CATCHWORDS Trade Practices - Consumer protection - Children's night garments - Supply of goods not complying with prescribed consumer safety standard - False representation by labelling that the goods were of a particular standard - Penalty Trade Practices Act 1974, sections 53(a), 62(1)(a), 63 EVALINE JILL HAMLYN v. MOPPET GRANGE PTY. LIMITED No. G375 of 1983 No. G376 of 1983 No. G377 of 1983 - Neaves J 16 February 1984 Sydnev CN THE FEDERAS, COURT OF AUSTRALIA ) ) Wo. G375 of 1983 NEW SOULTIH WALES DISTR{ICT REGLSTRY ) No. G376 of 1983 ) No. G377 of 1983 GENERAL DIVISION ) TRADE PRACTICES ACT 1974 ' * BETWEEN: EVALINE JILL WAMLYN Prosecutor AND: MOPPLT GRANGE PTY. LIMITED Defendant ORDER JUDGE MAKING ORDER: Neaves J. DATE OF ORDER: 16 February 1984 WHERE MADE: Sydney THE COURT ORDERS THAT: 1. ln maiter No. G375 of 1983, the defendant pay a fine of $1,000. ho In matter No. G376 of 1983, the defendant pay a fine of $500. fs) "S 3. In matter No. G377 of 1983, the defendant p a fine of $500. 4, The defendant pay the prosecutor's costs of the proceedings. IN THE FEDERAL COURT OF AUSTRALIA ) ) No. G375 of 1983 NEW SOUTH WALES DISTRICT REGISTRY ) No. G376 of 1983 ) No. G377 of 1983 GENERAL DIVISTON ) TRADE PRACTICES ACT 1974 BETWEEN: EVALINE JILL HAMLYN Prosecutor AND: MOPPET GRANGE PTY. LIMITED Defendant CORAM: Neaves J. DATE: 16 February 1984 REASONS FOR JUDCGHENT Moppet Grange Pty. Limited ("the defendant has entered a plea of guilty to each of three charges for offences against Part V of the Trade Practices Act 1974 ("the Act"). One offence is against' paragraph 62(1) (a) of the Act, the other two egainst paragraph 53{a). The of€ences relate to the supply, in trade or commerce, of children's night garments. fo understand the nature of the offences it is necessary to refer to certain provisions of the Act and to certain declarations made thereunder. Sub-sections (1) and (2) of section 63AA of the . Act provide - : "(1) The Minister may, by notice under his hand published in the Gazette, declare that, in respect of goods of a kind specified in the notice, a particular standard, or a particular part of a standard, prepared or approved by the Standards Association of Australia or by a prescribed associ- ation or body, or such a standard or part of a standard with additions or variations specified 1n the notice, is a consumer product safety standard For the pur- poses of section 62 or a consumer product information standard for the purposes of section 63. (2) Where a notice is so published, the standard, or the part of the standard, referred to in the notice, or the standard or part of a standard so referred to with additions or variations specified in the notice, as the case may be, shall be deemed to be a prescribed consumer product safely standard for the purposes of section 62 or a prescribed consumer product informa- tion standard for the purposes of section 63, as the case may be." Paragraph 62(1)(a) of the Act provides that a corporation shall not, in trade or commerce, supply goads that are intended to be used, or are of a kind Likely to be used, by a consumer j.£ the goods are of a kind in respecc of which there is a prescribed consumer product saFfetj standard and woich do not comply with that standard. Sub-section 63(1) makes 1t an offence for a corporation, im trade or commerce, to supply goods that ie are intended to be used, or are of a kind likely to be used, by a consumer, being goads of a kind in respect of which a consumer product information standard has been prescribed, unless the corporation has comolied with that standard in relation to those goods. : By a notice dated 11] January 1978 and published in Commonwealth of Australia Gazette No. S 8 of 13 January 1978 the then Minister for Business and Consumer Affairs declared that, in respect of the goods specified in Division 1 of the Schedule to the notice, Australian Standard 1249, "Children's Night Clothes Having Reduced Fire Nazard", Parts l and 2 published by the Standard Association of Australia on 1 January 1977 and Part 3 published by that Association on 1 May 1977, with the variations and additions specified in the noticc, was to be a consumer product safety standard For the purposes of section 62 of the Act. 'The goods specified in Division 1 of che Schedule to the notice were ~- "Children's Night Garments: Dezng any night dress, dressing gown, pyjama, pyjaina style overgarment, infant sleep bag or other article of nightwear (but not including any article of headwear, footwear or handwear) of any of the sizes 0 to 14 as specified in Australian Standard 1182-1972, 'Sive Coding Scheme for Infants' and Children's Clothing', published hy the Standards Association of Australia as in force on 1 December 1977." By a notice dated 15 Jume 1978 and published in Commonwealth of Australia Gazette No. § 119 of 30 June 1978 Ww the Minister declared that, in respect of the same class of goods, Australian Standard 1989-1976, "Classification and Labelling of Children's Night Clothers For Fire Hazard", published by the Standards Association of Australia on 1 December 1976, as amended by Amendment No. 1 and Amend- ment No. 2 published by that Association