Misleading and Deceptive Conduct

Please note: > justicecommand.com is a work in progress as of July 2018

Parliament House Canberra

STOP PRESS

COT Case Graham Schorer (see justicecommand.com) shows in our Open Letter File No/35 link > 20130627133948062. that, although the Australian Government Solicitor (AGS) warned Telstra that Graham Schorer (COT spokesperson), of Golden Messenger Courier services, had a valid claim against them for misleading and deceptive conduct under section 52 of the Australian Trade Practices Act and advised Telstra should settle with Mr Schorer, Telstra ignored the AGS. For the next NINE years, Telstra went on a deliberate campaign to destroy Mr Schorer’s credibility and his finances even though they knew the AGS was right.

On age 23 of the government communications regulatory draft findings on Golden Messenger (see 20130627133948062: it notes:

“Telecom Minute of 30/3/88 states that advice from Legal and Policy Headquarters indicate that Golden Messenger appeared to have a case against us…and…the Australian Government Solicitor had advised Telecom that Golden Messenger is likely to be successful in establishing that Telecom engaged in misleading and deceptive conduct contrary to the Trade Practice Act and that consequence of lost calls or calls not getting through was likely to lead to an immediate loss of business in relation to that call and potential loss of future business from the customer”.

Exhibits 20111025143553046 and 20130627133948062. were not released to Graham until October 2008, fourteen years too late to be used in his arbitration or during the Senate Estimates Investigation into why relevant documents were being withheld from Graham during his arbitration. In other words, if AUSTEL had provided their adverse findings against Telstra to Graham and the Senate Estimates Committee during that 1997/1999 Committee investigation, it would be fair to say that the Committee would have immediately ensured that Telstra didn’t pressure Graham into accepting compensation of only 33% of his arbitration claim and that 33% did NOT include the thousands upon thousands of dollars Graham had wasted on legal fees to prove something that the government regulator had already proved.

Graham Schorer – COT Cases Spokesperson – Overview

I have compiled justicecommand.com webpage (not yet complete) which supports the content of my report a number of Exhibits supplied, to the Australian Government and Australian Federal Police between June and September 2014.  This information supplied on , on my behalf, to the aforementioned parties still has not been transparently investigated.  Each entry in the download CAV – Evidence File Part Four (e.g. GS 1 etc.) refers to an Exhibit with the same number (e.g. Exhibit 1 supports entry CAV GS 1) and the Exhibits in the download are divided into separate folders called CAV-GS 1-88, CAV-GS 89154-b, CAV-GS 155-215 etc.

We began compiling these Casualties of Telstra (COT) databases and reports back in 2007. To date we have completed eight separate reports relating to my experience as the Casualties of Telstra spokesperson (COT Cases for short) in their battle for justice.  I am unable to document my own cases due to unwittingly signing a Deed of Release with Telstra in 1999, as a final conclusion to my case.  At the time I signed this Deed, I was unaware that the Government Communications Regulator AUSTEL (now the Australian Communications Media Authority) (ACMA) had compiled a different set of facts pertaining to my case than what was provided to the relevant Minister for Communication on 13 April, 1994.  Had I been aware of those findings, which confirmed that I had a case against the Telstra Corporation for misleading and deceptive conduct under the Australian Trade Practice Act, I would never had settled with Telstra in April 1999.  This damning evidence supplied to me under the Freedom of Information (FOI Act) was not released to me until October 2008 by the current regulator ACMA, regardless of my claim advisors, Freemans of the Sunshine Coast (Queensland) having requested material as such from AUSTEL during my 1995/95 arbitration.

We have also collated thousands upon thousands of evidential documents in support of each of those eight reports. To enable us to be positively sure of our facts, we also began a separate profile database to keep track of all the people we believe were important to our cases. We have recorded at least ten lines, and sometimes three-quarters of a page of information for each person and supported that information with at least one FOI or other document related to each individual we researched.  That profile database now includes 171 individuals. We have decided to detail this research and record-keeping as testament to the amount of work that has gone into preparing our two websites absentjustice.com and justicecommand.com. Although we originally planned to produce only one website we quickly found that the details are easier to follow if they are sorted into two separate websites, because each of those individual topics discussed in the two websites have been spread out over many years.  The topics we have chosen include, among others, the general deception and corruption that contaminated our TIO administered arbitrations; the illegal interception of many documents legally submitted to the arbitration by the claimants; the details of documents that were lodged with the arbitration but never addressed or referred to in the awards; and documents that were apparently somehow lost in the fax system and therefore never reached the arbitrator.  Taken together, these topics all contributed to the end result – an entirely undemocratic arbitration and mediation process.

This first chapter concentrates to the way Telstra chose to continue installing equipment at their customers’ premises around Australia, even though they knew that equipment was faulty.

Records show that, in early 1994, during official Government regulatory investigations carried out by the then-Government Regulator, AUSTEL (ACMA), into the telephone problems experienced by Golden Messenger, AUSTEL found that, even though Telstra had then already known for months that the Flexitel Commander System had many deficiencies, Telstra still sold and installed that system at Golden Messenger (my business) and, even after AUSTEL had uncovered this evidence, still they did not direct Telstra to publicly recall this product, under the Trade Practices Act 1974,  Once Telstra became aware of the many deficiencies with the Flexitel, it should have been recalled and/or removed from the network immediately.  AUSTEL, the Government Communications Regulator, appear to have breached their statutory obligation to the consumer (me) when they chose to conceal their findings on this Flexitel matter from both the relevant Communications Minister the Hon Michael Lee MP and me.

The secret findings in AUSTEL’s Golden Messenger March 1994 report (GS 453) also notes

No record was found where Telecom acknowledged that major network problems did exist and that these could have caused the problems/faults experienced by Golden Messenger

Misleading and Deceptive Conduct

The various pages in AUSTEL’s covert (withheld report) prove quite clearly that I as the proprietor of Golden Messenger was deliberately misled and deceived in a number of ways, on at least three separate occasions:

  1. In July 1987, when Telstra installed the Flexitel system at my business premises, even though they knew it was faulty;
  2. Throughout the whole of my Federal Court action against Telstra;
  3. When AUSTEL ignored assurances made by their own Chairman, Robin Davey, to a Senate Estimates Committee, on 2 September 1993 (GS 465), six months before my Government-endorsed Fast Track Settlement Proposal (FTSP) began. Mr Davey had assured the Committee that, if AUSTEL found that Telstra had knowingly misled and deceived their customers (and as we now know – they DID find in relation to my allegations/claims), under the Trade Practices Act, those matters would be dealt with in a settlement process.

It is important that this Flexitel summary is read in full because they explain my basic reasons for claiming that his Telstra Flexitel matter is still unresolved, even though I did ‘blindly’ accept a deed of release from the Telstra Corporation in April 1999, thereby ‘agreeing’ that all outstanding claims against Telstra had been resolved.  Unfortunately this meant that the arbitration agreement signed by me and Telstra did not allow the arbitrator to assess those Flexitel issues, because they were matters that had been part of my previous Federal Court action against Telstra in 1990, and I had accepted a settlement in relation to that case. At that time though, I was not aware that the Australian Government Solicitor in 1990 and AUSTEL in 1994, had already found and documented (see below) how Telstra had misled and deceived me over a number of years. Could this be one of the reasons for Telstra not allowing the Flexitel issue to be reopened, even though the other three COT claimants were allowed to reopen earlier issues.

Chapter-Two

The Australian Government Solicitor’s (AGS) Letter

Exhibit GS 448-A provided to the Australian Federal Government and the Australian Federal Police on a CD in 2014, dated 2 November 1990 was a fax from Telstra’s Corporate Solicitors Office to Telstra’s then recognised chief technical engineer, regarding Telecom v Golden Messenger Federal Court Legal Proceedings, which notes, among other items:

(3)  Telecom will also need to inspect any documents lodged by Golden Messenger as part of its (GM’S) discovery obligations.

(4)   Telecom needs to examine those documents pertaining to the test carried out on North Melb Exchange to determine if any of those documents have been generated as a result of an “interception”. If so, then Telecom will be precluded from disclosing them under the discovery process. I intend to ask (name deleted) of network investigations to undertake this task.

(5)   The Australian Government Solicitor, on behalf of Telecom, has written to the solicitors acting for Golden Messenger seeking their undertaking not to disclose to their client or others the contents of the report on the North Melb Exchange. To date, there has been no response. (GS 448-A)   

Directly below this entry the report then discusses an internal Telstra minute dated 7 November 1990 that Telstra’s, Manager, Business Network Planning, sent Telstra’s Executive General Manager, Telecom Business Services (FOI Folio 001801), noting that:

it would appear that any concerns over the disclosure of the adverse report on the North Melbourne Exchange can now be set to rest as it will not be released until point (5) has been complied with. (GS 43)

These two documents, together with our Comments in a webpage justicecommand.com in particular to the North Melbourne telephone exchange issue, show that, regardless of whether or not my solicitors, received a copy of the North Melbourne Telephone Exchange report during my early Federal Court action, I am  adamant that I did NOT see a copy of the letter from the Australian Government Solicitor (AGS) that is referred to in these faxes.

On 21 November 2012 I produced a letter of understanding that included:

During the period that I retained (name deleted), at no stage was I informed by (name deleted) or any other member of (my previous legal staff, that Telecom or the Australian Government Solicitor contacted them with information regarding the North Melbourne exchange.

