Australian Competition and Consumer Commission v Robinson [2011] FCA 17
Federal Court of Australia
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FEDERAL COURT OF AUSTRALIA
Australian Competition and Consumer Commission v Robinson [2011] FCA 17
Citation: Australian Competition and Consumer Commission v Robinson [2011] FCA 17
Parties: AUSTRALIAN COMPETITION & CONSUMER COMMISSION v PHILIP JAMES ROBINSON
File number: SAD 67 of 2010
Judges: BESANKO J
Date of judgment: 17 January 2011
Catchwords: TRADE PRACTICES — sentencing of defendant for eight offences under s 75AZS(1) of the Trade Practices Act 1974 (Cth) — where defendant pleaded guilty to eight offences — where defendant an unsophisticated businessman who sold baby sleeping bags imported from China on eBay — where baby sleeping bags did not comply with relevant Australian Standard in relation to fire hazard labelling — where defendant warned by Australian distributor of products that items he was selling did not comply with the Standard — where defendant contacted Australian Competition and Consumer Commission ('ACCC') in relation to sale of sleeping bags — where there was factual dispute as to content of conversations with ACCC representatives — where defendant continued to sell sleeping bags — where defendant subsequently co-operated fully with authorities — whether appropriate to treat all eight offences as one offence pursuant to s 79(2) — whether appropriate to exercise power in 19B of Crimes Act not to proceed to conviction — consideration of matters relevant to penalty contained in s 16A and s 16C of the Crimes Act 1914 (Cth) ('Crimes Act') — where defendant did not have capacity to pay a substantial fine.
HELD: It was not appropriate to exercise the power in s 19B of the Crimes Act because of the importance of consumer standards and the defendant's failure to make enquiries before he began selling the products and proper enquiries after he was alerted to potential problems with them. A fine of $1,000 was imposed in relation to each of the offences occurring before the defendant was contacted by the Australian distributor of the product and himself contacted the ACCC, and a fine of $1,500 was imposed in relation to each offence occurring after those events.
Legislation: Federal Court Rules O 49 r 1
Trade Practices Act 1974 (Cth) ss 65C, 75AZS, 79
Trade Practices (Consumer Product Safety Standards) (Children's Nightwear and Paper Patterns for Children's Nightwear) Regulations 2007 (Cth)
Crimes Act 1914 (Cth) ss 4K(4) 16A, 16C, 19B
Cases cited: ACCC v Dimmeys Stores Pty Ltd [1999] ATPR 41-716, cited
ACCC v Hartwich [2002] FCA 273, cited
ACCC v Nissan Motor Co (Aust) Pty Ltd [1998] ATPR 41-660, cited
ACCC v Nordic Lust Pty Ltd [1996] FCA 909, cited
ACCC v Skippy Australia Pty Ltd [2006] FCA 1343, cited
ACCC v Vales Wine Co Pty Ltd [1996] ATPR 41-528, cited
ACCC Prosecutor v MNB Variety Imports Pty Ltd [1998] ATPR 41-617, cited
Crossan v Commons [1985] ATPR 40-542, cited
Ducret v Colourshot Pty Ltd (1981) 35 ALR 503, cited
Gardam v Splendid Enterprises Pty Ltd (1987) 33 A Crim R 123, applied
Miller v Cunninghams Warehouse Sales Pty Ltd [1994] ATPR 41-321, cited
TPC v Advance Bank Australia Limited (1993) ATPR 41-229, cited
TPC v Farrow (1990) 95 ALR 53, cited
TPC v Sun Alliance Australia Ltd [1994] ATPR 41-286, cited
Date of hearing: 5 October 2010
Place: Adelaide
Division: GENERAL DIVISION
Category: Catchwords
Number of paragraphs: 75
Counsel for the Prosecutor: Ms G Davison
Solicitor for the Prosecutor: Commonwealth Director of Public Prosecutions
Counsel for the Defendant: Ms C O'Connor
Solicitor for the Defendant: Finlaysons
IN THE FEDERAL COURT OF AUSTRALIA
SOUTH AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION SAD 67 of 2010
BETWEEN: AUSTRALIAN COMPETITION & CONSUMER COMMISSION
Prosecutor
AND: PHILIP JAMES ROBINSON
Defendant
JUDGE: BESANKO J
DATE OF ORDER: 17 JANUARY 2011
WHERE MADE: ADELAIDE
THE COURT ORDERS THAT:
1. A conviction be recorded in respect of each count in the Information dated 14 May 2010 ("Information").
2. A fine of $1,000 be imposed in respect of each of counts 1 and 2 in the Information and a fine of $1,500 be imposed in respect of each of counts, 3, 4, 5, 6, 7 and 8 in the Information.
3. The parties have leave to make submissions with respect to costs, time to pay and any other orders.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. The text of entered orders can be located using Federal Law Search on the Court's website.
