By: Raisa Conchin

At a glance

  • In April 2019, the Australian Communications and Media Authority (ACMA) commenced proceedings against Balaska Pty Ltd (Balaska), a solar energy business, and its director, in the Federal Court of Australia.
  • ACMA alleged that Balaska had contravened the Do Not Call Register Act 2006 (Cth) and that the director had been knowingly involved in the contraventions.
  • In January 2024, the Court dismissed the case against the director, finding that he had not been knowingly involved in the contraventions by Balaska.
  • The decision confirms that accessorial liability will not attach to a director or officer unless they have actual or constructive knowledge of the elements of the contravention.

Background

In April 2019, the Australian Communications and Media Authority (ACMA) commenced proceedings against Balaska Pty Ltd (Balaska), a solar energy business, and its director, in the Federal Court of Australia.

Balaska had engaged a telemarketing company to sell its products to consumers. ACMA alleged that the telemarketer had made over 500,000 telephone calls to Australian numbers registered on the Do Not Call Register, in contravention of the Do Not Call Register Act 2006 (Cth) (the DNCR Act).

Pursuant to the DNCR Act, Balaska was taken to have caused the offending calls because the calls had been made by the telemarketer on behalf of Balaska. Balaska accepted that it had contravened the DNCR Act, through no fault of its own.

Accessorial liability

ACMA alleged that the director had been knowingly involved in the contraventions of Balaska.

The director denied that he had actual or constructive knowledge of the elements of the contraventions. In particular, the director did not know that the telemarketer had made, or was likely to make, calls to registered numbers. Indeed, as far as the director was aware, the telemarketer had a process of checking that its call lists did not include any registered numbers.

ACMA argued that the director did have the requisite knowledge because Balaska had received a number of compliance warnings from ACMA during the period of Balaska’s engagement with the telemarketer.

The decision

The Court handed down its judgment in the case against the director on 29 January 2024.

The Court dismissed the application against the director, finding that he had not been knowingly involved in the contraventions by Balaska. The Court concluded that although the director knew about the compliance warnings issued by ACMA, these warnings related to only a handful of calls and in some instances contained only very limited information. Further, when the director provided the compliance warnings to the telemarketer, he was assured by the telemarketer that the offending calls were isolated incidents, as opposed to evidence of a systemic failure in process.

The decision is significant for D&O insurers because it affirms that accessorial liability will not attach to a director or officer unless they have actual or constructive knowledge of the elements of the contravention. Knowledge of some limited aspect of the contraventions will not suffice.