Rogers v Whitaker

NCAT Consumer and Commercial|2023-08-15

REASONS FOR DECISION

This is a claim by the applicant that she paid for a consulting service for the development of her website, the program, "The Digital Accelerator Program" with a duration of 12 weeks was not provided as contracted by the parties and that the work was not completed with due care and skill pursuant to Section 60 of the Australian Consumer Law (NSW). The applicant seeks the amount in compensation of $9,000.00. The contracted amount was $18,000.00.

Jurisdiction

I am satisfied that I have jurisdiction to deal with this application under Part 6A of the Fair Trading Act, 1987 ("FT") (sections 79I and 79J) as a "consumer claim" as that term is defined in section 79E of the FT Act in that it is a claim for a specified sum of money that arises from the supply of services to the applicant by the respondents. The applicant is a consumer as that term is defined in section 79D of the FT Act in that they are natural persons: sub-section 79D(a). No attempt has been made to prove the contrary; section 79H of the FT Act.

Evidence of the applicant

The applicant works as a personal trainer, and she was commencing her on on-line business after leaving the current gym that she was working as a contractor. She required assistance to set up her new website for her on-line business.
On 10 January 2023 she contracted with the respondent for the Big Uppetite Digital Accelerator Program. This was a 12-week program had more inclusions than some of the other packages offered by the respondent. The applicant was to carry out some of the smaller tasks of the website to speed up the process.
In the first 2-3 weeks the applicant was mostly satisfied with the work including the log, brand mark and brand guidelines. However, she wasn't totally satisfied with the brand mark and some changes were required to the brand guidelines.
On 16 February 2023 the applicant requested a change in the brand and on 14 February 2023 that everything was in development and whether she wished to have a revision and she asked about the change to the brand mark.
The applicant entered a contract Exhibit R1 [26 to 64 and Annexure 8 to 10] IN Exhibit R1 [36] it refers to the work that was to be provided to the applicant which includes Design and Creatives, Operations and Development, and Support and Business Coaching. The applicant claims in her email dated 25 April 2023 to the respondent, she was to terminate the contract. The applicant claims that she was offered support to have business up and running with the inclusions of all things design and website and would mentor her through the process. The applicant claims that only 2 generic PowerPoint presentations that were rushed through and sent to her. The applicant claims that she advised the respondent that everything needed to be live in around 8 weeks and that she was assured that businesses would be launched around 8 or 9 weeks and that she was in week 15 and that the product had not gone "live."
The first website draft had been received on 7 February 2023 and 16 February 2023 and that the brandmark was to be changed. The applicant claims she was told that everything would need to be re-designed. She claims that she told the respondent that she did not want a photoshoot for the site as she couldn't afford it and waited on the second draft of the website.
The second draft was presented on 6 April 2023 which the applicant claims she had concerns about especially the cut images and she claims that she was assured that it was just a draft. On 21 April 2023 the applicant was presented with the work and she claims that the work was "appalling." Her edits had not been taken into consideration and that the template had been used for other clients of the respondent. The applicant claims that communication during the period was difficult with the respondent and that she had looked at other brands and realised that it was the exact the same templated for most. The applicant claims that she is out of pocket with nothing to show for it and was given minimal to no education. The work was a copy and paste and that her voice wasn't listened to and on 25 April 2023 requested a refund.
The applicant included in her documents an email dated 28 April 2023 from the respondent: "I certainly disagree with the claims made in this email … We delivered the website subject to your feedback within 3 weeks from receiving your images given the Easter public holidays and company closures which is a completely reasonable time frame… The adamacy on launching within 9 weeks from the commencement was never ever something communicated either verbally or written by you.. While we strive to launch around week 9 the program is a 12 weeks long to provide this period of execution. Your feedback has been abrupt at times but you have never been deterred from providing your feedback and have done so on a number of occasions, this has not be held back or changed in nature throughout the engagement…In terms of turnaround, with any new feedback we've implemented your requests immediately to achieve the end result of milestone completion. In saying that what has been completed, and received your approval and satisfaction includes: Your logo and brand design Your brand guideline Your client weekly emails Your launch graphcs Your social media templates Your social media highlights Your email and EDM banners Your email signature Client management spreadsheet Sales training videos with Jenna We have communicated weekly with Slack correspondence along the way and had 9 calls with two calls worth in our final call… we spent many hours in total, your questions answered and discussions had in each call time."
The applicant claims in her statement dated 16 June 2023 that not long after she received the Tribunal date that she received a call from the respondent, and she offered to finish the website using a different team and the applicant refused this offer as she no longer had faith in the respondent to provide quality work. Overall, she was disappointed with the service provided and that it was not delivered in a timely manner, and that the applicant has lost significant income, called names and treated unprofessionally, the work provided was not tailored to her but rather a copy and paste website, the quality of the product was poor for a premium price and she has nothing to show for the money and requests a refund of $9,000.00.

