(ACN 067 892 308) - [2001] FCA 355

FEDERAL COURT OF AUSTRALIA
Australian Communications Authority v Viper Communications Pty Ltd
(ACN 067 892 308) [2001] FCA 355
TELECOMMUNICATIONS – seeking pecuniary penalties in respect of contraventions of s 101(1) of the Telecommunications Act 1997 (Cth) – respondents failed to comply with statutory obligation to join the Telecommunications Industry Ombudsman Scheme (TIO Scheme) – failure to comply motivated by genuine but erroneous belief as to extent of statutory obligation – respondents joined TIO Scheme after a judgment setting out their statutory obligations – no quantifiable losses arising from their contraventions – no evidence of deterrent effect of pecuniary penalties – pecuniary penalties not appropriate.
Telecommunications (Consumer Protection and Service Standards) Act 1999 (Cth) ss 128-9
Telecommunications Act 1997 (Cth) ss 101-2, s 564, ss 569-72
AUSTRALIAN COMMUNICATIONS AUTHORITY v VIPER COMMUNICATIONS PTY LTD (ACN 067 892 308)
N 1451 of 1999
AUSTRALIAN COMMUNICATIONS AUTHORITY v ALBURY LOCAL INTERNET PTY LTD (ACN 069 269 432)
N 210 of 2000
MATHEWS J
5 APRIL 2001
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

N1451 OF 1999

BETWEEN:

AUSTRALIAN COMMUNICATIONS AUTHORITY
APPLICANT

AND:

VIPER COMMUNICATIONS PTY LIMITED
RESPONDENT

JUDGE:

MATHEWS J

DATE OF ORDER:

5 APRIL 2001

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:
1.I decline to order that the respondent pay pecuniary penalties to the Commonwealth as sought in the application.
2.I order the applicant to pay the respondent’s costs of the application for pecuniary penalties.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

N210 OF 2000

BETWEEN:

AUSTRALIAN COMMUNICATIONS AUTHORITY
APPLICANT

AND:

ALBURY LOCAL INTERNET PTY LIMITED
RESPONDENT

JUDGE:

MATHEWS

DATE OF ORDER:

5 APRIL 2001

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:
3.I decline to order that the respondent pay pecuniary penalties to the Commonwealth as sought in the application.
4.I order the applicant to pay the respondent’s costs of the application for pecuniary penalties.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

N 1451 OF 1999

BETWEEN:

AUSTRALIAN COMMUNICATIONS AUTHORITY
APPLICANT

AND:

VIPER COMMUNICATIONS PTY LIMITED
RESPONDENT

BETWEEN:

N210 OF 2000

AUSTRALIAN COMMUNICATIONS AUTHORITY
APPLICANT

AND:

ALBURY LOCAL INTERNET PTY LIMITED
RESPONDENT

JUDGE:

MATHEWS J

DATE:

5 APRIL 2001

PLACE:

SYDNEY

REASONS FOR JUDGMENT
BACKGROUND

The respondents are both internet service providers. As such they are “eligible carriage service providers” under the Telecommunications (Consumer Protection and Service Standards) Act 1999 (Cth) (“the CP Act”). Section 128 of the CP Act requires that all eligible carriage service providers must enter into a scheme providing for a Telecommunications Industry Ombudsman (“the TIO scheme”). Each of the respondents was requested by the applicant (“the ACA”) to join the TIO scheme but declined to do so in circumstances I shall describe shortly.
On 16 December 1999 the ACA commenced the present proceedings against Viper Communications Pty Ltd…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2001] FCA 355
Decision Date: 5 APRIL 2001

CaseChat Overview and Summary

In the matter of (ACN 067 892 308), the Australian Competition and Consumer Commission (ACCC) initiated proceedings against Viper, an internet service provider, for non-compliance with certain provisions of the Telecommunications Act. The dispute centred on Viper's failure to adhere to a remedial direction issued by the Australian Communications Authority (ACA) to join the Telecommunications Industry Ombudsman (TIO) scheme within a specified timeframe. The precarious financial state of Viper, which could be adversely impacted by any further liabilities, added urgency and significance to the proceedings.

The court was tasked with determining whether Viper had failed to comply with the legislative requirement to join the TIO scheme within the stipulated period and whether Viper's attempts to join the scheme were valid. The court also had to consider whether Viper's financial precariousness should be a mitigating factor in determining any pecuniary penalties. The central issue was whether Viper's applications to join the TIO scheme, submitted after the deadline and with alterations, were valid under the circumstances.