Furthermore, had I known that (name deleted) had concealed knowledge of such an important document from me, I would not have accepted his appointment as the arbitrator in my arbitration process. (GS 565)

This AGS letter is important because, when the arbitrator was appointed as the official arbitrator to the COT arbitrations, he did not declare his conflict of interest in relation to my previous Federal Court action against Telstra.

As the COT case spokesperson it is as important to look at this conflict of interest issue from the perspective of the other COT claimants (which included me) as it is to look at it from my perspective because, as my earlier legal advisor in both my business endeavours and my Federal Court / Telstra matters, (the now COT arbitrator) knew about the various discovery documents that he and/or his fellow partners did receive from the Australian Government Solicitors (AGS) after 24 July 1990, just as he knew about the incorrectly installed, faulty Flexitel telephone equipment at my business premises.

PLEASE NOTE:  Before the first four COT arbitrations began, the TIO and this then pending arbitrator assured me, in my position as COT spokesperson, that all four arbitrations would be administered ‘within the ambit of the Victorian Commercial Arbitration Act 1984’.  The TIO-appointed Special Counsel, then the President of the Institute of Arbitrators (later a County Court Judge) wrote to the pending arbitrtor on 24 January 1994, (see absentjustice.com download Senate Evidence File/6) noting:

“We discussed whether or not the Procedure should come within the ambit of the Victorian Commercial Act 1984. We decided that it should. Relevant considerations were under the Commercial Arbitration Act”

The Telecommunications Industry Ombudsman (TIO) later confirmed however, in his address to a Senate Estimates Committee on 26 September 1997, that our arbitrations were NOT conducted und the agreed Victorian Commercial Arbitration AcT noting:

“Firstly, and perhaps most significantly, the arbitrator had no control over the process, because it was a process conducted entirely outside of the ambit of the arbitration proceedings.”

The questions arising out of this official statement are:

  • Did the arbitrator lose control over the arbitrations – he was conducting (seven at least) because Telstra knew he had never declared his conflict of interest?
  • Did the secret use of the TIO-appointed arbitration resource unit as the secondary arbitrator for all four arbitrations contribute to the arbitrator losing control over the process?
  • Could it be that when the TIO (the administrator of the arbitration process) became aware that the arbitrator had lost control over the process, then the TIO had a duty of care to immediately request leave from the Supreme Court to appoint a new arbitrator?

Could it be that one of the reasons that Telstra accepted the arbitrator’s previous association with my Telstra Federal Court action without raising it as a problem in relation to his appointment as COT arbitrator, was because they knew that this AGS letter had never surfaced after it was first sent to my legal team and so they therefore, knew it had to have been deliberately concealed from me during his Federal Court proceedings?

PLEASE NOTE: for the purpose of this part of my story discussed below, I will be referring to myself as either Graham, Graham Schorer or Mr Schorer.

AUSTEL’s COT Covert Findings

No report can be used as evidence in any court of law or arbitration unless it is properly backed by relevant supporting documents and all other necessary information.  If that can be done, then justice will be done.  It is now quite clear however that justice was NOT done in Graham Schorer’s  case because, as the following points explain, AUSTEL’s March 1994 Golden Messenger report (Exhibit GS 450 and GS 453) proves that AUSTEL’s investigation into Graham’s complaints reached the conclusion that Telstra had knowingly misled and deceived him over the whole period of his claim but, even though they were the official decision makers when investigating Graham’s case, AUSTEL still concealed their findings from the relevant Minister (the Hon Michael Lee MP) and the arbitrator throughout the whole of Graham’s arbitration.

Page 14

In AUSTEL’s further draft findings on Golden Messenger (Exhibit GS 453):

Telecom have maintained the position that network service was within acceptable standards despite having considerable information, obtained from internal investigations, that major problems did exist with the network and that these problems did impact  on the level of service provided to the customer.

Page 23

In AUSTEL’s further draft findings on Golden Messenger (Exhibit GS 453):

Telecom Minute of 30/3/88 states that advice from Legal and Policy Headquarters indicate that Golden Messenger appeared to have a case against us…and…the Australian Government Solicitor had advised Telecom that Golden Messenger is likely to be successful in establishing that Telecom engaged in misleading and deceptive conduct contrary to the Trade Practice Act and that consequence of lost calls or calls not getting through was likely to lead to an immediate loss of business in relation to that call and potential loss of future business from the customer.

Exhibits GS 450 and GS 453 were not released to Graham until October 2008, fourteen years too late to be used in his arbitration or during the Senate Estimates Investigation into why relevant documents (which AUSTEL had previously used to arrive at their findings) were being withheld from Graham. In other words, if AUSTEL had provided their adverse findings against Telstra (GS 450 and 453) to Graham and the Senate Estimates Committee during that 1997/1999 Committee investigation, it would be fair to say that the Committee would have immediately ensured that Telstra didn’t pressure Graham into accepting compensation of only 33% of his arbitration claim – and that 33% did NOT include the thousands upon thousands of dollars Graham had wasted on legal fees to prove something that AUSTEL had already proved.

AUSTEL’s COT Formal Findings

It might be said that the Government Regulator breached their statutory obligation to Graham when they did not provide the Communications Minister, the Hon Michael Lee MP, with their true findings in the Schorer investigations (see page 2, above, and pages 12 to 13 in the attached report), because Section 342 under the Telecommunications Act 1991 states:

  • after concluding such an investigation AUSTEL must (our emphasis) prepare and give the Minister for Communications and the Arts a report covering the conduct of the investigation concerned;

and

  • any findings that AUSTEL has made as a result of the investigation.

A letter dated 28 October 1993, from Senator Richard Alston to Robin Davey, AUSTEL’s Chairman (GS 466), notes:

the opposition would reserve the right to consider the establishment of a Senate Select Committee if AUSTEL’s report raised matters of serious concern regarding outstanding problems or if there is evidence to substantiate the persistent complaints made by COT Case members, particularly Mr Schorer, of “misleading and deceptive conduct” on the part of Telecom.

After this 28 October 1993 letter was written, and under pressure from the Senate Estimates Committee, AUSTEL facilitated a new settlement process called the Fast Track Settlement  Proposal (FTSP) for the first four COT claimants, including Graham, (see pages 5 to 9 and Chapter Four in our report).

On 29 October 1993 however, Jim Holmes, Telstra’s Corporate Secretary, wrote to Graham, warning him that he was not allowed to raise the matter of the Flexitel System as part of his FTSP because he had already accepted a payment through the court, in relation to the Flexitel issue.  As shown above, when Graham agreed to accept this payment, which amounted to less than 10% of his actual losses at the time, he was not aware that the Australian Government Solicitor had advised Telstra (page 23 in AUSTEL’s adverse findings, GS 453) that:

Golden Messenger is likely to be successful in establishing that Telecom engaged in misleading and deceptive conduct contrary to the Trade Practices Act and that the consequences of lost calls or calls not getting through was likely to lead to an immediate loss of business in relation to that call and potential loss of future business from the customer.

Exhibits GS 3, 4, 5, 6 and GS 10 confirm that, by November 1986, both the Telstra Corporation and Philips (Australia) knew there were many deficiencies in the Flexitel Commander System.

On 18 July 1987 however, Telstra installed a new Flexitel Commander System at Golden Messenger, at a cost of $40,270.00 (GS 12).

On 18 November 1987 Mr P Nicolopoulos, for Telstra’s Chief General Manager, wrote to Mr Ron Jones, Philips Communications, Moorebank NSW stating:

Further to our discussion, Telecom now requires your assistance in paying prizes for the sales competition for Flexitel.

The prizes being offered are gift vouches from Myers stores (also redeemable at Grace Bros, and Bone Bros.) or Safeway Stores (also redeemable at Woolworths and Big W). We expect the value of prizes to be approximately $30,000 over the next 12 months. …

The first payment, required immediately, is to the value of $1800 to be paid to Mr Stephen Johnson. Mr Johnson has selected vouches from Myers (Grace Bros) as his prize.

Please advise me when these vouchers will be available. (GS 15).

Correspondence dated 20 November 1986 (GS 4, above); 6 January 1987 (GS 5); 9 January 1987 (GS 6) and 10 April 1987 (GS 10) all prove that the Telstra Corporation and Philips Australia (the manufactures of the Flexitel system) were both aware of a number of serious deficiencies in the Flexitel system.

The letter dated 18 November 1987 (GS 15, above), proves that both companies were then busily promoting the Flexitel system, even though they had known about the many deficiencies with that system for more than a year. In other words, both Telstra and Philips were willing to promote this faulty equipment to Graham, and to other businesses who, like Golden Messenger, would therefore suffer the consequences of purchasing the promoted, faulty Flexitel system for many years to come. These businesses not only suffered the loss of a single call from a particular client, when that client was unable to get through to make a booking, they also lost all the repeat business that might have materialized as a result of that first contact. 

Questions

  • According to Section 52 and 53 of the Trade Practices Act it is unlawful to sell and promote a product that is known to be faulty: does this mean that Graham has grounds to challenge AUSTEL (now the ACMA) in relation to them concealing their knowledge from him and the Minister that he had a valid claim against Telstra under Trade Practices Act 1974?
  • Since Graham was officially advised that he could not raise the issue of the Flexitel Commander System in his arbitration (GS 501 and GS 469), resulting in this particular Flexitel issue not being addressed at all, does this provide grounds for Graham to challenge the Government Communications Regulator, AUSTEL (now the ACMA), for not disclosing their findings in their report to the Minister?            

