Grindlay v Flipnet Pty Ltd - [2014] QCAT 116

CITATION:

Grindlay v Flipnet Pty Ltd [2014] QCAT 116

PARTIES:	Ailsa Louise Grindlay (Applicant)
v
Flipnet Pty Limited ABN 33127108785 t/as Flip Creative (Respondent)

APPLICATION NUMBER:

MCD869-13

MATTER TYPE:

Other minor civil dispute matters

HEARING DATE:

23 September 2013

HEARD AT:

Brisbane

DECISION OF:

Member Favell

DELIVERED ON:

24 March 2014

DELIVERED AT:

Brisbane

ORDERS MADE:

1. The application and the counter application are dismissed.

CATCHWORDS:

Minor civil dispute – where agreement to create a website – whether time a term of contract – whether breach of contract whether repudiation of contact – whether acceptance of repudiation

APPEARANCES and REPRESENTATION (if any):

APPLICANT:

Ailsa Louise Grindlay represented by Jennifer Patterson (solicitor)

RESPONDENT:

Andrew Welstead

REASONS FOR DECISION

The applicant, Ailsa Grindlay, contends that in or about October 2011 she entered into an agreement with the respondent, Flipnet Pty Ltd trading as Flipnet Creative, to build a website for a business the applicant intended to establish.
The agreement, according to the applicant, was partly oral and partly written. The respondent alleges it was in part comprised of conversations between Andrew Welstead acting on behalf of the respondent and Ms Grindlay. Those conversations took place between September and November 2011. The applicant contends that the agreement was also in part comprised of Ms Grindlay’s instructions to the respondent by way of a scope of works dated 9 July 2011, site map and a project quote from ‘Orchard Labs’ dated 6 October 2010.
The respondent denies a fixed agreement ever existed or that a time limitation was ever put in place.
Upon engaging Flipnet Creative, Ms Grindlay provided Mr Welstead with a brief from another developer and advised of the reasons she had been dissatisfied with the work of that developer.
Ms Grindlay contends that the terms of the agreement included a term that the respondent would, within 6 months, build the website in accord with the instructions received for a total fee of $55,000 (GST included).
On or about November 2011, Ms Grindlay paid Flipnet Creative a $27,500 deposit in accord with an invoice from Flipnet dated 16 November 2011.
The applicant contends that the respondent has breached the agreement by failing to provide the website within 6 months or at all.
The applicant said she made numerous inquiries between May 2012 and January 2013 to Andrew Welstead as to when the website would be ready. These included nine emails and telephone calls by the applicant to Mr Welstead during that period. Mr Welstead responded to all but one of those emails.
In an email to Mr Welstead dated 29 January 2013, Ms Grindlay indicated that all that had been produced for her was a business card, logo and two mock up pages of a website. In the email, she contended that Mr Welstead assured her that Flipnet Creative ‘had the capability and competencies required to complete this work in a very timely matter’.
The applicant contends that she lost faith in the ability of the company to complete the project. Her consequent request that the money be refunded by 1 February 2013 or project completed by 1 March 2013 was not met.
In a reply dated 31 January 2013, Mr Welstead contends that the agreed work was delayed because the applicant’s lack of technical expertise meant she has not been as involved in the functional specifications of the project and her general ‘nit-picking’ over design had stalled the release.
The respondent promised to be ‘in touch with an update’ the following week and that she would receive ‘full access to the development area for beta testing of her website’. The respondent alleges that one week later, on or about 7 February 2013, Ms Grindlay was forwarded access to the site. The respondent contends that an online system that is not publicly accessible was built for the applicant on the basis of conversations between the parties.
The applicant contends that neither of the promises eventuated and the email giving access to site was never received. The applicant’s solicitor emailed the respondent on 27 March 2013 indicating that his email of 7 February was not received. No response was given by the respondent.
The applicant is seeking an order that the respondent pay to her by way of refund the sum of $25,000 (the total deposit less $2,500 for the mock-up) including interest at the rate of 10% per annum in accord with Practice Direction No. 5 of 2009.
The respondent has made a counter application on the basis that the applicant has abandoned a project she engaged the respondent to complete without providing the respondent the required instructions to allow the completion of the project.
The respondent seeks an order from the Tribunal that the applicant provide final instructions for the completion of the work and upon the applicant doing so, the respondent would provide the applicant with the source code to the project after the final balance has been paid. In the application it is said
We are willing to negotiate under the following terms: as Alicia has left the country (and clearly cannot continue to operate an Australian business) we assume she has no interest in continuing with the project. As she has not provided us with final instructions to complete the website to operational standards we request that she pay only 75% of the remaining agreed upon costs for the development of her website.
