Online Lighting Pty Ltd v Paul Media Pty Ltd

Case •

[2023] NSWCATCD 19

•

27 February 2023

No judgment structure available for this case.

Civil and Administrative Tribunal


New South Wales

Medium Neutral Citation: Online Lighting Pty Ltd v Paul Media Pty Ltd [2023] NSWCATCD 19
Hearing dates: 9 November 2022 and 7 February 2023
Date of orders: 27 February 2023
Decision date: 27 February 2023
Jurisdiction:Consumer and Commercial Division
Before: M Tyson, Senior Member
Decision:

(1) The application is dismissed.

(2) If the parties are in agreement as to costs of the proceedings, then they shall provide proposed consent orders to the Tribunal within 14 days of the date of these reasons for decision.

(3) If the parties are not in agreement as to the costs of the proceedings, then

(a) If any party seeks a costs order, the applicant for costs (the costs applicant) must file and serve a costs application, submissions which shall be limited to three pages, and any evidence in support by way of affidavit, within 14 days of the date of these reasons for decision;

(b) The respondent to the costs application is to file and serve any submissions, which shall be limited to three pages, and any evidence in opposition by way of affidavit, within 14 days thereafter;

(c) The costs applicant is to file any submissions in reply limited to two pages within 14 days after receipt of the submissions and any evidence of the respondent to the costs application.

Catchwords:

CONTRACTS – express terms - implied terms – whether implied term of contract was obvious or necessary to give business efficacy

Legislation Cited:

Fair Trading Act 1987 (NSW) ss. 79E, 79H, 79J, 79K, 79U.

Fair Trading Regulation 2019 (NSW) cl 13A

Cases Cited:

Air Great Lakes Pty Ltd v KS Easter (Holdings) Pty Ltd (1985) 2 NSWLR 309

BP Refinery (Westernport) Pty Ltd v Hastings Shire Council [1977] HCA 40; (1997) 180 CLR 266

Codelfa Construction Pty Ltd v State Rail Authority (NSW) [1982] HCA 24; (1982) 149 CLR 337

Heimann v Commonwealth (1938) SR (NSW) 691

Texts Cited:

Nil

Category:Principal judgment
Parties:

Online Lighting Pty Ltd (Applicant)

Paul Media Pty Ltd (Respondent)
Representation:

Solicitors:

Arnotts Technology Lawyers (Applicant)

Somerville Legal (Respondent)
File Number(s): GEN 22/40035
Publication restriction: Nil

REASONS FOR DECISION

  1. By application filed 5 September 2022 in the New South Wales Civil and Administrative Tribunal, the applicant seeks an order for the payment to it of $52,800.00 arising from the respondent’s supply to the applicant of website development services. The principal issue in dispute the proceedings was whether there was a term in the contract between the applicant and the respondent, which term provided that all of the functionality and speed of the applicant’s existing website would be included or replicated in a new e-commerce platform or website being developed by the respondent for the applicant.

THE HEARING

  1. The application was heard on 9 December 2022 and 7 February 2023. Mr. Arnott of Arnotts Technology Lawyers appeared for the applicant. Mr. Hemsworth of Somerville Legal appeared for the respondent.

THE EVIDENCE

  1. For its evidence, the applicant relied upon a witness statement of Ara Kopoushian made 19 October 2022, together with the annexures to that witness statement. There were no objections to any part of that witness statement or its annexures. Mr. Hemsworth cross-examined Mr. Kopoushian at the hearing. Mr. Kopoushian is a director of the applicant. The applicant also relied upon a witness statement of Carl Jones made on 19 October 2022. There were no objections to any part of that witness statement. Mr. Hemsworth cross-examined Mr. Jones at the hearing. Mr. Jones is an employee of the applicant, employed in a senior sales and information technology role.

  2. For its evidence, the respondent relied upon an affidavit of Graham Talmon Cattley sworn 21 November 2022, together with an exhibit to that affidavit. There were no objections to any part of that witness statement or its exhibit. Mr. Arnott cross-examined Mr. Cattley at the hearing. Mr. Cattley is an employee of the respondent, employed as a senior digital producer and project manager. On the first day of the hearing of this application, Mr. Hemsworth also tendered another affidavit from another deponent (a Mr. Saad) but on the second day of the hearing, he indicated that the additional affidavit was not going to be relied upon by the respondent.

  3. The solicitors representing each of the parties made oral submissions on the second day of the hearing. The solicitor for the applicant also provided on the same day, written submissions to the Tribunal and the respondent. The Tribunal then reserved its decision.

FACTUAL BACKGROUND

  1. Based on the evidence, the factual background to this application is as follows.

a)   the events leading to the signing of a written document

  1. The applicant is in the business of selling lights and related accessories, via a website, to its customers. Prior to 2020, the respondent, which operates under a business or trading name “Direct Clicks”, was providing search engine optimisation and search engine marketing services to the applicant with respect to the applicant’s website (“the Existing Website”). The Existing Website used the CS Cart ecommerce marketplace platform.

  2. The applicant’s operations appear to be directed from an office in Brookvale, New South Wales. The respondent is domiciled in New South Wales.

  3. On 22 September 2020, Mr. Kopoushian says that he met with Mr. Saad and two other employees of the respondent (‘Bianca’ and ‘Eva’) and that during the conversation, the respondent’s ability to build websites was raised. Mr. Saad explained that the respondent did build websites but used the WooCommerce platform rather than CS Cart.

  4. In Mr. Cattley’s evidence, he says that he joined this meeting part way through it. Mr. Cattley says that he asked Mr. Kopoushian what he was looking for in the new website and that Mr. Kopoushian said that he wanted to add some new payment methods which were not available on the Existing Website, consisting of payment methods including Apple Pay, Google Pay and Zip Pay. Mr. Cattley gives other evidence about topics covered in the conversation including amongst other things, the ability of the WordPress [1] eCommerce site to support those payment functions, that the project to develop a new website for the applicant would be developed from Australia but supported by developers in India and about working together to develop a scope to cover all the functions on the site. Mr. Cattley says that he showed Mr. Kopoushian, on a screen in the meeting room where this meeting took place, a site developed for a chemist business that Mr. Cattley had been working on which used the WordPress platform.

