Federal Court of Australia

Australian Competition and Consumer Commission v Beacon Products Pty Limited (in liq) [2025] FCA 426

ORDERS

THE COURT ORDERS THAT:

Leave to commence against Beacon and Zandox

1.    Pursuant to s 500(2) of the Corporations Act 2001 (Cth) (Corporations Act), leave be granted to the applicant (ACCC) nunc pro tunc to commence proceedings against the first respondent (Beacon).

2.    The ACCC must not enforce any relief granted against Beacon in these proceedings without the prior leave of the Court.

3.    Pursuant to s 500(2) of the Corporations Act, leave be granted to the ACCC nunc pro tunc to commence proceedings against the second respondent (Zandox).

4.    The ACCC must not enforce any relief granted against Zandox in these proceedings without the prior leave of the Court.

Suppression and non-disclosure

5.    Pursuant to s 37AF(1)(b) of the Federal Court of Australia Act 1976 (Cth) (FCA Act), there be no disclosure, by publication or otherwise, of information that will reveal, or is likely to reveal the identity and personal information of consumers and businesses named in the confidential statement of claim dated 28 March 2025 (Confidential Statement of Claim) including their names, addresses, email addresses, employers or place of work, on the grounds that this order is necessary to prevent prejudice to the proper administration of justice under s 37AG(1)(a) of the FCA Act.

6.    Order 5 of these orders does not prevent disclosures to and between the following authorised persons:

(a)    Judges of this Court;

(b)    necessary Court staff (including transcription service providers);

(c)    the parties;

(d)    legal representatives of the parties instructed in these proceedings;

(e)    witnesses or proposed witnesses in these proceedings;

(f)    Commonwealth officers acting in the course of their duties; and

(g)    judicial officers and necessary staff of any court hearing an appeal from any decision made in the course of this proceeding.

7.    No person with the exception of those persons listed in Order 6 of these orders be permitted to access the Confidential Statement of Claim on the Court file until further order of the Court.

8.    Order 5 and Order 7 operate for a period of two years or until further order of the Court.

Interlocutory application

9.    Service of the ACCC’s interlocutory application dated 17 April 2025 (Interlocutory Application) be dispensed with.

10.    The Interlocutory Application be returnable instanter.

Substituted Service

11.    Pursuant to r 10.24(a) and (c), the originating application dated 28 March 2025 and the statement of claim dated 28 March 2025 (together, the Originating Documents) are to be served on, or otherwise brought to the attention of, the third respondent (Mr Warren Jason Skry)

(a)    by sending them by email to skry.warren@gmail.com and hello@coolabahhft.com marked for his attention;

(b)    by sending them by registered post to 2428 Emmaville Road, Reddestone NSW 2370 marked for his attention;

(c)    after the communications in (a) and (b) have been sent, by the ACCC’s lawyers:

(i)    sending a text message with a message in the form annexed to these Orders and marked “Annexure A”;

(ii)    sending a message using the Facebook Messenger service to ‘Warren Skry’ with a message in the form of Annexure A.

12.    Pursuant to r 10.24(c), the Originating Documents are taken to have been served on Mr Warren Jason Skry at the end of the seventh business day after the documents were sent pursuant to Order 11(b) of these orders.

Timetabling orders

13.    Any defences to the statement of claim are to be filed and served by 4.00 pm on Tuesday, 10 June 2025.

14.    This matter be listed for a further case management hearing at 9.30 am on Friday, 13 June 2025.

Other orders

15.    The costs of the Interlocutory Application be costs in the cause.

ANNEXURE A

[The order entered is available on the Commonwealth Courts Portal, which attaches Annexure A].

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

(REVISED FROM THE TRANSCRIPT)

THE COURT:

A.     INTRODUCTION

1    The applicant, the Australian Competition and Consumer Commission (ACCC) seeks interlocutory orders for (a) leave to proceed against the first respondent and second respondent in liquidation, (b) suppression and non-disclosure orders over material included in the statement of claim, and (c) orders for deemed service, or in the alternative, substituted service, of the originating application and statement of claim upon the third respondent, Warren Skry.

