The Trunk Group Limited t/as Gift Something v Neto E Commerce Solutions Pty Ltd
[2022] QCAT 44
QUEENSLAND CIVIL AND
ADMINISTRATIVE TRIBUNAL
CITATION:
The Trunk Group Limited t/as Gift Something v Neto E Commerce Solutions Pty Ltd [2022] QCAT 44
PARTIES: THE TRUNK GROUP LIMTED T/AS GIFT SOMETHING (applicant)
v
NETO E COMMERCE SOLUTIONS PTY LTD (respondent)
APPLICATION NO/S:
MCDO206-20
MATTER TYPE:
Other minor civil dispute matters
DELIVERED ON:
8 February 2022
HEARING DATE:
20 July 2021
HEARD AT:
Brisbane
DECISION OF:
Adjudicator Stroud
ORDERS:
The Respondent pay to the Applicant the amount of $9,280 within 21 days of this order.
CATCHWORDS:
ADMINISTRATIVE LAW – ADMINISTRATIVE TRIBUNALS – QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL – minor civil dispute – consumer trader dispute – trader and trader dispute – whether trader a consumer – contract – breach of contract – whether termination lawful – Australian Consumer Law – whether fit for purpose.
Competition and Consumer Act 2010 (Cth), Schedule 2, s 60, s 61, s 62, s 267, s 269
Fair Trading Act 1989 (Qld), s 50A
Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 3, s 11, s 12, Schedule 3.
APPEARANCES & REPRESENTATION:
Applicant:
Self-represented
Respondent:
Self-represented
This matter was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld)
REASONS FOR DECISION
What is this matter about?
The Trunk Group Limited t/as Gift Something (the Trunk Group) is an online retailer of flowers and other life-style products, servicing the Hong Kong, Malaysia and Singapore markets. It entered into a design contract with Neto E Commerce Solutions Pty Ltd (Neto) to design and implement an e-commerce back-end system for the sale of its products online. The Trunk Group claim that Neto failed to deliver an adequate design that was fit for purpose and terminated its contract with Neto prior to its completion. Neto denies it failed to provide the services in accordance with the design contract and claims the Trunk Group’s termination was unlawful.
The application was part heard before me on 23 March 2021 at which time the parties agreed that the following were the issues in dispute to be determined by the Tribunal:
(a)Whether the agreement of services to be provided by Neto to the Trunk Group included:
(i) First and last name as combined field in checkout;
(ii) Electronic payment functions to include direct transfer as payment option at checkout;
(iii) Language translations outside of front-end website (i.e. emails and printable documents; and
(iv) Deliver and checkout flow.
(b)Whether Neto could provide the above functionality.
(c)Whether the Trunk Group lawfully terminated the contract with Neto and whether it is entitled to a refund and/or damages.
The parties were directed to file submissions addressing each of the agreed issues as stated above following which the matter proceeded to a full hearing before me on 20 July 2021.
Jurisdiction
The Applicant has filed an Application for Minor Civil Dispute – Consumer Dispute claiming the amount of $32,464.80 for breach of contract and warranties contained in Schedule 2 of the Competition and Consumer Act 2010 (referred to as the Australian Consumer Law – ACL).
The Tribunal has jurisdiction to hear minor civil disputes[1] up to the prescribed amount of $25,000.[2] By applying to the Tribunal to deal with the claim as a minor civil dispute the Applicant’s claim is limited to the prescribed amount.[3]
[1]Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 11.
[2]Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 11.
[3]Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 12 (2) and (3).
The Tribunal’s jurisdiction is exercised upon application by a relevant person. A relevant person for a claim arising out of contract between two (2) or more traders, means any of the traders.[4]
[4]Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 12(4)(c) and Schedule 3 (definition of ‘minor civil dispute’).
“Trader” is defined the Queensland Civil and Administrative Act 2009 (QCAT Act) as a person who, in trade or commerce, carries on a business of supplying goods or providing services.[5]
[5]Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 3.
I am satisfied that the Trunk Group is a relevant person within the definition of the QCAT Act and that the Tribunal has jurisdiction to determine the matter as a dispute between two traders.
Relevant Legislation
Section 50A of the Fair Trading Act 1989 (Qld) (FTA) vests the Tribunal with jurisdiction in relation to certain actions under the ACL, these include an action by a consumer against the supplier of services[6] and termination of contracts for the supply of services.[7]
[6]Refer s 267 of Schedule 2 to the ACL.