Wheeler & Dealer

10 September 1993: this Telstra FOI document folio N00749 to N00760, from Telstra’s solicitors (we have factiously named them Wheeler & Dealer) to Telstra’s Corporate Solicitor, relates to strategies that were about to used in dealing with the COT cases.  Folio N00749 is the first page of this strategy it refers to both Wheeler & Dealer and Telstra’s outside Accountants

would be happy to assist you should matters raised in the issues paper or with regard to any other matters concerning management of “COT” cases and customer complaints.

This is document is important because Wheeler & Dealer was also involved with the employment of private investigators (paid by Telstra) in relation to my previous Federal Court matters. It is clear from folio N00750 that Wheeler & Dealer has singled out four of the COT Cases businesses Golden Messenger, Tivoli Theatre Restaurant, Japanese Spare Parts and the Cape Bridgewater Holiday Camp, in which Legal Professional Privilege was to be used to conceal documents from those four cases (GS 93)

In June 2000, renowned Legal Professional Privilege expert, Associate Professor Suzanne McNicoll, provided the COT claimants (GS 94) with the following legal opinion regarding the Wheeler & Dealer COT Case Strategy’

There is also some potential prima facie evidence of (4) i.e. knowingly making false or spurious claims to privilege.

For example, there is potential structure set up for the possible abuse of the doctrine of legal professional privilege in the faxed document entitled “COT” Case Strategy, marked “Confidential” dated 10 September 1993 from Wheeler & Dealer, Melbourne Office Telstra’, Corporate Solicitor, Telecom Australia.

27 September 1993:  This letter from me to Robin Davey, AUSTEL’s Chairman, is explaining my concerns regarding directions I had received to register any further phone complaints through Telstra’s solicitors who we have factiously named Wheeler & Dealer (GS 103).

September 1993: Telstra FOI document marked Sept/- folio R00524 notes that, “..on occasions, it might be desirable to install recording equipment at customer’s premises” and then states:

All technical reports that relate to customer’s services are to be headed “Legal Professional Privilege”, addressed to the Corporate Solicitor and through the dispute manager. (GS 107

19th October 1993: This document from the Wheeler & Dealer to Telstra titled Legal Professional Privilege In Confidence FOI folio A06796:  includes the following statements:

Wheeler & Dealer continuing of evaluating (blank) claim.  Final report to Telecom will be privileged and will not be made available to (blank) Telecom preparing report for Wheeler & Dealer analysing data available on (blank) services (CCAS, Leopard, Cabs and file notes) – this report will be privileged and will not be made available to (blank). GS 112

In other words, Telstra FOI documents (folio R00524 and A06796) confirm Telstra were already hiding technical information from the COT claimants under Legal Professional Privilege. It is important to note here that Telstra had directed both myself and Alan to register our ‘ongoing’ telephone faults, in writing, to Wheeler & Dealer in order to have those issues addressed.  The COT Cases found this not just time consuming but also very frustrating because, by the time they received a response to one complaint in some incidences they already had newer complaints to register.

It wasn’t until the four entered the arbitration process that it became apparent that Telstra were using the Wheeler & Dealer Legal Professional Privilege strategy to hide numerous important technical documents from the claimants.

16 December 1993: This letter from Denise McBurnie of Freehill’s GS 128 to Alan states:

I refer to your letter of 6 December 1993 and our subsequent telephone conversation.  With respect to your comment concerning a customer from Mount Gambier, South Australia, who has reported to you that he had difficulty contacting you on your 008 service, if you are able to provide our client with more details (such as the caller’s telephone number) our client may be able to investigate and comment on the problem which this customer reported to you.

Neither Telstra nor Freehills ever did explain why this Mt Gambier customer, and numerous other customers, were all experiencing the same 008/1800 problem when trying to contact Alan i.e. a recorded message stating:  ‘the number you are ringing is not connected’ even though Alan was billed for this non-connected call.  This letter however confirms that Alan was still having, to deal directly with Freehills in relation to each of his 008/1800 telephone problems and faults, (as they occurred), before there was any possibility of a resolution being reached.

Exhibit GS 129-a is a letter dated 4 January 1994 from Alan to Ms McBurnie and Exhibit GS 129-b dated 28 January 1994, is Ms McBurnie’s response.   These two documents show that Freehills had a significant input into settling the technical issues associated with Alan continuing phone problems being experienced during his FTSP/arbitration process. Not only was Freehill’s Telstra’s arbitration defence lawyers in Graham and Alan’s arbitrations, these letters show they also advised Telstra on how to address COT related technical issues.  Since none of the 008/1800 information Alan provided to Freehills was ever returned to Alan in response to his arbitration FOI requests, does Alan and Graham have good grounds to use this argument in any challenge against the arbitration process?

Legal Professional Privilege

It is most important we highlight the letter of 28 September 1993, Robin Davey, AUSTEL’s Chairman to Telstra’s CEO Frank Blount stating:

Telecom now appears to have a done a “back flip” by instructing its solicitors, (we have factiously named them Wheeler & Dealer), to inform Mr Schorer that he must “…address any concerns of a legal nature involving our client and your business, direct …”to their office. While Fre letter of 27 September 1993 (copy attached) to Mr Schorer states that “…does not in any way preclude …{him} …from addressing non legal matters through the normal channels of communications previously agreed …”between him and Telecom, it places Mr Schorer in the impossible position as a layman of having to distinguish between concerns of a legal nature” on one hand, and “non legal matters” on the other (GS 104)

The TIO, and administrator of my arbitration, was alerted by the COT Cases, during January 1994 that AUSTEL’s Chairman, Robin Davey, had assured them that Wheeler & Dealer, would no longer be involved in their FTSP/FTAP Settlement/Arbitration’s. In January 1994, Telstra appointed Wheeler & Dealer as their arbitration defence lawyers to the four COT arbitrations under the nose of the TIO.    

Telstra Corporation Limited – ‘Fast-Track’ Proposed Rules of Arbitration

The TIO’s Special Counsel, Mr Frank Shelton (now Justice Shelton of the Country Court of Victoria), modelled the formal version of the arbitration agreement on Telstra’s early draft agreement.  In October 1998, three years too late, the COTs eventually discovered that the draft version of the agreement was actually the “Telstra Corporation Limited’s, proposed ‘Fast-Track’ Rules of Arbitration’, and Mr Shelton had only made cosmetic changes to that Telstra document. Warwick Smith, Telecommunications Industry Ombudsman (TIO) and Dr Hughes (the pending arbitrator) would not provide any of the COTs with a copy of Telstra’s version of the rules, either during or since their arbitrations, even though the claimants were forced to use the version allegedly drafted by Mr Shelton. What is important about this re-drafting Telstra’s rules is that on 24 January 1994 Mr Shelton wrote to Dr Hughes (AS 407) noting:

We discussed whether or not the Procedure should come within the ambit of the Victoria Commercial Arbitration Act 1984. We decided that it should

On 26 September 1997, three years into the arbitration process, the then-new TIO, John Pinnock, advised the Senate that … perhaps most significantly, the arbitrator had no control over the process, because it was a process conducted entirely outside the ambit of the arbitration procedure” (GS 490).  Mr Pinnock then provided the Senate Environment, Recreation, Communications and the Arts Legislation Committee with a report, also dated 26 September 1997 (AS 232-A), confirming this statement.

At about the same time that the Senate Committee received this information from Mr Pinnock, questions were being asked around Canberra and amongst the legal fraternity in Melbourne.  Perhaps the most important of these questions was how ONE single arbitrator could be expected to view and evaluate the hundreds of thousands of highly technical claim documents that the seven COT claimants had already submitted while, at the same time, supervising various mediations (as Dr Hughes apparently had), and still provide natural justice for each individual case, as was required under the Commercial Arbitration Act 1984?  This task, as the Institute of Arbitrators and Mediators Australia are well aware, was impossible.

Towards the end of 1993, Telstra’s auditors (Coopers & Lybrand) distributed copies of an arbitration agreement that had been used by British Telecom for UK cases similar to the Australian COT claims.  Coopers & Lybrand provided copies of the UK agreement to the National Party, the Australian Democrats, Senator Richard Alston, (then the Shadow Minister for Communications), Michael Lee (then the Minister for Communications), the COT claimants and AUSTEL. The UK process showed quite clearly that, because of the complexity of the different cases and the amount of time that would be needed to evaluate each of them, a separate arbitrator would be needed for each claim (in the UK, the arbitrators were drawn from a pool of arbitrators who were qualified to hear such cases).

CHAPTER ONE

Telstra provided the document titled “Telecom In Confidence Draft Golden Messenger – Mr Graeme [sic] Schorer Melbourne”, FOI folio R03481 to R03486, dated 15th October, 1993 to assist AUSTEL in their investigations into the COT allegations.  Some of the inaccuracies shown in the AUSTEL COT Report, dated 13th April, 1994 appear to have originated from some of the misleading statements made by Telstra in this Chronology of Events.

Telstra’s document states:

“Mr Graeme Schorer has had an ongoing dispute with Telecom for the past six years. The issues have been represented to, and negotiated with all levels of Telecom management.

