Global Network v Legion Telecall
[1999] NSWSC 1090
•10 November 1999
CITATION: Global Network v Legion Telecall [1999] NSWSC 1090 CURRENT JURISDICTION: Equity Division
Commercial ListFILE NUMBER(S): 50278/96 HEARING DATE(S): 15/02/99 - 18/02/99
25/10/99 - 27/10/99JUDGMENT DATE:
10 November 1999PARTIES :
Global Network Services Pty Limited - Plaintiff
Legion Telecall Pty Limited - DefendantJUDGMENT OF: Rolfe J
COUNSEL : Mr P. LeG. Brereton SC/Mr M.K. Meek - Plaintiff
Mr J.W.J. Stevenson - DefendantSOLICITORS: Michael Saunders & Associates - Plaintiff
Watson Mangioni - DefendantCATCHWORDS: Construction of "one-off" Agreement:; Mitzui Construction Co Limited v Attorney General of Hong Kong (1986) 33 Build LR 1; Antaios Cia Navierasa v Salen Rederierma AB [1986] 1 All ER 794; Hide & Skin Trading Pty Limited v Oceanic Meat Traders Limited (1990) 20 NSWLR 310 and Australian Broadcasting Commission v Australasian Performing Right Association Limited (1973) 129 CLR 99 at p.109.; Consideration of measure of damages for lost opportunity:; Malec v J.C. Hutton Pty Limited (1990) 169 CLR 638; Sellars v Adelaide Petroleum NL & Ors (1994) 179 CLR 332; Norris v Blake (No 2) (1997) 41 NSWLR 49, at p.67 and Tszyu v Fightvision Pty Limited & Anor (1990) NSWCA 323 (13 September 1999). DECISION: 1. Judgment for the plaintiff against the defendant in the sum of $120,764.53 to which interest will have to be added; 2. The defendant's cross-claim be dismissed
I N D E X
PageIntroduction 1
The Pleadings 3
The Amended Cross-Claim 11
Matters Not In Dispute 12
The Agreement 13
A Refinement Of The Issues 22
Legion’s Defence Of Variation 24
The Plaintiff’s Submissions On Construction 33
Was The Agreement Varied? 47
Waiver 53
Repudiation 54Abandonment 55
The Giving Of Reasonable Notice 57
Conclusions Thus Far 59
Damages For The Failure To Provide All Calls To Global 59
Legion’s Claim For Damages On The Cross-Claim 75
Call Failures 85
Conclusions 921 By a Summons issued on 24 December 1996, which was amended by an Amended Summons filed in Court on 15 February 1999, Global Network Services Pty Limited, (“Global”), for which Mr P.LeG. Brereton of Senior Counsel and Mr M.K. Meek of Counsel appeared, sued Legion Telecall Pty Limited, (“Legion”), for which Mr J.W.J. Stevenson of Counsel appeared. Global alleged, under the heading “Nature of Dispute”, that it has been, at all material times, a provider of telephone psychic reading services by making available astrologers, star card readers, fortune tellers and similar services to members of the public on “190” telephone numbers, i.e. telephone numbers commencing with those numbers; that Legion has been, at all material times, a service provider of telephone lines to handle premium rate audiotex services; and that it contracted with Legion to provide psychic reading services on telephone lines supplied by Legion. It sued Legion for damages for breach of the terms of the contract, which, it alleged:-
THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
COMMERCIAL LISTROLFE J
WEDNESDAY, 10 NOVEMBER 1999
50278/1996 - GLOBAL NETWORK SERVICES PTY LIMITED v LEGION TELECALL PTY LIMITED
JUDGMENT
HIS HONOUR :
Introduction
2 Global identified the issues likely to arise as:-
“(a) obliged Legion to direct all 190 psychic and psychic-related call processing requests to Global (with the exception of the one-off Athena Starwoman - Woman’s Day Star Cards Promotion); and
(b) entitled Global to receive the residual moneys from the bad debt retention levy of 20% charged by Telecom, remitted by Telecom to Legion after a period of 7 months in respect of services promoted by Global using Legion solely as service bureau.”
“1. Whether Legion directed all 190 psychic and psychic-related call processing requests (with the exception of the one-off Athena Starwoman - Woman’s Day Star Cards Promotion) through Global’s psychic call centre, and, if not, then the number and value of the 190 psychic and psychic-related call processing requests which Legion did not direct through Global’s psychic call centre.
2. In particular, whether Legion has redirected calls on the Psychic Express service to Legion’s own Mystic Meg 190 line, and if so the quantity and value of calls so diverted.
3. Whether Legion has received from Telecom residual moneys from Telecom’s bad debt retention levy, in respect of services promoted by Global using Legion solely as service bureau, and if so the amount of such moneys.”
The principal issue was whether Legion had the obligation referred to in (a) above, it not being in dispute that there was no diversion as alleged in paragraph 2, save for a period after about 15 December 1995, and that Global was entitled to recover certain residual moneys, the amounts being $4,896 and $10,868.53 respectively.The Pleadings
3 In its Summary of Contentions, Global pleaded in paragraph C1 that it entered into a written Agreement with Legion on 30 November 1994 for the provision of a live psychic reading premium rate service on the 190 InfoCall Network. Legion admitted the entry into the Agreement on the date specified, relied on its terms as if they were set out in full, “but save as aforesaid” denied the Agreement contained the terms alleged in paragraph C1(f), and otherwise did not admit the allegations in that paragraph.
4 It pleaded that pursuant to the Agreement, Legion undertook to provide access to telephone lines to handle premium rate audiotex services to be operated by live operators provided by Global, with Legion outswitching call traffic to an operator bureau operated by Global; and to supply Global with call figures and operator call reports relating to the services monthly or at such longer period as may be necessary due to circumstances beyond Legion’s control, and that operator call reports would be made available daily: sub-paragraphs (a) and (b). It further pleaded that Legion undertook to notify Global of revenue due to be payable by a monthly statement, and that payment would be made within 30 days after the month end in which calls were generated, subject to receipt of an invoice by Legion from Global for the revenue due: sub-paragraph (c); and that Legion agreed to direct all 190 psychic and psychic-related call processing requests through Global’s Psychic Call Centre, with the exception only of the then current one-off Athena Starwoman - Woman’s Day Star Cards Promotion: sub-paragraph (d). It continued that Global agreed to work for Legion on an exclusive basis on the service in Australia, and not to offer its Psychic Call Centre capability to any other service provider during the term of the agreement: sub-paragraph (e).
5 Sub-paragraph (f) alleged:-6 Sub-paragraph (3) pleaded that:-
“Legion agreed to pay Global a share of all the revenue calculated by Legion as being due from Telecom Australia using the call logging equipment for each number allocated to the service for the period, on the following basis:
(1) calls were charged to callers at $3 per minute, of which Legion received $2.45 per minute from which amount of $2.45 the share of revenue between Legion and Global was to be calculated but that the rate to callers was subject to change and in the event of such change the amount retained by Legion would also change and Global would receive a proportionate share of any increase in that amount.
Particulars
The term is partly express and partly implied. In so far as it is express it is contained in paragraph 4(a) of the agreement. In so far as it is implied it arises from the express term in order to give business efficacy to the express term.
(2) where Legion pursued independent promotional opportunities using Global solely as call centre then, in respect of calls charged to callers at $3 per minute, as follows:-”
There was set out a formula for payment, and the paragraph concluded:-
“with Legion to be responsible for payment of the uncollectible (sic) debt levy (20%) charged by Telecom and to receive the residual moneys retained after the period of 7 months retention by Telecom ..”
“where Global pursued independent promotional opportunities using Legion solely as service bureau then, in respect of calls charged to callers at $3 per minute:”
Another formula was set out, and the sub-paragraph concluded:-
“with Global to be responsible for payment of the uncollectible (sic) debt levy charged by Telecom and to receive the residual moneys retained after the period of 7 months retention by Telecom.”
7 The pleading continued that pursuant to the Agreement Legion provided Global with access to 5 designated telephone lines on which Global provided Psychic Live services exclusively to Legion, and to 19 designated telephone lines on which Global provided Psychic Express services exclusively to Legion. Legion admitted that pursuant to the Agreement it provided Global with access to those lines, but made no other admissions.
8 Legion also admitted paragraph 3, which alleged that pursuant to the Agreement Legion marketed the Psychic Live service using Global solely as call centre, and Global marketed the Psychic Express service using Legion solely as service bureau.
9 Global pleaded and Legion admitted the following allegations in paragraphs 3A and 4A:-
“3A. From 30 November 1994, Legion received psychic and psychic-related call processing requests on:
(a) the 190 Listed Lines; and
(b) other 190 telephone lines (the 190 Other Lines).
The other 190 psychic and psychic-related telephone lines on which Legion received calls can be supplied after discovery but include at least 190 226 4064 and 190 224 3622.
PARTICULARS
….
4A. Some of the calls received by Legion on 190 Other Lines were charged to callers at $5 per minute, of which Legion received $4.24 per minute.”
10 Global denied the breaches of the Agreement pleaded in paragraphs 4 and 4B, and the consequences allegedly flowing therefrom pleaded in paragraph 5. The breach of paragraph 3A pleaded was that in breach of the term pleaded in sub-paragraph 1(d) Legion failed to direct all psychic and psychic-related call processing requests received by it on the 190 Other Lines, save for the one exception, through Global’s psychic call centre. The breach of paragraph 4A pleaded was that pursuant to the term alleged in sub-paragraph 1(f)(1) Global was entitled to a proportionate share of $4.24, “on the footing of Legion pursuing independent promotional opportunities using Global solely as call centre”. The alleged proportionate share was stated. Legion also denied the breach alleged in paragraph 6 and the consequences allegedly flowing therefrom.
11 The consequences of the breaches pleaded were alleged to be that Global suffered loss, in that it lost the share of revenue to which it would otherwise have been entitled and, after providing particulars of damage, it claimed $755,143.45 on the assumption that all calls were $3 calls, and $1,480,561.20 on the assumption that all calls were $5 calls.
12 The pleading continued that from about December 1995, Legion, in breach of the term pleaded in paragraph 1(d) redirected calls on the Psychic Express service to its Mystic Meg 190 service, whereby Global suffered loss: paragraphs 6 and 7, which Legion denied; and that as at 31 May 1996 there was due and payable to Legion from Telecom residual moneys, from the bad debt retention levy in respect of services provided by Global pursuing promotional opportunities using Legion solely as service provider, in the sum of $10,868.53, which Legion admitted. Legion denied that pursuant to the term pleaded in paragraph 1(f)(3) Global was entitled to receive that sum.
13 Legion raised certain “positive” defences. In paragraph 8 it denied the matters alleged in paragraph 1(d) of the Amended Summons and asserted that, on a proper construction of the Agreement, it was only obliged to direct to Global calls made on the 190 Listed Lines. In the alternative Legion asserted, in answer to the whole of the Amended Summons, that it and Global agreed on or about 31 March 1995 that:-
(a) clause 4(a) and Schedule 1 of the Agreement would be varied so that the allocation of revenue between the parties, for the period commencing 1 April 1995, would be as set out in Legion’s letter to Global of 16 March 1995 and not as set out in Schedule 1; and
The variation agreement was particularised as partly express and partly implied, the express terms being in letters passing between the parties dated 16 March 1995, 29 March 1995 and 31 March 1995. The implication was said to arise from the absence of a response to the letter of 31 March 1995; the distribution of revenue after 1 April 1995 as set forth in Legion’s letter of 16 March 1995; and the fact that Global “wound down” the advertising of Global through Legion and promoted its psychic services through other service bureaus.
(b) any obligation of exclusivity in clauses 1(k) and 2(c) of the Agreement would be no longer binding on the parties.
14 On 17 February 1999 Legion further amended to plead that in so far as clause 1(k) imposed an obligation of exclusivity on it in respect of incoming calls, other than those referred to in paragraph 2 of the Amended Summons, Global waived its right to rely on and hold Legion to that obligation.
15 In paragraph 10 Legion pleaded in answer to paragraphs 1(f) and 4B that if there was an agreement between them as to the way in which revenue would be distributed if the call charge to callers was increased from $3 per minute, the agreement was that such revenue would be shared in the same proportion as if the Charge Rate had not increased. That term was said to be partly express and partly implied, the express portion arising from clause 4A of the Agreement, and the implication arising from the necessity to give business efficacy to that express term.
16 Paragraphs 11 and 12 alleged that from September to December 1995 Global, by its conduct, evinced an intention not to be bound by the Agreement, which conduct Legion accepted on or about 15 December 1995 as a repudiation in a telephone conversation between Mr Burden of Legion and Mr Turnbull of Global on or about that date.
17 Legion asserted a number of other matters, which allegedly entitled it to bring the Agreement to an end or meant that no damage was suffered, viz:-18 Finally, Legion relied on a set-off by virtue of an entitlement to damages for breach of the Agreement by Global, which was more fully set out in the Cross-Claim.
