Ms Forster stated that the agreement with the respondent was to do work as set out in the brief, not as listed in the quotation. She said it was agreed development would take 42 days to complete. Fees agreed were $3,500.00.
Work progressed without incident in February and March 2011. In April 2011 the applicant agreed with the respondent to amend the site so it could be modelled on another site already operating in the handmade marketplace. Ms Forster said she went through that site with the respondent and sent him notes. On April 27, 2011 she approved the modelling of that site for the Tittle & Tat functions. In an email of 28 June 2011 Ms Forster says she agreed with the change "as long as I can still have all the menu items & functionality that I originally requested and have been incorporated into the design...I am open to the fact that issues might come up and the final price of programming may end up costing more than initially quoted".
The respondent requested more time due to design issues. On 5 June 2011 the applicant became concerned about the development. She emailed the respondent and voiced her concerns about readiness for a launch planned later in June.
The respondent stated he had been unwell. He also wished to alter some functions of the site being developed. He said he realised the job would be significantly more complex than what he had thought. On 17 June 2011 he sent an email indicating he would remove the shopping basket function as the "user is not online so this option not required". The feedback section was also to be removed.
Ms Forster said that by 18 June 2011 the respondent was copying and pasting the site they had agreed to model in April 2011. She tested links on her Tittle & Tat site and was even taken to the site being modelled.
On 21 June 2011, Ms Forster replied to the respondent's email of 17 June 2011. She outlined the functions she sought in her brief document. She indicated a feedback section was clearly required. On 28 June 2011 she informed the respondent that she had met a contact at PayPal which could assist the respondent integrate PayPal into the Tittle & Tat site.
Further emails over June and July dealt with functionality disputes. On 14 July 2011 Ms Forster was sent another invoice to include the "Buy now" option which the applicant said was what she was to be provided in the first instance as per her brief. In her written submissions she stated "I find it laughable that I now have to pay extra to have this feature on my e-commerce site". Despite that protestation, she paid in any event to keep the project moving.
On 10 August 2011 she emailed the respondent and stated she had not been able to concentrate on any project properly over the last 2 months due to her workload. On the same day, a dispute arose over who was to develop a blog for the site and the message function. She accused the respondent of picking and choosing functions he wished to include despite having given clear instructions in her brief. The respondent replied on the same day and acknowledged some functions had been left out as they were no considered necessary to operate the business.
In August the site went live. Problems at that stage included images stretching and warping, customers not being able to upload their documents, design files of the applicant not being used and image formats. In any event, the web site was launched on 22 September 2011.
There were still major problems. The applicant was directed by the Tribunal to each of the items allowed for in the quotation. She admitted some things operated, others did not. She was asked to comment on the state of each function at the time she terminated the agreement with the respondent and sought the services of others to carry out the work. These deficiencies included:
(a) items for sale either by administration or a supplier could be uploaded but the inventory would not update when sold;
(b) the credit and credit balance for users was not operating correctly;
(c) a dynamic advertising panel with artwork and links was not operating;
(d) Facebook and Twitter features were not provided as per the quotation;
(e) the integration with PayPal was not operating, though the applicant conceded the respondent did finally make this operate correctly;
(f) users would commence a purchase in the shopping cart but this would drop out without finalising the sale;
(g) images supplied by the applicant were stretching and distorting or not used at all.
As well as the deficiencies indicated at hearing, in her timeline document the applicant detailed 14 items that were not working correctly. In addition to those problems outlined above paragraph 26, further issues included:
(a) search function limited;
(b) no dynamic 'Contact Us' form;
(c) no holiday / vacation mode for users;
(d) scope and features of sellers' shop fronts reduced;
(e) over $3,000.00 worth of artwork and design files commissioned by the applicant and provided to the respondent was not used.
The applicant said she went to another supplier of these services on 27 September 2011. He rebuilt the entire site and started over again.
On 28 September 2011 the respondent sent the applicant his last invoice for $1,166.67. She refused to pay until the image problem was rectified. On 29 September she relented and paid $900.00 on the final invoice as the respondent had indicated to her that he needed to pay his staff. The applicant understood the problems would be fixed. Problems were not fixed. Nevertheless, the applicant paid the balance of the final invoice on 9 November 2011.
RESPONDENT'S EVIDENCE
The respondent said he was only engaged to build what he quoted for and stated in the quotation, not the brief. He indicated the quote detailed the functions to be provided in the site. He said a major part of the site was creating a system whereby users could sell their handmade items and receive a commission for the sale.
Nevertheless, in an email dated 18 January 2011 the respondent stated he could provide all the functions indicated in the brief. He stated he had done similar web sites in the past. He indicated all the functions would be listed in a quotation document.
When work commenced the respondent said he only just began to realise the design was "very complex". He admitted he "underquoted" for the job but that he tried to "do his best". Even though he was given access to the applicant's web site he could not see how the administration feature was operating. He said the applicant changed her mind in what she wanted.
The respondent indicated the applicant never told him she had gone to another company to do the work in September 2011. Instead, she asked him to shut down the web site.
The respondent commented on the alleged deficiencies indicated by the applicant. He said the PayPal function was finally integrated. He denied Facebook and Twitter were not working. He said that the problem with tracking of buyers was due to their not having enough credit rather than a technical issue caused by the web site developer. He said the product update feature was working and the applicant had over 50 products on her site in September when it went live. He said there was no stock function to update against an inventory provided for in the quotation.