on 1 May 1977 and 1 August 1977 respectively, and as varied by the variation specified in the noticc, was to be a consumer product information standard for the purposes of section 63 of the Act. Australian Standard 1249 ("AS1249"), with the variations and additions specified in the notice dated 11 January 1978 to which JT have referred, sets out limitations on the combustion characteristics for, and the design of, children's night clothes. The standard is divided into three parts each with their separate limitations. Part 1 sets out the requirements [for children's night clothes of the low fire hazard type. Gurments complying with this Part are classified as Category 1 in accordance with Australian Standard 1989 ("'AS1989"'). To comply with Part 1 of AS1249 a garment must be made from fabrics and trims which comply with Australien Standard 1248, "Fabrics for Domestie Apparel of the Low Fire Hazard Type". To ascertain whether a Fabric complies with Australian Standard 1248 1t is tested in accordance with Australsan Standard 1176 ("AS11176"), Parts 1, 2 and 3, sx "Methods of Test For Combustion Characteristics of Textile Materials". 'The latter standard prescribes tests for determination of ease of ignition, For datermination of burning time and heat output, and For determination of surface burning properties. The test Last referred to is applicable only if the Fabric has a pile or nap. For children's night garments to meet the requirements of Part 1 of AS11249 and to be classified as Category 1 in accordance with AS1989, the garments must pass the test in AS1176 for ignition, for burning time and for surface burning time, if that test is applicable, but may be of anv design. Part 2 of AS1249 specifies the requirements for children's night clothes designed to reduce fire hazard. Carments complying with this part are classified as Category 2 in accordance with AS1989. They are essentially Form Fitting garments which comply with the combustion character- istics specified. Part 3 of AS11249 "defines the limitations in the use of fabric types and garment length for garments classified in Category 3 of AS11989" (clause 3.1). Category "sarments 3 of AS1989 is expressed (see clause 4) to comprise such as pyjamas, pyjama-style overgarments, night-dresscs, dressing goims, infant sleepbags which do not comply with AS11249, Part 1 oc Part 2 but comply with the Limitations laid down in AS1249, Part %." These provisions appear to be somewhat circuitous but their effect is that to Lall within Part 3 of AS1249 and thus be classified as Category 3 of AS11989 the garments must not Fall within either Part 1 or Part 2 of AS11249 but must satisfy the Limitations pre- scribed in Part 3 of that standard. The limitations there specified relate to particularly flammable fabrics, such as cotton. Clause 3.5.2 of AS81249, Part 3 provides a Maximum mass per unit area of 130 gm/m? for fabric composed af 50 per cent or more cellulosic or acetate fibre, and maximum garment lengths. Cotton is a natural eccllulosic Fibre (see Appendix B to AS1249, Parts 1 and 2) so that, if children's night garments are made of fabric containing 50 per cent or more cotton, the fabric must be lightweight and the garments must not extend beyond knee length. AS1989 sets ovt requirements for the labelling of children's night clothes with respect to fire hazard, It specifies the wording to appear on the labels, the size of the letters to be used in the wording, the location of Lle labels on garments, and the durability of the labels to laundering. The labelling prescribed with respeet to fire hazard is as follows - nar tp nn vt ' Toserting tyye%e SOete and moma Clie dation Dowripann character and Ss nitios size. Orly | Corme dsr ie tren CAS )202 Bat dy do thes teap curl bibries Lap fede ANIC : otto tie hil LOW FIRE DANGER tye DFSIGNED FO Citar? Gorm ont dest ted ty REDUCE FIRS DANGER CXS TIE Pare 2) re due fire mace g FLAMMABLE FABRIC iq "ory 3 Gor uct Potecon aly ov ' WARNING ETS Pore 3) var eatecary bor? + . Te HIGH FIRE DANGER ste ty KEEP AWAY FROM FIRE outin AS EFS fared The words on labels for Category 1 and Category ? garments are to be printed in red on a white label background. The words and the symbol on the label for Category 3 garments are to be printed in black on a red label background. By virtue of the above provisions it is contrary to Law to supply children's naght garments which do not comply with AS1249. Tt 1s also contrary to law to supply enildren's night garments which fall within AS1249 if those garments are not correctly labelled in accordance with AS1989. Before turning to the offences with which the defendant is charged reference should be made to other provisions o£ the Act. Paragraph 53(a) provides that a corporation shall A not, in trade or commerce, in connexion with the supply or possible supply of goods or services or in connexion with the promotion by any means of the supply or use of goods or services falsely represent that goads are of a particular standard, quality, grade, composition, style or model or have had a particular history or particular + previous use. A person who contravenes a provision of Part V of the Act