[7]Refer s 269 of Schedule 2 to the ACL.
A consumer for the supply of services (as defined in the ACL) is (amongst other things) a person (which includes a corporation) who has acquired particular services as a consumer for an amount not exceeding $40,000.[8]
[8]Chapter 1, s 3 (3)(a) of Schedule 2 to the ACL.
As the contract for services between the Trunk Group and Neto did not exceed $40,000, the Trunk Group is a consumer for the purposes of the ACL, and the guarantees and remedies contained in the ACL apply to the contract between the parties. These include a guarantee as to due care and skill,[9] fitness for a particular purpose[10] and a guarantee as to reasonable time for supply.[11]
[9]Refer s 60 of Schedule 2 to the ACL.
[10]Refer s 61 of Schedule 2 to the ACL.
[11]Refer s 62 of Schedule 2 to the ACL.
A consumer may take action against a supplier of services if a guarantee is not complied with and (with respect to guarantees under s 61 and 62 of the ACL) so long as the failure to comply did not occur as a result of an act, default of omission made by any person other than the supplier.[12]
[12]Refer s 267(1) of Schedule 2 to the ACL.
Remedies
If the failure can be remedied it is not a major failure and the consumer can require the supplier to remedy the failure within a reasonable time. If the supplier refuses to remedy the failure the consumer may have the failure remedied and take action against the supplier to recover all reasonable costs or terminate the contract for the supply of services.[13]
[13]Refer s 267(2) of Schedule 2 to the ACL.
The consumer may, by action against the supplier, recover damages for any loss or damage suffered by the consumer because of the failure to comply with the guarantee if it was reasonably foreseeable that the consumer would suffer such loss or damage as a result of such failure.[14]
[14]Refer s 267(4) of Schedule 2 to the ACL.
If a consumer terminates a contract for the supply of services the consumer is entitled to recover, by action against the supplier of services, a refund of any money paid and an amount that is equal to the value of any other consideration provided by the consumer for the services to the extent the consumer has not already consumed the services at the time of the termination takes effect.[15]
[15]Refer s 269 of Schedule 2 to the ACL.
What was the contract between the parties?
Neto is a cloud-based commerce platform. It is, what is described as, a software as a service (SaaS) platform. SaaS is a software distribution model in which a cloud provider hosts applications and makes them available to end users over the internet.
One of the services provided by Neto is to custom design an e-commerce platform for use by its customers in running an online business.
In or around April 2017, the parties entered discussions regarding the provision of services by Neto. During this period Neto provided the Trunk Group with a two-week trial period to use the SaaS software to test and verify it met with the Trunk Group requirements.
Following this trial period, numerous discussions where had between the parties and multiple versions of a proposed scope of works where produced, the parties entered into a final Custom Design Proposal on 8 July 2017 (the Design Proposal). The Design Proposal set out the terms and conditions of the provision of services by Neto including the final scope of works agreed by the parties.
The Trunk Group argue, in summary, that Neto failed to correctly scope the Design Proposal based on prior communications regarding their requirements. They claim Neto falsely represented its capacity to be able to produce a design that was fit for purpose for the Trunk Group’s online business and that what was designed was not what was agreed and unfit for the purposes of its business.
Neto, in summary, submit they have produced what was agreed between the parties and set out in the Design Proposal. They state it was the responsibility of the Trunk Group to undertake their own project scoping document and software selection prior to engaging Neto as they do not offer consultancy services (meaning business consultancy service) in what is required for the scope of works. The project design as incorporated in the Design Proposal is based on information provided by the customer, and the scope of works is developed on this basis. They rely upon the scope of works set out in the Design Proposal as encompassing the final agreement between the parties as to what is to be provided.
From the email communications between the parties, it appears that difficulties with certain aspects of the design arose sometime in or about August 2017, whilst the parties continued to communicate in attempts to resolve the issues, certain issues were unable to be resolved and on 24 May 2018 the Trunk Group informed Neto it wished to terminate its contract with them.
The issues in dispute between the parties which resulted in the termination of the agreement where (as agreed by the parties) whether the agreement of services to be provided by Neto to the Trunk Group included:
(i) First and last name as combined field in checkout;
(ii) Electronic payment functions to include direct transfer as payment option at checkout;
(iii) Language translations outside of front end website (i.e. emails and printable documents; and
(iv) Deliver and checkout flow.