(i) that it was a term that if the number of call minutes on the 190 Listed Lines fell below 2000 per month the Agreement would come to an end; that that happened in October 1995; and that the Agreement either came to or was brought to an end. This allegation was not pressed;
(ii) that the parties had, by 15 December 1995, agreed to abandon their respective rights and obligations under the Agreement;
(iii) that it was a term of the Agreement, it being alleged that the term was implied to give it business efficacy, that either party could terminate it on giving reasonable notice, which Legion did by giving 7 days’ notice; and
(iv) that Global suffered no loss if Legion was in breach because it could not provide the necessary service.
The Amended Cross-Claim
19 On 15 February 1999 Legion filed an Amended Cross-Claim asserting the Agreement of 30 November 1994 and alleging three breaches by Global, viz the failure to maintain service opening hours; the failure to ensure there were sufficient operators available to cover the service at all times; and the failure to adhere to an agreement to work for Legion on an exclusive basis on the Psychic Hot Line service detailed in Schedule 1 in Australia and offer Legion first option for other related services not detailed in that Schedule. The last mentioned breach was the subject of the amendment, it being asserted in paragraph 4A that by reason thereof Legion was not able to take up the option from which it would have derived income, which was earned by another service provider.
20 In its Defence to the Amended Cross-Claim, which was also filed in Court on 15 February 1999, Global admitted the terms of the Agreement and asserted that Legion was bound to provide it with call figures on a monthly basis, which it failed to do after June 1995 with the consequence that Global was deprived of the ability to determine roster schedules and the numbers of operators, who should be rostered on at any time. It was pleaded, in these circumstances, that insofar as Global failed to maintain service opening hours or to ensure that there were sufficient operators available to cover the service at all times, any such failure was caused by Legion’s own breach of its obligations.
21 In relation to the allegation concerning Psychic Hotline Pty Limited Global denied it was its partner and the alleged breach of the agreement.22 It is convenient to note a number of matters, which the parties expressly agreed were not in dispute, viz:-
Matters Not In Dispute
23 A further matter which was not in issue was that once lines had been dedicated to Global by the setting up of the necessary computer equipment so that when the telephone numbers were dialled the computer automatically directed the call to the number so dialled, there could be no ad hoc interference with that call being received at that number. It was also agreed that the consequence of that was that the telephone would either be answered by an operative of Global or, if there was no operative available, an engaged signal would be given.
(a) That all the calls on the 190 lines specified in paragraph 2 of the Summary of Contentions as “Psychic Live” and “Psychic Express” were directed to Global until about 15 December 1995;
(b) That thereafter calls on those lines were not directed to Global;
(c) That Legion received calls on other 190 lines as alleged in paragraph 3A(b) and that it did not direct those calls to Global but directed them to other information providers; and
(d) That 1,145,071 minutes of psychic and psychic-related calls were received by Legion during the period from the commencement of the Agreement until 31 March 1996 and not directed to Global, they being the ones which came on “the 190 Other Lines” referred to in paragraph 3A(b).
24 When these matters are understood it becomes clear that the real issue, so far as the redirecting or diverting of calls, revolved around Legion’s not acting exclusively, in this field, as a provider of services to Global, but also providing the same service to other persons providing psychic reading services to members of the public, who telephoned on “the 190 Other Lines”.25 The Agreement, which is headed “Agreement for 190 InfoCall Services”, was prepared by the parties without the assistance of lawyers. After specifying the date it was “drawn up”, which was stated as 30 November 1994 and which was accepted as the date it was entered into, and the parties, it stated:-
The Agreement
26 Thereafter there are a number of sub-paragraphs, some of which follow from the words “Legion undertakes to” and some of which are introduced by the words “agree” and “agrees”. I shall refer to Legion’s undertaking to do various matters as its being “obliged to” or “obliged”. The parties acknowledged that the sub-paragraphs in paragraph 1 introduced by the words “agree” and “agrees” should not be read as meaning that Legion undertook to agree or to “agrees”, but rather that the words “agree” and “agrees” constituted an agreement between the parties.
“For the provision of a live Psychic reading premium rate service on the 190 InfoCall network.”
That sentence is followed by the word “WHEREAS” and the next line stated:-
“1. Legion undertakes to:”.
27 The opening words, which I have quoted, indicate that the Agreement was for the provision of the stated service on the particular network, and this is supported by clause 1(a) whereby Legion undertook to provide access to telephone lines to handle premium rate audiotex services as detailed in Schedule 1. In Schedule 1, beside the word “Service”, appeared:-28 Immediately thereafter, Schedule 1 provided:-
“Psychic Hotline. This service is operated by live operators, with Legion outswitching call traffic to the operator bureau.”
“BRANDING. The Service name may, from time to time, change as both parties see fit. Legion and Global to keep each other notified of any change of name of the Service.
ON-LINE DATES. As mutually agreed.
OFF LINE DATES. Off-line date is that date which is mutually agreed by both Legion, Global or in the event that the call traffic falls below 2000 call minutes per month.”
29 Clause 1(b) obliged Legion to use its best endeavours to ensure the “Service(s)” were set up and fully operational on the telephone numbers, and clause 1(c) obliged it to supply Global with call figures and operator call reports relating to the “Service(s)” monthly or at such longer period as may be necessary due to circumstances beyond Legion’s control. It provided that “Operator Call Reports” would be made available daily.
30 Clause 1(d) required Legion to ensure that the content of all services complied with a specified code and any other regulations, including Telstra’s functional specifications for 190 Infocall services.
31 Clause 1(f) obliged Legion to explore promotional opportunities independently or jointly with Global in mediums other than defined in Schedule 1. Schedule 1, beside the heading “Promotion of Services”, stated:-
“Promotion of the service to be pursued independently by Global and Legion under the following exclusions and other means as referred to in 1(f) and 1(k).
Legion: media identified as exclusive to them
ACP Publishing, Murdoch Magazines, Pacific Print Advertising, Seven Network nationally and Austext.
Global: media identified as exclusive to them
Ten Network, SBS, Ratio and Television Informercials (other than the Seven Network and Austext) and Shop a Dockets.”32 Clause 1(g) obliged Legion to supply Global with a schedule, on a monthly basis, of planned media campaigns for the services outlined in Schedule 1, and clause 1(h) obliged it to ensure that every time the number was promoted the relevant cost message was always included as set out in the regulations and Code of Practice from TISCC and Telecom Australia or other Network Provider respectively.
33 Clause 1(i) obliged Legion to notify Global of revenue due to be payable by the provision of a monthly statement, and provided that payment would be made within 30 days after the month end in which calls were generated, subject to the receipt of an invoice by Legion from Global for the revenue due. Clause 1(j) noted the agreement of Legion to conduct a Management Meeting with Global on a regular basis not less than once every calendar month.
34 Clause 1(k), which is of fundamental importance, stated:-
“Agrees to direct all 190 Psychic and Psychic-related call processing requests through Global’s Psychic Call Centre, with the exception of the current one-off Athena Starwoman - Woman’s Day Star Cards promotion.”
35 Global has submitted that this provision amounted to an agreement by Legion that all psychic and psychic-related call processing requests on 190 numbers, save for the exception, but irrespective of whether the 190 numbers were those dedicated to Psychic Live and Psychic Express or were “190 Other Lines”, were to be directed to Global’s Psychic Call Centre, and that this constituted an agreement for exclusivity in the sense that Legion would not accept business from others engaged in psychic and psychic-related call processing requests on 190 numbers or, if it did, it would do so on the basis that they were directed to Global’s Call Centre.
37 By clause 1(l) Legion agreed to keep the agreement it had with Telecom in connection with the InfoCall 190 service in force, and that any breach of that constituted a breach of the Agreement by Legion entitling Global to damages.
36 The submission continued that because Legion had no power to divert, at least on an ad hoc basis, calls made to the listed lines, and because it had no power if it was providing a similar service to other psychic and psychic-related activities to direct calls away from them to the listed lines dedicated to Global, the provision for exclusivity could only mean that it would not enter into any arrangements with other persons engaged in that type of business. It was submitted by Mr Brereton that the exception in the sub-clause made this clear.
38 Clause 2 is headed:-
“Global & it’s (sic) partners or assignees undertake to”.
Sub-clause (c) is in the following terms:-
“Agree to work for Legion on an exclusive basis on the services detailed in Schedule 1 in Australia (the Territory), and offer legion (sic) first option for other related services not detailed in Schedule 1. This clause will be subject to review at the end of each three month period or in the event of a sale to a third party. Further it is understood that Global will not offer it’s (sic) Psychic Call Centre capability to any other Service Provider during the term of this agreement.”
39 To some extent this may be seen as the mirror image of clause 1(k), although the word “all” in clause 1(k) is more all embracing than the words in clause 2(c), particularly in so far as there are the option provisions, which provide, at least to Legion, an element of choice. It may be thought strange if one party was offering exclusivity, but the other was not.
40 Subsequent clauses imposed obligations on Global as to the way in which it would conduct itself in essence to ensure that Legion had the benefit of the Agreement.
41 Clauses 2(l) and (m) provided that Global confirmed that it would maintain service opening hours and would notify Legion of any changes relating to them, and that it would ensure that there were sufficient operators available to cover the service at all times based on call statistics and operator management information supplied by Legion on a regular basis. Thus compliance with the latter clause was dependent on activity on the part of Legion.
42 Clause 4, it being agreed that there is no clause 3, provided that Legion agreed to pay Global a share of the revenue as set out in Schedule 1, revenue being defined as that calculated by Legion as being due from Telecom for using the call logging equipment for each number allocated to the service(s) and for the period specified in Schedule 1. Telecom received the amounts from the callers, they being debited by Telecom for the calls, and on-paid money, less its costs and the retention sum for potentially bad debts to Legion as, in effect, Telecom’s customer. Schedule 1 provided two bases for the division of revenue, viz:-
“On the basis of Legion pursuing independent promotional opportunities using Global solely as Call Centre ….”; and
“On the basis of Global pursuing independent promotional opportunities using Legion solely as Service Bureau ….”.
In the first instance, save for the first bracket of minutes per month, Legion received more. In the second, subject to the same proviso, Global received more. These figures seem to have been worked on a Telecom charge of $3 per minute. The first basis concluded:-
“Legion to be responsible for payment of the uncollectable debt levy (20%) charged by Telecom and will receive the residual monies retained after the period of seven months retention by Telecom. This levy may be subject to change from Telecom from time to time.”
The second basis concluded in substantially the same terms, but specifying Global in lieu of Legion.
The concluding sentence of clause 4(a) stated:-
“However, the call charges are subject to change and hence the amount retained by Legion and subsequently Global will be subject to this change.”
43 Clauses 4(b) and (c) provided for the consequences of material changes to the service and the resolution of disputes over revenue share.
44 Clause 4(d) provided:-45 Clause 5 dealt with the duration of the Agreement providing that either or both of the parties, either may, or more probably, shall “review the situation at regular three monthly intervals”, and that if any party failed to comply with its terms the other may give notice to the party in default to rectify such non-compliance within thirty days and, if after that period the non-compliance was not rectified, the complaining party may terminate the Agreement forthwith by giving written notice.
“Structure of payment of all charges relating to the number allocation, rental, connection and switching of the services are outlined in Schedule 2 of this Agreement.”
46 Clause 8, where first appearing, is headed “Number Portability” and provided:-47 The provisions for the distribution of revenue in Schedule 1 are, in my opinion, helpful in seeking to determine the issue of exclusivity. The entitlement of Legion to be paid the rate set forth in Revenue Deal 1 depended on its pursuing independent promotional opportunities using Global “solely” as the call centre. This raises the question as to how “solely” is to be interpreted. On the other hand the lesser rate payable to Legion applies where Global pursues independent promotional opportunities using Legion “solely” as the service bureau. Once again the proper interpretation of “solely” is raised, although it could hardly be suggested that it had different meanings wherever used in the same provision. A potential difficulty, which may rise, is what is to happen if either Legion or Global does not use the other “solely” in the role specified. In such circumstances no method for distribution of revenue is provided. Further, the income split provided for a lesser amount than $2.45.
“(a) If Legion fails to comply with the terms of this agreement, or Global’s Psychic interests are sold to another party, subject to clause 6(b), then Legion agrees that they will release the numbers assigned under Revenue Deal 2 in Schedule 1 of this agreement to the Service Provider of Global’s or subsequent owners choice.”
There is no clause 6(b) and it is not clear to me that there are any numbers assigned under Revenue Deal 2 in Schedule 1.