“The customer purchased a two Flexitel System from Telecom to replace their existing Multicom Telephone System in July 1987 when Telecom had a monopoly on the supply of Key Systems.  After installation it was claimed that the Flexitel Systems failed to provide the features as defined at the time of sale.  Call Queuing was viewed as a major feature that the system did not provide, which was overcome by the addition of two additional call sequences.  The response time of the system was also seen as excessive, causing mis-operation by the operators.  As a result of extensive complaints regarding the system, payment was never made and court action was initiated by the customer in 1990.

“The initial installation comprised; five PBX Groups – a total of 37 lines connected to the Flexitel System. The first correspondence was early November 1987 where the installation was reported as being incomplete and line faults existed. The faults reported included; Not Receiving Ring; Busy When Free and Call Cut Offs. Local staff responded to these faults but were unable to detect any fault and/or cause.” (GS 1)

It is apparent, from the exhibits below, that Telstra knowingly misinformed AUSTEL surrounding the Flexitel System, and did not disclose the known congestion problems affecting the North Melbourne exchange that serviced Golden Messenger.

9th April, 1986:  P Franklin, for Telstra’s General Manager of Network Engineering, writes an internal note, stating:

“Reference to Flexicom product co-ordination meeting of 2 April 1986 in respect to technical training for qualified installation and maintenance staff. …

“As a result of the delayed delivery of Flexicom models, Engineering Training propose the following:

  • Development of the Flexicom course to be suspended.
  • The training schedule as outlined in our Minute of 19 March 1986 to SBS, Engineering Branch will need to be reviewed. …

“As outlined in the training strategy demand training is the preferred option rather than saturation training.” (GS 2)

9th September, 1986:  This telex from Telstra’s Commercial Service Department to Philips Communications Systems states:

“Telecom has promulgated information that Flexitel can be configured in any line/station combination that the system hardware permits. Mar[k]eting and technical information so far published indicates this stance was taken on the basis of:

  • Tender response
  • Ongoing product interaction
  • Company presentations

It is now apparent that a software constraint can limit the system
configuration.”
(GS 3)

Note: although the copy is poor, the original is readable.

20th November, 1986:  This document from Ray Shenton of Philips (Australia) to Telstra (see fax footprint) confirms Philips advised Telstra regarding software limitation problems with the Flexitel system. (GS 4)

6th January, 1987:  A Telstra internal facsimile from C Lai (General Manager Commercial Services) to Mr R Tan (Voice Products Engineering) discusses some of the software problems associated with the Flexitel and notes:-

“Philips advised that the software bug in signalling parameters 7 & 8 will be fixed in software revision 9.1B and is expected to be available in April 1987. …

“Philips advised that Dial Tone Detector problem will be fixed in software revision V9.2 to be released in September 1987. …

“Philips advised that the circuitry of the headset adapter will be contained in a blank DSS module. A sample of the headset adapter is expected in January/February 1987.” (GS 5)

9th January, 1987:  Mr Tan sends a telex to Telstra’s Chu Lai, General Manager Commercial, detailing a further problem with the Flexitel, namely the hold function:

“A software fault has been discovered in one of our customer’s system I.E. Logical Solutions I.E.

“On the main operator’s keystation, there is only an ‘answer external’ key used for answering 8 external lines.  The ‘hold’ key is used for holding calls and it appears that only two calls can be successfully held by this method.” (GS 6)

In January 1987, Mr Schorer requested John Searle arrange for a Telecom Communications Consultant to visit Golden Messenger’s premises to gain firsthand knowledge of Golden’s current and foreseeable-future communication requirements.  Telecom was to advise Graham of the equipment available and the cost of replacing the multi phone system.  Mr Searle advised Graham that, due to the age of Golden’s present multi-phone system, Telstra could no longer provide technical assistance to maintain it and spare parts to service the system were not available.  Mr Schorer agreed to the purchase of the Flexitel.

Telstra’s printed file note, January 87, states:

“Rick Richards visited Golden Messengers with John Searle, CPM Footscray to discuss problems with existing equipment and necessity for a new system.

“Initial discussions revolved around providing a Trade Centre but when customer insisted on lines appearing behind one answer button, a Flexitel system [w]as promised.

“Bob Ryan (Golden Messenger) produced document setting out their requirement for a telephone system.” (GS 7)

January/February 1987:  An extract from Graham Schorer’s History of Events Leading Up to the Purchase Of Golden Messenger, dated 21st June, 1994 (see Graham Schorer’s – CAV relevant Information file, GS 3) states:-

“Late January early February Telecom advised Golden that all of their telephone service difficulties, problems and faults were being caused by Golden customers premises’ equipment multi phones used in the operations department, malfunctioning. Searle gave a very logical explanation of how each particular malfunction would cause each of Golden’s telephone service difficulties, problems and faults being experienced by Golden’s clients of Golden’s staff. It has since been discovered by Schorer what Searle told him was a complete fabrication.”

The AUSTEL COT Cases Report, of April 1994, discusses the same Flexitel issues at point 8.24:-

“In January 1987 in response to problems being experienced by Golden Messenger with its leased multiphone system, Telecom’s Senior Business Sales Representatives provided a quote to Golden Messenger on Flexitel system which ‘meets the service requirements of your company’ (letter dated January 1987, Telecom’s Senior Business Sales Representatives to Golden Messenger). The system was installed in July 1987, but its operation in the context of Mr Schorer’s courier business Golden Messenger was a disappointment to him. He complained of –

  • its inadequacy almost immediately from the time of its installation
  • continuing service problems

and threatened litigation to recover business loss due to the problems.”

10th April, 1987:  Telstra FOI document folio R25946/7 from Telstra’s Superintending Engineer (name redacted) writes to Telstra’s Manager – Small Business Systems Division, regarding the “Flexitel Recall Problem.” The document states:

“The following problem has been found on the Flexitel. …

“NOTE: If a Flexitel station number is dialled after pushing recall, the exchange line goes onto internal hold and the dialled extension is rung. …

Any further attempts to transfer the call are similarly unsuccessful.

“It therefore appears that timed loop break recall does not work as it was intended.” (GS 10)

29th May, 1987:  Graham Schorer writes to Telstra’s Geoff Gamble (re letter of intent) stating:

“We hereby confirm our intentions to purchase a Flexitel System on the following basis:”

The 10 headsets referred to in this agreement were never supplied to Golden Messenger during the whole period of this dispute. (GS 11)

18th July, 1987:  Telstra installs the new Telstra Flexitel telephone system, at a cost of $40,270.  The new system was discovered on that day, not to have sufficient battery backup, no music on hold and Golden were told that it would be another six weeks before Telecom would be in a position to supply and install the headsets.  During the next few months, there were many verbal complaints made to Telstra about Golden’s telephone service difficulties, plus it was continually drawn to Telstra’s attention that Telstra had not fully installed and commissioned the new Flexitel system as per agreement. (GS 12)

22nd July, 1987:  Mr Ryan, on behalf of Golden Messenger, writes to Telstra stating:-

“Thank you for your assistance in the installation of our new Flexitell [sic] telephone system.

“There appears to be a couple of problems still in existence as listed and your suggestions or assistance on how to solve them would be greatly appreciated.

  1. On my station, unable to programme direct dial numbers
  2. On Sales stations, having trouble obtaining an external line
  3. On Rocci’s station, having difficulty in programming a direct dial number” (GS 13)

5th November, 1987:  Mr Ryan, on behalf of Golden Messenger, writes to Telstra’s Footscray Office stating:-

“Recently we purchased a new telecom flexitell [sic] system through your office, but as yet is not installed in its entirety.

The features not yet in place are:-

Music on hold,

Headsets,

Volume control on handsets and headsets.

In addition to these features not being installed, we are experiencing problems in having some service problems rectified, this despite contacting a direct number (602-1374) as advised by Ms. Meek of your office.” (GS 14)

18th November, 1987:  A letter from P. Nicolopoulos, for Telstra’s Chief General Manager, to Mr Rob Jones, Philips Communication Systems, states:-

“Further to our discussions, Telecom now requires your assistance in paying prizes for the sales competition for Flexitel.

“The prizes being offered are gift vouches from Myers stores (also redeemable at Grace Bros. and Bone Bros.) or Safeway Stores (also redeemable at Woolworths and Big W).  We expect the value of prices to be approximately $30,000 over the next 12 months. …

“The first payment, required immediately, is to the value of $1800 to be paid to Mr Stephen Johnson. …

“The vouchers are to be sent to me for on-forwarding to the Sales Representatives.” (GS 15

10th December, 1987:  Julian James, Philips (Australia), faxes a message to Telstra’s Peter Nicolopoulos, regarding the Flexitel System’s memory capacity. He states:-

“There have been reports from Telecom field staff in Canberra stating that they are unable to programme all of the 231 EEROM memory units of the Key/Ring Address Maps and Rep. Dial Blocks when using TD8003.

“The TD 8003 EEROM has been modified to prevent system oversizing during configuration and now limits the EEROM capacity to a maximum of 221 units for Key/Ring Address Maps and Rep. Dial Blocks.

Please would you inform your technical staff and sales people of this change.”
(GS 16)

28th January, 1988:  A Telstra telex, FOI folio R30157, re Golden Messenger states:

“Access 500 cannot support a headset (and Collingwood have, in the past, refused to modify them) – to the best of my knowledge.” (GS 17).

Please note: Telstra never supplied Golden Messenger with the headphones/headsets even though this was part of the purchasing agreement.