IN THE FEDERAL COURT OF AUSTRALIA
SOUTH AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION SAD 67 of 2010
BETWEEN: AUSTRALIAN COMPETITION & CONSUMER COMMISSION
Prosecutor
AND: PHILIP JAMES ROBINSON
Defendant
JUDGE: BESANKO J
DATE: 17 JANUARY 2011
PLACE: ADELAIDE
REASONS FOR JUDGMENT
Introduction
1 The Australian Competition and Consumer Commission instituted this prosecution against Philip James Robinson by summons upon information under O 49 r 1 of the Federal Court Rules. The prosecutor charges the defendant with eight offences under s 75AZS(1)(a)-(c)(i) of the Trade Practices Act 1974 (Cth) ("Trade Practices Act"). Subsections 75AZS(1) and (2) relevantly provide:
(1) If:
(a) a corporation, in trade or commerce, supplies goods; and
(b) the goods are intended to be used, or are of a kind likely to be used, by a consumer; and
(c) the goods are of a kind:
(i) in respect of which there is a consumer product safety standard prescribed by regulations made for the purposes of s 65C and which do not comply with that standard;
(ii) in respect of which there is in force a notice under section 65C declaring the goods to be unsafe goods; or
(iii) in respect of which there is in force a notice under section 65C imposing a permanent ban on the goods;
the corporation is guilty of an offence punishable on conviction by a fine not exceeding ten thousand penalty units.
(2) Subsection (1) is an offence of strict liability.
2 Mr Robinson is a natural person but the prosecutor alleges that the supply of goods involved the use of a postal service and thereby engaged the provisions of the Trade Practices Act dealing with the activities of individuals (see s 6).
3 The essential elements of each charge against the defendant are that by the use of a postal service he supplied an infant sleeping bag called a "Grobag" in the course of a business of selling infant sleeping bags. The Grobags fell within a consumer product safety standard being the standard prescribed by the Trade Practices (Consumer Product Safety Standards) (Children's Nightwear and Paper Patterns for Children's Nightwear) Regulations 2007 (Cth) made under s 65C of the Trade Practices Act. The Standard is the Australian/New Zealand Standard AS/NZS 1249:2003, Children's nightwear and limited daywear having reduced fire hazard ("the Standard").
4 The prosecutor's case is that under the Standard each Grobag was required to be labelled with the words:
Warning
High Fire Danger
Keep Away From Fire
5 The prosecutor's case is that none of the Grobags which are the subject of the charges had such a label.
6 The maximum penalty for an individual for an offence under s 75AZS(1) is two thousand penalty units which is the sum of $220,000.
7 The defendant has pleaded guilty to each of the eight charges. He indicated at the first court hearing that he would be pleading guilty.
8 I must impose a sentence on the defendant and in that respect a number of issues arise. First, there are certain factual issues to be addressed. In order to identify those issues it is convenient at this stage to set out a schedule which contains the time of supply, the place of supply and the person to whom the infant sleeping bag was supplied in the case of each one of the eight charges.
Charge Dates Place Person
1 Between 30 December 2007 and 7 January 2008 At Nuriootpa in the State of South Australia, Moonah in the State of Tasmania or elsewhere in Australia Robyn Slater
2 Between 20 and 25 January 2008 At Nuriootpa in the said State, Myaree in the State of Western Australia or elsewhere in Australia Lara Howard on behalf of Bambini Pty Ltd
3 In or about May 2008 At Nuriootpa in the said State, Millswood in the State of South Australia, or elsewhere in Australia Rebecca Naffine
4 In or about May 2008 and 6 July 2008 At Nuriootpa in the said State, McKellar in the Australian Capital Territory, or elsewhere in Australia Lisa King
5 Between 12 May 2008 and 10 June 2008 At Nuriootpa in the said State, Duncraig in the State of Western Australia, or elsewhere in Australia Bianca Gartner (using the name 'Daniel Kilderry'), on behalf of the Australian Competition and Consumer Commission
6 Between 12 May 2008 and 10 June 2008 At Nuriootpa in the said State, Parmelia in the State of Western Australia, or elsewhere in Australia Bianca Gartner (using the name 'Rachel Rosewarne'), on behalf of the Australian Competition and Consumer Commission
7 Between 15 May 2008 and 10 June 2008 At Nuriootpa in the said State, Myaree in the State of Western Australia, or elsewhere in Australia Jessica Sinfield, on behalf of the Australian Competition and Consumer Commission
8 Between 30 May and 6 June 2008 At Nuriootpa in the said State, Mount Eliza in the State of Victoria, or elsewhere in Australia Carolynn Swann
9 In each case it is alleged that the Standard applied to the sleeping bag and that sections 4 and 5 of the Standard were not complied with because there was no fire information label.
10 The prosecutor and the defendant agreed certain facts and a statement of agreed facts was put before me. The prosecutor also tendered a number of affidavits and the defendant tendered an affidavit he had sworn.
