The facts
2 The respondent, Stellar Call Centres Pty Limited ("Stellar"), was incorporated on 13 May 1998 as a joint venture between Telstra and Excell Asia Pacific Pty Ltd ("Excell"), a subsidiary of Excell Global Services LLC, ("Excell Global"), a company based in the United States of America. Excell Global is experienced in the provision of telemarketing and customer services.
3 Telstra and Excell each own half the shares in Stellar and appoint half its directors. The chairmanship of the company rotates between their nominees. Each owner has rights in relation to the appointment of senior executives. A seconded Telstra employee, Stephen John Morphett, currently serves as the first Chief Executive Officer of Stellar. He deposed that Stellar's object "is to provide call centre services and solutions primarily targeting the financial, travel, government, telecommunications, technical support and utilities industries in Australia and such other countries in the Asia Pacific region as the joint venture partners may agree upon."
4 Mr Morphett went on to describe Stellar's business as being "to assist organisations to improve their interface with their customers through call centre solutions". He said the company "provides a range of services, including call centre outsourcing, staffing and management, consulting and training". He made the point that there are a number of other call centre providers who provide call centre services to clients. He said the "purpose of establishing Stellar was to compete with these call centre providers for Telstra and non-Telstra work". He went on:
"Telstra has the most intensive call centre business in Australia, in the sense that it employs the most people in call centres. It is therefore to be expected that a component of Stellar's business will involve outsourced Telstra work, in the same way that other call centre providers such as Teletech performs outsourced Telstra work. However, securing non-Telstra business in the telecommunications industry and in other industries is a specific objective, and this is evident from Stellar's business plans."
Mr Morphett exhibited to his affidavit the Stellar 1999/00-2001/02 business plan.
5 Both in his affidavit and oral evidence Mr Morphett gave examples of non-Telstra contracts, primarily for short-term telemarketing services. So far, Stellar's most significant contract is the contract that gives rise to these proceedings. It is a contract with Telstra for the provision of a call back centre at Robina on the Queensland Gold Coast.
6 Telstra maintains, nationwide, a dedicated telephone number, 132200, to deal with customer inquiries regarding billings and the availability and connection of services and new products; apparently everything but service difficulties. Until the end of 1998 all calls to this number were taken by Telstra employees located at Telstra-operated centres. According to one exhibit, in 1998 Telstra was employing some 12,000 people at 100 such centres.
7 In October 1998 Telstra published a document that it styled "Telemarketing Service Supplier - Campaign Brief Regional Overflow". In the course of the hearing of this case, Mr J N West QC, who appeared with Mr G J Hatcher for Stellar, described this document as an "Invitation to Tender". I think that is a fair description. The document explained in some detail Telstra's difficulty in coping with 132200 calls at busy times. The document set out these "Campaign Objectives":
"Initially to provide accurate and timely assistance to Customers with consumer sales enquiries during periods of high call traffic flow. This is to be undertaken within Telstra's policy and Guidelines for handling Consumer calls whilst providing excellent Customer Service.
The long term intention of the campaign is to utilise the site to benchmark 'operational practice'. A twelve month contract may be established with possibly a twelve month renewal. Reviews of the campaign every three months will be expected to assess and improve operations and productivity."
Standards were set out. The document identified the relevant "Target Area" by saying "Customers will originate from all over Australia - National". The section of the document headed "Systems Requirements" listed six Telstra systems to which the service supplier would need access. Information was given about those systems.
8 Stellar was one of two companies that submitted a proposal in response to Telstra's Campaign Brief. Its document identified the following "key elements" of its proposal:
"1. Deliver a full outsourcing solution for regional overflow of 132200 call traffic for the period 14 December 1998 to 14 February 1998 [sic: 1999];
2. Provide a price per contact quotation, based on Average Handling Time and Call Volume;
3. Present, for Telstra consideration, some logistical considerations, which Stellar believes may provide further benefit to the outsourced operation."