    1. I assume that the “Wordpress” platform referred to by Mr. Cattley is the same platform as the “WooCommerce” platform referred to by Mr. Jones and Mr. Kopoushian.

  5. Mr. Kopoushian makes no mention of Mr. Cattley’s presence during this meeting. The Tribunal finds that Mr. Cattley’s evidence should be accepted that he attended for part of this meeting and that his account in his affidavit about what was said and what happened during the meeting is accurate.

  6. On 23 September 2020, Mr. Saad asked Mr. Cattley to prepare a rough estimate for a new e-Commerce site for the applicant and on 25 September 2020, Mr. Cattley provided it to Mr. Saad.

  7. On 25 September 2020, Mr. Saad sent Mr. Kopoushian an email transmission that included as an attachment a proposal for a new e-Commerce website for the applicant. The attachment was headed “Statement of Work E-Commerce site”. Within the document, there is a section headed “Project Overview”, then a section “Project Objectives”, then “Scope of Work”, “Project Tasks”, “Your Investment”, a section giving information about the respondent, then provision for “acceptance”, including signature from the applicant. Within the “Scope of Work” section, there were eight ‘steps’ in the project scope for the respondent’s work for the applicant. Within the “Your Investment” section, invoicing and pricing was to be by stages, invoice 1 would be issued upon “sign-off” and would be in the amount of $22,500.00 (50% of the total price), invoice 2 would be issued four weeks from sign-off in the amount of $18,000.00 (40% of the total price) and invoice 3 would be issued ‘prior to going live’ and in the amount of $4,500.00 (10% of the total price). The total price envisaged was $45,000.00 plus GST.

  8. A further meeting was held on 29 September 2020 involving Mr. Kopoushian and Mr. Jones of the applicant and Mr. Saad. Mr. Kopoushian says that during this meeting he said to Mr. Saad:

“My biggest concern about developing a new website is to ensure that the speed of the new website is as fast as our existing website and that the new website has at least the same functionality as the existing website and more. This is critical for us, because without a fast website customers will just leave the website and go to a competitor.”

  1. Mr. Kopoushian says that Mr. Saad, amongst other things, agreed with what Mr. Kopoushian has said about the new website being as fast as the Existing Website and having the same functionality.

  2. Mr. Kopoushian was cross-examined about this conversation and it was put to him to him that his account (which is referred to in the two preceding paragraphs of these reasons) was not true. The Tribunal finds that Mr. Kopoushian’s account (which is referred to in the two preceding paragraphs of these reasons) should be accepted. His account was not undermined during his cross-examination and the Tribunal also takes into account that there was no evidence from Mr. Saad contradicting Mr. Kopoushian’s version of this part of the conversation. Mr. Jones was in attendance at this meeting. In his witness statement he gives an account of a conversation where Mr. Kopoushian, amongst other things, said words to the effect “the new website that you develop for us will need to be as fast as the current website” and either Mr. Saad or Mr. Cattley said “The speed will not be an issue on the new website as the WooCommerce platform that we will use is more than capable of delivering fast speeds for an ecommerce website.” Mr. Jones’s account of the conversation is not identical with Kopoushian’s account but it supports Mr. Kopoushian’s account that having the speed of the new website as fast as the Existing Website was stated as being important for the applicant.

  3. Mr. Kopoushian says that he and Mr. Saad then discussed the respondent having access to the applicant’s “staging” website pertaining to the Existing Website. The staging website was, as I understand it, meant to be a copy of the Existing Website. Mr. Kopoushian says that in the conversation he also expressed his concern that the new website would be developed onshore.

  4. Mr. Jones says that either Mr. Saad or Mr. Cattley said at the meeting on 29 September 2020 that the new WooCommerce website will be able to provide all the functionality and features that are currently available on your current website. After that, he says that the respondent’s representatives explained that a detailed scope of works would need to be developed, which usually takes three months to prepare, and that the detailed scope of works:

“is quite an involved process with the document going back and forth between each party until it is ultimately signed off by both parties. Once signed off, the new website will then be built by what was set out in this document.

The initial scope of works document has to be done first and agreed to, because there is significant cost involved in creating the detailed scope of works so there has to be an agreement in place first to justify such expenditure, otherwise without such an agreement in place first, DirectClicks could spend a lot of time, resources etc … then if the client decides … to not proceed with the new website this would result in a loss for DirectClicks.”

  1. Mr. Kopoushian says that after that meeting on 29 September 2020, he spoke to Graham Cattley of the respondent, providing him with “login credentials” for the applicant’s “staging website”.

  2. According to Mr. Cattley’s evidence, he was given access to the staging server, on or about 29 September 2020, which enabled Mr. Cattley to have access to the applicant’s product database and evaluate product content. Further, on or about 6 October 2020, Mr. Kopoushian gave Mr. Cattley temporary access to the back-end of the staging site of the applicant’s Existing Website and they went through a number of functions on the back-end of the staging website. On 9 and 13 October 2020, the applicant provided further information and administrative login details to Mr. Cattley and on 14 October 2020, Mr. Cattley went through the front-end and back-end of the staging website and prepared a summary of the features that Mr. Cattley could see, for the purpose of Mr. Cattley preparing a scoping document for the project.

  3. On 15 October 2020, Mr. Saad sent an email transmission to Mr. Kopoushian attaching an “updated proposal, with the revised additions, estimated time to complete the project and costs. This covers all the extras we have collated from the team, but if there are any further additions please let us know. There would be 1 more thing to cover relating to existing users & orders history, which we can discuss later on”. The attachment was headed “Statement of Work E-Commerce site” and appears to be an updated version of the “Statement of Work E-Commerce site” which had previously been sent to the applicant by the respondent. By way of example of some of the amendments to the document, there are a number of significant changes in the “Scope of Work”, including for the content of the ‘inventory control’ item, new items for ‘order management’, ‘product management’ and ‘admin tasks and recording’. The timing of the work and price of the proposed contract has also increased. Within the amended “Your Investment” section, invoicing and pricing was to be by stages, invoice 1 would be issued upon “sign-off” and would be in the amount of $31,000.00 (50% of the total price), invoice 2 would be issued six weeks from sign-off in the amount of $24,800.00 (40% of the total price) and invoice 3 would be issued ‘prior to going live’ and in the amount of $6,200.00 (10% of the total price). The total price envisaged was $62,000.00 plus GST.

