Mirrorcity Pty Ltd v SEO North Sydney Pty Ltd;; SEO North Sydney Pty Ltd v Mirrorcity Pty Ltd

Orders sought by each party

1. MC confirmed that it sought the following orders: 1. Refund of all monies paid to date by MC to SEO totalling $27,100.00; 2. An order relieving MC from payment of $24,000 being an accelerated amount of monthly payments for a second term of the Contract, which MC says it validly terminated at the end of the first term.
2. SEO's cross application is for a money order against MC for $24,000 plus GST. The representative for SEO confirmed that there was no jurisdiction for the Tribunal to determine the cross application, as it was not a "consumer claim" under Part 6A of the Fair Trading Act SNW 1987 because it was filed by SEO as a supplier of services and not as a consumer. However, there is a power under section 79O of the Fair Trading Act that if a consumer claim (i.e. MC's application) is decided (either wholly or in part) in favour of SEO as a respondent, then the Tribunal can make a money order in favour of the respondent against the consumer. SEO's representative at the hearing agreed that the Tribunal would determine SEO's claim for monies under the second term under section 79O of the Fair Trading Act NSW 1987.

MC'S Position

1. MC's claim is set out in the Points of Claim dated 28 November 2018. I summarise the claim as follows: 1. The parties entered into a contract dated 28 August 2017 titled "Gold SEO Package Agreement" (the Contract) a copy of which is exhibit C of MC's documents; 2. The initial term of the Contract was for 1 year which ended on 28 August 2018; 3. The Contract did not roll into a second year because the applicant gave written notice by email on 26 July 2018 that it would not be renewing the Contract; 4. Item 2 of Appendix 1 of the Contract specifies the price of the contract to be an initial set up fee of $570 and then $2000 per month (plus GST) to be paid each month in advance of work being done; 5. SEO failed to respond on most occasions in the time-frames required under the Contract, which was a breach of clause 7.1 of the Contract; 6. SEO breached the Contract by failing to comply with the service specifications set out in "Item 3 SEO Services Specifications" at Appendix 1 of the Contract (which I will define as the Service Specifications); 7. SEO failed to optimise 30 pages of MC's website and failed to provide proof of any such work done which is set out in the Service Specifications; 8. SEO failed to advise list of target pages, failed to optimise meta tags, pictures, content and keywords of target pages, in breach of the Service Specifications; 9. SEO failed to provide 30 minimum Google 1st pages guaranteed within the term of the Contract, in breach of the Service Specifications; 10. SEO failed to provide proof of whether the website was submitted to all major search engines during the term of the Contract in breach of the Service Specifications; 11. SEO failed to provide quarterly analytics and 1st page reports which caused MC to have no visibility of progress, which was a breach of the Service Specifications; 12. SEO failed to provide yearly analytics and 1st page reports which caused MC to have no visibility of progress, which was a breach of the Service Specifications; 13. SEO failed to provide details of any link building undertaken and whether or not those links were on quality and relevant websites as per Google guidelines, which was a breach of the Service Specifications; 14. SEO failed to provide details of 400+ words blog page per month in breach of the Service Specifications; 15. MC informed SEO of its dissatisfaction well before 34 day' notice to terminate was required under the Contract and therefore SEO knew of MC's intention not to renew the Contract; therefore the Contract ought not have been extended by SEO for a further 12 month term pursuant to Item 1 of Appendix 1 of the Contract; 16. No work has been done by SEO since 29 August 2018; 17. The Contract is a "standard contract" within the meaning of the Australian Consumer Law and a number of provisions are unfair and should be set aside; 18. MC had no right within first 12 months to exit the Contract; 19. The exit provision at Item 1 of Appendix 1 to the Contract refers to "30 business days' notice", but it should be "ordinary" days; 20. SEO's conduct was misleading in that SEO advertised "1st Page of Google - Guaranteed" on its website which was contradictory to Google Guidelines; 21. SEO's conduct was misleading in that it made representations that if it engaged SEO's services, MC would achieve the lead position in their niche and would see significant improvement within first 3 months; 22. SEO did not act in good faith; 23. MC has not had any benefit for the monies paid to SEO under the Contract and has suffered loss;
2. MC claims that no analysis or benchmark was set by the respondent to establish a starting point from which any improvements could be measured. MC submitted that they engaged SEO to improve on what they already had. However, it achieved less internet traffic than what they had had previously.
3. MC stated that they contracted with SEO, for SEO to improve MC's website traffic and they were promised they would receive regular reports to track improvements. Instead, MC claims that whatever they received was not timely; the information they received was random data which did not make sense; SEO's responses were rude and threatening; MC's results did not improve and MC's ranking was down by the end of the year.

