Plaintiff v Defendants [2022] VSC 5 | Case summary

DAMAGES - Claim for loss of opportunity damages/compensation and Counterclaims.

Plaintiff v Defendants [2022] VSC 5 | Case summary | Zoe

[58]

1. Calculate the additional sales revenue that would have been derived by ProLearn during the period September 2015 to November 2016 ('the Loss Period') on the following premise:

(a) that the number of sales that would have been effected by ProLearn per month would have been:

(i) the same number of sales as the average number of sales made per month during June 2014 to August 2015 ('the First Period');

(ii) the same number as the average number of sales made during the last 6 months of the First Period;

(iii) the same number as the average number of sales made during the last 5 months of the First Period;

(iv) the same number as the average number of sales made during the last 4 months of the First Period;

(v) the same number as the average number of sales made during the last 3 months of the First Period;

and that the average price per sale would have been the same as the average price per sale achieved during the Loss Period ('Scenario 1').

(b) that the number of sales that would have been achieved by ProLearn per month would have been:

(i) the same number of sales per month as the average number of sales per month made during the First Period from courses offered by SWSI IT, SWSI Online, the IT Institute, SWSI and The Online Institute ('the Nominated Education Providers), alternatively;

(ii) the same number as the average number of sales made from the courses offered by the Nominated Education Providers during the last 6 months of the First Period;

(iii) the same number as the average number of sales made from the courses offered by the Nominated Education Providers during the last 5 months of the First Period;

(iv) the same number as the average number of sales made from the courses offered by the Nominated Education Providers during the last 4 months of the First Period;

(v) the same number as the average number of sales made from the courses offered by the Nominated Education Providers during the last 3 months of the First Period;

and that the average price per sale would have been the same as the average price per sale achieved during the Loss Period ('Scenario 2').

2. Calculate the effect on ProLearn's earnings before interest and tax (EBIT) of the additional sales the subject of each scenario set out in question 1(a) and (b). For the purposes of this calculation assume that in order to generate the additional sales, the number of full time equivalents (FTE's) employed by ProLearn would have been such as to be the equal of the number of FTE's that generate the same number of sales in the First Period.

3. Calculate the additional sales revenue (and the corresponding EBIT) that would have been derived by ProLearn during the Loss Period:

(a) on each of the bases set out in question 1(a)( and (b);

(b) on the further basis that ProLearn would have employed additional call centre operators as follows:

(i) an additional 10 FTE's ('Scenario 3');

(ii) an additional 25 FTE's ('Scenario 4');

(iii) an additional 50 FTE's ('Scenario 5');

(iv) an additional 75 FTE's;

(v) an additional 100 FTE's;

and that each additional FTE would have effected sales per month at the following rates:

(A) at the same rate as the average rate of sales per month per FTE during the First Period;

(B) at the same rate as the average rate of sales per month per FTE during the last 6 months of the First Period;

(C) at the same rate as the average rate of sales per month per FTE during the last 5 months of the First Period;

(D) at the same rate as the average rate of sales per month per FTE during the last 4 months of the First Period;

(E) at the same rate as the average rate of sales per month per FTE during the last 3 months of the First Period.

4. Calculate the additional sales revenue and the corresponding EBIT that would have been derived by ProLearn during the Loss period if the number of calls by each FTE were increased by a factor of:

(a) 100%

(b) 200%

(c) 300%

(d) 345%

(e) 400%.

5. Make the same calculation on the further basis that ProLearn would have employed additional call centre operators as set out in paragraph 3(b)(i)-(v).

[73]

QUESTIONS

8. You are requested to provide a report that answers the following questions

General

8.1 Was the selection by Kytec of the Cisco PCCE solution appropriate for the ProLearn Project given the following requirements?

(a) capacity for 83 agents, to expand to 150

(b) To Do Lists (also called Personal Callback Lists) for all agents.

8.2 Can you describe Cisco's A2Q process, its purpose, and what it aims to deliver?

8.3 Based on the design documentation provided, was the set up and configuration of the Solution in line with Cisco best practice standards at that time?

8.4 How long would you expect an installer of a system similar to the Solution to be allowed to test that system prior to it going live? What impact could a shorter testing period have on the long term operation of such a system?

8.5 Would you expect an operator of a system like the Solution to undertake User Acceptance Testing? What would such testing involve?

8.6 What impact could using a temporary ISDN connection during testing, instead of the intended SIP connection, have?

8.7 Does using an ISDN connection and then migrating to SIP increase the chance of issues being experienced relating to the dialler?

8.8 In your opinion, what are the differences in functionality between Cisco Unified Communications Manager and the dialler process that was installed as a component of the Solution?

8.9 On the basis of the outages and issues that ProLearn claims affected the Solution, would you expect at any time that Cisco Unified Communications Manager would have been unavailable, noting the assumption in paragraph 9.7 below?

8.10 Have you identified any evidence that suggests that, at any time during the operation of the Solution, ProLearn's operators would have been unable to lift a handset and manually dial a prospect?