  4. Mr. Kopoushian gives evidence about a meeting on 20 October 2020 attended by himself and Mr. Jones, Mr. Saad, Mr. Cattley and “Eva” on behalf of the respondent where Mr. Kopoushian or Mr. Jones said “What do we need to next?” to which Mr. Cattley responded “Once you sign the quote, we usually prepare a detailed scope of work, which looks like this.” He then handed a thick document to the applicant’s representatives and Mr. Kopoushian observed that the document was a detailed scope of work for a school.

  5. On 4 January 2021, a further email transmission from Mr. Saad to Mr. Kopoushian provides a revised quotation, “as requested”. The text of the email transmission identifies an item of work for exclusion, another item of work that could be provided by a third-party and a revised price of $52,700.00 plus GST.

  6. On 5 January 2021, Mr. Kopoushian responded to Mr. Saad: “… If you are willing to do this project for $40,000.00 inclusive GST then lets sit down and have a chat again just to confirm all the fine print/details. Also bear in mind that you have our SEO business as well …” Later that day, Mr. Saad responded by email transmission “… unfortunately there is already a huge cost to us to build it, so I was not able to get an approval internally to reduce it any further unless we exclude some functionalities. I will give you a call tomorrow to discuss …”

  7. On 2 April 2021, Mr. Saad sent an email transmission to Mr. Kopoushian with a further amended version of the respondent’s proposal. This version of the proposal contained within it a “Preliminary Development Outline.” On 6 April 2021, Mr. Saad sent an email transmission to Mr. Kopoushian with a further amended version of the respondent’s proposal, and also including the “Preliminary Development Outline.”

  8. As far as I can tell from Mr. Kopoushian’s witness statement, the respondent’s April 2021 proposal was still headed “Statement of Work E-Commerce site”.

  9. Apart from the cover page of the proposal, the content was quite different when compared to the two prior versions of the “Statement of Work E-Commerce site”. Within the document, under the heading “Scope of Work”, the scope of work is stated to be outlined in an appendix, being a document “Preliminary Development Outline V1.3 – 01 April 2021”. That appendix begins with a cover page, and then on the next page, it has the heading “Front-end functionality’ and over four pages, there are listed a number of ‘functionalities’, grouped under internal sub-headings: ‘header’, ‘home page’, ‘footer’, ‘category page’, ‘product page’, ‘brand page’, ‘catalogs page’, ‘blog page’, ‘blog detail page’ and ‘about us’. After those four pages, on the next page, the appendix has the heading “Back-end functionality requiring custom development” and over four pages, a list of non-standard eCommerce functionalities are listed.

  10. The “Statement of Work E-Commerce site” document, after identifying the scope of work, has a heading dealing with ‘project timeline’ and says the estimated time to complete the project is 30 – 34 weeks from sign-off date. Then there is a heading ‘your investment’ which details the costs as 8 equal monthly invoices, with the first due on the sign off date, in the sum of $6,000.00 plus GST per month, for a total of $48,000.00 plus GST.

  11. The next page of the “Statement of Work E-Commerce site” document, is an “acceptance” page, which states that to accept the conditions set out in the Statement of Work, “Please sign and return.” There is provision for the company name, the company’s ABN, full name of the person signing, his or her position, the date and the signature. Mr. Kopoushian has signed the document as a director of the applicant, on 6 April 2021. On 7 April 2021, Mr. Kopoushian emailed the signed document to the respondent.

  12. Mr. Kopoushian says he didn’t take much notice of the “Preliminary Development Outline V1.3 – 01 April 2021”. He says he didn’t do so because it was a “preliminary document” and he had been told by Mr. Cattley that a more detailed scope of works would be provided.

  13. Mr. Cattley’s affidavit provides further background to Mr. Kopoushian’s signing of the Statement of Work in April 2021, that was not revealed in Mr. Kopoushian’s statement.

  14. Mr. Cattley’s evidence shows that on 26 March 2021, he had a telephone conversation with Mr. Kopoushian where they re-listed all the Existing Website functionality and confirmed only three reports were being used by the applicant to monitor its product reporting. Mr. Cattley then sent Version 1.1 of the Preliminary Document Outline to Mr. Kopoushian. Mr. Cattley’s email was as follows:

“Attached is the preliminary development feature list as discussed.

This is only a working document for now, so I would appreciate any feedback.”

  1. On 27 March 2021, Mr. Kopoushian emailed Mr. Cattley thanking him for his email and writing “Any chance we could go over this face to face just to clarify 100%” and proposing a meeting via Zoom. On 30 March 2021, a Zoom meeting took place with Mr. Cattley, Mr. Kopoushian and Mr. Jones in attendance. During the meeting they “went over all points in the proposed development outline” as well as discussing other matters including adding a new call-back feature and adding the Braintree (Pay Pal) payment method. By the end of the meeting, all the changes were accepted. Mr. Cattley incorporated the changes into version 1.3 of the development outline document. He provided that version to Mr. Saad and then as mentioned above, Mr. Saad provided the document to Mr. Kopoushian.

a)   events after the signing of the acceptance page

  1. As to events after the signing of the acceptance page, I will set out first the principal events based on Mr. Kapoushian’s evidence.

  2. Mr. Kopoushian says that after signing the acceptance page of the “Statement of Work E-Commerce site” document, he had a conversation with Mr. Cattley where he enquired with Mr. Cattley about what the next steps were. Mr. Cattley is said to have stated that, amongst other things, usually a detailed scope of work would be prepared, as thick as the Bible, and similar to the one shown to the respondent at an earlier meeting, but because it was costly and time consuming to produce one, and wasn’t needed in this instance. Mr. Kopoushian says that in this conversation, he also said to Mr. Cattley that the applicant needed a dedicated server for the new website so Mr. Kopoushian could check the speed. Mr. Cattley said that was a good idea.