SEO'S Position

1. SEO defends the claim on the following bases (summarised from the Points of Defence dated 21 December 2018): 1. The respondent was only required to optimise up to 30 website pages and it determined that it was only necessary to optimise 9 on MC's website, which it did; 2. SEO obtained the following results in the 1st year of the Contract: 1. 20 December 2017 - 242 1st page Google results; 2. 6 April 2018 - 204 1st page Google results; 3. 13 July 2018 - 244 1st page Google results; 4. 27 August 2018 - 142 1st page Google results. 1. SEO submitted MC's website to all major search engines; 2. Search results for MC's website increased 47.52% from 17/7/17 to 17/7/18; 3. SEO performed age targeting, optimisation of meta tags, optimisation of content and optimization of keywords for MC; 4. SEO conceded at the hearing that it did not do the word blogs because it said there was a verbal agreement from MC in September 2017 that MC did not require the word blogs to be done.
2. SEO sent an email to MC on 6 June 2018 (at page 44 of SEO's documents) which states: "I just wanted to drop you a quick SEO update to let you know how well our SEO strategy is working. Usually we just focus on how well we're doing now, compared with three months ago (as it takes Google 3 months to catch up with whatever we do today, etc). But from time to time I like to compare year on year. And as you can see, organic traffic (people finding us via Google searches) is up 95.77% on 12 months ago. Which means we've nearly DOUBLED organic traffic since taking over. Which by any stretch of the imagination is a terrific result". The email includes a graph and percentage data.
3. In a further email dated 20 June at page 45, SEO wrote to MC: "Just thought I'd drop you another quick SEO update with the GREAT news that we've cracked SERP#1 for "Mirrors Sydney"!
4. SEO relies on documents in its bundle to establish it has provided a large number of services to MC over the course of the first 12 months of the Contract, such as: 1. Written content for Mirrorcity website at exhibit 31; 2. Copies of screen-grabs of 4 search engines with Mirror City highlighted; 3. List of all links created for MC's website at exhibit 33; 4. Month by month acquisition review for the period 28 August 2017 to 27 August 2018 at exhibit 38; 5. Month by month acquisition review comparison for the previous 12 month period at exhibit 39; 6. Screen grabs of SEO main pages with keywords at exhibit 40; 7. Pre SEO analysis at exhibit 41; 8. Screen grabs of optimised images on SEO main pages at exhibit 42; 9. Acquisition overview at exhibit 43; 10. Screenshots pre and post SEO at exhibit 44;
5. Prior to entering into the Contract MC had a large number of questions which SEO answered by a number of phone calls and emails (contained at tab 1 of SEO's documents), which establishes that MC had thoroughly reviewed the terms of the draft contract before agreeing to be bound by it.
6. The Contract has an exclusion clause at clause 11, which provides amongst other things the following exclusions: "SEO North Sydney will endeavour to improve the Customer's search engine rankings on selected keywords and phrases, however SEO North Sydney does not guarantee that the Customer's website will rank in any particular position, or attain any level of website traffic as a result of the work undertaken, unless expressly provided to the contrary in this Agreement. SEO North Sydney is not liable for changes to the position of the Customer's website in any search engines. SEO North Sydney will employ various methods in the attempt to improve the rankings of the Customer website in search engine results. The Customer acknowledges that at any time search engines such as, but not limited to, Google, Bing, Yahoo! and Ask can re-evaluate a particular method, weighting and/or algorithm. This may lead to a lower ranking of the Customer's website on particular search queries."
7. SEO submits that SEO substantially grew MC's organic search traffic, despite the fact that Google constantly changes the rules of searching and what might work with search engine optimisation one day, might not work the next.
8. SEO also gave oral evidence that there was a period of time MC had banned SEO from accessing parts of MC's website which then prevented SEO from being able to do work under the Contract. SEO submitted that notwithstanding this ban, SEO still managed to achieve increased traffic to MC's website. MC denies there was a ban and said there was no objective proof to establish to the Tribunal there was such a ban.
9. SEO contends that MC is liable for a second term under the Contract and accordingly, an order should not be made relieving MC of payment for the second term, but instead a money order should be made in favour of SEO pursuant to the Tribunal's power contained in section 79O of the Fair Trading Act, in the sum of $24,000 plus GST. The reasons for this claim are summarised as follows: 1. Item 1 of Appendix 1 of the Contract provides that the Contract will automatically renew every 12 months unless SEO receives notice in writing to a specified email to the contrary 30 business days prior to the ending of the agreement; 2. MC did not validly terminate the Contract by way of its email dated 26 July 2018 because 30 business days' notice was not given; 3. The Contract renewed for a further term to 28 August 2019; 4. SEO claims that it has now terminated the Contract due to non-payment of fees by MC; or SEO claims in in the alternative that MC has repudiated the Contract which repudiation SEO have accepted; 5. SEO claims the full amount of $24,000 plus GST under the second term of the Contract.