48 Schedule 2 was headed “190 Number Allocation”, and was concerned, firstly, with the charge made by Telecom for each number issued and the monthly rental charge for that number, which was to be allocated as between Legion and Global under paragraphs 1 and 2 in Schedule 1. The remaining costs, which are for Centel line connections, were to be shared equally between Global and Legion and to be deducted monthly from net revenue. This may tend to indicate that the only matters causing concern were the actual lines dedicated to Global.49 Global’s case was based upon the breach pleaded in paragraph 4, viz a failure to direct all 190 psychic and psychic-related call processing requests received by Legion on the 190 Other Lines through Global’s psychic call centre. At Tpp.28-29, the following transpired:-
A Refinement Of The Issues
50 Against this background it is convenient to return to the pleadings. Paragraph 3A of the Amended Summons, the facts pleaded in which were admitted, identified the 190 Listed Lines and the 190 Other Lines. The breach alleged in paragraph 4 is that in breach of the pleaded requirement of clause 1(k), (sub-paragraph 1(d)), Legion agreed to direct all 190 psychic and psychic-related call processing requests through Global’s Psychic Call Centre, with the exception only of the current one-off Athena Starwoman - Woman’s Day Star Cards Promotion, and “Legion failed to direct all 190 psychic and psychic-related call process requests received by it on the 190 Other Lines”, save for the exception, through Global’s Psychic Call Centre. Therefore, the issue is whether the Agreement, on its proper construction, imposed this obligation on Legion.
“HIS HONOUR: There is something I want to ask someone and that is whether the people in the position of ITM or Legion are able to divert calls themselves or whether it comes through automatically once a person is logged on. I don’t know whether Mr Lovell’s expertise goes to that.
STEVENSON: Q. I think it is an automatic process. The number dialled is determinative of where the call will go and then you look to see if the operator is logged on to see the next available operator who is logged on and not on the phone.
BRERETON: I agree with that. As I understand the position what happens is if someone calls, for example, Psychic Live and there are three operators logged on and one or more of those operators is not currently taking another call, then the computer will select, will identify one or two of those operators are free and direct the call to that operator. If they are all busy their calls do play the engaged signal and if no one is logged on it plays the engaged signal as well, but there is no capacity in the service bureau or provider selecting which operator it goes to.
HIS HONOUR: Or to divert from your client, relevantly, to Mystic Meg or whatever her name is.
BRERETON: There was ultimately a capacity to do so but as I understand it it cannot be done on an ad hoc call by call basis.
HIS HONOUR: Provided somebody rings up your client’s number as advertised they will either get one of your client’s operatives or the engaged signal?
BRERETON: Yes.”
51 In paragraph 9 of its Defence to the Amended Summons Legion pleaded the variation to the Agreement said to have been effected on or about 31 March 1995 to which I have referred. None of the facts furnished in the particulars, as facts, were in issue.
Legion’s Defence of Variation
52 In paragraph 3A of its Amended Cross-Claim Legion pleaded that in breach of clause 2(c) Global “and/or its partner Psychic Hot Line Pty Limited (‘Psychic Hot Line’) promoted services to those detailed in Schedule 1 through service bureaus other than Legion without offering Legion first option for those services”. In the particulars the services were said to have been promoted through Information Dialling Services Pty Limited, (“IDS”), and Interactive Tele-Media Pty Limited, (“ITM”). It was pleaded in paragraph 4A that as a result of the breach Legion suffered loss because had it been offered first option it would have agreed to process calls to such services and would have been entitled to the revenue earned by ITM from 30 November 1994 “until the date on which the agreement between Legion and Global was varied as alleged at paragraph 9 of the Amended Defence, alternatively until 31 December 1995”. It was also pleaded that particulars in relation to losses occasioned through IDS would be provided in due course.
53 In answer to paragraphs 3A and 4A Global denied that Psychic Hot Line Pty Limited was its partner; that it breached the agreement; and otherwise did not admit the allegations.
54 The facsimile transmission of 16 March 1995 was sent by Mr David Burden to Mr Nigel Anthony Lovell, the principal director of and a fifty per cent shareholder in Global. It complained about certain matters, including low margins because of the alleged poor performance of Global, and proposed an amendment to the revenue “deal” by amending paragraph 1 relating to Revenue Distribution in the Schedule in the manner set forth. It stated that that would allow Legion to re-commence its advertising programme and asked for Mr Lovell’s comments.
55 Mr Lovell responded on 29 March 1995 accepting the revised schedule on a three months’ trial basis beginning on 1 April 1995 with a review of the position thereafter. The facsimile transmission continued:-56 The facsimile transmission went on to elaborate, at some length, the benefits of this proposal, and concluded by suggesting a meeting to discuss the issues in more detail.
“In agreeing to the revised schedule we would seek to amend our existing agreement to allow for the following change:
* Non-exclusivity as a call processing centre. The reasons for this are as follows;
1). The original agreement clearly stated that Global Network Services would be the exclusive call processing centre for all of Legion’s psychic activity apart from the one-off Woman’s Day Athena Starwoman promo. This has never been the case. Legion have continued to establish their own processing centre in direct competition to Global. Please see the attached agreement and the sections marked.
2). It has been clearly established that providing an exclusive call processing centre for Legion activity is not viable. To push the business into the realm of reasonable profit margins we must process volume calls on a consistent basis. The lumpy unpredictable nature of call activity so far has required a high degree of commitment by us and the unending patience of our readers to try to come to grips with chasing our tail 14 hours a day, 7 days a week.”
This communication made clear that Mr Lovell was contending for an exclusive arrangement of the type alleged.
57 On 31 March 1995 Mr Burden responded. At p.2, in dealing with certain argumentative matters, he wrote:-58 Subsequently on the same page he wrote:-
“Another bone of contention you hold is in regard to the Athena service. Both yourself and Simon claim that Adam stated that this service would be a one-off promotion. Neither Adam, nor Glenda can remember such a statement being made. I have always maintained that this service was running for the duration, this is ratified in the agreement between us, which lists the Athena service as an exception to the exclusivity agreement.”
59 He continued:-
“Your organisation has graciously allowed a modification to the Legion Telecall advertised service deal. However in the same breath you have asked for the exclusivity to be removed. I naturally assume that this applies to both parties.”
60 The penultimate paragraph of the letter stated:-
“We understand your desire to work with other Service Provider’s to build volume. This will keep your operators content. However we are very concerned that this move will reduce your levels of service, and increase the number of failed calls. This claim is naturally refuted by yourselves, but realistically I can see no other option for the short term. I do agree that once volume builds, the operators confidence is restored, and more than likely you will be in a position to handle the calls. The question mark remains over the level of service while this transformation takes place.
With your business spread across a number of bureaus, I can not see how you can facilitate the same operators providing services for all.”
61 The correspondence proceeded, however, on the basis that Legion sought a reduction in Global’s share of revenue to which Global said it would agree on a trial basis provided the exclusivity provisions were removed. The facsimile transmission of 31 March 1995 does not accept, in terms, this suggestion, and Mr Stevenson accepted that the correspondence was inconclusive as to whether there was an agreement. But, from 1 April 1995 the parties conducted their affairs on the basis of the changed revenue allocation and, so far as Global was concerned, on the basis that it was no longer bound by the exclusivity provisions. Mr Stevenson submitted that this constituted an acceptance of Legion’s requirement for a reduction in Global’s share of revenue in return for Global’s not being required to act as the exclusive Call Centre.
“We would have to very carefully consider your suggested approach to supporting a number of Service Provider’s. This would require you to fully explain the bureau operation and to guarantee a level of service to Legion Telecall. In your response please also consider the financial support and advertising you would give to your own services facilitated by each Service Provider, given your stated financial position.”
This letter not only seemed to accept that there was an arrangement for exclusivity, but that it was in Legion’s interests to maintain it.
62 In his witness statement, Exhibit A, of 4 June 1998 Mr Lovell annexed the various facsimile transmissions and, in paragraph 47, referred to a meeting on 7 April 1995 between himself, Mr Turnbull, Ms Ramzan and Mr Burden. Ms Taylor was not at the meeting, but she was in the same room and heard what was said. Mr Lovell asserted that he raised with Mr Burden a prime concern that Legion had not kept its agreement that Global would be the exclusive call processing centre for all of Legion’s psychic activities. He then referred Mr Burden to the Agreement and, in particular, to clause 1(k). He said that that clause had not been complied with and that after Mr Burden read it “there was a long silence and he shook his head” and said:-63 There was some further conversation and, in paragraph 48, Mr Lovell said that he did not hear back from Mr Burden about the Agreement and he then “wound down the advertising of Global through Legion”. It was not in issue that Mr Burden did not respond.
“I have to agree with you, I’ll have to take the matter up with Adam and get back to you.”
64 At Tp.30 Mr Lovell was shown a letter of 1 March 1995, which he wrote to IDS, which he agreed was sent with a view to entering into some business relationship with IDS and to persuade it that Global’s readers were properly qualified and provided a worthwhile service, which it would be in the interests of IDS to process. He was then taken to the facsimile transmission of 16 March 1995.
65 Mr Lovell was referred to his facsimile transmission of 29 March 1995 and he agreed that as from 1 April 1995 revenue was allocated in accordance with Mr Burden’s formula set out on 16 March 1995 to which Mr Lovell made no protest. He further agreed, Tp.34, that from that time he took the decision to wind down the advertising of Global through Legion, and shortly thereafter an arrangement was entered into between Global and IDS. At Tp.35 his evidence continued:-66 Mr Lovell was referred to further communications between Global and IDS and, in particular, to a facsimile transmission of November 1995 in paragraph 2 of which he referred to a psychic live service with an advertising campaign to commence on 4 December 1995. He agreed he knew that service was one Legion was promoting pursuant to the Agreement of 30 November 1994, which he sought to explain by saying that activity in Psychic Live was very low and, at Tp.37, he gave the following evidence:-
“Q. And I suggest the reason you were able to do this was that you felt that Global had shed itself of such obligations of exclusivity as it might otherwise have had to Legion after 30 November?
Q. Do you say that you were of the state of mind that you were not acting in breach of the obligations of exclusivity?
A. I don’t believe so.
A. Yes.
…
Q. The position is that by July 1995 and I suggest in April 1995 your state of mind was that such obligation of exclusivity as Global might have had by the agreement, had been discharged?
A. No, it was not in April.
Q. Certainly July?
A. Yes.”67 He denied that in his mind he regarded Global as having abandoned the contract.
“Q. I want to suggest to you that the only way to characterise your conduct in writing this letter was that either you regarded the agreement as being at an end or you were behaving in a commercially immoral and cavalier fashion?
A. Yes.
Q. Do you agree with that?
A. Yes.
HIS HONOUR: Q. Which of those two?
A. We were acting or I acted against the agreement, the existing agreement with Legion.”
68 In re-examination, Tp.38, he was asked about his agreement to the proposition that the obligation of exclusivity of Global to Legion had been discharged in July 1995. He was asked what caused him to form that view and he said:-69 There was no evidence of any complaint to this effect after the meeting of 7 April 1995 to which I have referred.
“Well so many services had been established by Legion such as Mystic Meg, Susanna Miles and so I felt that Legion were not honouring their side of the agreement.”
70 Mr Lovell agreed, Tp.38, that the business relationship with IDS was consummated in July 1995.
71 In paragraph 25 of her witness statement of 4 June 1998 Ms Taylor gave evidence of the meeting of 7 April 1995. She recalled hearing Mr Lovell say:-72 She said there was a period of silence of about five seconds and that Mr Burden said:-
“We have a very clear agreement that we are the exclusive call processing centre. Have you seen the signed agreement?”
She heard some rustling of papers and Mr Lovell say:-
“Just here it says we are responsible for processing all your psychic calls with the exception of the current one of Athena star cards promotion. This has not happened.”
73 In paragraph 17 of his witness statement of 4 June 1998, Exhibit C, Mr Turnbull gave evidence about the conversation on 7 April 1995. He said that Mr Burden said that if Global gave Legion exclusivity, Legion would give Global “Mystic Meg to process exclusively”. He said that he replied that the existing agreement was to process Legion’s psychic calls exclusively, which had not happened. Thereafter the Agreement was produced and Mr Turnbull heard Mr Lovell say:
“I haven’t seen this before. I have to agree with you. I’ll have to talk to Adam and get back to you on this.”
Ms Taylor was not cross-examined about this conversation.74 Mr Turnbull said, without objection, that Mr Burden appeared to read that section of the Agreement and looked shocked, and said that he would have to speak to Adam “and get back to you”. Mr Turnbull was not cross-examined about that conversation.
“It clearly states that we are responsible for processing all Legion’s psychic calls with the exception of the then current one of Athena Starwoman Woman’s Day star cards promotion. This has not been happening.”
75 Ms Ramzan, in paragraph 29 of her witness statement of 3 September 1998, Exhibit E, said that she attended the meeting on 7 April 1995, although she makes no reference to any discussion about exclusivity. She was not cross-examined about the conversation.