11 The factual dispute between the parties relates to a number of telephone conversations in which the defendant was involved on 22 January and 23 January 2008. It is clear on the evidence that there were telephone conversations between the defendant and a staff member or staff members of the prosecutor on those days, but the content of those conversations is in dispute. There may also have been a telephone conversation between the defendant and a staff member of SAI Global at that time. As I understand it, SAI Global is an organisation which, for a fee, is able to provide a copy of the Standard to members of the public. The defendant's case is that after his telephone conversations he believed the Grobags were not covered by the Standard and that he should be sentenced on charges 3 to 8 inclusive on that basis. The prosecutor disputes that case and its counsel cross-examined the defendant on his affidavit.
12 Once that factual dispute is resolved it will be necessary for me to determine the appropriate sentence. In doing so I must have regard to s 16A and s 16C of the Crimes Act 1914 (Cth) ("Crimes Act"). Those sections relevantly provide:
16A Matters to which court to have regard when passing sentence etc.
(1) In determining the sentence to be passed, or the order to be made, in respect of any person for a federal offence, a court must impose a sentence or make an order that is of a severity appropriate in all the circumstances of the offence.
(2) In addition to any other matters, the court must take into account such of the following matters as are relevant and known to the court:
(a) the nature and circumstances of the offence;
(b) other offences (if any) that are required or permitted to be taken into account;
(c) if the offence forms part of a course of conduct consisting of a series of criminal acts of the same or a similar character—that course of conduct;
(d) the personal circumstances of any victim of the offence;
(e) any injury, loss or damage resulting from the offence;
(f) the degree to which the person has shown contrition for the offence:
(i) by taking action to make reparation for any injury, loss or damage resulting from the offence; or
(ii) in any other manner;
(fa) the extent to which the person has failed to comply with:
(i) any order under subsection 23CD(1) of the Federal Court of Australia Act 1976; or
(ii) any obligation under a law of the Commonwealth; or
(iii) any obligation under a law of the State or Territory applying under subsection 68(1) of the Judiciary Act 1903;
about pre trial disclosure, or ongoing disclosure, in proceedings relating to the offence;
(g) if the person has pleaded guilty to the charge in respect of the offence—that fact;
(h) the degree to which the person has co operated with law enforcement agencies in the investigation of the offence or of other offences;
(j) the deterrent effect that any sentence or order under consideration may have on the person;
(k) the need to ensure that the person is adequately punished for the offence;
(m) the character, antecedents, age, means and physical or mental condition of the person;
(n) the prospect of rehabilitation of the person;
(p) the probable effect that any sentence or order under consideration would have on any of the person's family or dependants.
…
16C Fines
(1) Subject to subsection (2), before imposing a fine on a person for a federal offence, a court must take into account the financial circumstances of the person, in addition to any other matters that the court is required or permitted to take into account.
(2) Nothing in subsection (1) prevents a court from imposing a fine on a person because the financial circumstances of the offender cannot be ascertained by the court.
13 I was also referred to a number of cases and the prosecutor provided me with a document entitled "Comparative Sentencing Schedule".
14 The defendant asked me to exercise the power in 19B of the Crimes Act – that is, not to proceed to conviction. For reasons I will give, I do not think that it is appropriate to do so.
15 Some other points should be mentioned at this introductory stage. I was referred to s 4K(4) of the Crimes Act which gives me the power to impose one penalty with respect to all eight offences.
16 I was also referred to s 79(2) of the Trade Practices Act which provides as follows:
(2) Where a person is convicted of two or more offences constituted by, or relating to, contraventions of the same provision of Part VC, being contraventions that appear to the Court to have been of the same nature or a substantially similar nature and to have occurred at or about the same time (whether or not the person is also convicted of an offence or offences constituted by, or relating to, another contravention or other contraventions of that provision that were of a different nature or occurred at a different time), the Court shall not, in respect of the first mentioned offences, impose on the person fines that, in the aggregate, exceed the maximum fine that would be applicable in respect of one offence by that person against that provision.
17 Both the prosecutor and the defendant said that terms of that subsection were engaged by the offences before the Court and that the maximum fine in aggregate was $220,000. I am not convinced that that approach is necessarily correct in relation to all the offences. I certainly accept that the offences involve contraventions of the same provisions of Part VC of the Trade Practices Act and that those contraventions are "of the same nature or a substantially similar nature". However, I am not convinced that they or at least all of them occurred "at or about the same time". The point has been considered in the authorities: Ducret v Colourshot Pty Ltd (1981) 35 ALR 503 at 508-509 per Smithers J; Crossan v Commons [1985] ATPR 40-542; Trade Practices Commission v Advance Bank Australia Limited (1993) ATPR 41-229; ACCC v Hartwich [2002] FCA 273; ACCC v Vales Wine Co Pty Ltd [1996] ATPR 41-528; TPC v Farrow (1990) 95 ALR 53; ACCC v Nissan Motor Co (Aust) Pty Ltd [1998] ATPR 41-660; TPC v Sun Alliance Australia Ltd [1994] ATPR 41-286.