Decision

1. There was no issue that the parties had entered into a written contract. The Contract is at Exhibit C of MC's documents and is dated 28 August 2017. At the hearing the parties worked through each of the Service Specifications (item 3 on Appendix 1 to the Contract). MC's representatives gave oral evidence and relied on documents to submit that each of the items had been breached by SEO. SEO's representatives also relied on oral evidence as well as documents to submit that each of the service points had been complied with (unless there had been a specific agreement for particular items not to be done such as the word blogs).
2. Although the parties entered into a written contract, Clause 3 of the Contract provides that the parties will consult with each other and draft a "Customer Specification". I thought this document might provide some clarification regarding performance standards. When I raised the issue of whether such a document existed, both parties agreed that there was no separate written document as such which constituted the "Customer Specification".
3. Given the amount of technical evidence presented at the hearing by both parties, I am satisfied that search engine optimisation is a very technical area. The heart of MC's complaint is that no initial benchmark was prepared by SEO to facilitate future comparisons of whether there was an increase in traffic on MC's website or not. SEO in answer to this complaint relies on Google results which it says show increases in organic searches over the period of SEO's engagement and such increases, in themselves prove that SEO's services provided MC with improved results.
4. Neither party provided an expert report to analyse the data and to give an opinion on whether SEO had breached the Contract or not, and if so what those breaches were. When I raised the query at the hearing whether either party had considered obtaining an expert report, the only answer that was offered was that it would have been expensive. MC has submitted that internet traffic on its website has decreased over the course of the Contract period because SEO has failed to comply with the Contract. SEO has submitted the exact opposite, namely that traffic has significantly grown, directly as a result of SEO's performance under the Contract. This is a substantial difference in opinion. The Tribunal's role is not to resolve disputed factual matters by applying its own specialist knowledge, skill and/or experience but its role is to consider, weigh and assess the evidence provided by the parties in making findings of fact (as held by the Tribunal's Appeal Panel in Saeedi v Fisher & Paykel Appliances Pty Ltd [2016] NSWCATAP 235 (1 November 2016)).
5. The NCAT website describes the role which an independent expert plays in contested proceedings; they are often used when evidence is needed about a subject of specialist or technical knowledge. A report from a suitably qualified expert would ordinarily involve a review of the relevant technical evidence provided by the parties, and based on that review, the expert would then address the contested issues giving an opinion on those issues and fully explaining the reasons why that opinion was held, referrable to the expert's qualification and experience. Ordinarily, that report would contain an opinion as to whether in the expert's opinion there had a been a breach of the contract or the Australian Consumer Law, or another set of standards such as industry code.
6. In this case, absent an appropriately qualified independent expert evidence from either party to provide an objective opinion on the technical information and whether based on that information, SEO has complied with the Contract or not, or whether there has been an improvement in traffic, I find that there is no basis for the Tribunal to prefer one's party's position over the other party's position. As the Supreme Court of NSW held in Neville v Lam (No 3) [2014] NSWSC 607: "in some circumstances a Court may find itself unable to choose between competing versions. In such a case, the party upon whom the burden of proof lies will have failed to discharge it..."
7. I am not satisfied on the evidence that MC has been able to discharge the onus of proving (at the requisite standard of proof being the balance of probabilities) that SEO has failed to comply with the Contract and/or that traffic on the website has decreased due to SEO's failure to perform its obligations under the Contract, particularly in light of the exclusion in clause 11 of the Contract (which is set out above). Accordingly, I find that MC's claim against SEO does not succeed on the evidence.