other than section 52 is guilty of an offence punishable on conviction, in the case of a person being a body corporate, by a fine not exceeding $50,000 (sub-section 79(1)). Prosecutions for offences against the Act are to be brought only in this Court which is given jurisdiction to hear and determine such prosecutions (section 163). Pro- ceedings before the Court in accordance with section 163 may be instituted by swmmons upon information and shall not be instituted except with the consent of the Minister or of a person authorised by the Minister, by writing under his hand, to give such consents (1bid.). The defendant is charged - (a) that between 20 Februury 1983 and 24 March 1983 at Sydney in the State of New South Wales the defendant, being a corporation wilhin the meaning of the Act, did contravene veragraph 62(1)(a) of the Act in that 1t did, in trade or commerce, supply guvods, namely chiidren's night garments, ply & & 8g (b) (c) which were oF a kind likely to be used by a consumer, being goods of a kind in respect of which there was a prescribed consumer product safety standard namely that prescribed consumer product safety standard in respect of children's night garments declared in*the notice under sub- section 63AA(1) of the Act and published in Commonwealth of Australia Gazette number S8 dated 13 January 1978 and which said goods did not comply with that standard; that between 20 February 1983 and 24 March 1983 at Sydney in the State of New South Wales the defendant, being a corporation within the meaning of the Act, did contravene paragraph 53(a) of the Act in that it did, in trade and commerce, in connexion with the supply of goods, namely child- ren's night clothes, falsely represent that the goods were of a particular standard, namely that the goods complied with Part 2 of Australian Standard 1249; and that on 23 March 1983 at Sydney in the State of New South Vales the defendant, being a corporation within the meaning of the Act, did contravene paragraph 53(a) of the Act in that it did, in trade or commerce, in connexion with the supply of goods, namely children's night clothes, falsely represent that the goods were of a particular standard, namely that the goods complied with Part 2 of Australian Standard 1249. The first charge, that under paragraph 62(1) (a) of the Act, relates to the supply by the defendant to Gabriella'a Boutique of Burwood in the State of New South Wales of an "Absorba" brand night~-dress suitable for a child 10 years of age. The second charge relates to the supply t6 the same retailer of an "Absorba" brand night-dress suitable for a child of 6 years of age. The third charge concerns the representation made by the defendant when the night-dress referred to in the second charge was sold by Cabriella's Boutique to an officer of the Trade Practices Commission. The consent to the institution of these proceedings required by section 163 of the Act has been given. The defendant is a family company with a paid up capital of $2. Its sole shareholders and directors are Robert Francis Beullens and Patricia Iris Beullens, his wife. Tt carries on business as an impo.iter and-wholesaler. Ic is the Australian importer of 'Absorba" brand children's garments which are manufactured in France. {ft supplies "Absorba" brand children's garments to retazlers in the six Australian States and the Australian Capital Territory. Both Mr. and Mrs. Beullens gave evidence before me. Also in evidence is the written record of an interview of 10. Mr. Beullens by an officer of the Trade Practices Commis- sion on 14 April 1983. Prior to an incident involving a retailer in Melbourne in October 1/982 neither Mr. Beullens nor his wife were aware that safety and labelling.standards had been pre- scribed in respect of children's nightwear. During that month the Melbourne retailer informed an employee of the defendant that it had been supplied by the defendant with children's nightwear which did not bear labels as required by the prescribed standards. Mr. Beullens arranged to obtain a stock of labels in the forms prescribed in respect of Category 2 and Category 3 of AS1989 and supplied labels to the Nelbourne retailer for attachment to the garments in question. On 26 October 1982 an officer of the Trade Prac- tices Commission spoke to the same employee of the defendant concerning the supply of children's nightwear which did not bear the appropriate labels. The Trade Practices Commission also arranged for the defendant to receive a copy of each of the Gazette notices to which 1 have referred declaring the safety and information standards for flammability of children's nightwear, a copy of the Commission's Informarion Circular No. 31 entitled "Consumer Protection Mandatory Consumer Product Standurds relating to Safety and Lnformation" and a copy of a document deseribed as "Summary No. 1 - 19 May 1982 Edation" dealing with flammability safety standards For children's nightwear. Il. fr. Beullens admitted that he received the above documents. Mrs. Beullens agreed in cross-examination that the documents were not studied carefully. It is unnecessary to refer in detail to the Commission's Information Circular No: 31 