8.11 In your experience, do complex software systems such as a customised Cisco PCCE solution experience software bugs from time to time?

8.12 What is the process for identifying and rectifying a software bug in Cisco's systems?

8.13 What happens when a software bug is experienced that cannot be replicated in a laboratory setting?

8.14 In its management and deployment of the Solution, did Kytec follow the correct procedure and take all necessary steps upon identifying a bug?

8.15 Any other matters that you would like to address.

Personal To Do Lists

8.16 Is the statement:

[75]

In the ProLearn PCCE Solution As-Built v1.0 document dated 28 July 2015 [KYT.001.001.4335] consistent with the Outbound Option Guide for Cisco Unified Contact Center Enterprise and Hosted Release 10.5(2) and the expected requirements of ProLearn with respect to personal callbacks?

8.17 Without custom integration, was the Solution capable of being configured to enable operators to input specific dates and times for callbacks to be made?

Dialling Issues

8.18 What is the most likely explanation(s) for reports made by ProLearn of the Solution calling the same lead more than once?

8.19 If the output of the dialler is not monitored and adjusted by a dialler manager is there an ongoing risk that calls will be 'dialler abandoned'? What happens when a call is abandoned by the dialler, and in what circumstances might that happen?

8.20 What is the primary reason(s) for calls being abandoned by an automated dialler?

8.21 If the dialler process, or baDialer, had to be restarted, what would be the impact on any operators logged in at the time? Specifically, would those operators be logged out of the Solution? Could they continue to make calls manually whilst the dialler restarted? How long would you estimate the automated dialler would take to restart?

Capacity of the Solution

8.22 Given the design specifications of the Solution, would you reasonably expect that it would be capable of supporting up to 200 agents (assuming that ProLearn had purchased the requisite licenses)?

8.23 Could a Cisco UCCX system with an Acqueon integration be used to create personal callback lists for more than 25 operators?

8.24. Based on Cisco Package Contact Centre Enterprise Design Guide, Release 10.5(x) what was the agent capacity of the Solution?

ASSUMPTIONS

In preparing your response to the above questions, you should assume that:

9.1 at the time the Solution was installed, Prolearn employed 83 operators and intended to employ up to 200 operators in the future at any one time. All operators required the ability to create personal call-back lists, and accept dialling lists from an integration such as a text file;

9.2 Prolearn instructed Kytec to design a Solution that was compatible with an SQL based CRM;

9.3 the Solution was designed and installed in accordance with the enclosed documents:

(a) Final Proposal [KYT001.001.1013];

(b) Prolearn PCCE Solution As-Built [KYT.001.001.4335];

(c) Contact Centre Solution Overview [KYT.001.001.1216]; and

(d) Cisco PCCE Solution Managed Service Proposal [KYT.002.001.1411]

9.4 at all relevant times, Prolearn continued to operate the Solution using a manual CRM, and did not upgrade to an SQL based CRM;

9.5 due to the unavailability of Prolearn's premises, Kytec could not commence testing the Solution at the time of installation until 6 days prior to the Solution being commissioned;

9.6 at the time the Solution was installed, Prolearn had not yet had its SIP line installed, and Kytec was therefore required to test and commission the Solution against a temporary ISDN connection installed by Prolearn; and

9.7 at no stage during the operation of the Solution did Prolearn report to Kytec that any more than 3 phones were deregistered.

[87]

1. Vocational Education and Training (VET)

1.1 What is the VET sector in Australia? In answering this question please explain the types of providers in the VET industry (such as Registered Training Organisations), the regulation and funding of those VET providers, and any reporting requirements and data collection obligations imposed upon them.

1.2 How were marketing brokers and/or agents used in the VET industry, how has this changed over time, and how were those brokers and/or agents regulated?

2 VET-FEE HELP

2.1 What is VET-FEE HELP, when was it introduced, when did it end, and how was it administered?

2.2 What, if any, were the commonly known issues with the VET-FEE HELP system and/or the VET industry? In responding to this question, please focus on the period from January 2014 to December 2016.

2.3 What, if any, were the government responses to the issues identified above in question 2.2? In answering this question, please describe any responses including legislative and regulatory reforms as well as marketing, advertising and/or educational campaigns. Please also identify, where possible, when the responses were foreshadowed or anticipated prior to being implemented.

2.4 What, if any was the impact of the responses identified above in question 2.3 on the VET industry generally? In answering this question, please also describe any impact on student numbers, sales or enrolments for courses, and loan amounts. Please consider the calendar years 2014, 2015 and 2016.

3. ProLearn Corporation Pty Ltd as its Customers

3.1 Please describe how the plaintiff, ProLearn Corporation Pty Ltd (ProLearn) operated as a call centre marketing VET courses to prospective students?

3.2 What were the implications, if any, of the governmental responses identified in your answer to question 2.3 and the industry-wide impacts identified in your answer to 2.4 on ProLearn's sales? Please consider the calendar years 2014, 2015 and 2016.

