Australian Competition and Consumer Commission v South East Melbourne Cleaning Pty Ltd (in liq) (formerly known as Coverall Cleaning Concepts South East Melbourne Pty Ltd) (No 2) [2015] FCA 257

Australian Competition and Consumer Commission v South East Melbourne Cleaning Pty Ltd (in liq) (formerly known as Coverall Cleaning Concepts South East Melbourne Pty Ltd) (No 2) [2015] FCA 257

A pecuniary penalty of $500,000 was imposed on Coverall, reflecting six contraventions including four of s 37(2) and two of s 21 of the ACL, having regard to the seriousness and deliberateness of the conduct, the harm to franchisees, the need for general deterrence, the mitigating factors, and the principle that a penalty can still serve a deterrent function even if unlikely to be paid due to liquidation.

Jurisdiction
Australia
Judgment Date
23 March 2015
Procedural Posture
Civil / Penalty Hearing and Judgment
Outcome
Pecuniary penalty imposed on first respondent
Legal Topics
['false and Misleading Representations' 'unconscionable Conduct' 'franchising Code of Conduct' 'pecuniary Penalties' 'general Deterrence']
['trade and Commerce' 'consumer Law'] ['false and Misleading Representations' 'unconscionable Conduct' 'franchising Code of Conduct' 'pecuniary Penalties' 'general Deterrence']

Case Brief

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Procedural Posture

Civil / Penalty Hearing and Judgment

Legal Issues

  1. 1 ['What is the appropriate quantum of pecuniary penalty to impose on a company in liquidation for contraventions of the Australian Consumer Law including unconscionable conduct and false or misleading representations in the context of franchise agreements?' 'Should penalties be imposed where payment is unlikely and what is their deterrent value?']

Ratio Decidendi

A pecuniary penalty of $500,000 was imposed on Coverall, reflecting six contraventions including four of s 37(2) and two of s 21 of the ACL, having regard to the seriousness and deliberateness of the conduct, the harm to franchisees, the need for general deterrence, the mitigating factors, and the principle that a penalty can still serve a deterrent function even if unlikely to be paid due to liquidation.

Court Disposition

Pecuniary penalty imposed on first respondent

Orders

  • ['Coverall to pay the Commonwealth of Australia a pecuniary penalty of $500,000 under s 224 of the Australian Consumer Law.' '$250,000 penalty relating to contraventions towards Mr Eliaser: $150,000 for s 21 ACL, $50,000 each for two contraventions of s 37(2) ACL.' '$250,000 penalty relating to contraventions...