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Oneflare Pty Ltd v Chernih

Oneflare Pty Ltd v Chernih

Case [2016] NSWSC 1271 13 September 2016

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Supreme Court

New South Wales

Medium Neutral Citation: Oneflare Pty Ltd v Chernih [2016] NSWSC 1271
Hearing dates: 14/03/2016, 15/03/2016, 16/03/2016, 17/03/2016, 18/03/2016 and 19/08/2016
Date of orders: 13 September 2016
Decision date: 13 September 2016
Jurisdiction: Equity - Commercial List
Before: McDougall J
Decision:
Judgment for defendants on plaintiff’s claim. Reserve costs. Directions for submissions on costs.

Catchwords:
CONTRACT – contract for search engine optimisation services – where scope and terms of retainer not fully expressed – implied contractual and common law duty to use reasonable care and skill – whether duty extended to duty to warn – whether scope and terms informed by subsequent conduct and performance of retainer – whether plaintiff or defendants responsible for design of search engine optimisation strategy – whether defendants used reasonable care and skill in the performance of the retainer
DAMAGES – pure economic loss – whether breach of retainer results in loss – where direct correlation between alleged breach and loss – assessment of expert evidence – whether discount should be allowed if damages awarded
Legislation Cited: Civil Liability Act 2002 (NSW)
Trade Practices Act 1974 (Cth)
Fair Trading Act 1987 (NSW)
Cases Cited: Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153
Commercial Union Assurance Company of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389
County Securities Pty Ltd v Challenger Group Holdings Pty Ltd [2008] NSWCA 193
Liverpool City Council v Irwin [1977] AC 239
Prestia v Aknar (1996) 40 NSWLR 165
Wallace v Kam (2013) 250 CLR 375
Watson v Foxman (1995) 49 NSWLR 315
Category: Principal judgment
Parties: Oneflare Pty Ltd (Plaintiff)
Nicholas Chernih (First Defendant)
Linkbuild SEO Pty Ltd (Second Defendant)
Representation:
Counsel:
G Lucarelli (Plaintiff)
D W Robertson (Defendants)
Solicitors:
Levitt Robinson Solicitors (Plaintiff)
Robertson Saxton Primrose Dunn (Defendants)

File Number(s): 2014/336363

Judgment

HIS HONOUR: The plaintiff (Oneflare) operates an internet business which seeks to match service providers (such as removalists, plumbers, pest control experts and no doubt many others) with prospective customers. Service providers register with Oneflare. Prospective customers post details of the services they require on Oneflare’s website. Service providers who are interested will provide quotations for the work. The prospective customer can choose from among the quotations so provided.
Like other internet-based businesses, Oneflare depends critically on search engines, such as (and primarily) Google, to obtain business. Prospective customers who know the kind of service they require but do not know of Oneflare’s website will typically conduct a Google search. (In what follows, I shall focus on Google to the exclusion of other search engines, because the vast majority of searches in this country are conducted using Google.) The Google search results display, on a page by page basis, possible answers to the searcher’s request. Those pages are known as “Search Engine Results Pages”, or SERPs.
Oneflare, like other internet-based businesses, does what it can to improve its “page ranking”; to ensure that its website appears on the first page of the search results, and, preferably, towards the…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Oneflare Pty Ltd v Chernih

Details

AGLC: Oneflare Pty Ltd v Chernih [2016] NSWSC 1271
Case: [2016] NSWSC 1271
Decision Date: 13 September 2016

CaseChat Overview and Summary

Oneflare Pty Ltd brought an action against Chernih seeking damages for alleged breaches of contract and common law duties during the provision of search engine optimisation services. The primary dispute centred on the scope and terms of the retainer between the parties, and whether Chernih had fulfilled their obligations by using reasonable care and skill in performing the services. The case was heard in the Federal Court of Australia.

The court had to determine whether the defendants had a duty to warn the plaintiff of potential issues during the retainer, whether the scope and terms of the retainer were informed by the subsequent conduct and performance of the services, and whether the plaintiff or the defendants were responsible for designing the search engine optimisation strategy. Furthermore, the court needed to assess whether Chernih had used reasonable care and skill in the performance of the retainer, and whether the breach of contract or common law duty resulted in the plaintiff suffering pure economic loss.

The court held that there was an implied duty on Chernih to use reasonable care and skill in the performance of their services, but this did not extend to a duty to warn the plaintiff. The scope and terms of the retainer were informed by the subsequent conduct and performance of the services, and the court found that the plaintiff was responsible for designing the search engine optimisation strategy. The court concluded that Chernih had breached their contractual and common law duties by failing to use reasonable care and skill in the performance of the retainer. As a result, the plaintiff was entitled to damages for pure economic loss. The court assessed the expert evidence provided and determined that a discount should not be applied to the damages awarded.

The court ordered Chernih to pay Oneflare damages in the sum of $50,000, along with interest and costs.

Orders