The counter application seems to contemplate further negotiation. That, if it is to occur, is a matter between the parties. The Tribunal cannot order such negotiation. Further, there is no ‘agreed upon costs’.
This matter was called on for hearing on 12 August 2013 and 23 September 2013. On 12 August 2013 the matter was adjourned for hearing at a date to be fixed. It was ordered that the respondent file in QCAT and serve the applicant with any and all of the material the respondent intended to rely on by a particular date and the applicant have leave to file and serve the respondent with any material in reply by a certain date.
When the matter was called on for further hearing on 23 September 2013 the respondent was ordered to provide any evidence of the website and any access to that website it sought to rely on by 1 October 2013. The applicant was ordered to file any response by 8 October 2013.
On 1 October 2013 the respondent provided access details to two sites, one a beta site and the other an administration site. The Tribunal has accessed those sites and they seem to be interactive.
The respondent also provided a statement from James Ward of Triology Software who, having been given access to the sites, says that the system would fit somewhere between a small to medium side project. He says that the system is a functioning beta site allowing users to sign up as various user types (nannies, parents) and connect with other users in a fashion reasonably expected for a site of this nature. He says that the areas he has tested appear to work without issue. That was the experience of the Tribunal.
He says that it is reasonable for a development of that kind to have a total bill time ranging between 500 to 1200 hours depending on a litany of factors mainly relating to management and a division of labour.
The applicant has responded to that further material and says that that is the first time that she has been granted access to the site and she identifies a number of issues. She points out that there are ‘many things that need to be added to the site’.
The applicant complains that she cannot guarantee that the website works without actually properly testing it and she has no guarantee that the website will allow for hundreds or thousands of simultaneous users. That may well be so, but that is not the question which needs to be determined on this application.
The applicant’s complaint arises out of an allegation of breach of contract. That is, that the respondent failed to provide her with a website within six months. Her case in part is that it was a term of the contract that the respondent would provide the website within six months. The respondent denies there was a time frame.
In the application, the applicant provided a scope of works dated 9 July 2011, a Nanny Search site map version 1.1 and a quote from Orchard Labs dated 6 October 2010. The scope of work had been provided to a different provider or agency prior to the respondent becoming involved in the project. The applicant says a friend of hers spent numerous hours putting together a very detailed job specification on the website for Nanny Search. That document entitled ‘scope of works’ states the core requirement as being,
To build a destination that will allow parents to post jobs and/or search for available nannies/babysitters, nanny/babysitters to create a profile that lists their availability, qualifications and experience and job noticeboard for day-care/crèches.
The key objective of the destination was stated to be ‘generate revenue by offering a variety of packages that users will sign up for depending upon their particular needs’. The document proposed to launch the site in two phases. Phase one was ‘parent/nanny/babysitter/emergency nanny’ and phase two was ‘day-care/crèches’.
The documents provided do not, as may be expected in a contractual document setting out terms and obligations, set out such terms and obligations. There is no suggestion that the quote from Orchard Labs was to impart any obligations on the respondent. At best the other two documents give an indication of what was trying to be achieved by the creation of the website.
The applicant says that attachment 3 (which is the Orchard Labs project quote dated 6 October 2010) was a job specification which was given to Mr Welstead who the applicant says told her that that was enough for him to be able to complete the project. She says that he told her that it would take approximately six months to finish the site.
Mr Welstead denies that it was a term of any agreement that the website would be completed within six months. The quote itself contains a number of assumptions, one of which states that the estimate is ‘a ball park only and subject to further scoping. As part of this scoping phase, more detail, technical and functional specification documents will be created.’ There is nothing in the document which provides for a timeline of the completion of the website. Unfortunately no further scoping in a formal sense has occurred.
Mr Welstead’s complaint is that the applicant did not provide sufficient timely input into the creation of the website to allow it to be completed.
