The Federal Court has again found Neal Arthur Lyster and Helen Therese Glover guilty of contempt and issued warrants of committal for a prison term of one month, suspended on condition that they comply with other orders.
The warrants follow an Australian Competition and Consumer Commission application to bring contempt proceedings against Purple Harmony Plates Pty Ltd and its directors for failure to obey court orders and pay fines previously imposed.
The suspension of the term of imprisonment is conditional upon Mr Lyster and Ms Glover taking all steps necessary to effect a transfer of the domain name purple-plates.com to the ACCC for the purpose of placing a consumer notice on that site. The suspension is also conditional upon them not being involved in any further publication of representations previously found to be misleading and deceptive and in contravention of the Trade Practices Act 1974.
Justice Goldberg rejected submissions from Mr Lyster that previous decisions of the court were null and void.
Justice Goldberg said: "Mr Lyster is labouring under a delusion that he is the head of a non-existent state and that his conduct is beyond the reach of the laws of Australia. Mr Lyster should realise he is quite wrong in this respect".
There were clear findings of the Federal Court on this issue that had not been the subject of further appeal and, even if such an appeal had been filed, Justice Goldberg regarded such an application as having no prospects of success.
Unlike Mr Lyster, Ms Glover now accepted the authority of the Federal Court and that her actions were in contempt of earlier orders. While she apologised unreservedly for her actions, she has belatedly apologised for her earlier attitude.
Previously, the Federal Court imposed a $20,000 fine on Purple Harmony Plates Pty Ltd and $10,000 fines on the company directors, Mr Lyster and Ms Glover. The Federal Court imposed the fines because the respondents failed to implement court orders following a decision last year that they were in breach of the Trade Practices Act 1974. That earlier decision related to the making of unsubstantiated health and other claims for products promoted on the Internet.
The misleading claims included that the Purple Harmony Plates:
- protected against electromagnetic radiation from computers, televisions, mobile telephones etc
- energised water and freed it from odour and chlorine
- lowered body stress and fatigue levels
- grouped together heavy metals and other impurities [in water] into larger molecules so that they could not be absorbed by the body
- helped strengthen the immune system
- increased general health
- accelerated healing
- reduced less severe aches and pains or niggly coughs and colds
- improve plant growth
- ionised car fuel to allow a more complete fuel burn.
The original Federal Court orders included a direction to publish a corrective statement on its website within 14 days. The corrective statement should have been displayed immediately upon accessing the website's homepage and order form.
The latest orders of the Federal Court include orders to transfer the domain name purple-plates.com to the ACCC for the purpose of placing a corrective notice on the website.
In his earlier judgment, Justice Goldberg said he considered the case appropriate for corrective advertising because of the dubious health claims and such orders were in the public interest "for the purpose of enhancing the awareness of persons who had been exposed to the representations made in relation to the products marketed, offered for sale and sold by the company".
Justice Goldberg was satisfied that orders of this nature were appropriate in all the circumstances and within the power of the Federal Court even though the domain name is registered in the United States.
The ACCC sought the cooperation of the US Federal Trade Commission and led evidence at the trial of this matter on the operation of the Domain Name System in the US.
"This is a good example of the ACCC cooperating with its partners in the International Marketing Supervision Network to achieve effective outcomes on e-commerce matters involving cross jurisdictional issues", ACCC Chairman, Professor Alan Fels, said. "The ACCC holds the presidency of the IMSN for 2002 – 2003. The IMSN is a consumer protection enforcement network of agencies from more than 30 countries world-wide.
"The judgment also demonstrates that the ACCC is serious about its legal actions. It relies on parties to obey court orders and when they do not, it will vigorously pursue the matter. This decision again sends a very strong message to the community that the courts will not tolerate their orders being ignored.
"Enforcement of the law is a high priority as consumers must be fully and truthfully informed", Professor Allan Fels said. "Businesses cannot hide behind the Internet and use it as an excuse to ignore obligations arising under the Trade Practices Act. Irrespective of the medium, conduct in trade or commerce in Australia is subject to the Act and the jurisdiction of the Federal Court".
See also
Professor Allan Fels, Chairman, ACCC, (03) 9290 1812 or pager (02) 6285 6170
Mr Sitesh Bhojani, Commissioner, (02) 6243 1132
Ms Lin Enright, Director, Public Relations, (02) 6243 1108 or (0414) 613 520
MR 302/02
December 2002