Evidence of the respondent

The respondent claims that the applicant has paid $12,000 and that she was contracted to pay $18,000. It is the respondent's claim that the applicant is not entitled to any refund and that there is an amount of $6,000 that remains outstanding. In particular the respondent points to Clause 2 and Clause 28 (however this appear to be clause 38 - no partial refunds) of the Contract that there are no refunds or partial refunds. The respondent claims that the respondent would not work towards resolving the dispute and terminated the contract.
The services provided in the accelerator program included: Brand identity creation and guidelines Website development Lead generator development Marketing strategy and materials Go-to-market strategy Social media growth strategy Email marketing content Customer journey optimisation Client portal build Project Management Business coaching and support Growth strategies and revenue-driving tactics Lifetime access to business builder's community
The respondent claims that the applicant had been satisfied with the work to 25 April 2023 and that the website was delivered subject to the feedback.

Consideration

The claim is that the respondent has breached the contract with the respondent and that pursuant to Section 60 of the Australian Consumer Law that the services were not provided with due care and skill. The claim by the applicant that she is disappointed with the service provided and that it was not delivered in a timely manner, and that the applicant has lost significant income, called names and treated unprofessionally, the work provided was not tailored to her but rather a copy and paste website, the quality of the website

The contract not provided in a timely manner

The applicant agrees that some of the contract was performed being a logo, brand guide, social media, templates, an email signature and copies of the workshop PowerPoint, however, the applicant claims that the contract was not performed in the timeframe agreed and that the work was not to an acceptable standard.
The respondent disputes the claims that the images provided by the applicant to the respondent for the website were substandard and the respondent claims that the applicant decided to change her brand during the process that led to the delay that the applicant claims. The respondent claims that the applicant was instructed to have a photoshoot as is industry standard which forms part of the mentoring service which were declined, and the applicant provided photographs after the stipulated date.
The contract in Exhibit R1 provided that the service the Accelerator Program was to be provided by a one upfront payment of $16,500 or by instalments. It is uncontroversial that the applicant had paid the amount of $12,000. The respondent claims that $6,000.00 is still owed by the applicant.
The onus of proof is on the applicant to establish to an objective standard that the respondent did not provide services that were completed with due care and skill pursuant to the Australian Consumer Law (NSW): s 61.
The series of breaches should reach the civil standard that the Tribunal is satisfied that an order should be made for compensation. The evidence of the respondent is that there was no formal agreement that the website would be "live" within 8 weeks and that it would something that they would aim to achieve. The contract was entered on 10 January 2023. The respondent claims that she was sent two emails by the applicant on 12 January 2023 that she respondent to within 24 hours and on 14 January 2023 the respondent contacted her to book the first session. The respondent claims that during the onboarding and consultation period the applicant did not mention that she was changing jobs or that she would be relying on the website.
On 18 January 2023 the parties had a "First Discovery Call" and then there was subsequent correspondence with the applicant on 23, 27, 31 January 2023. On 7 February 2023 a draft mock-up was sent to the applicant and that minor amendments were made however, according to the respondent the applicant was on whole satisfied with the web design.
The respondent claims that when it comes to developing a website it will vary on the needs of the client, however, they generally use a website template that they adapt and customise to each client. The template themes and designs are used to streamline the process with regards to colours, typography, layout, and style. The templates are pre-designed frameworks or structures that serve as starting points for creating websites and come with pre-built-in layouts, styles and functionability allowing developers to save time and effort.
The respondent claims that the use of templates is the usual practice within the industry. The applicant's website was straight forward and did not require custom coding. The respondent used templates as a foundation for style but still developed the website and its other inclusions such as the lead generator which was a common practice in development. The respondent claims that they have never said to a claim that they would be given a custom created website that was built from scratch with custom coding.
There are a series of emails from 14 February 2023 to 10 April 2023 there were a series of interactions with the applicant and the respondent concerning the website. On 12 April 2023 the applicant sent a message to the respondent "…can I ask when we think the website will be completed and we'll be able to go live with it. I understand that you guys are super busy but I'm concerned that this is going to take another few weeks and I really need it up and running ASAP… Would love to know what I can expect since we're now in month 4 and initially was under the impression it would be live by week 8." In a response on the same day the respondent claims "We've moved as quickly as possible since receiving your shoot images at the end of March and reskinned within the week… I'll send you the social media assets which I know you've discussed with Katie and I intended to go over in our handover meeting though will press forward with quickly now."
On 14 April 2023 the respondent acknowledged that the applicant had concerns about the time and combined two meeting about the website into one and met the applicant. On 21 April 2023 the applicant contacted the respondent that the link to the website did not work and advised the respondent that the website had to be live by week 8.
The respondent claims that there was no formal agreement for the website to be "live" by week 8 it was something to be aimed to achieve. On 21 April 2023 the applicant had raised a number of concerns including the colours of the website and on 24 April 2023 the respondent told the applicant that the respondent was willing to work with the applicant to resolve concerns about the website. On 25 April 2023 the applicant terminated the contract. Then claim by the respondent is that the delays to the website going live were caused by the delays in the photo shoot caused by the applicant. As to solutions to resolve the matter, the respondent agreed to cease the contract and not complete the work and the applicant would be able to keep the material and not pay the remaining invoices or that the two remaining invoices be paid out.
In my view, having heard and read the submissions of both parties there was no certainty and no formal agreement by the respondent that the website would be live within 8 weeks. This was the aim of the parties as opposed to being a firm date. No date was proposed by either party and this did not form part of the written contract. The applicant claims that the respondent was aware that the applicant wasn't having a photoshoot, however the respondent claims that the photoshoot led to a delay. There is no correspondence that the respondent was aware of this and therefore I cannot be satisfied to the civil standard that the respondent was aware that the applicant had opted for no photo shoot. It appears that this lack of communication led to a delay and there were a number of changes to the brand mark. I find while there was delay of a number of the delays were caused by the applicant and therefore any breach was not a material breach in order to terminate the contract. I further find that training was provided by the respondent in the emails that corresponded between the parties. These claims are dismissed.

The quality of the website and whether it was not completed with due care and skill