12th February, 1988:  Julian James, Philips (Australia), FOI folio R30172, again faxes a message to Telstra’s Peter Nicolopoulos.  This time concerning Flexitel calls for and call waiting issues.  He states-:

“‘Calls For’ Not Flashing on K/S &DSS. When tested the ‘calls for’ lamp flashed correctly therefore no fault found.

“When an incoming call is transfered to a busy keystation &DSS no call waiting tone is heard, however if the keystation is not associated with a DSS module, call waiting tone is heard. This fault has been noted & faxed to the UK for a solution.” (GS 18)

15th February, 1988:  Telstra’s R Tan, Senior Product Engineer, writes to Philips (Australia), folio R25934, regarding Flexitel.  He states:-the problems still exist”and concludes, “In the light of the latest symptom, your urgent assistance is requested in pursuing a cause for this fault and subsequent solution please.” (GS 19)

29th February, 1988:  Telstra’s Manager Engineering Support sends a telex to Mr Sinclair or Mr Loch, with the heading Re: System Hold Time For Flexitel.  He states:-

“We have a few customers who have bought the Flexitel on the assumption that the system works like our previous key systems and they have been operating on that assumption. These installations are mainly multi-line answering positions. Many calls have been lost because of the relatively short system (common) hold time.”(GS 20)

Note: although the copy is poor, the original is readable.

March 1988:  This Telstra Internal Minute (FOI folio 000096), from Paul Killeen to Telstra’s State Manager, exposes the truth that Mr Schorer’s continuing complaints to Telstra about the Flexitel and exchange problems had not been investigated diligently until 23rd March, 1988. Mr Killeen’s states:-

“Network Investigations received a request from Mr P Arkle Customer Terminals, Commercial Dept. on 23-3-88.

“Only preliminary investigations to date have been carried out.” (GS 21)

No proper investigation into Mr Schorer’s complaints (since 1986) about network congestion or his complaints, since July 1987, concerning the Flexitel were taken seriously until 23rd March, 1988.

Mr Killeen states further:-

  1. Hence as far as MFC signalling was concerned all calls could be set up to establish ringtone and current. This does not answer whether ring current is received at the Flexitell [sic] system.
  2. Therefore results of traffic readings taken by PABX traffic measurements were obtained to determine if calls were reaching the Flexitell but not being answered (either no-one to answer them or staff not aware the call is there to be answered or staff unable to answer the call due to Flexitell limitations). …
  3. CCAS results have been obtained and these confirm the results in 2. These also show that the quantity of unanswered calls remains relatively constant over the first 6 auxiliaries while the answered calls drops from 1700 to less than 400.

The loss of 1,300 calls (during the time the CCAS system was monitoring) is serious enough, but the repeat business that might have been generated from these 1,300 calls is incalculable.  In most cases of heavy traffic, Telstra collects and researches the CCAS data every second day.  Using this calculation method, over a five-day period, it is reasonable to conclude Golden was losing 5,000 to 6,000 calls per week.

18th March, 1988:  Telstra’s handwritten fault memo re Golden Messenger states:-

  1.  CCAS has been performed on some hot lines and some booking line
  2. The order that the lines appear on the console is a problem & should be straight out? Cyclic Allocation?
  3. Only 3 hold lines av, which is not suitable.
  4. Phone System was slow moving stock!!!” (GS 22)

1st April, 1988:  A Telstra internal telex (no name) states:-

As discussed, Telecom has a need for modifications to be made to the Flexitel software due the problems that have been experienced in the field.

“The most pressing of these problems is that of common hold i.e. that calls put on common hold will be dropped out after a maximum of four minutes. This is totally unacceptable to Telecom. (GS 23)

Again, note although the copy is poor, the original can be read.

19th April, 1988:  Telstra begins recording Alan’s faults.

He recalls one particular example of these problems, which he experienced himself. He had driven some 20 kilometres from the camp into Portland to shop before realising he had left his shopping list at home.  He rang his wife from a public pay phone, intending to ask her to read him the list, and was stunned when he reached a recorded message saying his own phone was disconnected – not once, but twice.  He rang Telecom’s fault centre and was told Telecom would investigate.  After shopping from memory, he rang the camp again to check his purchases against the list.  This time the phone was engaged and he assumed his wife was talking to a friend or, hopefully, a prospective customer.

When he arrived back at the camp, his wife advised she had not answered, nor made, any phone calls in the entire time Alan had been gone.

26th April, 1988:  Telstra records another complaint of Alan’s.  When Alan accessed Telecom’s fault records during his arbitration, many records of faults he reported to Telecom in the early days, after taking over the business, could not be found.  In those early days, it didn’t occur to Alan to record the faults he reported to Telecom.  Therefore, Alan can’t assign any particular date for the complaint he lodged during the shopping trip to Portland, but he knows the first recorded message (RVA) fault certainly occurred within two months of moving in.

2nd & 24th May, 1988:  Telstra records two more of Alan’s complaints.  One fault Alan frequently experienced was call drop-out:  when the line would suddenly go dead while talking on the phone.  If Alan or Faye had rung the person, this was not such a great problem since they could redial, although it cost them another STD call.  The problem became much worse if they couldn’t reconnect (and often the line remained dead for some time).  However, if the caller had phoned the camp, the caller had to bear the cost of redialling.  If a call came into the camp, particularly if it was one of the few business enquiries that managed to get through at all, it was very frustrating for them to wait and wait for the caller to ring back, without the phone ringing at all.  At first, it didn’t occur to Faye and Alan that callers were unable to get through.

17th May, 1988:  A Telstra Internal Minute, from Paul Killeen, for the Supervising Engineer of Network Investigations, under the subject Golden Messenger Progress Report 2, states:-

“These tests do not take into account losses experienced in calls getting to North Melbourne.” (GS 24)

23rd May, 1988:  A Telstra internal memo from Phil Arkle, Commercial Engineering – Customer Terminals, to Chu Lai re Golden Messenger’s Flexitel System, states:-

“As you are aware we are having real problems with this system. We appear to have the speed up to what we hope is an acceptable level by the dodgy expedient of removing some of the DSS modules. This may or may not be acceptable to the customer (bless him) in the longer term.” (GS 25)

29th June, 1988:  Telstra FOI document, folio K25185, is a handwritten fault report titled Visit N Melb.  It states:-

  • Congestion problem from Footscray Node to N Melb problem in hand with Metro Network Design. …
  • “Potential NRR/BWF complaints. Fault cleared when jack was hammered home on recorded voice base.” (GS 26)

June 1988:  Telstra FOI document, folio K25209, is also a fault report on 329/328 numbers in North Melbourne and states:-

“Additional cut here been 57-80 put in on MELC … but still massive congestion. (GS 27)

2nd & 6th September, 1988:  Telstra continues to record Alan’s complaints as the phone problems worsen.  Often the line remained dead (locked up) for some time after a call was terminated.  This problem often was not noticed until they lifted the receiver to dial out of the business. (AS 1)

25th October, 1988:  This Telstra hand written fault document, FOI folio K25232, states:-

“52 Fail (17.3%)..

“Congestion Tone always dropped back to internal comm – get local congestion tone…

“Busy tone 30-50%(GS 28)

Alan Smith’s Cape Bridgewater Holiday Camp was routed through an unmanned RCM multiplexer system, at Bridgewater, to the Portland AXE exchange.  Graham Schorer’s business, Golden Messenger is also serviced by an AXE exchange.  Although not dated, the following Telstra documents are believed to have been produced around this period.

Exhibit (GS 28-b) titled National Network Operations – Melbourne, discusses the AXE Ericsson exchanges and insufficient CL as a causes of congestion – a problem North Melbourne exchange suffered.

(4) TNE:-

Congestion being experienced in AXE exchanges due to shortage of CL, PD and RE ‘individuals’ has been brought to the attention of TNE so that designers can be made aware of the problems.”

Exhibit (GS 8-c), titled CL Record insufficiencies, states:-

“If there are insufficient CL records then the AXE will send congestion to the A party.”

Exhibit (GS 28-d) is a 2nd July, 1992 Telstra Internal Minute, from Mark Ross, Customer Services Manager, to Network Operations.

Exhibit (GS 28-e) is an internal memo dated 29th November, 1993 from National Network Investigations to Harvey Parker, Group Manager Director of Commercial and Consumer.

This statement made in the internal minute:-

“Please find enclosed documentation in regard to a Grade of Service Complaint from Mr Alan Smith of Cape Bridgewater.

“Our local technicians believe that Mr Smith is correct in raising complaints about incoming callers to his number receiving a Recorded Voice Announcement saying that the number is disconnected.

“They believe it is a problem that is occurring in increasing numbers as more and more customers are connected to AXE,”

and the statement made in the Telstra internal memo:-

“As the performance quality of the network is directly translated to customer satisfaction and cost and quality of Fault Management, caution is also expressed about the decision on which switch should be used for FMO. I have long held the view the AXE switch provides an inadequate and crude Fault Analysis & Diagnostic tools [sic]. Attempts to have improvements incorporated have been acknowledged, but nothing has changed,”

confirm there were problems associated with the Ericsson AXE system.

It is also interesting to note, that in the official AUSTEL COT Cases Report dated April 1994, at point 7.40 – AUSTEL states:-

“…AUSTEL recently became aware that Telecom had prepared an internal document on the subject of this AXE fault and on 21 March 1994 sought a copy from Telecom.”

