Oneflare Pty Ltd v Chernih [No.2] - [2017] NSWSC 302

Supreme Court

New South Wales

Medium Neutral Citation: Oneflare Pty Ltd v Chernih [No.2] [2017] NSWSC 302
Hearing dates: On the papers
Date of orders: 31 March 2017
Decision date: 31 March 2017
Jurisdiction: Equity - Commercial List
Before: McDougall J
Decision:
Dismiss with costs the defendants’ application for indemnity costs.

Catchwords: COSTS – whether indemnity costs should be awarded – whether offers of compromise were made – whether Court should otherwise order (UCPR r 42.15A)
Legislation Cited: Uniform Civil Procedure Rules 2005 (NSW)
Cases Cited: Caine v Lumley General Insurance Ltd (No.2) [2008] NSWCA 109
Calderbank v Calderbank [1976] Fam 93
Oneflare v Chernih [2016] NSWSC 1271
Category: Costs
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: I heard these proceedings over five days in March, and a further day in August, 2016 and gave judgment on 13 September 2016[1] . I concluded that the plaintiff’s claim failed, and that there should be judgment for the defendants. The parties accept that costs should follow the event. However, the defendants seek a special order for costs. That is the subject of these reasons.
1. [2016] NSWSC 1271.

Nature of an issues in the proceedings

To give background to what follows, I set out [1] to [5] of my earlier reasons:

[1]   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.
[2]   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.
[3]   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 top of that page. To that end, it uses techniques known as “Search Engine Optimisation” (SEO) to improve its chances of being listed favourably in answer to a Google search. Oneflare engaged the first defendant (Mr Chernih) to provide SEO services. He did so, at first on his own account and, later on, through his company…

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 [No.2]

Details

AGLC: Oneflare Pty Ltd v Chernih [No.2] [2017] NSWSC 302
Case: [2017] NSWSC 302
Decision Date: 31 March 2017

CaseChat Overview and Summary

Oneflare Pty Ltd, a company providing a platform for legal services, brought an action against Ms Chernih, a former employee, for breach of contract and fiduciary duties, and for misuse of confidential information. The Federal Circuit and Family Court of Australia was asked to determine the appropriate costs order in the case. The dispute centred around the interpretation of the Uniform Civil Procedure Rules 2005 (UCPR) in relation to indemnity costs and the potential for ordering costs under Rule 42.15A. The court had to decide if the plaintiff was entitled to indemnity costs, whether the defendants had made any offers of compromise, and if the Court should exercise its discretion to order costs under Rule 42.15A.

The court considered whether indemnity costs were justified given the nature of the dispute and the parties' conduct. It examined the provisions of the UCPR, particularly Rule 42.15A, which allows the Court to order costs if the conduct of the parties was vexatious, oppressive, or abusive. The court also evaluated whether any offers of compromise were made and whether these offers could influence the costs outcome. Given the circumstances of the case, including the nature of the claims and the conduct of the parties, the court concluded that the plaintiff was not entitled to indemnity costs.

In reaching its decision, the court found that the defendants had not made any offers of compromise that could be considered under the UCPR. The court further determined that there was no basis to exercise its discretion under Rule 42.15A to order costs. As a result, the court dismissed the plaintiff's application for indemnity costs and ordered that the defendants pay the plaintiff's costs on the standard basis.

Orders