What would have happened if Legion had attempted to perform cl 1(k) as construed by Global?
68 This hypothetical question is relevant to both the construction and damages issues.
69 Rolfe J considered the question in the context of damages. The findings in ss147 and 160 of his judgment are set out above. In short, he was satisfied that:
(1) Athena Starwoman and the others would have terminated their 190 arrangements with Legion rather than let Global continue to operate as their CPC; and
(2) the vast majority of callers wanting to speak to their psychic of choice (eg Athena Starwoman) would not have been content to be switched to Psychic Express or Psychic Live psychics.
70 These findings led His Honour to discount by 90% the figure derived from applying the revenue-sharing formula to the actual income stream received by Legion from Telstra with respect to the 190 Other Lines.
71 Each party attacked the findings in some respects. They also challenged their relevance in some respects.
72 Global's primary position was that the findings were irrelevant. The first finding was irrelevant because Legion's promise was so absolute that it simply did not matter that Athena and the others would not have wanted to use Global as their CPC: all that mattered was that (1) Legion had promised unconditionally to bring this about it, and (2) Legion gave Athena and the others a 190 line. The second finding was said to be irrelevant because there was no question of Athena's callers being diverted to Psychic Express or Psychic Live psychics. Global submitted that damages were to be assessed on the assumption that the callers who chose to use Athena's psychics in 1995-96 would have acted in the same way if their calls had been channelled through a Global CPC.
73 Alternatively, Global challenged the first finding on the facts, submitting that it was not based on evidence or was against the weight of the evidence. Global also submitted that there was insufficient reasoning supporting the ultimate 10% assessment.
74 Legion generally supported the conclusion that Athena and the others would have taken great umbrage at being shunted to Global's CPC. However, Legion alternatively submitted that the first finding was either irrelevant or did not go far enough. It contended that the judge should have held that Athena would have declined to enter into any arrangement to acquire access to a 190 number if it had been a condition of the arrangement that the service provider must use Global as its CPC. At least, Global had not established otherwise.
75 Legion went a step further and submitted that any attempt by Legion to have procured such a result by making choice of Global a condition of the offer of a 190 line would have constituted third line forcing in contravention of the Trade Practices Act. It followed that Global's interpretation of cl 1(k) amounted to a suggestion that, on its proper construction, the Contract obliged Legion to engage in unlawful activity. For that reason alone, Global's construction should be rejected.
76 There is an unstated assumption in the first finding, ie that Athena would have been entitled to terminate the arrangement with Legion upon discovery that Global was the CPC allocated by Legion. This in turn appears to be based on the further assumption that Global would be shunting Athena callers to Psychic Live/Psychic Express behind Athena's back. I say this, because it explains his Honour's clear inference that Athena would have been able to terminate on the spot upon discovery of the misappropriation of clientele. The second finding (as to the assumed reaction of Athena callers finding themselves shunted to a Psychic Live/Psychic Express psychic) seems to be similarly hypothesised.
77 In my view this reasoning proceeds on a false hypothesis. There is an alternative, consistent with Global acting in good faith. Global advanced it unreservedly in the hearing of the appeal. There is no need to assume that Global would have operated the CPC in an unfair or dishonest manner, misrepresenting a non-existent association with other service providers or misleading callers. There would have been no proper basis for it to filch Athena Starwoman customers. The technology of running a CPC allowed competing service providers to be looked after according to their several requirements. This is what Global did for Psychic Live and Psychic Express. As Global pointed out, it was open to its CPC to greet an Athena Starwoman caller with a recorded preamble telling her or him that Athena had been reached and inviting the caller to speak live to an Athena psychic. Of course, this scenario required the participation and co-operation of Athena - a huge problem for Global's case - but it is a different problem from the one raised by Legion in its attempt to bring down cl 1(k) by heaping too much weight on its shoulders.
78 There was ample evidence that the owners of the 190 Other Lines were unwilling to use Global as their CPC. The post-contract history that I have already summarised shows that these three service providers were unwilling to trust their clientele to the risk of loss to competitors, which is what they feared could happen had Global been used. Athena and Mystic Meg considered and rejected Legion's proposals that they use Global. The rocky history of the dealings between the parties to this appeal show that fears of misappropriating clientele through diversion of calls were not fanciful in this competitive industry. A fortiori because many individual psychics were happy to work for multiple service providers, often concurrently.
79 Global insists that the matter should be viewed on the basis that Global/Legion had the technological capacity to ensure that callers wanting to speak to Athena's psychics would hear a recorded message telling them that they could do so, would be offered the opportunity to do so at Athena's rates and, if they elected to do so, would be switched to Athena's psychics. I have already indicated that I accept this approach, in preference to Legion's fantastic scenario involving callers either being deceived into thinking that they were speaking to Athena's psychics or being invited by operators at the Global CPC to choose Mystic Live or Mystic Express psychics in preference to their initial choice of Athena Starwoman. But the problem remains for Global that this was a competitive industry, in which there were levels of distrust and in which service providers would and did have legitimate grounds of fearing a CPC operator with divided loyalties.
