Unisys loses RACV case

Unisys loses RACV case

IT services company Unisys has been successfully sued over a bungled imaging system implementation.

The Victorian Supreme Court has decided in favour of a former Unisys client, The Royal Automobile Club of Victoria (RACV), which made a claim against Unisys for misleading and deceptive conduct under the Trade Practices Act. The two parties will return to court this Friday to negotiate costs, interests and the exact damages the IT company will have to pay.

The Royal Automobile Club of Victoria took legal action against Unisys over a contract signed in December 1993, in which Unisys promised to deliver a document and workflow management system to replace RACV's paper-based claims system.

The club's requested an imaging system that could access online claims with an expected response time of two-to-four seconds. Unisys delivered the system in 1995, but RACV claimed it did not work - response times averaged anywhere between 20 and 40 seconds. Several attempts at re-engineering the system were attempted, but the system was still unable to meet RACV's technical requirements. The contract was terminated in 1996.

The only joy in the result for Unisys is that RACV reduced the original amount of damages it was seeking. While originally RACV was proposing damages of more than $9 million, a spokesperson for the company said this had been reduced to around $4 million during the course of the trial, as RAXV had decided there were some matters not worth pursuing. Unisys released a statement last Friday suggesting it felt vindicated as the Court rejected a significant proportion of the damages originally sought by RACV.

The statement also said Unisys is reviewing the judgement in detail and considering its options for an appeal. It will decide shortly whether or not it will take any further action.

The case brings about an interesting precedent for software developers and IT services firms which now run further risk of litigation if they fail to deliver on promises to clients. "The result clearly demonstrates that companies should not be scared to face up to the computer industry and say it's not good enough," said RACV chief legal counsel, Pearl Drier.

Bronwyn Thwaites, chief manager of public affairs for RACV, said many observers have suggested the case will set an interesting precedent. RACV's back-office systems are now managed by the Insurance Manufacturers of Australia, a joint venture between RACV and the NRMA.

RACV has faced its fair share of turmoil due to IT issues, and in the days following the Victorian Supreme Court win it has been plagued by yet another problem - the hacking of its Web site. Until early this morning, the site was replaced with a message reading: "Owned by L4m4: Everything backed up. Wanting only to highlight an open system. Regards, L4m4."

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