3.3 In your experience, are there any other VET-related factors that would or could have had an impact on ProLearn's sales in the years 2014, 2015 and 2016?

4. Smith Report

4.1 Based on your expertise, do you have any comments on any assumptions contained in the Report of Mr Michael Smith dated 11 December 2018, which has been filed on behalf of the plaintiff to the proceeding?

[271]

(a) Asimakidis (of Telstra) participated in a telephone conversation between Tutungi and Okulicz on 22 April 2015 during which time they discussed the proposed terms of the updated Equipment and Services Agreement. This undermines the alleged agency relationship, because it demonstrates ProLearn's awareness that Okulicz was from Kytec and that Kytec was not authorised to enter into the agreement on Telstra's behalf.[166] Further, there is no evidence that Asimakidis said anything to the effect that Kytec was authorised to act on Telstra's behalf, nor did Tutungi give evidence that she relied on anything said by Asimakidis during that conversation;[167]

(b) Asimakidis was copied into certain emails between Telstra and Kytec, including the email dated 23 April 2015, where Kytec provided the Final Proposal to ProLearn. This does not support an agency relationship in circumstances where the unchallenged evidence of Asimakidis is that he did not have any input in the development of the Final Proposal, or the hardware components of the new telephone system,[168] with his role limited to determining the network infrastructure to be provided by Telstra;[169]

(c) Telstra had already approved the agreements and provided these to Kytec, prior to Kytec forwarding them to ProLearn by email of 23 April 2015,[170] and any changes to the Equipment and Services Agreement required Telstra's approval,[171] indicating that Kytec was not authorised to enter into these agreements with ProLearn on Telstra's behalf;[172]

(d) Telstra supplied equipment to ProLearn, and ProLearn paid Telstra, in accordance with the Equipment and Services Agreement. Kytec was not party to the Equipment and Services Agreement. The agreement referenced the Final Proposal in order to more precisely define the equipment to be supplied by Telstra;[173]

(e) Kytec held itself out as a 'partner' of Telstra. However, this is of no probative value in circumstances where the term was used as a commercial, as opposed to legal, concept. Accordingly, this does not demonstrate Telstra consented to Kytec acting as its agent, and ProLearn adduced no evidence that it relied on this statement.[174]

[440]

(a) ProLearn's staffing issues both pre- and post-implementation of the Solution, including high turnover and absenteeism.

I am unpersuaded by the above contention because logically any staffing issues causing ProLearn loss both before and after installation would balance each other out and would not cause a comparative loss of sales in the period after the installation of the Solution. I am also not persuaded that staffing issues resulted in any material cause of loss.

(b) ProLearn not employing a dialler manager to manage its phone system.

Similarly, I am not persuaded that a dialler manager to manage the Solution, or the absence of a dialler manager, has been established as having any particular effect on ProLearn's operations. Furthermore, Kytec did not recommend the need for a dialler manager and Tutungi's evidence was that she was not aware that a dialler manager was necessary or desirable.

(c) ProLearn being unable to purchase sufficient leads to satisfy the increase in demand experienced as a result of the Automated Dialler, and the consequence of ProLearn's poor quality leads.

I do not accept that the decline in ProLearn's sales following the installation of the Solution was to any material degree caused by ProLearn not being able to procure the required number of leads, or as a result of the quality of leads. Although Humunicki's evidence mentioned her loosely-founded and aspirational upper level target for leads, in my view there is not firm evidence that ProLearn's revenue was materially reduced because it lacked sufficient leads or materially affected by what have been referred to in the evidence as 'black data' leads, or leads of otherwise poor quality.

In this respect I also do not accept that there is any basis upon which to place weight on what I regard as the unrepresentatively small number of example calls played back during the trial of this matter.

Accordingly, I am not satisfied either that the position with ProLearn's leads was materially different after installation of the Solution or was causative of ProLearn's decline in revenue after installation.

(d) Changes in ProLearn's business, government restrictions, and the loss of credibility of the VET sector generally.

I underscore and highlight my earlier evaluation of the evidence of Tutungi and Humunicki, both of whom were impressive, accurate and frank in their evidence and convincingly established their detailed understanding of ProLearn's operations and what was in fact affecting ProLearn's operations from time to time.

I add that although Humunicki had no formal accounting qualifications or other financial qualification or the like, her evidence exhibited a deep understanding and ability to evaluate ProLearn's operation including its financial operations and the factors impacting ProLearn.

In relation to Kytec and Telstra's case, I am persuaded by the detailed evidence given in the Tutungi First Witness Statement at [222]-[226], that before January 2017, changes to the regulatory environment in which ProLearn's business operated, had no significant impact on ProLearn's business, and caused only negligible increases in operating costs.