76 In his witness statement of 10 August 1998, Exhibit 1, Mr Burden referred to the meeting of 7 April 1995 and he agreed that Mr Turnbull and Ms Ramzan were present and that Mr Lovell said:-
“We believe we have an exclusive arrangement with you for the Athena Starwoman business and that simply hasn’t been happening.”
The Plaintiff’s Submissions On Construction
He said he replied that that was not his understanding of the contract “at all”, and he said that he complained to Mr Lovell that Global was not processing the calls through one call centre as was originally agreed. He also complained that the business with ITM had not been brought to Legion.
77 Global submitted that the Agreement was for the provision of a live psychic reading premium rate service on the 190 InfoCall network and that, relevantly, it provided that Legion would provide access “to telephone lines to handle premium rate audiotex live psychic reading services. That, according to clause 1(a), was to be done “as detailed in Schedule 1”, namely the provision of a Psychic Hotline to be operated by live operators “with Legion outswitching call traffic to the operator bureau”. The submissions set forth a number of the terms of clause 1, with particular reference to clause 1(k), and then various provisions of clause 2, with particular reference to clauses 2(c), (l) and (m).
78 The submissions turned to a consideration of the “Financial Terms” in clause 4(a) and Schedule 1 and, in relation to the word “solely” in the Schedule, submitted that it governed “the function - service bureau or call centre - and not the entity, Legion or Global”. In his oral submissions, Mr Brereton contended that the word “solely” meant “merely”. This submission was made to meet Mr Stevenson’s submission that “solely” meant that when Global was being used “solely as Call centre” or Legion was being used “solely as Service Bureau”, it meant that parties other than Global and Legion respectively could be used by the other for that purpose. In each event it was necessary for Legion, as the service provider, to have an entity in the nature of Global providing the call centre facility, i.e. the persons who would receive and answer the calls. Similarly, so far as Global was concerned, it was necessary for it to have a service provider, such as Legion, to ensure that telephone calls were directed to Global’s operatives; that the necessary financial records of those calls were maintained; and that, accordingly, there was provision for the division of finances. Thus, if Legion pursued independent promotional opportunities it derived a larger percentage of revenue, save for the first bracket of time, and if Global pursued those opportunities, it derived a larger percentage of revenue, save for the first bracket of time, no doubt the larger percentage reflecting the cost of independent promotion in advertising, inter alia, in the media outlets identified beside “Promotion of Services” in Schedule 1.
79 Mr Brereton submitted that the word “solely” in both Revenue Deal clauses meant, in clause 1, “with Global performing the role of Call Centre only and not any promotional role”, so that all the word “solely” does is describe that for the purposes of that paragraph Global is only a Call Centre. So far as clause 2 is concerned, he submitted that Legion undertook no additional role but remained “solely” the Service Bureau, and Global assumed the additional role of independent promoter.
80 Mr Brereton submitted that in circumstances in which, i.e. on the basis of Legion’s pursuing promotional opportunities independently of Global, such that Global’s sole or only role in relation to the production of revenue was as Call Centre the “Revenue Deal” was as stated in paragraph 1; whereas in circumstances in which Global pursued promotional opportunities independently of Legion, such that Legion’s sole or only role in relation to the production of revenue was as a Service Bureau, the “Revenue Deal” was as stated in paragraph 2. In the first instance, save in the first minutes per month band, Legion was remunerated more highly than Global for the pursuit of independent promotional opportunities; and, in the second instance, save in the first minutes per month band, Global was remunerated more highly than Legion for the pursuit of independent promotional opportunities.
81 Mr Stevenson’s submission, in essence, was that if Legion used Global “solely as Call Centre” it necessarily followed that the Agreement contemplated that Legion would not “only” or “solely” use Global in that role and, therefore, may use another operator where it pursued independent promotional opportunities. His further submission was that if Global used Legion “solely as Service Bureau” it necessarily followed that the Agreement contemplated that Global would not “only” or “solely” use Legion in that role and, therefore, may use another service bureau where it pursued independent promotional opportunities.
82 The concluding words of each paragraph are, in the light of these submissions, significant. In the first instance, Legion, which received the greater share of revenue, was to be responsible for payment of the uncollectable debt being charged by Telecom and entitled to the residual moneys retained after the Telecom retention period. In the second instance, Global had the responsibilities and entitlements, which Legion had under the first.
83 Clauses 1(f) and 2(j) obliged Legion and Global respectively to explore promotional opportunities independently of or jointly with Global and Legion respectively in mediums other than those defined in Schedule 1. The Agreement does not provide for the manner of division of revenue in the event of a joint promotional opportunity, but, in the circumstances of this case, that does not matter, in the sense of throwing light on the possible construction. Clause 4(a) makes clear that there was an agreement by Legion to pay Global a share of revenue as provided in Schedule 1. There is no suggestion in clause 4(a) or Schedule 1 of a payment to any other Call Centre or Service Bureau.
84 The submission Global had to meet was that on Legion’s construction “solely” meant that neither Global nor Legion was bound to pursue independent promotional opportunities using the other for the provision of the services to which reference was made, the division of revenue only occurring where that was done “solely as call centre” or “solely as service bureau”.
85 The submissions continued that pursuant to the agreement Legion provided Global with access to five psychic live lines, which were identified by the number 64, and nineteen psychic express lines, which were identified by the number 60. These were the “190 Listed Lines” and, as I have said, it was not in issue that Legion did not allow those lines to be used by any entity other than Global prior to about 15 December 1995, nor that calls could not be diverted from them on an ad hoc basis.
86 Global’s claim, of course, is that Legion permitted calls to be made on “the 190 Other Lines” and, from about 15 December 1995, re-directed calls on the Psychic Live and Psychic Express services to the Mystic Meg 190 service, the total time of the calls to the “190 Other Lines” and the diverted calls from about 15 December 1995 being 1,145,071 minutes, which figure was not in issue.
87 Global submitted that the principal issue concerned the construction of the agreement and, in particular, clause 1(k), the question being whether, upon the proper construction of the agreement, Legion was bound to direct that number of minutes to Global. It submitted that the context, known to both parties, in which the agreement was made, and in particular in which clause 1(k) came to be included, was that Legion wanted to enter the live psychic reading market as a service bureau; Global had experience in that market and wanted to be the exclusive call processing centre for Legion for psychic and psychic-related calls; in negotiating the agreement, Legion was prepared to consider making Global its exclusive call processing centre for such calls save for the Athena exception; and Global requested the addition of clause 1(k) to which Legion agreed.
88 Mr Burden, who was the main witness called by Legion, agreed that during the negotiation period he said to Mr Lovell words to the effect that all calls would be handled by Global through its call processing centre; that he was keen to put all calls through Global “because Global was my client, yes”; and, once again, that all calls “will be handled by Global through its call processing centre”; Tp.140. In these circumstances Legion agreed to insert clause 1(k).
89 The submission continued that the plain words of clause 1(k) could lead to no other result, because the agreement was to direct “all” calls and, as no particular services were identified either in the Agreement or the Schedule, save for the Athena Starwoman exception:-
“… it is impossible to say that the obligation of exclusivity was to be restricted to the 190 Listed Lines, the number, identification, and name of which were not specified by the agreement, and for which the agreement provided no means of identification.”
90 It was submitted that if the agreement was construed otherwise, the obligation of exclusivity would be illusory because it could be circumvented by Legion’s opening an additional 190 line at any time and, in circumstances where both parties knew that Global was seeking an exclusive arrangement, such a result would be totally uncommercial. It was further submitted that this construction gained force from the express exception, which assumed that such calls “would otherwise have been caught”. It was submitted that any other construction would render the exception “mere surplusage”.
91 The next submission drew attention to a comparison of clauses 1(k) and 2(c), and noted that the first referred to “all” relevant calls, and the second to “services detailed in Schedule 1”. It was suggested:-
“While Global’s obligations of exclusivity were limited to the services described in the Schedule (and related services), Legion’s were not; they extended to all psychic and psychic-related call processing requests.”
Mr Brereton submitted that the first option for other related services meant that if Global developed a “related service”, not being the service specified in Schedule 1, i.e. being a service different from a psychic or psychic-related service, Global was obliged to offer that to Legion. Mr Stevenson submitted that a “related service” meant a psychic or psychic-related service. In the end I do not think that the difference matters. The service may be one or the other, but whichever it be, on a proper construction of the Agreement, I do not think that it impinges on the exclusivity point.
92 It was submitted that far from being uncommercial, in the context in which clause 1(k) came to be in the Agreement, it gave effect to “precisely what the parties had been contemplating in their negotiations”.
93 Mr Stevenson submitted that the terms of the Agreement made clear that the “Services” were those, and only those, promoted by either Legion or Global pursuant to it. They were to be provided, he submitted, in the context of the telephone numbers to be allotted to the parties under the Agreement, namely the 190 Listed Lines. He submitted so much was made clear by the recital, which was to be read as:-
“For the provision [by the parties] of a live Psychic reading premium service [to be promoted by Global or Legion] on the 190 InfoCall network.”
The additional words in square brackets are those it was submitted were necessary to give sense to the recital in the context of the Agreement.
94 The submission continued that clause 1(a) was an undertaking by Legion to provide access to telephone lines to handle the services detailed in Schedule 1, so that the obligation of Legion was to provide dedicated telephone lines for the provision of a Psychic Hotline to be operated by live operators for whom Global was responsible: clauses 2(a), (h), (l), (m) and (n). Thus, so the submission ran, Legion was obliged to provide access to telephone numbers; to use its best endeavours to ensure that the services were set up and fully operational “on the telephone numbers”, i.e. the telephone numbers referred to in clause 1(a); and to ensure, speaking generally, that everything was done necessary to maintain the telephone lines in a fully operational manner.
95 The next submission was that the undertakings and agreements of Legion were related to “the Service(s)”: clauses 1(b), (c) and (g), and that clause 4(a) defined revenue as the amount calculated by Legion as being due from Telecom using “the call logging equipment for each number allocated to the services(s) and for the period as specified in Schedule 1”.
96 Accordingly, it was submitted, Legion’s obligations included the provision of access to telephone lines as required by clause 1(a) and the use by Legion of its best endeavours to ensure that the Services were set up and fully operational on those telephone numbers, so that revenue could be determined in relation to “each number allocated” to the Service. It was noted that the parties may agree to change the Service name from time to time as they saw fit, and reliance was then placed on the method for the distribution of revenue.
97 It was submitted that the construction of clause 1(k) for which Global contended would lead to a commercially irrational result, which the parties could not possibly have contemplated. The evidence was that there were various people offering psychic and psychic-related readings to members of the public, such people operating under various names. If calls for a psychic, other than one promoted by Global, were directed to a Global operator the member of the public would have the call answered by an operator from whom that person was not seeking a reading.
98 Mr Stevenson submitted that clause 1(k) was inserted in the context that Gobal had expressed an interest in respect of the then contemplated Star Cards promotion involving Athena Starwoman and Woman’s Day; that Global was also interested in processing work for any on-going promotion with Athena Starwoman and Woman’s Day; and that although there had been discussions as to whether that would be possible, it was clear to Mr Lovell that such a result would depend upon whether Athena Starwoman was agreeable and, if she was not, that would be an end of the matter. Thus, it was submitted, not only did the exception relate to the “one-off” promotion referred to in clause 1(k), but also to any “on-going” arrangement with Athena Starwoman. This submission was added to the submission that the obligation imposed by clause 1(k), if Global’s construction was correct, would be to refer all psychic or psychic-related call processing requests received by Legion, even for one of Global’s competitors, to the Global operator. It was said that this would impose on Legion an obligation to act in breach of its contractual obligations to other clients; to put calls through to Global’s call processing centres, which were intended for those of Global’s competitors; and to subvert the intention of the callers on the 190 Other Lines by directing calls from the chosen psychics to one of Global’s psychics.
99 In response to this it was submitted that it is immaterial that by contracting with other parties, Legion may have put its capacity to perform its contractual obligations with Global beyond its control without breaching other contracts.
100 Mr Stevenson submitted that the result for which Global contended was that Legion could only contract with, for example, Athena Starwoman, on terms that any calls received in response to her advertisements would be processed by Global, which submission he said amounted to a suggestion that, on its proper construction the agreement obliged Legion to engage in unlawful activity, namely third line forcing contrary to ss.45 and 47(6), (7) and (10) of the Trade Practices Act 1974.
101 Mr Stevenson referred to various authorities relating to the poor quality of drafting of an agreement and the necessity to give the agreement commercial effect: Mitzui Construction Co Limited v Attorney General of Hong Kong (1986) 33 Build LR 1; Antaios Cia Navierasa v Salen Rederierma AB [1986] 1 All ER 974 and Hide & Skin Trading Pty Limited v Oceanic Meat Traders Limited (1990) 20 NSWLR 310. To those I would the add the frequently cited reference to the decision of Gibbs J in Australian Broadcasting Commission v Australasian Performing Right Association Limited (1973) 129 CLR 99 at p.109.