The document also said:
"We have been led to expect that Telstra intends to award a twelve month contract (renewable) and that the proposed new centre would be used for benchmarking purposes beyond February 1998. [sic: 1999]"
9 The document then detailed "the key benefits associated with using Stellar for the Telstra campaign". These included the location of the call centre "in regional Australia rather than capital cities", thus achieving cost savings in relation to both salaries and rent. The claimed benefits also included "Transmission of Business", in respect of which the document said:
"Stellar has available to it senior personnel who have successful overseas experience in handling the industrial relations, legal and people issues surrounding the 'Transmission of Business' that may occur when outsourcing components of an organisation's business."
In a later part of the document, dealing with pricing, Stellar said:
"Stellar would support the Telstra call centre operation on an outsourced basis, at the targeted performance levels, handling times and call volumes in year one for $[omitted] per inbound call."
However, the stated price was subject to adjustment, in either direction, by reference to two variables: Average Handling Time ("AHT") and Call Volume.
10 A section of the Stellar document was devoted to the supply of information about the company and its key staff. This section stated the "Stellar Vision" as being: "To be recognised, throughout our chosen market segments, as the best value partner for call centre outsourcing."
11 In mid-November 1998 Mr Morphett was informed by Telstra's Managing Director of Consumer and Commercial Sales, Andrew Day, that Stellar was the successful tenderer. It appears Stellar immediately commenced to recruit and train staff, using for that purpose premises at Bundall, on the Gold Coast, that had previously been used by Telstra for training purposes. On 14 December 1998 Stellar commenced taking customer calls, still at Bundall; but from 21 December this was done in new Stellar-owned premises at Robina that provide 150 work spaces for personnel taking customer calls.
12 Stellar commenced to provide call centre services pursuant to a memorandum of understanding with Telstra. Negotiations for a detailed agreement, covering a multitude of matters, were commenced in late 1998 and a draft document was created. The draft went through a number of mutations and only reached what was understood to be its final form during the hearing of these proceedings in July 1999. When the hearing concluded, it had not yet been executed.
13 A draft agreement was admitted into evidence in this case. I was informed by counsel for Stellar that some variations to this draft had subsequently been agreed. Those variations affect the amount of Stellar's remuneration, but not the principle upon which that will be calculated. That principle is the one mentioned in Stellar's proposal document: an amount per inward call that is adjusted upwards or downwards in accordance with a table setting out the AHT, stated in seconds, and volume of calls received at the call centre. Counsel indicated the other amendments to this draft do not affect any of the provisions referred to in the course of the hearing, some of which I will mention.
14 The agreement is to operate for 36 months from the "Start Date", identified as 14 December 1998, but subject to Telstra's right to extend for a further 12 months by giving notice to that effect to Stellar at least three months before the end of the term. Under the heading "Duties", the draft provides:
"2.1 You must provide the Services specified in Schedule 1 according to the terms of this agreement.
2.2 We must, during the Term:
(a) pay you in accordance with Schedule 2; and
(b) provide you with such training, manuals and other information (including forecasts and performance reports) as we determine are necessary to assist you to perform your obligations under this agreement; and
(c) provide you with hardware and systems support as detailed in Schedule 4."
15 Schedule 1 refers separately to "Call Centre Services" and "Benchmarking Services". In relation to the first subject, it reads:
"2.1 You must operate a call centre ('Your Call Centre') at Level 5, Library Complex, Robina Town Centre, Robina, Queensland, at all times from 7.30am until 6.00pm every day from Monday until Friday (inclusive) each week during the Term. Your Call Centre must provide to us and our customers all of the call management services of a Telstra Sales Centre ('Call Centre Services').
2.2 You must operate Your Call Centre in accordance with our policies and procedures as advised in writing from time to time.
2.3 You must ensure that Your Call Centre appears from a Customer's perspective, to have the 'look and feel' of a Telstra Sales Centre. Your Call Centre must function in effect as a 'seamless' part of our Sales Centre services.
