Australian Competition and Consumer Commission v Ultra Tune Australia Pty Ltd (No 3)

Australian Competition and Consumer Commission v Ultra Tune Australia Pty Ltd (No 3) [2024] FCA 156 is a Federal Court contempt decision arising out of earlier franchise enforcement proceedings. Ultra Tune pleaded guilty to four contempt charges for breaching compliance orders made on 4 March 2019.

The admitted breaches involved a late update to a disclosure document, two late marketing fund statements and a failure to ensure quarterly compliance officer reporting to the board and/or senior management. The Court convicted Ultra Tune on all four charges, imposed total fines of $1.5 million and ordered indemnity costs on the ACCC's interlocutory application.

The commercial story starts with earlier ACCC proceedings against Ultra Tune as a franchisor in the motor vehicle repair and maintenance sector. The Court described Ultra Tune as operating a national network of about 200 franchises across New South Wales, Queensland, Victoria and Western Australia. In the earlier case, the Court found failures to comply with minimum franchisor obligations, including disclosure obligations and marketing fund statement obligations, as well as unlawful conduct involving a prospective franchisee.

After the original liability findings and penalties, the Court made declarations and compliance orders on 4 March 2019. Those orders were meant to prevent the same kinds of problems happening again. Relevantly, Ultra Tune was restrained for three years from contravening clauses 8(6), 15(1) and 16(1) of the Franchising Code. It was also required to establish, administer and comply with a compliance program aimed at ensuring compliance with the Franchising Code, the Competition and Consumer Act and the Australian Consumer Law.

The compliance program was not just a general instruction to behave better. It included a specific governance requirement that the compliance officer report quarterly to the board and/or senior management on the continuing effectiveness of the program. That detail matters because one of the later contempt charges was based on the failure to ensure those reports were made.

The 2024 contempt proceeding was therefore about repeated conduct after the Court had already intervened. Ultra Tune pleaded guilty to four charges. Three were timing failures under the Franchising Code. One was a governance failure under the compliance program. The Court's reasons make clear that the earlier case had already established the importance of these obligations, especially their role in franchise transparency, accountability and informed decision-making.

The central issue was not whether Ultra Tune had committed the underlying conduct. It had pleaded guilty to the four contempt charges. The Court therefore had to deal with admitted breaches of orders that had been made to prevent repetition of earlier franchise law contraventions.

The charges were tied directly to the 2019 orders. Charge 1 alleged breach of order 2 by failing to update the disclosure document for the financial year ending 30 June 2020 within four months after the end of that year, contrary to clause 8(6) of the Franchising Code. Charges 2 and 3 alleged breach of order 2 by failing to prepare annual financial statements detailing all marketing fund receipts and expenses for the 2018-2019 and 2019-2020 financial years within four months after the end of those years, contrary to clause 15(1) of the Franchising Code. Charge 4 alleged breach of order 6 by failing to ensure the compliance officer reported quarterly to the board and/or senior management on the continuing effectiveness of the compliance program between April and December 2021.

A further issue was Ultra Tune's argument that it should not be liable for punishment because the 2019 compliance orders did not have an endorsement of the kind required by rule 41.06 of the Federal Court Rules 2011. Justice Bromwich rejected that argument. The formal orders later included an order, made under rule 1.34, dispensing with compliance with rule 41.06 to the extent required.

The judgment also places the contempt charges in the context of the earlier appeal. The Full Court had reduced part of the earlier penalty and held that the multiple requirements in clause 15(1) amounted to a single contravention rather than separate contraventions for each requirement. But the timing obligations remained significant, and the contempt charges focused on repeated timing failures rather than the content issue that had been characterised on appeal as egregious inadvertence.

The Court declared that Ultra Tune was guilty of contempt on all four charges and convicted it on each charge. The formal orders identify the conduct for each charge in detail, including the late disclosure document update, the two late marketing fund statements and the failure to ensure quarterly compliance officer reporting.

The Court imposed a total fine of $1.5 million, to be paid into the Consolidated Revenue Fund within 60 days. The formal orders break that total down as $240,000 for charge 1, $300,000 for charge 2, $600,000 for charge 3 and $360,000 for charge 4. The Court also ordered Ultra Tune to pay the ACCC's costs of and incidental to the interlocutory application dated 28 June 2022 on an indemnity basis, as agreed or assessed.