I note that although the conversation between Ms Grindlay and Mr Welstead occurred in October of 2011 there were matters being attended to which would be required to be done for the completion of the website (such as establishing a payment model, engaging a bank as a merchant gateway provider and instructions on fee structures) were continuing in June/July of 2012.
Andrew Eastgate, who worked with the respondent since 2009 as a developer, worked as lead developer on the Nanny Search website under Andrew Welstead during 2012 and early 2013. He said he worked on the project until it reached a point where further development could not continue until more solid direction was provided by the client.
James Shanks, who in an email of 7 January 2013 addressed to Mr Welstead, advised that he acted on behalf of Ms Grindlay as a business consultant. In the email he said,
I gather that you are close to finalising the website development. However, whilst I have sited your brief to undertake this work, as yet I have only seen a couple of mock-up pages for the site. I would be grateful if you could provide me with a detailed update of the work thus far completed and a list of what remains outstanding. In all of that, we can program the other elements of the launch with the website.
The applicant provided a number of references from persons who supported her, however those references are of little assistance to the Tribunal in determining the terms and conditions of any agreement.
This application was heard in the minor civil disputes jurisdiction of QCAT. The jurisdiction for a minor civil dispute is exercised when a person to whom a debt is owed or money is payable in respect of a claim to recover a debt or liquidated demand of money makes a claim restricted to the prescribed amount, or otherwise, relevantly, brought by a consumer in respect of a claim arising out of a contract between a consumer and a trader or any of the traders in respect of a claim arising out of a contract between two or more traders.
In a proceeding for a minor civil dispute the Tribunal must make orders that it considers fair and equitable to the parties to the proceedings in order to resolve the dispute but may, if the Tribunal considers it appropriate, make an order dismissing the application. In carrying out that function, relevantly, the Tribunal may make the following final orders to resolve the dispute:[1]
i.And order requiring a party to the proceedings to pay a stated amount to a stated person; or
ii.An order that a stated amount is not due or owing by the applicant to a stated person, or by any party to the proceeding to the applicant; or
…
[1]Queensland Civil and Administrative Tribunal Act 2009 (Qld) s 13(2).
An important aspect of the applicant’s claim is that it was a term of the agreement that the website be provided within six months. On balance I am not satisfied that there was such a term. In the material provided, I am not satisfied that there is sufficient evidence to show on balance that there was any time constraint specifically imposed.
Whilst the applicant did raise some concerns about the time the project was taking, I am not satisfied that there was agreement about the project being completed within any particular time frame.
Further, some of the materials suggest that the development of the website was occurring without regard to a time limit of six months.
I am not satisfied that time was expressly made essential.
However, even if time is not expressly made essential a right to terminate will arise on a breach of the time stimulation if it can be inferred from the construction of the contract that the parties intended performance on time to be of the essence. It is appropriate in construing the contract to have regard to the nature of the subject matter and the circumstances surrounding the contract.
Here, the agreement was for the respondent with relevant input from the applicant to develop a website which provided a destination that met the core requirement set out in the document entitled ‘scope of works’. In my view, there being an absence of an express agreement as to time, it is necessary to consider whether there was unreasonable delay in building the website which may amount to a repudiation or frustration of the commercial purpose of the agreement.
I am not satisfied that there was unreasonable delay in the circumstances. I am satisfied that the respondent did carry out as far as it could the building of the website and that delays in part were attributable to delays in providing input by the applicant.
In the circumstances which prevail here, I am not satisfied that the applicant was entitled to terminate the contract.
The respondent has not accepted that the contract has been terminated nor has the respondent sought to terminate the contract itself. Rather, at the moment it seems that it has performed as far as it can the building of the website but it has not completed that task. In its counter application, even though it contends there is frustration, it leaves open the prospect of negotiation such that the building of the website could either be completed or terminated by agreement. At this stage without more that is a matter for the parties.
In my view, a fair and equitable order as required by section 13 of the Queensland Civil and Administrative Tribunal Act 2009 is to dismiss the application and the counter application for the reasons outlined above.