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Repeat offender gets $28,000 fine

Issued 10 August 2004-05/015

Further offences cost repeat Fair Trading Act offender Michael Knight over $28,000

Repeat Fair Trading Act offender Michael Helsby Knight was fined $22,000 plus $6,430 costs in the Auckland District Court yesterday after pleading guilty to 12 charges of breaching the Fair Trading Act with respect to television and radio advertising production and placement company, One Connect Limited.

The Commerce Commission prosecuted Knight alleging that One Connect had made false and misleading representations in July and August 2001 as to the production and placement of television and radio advertising, when the company had no professional relationship with any of the major television channels or relevant radio stations. In addition, One Connect placed advertising in the New Zealand Herald misrepresenting the cost of these advertisements.

Knight also pleaded guilty to a charge relating to One Connect's offer of airfare vouchers to businesses that had agreed to the production and placement of television or radio advertising. The vouchers represented that they were valid to redeem $500 on Air New Zealand international flights, when there was no agreement by Air New Zealand to honour such a voucher. Knight's business partner, Andrew Selwyn Randle Hanna, was convicted in November 2003 in relation to the same charge.

Commission Chair Paula Rebstock said that Michael Knight was not a stranger to the Commerce Commission. "Knight was last convicted under the Fair Trading Act in April 2002 for 33 offences relating to his Budget Imports and Francais Imports companies.

"Knight has demonstrated a total disregard for the Fair Trading Act and its underlying principles. Consumers are entitled to rely on the fact that traders conduct their business fairly and with accurate disclosure of relevant information. His past and present offending shows complete contempt for both the reputation of fellow traders and the rights of consumers," Ms Rebstock said.

In sentencing, Judge Kerr commented that wilfulness and carelessness was obvious in Knight's offending and that there was a need to impose deterrent penalties. In setting the level of the fine, Judge Kerr took into account Knight's guilty plea and that he was an adjudged bankrupt, but also the fact that he had been convicted for similar behaviour in Australia and was a "recidivist offender".

Background
In April 2002, Michael Knight was convicted of a total of 33 breaches of the Fair Trading Act relating to the businesses Budget Imports and Francais Imports Limited.

A Commission investigation into Francais Imports revealed its advertising in facsimiled flyers and a television advertorial misrepresented the availability of Lancôme and Clarins cosmetics, and the price, origin and history of Donnatella Milano brand cosmetics.

Customers who ordered the brands complained of non-delivery, immediate debiting of credit cards, and delivery of Donnatella Milano products rather than the Lancôme or Clarins products they'd ordered. The cosmetic Donnatella Milano, while being represented to be of Italian origin and of higher retail price than Lancôme or Clarins, was in fact made in Auckland specifically for Francais Imports.

A similar investigation by the Commission into Budget Imports revealed its print advertising misrepresented the availability of adidas shoes, and the model and availability of laptop computers. No adidas shoes or laptop computers were delivered to people who had placed orders and made payments, and no refund or substitute goods were offered.

In 1994, the Commission obtained interim injunctions from the Auckland High Court relating to alleged breaches of the Fair Trading Act by Tasman Charter Flights Limited and Air Australia Worldwide Marketing Limited, companies promoted by Michael Knight.

ENDS

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