Misleading and Deceptive Conduct

Please note:

justicecommand.com is a work in progress: last edited April 2018

STOP PRESS

Further Damning evidence shows see Open Letter File No/35 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.

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.