Federal Court fines publisher for wrongfully accepting payment for advertising

The Federal Court has imposed a fine of $5,000 on the director of Commercial and General Publications Pty Ltd, Mr Anthony Hassett, for contraventions of the Trade Practices Act 1974 after Australian Competition and Consumer Commission action.

The court found that in late 1999, CGP and Mr Hassett accepted payment from five small businesses in Tasmania for advertising in a proposed Returned Services League publication when there were reasonable grounds for believing that his company would not be able to supply the advertising.

The defendants were acquitted on charges of demanding payment for unsolicited advertising from eight small businesses without a reasonable basis.

Section 58 of the Act prohibits a corporation accepting payment for goods or services where at the time of accepting payment there are reasonable grounds of which the corporation is aware, or ought reasonably to be aware, for believing that it will not be able to supply the goods or services within a reasonable time. Section 64(2A) of the Act prohibits a corporation asserting a right to payment for unsolicited services unless there is a reasonable cause to believe that there is a right to payment.

The unsolicited advertising charges (Section 62(2A)) against the defendants concerned alleged unauthorised advertising appearing in the Tasmanian CWA and RSL annual magazines published by CGP. The CWA and RSL both advised the ACCC that they had received complaints from Tasmanian small businesses alleging receipt of payment demands for unauthorised advertising appearing in the CWA and RSL magazines published by CGP.

In setting the fine on Mr Hassett for the section 58(b) contraventions, Justice Heerey considered that the risk/reward calculation was very relevant for this kind of offence. The court noted that traders should not be encouraged to think that it is worthwhile to accept and retain payments for services which are not likely to be delivered because if the worst comes to the worst the penalty might be more than the payment.