The Federal Court has declared that a number of representations made by Pippa Sampson of Goddard Elliott Lawyers, in the period April 2002 to October 2010, to collect small debts on behalf of video rental stores were misleading and deceptive.
Pippa Sampson, the principal and registered owner of Goddard Elliott Lawyers has admitted sending approximately 20,000 debt collection notices per month in the 12 months prior to the Australian Competition and Consumer Commission instituting proceedings. The notices were sent Australia-wide.
The ACCC took legal action after concerns were raised by the Central Australian Aboriginal Legal Aid Service on behalf of clients who had received debt collection notices making the misleading representations.
The representations found to be misleading and deceptive were that:
- the video store was entitled to recover a specified amount in solicitor's costs in addition to the claimed debt despite having no necessary entitlement to recover such a cost;
the customer would incur additional costs associated with any legal action, when in reality:
- if unsuccessful the video store could not recover legal costs;
- if successful a Court would not order that legal costs relating to the recovery of a small debt be paid unless there were special circumstances; and
- there are state laws that could limit the amount of legal costs that could be awarded by the court in actions for small debts;
- one of the notices was similar in format to a document that had been, or was able to be, filed in a court when the document had not or was not able to be filed in a Court;
- judgment could be made without a formal court order unless the debt was paid in full or the proceeding was successfully defended, when a judgment cannot be entered without legal proceedings being instituted and without an order being obtained from a Court;
- Goddard Elliott could enforce any judgment by itself, including by way of a warrant, or a garnishee order, or an attachment of earnings order, when in reality, the video store would need to win the case, apply for an order for payment and then the court must grant an order to enforce judgment.
The Court also made an order that its findings may be used as prima facie evidence in any later proceedings for damages or compensation orders.
By consent of the parties, the Federal Court has ordered Ms Sampson to:
- stop making the misleading representations;
- publish corrective notices in a number of national newspapers and industry publications;
- ensure herself, and Goddard Elliott staff, undertake trade practices compliance training; and
- contribute $30,000 towards the ACCC's court costs.