Mr Arthur Spencer, the sole director of Contact Plus Group Pty Ltd (in liquidation), was on Tuesday fined $8,000 and ordered to pay the Australian Competition and Consumer Commission's legal costs on an indemnity basis after being found guilty of contempt of a previous Federal Court order.
The ACCC brought contempt proceedings against Mr Spencer alleging he had not complied with the orders made by Justice Weinberg in February 2006.
Relevantly, the orders required Mr Spencer to provide certain people with whom Contact Plus had dealt:
- with a copy of the court's orders, and
- with a disclosure document compliant with the requirements of the Franchising Code of Conduct;
no later than 22 February 2006.
The ACCC alleged Mr Spencer failed to comply with these orders by the due date.
When Mr Spencer purported to comply with the orders following this date, he initially sent an email to various former franchisees to which he attached a copy of the orders in the form of a PDF file which was password-protected. To get the password, the email recipient had to answer a series of questions asked by Mr Spencer, including their current trading name and telephone number by return email. Mr Spencer's email indicated he would telephone the recipient to "verify receipt of the orders".
The ACCC alleged provision of a copy document that could only be accessed by use of a password did not amount to provision of a copy of that document in compliance with the court's orders. The ACCC alleged that when some of the attached PDF files were opened the copy of the orders provided were incomplete, with a page of the orders and the statement of agreed facts missing. It was also alleged the disclosure document provided in the attached PDF file was deficient.
In handing down Tuesday's decision, Justice Young said: "the password was a device that Mr Spencer used to deflect the operation of the orders".
He found that Mr Spencer's "non-compliance was wilful and that he took deliberate steps to deflect and, to some extent, defeat the intended operation of the orders, while maintaining a veneer of compliance".
Justice Young did not find Mr Spencer guilty of contempt of court in relation to the alleged failure to provide a compliant disclosure document. Justice Young considered there were difficulties in interpreting the operative effect of this order.
In determining the amount of penalty his Honour observed that: "I consider the present case warrants a substantial penalty. There is an element in Mr Spencer's conduct that borders on defiance of the orders. He deliberately adopted a series of steps that were designed to deny the benefit of the court's orders to the intended recipients of the documents. In my view a penalty must be imposed that demonstrates to Mr Spencer, and to others, that the court's orders cannot be disobeyed with impunity".
Justice Young ordered Mr Spencer to provide a complete copy of the orders made by Justice Weinberg on 8 February 2006, including the attached agreed statement of facts, by 27 June 2006 to each person with whom Contact Plus has entered into agreements, similar in terms to those the subject of the substantive proceedings.
ACCC Chairman, Mr Graeme Samuel said that the case again demonstrated the ACCC would vigorously pursue parties who do not obey court orders and that the court will not lightly tolerate its orders being disobeyed.
"This case provided a clear restatement of the role of regulatory agencies such as the ACCC in respect of proceedings of this nature as the court recognised the ACCC's action was 'consistent with its charter to act in the public interest' and that it had been 'forced to take these extra steps to enforce its rights after they [had] already been adjudicated by the court'".