8. In terms of SEO's claim against MC (for $24,000 plus GST), SEO claims that MC has not validly terminated the Contract because MC has failed to provide 30 business days' notice as required under the Contract. There was no issue that MC had provided at least 30 ordinary days' notice. MC submitted that the Contract was a small business contract to bring it within the ambit of section 24 of the Australian Consumer Law and the term requiring 30 business days' notice, in the termination clause when most other references in the Contract is to "days" being ordinary days, meant it was an unfair term. In order for section 24 to be invoked, the Tribunal ought be satisfied that the contract was a small business contract. The respondent contested that it was a small business contract, but did not put forward any evidence to contest this proposition. Section 23(4) of the ACL sets out the criteria of a small business contract, I am satisfied on the evidence that at least one the parties employed fewer than 20 people and that the contract price was less than $300,000, and these factors brought it within the criteria of a small business contract.
9. Section 24 sets out what an unfair term is. It is unfair if: 1. It would cause a significant imbalance in the parties' rights and obligations arising the contract; and 2. It is not reasonably necessary in order to protect the legitimate interests of the party who would be advantaged by the term; 3. It would cause detriment (whether financial or otherwise) to a party if it were to be applied or relied upon.
10. Section 24(4) provides that a term is presumed not be to be reasonably necessary in order to protect the legitimate interests of the party who would be advantaged by the term, unless that party proves otherwise.
11. SEO did not lead any evidence to submit that 30 business days was reasonably necessary to protect its legitimate interests. Accordingly, I am satisfied on the basis of the presumption in section 24(4) of the ACL that the term (requiring 30 business days' notice) was not reasonably necessary in order to protect the legitimate business interests of SEO as described in section 24(1)(b) of the ACL. I am satisfied that if the requirement of 30 business days was enforced it would cause MC a financial detriment as it would cause the Contract to roll into a second term of 12 months. I find the term to be unfair for the further reason that many of the termination rights of SEO as set out in clause 14 of the Contract were immediate and where there are references to "days" in clause 14, they are ordinary days not business days. I find that this is a significant imbalance between the rights and obligations of the parties for the purposes of section 24(1)(a) of the Australian Consumer Law. For these reasons I find the requirement of 30 business days to be unfair.
12. If I have erred in my findings regarding the termination clause being an unfair term under the Australian Consumer Law, then I must still be satisfied when making any orders that they are fair and equitable between the parties - (section 79U of the Fair Trading Act). For the purposes of section 79U(h)(iii) of that Act I am satisfied that the requirement of MC giving 30 days' notice having to be business days rather than ordinary days, was a provision that was not reasonably necessary to protect SEO's interests. The reason for this is that most references in the Contract mean ordinary days and there was no evidence from SEO that business days rather than ordinary days was reasonably necessary to protect its interests. Accordingly I find that it would not be fair or equitable to make an order that MC pay SEO the full amount of a second term, when the basis for SEO's claim relies on a term that I have found was not reasonably necessary to protect its interests, and if the notice was ordinary days, then MC had given sufficient notice of its intention not to proceed with a second term.
13. The Tribunal declares under section 79N(d) of the Fair Trading Act that MC is not liable to SEO for a second term of the Contract and the Tribunal declines to make an order under section 79O of the Fair Trading Act in favour of SEO regarding the claim for $24,000 plus GST.