18 The point was not the subject of submissions before me. However, I do not think it is necessary to call the parties back because I have reached the conclusion that on any view a small fine is appropriate in relation to each of the eight offences.
The Facts
19 I start by summarising those facts which are agreed. The summary is prepared by reference to the statement of agreed facts. Except where there is a dispute between the parties it is unnecessary to refer to the affidavits. They contain the evidence which forms the basis of the agreed facts.
20 The defendant operated an eBay account ('robins65') and an eBay store ('robins_Kids_and_Baby_Clothes') for the purpose of selling clothing for infants and children. The defendant's eBay account, robins65, was first registered on 27 November 2002 so that the defendant could purchase clothing for his own children. The defendant's eBay store, 'robins_kids_and_Baby_Clothes', was first registered in or about December 2007.
21 The defendant began selling children's clothing through the eBay account 'robins65' on 20 October 2007. On or about 3 December 2007, he began using his eBay store, 'robins_Kids_and_Baby_Clothes', to advertise and sell 'Grobag' infant sleeping bags which he imported from a supplier in China. Purchasers had the option of paying the defendant through PayPal, bank transfer, or by posting a money order to the defendant's home address. Soon after he received confirmation of payment, the defendant would arrange for the Grobag to be posted to the relevant purchaser.
22 On 17 August 2008, the defendant deregistered the eBay store 'robins_Kids_and_Baby_Clothes'. The defendant's eBay account 'robins65' remains registered but the defendant has not listed any items of any kind for sale through the account since June 2008, after he was contacted by the prosecutor.
23 Gro-Group International Ltd ('Gro-Group') is the inventor and manufacturer of Grobag infant sleeping bags. Gro-Group is located in the United Kingdom. Bambini Pty Ltd ('Bambini') is the exclusive distributor for Gro-Group products in Australia.
24 In December 2007, Bambini discovered that Grobags were being sold on eBay by a number of eBay traders with inconsistent 'TOG' (thermal rating of the garment) and size information on their packaging and labels. Bambini also identified that numerous Grobags did not appear to have any fire warnings or sizing at the neckline as required by the Standard. Bambini subsequently purchased several Grobags from eBay and sent them to Gro-Group in the United Kingdom. Gro-Group examined the Grobags and ascertained that they were old and rejected stock, and that they were part of stock allegedly stolen from Gro-Group's manufacturer in China. These bags were not purchased from the defendant.
25 In consultation with Gro-Group, Bambini prepared a written statement that was posted on the Australian website for Grobag (www.grobag.com.au) on 4 January 2008 advising potential purchasers of the existence of rejected Grobags on the market. The statement remains posted on the website to this date.
26 Bambini also contacted the prosecutor by telephone and email in January 2008, alleging that a number of eBay traders were selling Grobag infant sleeping bags which did not appear to comply with the requirements of the Standard.
27 In or about January 2008, there was contact between Ms Megan Caporn, director of Bambini, and the defendant. On 17 January 2008, Ms Caporn had a conversation with the defendant in which the following was discussed. First, Ms Caporn said to the defendant that she thought the bags were stolen and she thought the bags did not meet the Standard because they did not have a fire warning label at the neck. Secondly, Ms Caporn said to the defendant that Bambini were the exclusive distributor in Australia, and that as the bags had not been purchased from it, they may be fake and not "quality controlled". Thirdly, Ms Caporn said that she wished to buy all of the defendant's stock and that she had been authorised by the Gro-Group to do this. Finally, Ms Caporn asked the defendant to advise her of the identity of his supplier. The defendant declined to do that.
28 On 21 January 2008, Ms Caporn sent an email to the defendant and forwarded to him the written statement regarding rejected stock (see [25] above). She recommended that he remove all Grobag items from his stock 'in the interests of child safety'. She asked if she could buy all of the defendant's remaining stock. She also emailed him the prosecutor's Information line number.
29 After being contacted by Ms Caporn, the defendant contacted his supplier in China. The supplier assured the defendant that the Grobags were not seconds but were top quality stock that had been manufactured for the United Kingdom market. The supplier also advised the defendant that the Grobags were not stolen but were surplus to the requirements of Gro-Group and therefore had been sold to other buyers.
30 On 24 January 2008, Ms Caporn contacted the defendant requesting him to advise her of the total number of Grobags he had for sale so that she could purchase them from him immediately. She also reiterated that the products did not comply with the Standard, and that she had been "in touch" with the prosecutor in relation to his sales of non-compliant Grobags. She urged him to remove the items from sale 'in the interests of child safety'. On the same day, the defendant indicated to Ms Caporn that he had been in contact with the prosecutor and had been assured that the 'Grobags do meet all Australian Standards'. He also indicated that he did not believe the bags to be deficient and that he had received positive feedback about them from his clients. The defendant was referred to the Standard by the prosecutor during his contacts with them. Ms Caporn also informed the defendant, both by telephone and email, that Bambini was the exclusive distributor for the Grobags in Australia and that the Grobags being sold by the defendant were rejected stock.
