Oneflare Pty Ltd v Chernih

[2017] NSWCA 195

Court of Appeal

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:

Oneflare Pty Ltd v Chernih [2017] NSWCA 195

Hearing dates:

19 June 2017

Decision date:

07 August 2017

Before:

Meagher JA at [1];
Gleeson JA at [95];
Leeming JA at [96]

Decision:

Appeal dismissed with costs.

Catchwords:

CONTRACTS – construction – informal and partly oral contract to provide search engine optimisation services – where service provider instructed to undertake “aggressive” strategy including link building – where “unnatural”, “artificial” or “spammy” links to target website created in violation of Google Webmaster Guidelines – where algorithmic and human demotion in search results applied by Google – whether “aggressive” strategy entailed impugned link building

 

CONTRACT – remedies – damages – assessment – where marginal profit calculated assuming initial sales revenue from before revenue loss period and growth rate from period after consequences of breach ceased – whether appropriate to apply discount for endogeneity problem, apparent difference in growth trend lines and counterfactual possibility of adverse competition and harmful conduct by plaintiff

  EVIDENCE – witness evidence – cross-examination – rule in Browne v Dunn – reliability and truthfulness – where adverse credibility findings made against directors of plaintiff – where substantial points of difference between significant affidavit evidence of plaintiff’s directors and defendant – where truthfulness of plaintiff’s directors put in issue by opening statements and cross-examination – whether denial of procedural fairness

Cases Cited:

Armory v Delamirie (1722) 1 Stra 505; 93 ER 664
Browne v Dunn (1893) 6 R 67
Crown Melbourne Ltd v Cosmopolitan Hotel (Vic) Pty Ltd [2016] HCA 26; (2016) 90 ALJR 770
Kuhl v Zurich Financial Services Australia Limited (2011) 243 CLR 361; [2011] HCA 11
Malec v JC Hutton Pty Ltd (1990) 169 CLR 638
McCartney v Orica Investments Pty Ltd [2011] NSWCA 337
Seymour v Australian Broadcasting Commission (1977) 19 NSWLR 219

Category:

Principal judgment

Parties:

Oneflare Pty Ltd (Appellant)
Nicholas Chernih (First Respondent)
Linkbuild SEO Pty Ltd (Second Respondent)

Representation:

Counsel:
NJ Kidd SC (Appellant)
MK Condon SC, DW Robertson (First Respondent)

  Solicitors:
Levitt Robinson (Appellant)
Robertson Saxton Primrose Dunn (First Respondent)

File Number(s):

2016/301512

 Decision under appeal 

Court or tribunal:

Supreme Court

Jurisdiction:

Equity – Commercial List

Citation:

[2016] NSWSC 1271

Date of Decision:

13 September 2016

Before:

McDougall J

File Number(s):

2014/336363

Headnote

[This headnote is not to be read as part of the decision]

The appellant company retained the respondents to devise and implement an “aggressive” search engine optimisation strategy to improve the ranking of its website on Google. The contract between the parties was partly oral, and the evidence of the appellant’s directors and the respondents as to its terms differed substantially. The respondents proceeded to generate links to the appellant’s website which were described as “unnatural”, “artificial” or “spammy” and violated the Google Webmaster Guidelines. Upon identifying these links as non-compliant, Google algorithmically and then manually demoted the appellant’s website in its search rankings. The appellant’s sales revenue thereafter declined.

The appellant brought proceedings against…