The competition watchdog's case against 11 Harvey Norman outlets has suffered a legal blow after a judge ruled 10 injunctions be dismissed because they were filed in a state where outlets have no presence.
Justice Richard Edmonds of the Federal Court in NSW ordered the Harvey Norman franchisees, except for an IT superstore in Gordon be removed from the proceedings.
"I propose to do this because, so far as I can ascertain, only it and one other of the respondents are trading in NSW; the balance are trading in other states of Australia and, without agreement, any proceeding of this kind by a regulator such as the [Australian Competition and Consumer Commission] should not be brought in a registry of this court other than in the registry of a state in which a respondent is trading," he wrote in a judgment delivered on Monday.
Lawyers for the ACCC argued all respondents appointed Sydney-based counsel.
However, Justice Edmonds found that, "with respect, that has occurred as a consequence of the ACCC commencing the proceeding against every respondent in the NSW registry of the court".
The franchisees face fines of up to $1.1 million for giving customers misleading information about their right to claim a refund or replace faulty products.
People who bought faulty mobile phones, laptops, refrigerators and espresso machines were told they had to pay for repairs or wait for manufacturers to provide a refund, court documents show.
A store in Bundall, Queensland, allegedly told a customer trying to replace a faulty laptop worth $1200 that they could not do anything until it was contacted by the ACCC.
Legal action was taken against the owners of Harvey Norman stores in Launceston and Moonah, Tasmania, Albany and Mandurah in Western Australia, Hoppers Crossing and Sale in Victoria, Bundall, Ipswich and Oxley in Queensland, and Campbelltown in NSW.
Justice Edmonds said he would have heard the applications against all the defendants if the ACCC commenced the proceeding against one of the respondents and then applied for the other 10 to be joined, or applied to join the other 10 respondents as parties to the proceeding, or started 11 separate proceedings.
"I have considered this application as if there is currently one respondent to this proceeding and that the ACCC is seeking to join 10 (now nine) new persons as respondents or, in the alternative, to have all the cases heard together," he said.
An spokeswoman for the ACCC said it was considering the judgment.