The Australian Competition and Consumer Commission (ACCC) has started class action proceedings against Allphones Retail Pty Ltd and three individuals seeking damages on behalf of 74 Allphones franchisees.
The action was begun under the Trade Practices Act 1974 for alleged breaches of section 51 AC of the Act, which prohibits unconscionable conduct. It is based, in part, on existing ACCC Federal Court proceedings against three Allphone directors.
The ACCC alleges Allphones director and CO, Matthew Donnellan, director and COO, Tony Baker, and former national franchising manager, Ian Harkin, have been knowingly concerned – in or party to – the contravening conduct.
Under the class action, the ACCC alleges that Allphones received bonus payments from telecommunication networks which were not paid to franchisees in accordance with their franchise agreements; received rebates from mobile phone handset and other product suppliers which were not paid to franchisees in accordance with their franchise agreements; and made unilateral deductions from commission payments payable to franchisees which were not permitted by their franchise agreements.
Under the class action, the ACCC is seeking damages for losses sustained by the represented franchisees which the ACCC alleges flowed from this alleged unconscionable conduct.
In March 2008, the ACCC had began proceedings against Allphones Retail Pty Limited and others alleging contraventions of the Act. Allphones and the other respondents are defending those proceedings which are set down for hearing from March 23, 2010.
The ACCC began further proceedings in October 2008 against Allphones which resulted in Allphones giving interim undertakings to the court and the court ordering injunctions restraining Allphones from engaging in conduct in negotiations with its existing franchisees which the ACCC alleges contravened the Act.
Both these earlier proceedings include allegations of unconscionable conduct, contravention of an industry code, misleading conduct and misleading representations about certain business activities.
A directions hearing for the class action is set for September 8, 2009.
The ACCC has also instituted contempt of court proceedings against Allphones Retail for allegedly breaching orders made by Justice Foster in the Federal Court on October 9 2008.
The orders reflected the terms of two undertakings given by Allphones to the court which prohibits Allphones from withholding consent to the assignment of an Allphones franchise on the basis that the franchisee will not sign a deed releasing Allphones from liability (undertaking 8) and requires Allphones to give the ACCC 7 days’ written notice of its intention to withhold consent to the assignment of an Allphones franchise on the basis that the new franchisee must enter into a new franchise agreement (undertaking 9).
The ACCC claims Allphones breached undertaking 8 on one occasion and undertaking 9 on three occasions.
A directions hearing is set for August 21 2009.