The Tribunal must be satisfied that the service provided by the respondent was not provided with due care and skill. This is an objective assessment that the work of the respondent was not completed with due care. In S.G. Corones The Australian Consumer Law (2019) LawBook Co the author refers to due care and skill and that it is similar to the common law duty of care and skill in negligence cases as expressed in the High Court in Rogers v Whitaker (1992) 17 CLR 479 and what is expected of the "reasonable" person or service provider. The care and skill required of a professional will be objectively assessed by the standards and procedures adopted by the relevant field. The specialist will be required to attain the ordinary level of skill, competence and diligence of those who specialise in the same field.
The consumer guarantee is that services be provided with due care and skill that is implied into consumer contracts is a guarantee that the services will be performed in a "careful, skilful, and workmanlike" manner. However, the test is an objective test (Mayne Nickless Ltd v Crawford (1992) 59 SASR 490; Read v Nerey Nominees Pty Ltd [1979] VicRp 6; [1979] VR 47 at 49; S.G. Corones The Australian Consumer Law (2011) Lawbook Co pp 361-362), and all of the facts and circumstances must be considered in the context of the application of an objective standard of due care and skill: see for instance Liu v Zaccaria trading as Precision Automotive Engineers [2017] NSWCATCD 59 from [71].
In Scenic Tours Pty Ltd v Moore (2018) 361 ALR 456, Sackville AJA (Payne JA and Barrett AJA agreeing) said at [174]: The text of s 60 does not imply and certainly does not compel the conclusion that if there is a contract in place between the supplier and the consumer the obligations imposed on the supplier by the Care Guarantee [in section 60] are co-extensive with the supplier's contractual obligations. Unless there is some contextual reason to construe the Care Guarantee in s 60 of the ACL as applying only to "services" that are co-extensive with the supplier's contractual obligations, there is no basis for doing so. The same can be said for the Purpose and Result Guarantees. For the purposes of section 60, the question of whether there has been a failure to carry out the services with due care and skill is not one to be considered in the abstract, but in the context of the contractual terms agreed by the parties. The standard required under the contract, or by the ACL, is not perfection: RG Concrete & Polish Pty Ltd v Smart (Civil Claims) [2019] VCAT 722 at [55].
The contract in Exhibit R1 Clause 36 refers to the Accelerator Program which can be paid as an upfront payment or instalments.
The applicant has not provided any evidence of a professional nature from expert that the website was not completed within the terms of the contract and with due care and skill. In order for the Tribunal to assess whether the website was not completed with due care and skill the Tribunal needs to assess the work compared to those that provide similar as to determine whether there was a failing of the respondent. The applicant refers to her statement in Exhibit A1 [5] page 17 of a professional developer confirming her worries and thoughts, however no report was prepared by that developer or any website developer that the work was not completed with due care and skill. The respondent claims that the work was carried out to the industry practice and standard.
The claim is lacking an expert report that disputes the claim by the respondent that the work was completed to an industry standard and that that the failure amounted to a material failure in contract or a major failure pursuant to Section 260 of the Australian Consumer Law . Therefore, these claims are dismissed. The consequences of my finding would be that the contract would be continued to be performed. However, the respondent terminated the contract on 9 May 2023.

