The Federal Court has ordered Limni Enterprises—formerly Red Telecom—to pay $450,000 in penalties for overdue complaint resolution fees.
Red Telecom was sued in 2019 by the Australian Communications and Media Authority (ACMA) for failing to abide by Telecommunications Industry Ombudsman (TIO) rulings, specifically paying its customers more than $63,000 for complaint resolution.
Nicholas Kontaxis, the only director of Red Telecom, was also mandated to pay $115,125 in fines as part of the decision.
The ACMA looked into whether the telco had complied with the TIO program, which led to the Federal Court’s decision.
The watchdog conducted the investigations in response to TIO referrals alleging non-compliance by Red Telecom with seven legally-binding TIO rulings.
Red Telecom was ordered to make seven payments for $63,000 to six small businesses and one individual.
The ACMA succeeded in getting Red Telecom and Kontaxis to admit to the major violations during the hearings.
Red Telecom eventually compensated the affected clients for the money owed to them.
In 2020, Red Telecom became Limni Enterprises and went into liquidation after selling its customer base.
Despite this, the Court acknowledged a compelling public interest in moving on with proceedings to hold Kontaxis and Limni Enterprises accountable.
Nerida O’Loughlin, chair of the ACMA, stated that all telecoms in Australia providing services to residential and small business consumers must join the TIO system and abide by the Ombudsman’s rulings.
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O’Loughlin said, “This judgment serves as a reminder to members of the TIO Scheme that there are serious consequences for failing to comply with the TIO Scheme. It also makes it clear that directors who are responsible for ancillary contraventions may receive tough penalties, even where the company goes into liquidation.”
“The Court has sent a clear message that failing to comply with a TIO decision will result in penalties that provide a clear deterrent,” she added.
According to Justice Perry, Red Telecom neglected to work with the ACMA until it was too late, showed no regard for the TIO Scheme, nor did it take customers’ interests into account.
Perry determined that the telco’s consumers experienced financial and emotional stress due to the company’s delay in complying with the TIO rulings.
Perry also ruled, “the decisions not to pay the TIO decisions as and when they were due were deliberate decisions by him [Kontaxis] in circumstances where he had control over all payments by Red Telecom and was the governing mind of the corporation.”
She believed that Red Telecom had a culture that was “antithetical to compliance” and agreed with the ACMA that “the conduct must be discouraged in the strongest possible terms.”
The Court said Kontaxis’ actions occasionally showed “disregard for the interests of the relevant customers and the TIO rulings.”
Meanwhile, the TIO expressed its approval of the fines imposed on Red Telecom and Kontaxis by the Federal Court.
Ombudsman Cynthia Gebert said, “Our role as Ombudsman is to work with phone and internet providers to resolve complaints consumers make about their services. When these complaints cannot be resolved, we make decisions that telcos must comply with, and it is important that they do.”
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Source: ACMA
Jaw de Guzman is the content producer for Comms Room, a knowledge platform and website aimed at assisting the communications industry and its professionals.
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