The Federal Court found yesterday that corporations trading as SoleNet and Sure Telecom (the Harrison Companies) engaged in unconscionable conduct in connection with the supply of telecommunications services.
The Court found that between 2013 and 2015, the Harrison Companies were restructured in part to avoid regulatory sanctions and unpaid debts to regulators. As part of this process, customers were transferred from one Harrison Company to another without their knowledge or informed consent, and were then subject to unjustified demands for payment of early termination or cancellation fees, when there was no legitimate contractual basis for the Harrison Company that was seeking the payment to demand payment.
The Court also found the sole director of the Harrison Companies, Mr James Lee Harrison, was involved in the unconscionable conduct. In making this finding, Justice Moshinsky stated “I do not think there is any doubt that Mr Harrison was well aware of each of the elements of the system of conduct or pattern of behaviour… He was aware that the transfers involved, at best, a lack of transparency or, at worst, trickery or deception, vis-à-vis customers.”
“This outcome sends a clear message to companies and directors that they cannot avoid their obligations under the Australian Consumer Law by corporate restructures which involve transferring customers without their consent,” ACCC Chairman Rod Sims said.
The Court also found that in the cases of four of the six customers who gave evidence in the proceeding, the Harrison Companies engaged in undue harassment in connection with the supply of services and payment for services.
The Court has ordered the parties to file submissions on relief including penalty by 10 February 2017.
Both the TIO and the ACMA assisted the ACCC in its investigation of Mr Harrison and the Harrison Companies.