31 The defendant continued to have contact with Ms Caporn.
32 On 25 January 2008, the prosecutor sent a letter to the defendant's email address, informing him that allegations had been made that the infant sleeping bags he was selling on eBay did not comply with the Standard. The letter also outlined some of the requirements of the Standard and it contained an information request. The letter was not sent by post.
33 The defendant did not receive the email or he accidentally deleted the email. He did not respond to it.
34 Between 25 January 2008 and 1 February 2008, Ms Caporn communicated with the defendant and arranged to purchase all remaining Grobag infant sleeping bags in the defendant's possession, being 28 in total.
35 Once the defendant had sold all his remaining stock to Ms Caporn, he ceased advertising Grobags on eBay for a time. On 29 January 2008, Ms Caporn informed the prosecutor that the defendant had agreed to sell his remaining Grobag infant sleeping bags to Bambini and the prosecutor decided to take no further action.
36 In March 2008, the defendant purchased a further 60 Grobags from his Chinese supplier. On 9 April 2008, he sent an email to Ms Caporn in which he asked her whether she was interested in purchasing the 60 Grobags from him. He said that if she did not want to buy them from him he had other interested buyers. Ms Caporn thought that the defendant was bluffing and did not offer to purchase the Grobags from him. On 12 May 2008, Bambini noticed that the defendant was selling Grobags on eBay again. On 13 May 2008, Ms Caporn both telephoned and sent an email to the prosecutor to advise it that the defendant was again selling non-compliant Grobag infant sleeping bags. Staff of the prosecutor then covertly purchased six Grobag infant sleeping bags from the defendant using three separate eBay user names (see the schedule in [8] above).
37 Three of the six Grobags purchased by the prosecutor were sent to the Australian Wool Testing Authority ('the AWTA') for testing. As the infant sleeping bag is permanently sealed at the bottom, it was assessed against Section 4: Category 4 Garments of the Standard. In order to comply with the Standard, all garments were to be labelled as close as possible to the back centre top of each piece with a fire danger label (either high or low fire danger depending on the category of the garment), a manufacturer's logo, and a size label. The AWTA determined that the Grobags supplied by the defendant did not have any fire danger label present anywhere on the garment. The only label present in the relevant location was the 'Grobag' manufacturer's label.
38 The AWTA determined that the defendant's Grobags complied with the surface burning time requirements of the Standard. Clause 4.2 required fabrics with a pile or nap (as the defendant's Grobags had) to have a surface burning time of 10 seconds or greater after washing in accordance with Appendix D of the Standard. The defendant's Grobags met this aspect of the Standard as they had a minimum surface burning time of 16.5 seconds.
39 On 6 June 2008, the prosecutor sent a letter by email to the defendant. The letter stated that the Commission had reason to believe that the defendant had sold to consumers infant sleeping bags that were not labelled with prescribed fire hazard information and by doing so, he had contravened the Trade Practices Act. The prosecutor invited the defendant to attend a taped record of interview. On 9 June 2008, the defendant telephoned the prosecutor and agreed to attend a formal interview.
40 On 12 June 2008, employees of the prosecutor travelled to Nuriootpa and interviewed the defendant. During the taped record of interview, the defendant made admissions to the allegation of supplying infant sleeping bags that were not labelled with prescribed fire hazard information, but did not admit knowingly committing the alleged offences. He admitted that he had created an eBay trading account, imported Grobags from China, and supplied Grobags to consumers throughout Australian via his eBay store and he recalled communicating with Bambini on numerous occasions and selling to them his remaining stock in January 2008. The defendant also stated that he was not aware of the Trade Practices (Consumer Product Safety Standards) (Children's Nightwear and Paper Patterns for Children's Nightwear) Regulations 2007 or the mandatory requirement for a fire hazard information label. He did not recall being informed by Bambini that the Grobags he was selling did not conform with mandatory Australian Standards and he did not recall receiving the letter from the prosecutor on 25 January 2008 and said that he had not received the email communication or had accidentally deleted the email communication without reading it.
41 On 15 June 2008, the defendant provided to the prosecutor information identifying the sale of Grobag infant sleeping bags via the eBay online trading website. The defendant provided the following:
1. An Excel data spreadsheet identifying all Grobags sold by him between 12 April 2008 and 15 May 2008 inclusive.
2. Three pages of email communications between himself and the Chinese supplier identifying the ordering of products for delivery to Australia.
3. 137 pages of eBay payment summaries dated between 12 April 2008 to 15 June 2008 inclusive. These summaries identify consumers that purchased Grobags from the defendant between those dates.