Termination of the contract by the respondent

In the letter JJB Attorneys dated 9 May 2023, Exhibit R1[150] that the relationship between the parties had deteriorated to such an instance that a mutually beneficial working relationship is no longer possible. Additionally, you have restricted our clients access to your website.
It is due to your breach of the terms of the agreement as stated above that our client hereby invokes their right to cancel the agreement, and which is contained in Clause 26.
The applicant had already claimed to terminate the contract on 25 April 2023 which was rejected by the respondent. The respondent claims that there is no provision in the contract for the applicant to terminate the contract and claim a refund. Contract Clause 26: In the case of contract violation or other ethical concerns we (Big Uppetite) reserve the right, in my sole discretion, to terminate your consulting and the related services or any portion of it at any time, without notice. If your course is terminated, the following provisions will apply: a. Any fees you have paid at that time will not be refunded b. Big Uppetite will no longer be obligated to provide you with any further information regarding the consulting Program. c. You will not need to pay any remaining fees. A processing fee will be deducted from remainder fees for refund.
While both parties wanted the contract terminated. In Exhibit R1 [5] the respondent claims that she is entitled to the remaining fees of $6,000 and they intend pursing the balance owed. However, this contradicts Clause 26 (c) of the contract that the respondent will not pursue the remaining fees.
Further, the contract does not provide for the applicant to be able to terminate the contract for non-performance of the work agreed by the respondent. Clause 26 provides only for the respondent to terminate the contract. Clause 26(a) of the Contract provides that any fees you have paid at the time will not be refunded. This does not take into account the fees that were paid by the applicant and the work that has not been completed by the respondent.
The applicant paid the amount of $12,000 for the services of the respondent. The Tribunal had asked the respondent during their oral evidence whether they could itemise the work completed. However, the respondent could not break down the cost of the work that had been completed but told the Tribunal that the work completed amounted to $12,000.00.
The applicant claims that she did not receive the following inclusions: Strategising service offering Social media mood board Social media strategy Email banner templates Website and optimised operations Optimised client journey Automation Email copy for leads AND current clients (which I received, I had to rewrite) Sales funnel for leads Email marketing strategy Business coaching and mentoring Client retention and loyalty program Client referral and loyalty program Client referral and WOM initiatives How to innovate Accountability
On balance, I accept that the applicant did not receive the work that she claims were to be inclusions and these items remain outstanding at the time of the termination of the contract by the respondent.
In Australian Competition and Consumer Commission v Chrisco Hampers Australia Limited [2015] FCA 1204 (Chrisco), Edelman J explained how these provisions operate. At [43]-[44], His Honour said: In his eloquent submissions, senior counsel for Chrisco emphasised a number of matters concerning the construction of s 24, all of which I accept: (1) for a term to be unfair it must satisfy the requirements of all of s 24(1)(a) to (c); (2) the onus is upon the applicant to prove the matters in ss 24(1)(a) and 24(1)(c) but it is upon the respondent in relation to s 24(1)(b); (3) s 24(2)(a) only requires the Court to consider transparency in relation to the particular term that is said to be unfair and only in relation to the matters concerning that term in s 24(1)(a) to (c); (4) similarly, the assessment of