Posted by Elizabeth Gore-Jones
on 4 March 2024
In a landmark decision, the Federal Court of Australia has imposed Ultra Tune Australia Pty Ltd (Ultra Tune), a prominent car servicing franchisor, with a staggering $1.5 million fine for contempt of court, marking the highest penalty ever meted out for such proceedings by the ACCC.
Ultra Tune's troubles began in 2019 when it was found guilty of breaching multiple provisions of the Australian Consumer Law and the Franchising Code of Conduct. Despite court orders mandating compliance with disclosure requirements and the implementation of a compliance program, Ultra Tune fell short on multiple occasions.
Among the breaches, Ultra Tune failed to update its disclosure documents and prepare marketing fund statements on time, with one instance of delay stretching nearly eight months. These actions reflect a pattern of non-compliance, according to Justice Bromwich, who remarked that Ultra Tune's corporate character showed insufficient concern for adhering to court orders.
ACCC Commissioner Liza Carver emphasized the importance of timely disclosure, stating, "It is vital that franchisors prepare marketing fund statements in the timeframe stipulated by the Franchising Code, so that franchisees receive this important information when it is of most use to them."
This latest fine underscores the significance of compliance with court orders. Despite previous penalties and enforcement actions, Ultra Tune's failure to improve its compliance led to this unprecedented contempt charge.
In addition to the fine, the Court awarded the ACCC its costs on an indemnity basis, highlighting the severity of Ultra Tune's contempt.
This case serves as a stark reminder of the consequences of flouting court orders and reinforces the importance of strict adherence to regulatory requirements in the franchising industry.
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