This week’s Federal Court decision against Adepto Publications Pty Ltd (Adepto) has reinforced the serious penalties that may be imposed on companies, directors and managers for misleading or deceptive conduct.
On 26 March 2013, the Federal Court found that Adepto had engaged in misleading and deceptive conduct described as “blatant and knowingly deceitful”. The conduct involved calling business owners and misleading them into believing they had agreed to purchase advertising space in a number of ‘publications’. Adepto then sought to force the business to make a payment for these false advertising agreements. Adepto also falsely represented that it had a number of affiliations with charities and misled the businesses as to the distribution and readership of those ‘publications’.
The Court imposed the following penalties on:
- Adepto: $500,000.
- Craig Mitchell (sole owner and director): $150,000.
- Danielle McKay (office manager): $100,000.
Financial penalties were imposed on Mr Mitchell and Ms McKay as they were both parties to and had knowledge of Adepto’s misleading and deceptive conduct during the relevant period. They knew that Adepto had no right to demand payment and that the representations made were false. Injunctions were also imposed, which restrained the above parties from engaging in any further acts linked to the Adepto business model.
This case is a resounding reminder of the significant consequences that may arise from engaging in misleading or deceptive business practices. Business owners and managers must remember that they may be found personally liable and may face pecuniary penalties if they are found to have knowingly engaged in such conduct.
Authors: Kim de Kock and Christopher Murphy