2    The order for leave to commence proceedings against the first respondent and second respondent, Beacon Products Pty Limited (in liq) (ACN 616 146 555) (Beacon) and Zandox Group Pty Limited (in liq) (ACN 663 746 101) (Zandox) respectively, is sought nunc pro tunc. The ACCC relies on the affidavit of Andrew John Christopher sworn on 28 March 2025 and Exhibit AJC-1 in support of that application.

3    The suppression and non-disclosure orders are sought pursuant to s 37AF(1)(b) of the Federal Court of Australia Act 1976 (Cth) (FCA Act) over information that will reveal, or is likely to reveal, the identity and personal information of consumers and businesses named in the confidential statement of claim filed on 28 March 2025, including their names, addresses, email addresses, employers or place of work, all of which have been redacted in an alternate version of the statement of claim filed with the Court.

4    The orders sought for deemed service, and in the alternative, substituted service of the originating application and statement of claim upon Mr Skry are sought pursuant to r 10.23 and r 10.24 of the Federal Court Rules 2011 (Cth) (Rules). The ACCC relies on the affidavit of Joseph Sam Scarcella affirmed on 17 April 2025 and the affidavit of Shane Edward Blackman affirmed on 14 April 2025 in support of those applications.

B.     Background

5    These proceedings are directed at unsolicited sales of printer cartridges and cleaning products that the ACCC contends were made by Beacon and Zandox to small businesses and non-profit organisations. The ACCC alleges that the particular sales systems and techniques used by Beacon and Zandox in their dealings with small businesses during the period October 2020 to April 2023 constituted unconscionable conduct and involved misleading or deceptive conduct in contravention of s 18, s 21 and s 29 of the Australian Consumer Law (ACL) in Sch 2 to the Competition and Consumer Act 2010 (Cth). The ACCC alleges that at all material times Mr Skry was a director of Beacon and a shadow or de facto director of Zandox.

6    The ACCC seeks declarations that Beacon and Zandox engaged in misleading or deceptive conduct, made false or misleading representations, and engaged in unconscionable conduct, and that Mr Skry was involved in each of Beacon’s and Zandox’s unconscionable conduct contraventions. The ACCC seeks the imposition of pecuniary penalties upon all respondents, as well as a disqualification order and injunction with respect to Mr Skry, together with other consequential orders.

C.     LEAVE TO PROCEED

7    On 20 April 2023, each of Beacon and Zandox was placed into liquidation by way of a creditors’ voluntary winding up. The ACCC therefore requires leave to proceed against them pursuant to s 500(2) of the Corporations Act 2001 (Cth) (Corporations Act).

8    The applicable principles for leave to proceed against companies in liquidation under s 500(2) of the Corporations Act and related provisions are well-settled. The power to grant leave is discretionary, each application must be approached on its own particular facts and leave may be granted nunc pro tunc: J&J Richards Super Pty Ltd as trustee for the J&J Richards Superannuation Fund v Linchpin Capital Group Ltd (in liq) [2020] FCA 1772 at [8]-[9] (Derrington J).

9    The public interest has been held to be an important factor in the context of regulatory proceedings. Even if a company is in liquidation, it may still be appropriate to order that it pay penalties as a measure of the Court’s disapproval of the contraventions established and as a measure of the seriousness in which the Court regards them, including for the purposes of general deterrence: Australian Competition and Consumer Commission v SIP Australia Pty Ltd [2003] FCA 336 at [59] (Goldberg J). There is a significant public interest in declarations of contravening conduct and imposition of penalties being on the public record in aid of general deterrence, which is not defeated by the fact that the company is in liquidation and may be unable to pay any penalties imposed: Secretary, Dept of Health and Aging v Prime Nature Prize Pty Ltd (in liq) [2010] FCA 597 at [22]-[23] (Stone J) and Australian Competition and Consumer Commission v Australian Institute of Professional Education Pty Ltd (in liq) [2017] FCA 521 at [26] (Bromwich J).

