Tamara Hunter, Laura Kiss and Raesha Tamrakar explore the consequences of non-compliance with Court orders.
The recent decision of the Full Federal Court in Ultra Tune Australia Pty Ltd v ACCC is an important reminder that the ACCC and the Court takes non-compliance with Court orders seriously.
On 28 January 2025, Ultra Tune lost its appeal against a $1.5 million fine for four instances of contempt of Court.
The decision shows there are substantial risks associated with non-compliance with court orders and in particular, compliance programs. it is crucial that franchisors adhere to court orders and ensure that they implement an extensive compliance training program and monitor their business’ compliance.
Background to Ultra Tune v ACCC
- 2017 – The ACCC commended proceedings against Ultra Tune, an Australian automotive servicing and roadside asset franchise, for contraventions of the Australian Consumer Law (ACL) and the Franchising Code of Conduct (Code).
- January 2019 – Ultra Tune was fined $2.6 million for breaching the statutory obligation to act in good faith under the Code, and for breaching the ACL by making false or misleading representations in its dealings with prospective franchisees.
In addition to the pecuniary penalty, Ultra Tune was ordered to provide disclosure documents and marketing fund statements to franchisees in compliance with the Code, and to implement a compliance program to ensure no further contraventions of the ACL or Code (March 2019 Orders).
- June 2022 – The ACCC brought contempt of court proceedings against Ultra Tune alleging that they failed to comply with the March 2019 Orders.
- March 2024 – The Federal Court declared Ultra Tune guilty of contempt for these failings and criticised the franchisor for reflecting “a corporate character which was insufficiently concerned with, and with effecting, compliance, even when it came to court orders” of $1.5 million was imposed by the Court which was appealed by Ultra Tune.
- January 2025 – The Full Federal Court dismissed an appeal by Ultra Tune, upholding the March 2024 decision.
Appeal and decision
Ultra Tune had appealed the decision on two grounds:
- the Court could not impose a punishment for contempt of Court in circumstances where no endorsement is included on the relevant orders. Under Federal Court Rule 41.06, if an order requires a person to do, or not do, an act or thing, and the consequence of failing to comply may include punishment for contempt, the order must carry an endorsement to alert the person bound by the order to the potential penalty for non-compliance, and
- the calculation of the penalties for contempt were incorrect.
On the first ground, in addition to some reasoning regarding the application and interpretation of the relevant rules, the Full Federal Court found that Ultra Tune was not only aware of the terms of the March 2019 Orders and the need to comply with them, but also had ample opportunity to be made fully aware of the consequences of non-compliance including being on notice of the possibility of an application seeking orders that it was in contempt of Court.
On the second ground, the Full Federal Court found that Ultra Tune had not established any “overt error” in Justice Bromwich’s decision and rejected its claim that the fine was “manifestly excessive”. It was stated that the fine was not “manifestly excessive” given that “the evidence before the primary judge established that Ultra Tune was a substantial company with total income in the financial years ended 30 June 2020 and 30 June 2021 of $67.8 million and $72.8 million respectively and total profits in those periods of $7.7 million and $8.7 million respectively.”
Key takeaway
The decision serves as a timely reminder that the ACCC is actively monitor compliance with Court orders.