102 It is obvious that the poor drafting of the Agreement leads to difficulties in its ultimate construction and, I have no doubt, different minds may differ as to the correct or, perhaps I should say, the appropriate construction. I have come to the conclusion that the construction for which Mr Brereton contends is to be preferred for the following reasons:-103 In so far as regard may be had to subsequent events in construing the Agreement, I consider they are consistent with the view to which I have come. However, they are not matters on which I have to rely because, for the reasons I have given, I am satisfied that clause 1(k) imposed obligations on Legion to direct all the specified calls on 190 numbers to Global. In so far as it did not it was in breach of the Agreement.
(i) The mutually known factual matrix against the background of which the Agreement was entered into was the desire by Global for an exclusive agreement and the willingness of Legion to give that, save for the exception to which it was committed.
(iv) Clause 1(k) differs from the obligation cast on Global by clause 2(c), because whilst Global agrees to work for Legion on an exclusive basis for the services detailed in Schedule 1 and to give Legion first option for related services, there is no obligation on Legion to take up the option, so that another service bureau could do so. Thus, there is no obligation on Global to direct “all” its related services through Legion, which adds to the strength of the word “all”, supported by the exception, in clause 1(k).
(ii) There was no suggestion of other contractual obligations on Legion for providing for psychic and psychic-related services at that time, so that there was no other contractual reasons why Legion could not provide exclusivity.
(iii) Clause 1(k) is unambiguous in its terms. It provides that “all” stated call requests would be directed through Global’s Call Centre, save for only one exception. The use of the word “all” and the provision of the exception points powerfully to the result I favour.
(v) The Agreement, read as a whole, is one for the provision of services by Legion to Global and by Global to Legion for which each will receive remuneration. Save, possibly for the division of payments, there is no suggestion that any other party will acquire any rights (except in the case of an assignment or sale).
(vi) The “Revenue Deals” should be construed in the way for which Mr Brereton contended. They follow the obligation to make payment in clause 4(a). The word “solely” will not, in my opinion, do the work of creating exclusivity for which Mr Stevenson submitted. It is, to paraphrase Mr Brereton’s submission which I have set out, intended to govern the function of “Call Centre” and “Service Bureau” as a separate contractual activity from pursuing independent promotional opportunities.
(vii) To give clause 1(k) a more restricted meaning would be to relegate it to stating the contractual obligations of the parties but, in doing so, to write out the word “all”. There is no justification for taking this step.
104 For the reasons I have given I accept that the Agreement did provide for the exclusivity for which Global contended.105 Legion has pleaded that the Agreement was varied in the manner alleged in paragraph 9 of its Defence. Its submission was that the letter of 16 March 1995 was an offer by it, in the context of its complaint about failed calls and low margin, to amend paragraph 1 of the Revenue Deal in terms which would provide it with a higher percentage of the revenue in circumstances where it was pursuing independent promotional opportunities and, thereby, allow it “to recommence its advertising programme hopefully to the benefit of all”. Assuming that that was an offer capable of acceptance, Global, in its letter of 29 March 1995, did not accept it but, rather, made what could be described as a counter offer. Firstly, it was prepared to accept the revised Schedule on a three month trial basis beginning on 1 April 1995 with a review at the end of that period. Secondly, it was only prepared to agree to that, which in any event was a variation of the offer made by Legion, if the Agreement was amended to allow Global to have “non-exclusivity as a call processing centre”. The reasons put forward for this amendment were that Legion was not abiding by the exclusivity provision and had continued to establish its own processing centre in direct competition to that of Global; that an exclusive call processing centre for Legion was not viable; and that to continue to allocate time and resources to the business Global must pursue “by whatever means” a consistent level of call volume that allowed efficiencies from the economies of scale.
Was The Agreement Varied?
106 The letter of 31 March 1995 from Legion replied to a number of matters raised by Global, and asserted that the main cause of the problem was insufficient operators resulting in too many unanswered calls. The letter stated, as I have noted, the assumption that the removal of exclusivity would apply to both parties, and Legion’s understanding of Global’s desire to work with other service providers to build volume. The letter continued that Legion was very concerned that that would reduce Global’s level of services and increase the number of failed calls, and disputed the business wisdom of having a number of service bureaus for Global including “it will not be long before a number of callers realise that the same operators are working across different services”.
107 The letter also referred to various operational issues, and continued:-
“These are real concerns that will have to be addressed immediately if Legion Telecall is going to continue to switch calls to your bureau.
Legion Telecall is committed to the success of psychic services. We do believe that these services are in their infancy in Australia, and we are probably one of the only Service Provider’s (sic) with the media and the financial backing to ensure success that the service is optimised.
We are prepared to talk further on how an exclusive two way arrangement can benefit both our companies. This would require you to run and advertise all your services through Legion Telecall, and in return Legion Telecall to fully support the services run through your bureau.
We would have to very carefully consider your suggested approach to supporting a number of Service Provider’s (sic), this would require you to fully explain the bureau operation and to guarantee a level of service to Legion Telecall. In your response please also consider the financial support and advertising you would give to your own services facilitated by each Service Provider given your stated financial position.”108 Mr Stevenson conceded that the question as to any variation was left open by the correspondence, and that this was the situation which obtained at the time of the conference on 7 April 1995.
109 In his written submissions Mr Stevenson stated that in its letter of 31 March 1995, Legion indicated tentative agreement to the proposal for the revision of Schedule 1, provided Global could be released from its obligation of exclusivity under clause 2(c) “provided that all obligations of exclusivity (including such obligations as may be imposed on Legion under clause 1(k)) would be removed”. The submission continued that accepting that that question was left open by Legion’s letter of 31 March 1995 and at the meeting of 7 April 1995, none-the-less Legion by making all post-March 1995 payments to Global in respect of Psychic Live services at the rates set out in the letter of 16 March 1995, rather than those set out in the Agreement knowing that Global would only agree to accept payment at those lower rates if it were released from its obligation of exclusivity under clause 2(c), was accepting Global’s proposal that it be released from that obligation of exclusivity; and that Global, by accepting such reduced payments without demur and knowing that Legion would only release Global from its obligations of exclusivity under clause 2(c) if Global released Legion from such obligations as Legion owed under clause 1(k), agreed to release Legion from any such obligation of exclusivity.
110 The submissions continued that the variation took place in April 1995 or, on the view of the evidence most favourable to Global, by July 1995, and that from April 1995 Global started to wind down “the advertising of Global through Legion”; and that from 1 March 1995 Global commenced its “flirtation” with IDS, which continued and was consummated by July 1995 when Global offered its psychic capability to IDS. By then Mr Lovell believed that such obligation of exclusivity as Global might have had under the Agreement had been discharged: Tp.35.
111 It was submitted on behalf of Global, and so much was not in issue, that the correspondence did not bring about a variation. The question then was what effect the meeting of 7 April 1995 had. Global relied on Mr Burden’s evidence. Commencing at Tp.152, he agreed that the question of exclusivity was raised at that meeting and that he told Mr Lovell he would have to speak to Mr Maxted, his superior at Legion, and “get back” to Mr Lovell. He said the matter he was intending to discuss with Mr Maxted was whether Global could use or take calls from other service bureaus. He agreed, Tp.153, that Mr Lovell raised the obligations of Legion to deal with Global exclusively, and that he complained that calls were not being directed to Global. Mr Burden said that he believed the matter to be taken up with Mr Maxted was in regard to Global’s exclusivity to provide calls to other service bureaus, and that he left the meeting of 7 April 1995 believing that he would have to again speak to Mr Lovell about the whole question of exclusivity. He said:-
“I think it was fair to say, your Honour, when I left that meeting, Global had made it pretty clear that they wanted to work with other people and I left that meeting pretty much with that firmly in my mind.”
112 On the basis of this evidence there was no agreement as at 7 April 1995 in relation to exclusivity, save that Mr Burden would communicate again with Mr Lovell after consulting with Mr Maxted. Mr Burden did not do so.
113 Mr Brereton submitted that Legion argued that the variation was effected by its sending a payment to Global at rates it knew Global would accept only if released from exclusivity, and Global’s acceptance of payment at the lower rate knowing that Legion would release it from exclusivity only if Global reciprocated, thereby accepted the offer.
114 The submission continued:-
“This amounts to an alleged implied acceptance of an implied offer in circumstances where the parties had addressed the issue expressly and not reached agreement. An agreement to vary should not be implied in such circumstances. But there is an even stronger reason for not implying such an agreement: Global’s acceptance of payment at the lower rate is just as consistent with Global accepting a variation only in respect of the revenue share, as it is in respect of exclusivity. And that is the far more likely explanation, given the history of negotiations between the parties to that point.”
115 In my opinion a consideration of the correspondence and what transpired at the meeting of 7 April 1995, when Mr Burden was clearly taken by surprise by the terms of the Agreement, leads to the conclusion that the parties were still in a state of negotiation and, certainly, there was no concluded agreement for a variation of the type for which Legion contended, but only as to the rate of payment.
116 In the result I do not accept that the Agreement was varied, save to the extent to which I have referred. It may well be that the parties were acting in breach of it, but that is an entirely different thing to an assertion that there was an agreement whereby it was varied.117 In so far as a defence of waiver was raised, Mr Stevenson said that there was no additional argument, apart from that of variation, the waiver alleged being a waiver of Global’s right to enforce clause 1(k) if it had the meaning for which Mr Brereton contended.
Waiver
Repudiation
118 In paragraphs 11 and 12 of its Defence, Legion asserted that during the period September to December 1995, Global, by its conduct, evinced an intention not to be bound by the Agreement, and that on or about 15 December 1995, Legion, by its conduct, accepted Global’s conduct as a repudiation of the Agreement and terminated it. The particulars of the repudiatory conduct were failure to ensure there would be sufficient operators available to cover the services at all times in breach of clause 2(m) and to maintain service opening hours in breach of clause 2(l); and further the provision of a totally inadequate level of service so as to provide effectively no service at all. The acceptance of the alleged repudiation was pleaded as having occurred in a telephone conversation between Mr Burden and Mr Turnbull on or about 15 December 1995.
119 It does not appear that Mr Stevenson made any submissions in respect of these allegations. However, in his submissions in relation to abandonment, he referred to the decision of the High Court in DTR Nominees Pty Limited v Mona Homes Pty Limited & Anor (1978) 138 CLR 423. That case concerned the right to rescind for breach of an essential term and, at p.434, in the joint judgment of Stephen, Mason and Jacobs JJ it dealt with the question of abandonment.
120 Mr Brereton relied on the fact that no submission had been made in relation to repudiation and, notwithstanding that that submission was repeated, there was no further submission by Mr Stevenson on this point. In all these circumstances I do not propose to stay to consider the point pleaded, but not argued, particularly as specific reference was made by Mr Brereton to the failure to make submissions on it. However, at the end of the day, it may well be that the findings I make in relation to the alleged breaches will be such as to show that there was no breach of a repudiatory type by Global.
121 The matters pleaded in paragraph 13 of the Defence were abandoned expressly.
Abandonment
122 Mr Stevenson submitted that by 15 December 1995 the parties had agreed to abandon their respective rights and obligations under the Agreement in that from about 16 September 1995 Global ceased to arrange for operators to log onto Legion’s equipment and/or ceased to arrange for them to take calls on the 190 Listed Lines; and, on 15 December 1995, Legion disconnected Global’s access to the 190 Listed Lines.
123 The passage upon which Mr Stevenson relied in DTR Nominees, at p.434, stated:-
“Thus the contract in the present case was still on foot on and after 25 July 1974. Neither party had effectively rescinded. But there can be no doubt that by 5 December 1974, when these proceedings were commenced, neither party, whatever may have been their reasons, regarded the contract as being still on foot. Neither party intended that the contract should be further performed. In these circumstances the parties must be regarded as having so conducted themselves as to abandon or abrogate the contract. The position is similar to that with which Isaacs J dealt in Summers v The Commonwealth . The plaintiff did not succeed in his action for damages for breach of contract, but on the other hand the defendant had not rescinded. Time passed during which neither party took any steps to perform the contract. It was held that the parties had so conducted themselves as mutually to abandon or abrogate the contract.”
124 Mr Stevenson submitted that by the end of November 1995 Global had ceased to promote any service through Legion and to answer calls on the 190 Listed Lines, and that the effect of that conduct was that abandonment took place on 15 December 1995, so that if there was otherwise an entitlement to damages it ceased then.
125 I am not satisfied that there was any agreement, whether express or implied, by the parties that the Agreement should be abandoned. It will be necessary to consider the evidence relevant to the alleged breaches of contract by Global to ascertain what steps it took in performing its contractual obligations. In my view the claim based on abandonment must fail.