4. Eight pages of PayPal transactions for the period between 12 April 2008 and 15 June 2008 inclusive. The PayPal transactions identify payments received by the defendant from consumers.
5. Five pages of Bank of South Australia account statements in the name of the defendant. The statements identify payments made by consumers to the defendant for Grobags purchased between 12 April 2008 and 15 June 2008.
6. Ten pages of eBay transactions identifying the items sold by the defendant. The transactions identify the buyer, the product description, the amount paid by the consumer and the sale date.
42 The prosecutor analysed these documents and concluded that between 12 April 2008 and 15 June 2008, the defendant sold 152 Grobag infant sleeping bags to consumers throughout Australia. The defendant also sold 145 Grobags in the period between 3 December 2007 and 12 April 2008 to consumers throughout Australia.
43 The defendant ceased selling Grobags and disposed of all the remaining Grobags in his possession in June 2008 immediately after attending the interview with the prosecutor by placing them in the rubbish so that they would not enter the Australian market.
44 On 3 July 2008, the defendant sent a three-page letter to the prosecutor in which he stated that after reading the transcript of the taped record of interview with the prosecutor, he wanted to further explain his situation with regard to the circumstances of the matter. He stated that he thought Bambini was trying to use scare tactics as a way of stopping him from selling Grobags. He stated that when he lodged Grobags for sale on eBay, he clicked on to the link that took him through to the prosecutor's website and after reading through the headings, he thought there was nothing relevant to selling Grobags. He stated that he did not see the email dated 25 January 2008 from the prosecutor and he claimed that he received approximately 30 to 40 emails per day and that he would automatically delete any emails that were unwanted reading. He stated that he may have accidentally deleted the email from the prosecutor.
45 On 6 July 2008, the defendant sent out a voluntary recall notice by email and post to all Grobag purchasers advising them that the garments did not have the appropriate fire hazard information label, and therefore did not comply with the Standard, and that full refunds of the purchase price were available if the purchasers wished to return the garments. The prosecutor assisted the defendant with the drafting of the voluntary recall notice and approved it prior to it being sent by the defendant. The notice stated that the Grobags were 'designed for the UK market and to comply with the relevant UK standards' but that they did not comply with the relevant Australian Standard (AS/NZS 1249:2003).
46 On the same date, the defendant advised the Minister for Competition Policy and Consumer Affairs by email that he had taken voluntary action to recall the Grobags.
47 On 8 September 2008, the defendant advised the prosecutor by email that 18 Grobags had been returned, with those purchasers being fully refunded. The defendant disposed of all Grobags returned by those purchasers.
48 The defendant has not imported or sold any Grobags since June 2008.
49 In summary, the defendant sold 297 Grobags between December 2007 and June 2008. Of those 297 sales, 37 were to Bambini or an agent of Bambini. The total amount of money received by the defendant as a result of all Grobags sold was $9,908.42 (including GST). Of this amount, an amount in the range of $450 to $500 is attributable to the offences.
50 The defendant received a total profit of $2,235.39 from the sale of the Grobags. Of this amount, $251.10 is attributable to the offences.
51 I turn now to the areas where there is a dispute about the facts.
52 I reiterate the immediate context in which the dispute arises. The defendant did not make any inquiries about whether the Grobag infant sleeping bags complied with the Standard before he started selling them in early December 2007. On 17 January 2008 he was made aware of the possibility that they did not comply with the Standard by a person he viewed as a competitor, that is, Ms Caporn. He contacted the prosecutor. He did not read the prosecutor's email dated 25 January 2008 because either he did not receive it or he accidentally deleted it. That email, had he read it, would have advised him that a complaint had been made that he was selling Grobag infant sleeping bags which did not comply with the Standard. Between 25 January 2008 and 1 February 2008 the defendant sold all of his remaining stock of Grobag infant sleeping bags to Bambini.
53 Ms Jamie Winslow is a solicitor who was employed by the prosecutor between May 2007 and July 2010. In January 2008 she was working within the prosecutor's Infocentre and Management Reporting Section. She swore an affidavit in this proceeding and she was not cross-examined on her affidavit. She produced copies of the computer records she said were made at the time. I think in the end the defendant did not challenge Ms Winslow's account of the two telephone conversations she had with him. I accept her evidence and based on it I make the following findings.
54 First, a person contacted Ms Winslow by telephone at 1.00 pm on 22 January 2008. The defendant admits he was that person and that he used a false name. His inquiry was recorded by Ms Winslow as follows:
C has been importing goods from China to sell on Ebay. The Australian distributor of Grow Bags (baby sleeping bags) has told C that C cannot sell the products in Australia as the label is not placed in the correct spot. C wants to know if this is correct
Secondly, Ms Winslow provided the following advice to the defendant:
These items are washable and not specifically exempted from the Care Labelling information standard. Adv C of the need to label under the Children's Nightwear mandatory standard. Details of both mandatory standards are on the ACCC website. To fully understand the requirements of these standards, the seller will also need to obtain copies of the referenced Australian Standards (from SAI Global).
