The former sole director of a New South Wales-based motorhome converter business has been sentenced to 15 months’ home detention after a court found he took more than $165,000 in payments to build motorhomes that were never delivered.
In a case brought by the NSW Office of Fair Trading, the former director admitted in Parramatta Local Court to obtaining a benefit by deception, failing to supply services and accepting money while he was bankrupt.
The business traded under the name ‘Stargazer RV Conversions’ until it was deregistered in April 2014. The court found vehicle conversions were not completed as outlined in quotes and consumers were forced to collect their vehicles unfinished after lengthy delays.
According to an agreed statement of facts tendered to the court, “numerous” consumers had been forced to take action against the business through local courts, the NSW Sheriff and the NSW Civil and Administrative Tribunal. The former director was also declared bankrupt in July 2015.
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In a statement this week, NSW Minister for Better Regulation Matt Kean was scathing in his assessment of the case.
“This shonk blatantly ripped off consumers by taking their hard-earned money and failing to provide a finished product,” Keen said.
“One poor customer had paid more than $90,000 for the motorhome conversion of a bus. But after frustrating delays and dodgy unfinished work the owner had to have it towed to another company and fork out another $80,000 to get the job done.”
Cases becoming more commonplace
Director of Viridian Laywers Richard Prangell says cases such as this one are becoming more common.
“I see more case like this crossing my desk now than I did five years ago,” Prangell tells SmartCompany.
And, he says, regulators are clamping down.
“It seems that we’re seeing increasing enforcement activity from consumer protection organisations — in this case NSW Fair Trading, but also the ACCC at the federal level,” he says.
Prangell also says cases like this are a reminder that liability for consumer law breaches can extend beyond the company to include company directors themselves.
“I’m seeing an increasing willingness to pierce the corporate veil by regulators,” he says.
“It is particularly interesting that they’ve also brought a criminal action in this instance for what looks on its face like a breach of contract.”
Pragnell says the key take away point for small businesses is to not be complacent around the law.
“Long gone are the days that business owners can assume they’ll get away with a ‘slap on the wrist’ for bad behaviour,” he says.
“Regulators are exercising their investigatory powers, looking for alternative remedies and finding their teeth.”
The former director in this case has the right to lodge an appeal. SmartCompany was unable to contact him prior to publication.