  3. As I understand Mr. Kopoushian’s witness statement and cross-examination, he did not ask or even insist that the detailed scope of work be provided, or dispute what he says Mr. Cattley had told him about this matter. It appears to me that he accepted that a detailed scope of work would not be provided.

  4. Mr. Jones gave evidence that he had overheard Mr. Cattley on a telephone call to Mr. Kopoushian saying that the respondent wouldn’t need to do a detailed scope of works for the applicant because the respondent had had access to Existing Website and could see the functionality and this would save time. Mr. Jones says that Mr. Kopoushian responded “Well Okay, you guys are the experts.”

  5. Mr. Kopoushian then gives evidence about the how the work on the new website developed. He says that between April and July 2021 he telephoned Mr. Cattley about how the development of the website was going and Mr. Cattley said it was going well. He says he contacted Mr. Cattley on 7 April 2021 to ask why there was no “dashboard” on the new website. There is an email transmission dated 7 July 2021 from Mr. Cattley explaining that a financial reporting panel was not part of the applicant’s initial request and was not available on the staging site. The email explains what the options were and the hourly rate to do the work.

  6. Mr. Kopoushian then explains that the respondent developed the “dashboard” and did so for no further cost to the applicant.

  7. He says that in July 2021, he contacted Mr. Cattley about an issue relating to “SKUs” and that the issue was later resolved.

  8. Mr. Kopoushian gives evidence about a conversation with Mr. Saad in July 2021 and a conversation and email communications in July 2021 with Mr. Johnston, the general manager of the respondent.

  9. On 23 July 2022, Mr. Kopoushian sent an email transmission to the respondent. The subject of the email was “URGENT: TIME HAS RUN OUT!!!!”. Amongst other things, Mr. Kopoushian says in the email transmission that many deadlines have been given and not met by the respondent. He says that his patience has run out. He says that the estimated project time line was 34 weeks from 7 April 2021, being 1 December 2021. He says that the applicant has made all payments on time. He gives a final deadline to the respondent of 6 August 2022 for the respondent to provide a website that is acceptable to the applicant and launchable. He says that if the deadline is not met, the respondent will be in breach of the “signed agreement.”

  10. In the Court Book at p. 80 there is an undated email transmission, which appears to be a response by Mr. Johnston to Mr. Kopoushian’s 23 July 2022 email transmission. In the response, Mr. Johnston says, amongst other things, that thirty-four weeks after Mr. Kopoushian had signed, the respondent had a working and functional website that covered the development outline in the contract, with some bugs that could be addressed pretty quickly. Mr. Johnston then explained that the respondent had been receiving numerous requests for changes and for new features, mainly placed through a telephone call to Mr. Cattley. The response asks for Mr. Kopoushian to confirm that no additional work, features or reporting are to be developed and that the respondent could work towards ‘going live’ on 6 August 2022. It states that if there are further cosmetic or functional changes then it would not be reasonable to expect the new deadline for ‘going live’ to be met.

  11. Mr. Kopoushian recounts in his witness statement further conversations and email communications with Mr. Johnston from July and August 2022 about the project for the new website and the functionality, and a three-and-a-half-hour telephone call between Mr. Kopoushian and Mr. Cattley on 30 July 2022 ‘walking through a long list of functionality that I observed was missing from the new website.’

  12. By an email transmission, undated in the Court Book at p. 83, but said to have been sent on 5 July 2022, Mr. Johnston wrote to Mr. Kopoushian explaining that the respondent had decided to stop adding features and functions to the website that were not included in the Preliminary Outline. Mr. Johnston states that for nine months after the respondent considered the project to be complete as per the contract, the respondent had tried its best to accommodate the extra functionalities and significant changes which had been added. Mr. Johnston referred to Mr. Cattley, on Saturday, spending three hours with Mr. Kopoushian going over “the current website’s backend” which generated over 300 hours of web development for new functionalities and changes.

  13. The applicant’s solicitors wrote a letter of demand to the respondent on 17 August 2022. The respondent’s solicitors responded on 25 August 2022. The applicant’s solicitors wrote a further letter and then this application was filed on 6 September 2022.

  14. The applicant’s position, as was made clear during oral submissions, was that the contract was abandoned by the parties in August 2022. The respondent’s position was that the applicant unlawfully terminated the contract in August 2022 and that the contract was at an end by the time or upon the respondent filing its application in these proceedings. The applicant’s claim and its submissions assume that the applicant had made payments to the respondent prior to August 2022 of $52,800.00.

  15. Annexure P to Mr. Kopoushian’s witness statement is said to be a list of some functionality which Mr. Kopoushian says is included in the applicant’s Existing Website but which is missing from the new website.

  16. I will now turn to Mr. Cattley’s version of events after the signing by Mr. Kopoushian of the acceptance page in April 2021.

  17. Mr. Cattley provides a very detailed version of events after 6 April 2021 through to August 2022. He starts at paragraph 26 in his affidavit dealing with 15 April 2021 and ends at paragraph 201 in his affidavit dealing with Mr. Johnston’s 5 August 2022 email transmission to Mr. Kopoushian.

  18. A very large number of discrete and specific requests were made by Mr. Kopoushian to Mr. Cattley about content, features, design, layout, functionalities to include, and functionalities to remove, in respect of the new website over the period from 6 April 2021. These are detailed with some precision in Mr. Cattley’s affidavit. To give some flavour to the material, some specific examples of the sort of requests being made, and work done, are as follows:

  1. On 17 June 2021, Mr. Kopoushian sought new functions to be added to the site including a 20% discount for subscription sign-up, integration with Mailchimp and a new ‘Living by Online Lighting’ section.

  2. On 9 July 2021, Mr. Cattley sent an email transmission to Mr. Kopoushian highlighting changes that had been completed, development that was underway, containing 26 points including a list of new functions that Mr. Kopoushian had added to the site over the past few months.

  3. On 26 July 2021, Mr. Kopoushian sought the removal from the website of the ability to refund an order, which Mr. Cattley explained was not standard functionality, but Mr. Kopoushian wanted the function removed as he said he didn’t trust his staff not to provide refunds through the website.

