The Full Federal Court has today dismissed an appeal by Ultra Tune Australia Pty Ltd (Ultra Tune), upholding a decision of the Federal Court in March 2024 to impose $1.5 million in fines for four separate instances of contempt of court.
The contempt of court decision related to breaches of orders made by the Court in 2019 after earlier ACCC proceedings in relation to breaches of the Australian Consumer Law and the Franchising Code of Conduct (Franchising Code) by Ultra Tune, including its failure to implement a compliance program.
Ultra Tune appealed the decision on two grounds; first that the Court had no power to impose a punishment for contempt where no endorsement was included on the relevant orders as to the consequences of non-compliance with those orders and secondly as to how the fines were calculated.
In dismissing the appeal, the Full Federal Court held on the first ground that there was no error in the primary judge's construction of the relevant Federal Court rules relating to the endorsement. On the second ground the Full Federal Court held that "Ultra Tune has not established any overt error on the part of the primary judge in determining the fines for the contempts nor that they are otherwise manifestly excessive, taken alone or as a total penalty".
"We are pleased with the Full Court upholding this decision, which we consider a clear message that compliance with the Franchising Code is of utmost importance," ACCC Commissioner Liza Carver said.
"This is a serious matter because Ultra Tune had failed to comply with the requirements which are in place to protect franchisees even after judgments in earlier ACCC court action against it."
"We will continue to monitor the compliance by Ultra Tune and other franchisors, and take appropriate action if required," Ms Carver said.
The Court also awarded the ACCC its costs of the appeal.
Background
Ultra Tune is a car servicing franchisor with operations in every mainland state and territory and over 260 centres across Australia.
In 2017, the ACCC instituted proceedings against Ultra Tune in relation to alleged contraventions of the ACL and the Franchising Code. In January 2019, the Federal Court imposed total pecuniary penalties of $2.604 million against Ultra Tune (reduced to $2.014 million on appeal) for its contravening conduct.
The penalties related to Ultra Tune's:
- late production and dissemination (by over six months in some instances) of marketing fund statements and disclosure documents mandated by the Franchising Code; and
- treatment of a prospective franchisee, whom the court found Ultra Tune had misled.
In March 2019, the Court ordered Ultra Tune to implement a compliance program and made injunctions restraining Ultra Tune from contravening certain provisions of the ACL and the Franchising Code. The Full Federal Court rejected an appeal by Ultra Tune against this decision in September 2019.
In June 2022, the ACCC instituted proceedings alleging Ultra Tune was in contempt of court by failing to comply with the orders made in March 2019. In March 2024, the Federal Court fined Ultra Tune $1.5 million for contempt of Court. The company appealed this decision in late March.