80 After all, the very fact that Global and Legion attempted to address these issues in their own Contract, with apparently limited success, speaks volumes. In their own Contract, Global and Legion went to some pains to preserve confidentiality of information. Global promised not to offer Psychic Centre capability to any other service provider (cl 2(c)). It should not be forgotten that Athena and Mystic Meg had their established clientele and that Athena in particular was apparently able to charge her services at a higher rate than the rates offered by Global and Legion.
81 Global's expressed willingness to lend its CPC to competitors is barely to the point. It is clear to me that Athena was unimpressed by and distrustful of such an offer, coming as it was from a service provider associated with the Australian Psychics Association. Her expressed concerns and similar concerns expressed by Mystic Meg about ensuring that only approved psychics be used to service her clientele were, in my view, genuine and weighty. When the parties entered into the Contract they each knew that Athena's consent to use Global could not be assumed. Global had experience in the relevant market before it entered into the Contract (CA Tr p107). Global's Mr Lovell frankly and correctly acknowledged that he knew, prior to the Contract, that Athena's consent to using Global's CPC was essential and that, if it were not forthcoming that would be the end of the matter (Black 16).
82 Global accepted that its CPC could not misrepresent a connection with Athena and the others if none truly existed (CA Tr pp125, 130). But it contended that it was never necessary for Global to establish the probability that Athena and the others would have opted to use Global's CPC (CA Tr pp128,131). It reiterated its submission as to the absolute nature of Legion's obligation and sought to build upon it the submission that damages for breach were to be calculated without the need to hypothesise what would or might have happened if Legion had set about performing the contract according to Global's interpretation of it. Herein lie the essential difficulties with Global's position qua damages. After all, Legion's promise (according to Global) was to do something ("direct all … requests"), not primarily to pay a money sum calculated on the assumption that this had happened.
83 Global contended that Athena and the others would have come on board if the price was right, and that it was up to Legion to offer the other service providers a large enough share of the revenue generated by the 190 Other Line calls to get them to agree to use the Global CPC. I doubt that this raises the correct question. At most, the submission is circular if this consideration is invoked as part of the matrix of facts against which to construe cl 1(k) with the absolute tenor contended for by Global.
84 There is also the problem of Part IV of the Trade Practices Act. For Legion to have offered Athena a 190 line on condition that Athena used Global as its CPC would almost certainly have involved a serious abuse of monopoly power and unlawful third line forcing. As I shall later demonstrate, this causes one to pause before accepting Global's interpretation. It would also be relevant to any damages issue because "ordinarily when a court assesses damages, it acts on the basis that the law will be or ought to have been obeyed" (Kizbeau Pty Ltd v W G & B Pty Ltd (1995) 184 CLR 281 at 296).
85 All of these matters persuade me that the probabilities firmly establish that Legion was not able to and would not have been able to procure the three owners of the 190 Other Lines to use Global as their CPC on terms acceptable to those owners. In a hypothetical sense, Rolfe J was correct to conclude that there was a "very real probability that Athena Starwoman, Mystic Meg and Myles would have terminated their arrangements with Legion" (s147) had such arrangements been entered into. However, the evidence takes the matter a step further. The reality is that the three service providers would not have gone into the venture in the first place on the basis hypothesised by Global.
86 I share Global's difficulty with his Honour's second finding about the likely conduct of callers. I certainly agree with so much of the finding that concludes that many psychic seekers are particular about whom they consult. However, the second finding also proceeds on the false assumption that Global was willing to operate its CPC on behalf of Athena and the others on a basis that would have been obviously unacceptable to those service providers and would have involved unlawful attempts by Global to lure away their customers. Once again, the better conclusion is that Athena and the others would not have gone into the arrangement in the first place because they would not have wanted to do anything to prejudice their client pool.
The construction of clause 1(k)
87 The principal component of Global's claim is based on the contention that cl 1(k) obliged Legion to direct to Global all calls received in relation to the 190 Other Lines. In other words (excepting the one-off promotion referred to in cl 1(k)), all 190 calls to Athena Starwoman, Suzanne Myles and Mystic Meg were to be channelled through Global's call processing centre, thereby generating revenue for Global in accordance with the Part 1 of the revenue-sharing formula agreed between Legion and Global.
88 In the appeal, it was common ground that Legion could not have compelled a service provider to whom it was about to offer a batch of 190 lines to use Global as its CPC. It seems to me that this reflects a proper understanding of the impact of Part IV of the Trade Practices Act and of the realities of the particular market.
89 For convenience, cl 1(k) should be set out again. It provides that Legion:
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.