  4. Mr. Kopoushian made a number of requests to Mr. Cattley to make the design for the applicant’s website to be like Temple and Webster’s website, in terms of logo, colours and design, as well as having features from the Temple and Webster website such as a gift card functionality or the addition of a new help centre as was used on the Temple and Webster website.

  5. On 23 September 2021, Mr. Kopoushian made a number of requests to Mr. Cattley to discuss the layout of the product pages by replicating some points from the Lights 4 Less and House of Isabella websites.

  6. Changes to the product detail pages were sought by Mr. Kopoushian in October 2021.

  7. Request for new functionalities to be included, including a request in October 2021 for a “MyDeal” integration that Mr. Kopoushian wanted added to the site.

  8. On 9 March 2022, Mr. Kopoushian requested a ‘switch off brands’ function on the website. When Mr. Cattley asked what that was Mr. Kopoushian explained that he wanted to be able to hide a brand, and all the products of that brand on the applicant’s website, so that he could punish the applicant’s suppliers if there were issues. Mr. Cattley explained that “programmatically” that would be difficult and time consuming but Mr. Kopoushian said he needed that feature and Mr. Cattley said he would see what was involved.

  9. In May and June 2022, 47 development tasks were completed and are identified in paragraph 184 of the affidavit.

  1. On 1 September 2021, Mr. Cattley sent an email transmission to the team within the respondent asking them to test the site and provide any feedback as he was soon to tell Mr. Kopoushian that the development was complete. On the same day, Mr. Cattley received five emails from Mr. Kopoushian containing three different layouts for the product detail page. On 1 November 2021, Mr. Kopoushian had a conversation with Mr. Cattley. Mr. Cattley asked for a final meeting to go over all the functionalities and confirm that the site is complete adding “It’s been that way at our end since September.” On 4 November 2021, Mr. Cattley met with Mr. Kopoushian and Mr. Jones at the applicant’s office discussing and demonstrating the functionality of the new site. Mr. Kopoushian left during the meeting to attend to deliveries. The meeting ended at 6 p.m. when Mr. Jones had to go home.

  2. Mr. Cattley says that as at this date, the new website was fully functioning and ready to ‘go live’ but 14 layout and functionality changes that had never been mentioned before were requested at the 4 November meeting and rather than ‘going live’, the applicant and the respondent agreed to implement further changes. But further changes were then requested, including on 15, 17 and 18 November 2021 and 31 December 2021, as detailed in Mr. Cattley’s affidavit.

  3. On about 18 April 2022, Mr. Kopoushian telephoned Mr. Cattley and said that he was happy with the progress on the new website and wanted to ‘take the site live’ at the end of the month. Mr. Cattley responded enthusiastically to that and said that the respondent would be ready to update the databases and switchover the sites on the evening of 30 April 2022.

  4. On 21 April 2022, Mr. Kopoushian telephoned Mr. Cattley requesting further changes to the new website as detailed in paragraph 154 of the affidavit.

  5. On 29 April 2022, Mr. Cattley did a final check of the website and databases and found that while the respondent had been aligning the databases, Mr. Kopoushian had continued to update hundreds of products per day on the Existing Website for at least 10 days.

  6. Mr. Cattley then details requests by Mr. Kopoushian for further changes to the website and a failed attempt, between 13 and 18 May 2022, to organise with Mr. Kopoushian to ‘take the site live.’ Mr. Cattley discovered on 16 May 2022 that Mr. Kopoushian had been continuing to update manually aspects of the site, but there was no record of the changes to the databases, the two databases were not aligned and so could not be taken live. Mr. Cattley said that Mr. Kopoushian’s changes to the databases without informing the respondent had the effect “of sabotaging any attempt to take the site live.”

  7. The affidavit of Mr. Cattley then explains why another attempt to ‘take the site live’ on 15 July 2022 failed after Mr. Kopoushian contacted Mr. Cattley on 14 July 2022 and requested further changes before the site could go live.

  8. The solicitor for the applicant carefully cross-examined Mr. Cattley about his evidence. Amongst other things, Mr. Cattley was challenged on his evidence (a) that the respondent completed its development work on the new website for the applicant, (b) that the new website was ready to go live on three different occasions but for the applicant’s continued requests to add new or different functionalities to the new website before it went live and (c) that it was not true that the new website was loading slowly and “couldn’t cope” and that by the second and third proposed dates for the new website to ‘go live’, the use of caching tools meant that the respondent could bring the new website up to speed.

  9. Despite the cross-examination, Mr. Cattley maintained his evidence and the Tribunal did not assess that Mr. Cattley’s evidence was undermined. Indeed, Mr. Cattley appeared to me to be a careful, impressive and truthful witness, who gave detailed and precise evidence in his affidavit and when he was challenged during cross-examination. The Tribunal accepts Mr. Cattley’s evidence (a) that the respondent completed its development work on the new website for the applicant, (b) that the new website was ready to go live on three different occasions but for the applicant’s continued requests to add new or different functionalities to the new website before it went live and (c) that it was not true that the new website was loading slowly and “couldn’t cope” and that by the second and third proposed dates for the new website to ‘go live’, the use of caching tools meant that the respondent could bring the new website up to speed. The Tribunal also accepts Mr. Cattley’s account detailing the many requests from Mr. Kopoushian after 6 April 2021 to add, or explore adding, new or different functionalities to the website being built by the respondent for the applicant.

THE APPLICANT’S CASE

  1. The applicant put its case at the hearing in contract and alleged that the respondent had breached its contract with the respondent. More particularly, the applicant alleged that there was an express term in the contract between the applicant and the respondent, such that the new website developed by the respondent for the applicant would include all the functionality of the Existing Website, including a fast load speed. Alternatively, there was an implied term that the new website developed by the respondent for the applicant would include all the functionality of the Existing Website, including a fast load speed.