the contract as a whole in s 24(1)(c) only requires the Court to consider the contract as a whole in relation to the particular term that is said to be unfair and only in relation to the matters concerning that term in s 24(1)(a) to (c); (5) as the Explanatory Memorandum to the Trade Practices Amendment (Australian Consumer Law) Bill (No 2) 2010 (Cth) provided at [5.39], "if a term is not transparent it does not mean that it is unfair and if a term is transparent it does not mean that it is not unfair"; and (6) guidance can be had to s 25 which provides examples of unfair terms. Although there was some dispute about (5), a contextual approach to statutory interpretation cannot ignore the matters provided in s 25 which are specifically provided for the purpose of giving examples of potentially unfair terms: see also Jetstar Airways Pty Ltd v Free [2008] VSC 539, [110] and [114] (Cavanough J); Director General of Fair Trading v First National Bank Plc [2001] UKHL 52; [2002] 1 AC 481, 481 [17] (Lord Bingham). Further, the Explanatory Memorandum to the Trade Practices Amendment (Australian Consumer Law) Bill (No 2) 2010 (Cth) in which these provisions were introduced, provided in [5.44] that the examples in s 25 "provide statutory guidance on the types of terms which may be regarded as being of concern. They do not prohibit the use of those terms, nor do they create a presumption that those terms are unfair". See also the second reading speech of the Trade Practices Amendment (Australian Consumer Bill) 2009, Hansard, House of Representatives, 24 June 2009, 6986 (Dr Emerson).
There is no account itemised of the work performed by the respondent when the contract was terminated by the respondent. The retaining of $12,000.00 by the respondent were all of the monies paid by the applicant during the course of the contract. The term in clause 26 (a) of the contract provides a significant imbalance in the rights of the parties and is not reasonably necessary in order to protect the legitimate interests of the party and would cause detriment to the applicant if relied upon. The term is not transparent, retaining all fees paid does not provide for transparency of the work completed and monies that may be owed back to the applicant: Section 23 (1) (a) to (c) of the Australian Consumer Law. I find that clause 26 (a) of the contract is unfair as the work completed cannot be itemised and it would be unfair for all the fees paid to be not refundable where the applicant is entitled to be refunded for work not completed.
While the work completed is not itemised with a cost, I am required to assess the work not performed during the term of the contract to ascertain what amount of $12,000.00 is payable back to the applicant. In accordance, with Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64; [1994] HCA 54 at 83 (Amann), where Mason CJ and Dawson J said: "'The settled rule, both here and in England, is that mere difficulty in estimating damages does not relieve a court from the responsibility of estimating them as best it can. Indeed, in Jones v Schiffmann Menzies J. went so far as to say that the 'assessment of damages … does sometimes, of necessity involve what is guesswork rather than estimation'. Where precise evidence is not available the court must do the best it can. And uncertainty as to the profits to be derived from a business by reasons of contingencies is not a reason for a court refusing to assess damages. (Footnotes omitted)'"
The total of contracted amount was $18,000. The amount paid by the applicant was $12,000. The work that was not completed is in paragraph [41] of this decision. I assess from the work that was not completed during the term of the contract to be the amount of $3,000.00 and that amount is payable to the applicant by the respondent.

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: 13 August 2024

At a glance

Court

Decision date

Catchwords

Source

Catchwords

Judgment (9 paragraphs)

Parties

Cases Cited (9)