Court declares internet service provider acted unconscionably
The Federal Court of Australia has declared that Dataline.net.au Pty Ltd has engaged in unconscionable and misleading and deceptive conduct in connection with the supply of internet related services to small businesses and consumers throughout Australia.
The court also declared that Australis Internet Pty Ltd* and World Publishing Systems Pty Ltd engaged in misleading and deceptive conduct and that Mr John Russell, managing director of Dataline and Australis was knowingly concerned in the contraventions by all three companies. Former staff members of Dataline also consented to declarations that they were knowingly concerned in misleading and deceptive conduct by Dataline.
The business of Dataline (in liquidation) included the sale of wholesale internet provider services to small businesses, called Virtual Internet Service Providers (VISP), for resale by VISPs to their customers. Australis (in liquidation) was related to Dataline and was a VISP retailing internet services.
Justice Kiefel in Brisbane made the declarations in proceedings commenced by the Australian Competition and Consumer Commission. The declarations follow an application made by the ACCC during the proceedings to have the respondents' defences struck out for non-compliance with court ordered steps and to obtain judgment. The court deemed that the respondents made admissions based on the ACCC's Statement of Claim and declared that Dataline engaged in misleading and deceptive conduct in contravention of section 52 of the Trade Practices Act 1974 by representing that:
Dataline was entitled to make charges against customers credit card accounts when it had no authority or contractual basis for doing so
Dataline was entitled to make charges with respect to its customers' use of the internet-related services it provided, when the customers had ceased to access the services
customers could purchase unlimited access to Dataline's services, when Dataline had limited the ability of customers to access those services, and
Dataline would provide skilled technical support at all times when it did not have the intention of doing so.
The court also declared that Dataline engaged in unconscionable conduct in contravention of section 51AC of the Act by:
not permitting the VISPs to obtain legal advice before signing their initial legal contract with Dataline, and
threatening VISPs with disconnection of their internet service if they did not sign further agreements with Dataline.
The court also ordered that Mr Russell be restrained from engaging in resale price maintenance by requiring or encouraging retail providers of internet-related providers to sell services to consumers at a price less than a price specified by any business with which he is connected. Mr Russell was also ordered to pay a pecuniary penalty in respect of the resale price maintenance conduct which the court declared was engaged in by Dataline and Australis.
In addition, the court ordered that Mr Russell pay the ACCC's costs of the court proceedings.