23/1/08 C called back and I adv as above.
Thirdly, the defendant contacted Ms Winslow again on the following day at 12.15 pm and she provided the same advice to him as she had the previous day.
Fourthly, Ms Winslow did not at any time advise the defendant that he could sell the Grobags as they were because on her understanding that would have amounted to legal advice and the provision of legal advice was not the role of the Infocentre.
Finally, if there were other calls made by the defendant they are not recorded in the prosecutor's electronic database. That might occur, said Ms Winslow, if the caller did not provide enough information to warrant an entry "for example, the caller may have remained anonymous and not provided details when prompted by the Infocentre Officer".
55 It is now necessary to consider the defendant's version of the conversations. The defendant swore an affidavit and was cross-examined by counsel for the prosecutor. Some aspects of his evidence were unclear. His telephone records indicate that he contacted the prosecutor by telephone on three occasions on 22 January 2008 and on two occasions on 22 January 2008. He contacted SAI Global on 22 January 2008.
56 The defendant did not have a clear recollection of his telephone conversations with the Commission. The defendant produced two pages of handwritten notes which he said that he prepared on 22 and 23 January 2008. The notes themselves did not refresh the defendant's memory and are rather confusing in their layout and details. He gave evidence about what the notes record. One of his notes is as follows:
Not covered under Mandatory 98% Certain
57 The defendant said that he recalled being told by a male person during one telephone conversation that he was "98% certain" that the Grobags were not covered by "mandatory" standards but he could not recall whether he was told that by a male person from the prosecutor or a male person from SAI Global.
58 The defendant said that he looked at some information on the internet after his conversations with SAI Global. He found the information "extremely confusing and difficult to follow". He does not think that he purchased the Australian Standard.
59 The defendant said that as a result of his conversations with the prosecutor, SAI Global and his supplier (see [29] above) he believed that the Grobag infant sleeping bags complied with the Standard. He believed that Ms Caporn was simply a competitor trying to drive him out of the business of selling Grobags on eBay.
60 The defendant now says that he accepts that he did not make proper inquiries and that he is liable to be sentenced on that basis.
61 In the course of cross-examination it became clear that the defendant was uncertain as to a number of matters. As I have said, I think that in the end he accepted that Ms Winslow's evidence about her two conversations with him was correct. He could not recall whether the unknown male who told him he was 98 per cent certain the Grobags were not covered by the mandatory standard was from the prosecutor or SAI Global.
62 I did not find the defendant's evidence particularly convincing. Even if I accept that a male person told him that he was 98 per cent certain that the Standard did not apply, that person was from SAI Global. Ms Winslow told him what I have set out above, and the fact is that the defendant did attempt to discover the true position by searching the internet after the conversations with the prosecutor and SAI Global. His admission that he was at least reckless as to whether the Grobags complied with the Standard is correctly made. He was alerted to the problem but failed to make adequate inquiries. It seems to me that the proper conclusion is that in March 2008 he saw an opportunity to make an easy profit by selling another batch of Grobags to Bambini.
Relevant sentencing considerations
63 In Gardam v Splendid Enterprises Pty Ltd (1987) 33 A Crim R 123, French J (as his Honour then was) dealt with a case of false labelling rather than, as here, a case of non labelling. His Honour said (at 132):
The appropriate level of penalty to be fixed will vary according to the circumstances of each case and the class of relevant considerations is not closed.
Nevertheless it appears to be well established that the following matters are relevant to the punishment to be imposed.
1. The objectives of the Act.
2. The importance of any untrue statement made.
3. The degree of wilfulness or carelessness involved in making such a statement.
4. The extent to which the statements in question depart from the truth.
5. The degree of their dissemination.
6. The resulting prejudice to consumers.
7. Whether any and if so what efforts have been made to correct the statements.
8. The need to impose deterrent penalties.
The sections of the Act which provide for the declaration of consumer product safety standards and their enforcement are plainly of the highest importance.
64 In 1990, s 16A and s 16C were introduced into the Crimes Act and they set out the relevant matters for the purpose of this case. Nevertheless, with respect, the observations of French J remain instructive in the case of offences under the consumer product safety standard sections of the Trade Practices Act.
65 Surprisingly, general deterrence is not one of the matters referred to in s 16A(2). Nevertheless, it is clear that it is a matter to be taken into account: Australian Competition and Consumer Commission v Dimmeys Stores Pty Ltd [1999] ATPR 41-716 ('Dimmeys Stores') at 43,241 per Weinberg J. In fact, general deterrence is an important consideration in sentencing for offences of the nature under consideration in this case. In Miller v Cunninghams Warehouse Sales Pty Ltd [1994] ATPR 41-321 ('Miller') von Doussa J said (at 42,269):
It is, however, important when imposing a penalty for an offence of the kind now before the Court to remember the purpose of PtV of the Trade Practices Act, and to impose a penalty that not only has a deterrent effect upon the particular defendants before the Court, but is seen as having a deterrent effect on other suppliers into the consumer market for like goods. It is for that reason that substantial penalties are prescribed by the Trade Practices Act.