or the document described as "Summary Noa. 1 - 19 May 1982 Edition". Suffice it to say that a reader of them would be left in no doubt that mandatory standards had been prescribed which require all children's night clothes to fall within one of the three categories details of which were given and that night clothes which do not come within one of those categories may not legally be supplied. It was also made abundantly clear that the standards apply "to transaction at all levels of supply, 1.e. at wholesale, retail and any other intermediate stages whether the transection is For the supply by way of sale, exchange, lease, hire or hire purchase." The defendant received a shipment of "Absorba" garments in February 1983. The garments were not labelled in accordance with AS11989 and lirs. Beullens made arrangements for labels to be attached. A lelier dated 15 February 1983 was sent by the defendant to a fizm trading under the name of "Royal Sports" at Manly Vale, New South Wales, the Letter reading as Follows - "Rnclosed arc rolls of labels, to be attacned to the garments which [ will be delivering to your factory on Monday, 2lst. The white label "Designed to Reduce Fire Danger - Flammable Fabric" is to be attached to all ' * mat growers and all two piece tracksuits, a white label to be attached to both pieces of the two piece garment. "The red Label, "Warning-Iligh Fire Danger Keep away from Fire'' is to be attached to all night- dresses and dressing gowns. "T confirm the costs of putting on the label @ .25¢ per label." 1 According to Mrs. Beullen's evidence there were some 5,300 garments to be labelled of which 127 were children's night-dresses. It is clear on the evidence that, prior to the instructions being given to "Royal Sports" to attach labels to the children's night-dresses, the defendant was not aware whether those garments complied with the requiremcnts of AS1249 and no steps were taken by the defendant, either then or later, to have the garments tested for compliance. , & Mrs. Beullens also gave evidence of the steps she had taken to have the garments labelled. She says that she perscnally spoke to the machinist who was to undertake the work and impressed on her that the Category 3 label was to be attached to the children's night-dresses. When the garments were returned to the defendant random checks only were made to see that the labels had been attached in accordance with the instructions given. On 22 March 1983 an officer of the Trade Practices Commission visited a children's wear retail shop, Gabriclla's Boutique, at Burwood, New South Wales and examined a number of children's night garments including "Absorba" brand night-dresses. All the "Absorba" brand garments carried labels indicating that they were made of the same fabric - 74 per cent cotton and 26 per cent nylon/polyamide. Thirteen of the "Absorba" garments were night-dresses. They were of the same style and appeared to be below the knee length. Nine of them carried a label in the forn prescribed for Category 3 of AS11989, Four carried a label in the form so prescribed for Category 2 of that standard. The proprietor of Gabriella's Boutique stated that the garments had been supplied by the defendant. On 23 March 1983 the officer of the Trade Practices Commission returned to Gabriella''s Boutique and purchased two of the "Absorba" brand night-dresses with Category 2 labels. One garment was for a 10 year old child (this being the garment the subject of the charge undec paragraph 62(1) (a) of the Act) and the other For a 6 years old child (this being the subject of the other two charges). The "Absorba" night-dress for a-10 years old child was subsequently tested for compliance with AS1249. The report of the test shows that the garment does not comply with the Limitations un any of the three categories of AS1249 and cannot, therefore, be classified under AS11989. The garment does not comply with Part 1 of AS1249 as it 14. failed the ignition time and hurning time tests for Elammability. The minimum permitted ignition time is 6 seconds (see Australian Standard 1248, clause 3(a)) whereas the mean ignition time for the inner surface of the garment under test was 4.3 seconds. Mean permitted burning time is 18 seconds, with no one burning time'being less than 16 seconds (ibid., clause 3(b)). Mean burning time for the garment under test was 14.4 seconds, minimum burning time 13.8 seconds and maximuin burning time 14.8 seconds. The garment does not comply with Part 2 of AS1249 because it does not comply with the design requirements therein set out. Tt does not comply with Part 3 of AS1249 because the fabric contains more than 50 per cent cottor and has a greater mass per unit area than the maximum permissible. Fabrics with more than 50 per cent cotton must have a mass per unit area of less than 130 gm/m*? (see AS1249, Part 3, clause 3.5.2(a)). The garment in question had a mass per wnit area of 233 gm/m?. The defendant has admicted supplying the garments to Gabriella's Boutique. They were delivered at some time between 20 February 1983 and 24 March 1983. It is also admitted that the defendant supplied a further 114 of the same type of children's