The orders sought
18 The agreed orders which are sought against the first respondent are limited to a declaration that the first respondent acted in breach of ss 52, 53(a), and 55 of the Act by applying free range labels to cartons of eggs which were produced by caged hens. Whilst the parties have agreed that this is the appropriate relief which should be granted, the Court is not bound by their agreement. There are good reasons why the Court should accept the agreement of the parties. It is in the public interest that the time of the Court and the energy of regulators is conserved by parties accepting liability when conduct is in breach of the law.
19 However, the limited nature of the orders sought against the first respondent gave rise to a degree of concern by the Court. It will be remembered that the first respondent conducted business for a substantial period of time and, in that time, supplied a very large number of eggs by conduct in contravention of the Act.
20 The parties agreed that the second respondent should incur a pecuniary penalty for the same type of conduct in relation to the supply of a much smaller number of eggs in a much more limited period. This raised a question of the appropriateness of the agreement in relation to the first respondent. Consequently, the Court raised with counsel for the applicant some questions concerning the issue. As a result, information was proffered from the bar table but was not contradicted or objected to by counsel for the respondent. The information included that the first respondent was controlled by Mr D'Alessio, the father of the third respondent. The third respondent is married to the second respondent and effectively the business of the first respondent was continued by the second and third respondents.
21 On first impression, it appeared to the Court that given the substantial gains made by the first respondent from unlawful conduct it would seem inappropriate that the first respondent escape any consequences apart from the declaration sought. However, further information clarified the situation. The Court was told that Mr D'Alessio died a short time ago and that this had constrained the remedies which might be available against the first respondent. The applicant was only able to apply for pecuniary penalties for breaches of ss 53(a) and 55 of the Act after 15 April 2010 when s 76E of the Act came into operation. The only way by which the applicant could have proceeded against the first respondent for a pecuniary penalty prior to 15 April 2010 was by taking action for the commission by the first respondent of a criminal offence under the Act. The Court was told that the applicant had formed the view, after investigation, that the controlling mind of the first respondent was the late Mr D'Alessio. In his absence, the applicant concluded that it would likely have difficulty in establishing criminal liability. Against that background, the limited relief which is sought against the first respondent becomes explicable. In the absence of that explanation, it might have been concluded that the first respondent, together with the second and third respondent as, in effect, a family group, had escaped with a modest penalty following many years of unlawful conduct which must have yielded considerable undeserved profit. For the reasons outlined, the picture is rather more complex than that. I accept that a declaration, and no other penalty, sought against the first respondent is an appropriate remedy in all the circumstances.
22 Then the proposed orders provide for declarations against the second respondent that he breached s 55 of the Act by supplying eggs in cartons labelled free range when the eggs within the cartons were not free range. A further declaration is agreed against the second respondent in relation to the fresh range labels on the basis that those labels suggested that the eggs were the same free range eggs as were previously supplied in cartons bearing deceptively similar labels when, in fact, the eggs in those cartons were not free range eggs. Mirror declarations are also sought against the third respondent for both the free range and the fresh range representations.
23 It is further agreed that the Court grant injunctions against each of the second and third respondents for a period of five years to prevent a recurrence of the conduct.
24 It is also agreed that the second and third respondents write letters to all customers to whom they supplied eggs from 1 June 2008 until the present, which describe the investigation by the applicant, the declarations made, the essence of the wrongdoing, and the orders of the Court. The second and third respondents are also to publish an advertisement in the West Australian newspaper which explains that the Court has made declarations against the second and third respondents, and describes the conduct and the orders of the Court.
25 In relation to the second and third respondents the declarations, injunctions, and remedial advertising are appropriate in the circumstances. The respondents also agreed to pay the applicant's costs, fixed at $15,000 and that, again, appears appropriate in the circumstances.
26 More attention needs to be given, however, to the agreement that the second respondent pay to the Commonwealth pecuniary penalties, pursuant to s 76E of the Act for contravention of s 55 of the Act. Section 76E came into operation on 15 April 2010. Consequently, only conduct after that date may be taken into account. It is proposed that the second respondent pay a pecuniary penalty of $30,000 for labelling cage eggs as free range eggs in the period from 15 April 2010 to 30 April 2010, and $20,000 for applying the fresh range label to cage eggs between 15 April 2010 and June 2010.
27 The maximum penalty, under s 76E, is $220,000 for each contravention. Every separate sale of free range labelled or fresh range labelled eggs to a consumer constitutes a breach of s 55 of the Act. However, the application of free range labels, between 15 April and 30 April, should be regarded as a course of conduct over that period and, for the purposes of assessment of the appropriateness of penalty, should attract one penalty even though there were multiple contraventions. ACCC v ABB Transmission and Distribution Ltd (No 2) [2002] FCA 559 at [38], and ACCC v Rural Press Ltd [2001] FCA 1065 at [19].