A copy of this AXE report was not provided, under FOI, to either Graham Schorer or Alan Smith.

The AXE Ericsson exchange problems (see also below for the dates of 16th July, 1997, 24th July, 1997, 20th August,1997 and 16th September, 1997), were one reason the COT cases suspect the TIO-appointed Arbitration Technical Consultants, Lane Telecommunications, had a conflict of interest before they were removed from the arbitration process.

31st October, 1988:  Telstra’s P Killeen writes to T Hoskins, Telstra’s Manager of BCS North (Victoria), FOI folio R30014, discussing similar AXE problems and stating:-

“We have only ever obtained one list of customers names and numbers on the 27/7/88. This highlighted that 10 of the 12 customers were served by AXE exchanges, the remaining 2 by ARE. …

“It was found that at or before this time there were changes made in the trunking of IDN originated traffic to North Melbourne, and Footscray DSC realizing that the IDN exit route from Footscray Node to North Melbourne was severely congested initiated action to increase the number of circuits. …

“A series of 7275 test calls were established between 13/10/88 and 20/10/88 calling from an AXE service to a North Melbourne TCARS base in the same thousand range as G.M [Golden Messenger].  This time it was revealed that between 5 and 14% congestion was being experienced.” (GS 29)

This five per cent to 14 per cent congestion level regarding this same fault is mentioned at point 6.78 on pages 134 to 135 in the formal 13 April, 1994 COT Cases Report.

AUSTEL’s official April 1994 COT Cases Report also confirms this.

Please note:

In the Telecom In Confidence Draft ReportGolden Messenger, FOI folio R03481 to R03486, see (1) Telstra stated to AUSTEL, {P1} that:-

“Nation Network Investigations were contacted and an exhaustive test program was conducted between 3 October 1988 and 20 October 1988. Several Network faults were located and rectified which would have affected the customers level of service, all of these faults were repaired by 25 October 1988,”

however, the information shown below confirms “all of these faults were” not repaired by 25 October, 1988.

6th & 10th January, 1989:  Telstra continues to record our complaints.  As the weeks go by and Alan’s business, which should have been flourishing by now, begins to vanish before their eyes.  Alan and Faye begin to wonder if they should have moved to Cape Bridgewater at all.  Family arguments ensue as Alan pushed to sell their family home in Melbourne (with its in-ground swimming pool and spacious back yard) and asked his wife, Faye, to give up her thriving dressmaking business.  Alan does not lay the entire blame for his 20-year marriage breaking up on Telstra’s doorstep, but the constant stress created by prospective customers not being able to reach them on the phone in Cape Bridgewater, was certainly a major factor.  When Alan now looks at Telstra FOI documents, confirming Telstra knew, all along, that their phone problems were caused by the poor network into Cape Bridgewater (while they continually denied the problem), he finds it really difficult to accept.  If Telstra had addressed the rural phone problems in Cape Bridgewater when he first raised them, he might well still have a marriage and contact with both his children.

13th June, 1989:  This letter from Philips (Australia) to Telstra’s Mr C Hamilton, shows Philips knew there were many problems with the Flexitel system:-

      1. Philips will investigate the reported failure rate of Control PBA’s Telecom estimate a MTBF of 0.833 years. …

  1. Philips will investigate the suspected high failure rate of the PSU
    assembly. …
  2. Telecom will investigate the actual failure rate of the PSU assembly and report it to G. Massie. …
  3. Philips will advise Telecom of the cost and availability of a software engineer to assist with diagnosis of a possible software difficulty being experienced by Telecom maintenance staff. …
  4. Philips will provide to Telecom monthly reporting for all returns from 30th June 1989. …
  5. Telecom will pay all outstanding invoices in full (as detailed below) immediately. …
  6. Philips will resume the activity of accepting orders and carrying out repairs on Flexitel equipment upon receipt of the monies detailed in point 6 above. …
  7. Philips will immediately present invoices to Telecom for the first and second quarters 1989 under contract CS16330 as follows. …
  8. Telecom will pay the invoices in point 8 within thirty days of receipt
    (GS 30)

4th August, 1989:  Telstra’s John Kelly, Commercial Manager Service Assurance Branch, writes to Telstra’s Mr L Muthu, Business Terminals in Telstra’s Business Services, stating:-

“As discussed, would you please arrange for the respective T.B.S. Regions in Victoria to pay the outstanding invoices.

“As Philips are withholding supply of spares our ability to provide quality Service to Flexitel Customers is being impeded.  Therefore I would appreciate urgent advice as to when these invoices will be paid.” (GS 31)

17th August, 1989:  Geoff Read, Telstra’s Manager, Service Assurance Branch shows great concern in this letter to Ed Blake, Manager of Telstra’s Business Services, regarding Telstra’s outstanding debt to Philips:-

“Early in 1988 Ken Sharrock from National PABX Service, at the request of TBS, assisted in negotiation of a Service and Training contract with Philips to provide spares for Flexitel Systems.

“Since that time Philips have issued a number of invoices under that agreement to each state. In Victoria’s case the invoices were sent to Business Terminals Branch, Corporate Customer Operations. … These invoices were passed to Craig Hamilton from TBS for payment by the respective product group.

“Since that time responsibility for payment has been passed from ‘pillar to
post’. …

“Philips have now stopped providing spares because of the unpaid bills. This is severely affecting our ability to provide a quality service to Flexitel customers.”
(GS 32-a)

Exhibit GS 32-b is a copy of Graham Schorer’s letter, dated 29th May, 1987 to Telstra’s Geoff Gamble, Operations Department, re his purchase of the Flexitel System, confirming that 10 headsets were incorporated into the purchase price of $37,000.  During the whole period in which Mr Schorer and his staff persisted with the Flexitel System, Telstra was unable to supply these headsets, due to a shortage of spares.

Please note: the segment being prepared for this space is currently being edited as of 7 July 2018.

This letter dated 29 March, 1993 from Russell Berry of Freehill’s to Telstra’s Rosanne Pittard FOI folio A06155 Subject: AOTC ats GM (Melbourne) Holdings Pty Limited notes:-

“I confirm that we have just received a Notice of Acceptance of the Payment into Court made by AOTC. A copy of that notice is attached.

As a result of the service of that Notice both the claim by GM and the cross-claim by AOTC will be compromised by GM taking the $200.000 paid into court together with the payment of its costs to the date of Notice of Acceptance of Payment into Court.

As a result of the length of this letter we have not included all of the statements but make note that it is clear from this letter that Telstra used its bottomless public purse to grind Graham into submission accepting the $200.000 payment regardless that Graham had claimed losses over the 2 million mark.  The following statement made in this letter shows how far Telstra pushed Graham i.e.

Prior to receiving the Notice of Acceptance of the Payment into Court we met with Senior Counsel and the Accountants from Duesbury’s for the purpose of discussing Duesbury’s latest report. That report was created following the attendance by ourselves and the accountants at GM’s premises for the purposes of inspecting the Applicants documents in detail. A copy of that report is enclosed to complete your file. In particular you will note from that report that on one scenario Duesbury’s concluded that GM may have considerably underestimated its claim for damages’… and Indeed, you will recall that the Applicants’ claim was originally for 2,000.000 plus interest plus costs and, in the circumstances of the latest report by Duesbury.s the settlement is extremely favourable to AOTC”. 

The settlement also ensures that each of AOTC’s witnesses will not be subject to lightly cross-examination concerning the Flexitel system, its various sales pitches and functionality of the North Melbourne exchange.  (GS 449)

Graham’s Federal Court action finalised.

A comparison of exhibits GS 3, 4, 5 and 6 (which confirm that Telstra knowingly sold a faulty Flexitel system to Graham) with Exhibits GS 448-A & 449, plus the other Exhibits listed above, proves that Telstra certainly did not want Graham’s solicitors to cross-examine their witnesses in court in relation to either the installation of the Flexitel system that was known to be faulty before it was installed, or the problems created by the congestion at the North Melbourne Exchange.

It was most important we draw the reader’s attention to Graham Schorer’s Federal Court Action and his later arbitration issues.  In doing so, we hope to show the reader how unjust Graham was treated by AUSTEL prior to Graham signing his 21 April, 1994 arbitration process.  Whilst Alan Smith was also misled and deceived by AUSTEL in a similar manner prior to his arbitration signed on 21 April, 1994, one has to conclude in Graham’s case, AUSTEL knew Graham had unwittingly accepted a settlement made by Telecom/Telstra into the Federal Court unaware the Australian Government Solicitor had already found against their own client for misleading and deceptive conduct.  Those findings were concealed from the Federal Court and Graham at the time he accepted his out of court settlement of 10% of what his claim was worth.  He did not have the finances to continue to pursue his matters through the court system.

The fact that AUSTEL withheld this evidence from the Communications Minister as well as the arbitrator is the reason we decided to itemise Graham’s Flexitel Commander System Federal Court issue first before we expose the conduct of the arbitration process.

AUSTEL the not so honest broker

These five business-people (see Introduction above) had long lists of telephone complaints that had been occurring for years, including calls that didn’t get through; customers complaining of frequently getting a recorded voice message incorrectly stating that the phone number they had called was not connected; customers complaining that their call just dialled out; and customers complaining that the phone line was constantly engaged (when the COTs knew their lines were not engaged at all).  Most of the following report focuses on Graham Schorer’s matters, although the other members of COT will be referred to on occasion.