  2. The applicant alleges that the “Statement of Work E-Commerce site” document signed on 6 April 2021 is the written part of the contract between the applicant and the respondent but it is not “exhaustive” of the contract between the applicant and the respondent. It says the contract also included as an oral term, the term it says was agreed between Mr. Kopoushian and Mr. Saad on 29 September 2020, that the speed and functionality of the new website provided by the respondent would be as fast as the applicant’s Existing Website. The applicant alleges that the contract was also constituted by the conduct of the parties in that the functionality of the Existing Website was reflected in the staging website and because the applicant had access to the staging website, it was aware of the existing functionality of the Existing Website.

  3. The applicant says that the new website provided by the respondent is of no value to it and is entitled by way of damages to be repaid the $52,800.00 paid to the respondent. (I should note that although there was only very general and limited evidence about what payments were made by the applicant to the respondent, it seems to be accepted by the parties that the applicant paid the respondent $52,800.00).

JURISDICTION

  1. No submission was made by the respondent that the Tribunal does not have jurisdiction to resolve this application.

  2. I assume that I have jurisdiction to deal with the contract cause of action before me, pursuant to s. 79J of the Fair Trading Act 1987 (NSW) as a “consumer claim.” The applicant is a corporation but of course that doesn’t mean it cannot be a “consumer” and I presume that it is a “consumer” (s. 79H Fair Trading Act 1987). The applicant makes a claim for the payment of a specified sum of money arising from a supply of goods or services by a supplier to the consumer (s. 79E(1)(a) Fair Trading Act 1987). There is the requisite connection with New South Wales as the case concerns a contract made in New South Wales (s. 79K(1)(c) Fair Trading Act 1987). The application has been brought within time and is within the Tribunal’s jurisdictional limit which was extended from $40,000.00 to $100,000.00 from 18 July 2022 (see cl 13A of the Fair Trading Regulation 2019 (NSW)).

CONSIDERATION

  1. The Tribunal applies the principle that the applicant bears the onus of proving its case on the balance of probabilities.

  2. I will deal first with the “express” term part of the applicant’s case.

  3. The applicant’s case that the contract between the applicant and the respondent was partly oral and included as a term that which was said between Mr. Kopoushian and Mr. Saad on 29 September 2020 (see paragraphs 14 to 15 above in these reasons), is not persuasive.

  4. The Tribunal does not accept that the parties were contractually bound by what was said between Mr. Kopoushian and Mr. Saad on 29 September 2020. An objective approach is taken to the question whether what the parties said to each other on that day coincided to bring about a binding agreement: see for example Air Great Lakes Pty Ltd v KS Easter (Holdings) Pty Ltd (1985) 2 NSWLR 309 at 315 – 319 and 335 – 339.

  5. No party had any assurance on that day that any agreement between the applicant and the respondent would proceed, let alone that a term or terms of that agreement had been agreed. It was only shortly before the 29 September 2020 meeting, on 23 September 2020, that the respondent had raised the prospect of it building a new eCommerce website for the applicant. On 23 September 2020, the respondent had put a “proposal” to the applicant (see email transmission sent on 23 September 2020 at 4.33 pm to Mr. Kopoushian: Court Book p. 27). Next, on 25 September 2020 the respondent had emailed the respondent with an attachment constituted by the “Statement of Work E-Commerce Site”. Within that document, under the heading “Scope of Work” and the first sub-heading thereunder “Store design, development, and launch” the respondent communicated very clearly that an initial mock-up would be presented, there would then be feedback provided on the initial theme and that “Design work will require sign off before proceeding to development.” This document and the surrounding circumstances prevailing as at 29 September 2020 suggest to me that the applicant and the respondent were at an early stage of negotiations; and further, that certain other processes would have to take place first, and then “sign-off” by the applicant after those processes had taken place, before the respondent would be contractually bound. After the initial design process took place, the applicant would have an opportunity to give feedback and would have the opportunity to include in any agreement that might be reached with the respondent any terms which it sought, including terms about the new website having speed and functionality as fast and as at least equal to the applicant’s Existing Website.

  1. Further, even after that which was said between Mr. Kopoushian and Mr. Saad on 29 September 2020 (see paragraphs 14 to 15 above in these reasons), Mr. Jones’s evidence makes it clear that later in that conversation, the respondent was communicating that it was not bound on 29 September 2020 but that a lengthy and “involved process” would first have to take place and that the parties would be bound when an agreement was signed-off. Mr. Jones’s evidence, it will be recalled, was that after speed and functionality was discussed on 29 September 2020, that either Mr. Saad or Mr. Cattley said words to the effect that the detailed scope of works:

“is quite an involved process with the document going back and forth between each party until it is ultimately signed off by both parties. Once signed off, the new website will then be built by what was set out in this document.

The initial scope of works document has to be done first and agreed to, because there is significant cost involved in creating the detailed scope of works so there has to be an agreement in place first to justify such expenditure, otherwise without such an agreement in place first, DirectClicks could spend a lot of time, resources etc … then if the client decides … to not proceed with the new website this would result in a loss for DirectClicks.”

  1. The Tribunal finds that the contract between the applicant and the respondent is constituted by the written document signed by Mr. Kopoushian on 6 April 2021 and then forwarded by him to the respondent on 7 April 2021. The provision by the respondent to the applicant of the “Statement of Work E-Commerce site” document, which included the “Preliminary Development Outline V1.3 – 01 April 2021”, was an offer. The offer was accepted by Mr. Kopoushian signing the document and sending it back to the respondent.

  2. The Tribunal places no weight on Mr. Kopoushian’s evidence that he didn’t take much notice of the “Preliminary Development Outline V1.3 – 01 April 2021”. First, as stated above, an objective theory is applied to the question of whether a contract has been formed and what its terms are. The subjective opinion of a director of a corporate contractual counter-party is not material to the analysis. By signing and dating the “Statement of Work E-Commerce site” document, which included the “Preliminary Development Outline V1.3 – 01 April 2021”, Mr. Kopoushian was accepting the terms therein, applying the objective analysis which the law requires me to apply.