28 Similarly, in respect of the fresh range contraventions, although there were probably a large number of sales over a period of six to eight weeks, each of the contraventions should be viewed, for the purpose of the imposition of a penalty, as attracting a single maximum of $220,000.
29 The question, then, is whether, viewed against the maximum, these agreed amounts properly reflect the circumstances of the contraventions. Section 76E(2) of the Act requires the Court to have regard to all relevant matters, including:
(a) the nature and extent of the act or omission and of any loss or damage suffered as a result of the act or omission; and
(b) the circumstances in which the act or omission took place; and
(c) whether the person has previously been found by the Court in proceedings under Part VC or this Part to have engaged in any similar conduct.
30 The factors which mitigate the penalty in this case are, in relation to the free range representations, that the conduct occurred over a short period, namely 15 days. Secondly, the second respondent has not previously been found to have contravened the Act. These are substantial factors.
31 However, on the other side of the ledger is the fact that the revenue obtained by the second and third respondents could have been as high as nearly $10,000 in a short period. The conduct involved a high level of dishonesty. The conduct was also extremely difficult to detect because, once the eggs were placed in the cartons, it was impossible to determine whether they were free range or not. The second respondent knew what he was doing and must have known that it was dishonest to a high degree. Further, the conduct amounted to a cruel deception on consumers who mostly seek out free range eggs as a matter of principle, hoping to advance the cause of animal welfare by so doing.
32 In the end I am satisfied that the pecuniary penalty, taken together with the other orders against the second respondent, serve the purpose of specific deterrence.
33 The orders must also serve the purpose of general deterrence. On this issue, the Court was told from the bar table the applicant believes that this type of conduct is a problem within the egg industry. The case represents the first attempt by the applicant to ensure that such conduct is not allowed to continue. It is necessary that the penalties are sufficient to send the message that such conduct will be dealt with quickly, and in such a way that makes the conduct uneconomic. Viewed against the total potential liability for $220,000, $30,000 is perhaps not a particularly high level of penalty. However, taking into account that the penalty only relates to conduct in a short period, it is unlikely that other operators in the industry could be in any doubt about the Court's view of the gravity of the deception visited upon unsuspecting and often well motivated consumers.
34 Much the same approach applies in relation to the fresh range representations. In this case the penalty proposed is somewhat less, namely, $20,000. But, again, the period of the conduct was not long, namely, about six to eight weeks. Again, the fact that the second respondent has not contravened the Act previously is a significant mitigating factor. In relation to the fresh range representations, however, no estimate has been made of the revenue obtained as a result of trading in contravention of the Act. The character of the contraventions is similar in its effect on consumers. The applicant, however, submitted that a lesser penalty than for the contraventions in relation to the free range representations was justified because the level of dishonesty could be seen to have been less. The fresh range label included the words "12 cage eggs," thereby, notifying the observant purchaser that the eggs were not free range. This was a charitable view of the circumstances. It will be recalled that the fresh range labelling followed the notification by the applicant of its investigation of the free range representations. It is possible to view the fresh range labelling as at a higher level of dishonesty, if one concluded that the second respondent, knowing of the applicant's investigation, nonetheless, intended to continue undeterred in his fraudulent activities. However, in the end, I am prepared to accept the more charitable view which explains the fresh range labelling as, although misleading to the consumer, an attempt, albeit misguided, to avoid the use of the word "free range" and, thereby, comply with the law as perceived by the second respondent. Viewed in that way, there is some justification for the lesser penalty. But, again, the quantum of the penalty should signal to the suppliers of eggs that to mislabel free range eggs will be viewed as a very serious contravention of the Act, attracting severe penalties, even for a short period of trading as occurred in this case.
35 It is further necessary for the Court to view the orders together as a package and to determine whether, viewed in such a way, they achieve the aims of both specific and general deterrence. Counsel for the respondents drew attention to the importance, in this regard, of the remedial orders proposed under s 86C of the Act. He submitted that the requirement that the second and third respondent explain to their customers, and to the world at large, that they had engaged in dishonest conduct is a severe penalty. Their conduct reflects upon their integrity. Their departure from proper standards of probity will be widely known. This will potentially affect their capacity to do business with others. Their integrity and reputation is likely to be severely damaged by the orders made by the Court.
36 When reviewing an agreement reached by the parties in such proceedings, the Court does not ask the question whether it would have made orders in the same terms, but rather whether the orders proposed are within the range of potential orders which the Court might make. I am satisfied that, taken together, the agreed orders are appropriate even though, if left to determine the pecuniary penalties independently of the agreement of the parties, I expect I might have come to the conclusion that higher penalties were justified. The pecuniary penalties are, however, within range. Consequently, the orders of the Court will be in the terms of the proposed minutes of consent orders submitted by the parties.
I certify that the preceding thirty-six (36) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice North.