10    Robyn Duggan and David Kennedy have been appointed as joint liquidators of both Beacon and Zandox. Ms Duggan has indicated that the liquidators would not oppose the ACCC’s application for leave to commence proceedings but has requested that the ACCC postpone any potential proceeding due to her concern that any action taken by the ACCC to seek penalties against Mr Skry will likely impact any potential pool of funds that may be available to reach a settlement in relation to any successful claim by the liquidators for the benefit of creditors.

11    As submitted by the ACCC, I am satisfied that the Court should exercise its discretion to grant leave to the ACCC to proceed against Beacon and Zandox for the following reasons.

12    First, I accept that the claims made against Beacon and Zandox are serious in nature, and there is a serious question to be tried in the proceedings. The allegations made by the ACCC concern unconscionable conduct and false or misleading representations made by Beacon and Zandox that consumers had (a) agreed to acquire printing cartridges and cleaning chemicals from them and on an ongoing basis, (b) did not have a right to terminate agreements entered into for an ongoing supply of goods from Beacon and Zandox, and (c) did not have a right to return and therefore be relieved of the liability of payment for the printing cartridges and cleaning chemicals supplied by Beacon and Zandox.

13    Second, I accept that the relief sought is relevant to the promotion of general deterrence, as well as the protection of consumers in accordance with the ACCC’s statutory regulatory functions. The ACCC is a regulator with an interest in ensuring compliance with, and accountability for, contraventions of the ACL, rather than an ordinary creditor. Moreover, the relief claimed by the ACCC cannot be claimed by way of a proof of debt.

14    Third, the commencement of these proceedings against Beacon and Zandox would not give the ACCC an advantage over other creditors. As a condition of the grant of leave pursuant to s 500(2) of the Corporations Act, the ACCC agrees not to enforce any relief granted against Beacon and Zandox in these proceedings without the prior leave of the Court. There is no likely prejudice to creditors if the Court grants leave to the ACCC to proceed against Beacon and Zandox, given that the liquidator does not intend to take an active part in the proceeding.

15    The concerns raised by Ms Duggan set out above ultimately do not affect the consideration as to whether leave should be granted to proceed against Beacon and Zandox. The issue raised by Ms Duggan is effectively that in the event that a pecuniary penalty order is obtained against Mr Skry, the funds that might be available to creditors if any action or proceeding is successfully brought by the liquidators against Mr Skry, may be reduced.

16    The question of whether priority should be given to the enforcement of a pecuniary penalty or the recovery that might be obtained by creditors in proceedings commenced by a liquidator on behalf of a company against a former director of an insolvent company, is not a matter that is relevant to the question of whether leave should be granted to commence proceedings against a company in liquidation.

17    The question of the impact on creditors resulting from any enforcement of a pecuniary penalty is a matter that is generally and appropriately dealt with at the time of any potential enforcement by the ACCC of the pecuniary penalty order. It is premature to consider that matter at this stage.

18    Fourth, there is no suggestion of any multiplicity of other actions.

D.     ORDERS FOR DEEMED OR SUBSTITUTED SERVICE

19    On 9 April 2025, after unsuccessfully attempting personal service upon Mr Skry, a process server, Mr Blackman, left the originating application and copies of both the unredacted and redacted statement of claim (together with other documents) (Originating Documents) in the letterbox of a rural property in Reddestone, New South Wales (Reddestone Property).

20    Mr Skry did not respond to voice or text messages left by Mr Blackman subsequently informing him that he was attempting to serve documents upon him.

21    I am not satisfied that leaving the Originating Documents at the Reddestone Property provides a sufficient evidentiary basis to make the finding sought by the ACCC under r 10.23 of the Rules, namely that the originating application and statement of claim should be taken to have been served on Mr Skry on 9 April 2025. Mr Skry no longer owns the Reddestone Property. The company of which Mr Skry is the sole director and shareholder, Coolabah Hunting and Fishing Tours Pty Ltd (Coolabah Hunting and Fishing Tours), is the current lessee of the Reddestone Property, and this is inconclusive as to whether the Originating Documents have been brought to his attention. Nor does the statement made to Mr Blackman by a male in his late twenties who identified himself as “Sam” when Mr Blackman attempted personal service on 2 April 2025, to the effect that “Warren was not at home and that he was away for approximately one week” provide a sufficient evidentiary foundation to conclude that Mr Skry’s permanent residence remains the Reddestone Property.