  3. Secondly, it is not persuasive to suggest that the document which Mr. Kopoushian signed was merely preliminary. The signing of that document was preceded by more than six months of negotiations between the applicant and the respondent, involving very many telephone calls, email transmissions and meetings. Indeed, Mr. Cattley’s evidence shows that he had a telephone discussion with Mr. Kopoushian on 26 March 2021 where they re-listed all the Existing Website functionality and confirmed only three reports were being used by the applicant to monitor its product reporting. Mr. Cattley then sent Version 1.1 of the Preliminary Document Outline to Mr. Kopoushian, and expressly invited his feedback. The next day, Mr. Kopoushian requested a meeting so that the applicant could “clarify 100%” the feature list. There was than a meeting on 30 March 2020 between the applicant and the respondent, after which, Mr. Cattley made changes to Version 1.1 of the Preliminary Document Outline.

  4. Mr. Kopoushian’s request for a meeting so that he could “clarify 100%”, and then participation in the meeting with Mr. Cattley, suggests to me that it is likely that he did appreciate the importance of the document which Mr. Cattley had sent him.

  5. Mr. Kopoushian had every opportunity to review and discuss the Preliminary Document Outline before he signed it. He had every opportunity to ask for terms to be included in the agreement which he signed, additional to those terms which appear in the document he signed on 6 April 2021.

  6. There is no express term in the document signed by the applicant’s director on 6 April 2021 to the effect of that asserted by the applicant in this application and that part of the applicant’s case accordingly fails.

  7. I should note again that Mr. Cattley had raised with Mr. Kopoushian, after the acceptance was signed, that a more detailed document setting out much more fully the scope of work by the respondent for the applicant was something that usually would be prepared. Mr. Kopoushian did not ask Mr. Cattley to provide such a document or insist that the respondent provide one.

  8. I should also deal with the applicant’s submission about “conduct” forming part of the contract.

  9. I am not persuaded by the applicant’s submission that the contract between the applicant and the respondent was also constituted by the conduct of the parties in that Mr. Cattley had access to the staging website, with the consequence that the scope of functionality for the new website being built by the respondent, should be reflected by the scope of the staging website.

  10. It is difficult to understand how that ‘conduct’ may give rise to any particular contractual term or terms, material to the determination of these proceedings. I do not see how the fact that Mr. Cattley did have access to the staging website, creates any relevant contractual obligation on the part of the respondent. Mr. Cattley’s oral evidence at the hearing, which I accept, was that having access to the staging website over a number of months did not give him complete knowledge of the functionality of the Existing Website. He said that after logging into the staging website, there was no way of telling if you had looked through all of the website. He said that there were matters that could not be directly observed but that functionality had to be pointed out. He said that a lot of the functionality on the staging website derived from rules and behaviour and was not observable merely by viewing the staging website, even over a few months. He said that there were hidden rules, which were not documented, were not obvious and that it took many telephone calls and conversations to discover the functionality of the Existing Website. Mr. Cattley also made the point in his evidence that new functionality was frequently being sought by the applicant over many months. In the respondent’s submissions, the respondent drew attention to Mr. Kopoushian asking for some of the functionality of the Existing Website to be removed from the website being built by the respondent. Based on Mr. Cattley’s evidence, it seems to me that the scope of the functionality of the Existing Website was not easy to determine, even with access to the staging website.

  11. The applicant submitted that the email transmission dated 7 July 2021 from Mr. Cattley to Mr. Kopoushian which referred to a financial reporting panel that was “not part of the initial request or available on the staging site” was an “admission” that the functionality of the Existing Website found in the staging website that had been made available to the respondent was part of the scope for the project. I am not persuaded that such an admission was being made. What was ‘available on the staging site’, as Mr. Cattley’s evidence and especially his evidence during cross-examination made plain, was that determining what was available on the staging site was difficult. His evidence was that it difficult and time consuming to understand what functionality was available on the staging site and the knowledge of what was available on the staging site could not be gleaned merely by observation but depended in part in testing the site and discovering its functionality. In any event, Mr. Cattley’s view of what the contract between the applicant and the respondent involved, as disclosed in the 7 July 2021 email transmission according to the applicant, is not determinative. I have to apply an objective theory of contract.

  12. My finding is that by the respondent providing the applicant of the “Statement of Work E-Commerce site” document, which included the “Preliminary Development Outline V1.3 – 01 April 2021”, that was the offer from the applicant and that document included the express terms on which the respondent was agreeing to be bound. It seems to me that the fact that Mr. Cattley had had access to the staging website was plainly useful to him in compiling the Preliminary Development Outline V1.1 and V1.3 but the “conduct” involved in him having access to the staging website, does not suggest some new term, or set of terms, in addition to the ones which appear in the “Statement of Work E-Commerce site” document, which included the “Preliminary Development Outline V1.3 – 01 April 2021”.

  13. In oral submissions, the applicant developed the submission about the staging site by submitting that as the respondent had expertise as a website development company, there is no reason why it shouldn’t have had access to other programs or skills, such that it should have been able to carry out a full analysis of what was on the staging site. My difficulty with that submission is that it is not supported by evidence, particularly expert opinion evidence, that establishes what a company in the position of the respondent should have known or learnt when it (especially its employee Mr. Cattley) did have access to the staging website. The applicant of course bears the onus of proof.

  14. I turn next to the applicant’s submission that a term should be implied in the contract between the applicant and the respondent to the effect that the new website developed by the respondent for the applicant would include all the functionality of the Existing Website, including a fast load speed.

  15. The authorities which explain the test to be applied when a court or tribunal evaluates whether a term should be implied in fact are well-known (e.g. Codelfa Construction Pty Ltd v State Rail Authority (NSW) [1982] HCA 24; (1982) 149 CLR 337 at 346 and BP Refinery (Westernport) Pty Ltd v Hastings Shire Council [1977] HCA 40; (1997) 180 CLR 266 at 283) and the legal principles to be applied were not disputed by the parties.

  16. The Tribunal does not find that such a term as alleged by the applicant should be implied.

  17. First, it does not seem to me that the term proposed is so obvious that ‘it goes without saying’ for the term to be implied.