14. SEO has sought costs of the proceedings. Section 60 of the Civil and Administrative Tribunal Act NSW 2013 provides as follows: (1) Each party to proceedings in the Tribunal is to pay the party's own costs. (2) The Tribunal may award costs in relation to proceedings before it only if it is satisfied that there are special circumstances warranting an award of costs. (3) In determining whether there are special circumstances warranting an award of costs, the Tribunal may have regard to the following: (a) whether a party has conducted the proceedings in a way that unnecessarily disadvantaged another party to the proceedings, (b) whether a party has been responsible for prolonging unreasonably the time taken to complete the proceedings, (c) the relative strengths of the claims made by each of the parties, including whether a party has made a claim that has no tenable basis in fact or law, (d) the nature and complexity of the proceedings, (e) whether the proceedings were frivolous or vexatious or otherwise misconceived or lacking in substance, (f) whether a party has refused or failed to comply with the duty imposed by section 36 (3), (g) any other matter that the Tribunal considers relevant.
15. SEO submits that it is entitled to costs for the following reasons: 1. MC introduced new evidence at the hearing; 2. MC provided a lengthy submission on 13 February 2019 when the Tribunal had a ordered a brief submission; 3. MC raised new allegations in the document of 13 February 2019; 4. MC made scandalous and baseless allegations of improper behaviour against SEO throughout the hearing and in the documents filed in the proceedings; 5. MC has conducted the hearing in a way that has unnecessarily disadvantaged SEO; 6. The case has taken unreasonably long; 7. MC has not followed the Tribunal's orders; 8. MC's case is hopeless, vexatious and frivolous; 9. MC's case is one of buyer's remorse.
16. For costs to meet the threshold of "special circumstances" of section 60(2) the circumstances ought to be out of the ordinary. I am not persuaded that there is any part of this case which I would find to be out of the ordinary to justify the Tribunal to exercise its discretion to order costs against MC. Firstly, MC has been partly successful in that I have declared that no monies are owing by it to SEO under a second term. Other factors are set out below.
17. The matter was listed for 1 conciliation and group list hearing on 6 November 2018 and then for formal hearing on 7 February 2019. The application and cross application were finalised within 2 hearing listings, which is standard and for a case of this complexity, in fact represents fewer hearings than what might ordinarily be expected.
18. As to the claim that MC tendered a small bundle of new documents at the beginning of the hearing, this is not out of the ordinary. As to the complaint that MC provided a lengthy submission instead of a short one, I note that this submission only came about because SEO tendered a written submission towards the end of hearing, which necessitated an opportunity for MC to put on a further submission. I do not accept the submission that the MC did not have an arguable case; MC has been unsuccessful for part of its claim because it has not discharged the onus of proof; there is no independent expert evidence from SEO which the Tribunal could rely on to make a finding that MC's case was hopeless and without basis as claimed by SEO.
19. The Tribunal is a self-represented Tribunal (section 45 of the Civil and Administrative Tribunal Act). A party may be granted leave to be legally represented but it does not follow that the circumstances are "special" and a costs order should be entertained. Parties engage lawyers for advice and/or legal representation as a matter of commercial preference, and it is at that party's risk that the costs incurred will not be met by the other party if the other party does not succeed.
20. The Tribunal is not satisfied that any of the matters raised in paragraph 17 of the submissions of SEO dated 27 February 2019 establish the circumstances of this case to be "special" for the purposes of section 60(2) and accordingly the costs application is refused and I make an order that each party ought pay its own costs in accordance with section 60(1).

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 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 07 June 2019