He admitted he agreed to develop the site in 42 days. It took 225 days because the applicant:
(a) continually wanted variations to the quotation;
(b) had a baby during the development period;
(c) went interstate and was often not available for testing;
(d) was slow to respond to testing;
(e) did not provide log in access at times;
(f) had problems with third parties such as Facebook and PayPal leading to delays beyond the respondent's control.
He conceded there were problems with image formats. He said that by the end of September the web site was "workable" with minor bugs which the respondent was working on at the time the applicant went elsewhere. He said development of the site was a big loss for the respondent as they had spent up to 600 hours on developing the site.
The respondent said he had provided a web site that was workable. The respondent was given time after hearing to provide to the Tribunal any documents regarding web site functionality. These were provided on 29 November 2011.
These documents included a screen dump of the last order screen on 11 September 2011 which he said showed PayPal, Facebook and Twitter integration. Another screen indicated artwork and goods uploaded by either admin or a user. One page had links to social media and a blog comment from a user. There was a product keyword search functionality and another page with product categories.
FACTS
The agreement was varied in April 2011 to model another site not previously considered. However, the respondent did agree to provide functions outlined in the brief and allowed for in the quotation. The applicant agreed to pay for any additions.
The respondent also agreed that he had perused the brief and calculated his quotation based on that. In other words, I find the applicant had made known to him the purpose of the web site design. In short, the required result of an interactive e-commerce site was made plain. The brief required the opportunity for sellers to be able to create a shop front for their wares. However, the brief stated the web site will not "Handle shipping, warranty or payment for items listed on the website, this will be up to the individual seller". The site fell short of being a full e-commerce site. Clause 10 of the brief outlined E-commerce requirements. A shopping cart was to be provided allowing purchasers to indicate items required and quantity. At the check-out, the user made payment to each seller separately. This was either by providing ABN details or PayPal.
A significant evidentiary problem was that neither party provided a historical operating version of the web site as at the date of termination of the agreement for me to peruse. There was no archived version from a source such as The Wayback Machine. The screen dump documents of the respondent go some way to showing what was provided. But they fall short in assisting in any assessment of the interactive functions of the site in dispute. From a series of screen dump documents interactive functionality is impossible to assess. However, the emails between the parties indicate the problems during all material times between May and September 2011, the period in which deficiencies were most stark and being resolved or otherwise after testing.
APPLICATION OF RELEVANT LAW
The applicant made clear to the respondent the purpose of the web site. I am satisfied that the applicant made plain that a site with limited e-commerce functionality was required. The extra charge for the 'Buy Now' function was clearly contemplated in the original contractual documents.
Further, there is not only a statutory guarantee that the web site would be developed in a reasonable time but this time was stipulated contractually as being 42 days.
On his own admissions the respondent indicated that the web site was difficult to create and "new" to him. He also admitted that he underquoted for the work. However, considerable work was done by the respondent and alterations made after testing. The provision of PayPal integration was a key provision allowed for in the brief and quotation and something provided. The social media functionality was provided. However, there has been an ongoing image format problems and a failure to use artwork provided. I cannot be certain of the deficiencies alleged in interactive functions because, as I have indicated, there was no interactive evidence relied on to assist in such a finding. The applicant has provided no evidence for the person that rectified the deficiencies on the site in support of her claim.
Set against this uncertainty, is the respondent's admission that he underquoted for the site. Indeed, he may well have been out of his depth and did not have the due skill required under the legislation to apply to the project. I am satisfied that he applied what care he could to making good his obligations once he became aware of the level of difficulty. However, he did not have the requisite skill to develop the site for which he quoted. He was making amendments as the project progressed due to the lack of such skill. He charged extra for items clearly envisaged in the original agreement.
I do not accept that the respondent has breached the contract by failing to provide the site in 42 days. It is clear that the agreement was still being negotiated and varied up to a at least the end of April when, by mutual agreement, the parties agreed to emulate a new site. On her own admission in her email of 10 August 2011, the applicant said she had lost two months due to her workload. Variations were made during the project. Any delays arose from actions of each of the parties.
CONCLUSIONS
Whatever the applicant paid the third party engaged for rectification work after termination of the agreement may have been a suitable money order in this matter. However, she provided no evidence of such payments, their quantum or the work done.
For the applicant to be fully refunded all fees paid would be unjust.
She should not have been charged more for the 'Buy Now' function. There were ongoing image format issues. Images provided were not used. Some functions of the site were not operating properly. In addition, the applicant acted in good faith and paid increased charges and disputed invoices when they were requested. Extra charges were for functions set out in the brief where she made known what was required as a limited e-commerce site was clearly envisaged.
On the other hand, the respondent provided many of the functions for which he quoted. He made good many of the deficiencies that were raised after testing.
In the circumstances of the case, and the evidence before the Tribunal, I am satisfied that for the breach of not providing due skill the applicant ought to be reimbursed 50% of the total fees she paid. Orders are made accordingly.
G Bassett
General Member
Civil and Administrative Tribunal of New South Wales
17 January 2014
I hereby certify that this is a true and accurate record of the reasons for decision of the New South Wales Civil and Administrative Tribunal.
Registrar
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I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales.
Registrar
Decision last updated: 16 May 2014
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