Further, the Tutungi Reply Witness Statement at [7]-[27], in particular [8(c)], [10], [19] and [27], provided firm and clear evidence that the legislative changes which occurred in 2015 and 2016 had no material impact on ProLearn's business. Humunicki confirmed the same.[288]

Because of their intimate acquaintance and knowledge of ProLearn's business and the quality of their evidence, I prefer and find persuasive the evidence given by Tutungi and Humunicki on matters in issue, particularly so in relation to the matters relating to the operation of their business, for the reasons I have earlier stated.

I give significantly less weight to the evidence of Wolff and Wright, who were expert witnesses reviewing data and trends and hypothesising about the impact of legislative changes on the relevant industry. Their statistical and more hypothetical expert evidence is, I consider, of significantly less weight and was significantly less persuasive in respect of the present matters under consideration.

In relation to my finding above, I add however that the decline in the VET sector and the effect which that had on ProLearn's sales constitutes a factor and circumstance which is both difficult to quantify, or to relegate. Although I accept ProLearn's evidence that the general decline in the sector had no substantial impact on ProLearn's business, I consider that it did have some negative effect. I also consider that this negative effect likely became more pronounced progressively over 2015 and beyond, as criticisms of and changes to, the sector increased.

(e) ProLearn did not migrate its CRM to a web-based CRM as planned and, Kytec was forced to develop a custom gadget that enabled ProLearn to display additional customer information on the Finesse Screens, causing intermittent capacity issues.

I do not accept that by not migrating its existing ProLearn CRM to a web-based CRM ProLearn caused some of its intermittent capacity issues. This cause and its possible effect of capacity issues was not raised contemporaneously by Okulicz with ProLearn. Furthermore, the evidence does not establish that had ProLearn migrated to a web-based CRM there would have been any improved capacity performance.

(f) ProLearn's delay in confirming that it was moving to the La Trobe Street premises, leaving Kytec only ten days to install, test and implement the Solution,[289] and the consequent delay in Telstra being able to install the SIP line, preventing SIP testing as part of the commissioning phase.[290]

[442]

However, I do not consider that ProLearn delays and unsatisfactory communication in relation to its move to the new La Trobe Street premises, in all the circumstances, contributed in any demonstrable and material way to ProLearn's own problems with the new telephone system, although as I have accepted, this lack of timely communication by ProLearn detrimentally affected Kytec's testing program.

Ultimately, as further addressed below in relation to ProLearn's negligence case, I am not persuaded that Kytec's testing of components of the NTS was clearly inadequate or was itself a material cause of the problems and deficiencies with the NTS, or the cause of material delays in such problems and deficiencies being addressed. Nor am I satisfied that any delaying effect ProLearn's conduct had on Kytec caused any of ProLearn's own problems with the NTS.

In my view, ProLearn was under no obligation to do so. Further, I accept ProLearn was not advised or warned by Kytec that it required a certain time to test the NTS or that ProLearn's move would cause testing problems. I am also not persuaded that ProLearn insisted on the Solution 'going live' on 31 August 2015.

(g) The significant increase in the volume of calls initiated by the Automated Dialler[291] and made by ProLearn Operators after the Automated Dialler was turned on, as evidenced by the graphs tendered by Telstra;[292] and the fact that manual calls could still be made through the CommSys and ProLearn was relying successfully on its existing 'to do list' and personal call back system.

I do not accept that the volume of calls made by ProLearn Operators via the Automated Dialler contradicts or reduces the impact on ProLearn of what I regard as the very large and persuasive body of evidence referred to above which establishes what was actually occurring with the NTS after installation in relation to problems, deficiencies, incapacities and dysfunctionality of the Solution.[293]

I have found in substance that the ability to make calls through the existing system and ProLearn's limited ability to use previous 'to do lists' and the existing call back system was far from adequate to address or significantly alleviate the problems caused by the deficiencies, incapacities and dysfunctional aspects of the NTS.

Additionally, I am comfortably persuaded that the large number of contemporaneous communications and records detailed and cross-references in ProLearn's Closing Submissions at [20]-[25], and the extensive and detailed evidence describing the immediately manifest and persistent faults with the Solution very soon after ProLearn commenced to use it, abundantly establish those matters and the significant and sustained ways in which those problems and deficiencies impaired ProLearn's core operations.

I also reject that difficulties with the Automatic Dialler function were the result of ProLearn not moving to a new web-based CRM. I prefer Tutungi's evidence on this point,[294] which I consider to be more persuasive, both because of my separately addressed preference for Tutungi's evidence to that of Okulicz on matters in issue, where Okulicz's evidence is not corroborated, and additionally because I also consider Tutungi more likely to fully appreciate and be focused on, and therefore more likely to be correct in her recollection in respect of, the problems ProLearn was encountering with the Automatic Dialler and ProLearn's plans and issues with relation to changing to a web-based CRM.

[695]

On 15 June 2015, Kytec provided ProLearn with its project plan,[455] which allowed for 46 days worth of work from design to "go live", including 10 days onsite to install, test, implement and commission the Kytec Solution (after design and assembly offsite).