2.4 The call groups operating within Your Call Centre must be aligned with our operational service strategy, according to our instructions from time to time.
2.5 We will:
(a) endeavour to provide you, at the beginning of each month, with an indication of the number of calls which we expect to be able to forward to you during that month; and
(b) advise you of the number of calls which we expect to forward to you to handle, on each particular Working Day of each particular week ('Estimated Daily Call Volume') during each preceding week.
For example, we will advise you of the Estimated Daily Call Volumes for each day from Monday 12 January until Friday 16 January 2000, during the week commencing Monday 5 January 2000.
2.6 Your Call Centre must handle a minimum of 5% less than the Estimated Daily Call Volume every Working Day ('Required Daily Call Volume'). Failure to meet the Required Daily Call Volume on any particular day will constitute a material breach of this agreement.
2.7 For the purposes of this paragraph 2, to 'handle' a call means to receive a call, deal with the customer's query or matter, end the call, and input the data resulting from that call."
16 The material regarding Benchmarking Services is as follows:
"3.1 You acknowledge that:
(a) you will use your best endeavours and access to international resources, best practice processes and skills to provide an efficient and effective service for us at all times; and
(b) in assessing your performance under this agreement, we are entitled to rely on an expectation that you will apply those best practice processes.
3.2 You must work with us in benchmarking and in performing studies to determine and develop more efficient practices and processes which provide best practice for our call centre operations (this work to be known as 'Benchmarking Services').
3.3 You must, at all times when we ask:
(a) give us full access to:
(i) Your Call Centre site and staff; and
(ii) your data concerning the operation of Your Call Centre; and
(iii) your work instructions and other documents concerning the operation of Your Call Centre; and"
(b) allow us (unless you are prevented from doing so by any pre-existing legal obligation to a third party) to make copies of your documents concerning the operation of Your Call Centre; and
(c) participate in, and direct your appropriate Representatives to participate in forums,
concerning the Benchmarking Services, benchmarking or best practice issues.
3.4 In exercising our rights under the preceding paragraph, we must use our best efforts not to impede your ability to carry on your business activities substantially as normal.
3.5 You must:
(a) give us monthly reports, to be delivered to us by the 7th Working Day of each month; and
(b) attend and report at each of our monthly operations team meetings,
concerning initiatives being undertaken for improved methods in any aspects of the Services."
17 Schedule 1 goes on to detail Stellar's duties. Those provisions require Stellar to "provide a level of service equal to or superior to that provided by our Sales Centres", to comply with Telstra's Code of Conduct and Privacy Protection Policies, to attend meetings and training sessions as required, to keep records and provide reports, and to use any facilities or equipment provided by Telstra "only for the purpose of providing the Services". Stellar is required to ensure that the infrastructure at its call centre used for Telstra services "is physically and electronically isolated from any infrastructure used for the purposes of providing services to anyone other than us". Telstra is to have full and free access to Stellar's call centres at any time. Stellar is to comply with Telstra's systems requirements as set out in Schedule 4 to the agreement. Stellar (and, presumably, each of its employees) is to identify itself "only in the manner specified by us from time to time" and to "adjust the hours and days of your Working Days in accordance with our instructions from time to time". Stellar is to maintain a workforce from the Start Date to 30 June 1999 of "150 Full Time Equivalent Consultants". After 1 July 1999, the number drops to 130, but subject to Telstra's directions from time to time.
18 Schedule 4 provides for Stellar to have access to those Telstra systems that are necessary for it to perform its services. The Schedule also refers to Telstra hardware that has been supplied to Stellar. Rules are stated in relation to both Stellar's use of its right of access and the hardware.
19 It seems the Stellar call centre has operated in the way envisaged by the documents to which I have referred. Mr Morphett explained in his affidavit:
"Modern call centre technology means that the precise location of the performance of the work is often irrelevant, as it is in the performance of the Overflow Contract, which operates in the following way. Telephone calls are networked nationally, so that each call finds the next available operator, wherever that operator is located. In other words the whole national network operates as a virtual single centre."