22    I am satisfied, however, that it is not practicable to serve Mr Skry personally, as required by the Rules. While inconvenience is not sufficient for the purposes of r 10.24, it is not necessary for an applicant to establish that it is impossible or futile to effect personal service before an order for substituted service can be made: Commissioner of Taxation v Zeitouni [2013] FCA 1011 at [66]-[71] (Katzmann J).

23    In the alternative to an order for deemed service, the ACCC seeks an order pursuant to r 10.24 of the Rules that the Originating Documents be served on Mr Skry by emailing them to his personal email address, an email address belonging to Coolabah Hunting and Fishing Tours, and sending them by registered post to the Reddestone Property’s address. I observe, as submitted by the ACCC, that if Mr Skry has an arrangement whereby mail is held for him at a local post office, the third method of substituted service would enhance the prospects of the documents being brought to his attention.

24    The order sought by the ACCC would also require the ACCC to take steps to bring the Originating Documents to Mr Skry’s attention by sending a text message to him and a message to a Facebook profile in his name informing him that the Originating Documents have been sent to him by the various means set out above. Mr Scarcella gives evidence that ACCC officers have previously successfully contacted Mr Skry in October 2024 on the mobile phone number set out in the proposed order and received emails from him using the email address specified in the order. He also gives evidence that a person with the Facebook profile name “Warren Skry” offered a bull for sale in the Glen Innes area. Given the proximity of Glen Innes to Reddestone, I infer there is a reasonable possibility that that profile is used by Mr Skry.

25    For these reasons, in my view, the steps proposed by the ACCC will, in all reasonable probability, if not certainty, bring the documents to the attention of Mr Skry, as is required, and the orders for substituted service sought by the ACCC should be made: Royal Express Pty Ltd (receivers and managers appointed) (administrator appointed) v Huang (No 3) [2021] FCA 611 at [12] (O’Bryan J).

E.     NON-PUBLICATION AND SUPPRESSION ORDERS

26    The non-publication and suppression orders sought by the ACCC seeks to restrict the publication or other disclosure of information tending to reveal the identity of consumers and businesses named in the statement of claim, being information that relates to a proceeding before the Court and is a document filed with the Court. The Court therefore has jurisdiction to make the order under s 37AF(1)(b) of the FCA Act if it is satisfied that it is necessary to make the order to prevent prejudice to the proper administration of justice: s 37AG(1)(a) of the FCA Act.

27    In my view, it is necessary to make the orders sought by the ACCC to prevent prejudice to the proper administration of justice. There is a public interest in protecting consumers from publicity and attention in regulatory proceedings in order to ensure that consumers continue to provide co-operation to regulators, such as the ACCC, in the enforcement of consumer protection laws, particularly in circumstances where the conduct the subject of the alleged contraventions may have caused them to suffer financial loss, stress or embarrassment.

28    The Court made non-publication orders over individuals’ names, addresses, telephone numbers and other personal information in Australian Securities and Investments Commission v NGS Crypto Pty Ltd (No 4) [2024] FCA 986. In that case, Collier J accepted at [16] that it would bring the administration of justice into disrepute if the Court were to publish sensitive financial information or details which would leave consumers vulnerable to identity theft, and at [19] found that the grant of suppression orders over certain evidence would prevent improper contact of persons identified which could prejudice evidence given in ASIC investigations.

F.     Disposition

29    For the foregoing reasons, interlocutory orders are to be made substantially in the form sought by the ACCC in the originating application and in the interlocutory application dated 17 April 2025, as amended in the form of proposed orders handed up in Court this morning at the hearing of the application for interlocutory relief.

Associate:

Dated:    29 April 2025