By mid July 2015, being six weeks before the project was scheduled to go live, ProLearn had still not confirmed where its new premises would be located. It was still deciding between taking space at 120 Spencer Street, Melbourne or 380 Latrobe Street, Melbourne.[456]

Mr Okulicz had told ProLearn that it should allow at least six weeks to install and test the Kytec Solution. It was not until 3 August 2015[457] that ProLearn confirmed that it would be relocating its premises to Level 15, 380 La Trobe Street. Before this, ProLearn had also been incorrectly advising Kytec that its proposed new premises was Level 13, 380 Latrobe Street.

As noted by Mr Okulicz in paragraph [99] of his witness statement, until the location of ProLearn's new premises was confirmed, including the level, Kytec was unable to cause install the Telstra ISDN services to be installed or commence on-site activities that would usually include pre-installation testing, or confirm the installation timetable.

Kytec ultimately had only ten days to install, test and implement the Kytec Solution. Ms Tutungi admitted that at this stage there was tight timing for Kytec to do the testing.

Until the Kytec Solution was installed and connected to the actual carriage services from Telstra no use acceptance or pilot testing was possible. The delay in confirming its new premises caused a consequent delay in Telstra being able to install the SIP line, the SIP testing was unable to occur as part of the commissioning phase.[458]

Kytec was unable to test the Kytec Solution on the SIP connection before it went live. Testing, using the temporary ISDN line, was unable to commence until Friday 21 August 2015.[459] The SIP service was enabled once delivered by Telstra in November 2015.

Mr Green gave evidence that offsite testing could not be done without the carriage service being installed.[460]

On Sunday 30 August 2015, Ryan Smith of Kytec and Mr Okulicz were on site at ProLearn's new premises for testing.[461]

Ms Tutungi accepted that she was incorrect when she said in an email that Kytec undertook no testing prior to launch.[462] Ms Tutungi also accepted that ProLearn's delay in moving was "in part" responsible for reducing the time available for testing[463] and was a contributing factor.[464]

Ms Tutungi gave evidence that ProLearn was trying to do its own user accepting testing around that time (27 August 2015) and that "Doris actually did the user testing with the operators on-site".[465] Ms Humunicki admitted that, during the lead up to 31 August 2015, she did not do user acceptance testing herself or with the operators.[466]

[699]

Your real point is that it was ProLearn's conduct which meant that Kytec was unable to conduct the extent of testing it would ordinarily conduct. That's the point you are seeking to make in paragraph 108, isn't it?---That's - that's the point definitely, yes.

Yes. And so that has as its premise, doesn't it, that you didn't do the amount of testing that you ordinarily would conduct prior to deployment?---Yeah, that's exactly what - - -

Yes?--- Yeah.

And what you are simply saying is that it was ProLearn's fault?---I think that's where that leads, yes.

Yes. Now, of course you understood, didn't you, that ProLearn had come to you for your expertise in relation to the design and installation of these type of systems?---Yes.

Yes. And see, I want to suggest to you that in the period prior to the system going live on 31 August 2015, you never told Ms Tutungi at ProLearn that Kytec hadn't done the extent of the testing that it would ordinarily conduct. Do you accept that you never told ProLearn of that fact?---I accept that it was never told.

So you accept you never told ProLearn?---Not directly. There were definitely project plans put forward that showed more testing, and I think that's in evidence, than was feasibly possible given when we got access to the building.

Let's break this down. You agree with me that you never said, 'Vicki, we haven't been able to properly test this before the solution going live'. You never told her that orally?---We never said those words.

Yes. And you never sent an email to that effect?---No.

And you never said anything along those lines to Ms Tutungi, did you?---No.

No. And you never told Ms Tutungi that because of that there were tasks in the deployment that would not have arisen had you been able to undertake sufficient testing?---No.

And so you deployed for ProLearn a telecommunications system with respect to the operation of the call centre that, on the logic of your own evidence, had not been sufficiently tested; you would agree with that?---That's - that's what my statement says.

Yes. And you say it was their - but you concede, don't you, that you never told them - - -?---I think - - -

that you were deploying a system that had never been sufficiently tested?

---As I said before, I think it was number one in a project plan and I also recall evidence put to your client about some yelling in an email about the date that it had to go live and the first time I heard that date could have been slipped was in cross-examination late last week.

Yes, but of course if you hadn't said to them, 'Vicki, we haven't been properly able to test this', you wouldn't expect her to say that, 'we can delay the move', would you?---I would also say that we're talking about putting in temporary solutions because SIP wasn't available. There was no conduct that would have ever suggested that we could have moved that go live date.

...

But you wouldn't have expected her to tell you that, 'we can delay the move'. Sorry, I will withdraw that. The only circumstance where she would tell you that they could delay the move was that if you had told her that there was a risk in deploying because there had been insufficient testing?---So I wasn't the project manager on this project and, no, I don't think that's the only time that they would raise that.[467]

[702]

So the long and the short of it is that the level of testing that's done can depend on a variety of factors, depending on the particular customer and the circumstances of the particular case?---Ah, correct.

