Red Telecom fined $450k over outstanding complaint resolution payments

Sydney-based telco Limni Enterprises, formerly known as Red Telecom, has been ordered by the Federal Court to pay $450,000 in penalties over unpaid complaint resolution payments.

The Australian Communications and Media Authority (ACMA) took Red Telecom to court in 2019 for failing to comply with decisions of the Telecommunications Industry Ombudsman (TIO), specifically paying its customers more than $63,000 for complaint resolution.

Red Telecom sole director Nicholas Kontaxis was also ordered to pay $115,125 in penalties as part of the ruling.

The payments ordered by the TIO were spread across seven customers, ranging from just over $1000 to more than $20,000.

Red Telecom originally owed customers The Axis Brokerage & Trading Company $20,258.80; Angie’s Travel $4,177.87; Hinterland Smash $10,750.86; KJ Real Estate $1,012.34; Joycey’s Sportz’ costs of cancelling the finance contract ($12,544.87); Diana Canepa $5,895.60; and The Stewart Family Trust $8,421.60.

The $565,125 in penalties are on top of the $63,000, also spread across the customers.

Red Telecom and Kontaxis admitted to the non-payment in court and all customers have been paid the owed amounts.

Red Telecom in October 2020 sold its customer base to United Networks (now Hubify), and changed the company’s name to Limni before going into liquidation. The court said proceedings went ahead due to the case having “strong public interest”.

ACMA chair Nerida O’Loughlin said all telcos that supply services to residential and small business customers in Australia must join the TIO scheme and must comply with decisions made by the Ombudsman.

“This judgement 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,” O’Loughlin said.

“The court has sent a clear message that failing to comply with a TIO decision will result in penalties that provide a clear deterrent.”

Federal Court Justice Melissa Perry said in the ruling that Red Telecom had a lack of respect for the TIO Scheme and a lack of consideration for the interests of customers, and failed to cooperate with the ACMA until it was too late. She said the delay in payments caused financial and emotional stress to the affected customers.

The ruling also found “the decisions not to pay the TIO decisions as and when they were due were deliberate decisions by [Kontaxis] in circumstances where he had control over all payments by Red Telecom and was the governing mind of the corporation”.

Red Telecom was also deemed to have a culture of being “antithetical to compliance” and Perry accepted the ACMA’s submission that “the conduct must be discouraged in the strongest possible terms”.

In a separate statement, the TIO said it welcomed the penalties handed down by the Federal Court to Red Telecom and Kontaxis.

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.”