66 The point has been made on many occasions: Dimmeys Stores at 43,247 per Weinberg J; Australian Competition and Consumer Commission Prosecutor v MNB Variety Imports Pty Ltd [1998] ATPR 41-617; Australian Competition and Consumer Commission v Skippy Australia Pty Ltd [2006] FCA 1343 at [15]. In the context of general deterrence, I take into account the fact that the risk of fire and burning is a very dangerous one and that the goods which were the subject of the Standard were goods to be used by infants.
67 As far as personal deterrence is concerned (that is, s 16A(2)(j)), the defendant has no prior criminal convictions. He was conducting a small operation and I have taken into account the two character references put forward on his behalf. He struck me as a rather unsophisticated businessman. At the same time, I think that he was prepared to run the risk after January 2008 that the Grobags did not comply with the Standard.
68 The nature and circumstances of the offences (s 16A(2)(a)) are apparent from the summary of the agreed facts set out above. Viewing the conduct as a whole it is appropriate to conclude that the operation was a small one. Even if I take into account the sales of all Grobags as I think I am entitled to do (Dimmeys Stores at 43,246 per Weinberg J), the sales and the profit realised were modest. At the same time, the defendant made no inquiries before he commenced selling the Grobags and he made inadequate inquiries after he was alerted to the risk in January 2008.
69 There has been no injury, loss or damage resulting from the offence (s 16A(2)(e)). Although the risk of injury was perhaps small, the consequences of the risk being realised were very significant. Some Grobags were returned to the defendant as a result of his voluntary recall notice.
70 I can deal with contrition, plea of guilty and co-operation with law enforcement agencies as one matter (s 16A(2)(f), (g) and (h)). I am satisfied that the defendant is contrite; he has in fact pleaded guilty and he has co-operated with law enforcement agencies. It is sufficient for me to refer to the matters set out in paragraphs [39]-[48] above.
71 As far as character, antecedents, age, means and the physical and mental condition of the defendant are concerned (that is, s 16A(2)(m)), I have already referred to the fact that I think the defendant was an unsophisticated businessman conducting a small operation. As I have said, I note the character references and the fact that he has no prior criminal convictions. As against those matters, he was prepared to "bury his head in the sand" rather than make adequate inquiries in January 2008. There is nothing about the defendant's age or physical or mental condition which warrants comment.
72 I can deal with the defendant's means and the probable effect of fines on the defendant's family or dependants (that is, s 16A(2)(p)) and the financial circumstances of the defendant (s 16C) as one matter.
73 The defendant is married and has two young children. A document was put before me which summarised the taxable income of the defendant and his wife for the financial years 2006/2007, 2007/2008 and 2008/2009 and the household's annual and weekly expenses, and assets and debts. The defendant's business earns a modest income and less than the income earned by his wife. The household does not appear to have the capacity to pay a substantial fine. This has been an important consideration in my decision to impose relatively modest fines.
74 Three matters remain before I impose a sentence. First, it appears that the Grobags complied with the relevant United Kingdom Standards and that is a matter I should take into account: Miller. This does not seem to me to be a particularly weighty matter as I have not been told anything about the United Kingdom Standards. Secondly, this is not an appropriate case for the Court to exercise the power in s 19B of the Crimes Act. The importance of the consumer product safety standards and the fact that the defendant made no inquiries at the outset and inadequate inquiries in January 2008 mean that it is inappropriate to exercise the power in s 19B: Dimmeys Stores (at 43,248); Australian Competition and Consumer Commission v Nordic Lust Pty Ltd [1996] FCA 909. Thirdly, the defendant's counsel advised me that in a number of other cases the prosecutor had accepted an undertaking rather than prosecute a contravening party. Exhibit D3 is four undertakings given in previous cases and exhibit D4 is eight product recall notices. I have noted these documents and the defendant's submissions. In the end, I am not satisfied that the circumstances of the previous cases are relevant to the matters I must decide in this case.
Conclusion
75 In my opinion, a conviction must be recorded in relation to each charge. In terms of penalty, I have had regard to the Comparative Sentencing Schedule tendered by the prosecutor. I think the defendant's culpability is greater after January 2008 than it was before. I will impose a fine of $1,000 in relation to each of the first two charges and a fine of $1,500 in relation to each of the third to eighth charges inclusive. I will hear the parties as to costs, time to pay and other orders.
I certify that the preceding seventy-five (75) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Besanko.
Associate:
Dated: 17 January 2011