Yes. But within that framework you would agree, wouldn't you, that you would expect a Cisco partner to liaise with the customer about those sorts of issues - about how much testing should be done - - -?---Yes.

and to inform the customer as part of that if the Cisco partner thought inadequate time existed for testing the solution?---Ah, ideally that dialogue would happening between partner and customer.

Yes?---Yes.

So that you'd expect the Cisco partner to say, 'Look, you know this timeframe's too tight. We haven't got enough time to test this properly, and this poses a risk for how the solution's going to work when it goes live'. You'd expect that sort of discussion to take place, wouldn't you?---I would, ah - - -

Yes?--- - - - in - yes.

And, indeed, I suggest to you that the that evidence you've just given is influenced by the opinion you've expressed at paragraph 31 of your report that if less than adequate time is allowed between the dates for testing and a target go-live date, the capacity to correct any issues prior to target go-live date is reduced; that's a risk, isn't it?---Yes.

Yes. And another risk is the risk you point to at paragraph 32 over the page that, in your experience, 'the severity and number of unexpected issues encountered in the first few weeks after going live is typically directly proportional to the time allocated and the quality of the testing performed on the solution prior to going live'?---It's a bit of a generalisation, but in my 13 years' experience I would agree with that.

And by 'generalisation' what you mean - it's not the fact that in every case where there's a bit less testing that necessarily means, as night follows day, that there will be a lot of problems?---Yes.

But it, sort of, increases the risk; can I put it that way?---Correct.

Yes. And so they're all reasons why - I withdraw that. And of course, a PCCE system is a reasonably complex system?---Correct.

And it's a matter where the expertise really resides in the Cisco partner, not in the customer?---Correct.

And for all those reasons you'd expect the Cisco partner to advise and warn their customer if they thought there wasn't sufficient time for proper testing and that might cause problems?---Ah, ideally, yes.[468]

[761]

(a) ProLearn did not call Roberts (the CEO of SWSI) to give evidence, after Kytec objected to the admissibility of a key part of his witness statement. That he was not called does not elevate other evidence;[534]

(b) even if Kytec's criticisms of Annexure B were accepted, this would not materially affect the data in Annexure B;[535]

(c) as to the alternative system, it is the foundation of Kytec's defence that the Solution had the functionality to comply with ProLearn's requirements; accordingly, such a system was available and could have been provided, whether by Optus/Avaya, who had provided a quote to ProLearn, or by Telstra itself via a more competent dealer than Kytec;[536]

(d) ProLearn accepts that it must establish, on the balance of probabilities, that its causal hypothesis (that its decline in profitability was caused by the defects in the Solution) is more probable than the alternative hypothesis contended by Kytec and Telstra (that ProLearn's decline in profitability was caused by other matters unrelated to the Solution).[537] ProLearn does not accept that this task requires ProLearn to entirely eliminate all matters not the responsibility of the defendant from the quantification of loss and damage.[538]

(e) it is not in dispute that ProLearn's revenue and EBIT declined substantially following installation of the Solution, and that ProLearn's sales from call backs dropped from 67 percent to 28 percent;[539]

(f) sales data prior to installation of the Solution shows a fairly consistent rate of approximately five sales for an FTE Operator per month;[540] however, the fact of business variability does not mean that the plaintiff cannot recover;[541]

(g) Annexure B to Humunicki's Witness Statement accounts for the sales that ProLearn did achieve utilising the Solution.[542] Humunicki was not challenged as to the reliability of Annexure B,[543] which was not undermined by Wright; and Smith verified Annexure B,[544] reporting that any discrepancy between his analysis and Humunicki's figures was minor.[545]

[947]

(a) the bans on inducements in April 2015 and January 2016 had no effect on ProLearn's business because ProLearn did not and had never offered inducements.[659]

(b) Prior to the July 2015 reforms, ProLearn had written agreements in place with the education providers with which it dealt and, therefore, the July 2015 reforms did not impact on ProLearn.[660]

(c) The removal of barriers to a student withdrawing from study before the census date was introduced to stop providers from charging students a withdrawal fee and, to Tutungi's knowledge, the TAFEs and RTOs with which ProLearn dealt did not charge a withdrawal fee and, as such, those changes did not impact ProLearn.[661]

(d) The reforms introduced in July 2015 to improve information for students in relation to providers and course fees had no impact on ProLearn's business, because prior to July 2014, ProLearn had introduced a checklist that set out key information about the program which a student was enrolling in, which the student was required to sign and return. From November 2014 the checklist became a Student Commitment Form which explicitly required students to confirm they knew the details of the provider, the course and the course fees.[662]