There is an important correction note attached to the published materials. A table of corrections dated 6 March 2024 states that in paragraph 195 of the judgment the amount of $240,000 was amended to $360,000. The same correction table also records the insertion of order 8 dealing with rule 41.06. However, the formal orders themselves record the charge 1 fine as $240,000 and the charge 4 fine as $360,000, which is the combination that produces the stated total of $1.5 million. For that reason, anyone relying on the case should check the most recent version of both the reasons and the orders rather than lifting a single figure from one part of the published material.

The judgment's catchwords also indicate that the Court considered the appropriate scaling up of fines for conduct that would otherwise have been civil penalty contraventions. That helps explain why the penalties were substantial even though some of the underlying failures were timing failures measured in days or weeks rather than years.

The obligations in issue were not obscure. The judgment quotes earlier reasons explaining that a disclosure document is meant to give a prospective franchisee, or a current franchisee considering renewal, variation or extension, information material to running the business and information to help make a reasonably informed decision about the franchise. That is why a late update matters. If the document is not current when it should be, the statutory purpose is weakened.

The same is true of marketing fund statements. The Court referred to the requirement to prepare annual financial statements detailing receipts and expenses for marketing funds to which franchisees contribute. Those statements support transparency and accountability about how franchisee money is being used. In Ultra Tune's case, there were separate marketing funds for each state-based region, with New South Wales split into metropolitan and regional funds, making five marketing funds in total.

The internal reporting obligation was also central. The compliance program required the compliance officer to report quarterly to the board and/or senior management on the continuing effectiveness of the program. The contempt finding on charge 4 shows that a compliance program must operate in practice. It is not enough to have a written policy if the required reporting line to decision-makers is not actually functioning.

The judgment also refers to earlier Full Court observations that delay by external service providers does not provide an adequate explanation for these kinds of delays. The obligation remains the franchisor's. That is a practical warning for any business that relies on outsourced accountants, consultants, company secretarial support or compliance advisers. External help may assist with preparation, but it does not transfer legal responsibility.

If you run a franchise network, this case is best read as a governance decision as much as a franchise law decision. The Court was dealing with repeated failures in areas that had already been identified as compliance risks in earlier litigation. That means the real business issue was not just whether a document was late. It was whether the company had built systems strong enough to stop the same problem happening again after regulatory action and court orders.

A practical response starts with a dated compliance workflow around the end of each financial year. The judgment shows that the relevant trigger point for the disclosure document and the marketing fund statements was four months after the end of the financial year. Businesses should work backwards from that date and allow time for data collection, drafting, review, sign-off and any audit or distribution steps that may be required.

Board and senior management oversight should also be formalised. If your compliance program requires quarterly reporting, set those dates at the start of the year, assign responsibility for preparing the report, and keep records showing the report was actually provided and considered. If a deadline is at risk, the issue should be escalated before the breach occurs. A later explanation that the business was busy, waiting on advisers or dealing with internal delays is unlikely to carry much weight.

Even outside franchising, the broader message is clear. Once a business has been through enforcement action, courts expect evidence of ownership, systems, monitoring and escalation. Repeat-risk obligations should not sit in the legal team alone or with an external adviser alone. They need operational accountability and management attention.

The judgment was delivered on 1 March 2024. The published materials also include a table of corrections dated 6 March 2024. That correction table records three points: order 8 was inserted to dispense with compliance with rule 41.06 to the extent required, the heading above paragraph 26 was amended from 46.01 to 41.06, and paragraph 195 of the judgment was amended from $240,000 to $360,000.

Because the correction table affects the fine discussion and the procedural order about rule 41.06, it is important to check the latest version of the judgment and orders before relying on the case. The formal orders remain the clearest source for the operative outcome, including the declarations, convictions, total fine and costs order.

This page is based on the Federal Court judgment and orders in Australian Competition and Consumer Commission v Ultra Tune Australia Pty Ltd (No 3) [2024] FCA 156, together with the published correction table dated 6 March 2024. The material confirms the parties, the procedural posture, the four contempt charges, the convictions, the total fine, the indemnity costs order and the correction relating to rule 41.06 and paragraph 195.

Some detailed reasoning is not reproduced here in full. If you need to rely on the case for advice, litigation or a detailed legal submission, review the most recent published version of the reasons and orders directly.