The Giving Of Reasonable Notice
126 Mr Stevenson relied upon the fact that it was an implied term of the Agreement that either party was entitled to terminate it on giving reasonable notice to the other, such term being implied to give business efficacy to the Agreement. He submitted that although no notice was given seven days would have been a reasonable period because the parties had ceased to be in contractual relations.
127 Mr Brereton relied upon clause 5(b) of the Agreement, which provided:-
“If any party fails to comply with the terms of this agreement then the other parties may give the party in default thirty days notice in writing in which to rectify such non-compliance. If after thirty days such non-compliance has not been rectified then the complaining parties may terminate this agreement forthwith by giving written notice of such termination.”
128 The implication of the term, for which Mr Stevenson contended, can only arise if, inter alia, it does not contradict an express term of the Agreement. In my opinion clause 5(b) provides that if there is breach, including breach of the terms of clauses 2(l) and (m) in the manner alleged, the Agreement required Legion to give notice to Global to rectify the default within 30 days and, in the event of its not being rectified, it was then open to Legion to terminate the Agreement. This term, in my opinion, is contradictory of the term sought to be implied.
129 Further, it seems to me that clause 5(b) also justifies the view that a minimum period of notice is 30 days. However, clause 5(a) provided that the parties are to review “the situation”, i.e. the duration of the Agreement, “at regular three monthly intervals”.
130 Mr Brereton submitted that the effect of clause 5(a) was to deal with the Agreement’s duration, save as provided in clause 5(b), and that, on its proper construction and in the absence of a notice under clause 5(b), the Agreement could not be terminated in the absence of breach save on three months’ notice. Alternatively, he submitted, that if the Agreement was terminable on reasonable notice, the circumstances required not less than three months’ notice because, inter alia, of the lead time for advertising of two to three months; the circumstance that the Agreement contained provision for three monthly reviews; and the inference to be drawn from the fact that in the case of breach a 30 day notice requiring rectification was necessary before the Agreement could be terminated thus leading to the conclusion that a substantially longer period would be expected in the absence of a breach justifying termination.131 Global was entitled, upon a proper construction of the Agreement, to the exclusivity for which it contended. There was no variation of the Agreement in the way for which Legion contended. The questions, which arise therefrom, are the damages to which it is entitled. Further questions will arise as to whether, in consequence of any alleged breaches by Global, Legion is entitled to damages.
Conclusions Thus Far
132 Damages For The Failure To Provide All Calls To Global
Global submitted that its damages are the amount of remuneration to which it would have been entitled had Legion directed all 190 psychic and psychic-related call processing requests through its psychic call centre, other than the current one-off Athena Starwoman - Woman’s Day Star Cards Promotion. It submitted that the damages should be calculated to March 1996 because Legion could not, as it purported to do, have lawfully terminated the Agreement on 15 December 1995, but was required to give three months’ notice from that date, for the reasons to which I have just referred, thus meaning that it could not have terminated in the absence of breach before 15 March 1996. This submission was supported by submissions that no notice pursuant to clause 5(b) was given to Global, so that Legion was not entitled to terminate for breach; that in those circumstances, for the reasons earlier submitted, the Agreement was terminable on three months’ notice; and, alternatively, it was terminable on reasonable notice which, in the circumstances, was three months.
133 The submissions continued that had Legion honoured its contractual obligations, Global would have been entitled to its revenue share in respect of the calls not directed to it at the rate provided for in Part 1 of the Revenue Schedule, until 31 March 1995, and thereafter as varied by the correspondence of March 1995. Global accepted that as Athena, Mystic Meg and Myles lines were not promoted by it, Part 1 of the Revenue Schedule was applicable and, further, that the correspondence of March 1995 effected a variation, with effect from 1 April 1995, of the Revenue Share Deal, although not of exclusivity. The relevant figures are set forth in the letter of 16 March 1995.
134 The submissions continued that certain calls to Athena, Mystic Meg and Myles were on $5 and $3.95 lines, and that the Agreement did not directly address calls at such charge rates. Reference was then made to clause 4(a), which dealt firstly with calls at $3 per minute and concluded:-
“However, the call charges are subject to change and hence the amount retained by Legion and subsequently Global will be subject to this change.”
135 The submission was that the changes to $5 and $3.95 per minute meant that the call charges had been changed, as contemplated in that sentence, and that, consequentially on that change, there was to be a change in the amount retained by Legion and subsequently Global; and that the clear intention evidenced by this sentence was that in the event of call charges being changed the amounts to be distributed to Legion and Global would alter proportionately in accordance with the original division of call charges. There seemed to be no significant difference in the submissions on this point, save that Mr Stevenson submitted that there was only an agreement to enter into a further agreement.
136 Mr Stevenson submitted that in considering damages, on the basis that the construction of the Agreement for which he contended was not accepted, it was necessary, firstly, to have regard to the fact that Legion only failed to direct the relevant calls on the 190 Other Lines amounting to 1,125,447 minutes. The submission continued that on the construction of the Agreement, which I consider is correct, Global is entitled to damages sufficient to put it in the position it would have been had Legion directed calls on those lines, being specifically those to Athena Starwoman, Mystic Meg and Myles, to Global, and the submission posed the question rhetorically as to what would have happened if Legion had attempted to do so. The evidence was that Athena Starwoman, Mystic Meg and Myles were competitors of Global and had their own call processing centres. Further, it established that Athena Starwoman had been approached by Legion with the suggestion that Global’s psychics be used, a matter she considered to be “unwise” and about which she would be “most apprehensive” to lend her name. Legion also approached Mystic Meg and, when she ultimately commenced operations in November 1995, she used Myles as her call processor.
137 From this the submission ran that it is obvious that these people would have become aware if Legion had put their calls through to Global operators, and that it is “inconceivable” that they would have “been prepared to tolerate that conduct” and that if Legion had persisted in it they would have terminated their arrangements with it pursuant to their contractual arrangements with Legion.
138 Mr Stevenson submitted that the onus is on Global, as is obviously correct, to prove the quantum of its damages, and that it had not adduced any evidence to establish that any of these persons, all of whom were Global competitors, would have allowed calls intended for their services to be directed to Global. He submitted the evidence was to the contrary and the probabilities favour the view, which was otherwise established by the evidence, that these people would have rejected Global as the call centre.
139 There was evidence, to which Mr Stevenson’s written submissions referred, that callers would have realised they were being connected to operators other than those of their choice and that:-
“In all these circumstances it is highly improbable that Global would have generated any income from the calls it claims Legion was obliged to direct to it.”
140 Mr Stevenson further submitted that Global’s case assumed an inability to handle the vastly increased number of calls without any increase in overhead costs, “merely because the operators logged on to the Psychic Express and Psychic Live service were not fully occupied”. The submission referred to the evidence of Ms Ramzan that Global’s “business rule” was that its operators would log on to only one service at any given time, because otherwise “not all services could be dealt with adequately”. The submission was that Global had not demonstrated that it could have engaged sufficient operators to meet “such an extraordinary increase in demand”, and that Global is merely asking the Court to either infer “or, more accurately, to speculate” that it could have done so. These submissions concluded that Global suffered no loss, let alone the amount claimed.
141 Mr Stevenson’s submissions then turned to calls charged at $5 per minute and, I shall assume, these were also intended to cover any calls at $3.95 per minute. He submitted that Global’s contention that it was entitled to the benefit of an increase in call charges “is inconsistent with clause 4(a) … which, properly construed, requires there to be further agreement between Global and Legion, in the event of an increase in call charge”, and that absent any such agreement Global had no entitlement to any increase. I do not agree with this submission. In my opinion, the concluding sentence of clause 4(a) does not require a further agreement. It provides the agreement of the parties as to what shall happen in the event of a change in call charges and provides that the amounts to be retained “will be subject to this change”. It is not difficult to imagine a more expanded method of stating what was intended. However, a fair reading of the provision is that in the event of a change in call charges, whether upwards or downwards, Legion is to be paid a percentage, on those adjusted figures, that $2.45 bears to $3, and the share of the revenue to be divided is to be calculated on the basis of the changed figure, but by reference to the percentages appearing in the revenue provision of Schedule 1 and the subsequent correspondence.
142 Mr Stevenson continued that if, contrary to that submission, Global was entitled to increased revenue, such increase should be such amount as would give Global the same proportion of the charge rate had there been no increase “and not a ‘proportionate share of any increase’”.
143 Mr Brereton submitted that there was no justification for discounting the amount of damages to which Global was entitled based on insufficient capacity to cope with the increased level of calls. He submitted Global had ample capacity and relied on the evidence of Ms Ramzan to this effect. In my opinion the evidence does establish that Global had the necessary capacity to handle an increased volume of calls.
144 Mr Brereton then turned to consider whether the other people would have agreed to Global’s handling their calls, and the submission that it was improbable that they would have. He submitted this completely misunderstood the approach to damages in contract, as distinct from tort, the question being simply what would have happened had the Agreement been performed, this not being a case where one had to question whether the calls would have been made at all.
145 To this point I do not discern any great difference between the submissions.
146 Mr Brereton then submitted that the question “becomes simply, what would Global have earnt had they been directed to Global”, and that the question as to whether Athena Starwoman, Mystic Meg or Myles would have allowed calls intended for their services to be directed to Global does not arise and that it was for Legion, if it decided to process such calls, to ensure that it was able to direct them to Global to perform its contractual obligations to Global.
147 In my opinion there are two issues involved in these various submissions. Firstly, for the reasons I have sought to explain, I am of the opinion that Legion was obliged to direct all calls to Global operators. However, this would have led to two potential difficulties so far as the 190 Other Lines were concerned. Firstly, there would, I am satisfied by the evidence, have been a very real probability that Athena Starwoman, Mystic Meg and Myles would have terminated their arrangements with Legion. Secondly, the submission overlooked the fact that a critical aspect of the revenue raising was that callers would remain on the line. The proper inference from the evidence is that the callers, or indeed the vast majority of them, were seeking to speak to a person of their choice. They were not simply seeking to speak to any operator. This observation is not overcome by the fact that a person ringing Psychic Live or Psychic Express may receive one of a number of operators, because such people were content to have the service operating under one or other of those names. But it does not follow, and indeed the evidence is to the contrary, that a person telephoning, for example, Psychic Express or Psychic Live would be prepared to accept a service provided by, for example, Athena Starwoman or Mystic Meg, and the converse position must be so. I am satisfied that the evidence supports this.
148 The total amount claimed by Global for this breach is $1,054,902.18, which includes $4,896 for calls on Psychic Express directed to Mystic Meg. In my view the proper way to approach this claim, having regard to the difficulties confronting Global in relation to Athena Starwoman, Mystic Meg and Myles remaining with Legion and callers being prepared to accept Global’s operators, is on the basis of damages for loss of opportunity to have received and taken advantage of such calls. The issue, in the context of a tortious claim, was considered by the High Court in Malec v J.C. Hutton Pty Limited (1990) 169 CLR 638, particularly at pp.642-645 in the joint judgment of Deane, Gaudron and McHugh JJ. It was considered in the context of a claim for damages under the Trade Practices Act in Sellars v Adelaide Petroleum NL & Ors (1994) 179 CLR 332.
149 In the joint judgment of Mason CJ, Dawson, Toohey and Gaudron JJ, their Honours said, at pp.339-340:-150 At p.349 their Honours said:-
“The primary question is whether, in the circumstances of this case, the loss of an opportunity to obtain a commercial advantage or benefit amounts to ‘loss or damage’ within s.82(1). Is it necessary for the applicant to prove on the balance of probabilities that a benefit would have been derived from the opportunity had it not been lost and, if so, the extent of that benefit? Or is it sufficient for the applicant to show, not on a balance of probabilities, but by reference to the degree of possibilities and probabilities, that there was some prospects of deriving a benefit from the opportunity had it not been lost and, if so, then to ascertain the value of the opportunity or benefit by reference to such possibilities and probabilities? The question whether the applicant has sustained loss or damage is necessarily related to the ascertainment or measurement of that loss or damage.”
151 At p.350, after referring to Malec, their Honours said:-
“In the realm of contract law, the loss of a chance to win a prize in a competition resulting from breach of a contract to provide the chance is compensable, notwithstanding that, on the balance of probabilities, it is more likely than not that the plaintiff would not win the competition. As the contract contained a promise to provide the chance, the breach of the contract resulted in the loss of the chance and that loss was for relevant purposes an actual loss, in the sense in which Dixon and McTiernan JJ used that expression in Fink v Fink . And where there has been an actual loss of some sort, the common law does not permit difficulties of estimating the loss in money to defeat an award of damages. The damages will then be ascertained by reference to the degree of probabilities, or possibilities, inherent in the plaintiff’s succeeding had the plaintiff been given the chance which the contract promised.