(e) She recalls being informed by a representative of SWSI, whose identity she could not recall, that the January 2016 VET Fee-Help loan freeze did not apply to TAFEs. While she could not find written communication with SWSI referring to this, Tutungi says that the SWSI enrolments for 2016, as shown in the SWSI subpoenaed documents, is consistent with the VET Fee-Help loan freeze not applying to TAFEs.[663]

(f) The January 2016 reforms relating to strengthened student eligibility requirements, ensuring that debt was only incurred in line with course delivery and creating a requirement to have at least three census dates for Diploma level courses, had no impact on the number of sales as opposed to the manner in which ProLearn was paid (through three instalments rather than one).[664]

(g) The January 2016 marketing reforms, which included a ban on unsolicited contact and cold calling, had no impact on ProLearn's business because ProLearn did not make unsolicited contact with, or cold call, prospective students, with all leads that ProLearn used coming from people who had submitted their contact details online.[665]

(h) ProLearn sent all students an email containing the information required under the January 2016 reforms.[666]

[982]

(a) I have rejected, for reasons I have earlier outlined, Kytec and Telstra's claims that there were other significant and material causes of ProLearn's significant drop in revenue and consequential profits before and after deployment of the Solution;

(b) As the ProLearn calculation of loss and damage under Scenario 2 is based on the Existing System Counterfactual, any unjustified additional revenue generated by ProLearn's use of the Automated Dialler is not applicable; and

(c) In my view, in all the circumstances the calculation of ProLearn's loss, confined to the period of three months prior to the Loss Period and limited to Providers to which ProLearn sold courses in the Loss Period (Scenario 2), is sufficiently and appropriately conservative so as to thereby make appropriate allowance for the factors and circumstances which I have earlier identified and recognised as difficult to quantify but which I nevertheless consider were to some degree impairing ProLearn's revenue in the period prior to deployment by ProLearn of the Solution and after deployment, and which I also consider were likely to gradually but increasingly impair ProLearn's revenue and consequently profits in the Loss Period.

Furthermore, I consider the application of ProLearn's evidence of relevant loss and damage calculated on the conservative basis of a period of three months and on the basis of limited Providers, as referred to above, is in my view likely to be appropriate, just and fair.

This includes because the short duration of three months and its proximity to deployment of the Solution, in my view probably better and more accurately reflects the difficult to quantify factors and circumstances negatively impacting ProLearn's revenue, which it is logical and reasonable to consider were, and would continue to, increasingly negatively impact ProLearn's revenue, in particular the demise of the VET sector market.

Further, by basing the applicable calculation on Providers limited in the manner referred to above, I consider that this component of the estimation of ProLearn's reduced sales and consequent reduced revenue and profit is calculated using an integer which is less hypothetical and which reflects likely actual sales in that period.

(d) Finally, in this assessment process evaluating the large number of relevant factors and circumstances I have referred to, I have done the best I can to estimate the effect of difficult to quantify impairing factors and circumstances on ProLearn's revenue and consequential profits, informed by the very substantial body of data, metrics and other evidence adduced on by the parties on these matters.

[986]

236 Actions for damages

(1) If:

(a) a person (the claimant) suffers loss or damage because of the conduct of another person; and

(b) the conduct contravened a provision of Chapter 2 or 3;

the claimant may recover the amount of the loss or damage by action against that other person, or against any person involved in the contravention.

(2) An action under subsection (1) may be commenced at any time within 6 years after the day on which the cause of action that relates to the conduct accrued.

Division 4 -- Compensation orders etc. for injured persons and orders for non-party consumers

Subdivision A--Compensation orders etc. for injured persons

237 Compensation orders etc. on application by an injured person or the regulator

(1) A court may:

(a) on application of a person (the injured person) who has suffered, or is likely to suffer, loss or damage because of the conduct of another person that:

(i) was engaged in a contravention of a provision of Chapter 2, 3 or 4; or

(ii) constitutes applying or relying on, or purporting to apply or rely on, a term of a contract that has been declared under section 250 to be an unfair term; or

(b) on the application of the regulator made on behalf of one or more such injured persons;

make such order or orders as the court thinks appropriate against the person who engaged in the conduct, or a person involved in that conduct.

(2) The order must be an order that the court considers will:

(a) compensate the injured person, or any such injured persons, in whole or in part for the loss or damage; or

(b) prevent or reduce the loss or damage suffered, or likely to be suffered, by the injured person or any such injured persons.

(3) An application under subsection (1) may be made at any time within 6 years after the day on which:

(a) if subsection (1)(a)(i) applies--the cause of action that relates to the conduct referred to in that subsection accrued; or

(b) if subsection (1)(a)(ii) applies - the declaration referred to in that subsection is made.

...