nighl-dress to other retailers at or about the same time. All of the garments were of the same fabric as that which was subject to test with the results to which I have referred. The defendant issued two circular letters dated 31 March 1983. One was sent to all customers of the defendant who had received garments which it was thought might have been incorrectly labelled requesting them to check the labelling and to inform the defendant if any mistake was discovered. The other was addressed to those customers who had been supplied with "Absorba" brand children's night-dresses. That circular letter read - "A check of our records has revealed that you received some Absorba nightdresses in your Winter order. "Would you please put these nightdresses to the rear of your shop, and do not display them for sale, pending the possible recall of these garments. Please decuct the cost of these nightdresses thus put aside, From your payment to us Lor stock received. "We will let you know immediately we know whether or not you may sell the nightdresses. In the meantime, do not have them displayed For sale." Once the defendant became aware of the results of the test referred to above, steps were taken to recall from its customers any "Absorba" children's night-dresses that remained unsold. £ the 127 night-dresses supplied, 119 were returned ta the defendant. . The evidence adduced for the defendant includes a copy of the accounts of the defendant 1m respect of the year ended 30 June 1983. My attention was directed to the profit and loss report for the year which shows total income from sales of $670,516.84 twith profit before tax of $1,289.01. 16. Aol Evidence was given that Mr. and Mrs. Beullens were each paid a salary of $11,000 during the year. In relation to the seriousness of the offences counsel ror the informant referred to a report made in t August 1982 by scientists of the Commonwealth Scientific and Industrial Research Organisation and in particular to the following passage in that report -~- "It is difficult to ascertain quantitatively with any precision the impact of children's nightwear standards on the reduction of burns. From the limited data collected prior to the development of the standards it was evident that every year several deaths and extremely serious injuries occurred with nightwear unvolvement. Quite clearly the number of burns due to children's nightwear is now relatively small and no deaths caused by inflammable nightwear have been recorded in our recent statistics." Counsel for the defendant acknowledged the seriousness of the offences but relied upon a number of matters in mitigation of penalty. These may be summarised as Follows ~ (a) the three charges arise out of the same set of Facts; (b) the defendant through its directors be- lieved that the garments were properly labelied and it was not unreasonable in the circumstances for the directors to hold that beliel; 17. (c) once the directors became aware of the non-compliance, they acted responsibly and properly to draw the attention of their customers to the problem and, once the result of the test was known, to recall the offending garments, : (d) the defendant has not previously been convicted of an offence of the nature of the charges to which it has pleaded guilty; and (e) the defendant is a small family company and is only marginally profitable. I can accept all of those matters excepeé that celating to the belief of the directors that the garments had been correctly labelled. It would, I think, be Fair to say that, given the steps taken by Mrs. Beullens, the directors were entitled to assume that the instructions that had been given in the LeLter dated 15 February 1983 addressed "had been carried out. But the instructions to "Royal Sports to label the parments in a particular way were given without there being any basis upon which 1t could properly be con- cluded that the labelling requested was in accordance with the prescribed safety and unformation standards. The defendant had taken no steps to have the garments tested for compliance with those standards - it had not even been unformed by any person that they did so comply. 'the evidence does not establish that the directors ever addressed their minds to the question of compliance with those standards. The directors' 18. 4, Aq 'Mm, conduct cannot be regarded as being other than irresponsible when one considers that in October 1982, before the shipment arrived, detaiied information had been givcn to the directors as to the prescribed standards and it had been made abundantly clear that to market children's nightwear which did not comply with the standards was contrary to law. + Taking all these matters into consideration I impose a Fine of $1,000 in respect of the offence against paragraph 62(1)(a) of the Act and a fine of $500 in respect of each of the two offences against paragraph 53(a) making a total penalty of $2,000. The defendant 1s to pay the pro- secutor's costs of the proceedings. I certify that this and the preceding eighteen (18) pages are a true copy of the Reasons for Judgment herein of the Honourable Mr. Justice Neaves. Dated. 16 February 1984 { O Ce a Associate 19.