Armed with their lists of complaints, the five COTs approached AUSTEL (then the Government Communications Regulator) for help.  By October/November 1992 Telstra had declared that all the phone lines to Alan Smith’s business had been fixed and had agreed to compensate Alan for his losses, and Graham Schorer had accepted compensation paid into Court by Telstra, on the understanding that his telephone problems had also been fixed.

Within two months of accepting their individual compensation packages, both Alan and Graham were complaining that the faults had not been fixed at all and, by October 1993, AUSTEL had set up a second settlement process called the Fast Track Settlement Proposal.  This process was to be used by Alan, Graham, Ann Garms and Maureen Gillan.  Sheila Hawkins had, by then, left the group.  Between December 1993 and April 1994 AUSTEL carried out their own investigations into the problems raised by the four claimants which of course included Graham, using information provided by Graham and Telstra.  Unbeknown to Graham though (see point 7 above), AUSTEL then drafted a forty-nine-page report on Graham’s business problems.  The draft report of Golden Messenger (Graham’s businesses) found that Telstra had used bullying tactics and misleading and deceptive conduct towards Graham, and had breached the Trade Practices Act.  This draft report was completed by March 1994 and, although copies were provided to Telstra at the time, they were not provided to Graham.  Alan Smith finally received a copy of his AUSTEL report, under FOI, in November 2007 and Graham’s was given to him in October 2008.  Alan has addressed the significance of AUSTEL concealing their draft findings from him prior to arbitration in the closing summary part of this report. This has been done so as not bog the reader down into trying to balance so many technical issues on two different individual cases.

On page (iii) of the formal AUSTEL COT Cases report provided to the relevant Minister the Hon Michael Lee MP in 13 April 1994 notes:

AUSTEL’s investigation of the COT Case was conducted under section 335 (1) of the Telecommunications Act 1991

Section 342 of the Act provides, in effect, that after concluding such an investigation AUSTEL may prepare and give the Minister for Communications and the Arts a report covering 

  • the conduct of the investigation
  • any findings it makes as a result of the investigation

What section 342 of the Act really states is:

  • after concluding such an investigation AUSTEL must (my emphasise) prepare and give the Minister for Communications and the Arts a report covering –
  • the conduct of the investigation concerned; and
  • any findings that AUSTEL has made as a result of the investigation“.

It is important to note that, if Alan and Graham had been given copies of these reports before they signed their arbitration agreements, on 21st April 1994, they would have had no reason to abandon the already operating Fast Track Settlement Proposal because the assessor could have used the Government’s own findings, in the draft AUSTEL reports, to calculate and award damages to both Alan and Graham.  This would only have required the assessor to appoint an independent technical consultant to: investigate the faults, decide how long they had been occurring.  Since the AUSTEL reports were only supplied to the defendants Telstra (see page 7 in Exhibit GS 462) and not provided to the claimants, and Telstra refused to provide the documents Alan and Graham needed to prepare their cases for the Settlement process, the then assessor Dr Gordon Hughes, advised them that he could only force Telstra to comply with their request if Alan and Graham agreed to switch to a more legalistic arbitration process.  Alan and Graham believed they had no alternative and so they signed for arbitration, not knowing that, in the two AUSTEL reports, the Government Regulator had already found that their claims were valid. Duped before the arbitration had even started.

The End Justifies the Means. This is an attitude which can excuse all of us of the most horrific conduct. It relieves us of the need to exercise discernment and in some instances we can convince ourselves (as AUSTEL appears to have done) that what we did was for the greater good. Tell those who are violated that the greater good has taken precedence over the welfare of their families and their business endeavours, and see how well AUSTEL’s argument is accepted – it won’t be; and particularly when viable alternatives could have been adopted, by the Government Regulator.

For instance, in the case of Graham Schorer, when AUSTEL withheld their draft findings regarding his complaints made against Telstra under section 342 of the Telecommunications Act 1991, AUSTEL breached their statutory obligation to Graham as well as misleading and deceiving the Senator Bob Collins and Senator Richard Alston during a Senate Estimates Committee hearing on 2 September 1993 i.e. (see immediately below)

In the covert AUSTEL draft reports related to Alan Smith and Graham Schorer, which AUSTEL provided to Telstra in March 1994, during the COT arbitrations (see [P-7] Exhibit (GS 462)), but concealed from the claimants and arbitrator, that AUSTEL did find Telstra had deliberately misled and deceived both claimants.  So why did the Government Regulator conceal this information from the arbitrator and the claimants?

It seems that Senator Alston’s letter to Mr Davey has answered the two questions raised by Alan above, i.e. (1) why did AUSTEL’s final report not state publicly that Alan’s phone problems were still ongoing and (2) why did that same report not declare specifically which COT cases Telstra had mislead and deceived?  If AUSTEL had included those findings in their formal Report  acknowledging Graham and Alan had been misled and deceived prior to arbitration, this would have immediately led Senator Alston to call for a Senate Select Committee investigation into these matters, on behalf of the then-opposition party.

It is therefore clear, that the formal AUSTEL COT Cases report that was used as evidence in the COT arbitrations was tainted, ‘got-at’ or ‘cleansed’ well before the arbitrator and the COT Cases received their copies.

Hansard records of a Senate Estimates Committee hearing on 2 September 1993 (GS 465) confirm AUSTEL’s Chairman Robin Davey advised various Senators including Senator Richard Alston that:

“We have legal advice which I am quite prepared to make available to you, Senator – I apologise that I have not got a copy with me at the moment – to the affect that, if we were to find misleading and deceptive conduct, as distinct from sheer incompetence, then we could direct Telecom to engage in an assessment process to assess the quantum. Having assessed the quantum, we do not have the power to enforce the quantum, but I am sure that at that point that would not be necessary. I think there would be such a moral persuasion at that point” (GS 465)

In the letter dated 28 October 1993 from Senator Richard Alston to AUSTEL’s Chairman Robin Davey (GS 466), he indicated (see below), that there was a strong possibility that the problems Graham raised in relation to his Flexitel equipment may well have been addressed by the TPC (now the ACCC) back in 1993, if only AUSTEL had admitted to the Committee and Senator Alston that Telstra HAD knowingly misled and deceived Graham, both before and throughout his Federal Court Action, particularly if other members of the then-hostile Senate (which was already demanding Telstra answer for their disgusting behaviour towards the COT claimants in general) noting in his letter to Robin Davey that:

“the Opposition would reserve the right to consider the establishment of a Senate Select Committee if AUSTEL’s report raised matters of serious concern regarding outstanding problems or if there is evidence to substantiate the persistent complaints made by COT case members, particularly Mr Schorer, of “misleading and deceptive conduct” on the part of Telecom”.

AUSTEL’s (Golden Messenger) draft findings

Armed with all the necessary information, then and only then, can a properly prepared report and supporting documentation be used as evidence in any court of law/arbitration.  If that can be done, then justice will be done.  It is now, however, quite clear that justice was NOT done in Mr Schorer’s case because the following points explain how AUSTEL’s March 1994 draft Golden Messenger report (see also Exhibit GS 450 and GS 453) proves that AUSTEL’s investigation into Mr Schorer’s complaints reached the conclusion that Telstra had knowingly misled and deceived Mr Schorer over the whole period of his claim but, even though they were the official decision makers when investigating Mr Schorer’s case, AUSTEL still concealed those findings from the arbitrator throughout Mr Schorer’s arbitration.

The following quotes have been taken from the AUSTEL Golden Messenger Draft Report:

Point 6

“The files made available by Telecom in response to AUSTEL’s direction of 12 August 1993 do not provide a comprehensive history of the problems reported, dealings with the customer or of testing undertaking. Of particular note is the limited number of, and information in, exchange files relating to the North Melbourne Exchange (and any other exchange having involvement with this case). provided by Telecom”.

Point 7

“The absence of a standard or systematic set of records in the files provided by Telecom not only precludes the construction of a comprehensive outline of the history of this case, but also provides little evidence to suggest that Telecom adopted a systematic and methodical approach to tracing and rectifying faults, or identifying and considering alternative options for service delivery whilst problems persisted over the eight year duration of this case”.

Point 15:

“The key issues identified in this documentation were

  • Golden Messenger claimed that it – suffered from unsatisfactory service caused by indentified network problems
  • Followed Telecom’s advice and purchase a Flexitel system which was subsequently found to not meet its operating requirements and that these problems caused business mosses”.

AUSTEL then notes:

  • “Telecom maintained that the network and the Flexile system were working satisfactory despite having internal information that there were problems with the network and that the Flexitel system did not meet Golden Messenger’s business needs”.

AUSTEL under the heading –

MISLEADING AND DECEPTIVE CONDUCT 

Point 20:

“Telecom records (file note of conversation with G Schorer on 1 February, 1988) indicate that Golden Messenger was reporting problems since mid 1986 and various file notes also indicate that during the period 1986-1988 frequent representations were being made by Golden Messenger to report continuing problems”.

Point 21:

“Telecom file notes also reveal that on 1 February 1988, Golden Messenger advised of concerns at network faults causing lost business”.