243 Kinds of orders that may be made

Without limiting section 237(1), 238(1) or 239(1), the orders that a court may make under any of those sections against a person (the respondent) include all or any of the following:

(a) an order declaring the whole or any part of a contract made between the respondent and a person (the injured person) who suffered, or is likely to suffer, the loss or damage referred to in that section, or of a collateral arrangement relating to such a contract:

(i) to be void; and

(ii) if the court thinks fit--to have been void ab initio or void at all times on and after such date as is specified in the order (which may be a date that is before the date on which the order is made);

(b) an order:

(i) varying such a contract or arrangement in such manner as is specified in the order; and

(ii) if the court thinks fit--declaring the contract or arrangement to have had effect as so varied on and after such date as is specified in the order (which may be a date that is before the date on which the order is made);

(c) an order refusing to enforce any or all of the provisions of such a contract or arrangement;

(d) an order directing the respondent to refund money or return property to the injured person;

(e) except if the order is to be made under section 239(1)--an order directing the respondent to pay the injured person the amount of the loss or damage;

(f) an order directing the respondent, at his or her own expense, to repair, or provide parts for, goods that had been supplied by the respondent to the injured person;

(g) an order directing the respondent, at his or her own expense, to supply specified services to the injured person;

(h) an order, in relation to an instrument creating or transferring an interest in land, directing the respondent to execute an instrument that:

(i) varies, or has the effect of varying, the first mentioned instrument; or

(ii) terminates or otherwise affects, or has the effect of terminating or otherwise affecting, the operation or effect of the first mentioned instrument.

[1009]

(a) I add that in this matter there is no need to differentiate or deal separately with the apportionment of damages and compensation in respect of contraventions of s 18 of the ACL and contraventions of s 29(1)(g) of the ACL. Here, the whole of ProLearn's loss and damage is as a result of several almost congruous established representations by Kytec and Telstra, contravening both s 18 and s 29(1)(g) of the ACL. Accordingly, in my view, it is not necessary or sensible, nor practically possible, to attempt to adjust the above apportionment on the basis that the wrongful representations which contravened s 29(1)(g) give rise to some separately identifiable loss and damage. Furthermore, as I have observed in this matter, nearly all the established Kytec and Telstra Representations each contravened s 18 of the ACL, giving rise to apportionable liability under that section.

(b) I add for avoidance of any doubt that I do not regard ProLearn as having caused any appreciable part of its own loss or damage. I make this finding in respect of ProLearn's ACL claims and its contractual claims, and its unsuccessful negligence claim.

(c) I have below separately addressed the reasons for concluding that Kytec and Telstra should each bear fifty percent (50%) of the liability for ProLearn's loss and damage.

(d) No s 24AE of the Wrongs Act apportionment is necessary because I have rejected ProLearn's negligence case against Kytec.

I have also rejected Telstra's assertion that ProLearn's claims in contract were in part founded on a breach of contractual duty of care, rather than on unembellished breaches by Telstra of cl 1.1 of the Equipment and Services Agreement and the Warranty in cl 5.3 of Schedule 2 of that same contract;

(e) Although ProLearn has succeeded in its contractual claim against Telstra, ProLearn's pleading and submitted case at trial seeks statutory rescission. ProLearn also pressed to have the Telstra Contracts set aside at trial, more so if, on the outcome of the various ProLearn causes of action in this proceeding, such orders advantaged ProLearn.

[1061]

In view of the broader scope of ACL ss 237 and 238, the role of s 236 in the Acts' remedial regimes might be thought to be marginal. There is, however, no entitlement to s 237 and s 238 orders, which are granted at the court's discretion.

Orders pursuant to s 237 or s 238, may be refused if, for example, it is impossible to do 'practical justice' between the parties by avoiding a contract induced by a breach, or if a monetary award under those provisions would avoid a limit imposed on damages available pursuant to s 236, such as for contributory negligence. In such circumstances, s 236 awards, which, if sought, must be granted for proven loss or damage by misleading conduct, may be the only means of redress for that loss. Awards pursuant to s 236 will also be the sole available compensatory remedy where the limitation period for a cause of action under s 237 or s 238 (which may begin to run when loss or damage is likely to be suffered) expires prior to that for a s 236 claim (which commences upon actual loss being first suffered by the plaintiff).

Where relief is available under each provision, whether one form of compensation is to be preferred to another is unclear. It was said that damages are the 'ordinary remedy for a breach of [TPA] s 52', and, as 'the right [to damages under TPA s 82 is] not made subject to s 87', the latter did not provide 'a discretionary remedy to take away, or modify the right conferred by s 82'. Further, the reference in ACL ss 237(2) and 238(2) (before 1 January 2011, TPA s 87(1) and (1A)), to the making of orders that 'will compensate [the victim] in whole or in part for the loss or damage' because of, or by, a contravention does 'not suggest that the combination of orders that a court makes should do less than provide full compensation' for the loss. In that context, 'in whole or in part' refers to the possibility that full compensation pursuant to s 237 or s 238, may be 'unnecessary or inappropriate' due to the grant of compensation under other powers, such as s 236.

Plaintiff v Defendants

At a glance

Court

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Judgment (1540 paragraphs)

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Legislation Cited (12)

Cases Cited (33)