This approach is not confined to contracts relating to games of chance, sporting contests or other competitions. Fink v Fink concerned a contract to provide an opportunity for a reconciliation, breach of which was held to entitle the wife to damages. And there can be no doubt that a contract to provide a commercial advantage or opportunity, if breached, enables the innocent party to bring an action for damages for the loss of that advantage or opportunity. So, in The Commonwealth v Amann Aviation Pty Limited , Mason CJ and Dawson J, Brennan J and Deane J concluded that a lost commercial advantage or opportunity was a compensable loss, even though there was a less than fifty per cent likelihood that the commercial advantage would be realised. Damages for breach of contract were assessed by reference to the probabilities or possibilities of what would have happened.”
152 At p.355 their Honours said:-
“Neither in logic nor in the nature of things is there any reason for confining the approach taken in Malec concerning the proof of future possibilities and past hypothetical situations to the assessment of damages for personal injuries. The reasons which commended the adoption of that approach in assessments of that kind apply with equal force to the assessment of damages for loss of a commercial opportunity, as the judgments in Amann acknowledge.”
“Notwithstanding the observations of this Court in Norwest , we consider that acceptance of the principle enunciated in Malec requires that damages for deprivation of a commercial opportunity, whether the deprivation occurred by reason of breach of contract, or contravention of s.52(1) should be ascertained by reference to the Court’s assessment of the prospects of success of that opportunity had it been pursued. The principle recognised in Malec was based on a consideration of the peculiar difficulties associated with the proof and evaluation of future possibilities and past hypothetical fact situations, as contrasted with proof of historical facts. Once that is accepted, there is no secure foundation for confining the principle to cases of any particular kind.
On the other hand, the general standard of proof in civil actions will ordinarily govern the issue of causation and the issue whether the applicant has sustained loss or damage. Hence the applicant must prove on the balance of probabilities that he or she has sustained some loss or damage. However, in a case such as the present, the applicant shows some loss or damage was sustained by demonstrating that the contravening conduct caused the loss of a commercial opportunity which had some value (not being a negligible value), the value being ascertained by reference to the degree of probabilities or possibilities. It is no answer to that way of viewing an applicant’s case to say that the commercial opportunity was valueless on the balance of probabilities because to say that is to value the commercial opportunity by reference to a standard of proof which is inapplicable.” (Their Honours’ emphasis.)
153 Their Honours considered that this approach resulted in fair compensation, whereas “the all or nothing outcome produced by the civil standard of proof would result in the vast majority of cases in over-compensation or under-compensation to an applicant who has been deprived of a commercial opportunity”.
154 The matter, so far as I am aware, was most recently considered by the Court of Appeal in Tszyu v Fightvision Pty Limited & Anor (1990) NSWCA 323 (13 September 1999). A boxing fight promoter sought damages from, inter alios, a boxer, on the basis that but for his breach of contract he would have continued to fight in circumstances where the fight promoter would have derived income. The Court was necessarily confronted with the question as to what would have occurred but for the breach by the boxer of his contract, which involved considerations such as the number of fights in which he would have been engaged, the profits to be derived from them, the amount to which the promoter would have been entitled from them, and the inherent vicissitudes and contingencies that the underlying circumstances would have transpired necessary to enable the boxer to have engaged in such fights before crowds and in circumstances where other income would have been derived, which would support the damages claimed.
155 Their Honours noted that in that case causation did not arise. In my opinion, in the present case causation does not arise because the failure to direct the calls was the breach of contract and, in so far as there was any loss, it was caused by that failure.
156 At paragraphs 140 and 141 the Court of Appeal said:-
“140 It would have been erroneous to apply a balance of probabilities test to the programme and the earnings, treating as certain the past hypothetical events of promotion or co-operation by Fightvision of bouts in which Mr Tszyu participated and earnings from those bouts as put forward in the evidence of Mr Mordey if satisfied on the balance of probabilities that those events would have occurred. That would have then been unfair to the defendants, because it would have treated as certain a prediction of events with a 51% probability of occurring. It would equally have been unfair to Fightvision to have ignored the events altogether, and so awarded no damages, if the prediction of their occurrence was given only a 49% probability. The correct approach, given the causation of loss was not in issue and the task was to assess the damages for loss of the commercial opportunity of promoting or co-promoting fights in which Mr Tszyu participated, was according to the degree of possibility or probability of such bouts occurring and bringing earnings as claimed.
141 It is not essential, however, in making an assessment of damages of this kind, to express a percentage possibility or probability of the occurrence of the events necessary for the claimed lost profits, here the number of fights and the amounts of earnings.”
157 In my opinion paragraph 141 was said in the context of the particular findings at first instance in that case. I do not consider that their Honours were suggesting that the application of a percentage amount, which is a conventional approach to the problem, was not permissible.
158 Their Honours quoted with approval from the decision in Norris v Blake (No 2) (1997) 41 NSWLR 49, at p.67:-159 At paragraph 144 they continued:-
“Where a valuation of a loss has to be made and the extent of the loss depends upon an uncertain event, which has not occurred by the time the evaluation is made, such evaluation must be made by reference to the chance of the event occurring, and not by reference to whether or not the occurrence was or is probable.”
“So where there is controversy over the validity of a hypothetical exercise of earning capacity, or hypothetical events necessary for claimed lost profits, being the hypothesis for which the plaintiff contends, to say that it is more probable than not that something less than that for which the plaintiff contends would have occurred may be a way of allowing for imponderables or chances and coming to the degree of probability of that for which the plaintiff contends. In substance, that is what was done in Norris v Blake (No 2) , although with further allowance for the particular prospect of greater success.”
160 In my opinion, these authorities set forth the proper approach to the assessment of the damages with which I am now dealing. The evidence does not establish that had Legion directed the 190 Other Line calls to Global, Global would have derived anything like the full financial advantage it claims from them. Rather, I am satisfied that had this been done Athena Starwoman, Mystic Meg and Myles would have terminated their arrangements with Legion, so that there would have been no calls on the 190 Other Lines to be directed to Global operators. Further, I am satisfied that most, if not all, the callers would, in all probability, not have accepted other services than those to which they were seeking to be connected. However, there are two qualifications in this. The first is that it would have taken some little time for Athena Starwoman, Mystic Meg and Myles to terminate their respective arrangements with Legion. The second is that there is the possibility that some callers would have accepted the Global operators. I am not prepared, using the example in Malec, to conclude that these possibilities were so remote that no assessment could be made of the lost opportunity by virtue of the breach of contract. On the other hand, I am by no means satisfied that the situation would have continued for long and, of course, once Athena Starwoman, Mystic Meg and Myles ceased their contractual arrangements with Legion, there would have been little possibility that callers to them would have accepted Global operators because they could not have been directed to them. I say “little” in recognition of the fact that there was still advertising material available, which may have led to calls, which may, in turn, have led to some callers accepting Global operators. None-the-less, Global is entitled to be recompensed, on the principles to which I have referred, for the loss of the opportunity.
161 The Schedule, on the basis of which the damages have been calculated, could be used as some guide to the amount. The amounts claimed for the months of January, February, March and April 1995 respectively are $32,524.40, $40,049.92, $45,947.53 and $51,384.98 of which Global claims an entitlement to $7,590.75, $16,566.60, $15,589.05, $19,824.15 and $17,309. These figures total approximately $76,880.
162 I have taken this figures as a check against the percentage of the claim of $1,050,006 (i.e. $1,054,902.18 less $4,896), which, in my opinion, would be appropriate. In my view the percentage is 10% and, accordingly, the amount of damages to which Global is entitled, under this head, is $105,000.
163 It was not in issue that, in addition to this amount, Legion was obliged to pay Global the bad debt retention levy of $10,868.53 and $4,896 for Legion’s admitted re-direction of calls on the Psychic Express service to Mystic Meg. In the result I consider that Global is entitled to damages in the sum of $120,764.53.
164 The assessment I have made also takes account of the view expressed by Mr Lovell, paragraph 65 above, that such obligation of exclusivity as Global might have had was discharged by July 1995, when read with his re-examination on this point.
Legion’s Claim For Damages On The Cross-Claim
165 Legion made several claims for damages under its cross-claim. The first alleged breaches of clauses 2(l) and (m) in that for the period from 1 April 1995 to 15 December 1995 Global failed to maintain service opening hours and to ensure that there were sufficient operators available to cover the service at all times and, for the period from 1 September 1995 to 15 December 1995, the service provided by Global “was totally inadequate so as to effectively provide no service at all”.
166 The particulars alleged that for the period from 1 April to 15 December 1995 Global’s operators failed to answer a total of 97,568 calls to the service and, during the months from September to December 1995, its operators failed to log in to the service on whole dates thereby failing to answer calls on those days. The particulars alleged that the number of days were 30, 31, 30 and 15 in September, October, November and December respectively. It was pleaded that as a result of these breaches Legion has suffered loss and damage.
167 Mr Stevenson submitted that there had been a breach of sub-clauses 2(l) and (m) as a result of which Global had repudiated its obligations under the Agreement, and Legion had suffered damage and is entitled to damages. The submission continued that it was clear that Global did not maintain service opening hours throughout the course of the Agreement, and reference was made to Mr Turnbull’s evidence that he told Mr Burden, on or about 15 December 1997, that Global had stopped attending the lines:-
“.. because our psychics were fed up with being at a desk for four hours at a time and not getting any calls.”
168 Mr Stevenson referred to an answer to particulars in which the solicitors for Global stated that no operators were logged on after 16 September 1995, and to Schedule JB4 to Mr Bailey’s statement of 22 September 1999, which revealed that between 16 September 1995 and 15 December 1995 no operators were logged on for 51 days out of 91 days. This would tend to indicate that the answer to the particulars: Exhibit 11, was incorrect, the correct position, as disclosed by the evidence, being that there were operators logged on for some periods after 16 September 1995.
169 Mr Stevenson submitted nextly that it was to be inferred from the pattern and extent of call failures and unanswered calls that Global ceased to maintain service opening hours and to ensure sufficient operators were available.
170 He submitted that Global’s obligation to ensure the availability of sufficient operators was expressed to be “based on” a supply of “call statistics” and “operator management information”, which Legion was obliged to supply pursuant to clause 1(c), and which it did supply in monthly statements sent by it to Global, which set out, in relation to each line, the number of calls and the total number of minutes of those calls and thus provided sufficient information to enable Global to determine how many operators were necessary.
171 Mr Stevenson also submitted that Legion provided Global with operator call reports, although he accepted that none were furnished after 23 August 1995.
172 A great deal of evidence was given in relation to failed and unanswered calls. It was submitted that the source of information in relation to these calls came from Legion’s computer records and that the two questions which arose were whether the information was accurate and what conclusions should be drawn from it.
173 Mr Stevenson submitted that Legion’s relevant records had been subjected “to rigorous and critical scrutiny” by Mr Murrell, who was called to give evidence by Global, and by Mr Simpson, who was retained by Global but was not called. Mr Stevenson noted that Mr Murrell had sought to impugn the integrity of the data in the records, but he submitted that cross-examination revealed that this attempt failed and that Global had failed to establish that the records were inaccurate. He further submitted that ultimately, albeit reluctantly, Mr Murrell conceded that there was no error in the records themselves. Mr Murrell also made an allegation that Legion’s records had been subjected to a process of auto dialling, which allegation was withdrawn during the hearing.
174 Mr Stevenson submitted that if Legion’s records showed a call failed “it clearly did fail”, the question being the reason for that. He accepted that for there to be a relevant call failure it must be demonstrated that it occurred when a call was received, and no operator was available to take the call because either no operators were logged on at all, or all operators logged on were “blocked out”, i.e. were engaged on other calls, the answer depending upon the proper analysis of Legion’s records.
175 Mr Bailey carried out an analysis of the records for Legion. He made various statements and responded to criticisms of his analysis offered by Messrs Murrell and Simpson by adjusting his conclusions in relation to call failures and unanswered calls. Mr Stevenson, as I understood it, accepted that this provided a basis for criticism of Mr Bailey’s analysis, but that subject to that the resulting figures should be accepted as accurate. He submitted that from Mr Bailey’s figures there was a total of 1,333 calls on both lines not answered and of 17,737, which failed, making a total of 19,070 calls. Mr Brereton asked that that figure be contrasted against the figure originally claimed in the cross-claim of 97,568 calls and the figures thereafter put forward by Mr Bailey leading to his final figure of 19,070. The figure of 19,070 calls presented a problem, which Mr Stevenson frankly accepted, arising from the fact that an unspecified number of unanswered calls may have occurred when an operator was logging out; the entries for 16 September 1995 and 17 October 1995 in Schedule JB3 to Mr Bailey’s statement of 22 September 1999 disclosed negative numbers, which he said should not have occurred; and any further issue arising out of Exhibit Q with which Mr Stevenson said he would deal in reply.
176 One matter of criticism of Mr Bailey was that, prima facie, his Schedule in reference to Exhibits JB2 and JB3 to his statement of 22 September 1999 was inaccurate. However, that inaccuracy was explained by a wrong transposition of figures, which Mr Brereton accepted. Nothing more turns on that, as such.
