Software Integrators Pty Ltd v Roadrunner Couriers Pty Ltd No. Scgrg-97-746 Judgment No. 6333 Number of Pages 23 Trade Practices

Software Integrators Pty Ltd (Software) appeals against a decision of a Magistrate, which ordered repayment of $16,000 paid under a contract and awarded damages to compensate for some expenses incurred. The contract was for the provision of certain computer software, services and goods. The appeal turns upon issues of misleading and deceptive conduct in contravention of s52 of the Trade Practices Act 1974 (Cth). In particular, the circumstances in which silence, or the failure to provide information important to a contract, will constitute misleading and deceptive conduct. The Magistrate found that there was an understanding between the parties that the system would be operational by 3 October 1995. By this time, the system was not installed and ready for use. The Magistrate found that Software had represented to the respondent that the Transpac system was better than the Carry system. There were problems with the transfer of the data within the transit grid, the copying of the plaintiff's client files from one system to another, the flexible rate system, the unlimited billings option and aspects of duplication on the Transpac system of screen functions which the Carry system had. The Magistrate found that by 3 October 1995 Transpac could not provide a number of essential requirements for RR's business. These were functions that the Carry system performed. The Magistrate found that Ryan relied upon Brain for expert guidance, in relation to his replacement of his present system by the Transpac system. The Magistrate found that Brain had represented to Ryan that the Transpac system was better than the Carry system. He found that by 3 October 1995 Transpac could not provide a number of essential requirements for RR's business. These were functions that the Carry system performed. In particular there were problems with: the transfer of the data within the transit grid, the copying of the plaintiff's client files from one system to another, the flexible rate system, the unlimited billings option and aspects of duplication on the Transpac system of screen functions which the Carry system had. The Magistrate found that the evidence as to the transit grid can be summarised as follows. A company called Transit markets distance grids for each capital city of Australia, in the form of floppy disks. For Adelaide, this grid comprises a database of suburbs cross-referenced to each other with a distance stated in kilometres from each suburb to every other. The so-called "raw grid" was purchased from Transit in the form of a floppy disk by RR in 1990. In examination in chief Ryan described the transit grid in the following way: "A. Probably the clearest way of describing it initially is if you take the city open zone as being a suburb, which it is in a book format, you have every suburb ex Adelaide listed with a distance attached and then throughout the book obviously every other suburb cross references back to the other suburb, so there is a suburb that you might wish to travel....."..... "A. From a practical users point of view every client that we engage we have the facility to apply a different rate to the distance that the system says a particular job is worth so we might do it on a let's say a job to Henley Beach is a $10 delivery for client A. We have facility to charge client B the same ten or lets say the distance is 10 km and the cost of the job is $10, we have facility to charge client B the same 10 km journey but at a discount or at a different base rate at a different kilometre rate. All sorts of different ways of coming up with a different price that almost always they are predominantly distance based so it's just how we then attach a dollar value to that distance. So, I mean, you could even say if you look at a taxi depends on which way the taxi driver goes that trip can take a longer distance and you'll get charged a different price because we can't - we have to quote the clients a fee up front, we have to allow for a certain amount of variables such as going to the furtherest point of the suburb or the closest point and get an average sort of distance that is acceptable for charging purposes. Q. Does the information which arises from that distance grid does that have any relevance to the rates of pay of your drivers. A. Yes, everything to do with how far our drivers go or goes relates specifically to what sort of money they end up earning. So clearly if one system is say a trip from point A to point B is 10 km and another system says that same trip is 15 km, let's say the true distance is 15 km, our driver will get paid on the basis of the 10 rather than the 15 and it works the other way so the driver may, if the distance grid is inaccurate for any reason, and unfortunately for whatever reasons that it can be very counter productive both from the customer and driver's point of view as to whether they end up getting charged higher or lower rates." Between 1990 and 1995, the operators of RR had manually entered numerous changes to the raw grid, to "...correct errors..." The floppy disk and the data originally held upon it, could be transferred from the old Carry system into the new Transpac system simply by transferring over the floppy disk. The Transpac system could then access the data which constituted the raw grid. The many changes to the raw grid made between 1990 and 1995 by RR staff could be transposed only if they were re-entered manually in the same way that they had originally been entered. The changes to the raw grid could not automatically be transposed by a "...push of the button..." With respect to the transfer of the data in the transit grid, the Magistrate found that by about the end of 1994, and certainly by the time that the agreement was entered into by the parties, Brain knew that the only way of transferring the information contained within the grid was to use the procedure adopted when Software assisted another company in Perth, Fasta Couriers. The evidence of Michael Skuba, the managing director of Fasta Couriers, revealed that Software had performed a similar operation for Fasta Couriers in late 1994 or early 1995. It was found that changes to the transit grid needed to be re-entered manually in the same way as they had originally been entered. Mr Skuba achieved this task by hiring two data processors for two weeks. The Magistrate held that it is was incumbent upon Brain to tell Ryan that a straight transfer was not possible and that it would have to be done manually, which would be quite labour intensive. His Honour found that that this was never done, and that if it had been done it would have materially influenced Ryan's decision as to whether he was going to accept the proposal. In relation to the flexible rate system and the unlimited billing options, he found that Ryan was ignorant of the problems and that if he had known he would have been apprehensive about committing himself to any contractual arrangement. As to the flexible rate system, the problem was that the Transpac system was inferior to the Carry system in this respect. According to RR's particulars in the Statement of Claim, Transpac was unable to