Determinations

TDR Case Note T003926 (2009)

Issue

Failure of contracted services, loss of business profits

Background

The customer, a small business, switched to internet services provided by the Scheme Member Provider (Provider) on 30 March 2009. The transfer did not occur as expected and the customer was left without services for the whole day. The provider advised that it did not have any technician available to deal with the problems. The customer therefore engaged its own IT contractor to restore services, and was charged $720.00. The customer sought reimbursement of those costs together with release from its contract with the provider at no cost, and compensation of $3995.00 being the cost associated with the inability of employed staff to work on the day in question.

The provider acknowledged that its sales representative had misunderstood the complexities involved in the service transfer, which had resulted in a failure to accurately inform the customer, and agreed to reimburse the customer $405.00 of the unexpected costs of $720.00 for the IT specialist to make the configuration changes required. However, the provider submitted that the customer’s claim for compensation for the costs of $3995.00 were for indirect losses were beyond the scope of the scheme’s jurisdiction. The provider made a goodwill offer of compensation equivalent to six months’ line charges and considered that this discharged it of any obligation under its Business Terms and Conditions for the failure of service.

Adjudicator’s decision

The adjudicator noted that the essential issues were whether there was a failure of contracted services, and the remedies for compensation, including the extent of the provider’s liability.

The adjudicator found that the provider failed to deliver the contracted services, failed to give the customer accurate information about the transfer, and was unable to provide the necessary technical assistance. This breached the service standards set out in the Customer Complaints Code (the Code). The adjudicator found that a written apology by the provider would be appropriate, and that the customer was also entitled to compensation. With regard to the compensation, clause 33.8(a) of the Code provides that the Scheme Agent cannot consider claims for compensation for “loss of profits or indirect loss”. The provider’s business terms and conditions also exclude compensation for “indirect, special or consequential loss or damage”. The adjudicator therefore found that the customer’s claim for compensation for loss of staff wages and incidental costs was excluded.

With regard to the claim for reimbursement of costs incurred as a result of the failure of the service, the provider’s business terms and conditions limited its liability to “the value of 3 months service used by the customer”. The adjudicator stated that the provider’s goodwill offer of compensation equivalent to six months’ line charges was a better result for the customer than the provider was contractually obliged to provide.

With regard to the claim for the IT specialist’s charge, the adjudicator found that the customer clearly suffered loss of services despite being advised that the transfer would be “seamless”. The provider was also unable to give technical assistance at the time. The unexpected costs incurred by the customer for the necessary reconfiguration was direct and therefore had to be reimbursed by the provider. The adjudicator noted that the provider had already reimbursed an amount of $405.00 to the customer.

Final outcome

The adjudicator concluded that: (1) the provider was to make a written apology to the customer with regard to the failure of the contracted service; (2) the customer’s claim regarding compensation for the cost of $3995.00 associated with the inability of employed staff to work was excluded from the scope of the TDR scheme; (3) the claim for reimbursement of costs incurred when the provider was unable to provide technical support was upheld and the provider was required to pay $720 (from which the already reimbursed amount of $405.00 was to be deducted; and (4) the provider was to provide the customer with compensation or credit equivalent to an average of three months’ costs of services.