Investigating a business loss claim
The issue
Jane Romano’s* business moved premises in October 2017 and contracted with Pearl Phones* to connect new landline and internet services.
The following February, when Pearl Phones had still not connected the services, Jane connected the business phone and internet services with another provider.
Pearl Phones offered Jane $2,000 as compensation for the time the business spent without services.
The investigation
Jane complained to the Telecommunications Industry Ombudsman. Jane said that based on profit and loss statements for the same period in the previous financial year, the business had lost $196,357 of revenue because of the connection problems. Jane wanted Pearl Phones to compensate her for this amount, plus a $14,000 accountant’s fee. Jane also gave us the profit and loss statements she was relying on for her claim.
After the complaint was referred to Pearl Phones, they increased their offer to $9,000, which Jane refused.
A Dispute Resolution Officer told Jane that if she and Pearl Phones could not agree, our office could only make a binding decision to the value of $50,000, or a recommendation to the value of $100,000.
Investigating a business loss claim The Dispute Resolution Officer also contacted Pearl Phones, who explained the reasons for offering $9,000. These included:
- Jane’s business call records from before and after the period without services showed the landline received very few incoming calls, indicating the business did not rely on the landline to generate revenue
- Jane’s mobile phone usage was the same during the disconnection period as it was before and after the period, indicating Jane conducted most of her business by mobile phone
- Jane had not asked Pearl Phones for interim internet solutions even though Pearl Phones had suggested this
- Based on the information Jane had supplied to Pearl Phones, they argued her business revenue had been decreasing year-on-year.
Pearl Phones gave the Dispute Resolution Officer call records and data to support its view.
The outcome
Jane said her reason for refusing Pearl Phones’ offer was because her business revenue was seasonal, so comparing the period without services to the months directly before and after did not reflect the contact the business would have received from potential customers. She also said the best way to determine the revenue seasonality was to compare profit and loss statements from previous financial years.
The Dispute Resolution Officer explained to Jane that to make an accurate assessment with this much money involved, she would need to provide:
- business activity statements and tax returns for the 2017/18, 2016/17, and 2015/16 financial years
- monthly profit and loss statements for the 2017/18 financial year.
At this point Jane told the Dispute Resolution Officer she would accept Pearl Phones’ offer of $9,000.
*Name of individuals, organisations and companies have been changed