  18. The functionality and speed of the website being built by the respondent for the applicant involved complex and time-consuming inquiry, over many months, by the respondent even to ascertain the functionality and speed of the Existing Website. Mr. Cattley’s evidence establishes that circumstance. An “involved” process was inherent in building the website by presenting an initial theme as the basis for the design of the website and then obtaining feedback from the applicant. The attachment to the 25 September 2020 email transmission from Mr. Saad to Mr. Kopoushian, and Mr. Jones’s evidence about what was said on 29 September 2020, establishes that circumstance. Mr. Kopoushian was requesting many additional features or functionalities for the new website, according to Mr. Cattley’s evidence. Mr. Kopoushian was also requesting that some features or functionalities from the Existing Website not be replicated on the new website, according to Mr. Cattley’s evidence and noting that in cross-examination, Mr. Kopoushian acknowledged that there were some features from the Existing Website that he did not want in the new website. Based on all that evidence, it seems to me that the scope of what the respondent would deliver to the applicant was a topic that had to be requested by applicant, examined and tested and it is not “obvious” that any term about the scope of what the respondent would deliver the applicant, of the sort alleged by the applicant, can be implied.

  19. Other aspects of the matrix of surrounding circumstances for this particular contract fortify that conclusion. There was evidence before the Tribunal that the scope of what the respondent would deliver to the applicant was a matter that also related to the price the applicant would pay. That was most clear from Mr. Kapoushian’s request in January 2021 for the contract price to be $40,000.00 inclusive of GST and Mr. Saad’s response which contemplated the exclusion of some functionalities to achieve that price. Many variables could potentially be involved and impact on the scope of work which the applicant and the respondent might agree. For example, speed might be reduced, but only very marginally and not in a way that could have any practical impact. The website being built by the respondent also involved both ‘front end’ and ‘back end’ functions. So another example might be that a significant functionality gain to the ‘front end’ functions might be at the expense of speed of the some ‘back end’ functions. It seems to me that the inclusion of new features or functionalities could involve potential advantages that might reduce the speed or functionality of the Existing Website, but notwithstanding that, could potentially be to the benefit of the applicant’s business. It seems to me that a number of terms might be equally justifiable in the particular circumstances of the contract between the applicant and the respondent. I am not persuaded that the applicant has discharged its onus of establishing that the term it proposes is so obvious that it goes without saying.

  20. Further or alternatively, I do not find that the implied term proposed by the applicant is necessary in order to make the agreement work or conversely, to avoid an unworkable situation: BP Refinery (Westernport) Pty Ltd v Hastings Shire Council [1977] HCA 40; (1997) 180 CLR 266 at 292. “Clear necessity’ is required (Codelfa Construction Pty Ltd v State Rail Authority (NSW) [1982] HCA 24; (1982) 149 CLR 337 at 346). In my view, the contract between the applicant and the respondent was workable without the implied term propounded by the applicant (Heimann v Commonwealth (1938) SR (NSW) 691 at 695). The applicant has not discharged its onus of proof in this respect.

  21. Accordingly, I have found that the applicant has not established, with respect to the contract between the applicant and the respondent, the express term and the implied term which it has advanced. I have taken into account all of the factors identified in s. 79U(2) of the Fair Trading Act and I considered whether an order for dismissal is fair and equitable to all the parties in the case (s. 79U(1) of the Fair Trading Act) and have come to the conclusion that it is.

  22. I find that the application should be dismissed.

  23. If I am wrong in coming to the conclusions I have reached about the express term and the implied term propounded by the applicant, I deal in the alternative with the applicant’s submission that the respondent breached the express term and the implied term on which it relies.

  24. The applicant adduced no persuasive evidence that the respondent had failed to built a new website with speed and functionality falling short of the Existing Website’s speed and functionality.

  25. What was most striking, was that there was no independent expert opinion evidence from the applicant relating to the new website and the Existing Website, comparing the speed and functionality of the two sites.

  26. As to annexure “P” to Mr. Kapoushian’s witness statement, it is difficult for me to place any weight on that document prepared by Mr. Kopoushian. The Tribunal was given no evidence about Mr. Kopoushian’s expertise to offer an opinion about speed and functionality. It is also not clear to me when, and what were the circumstances, in which he tested the speed and functionality of the Existing Website and the new website. Annexure “P” seems to me to involve the assertion of a conclusion or conclusions, without identifying the circumstances from which the conclusion or conclusions have been reached. Mr. Cattley’s evidence explained that testing on the new website was not a simple process, it could require transfers to a file domain, settling the site over a period of 24 – 48 hours, working with different databases and employing caching tools. Testing the new website could also be affected by Mr. Kopoushian continually updating manually aspects of the site, which had the consequence, according to Mr. Cattley’s evidence, that the two websites were not aligned. The Tribunal is not aware of the circumstances in which Kopoushian compiled annexure “P” to his witness statement and whether when it was compiled, that Mr. Kopoushian had created the conditions necessary for a fair testing and evaluation of the new website when compared to the Existing Website.

  27. Mr. Kopoushian during cross-examination pointed to one area where he said the new website fell short in its functionality but the applicant did not establish that Mr. Kopoushian had expertise relevant to being able to evaluate the speed and functionality of the two websites, nor the precise circumstances in which he tested the functionality.

  28. The principal evidence which the Tribunal was left with was Mr. Cattley’s evidence, including his evidence during cross-examination, where he said that the respondent had (a) completed its development work on the new website for the applicant, (b) that the new website was ready to go live on three different occasions but for the applicant’s continued requests to add new or different functionalities to the new website before it went live and (c) that it was not true that the new website was loading slowly and “couldn’t cope” and that by the second and third proposed dates for the new website to ‘go live’, the use of caching tools meant that the respondent could bring the new website up to speed. As mentioned above, the Tribunal accepted Mr. Cattley’s evidence in relation to those matters.

  29. The applicant failed to discharge its onus of establishing any breach of the contract by the respondent.

ORDERS

  1. I will make an order dismissing the application and also orders to enable submissions and evidence about costs to be brought before the Tribunal.

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Endnote

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: 28 June 2023

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Cases Citing This Decision

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Cases Cited

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Statutory Material Cited

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Ermogenous v Greek Orthodox Community of SA Inc [2002] HCA 8
Burger King Corporation v Hungry Jack's Pty Ltd [2001] NSWCA 187
Codelfa Construction Pty Ltd v State Rail Authority of New South Wales [1982] HCA 24