177 Mr Stevenson also confronted evidence given by Mr Bailey, at Tpp.229-230, in relation to the existence of the negative numbers. Mr Bailey agreed that there should not be a negative number and that it appeared to be a result of some programming error. He continued:-
“Q. And your figures cannot be treated as reliable, can they?
A. It doesn’t appear that is so, does it.
…
HIS HONOUR: Q. If you go back to 16 September 1995, page 4 of 6. Does the same answer apply?
A. Sorry, what is this one?A. …
Q. Sorry, 16 September 1995, the previous page, does the same answer apply about the validity of the figures?
Q. What I wanted to direct your attention to was 16 September where there are three negative figures. The question I just wanted to ask you was does the same answer apply as to the weight or reliability that can be placed upon your figures, having regard to those negative figures?
A. Yes, they are wrong.”178 Mr Stevenson submitted that that evidence must be read as confined “to that matter”, which I take to mean for the period from 16 September 1995 to 17 October 1995. Even if it is read in that somewhat benevolent way it still means that the figures are wrong, a word used by Mr Bailey in the answer I have just quoted.
179 Mr Stevenson also sought to meet the submission that Mr Bailey’s evidence that his statements did not necessarily contain everything that he did was intended to convey no more than that he had not exposed, in his statements, every step in his process of reasoning, and not as a concession that he had adjusted his figures otherwise than to deal with the specific criticisms made of him. It seems to me that that probably is so.
180 Mr Brereton submitted that Global’s obligation was to ensure there were sufficient operators based on call statistics and operator management information supplied by Legion on a regular basis, and that Legion was bound to provide Global with call figures monthly, and operator call reports daily. There was no suggestion that the failure to provide the “monthly” figures should be excused due to circumstances beyond Legion’s control.
181 Mr Burden agreed that after June 1995, Legion failed to provide Global with such figures and reports at all. Their absence, it was submitted, deprived Global of the information essential to determine roster schedules and the number of readers to be rostered at any time and, in these circumstances, a condition precedent to the obligation created by clause 2(m) was not met. The matter was also put that any such failure was attributable to Legion’s breach of its obligations under clause 1(c).
182 However, it was further submitted that Global did ensure there were sufficient operators available to cover the service. Ms Ramzan, who was in charge of rostering the operators, said she had no difficulty in finding operators to fill the demand and that a minimum of twelve and a maximum of fifteen operators were rostered from January until April 1995. As at July 1995, Legion had recorded twenty named psychic readers as provided by Global to whom identification numbers had been issued for use on the system. Further, Mr Brereton submitted, certain statistics referred to as the “Shabnam statistics” showed that for the period April 1995 to January 1996, according to Legion’s statistics, operators were logged on for a total of 354,675 minutes, but that calls totalled only 105,277 minutes. Thus, during that period, there was, he submitted, always a surplus capacity available. Mr Burden, when faced with these figures, conceded that the time operators were logged on exceeded call minutes over the period by a factor of 6.0:1.7. This percentage derived from Mr Burden’s concession, Tp.130, that operators were logged on for 6,077 hours, but were busy only for 1,791 hours. Mr Brereton submitted that even using Mr Bailey’s most recent figures in place of the Shabnam statistics, a similar result was achieved.
183 He continued that if operators were not “logged on” during the period from October to December 1995 it was because calls were not being received by them during that period and no call statistics were provided to Global to enable it to plan for that period.
184 Mr Brereton made the telling submission that a number of operators were called, who gave evidence that although they were logged on and ready and willing and able to take calls, calls were not made to them.
185 Exhibit 4 was tendered with a view to seeking to prove recorded instances when Global’s operators, although logged on and therefore purportedly available, failed to answer calls directed to them. However, serious doubt was cast upon the accuracy of that by the evidence of Mr Burden at Tp.104. He was cross-examined about 1 April 1995, as recorded in that exhibit, and he said it would seem that the computer was obviously selecting “success” plus “clear” as well as “success” plus “no answer” plus “clear”, the former indicating a call on which the caller had hung up before the operator had an opportunity to answer it generally. The evidence continued:-
“Q. Therefore included in Exhibit DB-1, just in respect of the first day, five out of the six calls are calls in respect of which the caller hung up before the operator had a chance to answer?
A. That would seem to be the case in those six calls.
Q. Yes. And to describe Exhibit DB-1 as a list of calls when an operator failed to answer is an inaccurate description, isn’t it?
A. Yes, it is.
Q. And I think you may have already agreed with me, that save in respect of the days for which we have the original data, it is just not possible to tell which of the other calls in Exhibit DB-1 are ‘success’ plus ‘clear’ and which of the others are ‘success’ plus ‘no answer’ plus ‘clear’, is it?
A. No, it is not possible to tell that.”186 Mr Brereton then noted that Mr Bailey’s most recent report showed a markedly reduced level of “calls not answered”, which needed to be weighed against the unchallenged evidence of the operators which was substantiated to a large degree by their logs. This had to be done in the context of their evidence not being challenged and the accuracy of their logs being corroborated by the close correlation with Telstra’s records.
187 In my opinion Legion has not established that Global failed to provide sufficient operators. Notwithstanding that Legion failed to furnish Global with the information to which Global was contractually entitled, none-the-less Global did provide sufficient operators and there is no justification to find, on the evidence, that unanswered calls were as a result of Global operators not being on duty.
Call Failures
188 Mr Brereton submitted that there was no acceptable evidence of “call failures”, i.e. of calls made but not answered. I have referred to the difficulties with the evidence of Mr Bailey and to the reduction in numbers from those alleged originally to those upon which reliance was ultimately placed, the latter being one of significance as the analysis was of Legion’s data and still disclosed a real potential for error.
189 As the evidence developed, however, it emerged, and I accept this evidence, that a substantial proportion of these failures was, as a matter of probability, repeat calls generated by a few persistent callers. Mr Brereton submitted this was evidenced by the Telstra Origin of Call Reports and the documents subpoenaed from Telstra: Exhibit Q, which showed the actual calling number, and also from the analysis of calls prepared for Legion, with a view to refuting the auto dialler claim, and ultimately tendered by Global as Exhibit S. An analysis of these figures shows the call failures were, in a number of instances, generated by a few callers making from ten to, sometimes, fifty successive attempts before being connected, although the evidence also showed that notwithstanding the number of attempts the caller was, generally speaking, usually connected so that no revenue was lost. Mr Brereton submitted that this view was supported by the circumstance that there was no advertising after August 1995, so that one would expect that the level of demand to progressively decrease; that while, as expected, the call volume decreased according to Telstra records, there was apparently a massive increase in “failures”; that while very high in the days preceding the switch on 19 December 1995, when the lines were switched to Legion the failures ceased although there was no commensurate increase in revenue calls; and that these matters led to the inference that despite the apparently high number of “failures” they represented a very small demand, and, ultimately, that was a demand which was generally satisfied.
190 Mr Brereton further submitted that it was never anticipated that every call would be answered, with which Mr Burden had agreed: Tp.127.
191 Mr Brereton submitted that the circumstance that there were some call failures did not establish a failure to ensure that sufficient operators were available to cover the service. He then dissected the figures in various ways, placing emphasis upon the fact that not every unanswered call or call failure would have led to a revenue producing situation.
192 The relevant records from which unanswered calls and call failures could be ascertained were those of Legion. Legion had every opportunity to establish that for which it contended. It also had obligations, with which it failed to comply to the extent to which I have referred, to provide information to Global.
193 The case was adjourned on 18 February 1999 because of the necessity to consider the evidence of Mr Bailey and certain other evidence relating, inter alia, to unanswered calls and call failures. In the result Legion had more than ample time to put forward its case in this regard.
194 In his submissions in reply Mr Stevenson attacked the analysis of Exhibit Q on which Mr Brereton relied. He submitted that it established no more than that there were repeat callers, which Legion accepted. He continued that it provided no reliable basis upon which to calculate the pattern of repeat callers in April 1995, the extent to which call failures in April 1995 might be repeat calls, nor such discount as should be made to Legion’s figures to take account of repeat callers.
195 He continued that Exhibit S did not purport to deal in a comprehensive way with the April origin of call records, but, rather, was prepared to deal with the allegations by Mr Murrell of auto dialling. He submitted it did not provide any basis upon which to extent the pattern of repeat calls during April or any other period, that it was not prepared for that purpose and that it did not purport to do so.
196 The submission then went on to refer to some further analysis, which had been carried out on the April 1995 Telstra Origin of Call Reports. Even accepting for the moment the way in which the material is sought to be used and the validity of the hypotheses, there is no justification for carrying forward the April 1995 figures to other months and, in fact, irrespective of these analyses, which in my view should have been carried out and the subject of evidence, the fact remained that there was powerful evidence of repeat callers, which would explain the failed calls. Mr Stevenson finally submitted that the appropriate way to take into account repeat calls, when assessing the damage Legion had suffered as a result of Global’s alleged breach of the Agreement, was to discount the number of missed calls for which Legion contended, namely 19,070 by 14.49% at the most.
197 In my opinion Legion has simply failed to prove the number of failed and/or unanswered calls and to put into any context that number, in any event, in relation to the extent to which it was anticipated that not all calls would be successful in any event. Therefore, it has not proved that Global breached its agreement.
198 For all these reasons this aspect of Legion’s cross-claim must failed.
199 The second basis on which the cross-claim proceeded was that clause 2(c) of the Agreement provided an undertaking by Global and its partners to offer Legion first option for other related services not detailed in Schedule 1.
200 It was submitted that Global breached this clause by failing to offer Legion the opportunity of processing the calls it promoted through ITM, which were the Psychic Hotline calls. There was no challenge to the evidence of Mr Burden that no such offer had been made and that had it been Legion would have accepted it.
201 Mr Stevenson pointed to Mr Lovell’s evidence of his understanding that the Agreement imposed upon Global an obligation to procure that Legion have the work of processing the Psychic Hotline calls and, from all this, he submitted that Legion was entitled to damages in an amount equal to that earned by ITM for processing those calls. He continued that the documents produced by ITM on subpoena did not enable a precise calculation to be made of its earnings for the period from December 1994 to June 1995, although it was possible to provide a precise calculation for the period July 1995 to December 1995. Mr Stevenson submitted further that Legion accepted that if its submissions as to the variation of the Agreement were accepted, its claim under clause 2(c) would only be for the period up to the date when the variation took effect. As I do not accept that there was a variation that becomes irrelevant.
202 Mr Brereton submitted that the issue was whether “Psychic Hotline” was Global’s partner, as pleaded in clause 3A of the Amended Cross-Claim. “Psychic Hotline” was operated through Psychic Hotline Pty Limited. At Tp.141 Mr Burden agreed that as at December 1994 he knew that Psychic Hotline Pty Limited had an existing relationship with ITM and that that was “a business I was after”. He said the telephone numbers were portable “with the consent of both service providers” and that, accordingly, ITM’s consent would be necessary. He continued:-
“Q. You knew that Psychic Hotline Pty Ltd could not take those numbers from ITM and give them to Legion without ITM’s consent?
A. That’s right. Such consent would not normally be withheld by ITM.
Q. Did I ask you that?
A. No you didn’t.
Q. At the meeting on 8 November 1994, Mr Lovell said to you and the other Legion personnel present, ‘you know our current position with ITM’. Didn’t he?
A. He said words to that effect, yes.
Q. He said, ‘while we are interested in pursuing a business relationship with you, we do want to protect our investment in this business so far’?
A. Words to that effect, yes.
Q. Mr Maxted said, ‘that’s fine and we certainly understand that’?
A. Yes.”203 Mr Burden said he did not know, in December 1994, that the reason why the company contracting with Legion was Global and not Psychic Hotline Pty Limited was because of the latter’s existing relationship with ITM.
204 This evidence makes it obvious to me that “Psychic Hotline” was controlled by Psychic Hotline Pty Limited. There was no evidence that Psychic Hotline Pty Limited was either a partner or assign of Global, each being a corporate entity carrying on a similar business.
205 I also accept the submission of Mr Brereton that the words “Psychic Hotline”, in the Schedule, were descriptive of the services only and a generic statement of the type of service being offered.
206 On the issue of damages the parties have agreed that if, contrary to the view to which I have come, there was such a breach Legion’s total entitlement for the period from December 1994 to December 1995 is $62,030.95. If, on the other hand, the obligations of exclusivity came to an end in April 1995, the parties are agreed the total would be $22,031.24.207 In my opinion the following orders should be made:-
Conclusions
2. The defendant’s cross-claim be dismissed.
1. Judgment for the plaintiff against the defendant in the sum of $120,764.53 to which interest will have to be added.
208 I invite the parties to bring in Short Minutes of Order to give effect to these conclusions at which time I shall consider any submission on costs and interest.
209 I stand the matter over until Friday, 26 November 1999 for mention.
**********
0
6
0