First and last name as combined field in checkout
The Trunk Group claims that it was not informed by the Respondent that there was any issue with a combined field for the first and last name prior to entering into the Design Proposal and that the first wireframe iteration provided by the Respondent on 22 August 2017 had a combined field and then a subsequent wireframe sent on 28 August 2018 did not (I am assuming this is a typo and should refer to 2017).
Neto claims that separate first and last name fields is a standard part of the functionality of the Neto checkout page and that there is no specification in the Design Proposal to alter the standard functionality of separate first and last name fields. Confirmation with respect to certain fields was sought by Neto in an email to the Trunk Group on 23 August 2017 which included separate fields for the first and last names, this was confirmed as correct by the Trunk Group in an email in return.[16]
[16]Refer Neto documents reference numbers 7 and 8.
The Trunk Group sought adjustment to merge the fields by way of email to Neto on 10 September 2017.[17]
[17]Refer Neto document reference number 9.
Neto argues that the Trunk Group was under a misconception that the checkout design would be based on a design produced by third party Wireprofit which included this functionality. However, part of the Design Proposal included Neto developing their own wireframe to ensure that what was designed was able for use on the Neto platform.
I am not satisfied on the evidence that a combined field for the first and last name was clearly communicated to Neto as being an essential element of the Design Proposal. This position is supported by the Trunk Groups confirmation to Neto in their email on 23 August 2017 that first and last name were to be separate.
It seems more likely that the Trunk Group became aware of the importance of this issue once the Design Proposal was underway. The Trunk Group asserts that even if this function was not included specifically in the Design Proposal, Neto failed to inform them that there were limits to the checkout functions capabilities. In other words, they were not informed that that any changes they subsequently may require may not be able to be delivered.
I am not persuaded that this argument has merit. There will always be limits to design capabilities and there is no evidence to support that Neto ever represented otherwise. It is incumbent upon the customer prior to signing of on the final design proposal to ensure that the scope of works encompasses the requirements of their business. Neto would not know, nor could it know, the individual intricacies of its client’s business. They do not, as previously stated, provide business consultancy services, rather they provide a system to support the requirements of the business as communicated by the client
Even if I am wrong in this regard, the Design Proposal specifically states that the scope is a final outline of what will be implemented for the quoted amount and that any functionality not outlined in the scope, even if it is present on the customer’s existing site, example sites provided for inspiration, or mentioned in scoping discussion is not included in the Design Proposal.
As the Design Proposal did not include the combined first and last name fields this part of the Applicant’s claim must fail.
Electronic payment functions to include direct transfer as payment option at checkout
The payment methods to be incorporated as set out in the Design Proposal include direct deposit.
This is agreed by both parties.
Trunk Group submit that in a skype call on 12 April 2018, a representative from Neto (Craig) informed them that direct transfer payments would be incompatible as a payment option for the Trunk Group. In subsequent emails between the parties the Trunk Group state that they were informed by Craig that “I can not see any reference to TT payment on your live site or discussions provided, this would have been flagged as incompatible if this was highlighted as a core requirement”.
In its submission filed in the proceeding Neto maintains that direct transfer or direct deposit is a standard payment option available to Neto merchants and was available to the Trunk Group as a payment option.
In its email of 13 April 2018 to the Trunk Group, Craig Blunton of Neto states “Neto provides services based upon an agreed proposal (attached), though we discussed at length the platform limitations of such functionality you require such as (but not limited to) … ‘TT Payment’.
It is not clear on either parties’ evidence whether ‘TT Payment’ (telegraphic transfer) is used in the same context as direct deposit or direct transfer. Neither party addresses this in their submissions.
In the event that it is not the same as direct deposit than this was not a functionality included in the Design Proposal, if it is the same as direct deposit, then the email referred to above from Neto suggests that there was some difficulty in Neto providing this checkout function.
Due to the lack of evidence, I am unable to draw a conclusion whether Neto was ultimately unable to provide this function. However, even if this was the case, this lack of functionality, in my view, would not constitute a breach of an essential term of the contract sufficient to warrant termination in circumstances where there were still other multiple payment methods. For the same reason I would not find that this on its own would render the services provided unfit for purpose.
Language translations outside of front-end website (i.e emails, printable documents).
The Trunk Group submit that due to its presence in Hong Kong, Chinese translations for the front-end website and backend output such as delivery notes was crucial and one of the determining factors in engaging Neto’s services.
