Hospitals, Theatres among those to be compensated for missed fire protection services

14 December 1999
Customers of Tyco Australia Pty Ltd, trading as Wormald Fire Systems, will get compensation over the company's failure to carry out routine services of fire protection systems.

An Australian Competition and Consumer Commission investigation found the company, between 1990-98, failed to perform routine inspection, testing and maintenance of fire protection systems to the relevant Australian Standards.

The standards require regular inspection, testing and maintenance routines for fire sprinkler, alarm and hydrant systems that are critical to their reliability and performance.

"This extremely reprehensible conduct could have endangered lives and the property of its customers", ACCC Chairman, Professor Allan Fels, said today.

"It is particularly disturbing considering that Tyco's customers include the Princess Alexandra Hospital, Greater Union Theatres, Marist Brothers College and the Seventh Day Adventist Retirement Village".

"At the Princess Alexandra Hospital log books for the Main Acute Block revealed no entries for quarterly, annual and three-yearly services. Attendance records indicated that service staff had recorded insufficient time to perform weekly service procedures for the hydrant systems".

Testing of the Main Acute Block's hydrant systems revealed that there was no measurable flow of water to hydrants servicing floors from levels five to 9.

"In the event of fire, water may not have been available to these floors. These floors house the Hospital's Cardiac Care Unit, Burns Unit & Plastic Surgery, Critical Care, Transplant Unit, Intensive Care Unit and Operating Theatres.

"From at least 1990 until about September 1998, Tyco was only performing about half the contracted alarm routines and less than half of the annual sprinkler routines.

"At no stage did it employ sufficient staff to perform the contracts or have a system to check if routines were due or had been done. Tyco's Queensland management was aware there were insufficient staff to carry out the majority, let alone all, the work contracted, yet continued to renew existing contracts and enter new ones.

"Tyco also issued certificates of maintenance to building owners without knowing whether such routines had happened and knowing that less than half of its contracted work was being done. Further, Tyco billed its customers without knowing whether the work was being done and accepted payments in advance knowing it was not going to perform all contracted work.

"In doing so, the ACCC believes that Tyco breached parts of the Trade Practices Act 1974, which prohibits misleading and/or deceptive conduct, false representations regarding the standard or quality of services provided, and accepting payment without intending or being able to supply goods or services, respectively. Tyco admitted the conduct and cooperated with the ACCC to rectify the concerns".

Justice Drummond of the Federal Court ordered three-year injunctions preventing Tyco from making certain representations about its services and from accepting payment for services it does not intend or have the capacity to supply. Tyco has also provided court enforceable undertakings to the Commission requiring it to: write to customers identified as not having received contracted services and offer compensation; place advertisements in the Courier Mail to alert previous customers to potential missed services; conduct an internal review to identify the causes of the subject contraventions of the Act; and upgrade its trade practices compliance program.

"The ACCC acknowledges the considerable cooperation Tyco has provided in addressing this matter and the regret it has expressed for its conduct", Professor Fels said. "However, it has engaged in conduct that was a blatant and troubling contravention of the Act.

"Thankfully, the only likely consequences of its conduct now are that its customers will be credited or refunded for past services not performed, and that future services will be performed as expected. Once Tyco was made aware of the ACCC concerns, it took steps to remedy the conduct and has assured the ACCC that it now properly undertakes all fire protection system services".

The ACCC believes some other fire protection companies were involved in similar conduct and is continuing with its investigations.

Tyco was also a respondent to the ACCC proceedings considered by the Court today concerning anti-competitive price fixing and market sharing agreements between fire protection companies for the installation of fire sprinkler and alarm systems.
Release number: 
MR 244/99
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