ACCC v Halkalia Pty Ltd (No 3) [2017] FCA 522: Former Company Director Found Guilty of Contempt of Court

Tuesday 30 May 2017 @ 9.50 a.m. | Legal Research | Trade & Commerce

In the recent judgment of ACCC v Halkalia Pty Ltd (No 3) [2017] FCA 522 (17 May 2017), the Federal Court has sentenced a former company director of a parcel distribution business for “Heartlink” branded products, Laurence Hann, to five months imprisonment for failing to comply with court orders made against him in May 2012, following the latest action from the Australian Competition and Consumer Commission (the ACCC) for contempt of Court.

Background to the Judgment

In May 2012, the Federal Court found that Mr Hann had engaged in false, misleading or deceptive conduct, and been knowingly concerned in the conduct of three corporations that breached the Trade Practices Act 1974 (now the Competition and Consumer Act 2010 (Cth)). The Court found that, as a result of the conduct, consumers were misled about the profitability and earnings potential of the parcel distribution business opportunity as well as the overall viability of the business.

The ACCC filed proceedings for contempt on 14 December 2015 alleging that Mr Hann had breached these injunctions by being involved in a business selling household cleaning products, claiming that some of the money from the sale of those goods would be donated to charity and recruiting a person to sell and distribute products in connection with that business.

On 7 October 2016, Justice Tracey made orders by consent that Mr Hann was guilty of each contempt charge brought by the ACCC.

The Current Penalties

The Court imposed orders disqualifying Mr Hann from managing a corporation for 15 years, as well as injunctions preventing him for a period of 15 years from carrying on a business or supplying goods or services in connection with which:

  • persons are invited to invest money or perform work;
  • any claim is made that moneys or profits earned by the sale of goods are donated to charity; or
  • goods or services concerned are or include household cleaning products.

Tracey J found Mr Hann in contempt of court and ordered him to serve two weeks of the five-month sentence with the remainder suspended.  The court also ordered Mr Hann to pay the ACCC’s full costs.

His Honour said at [para 175], in relation to costs that:

“…Mr Hann’s misconduct was only brought to the Court’s attention because the ACCC devoted considerable resources to a long and detailed investigation and then prosecuted this application.”

Comment from the Sentencing Judge

In handing down his judgment, Tracey J stated at [para 25]:

“… The offending which Mr Hann acknowledges is … of a most serious character.”

His Honour also noted at [paras 169-170]:

“…The ACCC informed the Court that Mr Hann had accumulated a large number of criminal convictions in the Northern Territory, Western Australia, South Australia and Victoria between 1961 and 1990. These convictions are dated and can have little influence on the sentencing process in which I am now engaged … As already noted, the seriousness of Mr Hann’s conduct is not in dispute. That seriousness is compounded by the fact that his offending continued after he was served with the present application in December 2015.”

His Honour also restrained Ms Vicki Ann Lowe from engaging in the promotion of business activities or opportunities where representations are made as to the potential earnings of that business activity, where there are no reasonable grounds for such representations. This injunction was ordered by consent following the filing of a Statement of Agreed Facts in relation to the ACCC's case against Ms Lowe.

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Sources:

ACCC v Halkalia Pty Ltd (No 3) [2017] FCA 522 (17 May 2017)

Heartlink company director banned for 15 years and penalised $450,000 – findlaw.com.au

ACCC contempt action results in jail sentence for director – ACCC Release MR 72/17

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