The court found that while Viper had not complied with the legislative requirement to join the TIO scheme within the required timeframe, the company's subsequent attempts to join were genuine and made in good faith. The court acknowledged that Viper's precarious financial situation could be a mitigating factor but ultimately declined to impose pecuniary penalties on Viper. The court reasoned that Viper's founder had acted in good faith, and the ACA had not acted promptly in informing Viper about the need for an amended application form. Consequently, the court ordered the ACA to bear the costs of the application for pecuniary penalties.

The court's final orders were to decline the imposition of pecuniary penalties on Viper and to direct the ACA to pay Viper's costs associated with the application for pecuniary penalties. This outcome reflected the court's consideration of Viper's financial vulnerability and the procedural missteps by the ACA.

Orders

Orders of the court

1. I decline to order that the respondent pay pecuniary penalties to the Commonwealth as sought in the application.

2. I order the applicant to pay the respondent’s costs of the application for pecuniary penalties.

3. I decline to order that the respondent pay pecuniary penalties to the Commonwealth as sought in the application.

4. I order the applicant to pay the respondent’s costs of the application for pecuniary penalties.

Background

Background to the litigation

Sub-sections 101(1) and 101(2) of the Telecommunications Act are specified in sub-section 101(3) to be civil penalty provisions.FACTUAL BACKGROUND – VIPER Viper was established as an internet service provider in 1996. Mark Russell was its founder and remains its sole director. In an affidavit prepared for these proceedings Mr Russell set out Viper’s present financial position. Without going into details, it is precarious. If Viper were to incur a further significant liability it would be, as Mr Russell describes it, “the last straw” which would probably lead to the winding up of the company. On 17 September 1999 a remedial direction under s 102(2) of the Telecommunications Act was sent by the ACA to Viper requiring it to enter into the TIO scheme within fourteen days of receipt of the direction. It was received on 21 September 1999. There was no response. On 16 December 1999 the ACA commenced the present proceedings. On 7 February 2000 and again on 4 May 2000, when the proceedings were pending, Viper forwarded an “application” to join the scheme. In each case the application form was altered so as to delete reference to the company TIO Limited. The form also had the words “under duress” inserted under Mr Russell’s signature. On 22 November 2000 I delivered my judgment in relation to the two preliminary questions which had been raised by the parties. In it I made findings that, first, it was a legislative requirement that each eligible service provider become a member of TIO Limited, and secondly, that the applications lodged by Viper on 4 May 2000 and Albury on 2 May 2000 were not valid applications to enter into the TIO scheme. On 28 November 2000 Mr Russell downloaded an application to join the TIO scheme from the TIO’s website. He completed the form that day and returned it to the TIO. As it transpired, on 16 November 2000 the Memorandum and Articles of Association of TIO Limited had been amended in a manner which affected the membership application form. However the form itself, as shown on the TIO’s website, had not yet been altered. Consequently, on 29 November 2000 and again on 19 December 2000, the TIO wrote to Viper requesting that an amended form be completed and returned. Mr Russell said that neither of these letters were received by Viper or himself, at least before 24 January 2001 when his barrister showed him an affidavit filed on behalf of the ACA annexing copies of these letters. The next day, 25 January 2001, Mr Russell said that he again visited the TIO’s website and downloaded an updated membership form. He completed the form on behalf of Viper and faxed it the TIO on the same day, 25 January 2001. The TIO had no record of receiving this form. The result was that, at the commencement of the hearing on pecuniary penalties, the ACA was under the impression that Viper had not sought valid membership of the TIO scheme. Mr Russell, on the other hand, was under the impression that a valid application had been sent on 25 January 2001. When the actual situation became apparent Mr Russell, on the day of the hearing, lodged a further application form on behalf of Viper. At that point Viper became a member of the TIO scheme.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

MATHEWS J

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Established by: MATHEWS J

Full text does not contain this section.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY		N1451 OF 1999
BETWEEN:	AUSTRALIAN COMMUNICATIONS AUTHORITY APPLICANT
AND:	VIPER COMMUNICATIONS PTY LIMITED RESPONDENT
JUDGE:	MATHEWS J
DATE OF ORDER:	5 APRIL 2001
WHERE MADE:	SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N210 OF 2000

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N 1451 OF 1999

JUDGE:	MATHEWS J
DATE:	5 APRIL 2001
PLACE:	SYDNEY