Point 22:

“Telecom records quite early in this case reveal that it was aware that network problems did exist with the North Melbourne exchange. Three such records are –

Telecom Minute of June 1986 from Network Investigations Unit, NSW, to Network

Investigations Section Victoria

As previously discussed, during network investigations in the Canberra area it was observed that congestion was being experienced to 03 codes and that this was a significant component of the Canberra congestion. In most instances the congestion (A3 + B4) signal was being returned from the terminating Melbourne Switching Centre which suggests that the congestion is in the Melbourne network.

The attached list indicates the Melbourne (03) codes fall into the above category and it would be appreciated if your Section could examine the codes and indicate whether they correspond to known congested routes in the Melbourne network.

A list of Melbourne 03 codes experienced congestion was attached to the minute and showed that 55.22% of total congestion was attributed to the North Melbourne exchange”.

Point 23

“The network service difficulties reported by Golden Messenger appear to have been compounded by the purchase and installation of a Telecom supplied and serviced PABX. The PABX, a Flexitel system, was purchased on the recommendation of Telecom and was installed in July 1987, Telecom records indicate that very soon after installation Golden Messenger reported problems with the system and the following documents reveal that Telecom was aware, early in the case of problems with the Flexitel –     

  • Telecom letter of 14 January 1988 from Regional Sales Manager to Golden Messenger which acknowledged some of the reported deficiencies of the system and suggested to overcome the non-compliance with the terms of contract.
  • Telecom letter of 3 February 1988 Manager, State Business Sales to Golden Messenger proposed two options to overcome the operational deficiencies of the Flexitel System –
  • Option1- by providing additional equipment and modification to the system
  • Option 2 – replace with a Phillipa D1200 PABX”.

AUSTEL

  • “Telecom letter of 10 March 1988 from Manager, State Business Sales advised Golden Messenger that Option 1 caused the system to be slowed to such an extent that it could not then cater for an expansion to cover the company’s administration section. Telecom suggested that another Flexitel system be installed and linked to the first system with tie lines. This was accepted by Golden Messenger and the additional system was installed on 9 and 10 April 1988.
  • Telecom minute of 30 March 1988 from Regional Business Sales Manager-North Melbourne Manager, State Business Sales states –

“That advice from Legal and Policy Headquarters indicate that Golden Messenger appeared to have a case against us and that we should negotiate a settlement to prevent legal action proceeding”.

AUSTEL

  • “This advice was also contained in Telecom minutes of 27 May 1988 on its investigation into Golden Messenger stated” –

“The major problem still appears to be the slow response time of the Flexitel. This combined with high call through put resulted in operators misusing the system resulting in adverse service to their customers.

AUSTEL

  • “Telecom Minute of 23 May 1988 from Commercial Engineering Section – Customer Terminals to State Business Sales – HQ advised of the following –

As you are aware we are having real problems with this system. We appear to have the speed up to what we hope is an acceptable level by the dodgy expedient of removing some of the DSS modules. This may or may not be acceptable to the customer (bless him) in the longer term.

The most pressing problem now is the intermittent failure of the station displays. The displays do not fail completely, remaining able to show “unobtainable” at the correct times as required, but nothing else. No CDR card is fitted. We intend to try and fit one but this may not be possible given the large size of the system”.     

Point 24

AUSTEL Commented on the above –

“Despite having internal advice that network problems were being experienced at the North Melbourne exchange and that there were problems with the Flexitel system, on 11 October 1988, Telecom advised Golden Messenger as follow” –

I refer to the Flexitel System ordered by Golden Messenger and the continuing complaints by Golden Messenger that deficiencies in the public switched telephone network have resulted in Golden Messenger suffering damages due to loss of business

As you are aware extensive investigations, reports and discussions, I confirm that Telecom cannot accept your allegations and claims. In Telecom’s view, all reasonable efforts to inquire into your complaints have been unable to substantiate the allegations and claims”.

AUSTEL

Point 25

“On 17 November 1989 Network Investigation Section issues the Golden Messenger – FINAL REPORT. Findings within this report related to both Flexile and network issues. Some of the key findings were –

  • Congestion existed on the IDN exit route from Footscray Node to North Melbourne due to IDN changes and traffic growth
  • Under dimensioned CL and PD individuals at Footscray Node were causing congestion
  • The response time of the Flexitel was excessive causing misoperation by the operators. Whilst the Flexitel was configured in accordance with design rules, it was the ‘sluggish’ response to station keystrokes that was its worst characteristic
  • The inability to meet the customers requirements for call queuing was also a weakness and had to be overcome by the appendage to the Flexitel main equipment of call sequences”.

AUSTEL

Point 26

“No record was found of Telecom advising Golden Messenger of the findings contained within the report. The findings of the report appear to confirm the views expressed by G Schorer, at the time that Golden Messenger was affected by exchange problems and network congestion”.   

Point 29

“On 19 June 1990, Golden Messenger wrote to telecom advising of continuing problems with the level of service and problems with the Flexitel system, and of business losses suffered as a result. The letter was Golden Messenger’s last attempt before litigation to obtain a solution to problems experienced with the Flexitel system. Golden Messenger was also seeking compensation for business losses”.

Point 30

“The following extracts from Telecom correspondence, which were prepared in response to the Golden Messenger letter of 19 June 1990, indicate a continuation of the situation where Telecom maintained that the Flexitel system and the network were operating satisfactory whilst internal information that problems did exist”.   

Telecom minute of 29 June 1990 from Telecom Business Service (North Victorian Region) to Corporate Secretary –

AUSTEL – ARROGANT AND BULLYING BEHAVIOUR

Point 37

“Findings under the previous section – Misleading and Deceptive Behaviour indicate that Telecom has maintained the position that the Flexitel system and the network were operating within acceptable standards despite having information, obtained from internal investigations and technical staff, that problems did exist and that these problems did impact on the level of service provided to Golden Messenger”.

AUSTEL – Customer Equipment 

Point 38

“The documentation reviewed indicates that Telecom has had access to information from internal technical and legal experts regarding the Flexitel system which confirmed claims made by Golden Messenger that problems were being experienced. Documentation reviewed indicates that Telecom did not only not share information available to it, but also provided advice which contradicted its own internal information, and in doing so took advantage of its privileged position of being the system supplier, technical expert and network service provider in dealing with Golden Messenger”.

AUTHORS NOTE (2)

It is most important to highlight Exhibits GS 3, 4, 5 and 6, because they confirm that, as early as September 1986, Telstra already knew there were a number of deficiencies with the Flexitel system but they still chose to sell and then install one of those faulty systems at Golden Messenger, ten months later, on 18th July 1987 (see GS 12, below).

It is also important to raise statements made in points 52 to 57 of the draft AUSTEL – Golden Messenger Report because they prove that Telstra misled the Minister in relation to the problems experienced by the members of COT.  For instance, point 52 states:

Inappropriate Briefings

“On 9 August the Minister for Telecommunications wrote to Telstra advising of serious complaints raised by customers known generally as COT (Casualties of Telecom)”.

And point 57 notes:

Comments

“Golden Messenger has advised that its decision to accept a settlement and not proceed with legal action was made on the basis that it was not in a position to fund the legal action in the Federal Court. It should be noted that for five years prior to the settlement, that is for the entire duration of the dispute period, Telecom maintained that the Flexitel System was satisfactory whilst internal correspondence from technical and legal staff acknowledged that –

  • The system did not meet Golden Messenger operational requirements (paragraphs 23, 24 and 25 refer
  • Golden Messenger was likely to be successful in establishing that Telecom engaged in misleading and deceptive behaviour (Legal Briefing Paper, dated 1 July 1992, prepared by Principal Legal Officer)”.

Page 14 

AUSTEL further draft findings on Golden Messenger (see Exhibit GS 453) notes:

“Telecom have maintained the position that network service was within acceptable standards despite having considerable information, obtained from internal investigations, that major problems did exist with the network and that these problems did impact  on the level of service provided to the customer”.

Page 23

AUSTEL’s further draft findings on Golden Messenger (see Exhibit GS 453) notes

“Telecom Minute of 30/3/88 states that advice from Legal and Policy Headquarters indicate that Golden Messenger appeared to have a case against us…and…the Australian Government Solicitor had advised Telecom that Golden Messenger is likely to be successful in establishing that Telecom engaged in misleading and deceptive conduct contrary to the Trade Practice Act and that consequence of lost calls or calls not getting through was likely to lead to an immediate loss of business in relation to that call and potential loss of future business from the customer”.

Exhibits GS 450 and GS 453 were not released to Graham until October 2008, fourteen years too late to be used in his arbitration.

It is again important to note at Exhibit AS 495 and Exhibit (GS 462) is a copy of transcripts of an official Commonwealth Ombudsman COT investigation in September 1994 record that AUSTEL admitted to providing Telstra with a copy of their draft findings in March 1994.  It is just as important to note also that the final AUSTEL COT Report of 13th April 1994 includes numerous points that favour Telstra, including the omission of their more adverse Flexitel findings, even though AUSTEL knew that the Telecommunications Act 1991, Section 342 states that:

“(2) After concluding an investigation under subsection 335 (3) AUSTEL must prepare and give to the Minister a report under this section.

(3) A report under this section must cover: (our emphasis)

   (a)  the conduct of the investigation concerned; and

   (b)  any findings that AUSTEL has made as a result of the investigation”.

It should therefore be noted, once again, that we contend that the Government Regulator did breach their statutory obligation to Graham by not reporting everything they uncovered during their official investigations into the complaints he raised with AUSTEL.