20 As I understand the position, the Stellar centre at Robina operates as part of that "virtual single centre". Robina only handles overflow calls in respect of phone connection and product inquiries but, with that limitation, it is a matter of chance whether a particular customer who dials 132200 is answered by a Stellar employee at Robina or by a Telstra employee at any one of its call centres. The intent of Telstra and Stellar is that the customer is to be unaffected by the circumstance that he or she is dealt with by a Stellar employee rather than a Telstra employee. The customer is not to be apprised of that fact and the same services and information are to be available to him or her. In the words of cl 2.1 of Schedule 1 of the agreement, the Robina call centre functions "in effect as a 'seamless' part of (Telstra's) Sales Centre services."
21 John Zisis, the Corporate Operations Manager of Stellar, deposed that Stellar owns most of the equipment used at Robina. Telstra owns the computing equipment necessary for Stellar's computing system to connect with Telstra, but this is operated and maintained by Telstra's own employees. Mr Zisis said:
"Telstra gives Stellar a daily schedule which specifies, in half hour blocks, the number of customer service agents who must be logged on to the Telstra system at any given time. This is referred to as the number of 'requireds'. Stellar must meet the level of requireds, however, the way Stellar organises its operation to adhere to the level of requireds is for Stellar to determine. For example, the number of customer service managers Stellar uses to supervise the work of the customer service agents is wholly within Stellar's discretion. Further, there is no requirement that Stellar adopt the Telstra model of managing customer service agents."
22 Mr Morphett deposed that there was never, and is not, any agreement that Stellar would offer employment to current or former employees of Telstra at Bundall. Nor did Stellar give preference to those people. According to Rosemary Crothers, Stellar's Human Resources Manager, 181 agents and 11 managers were recruited for Robina. Selection for both positions was on the basis of face to face interviews with testing for relevant skills and aptitudes. Ms Crothers deposed:
"In recruiting employees for positions at Stellar's Robina call centre, I focussed on the key skills and competencies indicated for each job as set out in the interview guide that was used …
The key competencies that were used were based on Customer Service experience, rather than particular experience in call centres. As a result, the employees at Robina come from a wide variety of backgrounds. There were also a number of employees who were unemployed at the time they applied to Stellar."
23 Ms Crothers analysed the employment history of the 192 recruits. She said:
"(b) Of the 181 agents employed at Robina, 8 came directly from employment by Telstra, 99 came from other employers and 74 were previously unemployed.
(c) of the 11 managers employed by Stellar at Robina, only 1 person had worked with Telstra at some time prior to commencing with Stellar."
24 On 12 March 1999 David Letizia, an industrial organiser employed by the Queensland branch of CPSU, The Community and Public Sector Union ("CPSU") wrote to Mr Zisis indicating his intention to enter Stellar's Robina premises pursuant to s285C of the Workplace Relations Act. That section provides:
"(1) A person who holds a permit in force under this Division may enter premises at which:
(a) work is being carried out to which an award applies that is binding on the organisation of which the person holding the permit is an officer or employee; and
(b) employees who are members, or eligible to become members, of that organisation work;
for the purposes of holding discussions with any of those employees who wish to participate in those discussions.
(2) The person may only enter the premises during working hours and may only hold the discussions during the employees' meal-time or other breaks."
25 Mr Zisis responded by challenging Mr Letizia's right to enter the premises. On 16 March Mr Letizia, and another organiser Claire Moore, went to Robina and sought entry. Mr Zisis refused entry. There was a conversation, the details of which are in dispute; but they are immaterial. It is sufficient to say Mr Zisis made clear to Mr Letizia and Ms Moore that he did not think the Telstra awards and certified agreements bound Stellar, or that CPSU had coverage of any of its employees.