It claims Neto was well aware of the importance of this function and requirement particularly in the Hong Kong market.
It states the requirement for the delivery note to be in English and Chinese was included in the Design Proposal.
It says that on 12 April 2018, Neto informed them that all Chinese character outputs outside of the front-end of the website, including emails and other printable documents (i.e. the delivery note) could not be supported by the Respondent and it was unable to deliver this function.
Neto submits that translation of the front-end website was included within the scope of the of the Design Proposal, but the back end was not. It refers to page 16 of the Design Proposal which states that “Changes to print docs (e.g. invoices) or system emails (e.g. order confirmation) outside this scope.”
Neto refers to email communication between the parties on 24 April 2017, which provided an example where if Chinese characters were entered in an input field the delivery dockets and order receipt emails would print out in Chinese. This is not the same function as translating the document into Chinese.
In an email dated 15 August 2017, Elaine Chu of the Trunk Group asked “Will this translate both the front end and back end? Majority of translation is for the front end, we only need to translate for the backend if this is required for confirmation emails etc (so the confirmation email sent to the customer appears in Chinese) – just need to ensure that the backend will not be in Chinese.”
In response to this email Sarah Horsup of Neto relevantly states “This locale file will only be translating for the front-end website. You will need to translate anything you wish to be in Chinese. Anything not translated in the template will stay as English.”.
On the evidence there does appear to be discussion prior to entering into the Design Proposal regarding English translation into Chinese. I am not persuaded however, that this included the translation ultimately sought by the Trunk Group in relation to back-end documents. Whilst it may have been contemplated by the Trunk Group, it was not expressly communicated sufficiently to be included in the scope of works. I am satisfied the Design Proposal did not include language translations outside the front-end website and in fact contained a specific clause excluding changes to backend documents such as invoices and system emails.
As it was not included in the Design Proposal and the Design Proposal supersedes any previous communication between the parties, the parties are bound by the scope of works contained in the Design Proposal and as such this ground of the Applicant’s claim must fail.
Delivery Time and Checkout Flow
The Trunk Group submit that prior to engaging Neto its checkout flow had always been contained in the UX design mock-ups and Webprofits wireframes. The checkout flow was available on the Trunk Group’s website for Neto to scope. The preliminary UX designs were provided to Neto for review on 14 July 2017, the Trunk Group indicated at that time that there would be some changes to the checkout set up but that these would not change the Trunk Group’s original checkout flow in any way.
On 25 July 2017 it emailed the wireframe design by Webprofits to Neto. Is says that this clearly illustrated the checkout flow as shipping > delivery date > delivery time, which are all separate sections, so the customer chooses their preferred date of delivery and then the available delivery items.
In an email to Neto on 1 August 2017, the Trunk Group again indicated that a date selection followed by a time selection was required. Neto responded that the checkout flow would allow selecting a delivery date first and then a delivery time.
Prior to entering into the Design Proposal Neto informed the Trunk Group that it would be creating the wireframe and that customisation was required on the checkout page and that some of the checkout functionality could not be customised. The Trunk Group state that Neto did not elaborate any further on this issue.
It says that upon receipt of the wireframe iteration on 24 August 2017, it emailed Neto and raised concern about the design layout being substantially different. This was repeated in an email to Neto on 10 September 2017, where it expressed concerns with the significant differences to the wireframe and in particular that, the delivery time option had not been included on Neto’s wireframe, which was one of the key aspects of the Trunk Groups checkout flow.
It says on 4 December 2017 it was informed by Neto that the limitations on the platform meant that the time slot would be displayed before the delivery date. The Trunk Group state this was not an acceptable option and it was critical to the checkout flow that the delivery date be selected first.
Neto provided two (2) workaround options to the Trunk Group, neither which was considered acceptable to them.
Neto submits that the checkout flow above was a requested change to the display order sought by the Trunk Group after entering into the Design Proposal. It refers to the Design Proposal where the shipping options are listed first, followed by the delivery date, which they state is indicative of the display order for that section.
It refers to an email between Elaine Chu and Neto of 30 November 2017 where she relevantly states:
“…Well noted that Neto displays the shipping options before the calendar – however please note that our shipping matrix dictates the available delivery time slots based on the delivery date that the customer chooses, and the time or ordering.
For example, let’s take todays date and time is Dec 1st, 11.am.
