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Ali v Australian Competition and Consumer Commission

Ali v Australian Competition and Consumer Commission

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FEDERAL COURT OF AUSTRALIA
Ali v Australian Competition and Consumer Commission [2021] FCAFC 109

Appeal from:
Australian Competition and Consumer Commission v Geowash Pty Ltd (Subject to a Deed of Company Arrangement) (No 3) [2019] FCA 72

Australian Competition and Consumer Commission v Geowash Pty Ltd (Subject to a Deed of Company Arrangement) (No 4) [2020] FCA 23

Australian Competition and Consumer Commission v Geowash Pty Ltd (Subject to a Deed of Company Arrangement) (No 5) [2020] FCA 440

File number: WAD 35 of 2020

Judgment of: ALLSOP CJ, BESANKO AND PERRAM JJ

Date of judgment: 22 June 2021

Catchwords:
CONSUMER LAW – appeal from a decision of the primary judge that the appellants were knowingly concerned in contraventions of s 18 of the Australian Consumer Law – where representations made to prospective franchisees created the overall impression that franchisor intended to charge in a particular way – where overall impression was false and misleading as to the franchisor’s intentions as to the way it would charge –whether evidence of six franchisees could be extrapolated so as to find that representation was made to all prospective franchisees – appeal dismissed

CONSUMER LAW – appeal from a decision of the primary judge that the appellants were knowingly concerned in contraventions of s 21 of the Australian Consumer Law and contraventions of cl 6 of the Franchising Code of Conduct – where appellants were director and national franchising manager of company – whether company engaged in unconscionable conduct and did not act in good faith by its charging practices – where franchisees were charged in staged payments and told these payments would be for the set-up and fit-out of franchise – where payments were instead applied to meet general expenses of the company and pay commissions – whether evidence of six franchisees could be extrapolated to all prospective franchisees – whether primary judge could make findings of fact relied upon to find unconscionable conduct – whether a system of systematic dishonest conduct sufficient to establish unconscionability – whether finding of unconscionable conduct illogical – appeal dismissed

CONSUMER LAW – appeal from a decision of the primary judge that the appellants were liable to pecuniary penalties, injunctions, disqualification and redress – where penalties imposed exceeded single statutory maximum – whether appellants engaged in one system of conduct or a series of dealings with consumers – whether penalties were manifestly excessive – where primary judge ordered that a trust fund be created for consumer redress to be administered by an accountant under Court supervision – whether redress orders beyond power – whether quantum of funds to be contributed to redress fund arbitrary, inappropriate or manifestly excessive – whether disqualification orders were manifestly excessive – appeal dismissed

Legislation:
Competition and Consumer Act 2010 (Cth) ss 51ACB, 51ADB, 51AE

Competition and Consumer Act 2010 (Cth) Schedule 2 (Australian Consumer Law) ss 20–22, 29, 37, 224, 239–241, 243

Competition and Consumer (Industry Codes - Franchising) Regulation 2014 (Cth) Schedule 1 (Franchising Code of Conduct

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: [2021] FCAFC 109
Decision Date: 22 June 2021

CaseChat Overview and Summary

The case of Ali v Australian Competition and Consumer Commission involves the appellants, who are directors and managers of a company that operates a franchise business, challenging a decision by the primary judge. The primary judge found that the appellants were knowingly involved in contraventions of sections 18, 21 of the Australian Consumer Law, and clause 6 of the Franchising Code of Conduct. The dispute centres on the conduct of the appellants and the company in relation to prospective franchisees. The court had to determine whether the appellants were knowingly involved in misleading representations about the company’s charging practices and whether their conduct was unconscionable and lacked good faith.

The court considered whether the evidence provided by six franchisees could be generalised to all prospective franchisees, thereby establishing the misleading representations and unconscionable conduct. The appellants argued that the findings of fact made by the primary judge were illogical and not supported by the evidence. They also challenged the penalties imposed, including pecuniary penalties, injunctions, disqualification, and consumer redress, arguing that the penalties exceeded statutory limits and were excessive. The court had to examine if the appellants engaged in a single system of conduct or multiple dealings, and whether the orders for redress and disqualification were appropriate.

The court dismissed the appeal, finding that the primary judge's conclusions were supported by the evidence and were not illogical. The court upheld the findings that the appellants were knowingly involved in misleading conduct and unconscionable behaviour. Regarding the penalties, the court held that the penalties imposed were not manifestly excessive and that the primary judge had the power to order a trust fund for consumer redress. The court found that the primary judge's decisions were within the scope of the law and were appropriate given the evidence and circumstances of the case.

The orders of the court were that the appeal of each appellant be dismissed with costs. This decision was made in accordance with Rule 39.32 of the Federal Court Rules 2011, which governs the entry of orders in such cases.

Orders

Orders of the court

1. The appeal of each appellant be dismissed with costs.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.

Appeal from:	Australian Competition and Consumer Commission v Geowash Pty Ltd (Subject to a Deed of Company Arrangement) (No 3) [2019] FCA 72 Australian Competition and Consumer Commission v Geowash Pty Ltd (Subject to a Deed of Company Arrangement) (No 4) [2020] FCA 23 Australian Competition and Consumer Commission v Geowash Pty Ltd (Subject to a Deed of Company Arrangement) (No 5) [2020] FCA 440
File number:	WAD 35 of 2020
Judgment of:	ALLSOP CJ, BESANKO AND PERRAM JJ
Date of judgment:	22 June 2021
Catchwords:	CONSUMER LAW – appeal from a decision of the primary judge that the appellants were knowingly concerned in contraventions of s 18 of the Australian Consumer Law – where representations made to prospective franchisees created the overall impression that franchisor intended to charge in a particular way – where overall impression was false and misleading as to the franchisor’s intentions as to the way it would charge –whether evidence of six franchisees could be extrapolated so as to find that representation was made to all prospective franchisees – appeal dismissed CONSUMER LAW – appeal from a decision of the primary judge that the appellants were knowingly concerned in contraventions of s 21 of the Australian Consumer Law and contraventions of cl 6 of the Franchising Code of Conduct – where appellants were director and national franchising manager of company – whether company engaged in unconscionable conduct and did not act in good faith by its charging practices – where franchisees were charged in staged payments and told these payments would be for the set-up and fit-out of franchise – where payments were instead applied to meet general expenses of the company and pay commissions – whether evidence of six franchisees could be extrapolated to all prospective franchisees – whether primary judge could make findings of fact relied upon to find unconscionable conduct – whether a system of systematic dishonest conduct sufficient to establish unconscionability – whether finding of unconscionable conduct illogical – appeal dismissed CONSUMER LAW – appeal from a decision of the primary judge that the appellants were liable to pecuniary penalties, injunctions, disqualification and redress – where penalties imposed exceeded single statutory maximum – whether appellants engaged in one system of conduct or a series of dealings with consumers – whether penalties were manifestly excessive – where primary judge ordered that a trust fund be created for consumer redress to be administered by an accountant under Court supervision – whether redress orders beyond power – whether quantum of funds to be contributed to redress fund arbitrary, inappropriate or manifestly excessive – whether disqualification orders were manifestly excessive – appeal dismissed
Legislation:	Competition and Consumer Act 2010 (Cth) ss 51ACB, 51ADB, 51AE Competition and Consumer Act 2010 (Cth) Schedule 2 (Australian Consumer Law) ss 20–22, 29, 37, 224, 239–241, 243 Competition and Consumer (Industry Codes - Franchising) Regulation 2014 (Cth) Schedule 1 (Franchising Code of Conduct