If I chose Dec 1st on the delivery calendar, my available time slots will be 4pm-6pm| 6pm – 9pm
If I chose Dec 2nd on the delivery calendar, my available time slots will be 9am-1pm| 1pm – 4pm| 4pm – 6pm|6pm – 9pm.
As long as Neto is able to replicate the same results and follow (sic) our shipping matrix, it will not matter to us which order the shipping option and delivery dates are displayed.
Also, what happens to option if the time slot is not available? Will the option not appear at all, or will the option be greyed out so the customer cannot choose it?”
In response Rob Keelan of Neto provides in an email on 4 December 2017 to the Trunk Group:
“…I am placing an order @ 11am on Dec 1st
If I select either the 9am-12pm or the 12pm-3pm slots on Standard Free Delivery, the date of December 1st won’t be available for selection on the calendar.
If I select the 3pm to 6pm time slot, December 1st will be available for selection.
…The time slots will always remain visible but, depending on the option selected, the date will become available/unavailable for selection.
In summary, our software works a little differently to your current site but it will work with the shipping matrix.”
By way of email on 5 December 2017 to Neto, Justin of the Trunk Group states “It seems to be very strange for a customer to select a ‘time slot’ before selecting a date when date is the critical component. It’s like asking someone what time they want a table reservation and then give them a list of available dates to select. It doesn’t make sense. Is there another way around this?”
In an email in response on 6 December 2017, Neto confirms that the limitations of the software prevent selecting the date first, delivery option is required before dates are made available.
The Trunk Group in their submission rely heavily on the checkout flow functions of Webprofits as being what they expected to be provided by Neto. However, Neto were not engaged to provide an exact replica of Webprofits, they were engaged to provide a custom design for use by the Trunk Group. I accept the submissions by Neto that if this was the case what would have been the point in having Neto create a custom wireframe.
I am satisfied on the evidence that Neto communicated to the Trunk Group that by creating a custom wireframe there were going to be limitations due to the underlying software structure of the Neto platform. What was to be provided was not an exact copy but would be similar.
Whilst I find that the shipping date and delivery time in the Design Proposal is not worded as clearly as it could be, I am still satisfied that what was provided by Neto was in accordance with the Design Proposal.
Even if I am wrong in this regard, the order upon which the delivery date and time is selected would not in my render grounds to terminate the contract. The order for which they were to be provided is not in my view an essential term of the contract. What was essential was, nor does it render what was provided unfit for purpose. The essential checkout steps (or terms) required to be provided where the ability to select a gift, pay for the gift, and have the gift delivered on a selected date and time, all of which were provided by Neto.
Whether the Neto could provide functionality requested by the Trunk Group
As set out above, I am satisfied that Neto could and did provide the functionality as required in the Design Proposal.
Due to the limitations of the Neto platform and the customisation of the design, there were certain functions that were not able to be provided by Neto. However, I have found that these functions were not functions included in the scope of works but changes requested by the Trunk Group to the scope of works.
Whether the Trunk Group lawfully terminated the Contract with Neto and is entitled to damages
As I have found there was no breach of the Design Proposal by Neto, I find that the Trunk Group did not have grounds to terminate the Design Proposal with Neto on this basis and the termination by it was unlawful.
Had the Trunk Group wished to terminate the contract with Neto, it could have done so pursuant to clause 17.1 of the General Terms and Conditions to the Contract which provides that either party can terminate without reason by giving the other party 30 days written notice. If a party terminates pursuant to this provision clause 17.3 provides that neither party shall be liable to the other party for any loss or damage whatsoever arising from termination under clause 17.1. Obviously had it relied upon this clause it would not have had the right to claim for any damages.
Neto claim that at the date of termination it completed 90% of the work under the Design Proposal and could not complete the remaining 10% of work as the Trunk Group refused to approve the checkout wireframe that was produced. It states that it was only paid for 50% of the contracted amount.
Had Neto filed a counterclaim in the proceeding then I could have considered whether Neto was entitled to be paid for the balance of the contract price. It did not do so and therefore no order can be made in this regard.
I note that at the hearing and in its submissions Neto have stated that, despite the above, it has agreed to refund to the Trunk Group the amount of $9,280 for works (outside the Design Proposal) which it did not complete.
Accordingly, the order I make is that Neto pay to the Trunk Group the already agreed refund amount of $9,280.
Orders
Neto pay to the Trunk Group the amount of $9,280 within 21 days of this order.
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