Australian Competition and Consumer Commission v Dimmeys Stores Pty Ltd ACN 073 979 781

Federal Court of Australia|2001-03-22|Before: Drummond J

The defendant is convicted of Counts 1 to 6 on the Summons issued on 17 November 2000.

In respect of each of the six charges alleging a contravention of s 79(1) the Trade Practices Act 1974 (Cth) on various occasions between 7 July and 10 July 2000 Dimmeys Stores Pty Ltd is fined $10,000, such fine to be paid to the Commonwealth Director of Public Prosecutions on or before 20 April 2001.

Counts 7 and 8 on the said Summons be withdrawn.

Dimmeys Stores Pty Ltd ACN 073 979 781, whether by itself, its directors, servants or agents or otherwise be restrained until 20 March 2004 from offering to supply by retail sale to prospective customers or supplying by retail sale to customers any goods at any of its stores in Australia in respect of which goods there is a prescribed consumer product safety Standard unless such goods comply with that Standard.

The defendant enter into a compliance program in terms of the program attached to this Order pursuant to s 80 the Trade Practices Act 1974 (Cth).

The defendant pay the Australian Competition and Consumer Commission's costs of and incidental to the prosecution, including reserved costs.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

BETWEEN: AUSTRALIAN COMPETITION AND CONSUMER COMMISSION

Within three months of the Court orders, Dimmeys will create and maintain at its own expense a trade practices compliance program ("the Program") in relation to Part V of the Trade Practices Act 1974 (Cth). In summary, the Program will have the following elements:

Dimmeys will use its best endeavours to ensure that the Program:

Complies with Australian Standard on Compliance Programs AS 3806-1998 and be tailored to suit the circumstances of Dimmeys.

Demonstrates commitment to a policy of compliance and embed a culture of compliance throughout the company.

Analyses and respond to trade practices matters resulting from the conviction.

Identifies risk areas for trade practices breaches and develop systems to eliminate or minimise these risks.

States that the company will take action internally against those responsible for breaches and will not indemnify them.

Provides practical and verifiable training for all relevant staff and management so that breaches and potential breaches may be prevented or otherwise detected, referred and acted upon.

In particular the Program will include the following steps:

i) Form a compliance committee of the Board or ensure that compliance matters are standing items on the Audit Committee and/or Board meetings.

ii) Appoint a Senior Manager with overall responsibility for compliance systems ("the Compliance Officer").

iii) Implement adequate procedures to check for Trade Practices compliance.

iv) Ensure that compliance procedures are understood by staff and other relevant parties, eg, agents, distributors and advertising representatives.

i) Produce a written policy of commitment to compliance and articulate how this will be carried out; set in place procedures so that the policy is well understood throughout the company; ensure procedures are laid down to assess compliance against predetermined objectives and assessment criteria.

i) Detail the process involved in establishing, implementing and maintaining the Program and the roles and responsibilities of management, staff and other stakeholders.

ii) Ensure that line managers are responsible for compliance in their immediate area.

a) authority, recognition and support within the company;

b) access to all levels in the company to ensure compliance;

c) overall responsibility for design, integrity and updating of the Program;

ii) Ensure that staff have access to the necessary materials including compliance manuals and training, reference material databases; and

iii) Ensure that any external compliance service providers have the resources and expertise to carry out the required tasks.

i) Put in place procedures to ensure the Program has regular ongoing reviews.

f) management performance evaluations (line & senior)

i) Develop and execute a practical and easily understood compliance training system throughout Dimmeys. Training will be:

f) integrated into line and senior management development.

ii) Trade Practices training sessions will be undertaken by all relevant staff including senior management, store managers and purchasing officers. Such training sessions will be:

a) on two occasions, the first being within three months of these orders and the second between twelve and thirteen months thereafter; and

b) conducted by an independent external auditor with appropriate experience in Trade Practices law.

i) Dimmeys will implement a visible and accessible complaints handling system which it will use its best endeavours to ensure it complies with Australian Standard AS 4269.

i) Keep an accurate record of compliance failures and complaints and of the rectification of such failures and complaints.

i) Develop a disciplinary policy for breaches of the Trade Practices Act 1974 (Cth) by employees and ensure the policy is widely disseminated.

ii) Ensure that compliance is integrated into performance reviews for employees.

i) Develop a system to identify and classify compliance failure so that systemic and recurring problems are rectified.

i) Ensure that compliance problems are rapidly reported to the Compliance Officer.

i) Ensure that compliance problems are rapidly reported to the Compliance Manager.

i) Ensure that the Compliance Manager is accountable to the Board for compliance issues.

Dimmeys will cause, at its own expense, an independent audit of the Program to be conducted twelve months and twenty-four months from the date of the implementation of the Program. The audits will be carried out by an independent external auditor with appropriate experience in Trade Practices law. The auditor should review and report on:

ii) the implementation of the Program and the achievement of its objectives over the preceding twelve months; and

iii) recommend changes to the Program that may be necessary to ensure achievement of its objectives.

Dimmeys will implement the recommendations of the audit referred to above within two calender months of the provision of the audit.

The Program will remain in place for at least three years following its implementation.

Dimmeys will provide a copy of the Program to the Commission within two weeks of its implementation.

BETWEEN: AUSTRALIAN COMPETITION AND CONSUMER COMMISSION

The defendant is convicted on the Summons issued on 22 February 2001.

In respect of the charge alleging a contravention of s 79(1) the Trade Practices Act 1974 (Cth) on 9 November 2000 Dimmeys Stores Pty Ltd is fined $100,000, such fine to be paid to the Commonwealth Director of Public Prosecutions on or before 20 April 2001.

The defendant pay the Australian Competition and Consumer Commission's costs of and incidental to the prosecution and of the notice of motion filed 20 February 2001, including reserved costs.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

BETWEEN: AUSTRALIAN COMPETITION AND CONSUMER COMMISSION

1 Dimmeys Stores Pty Ltd has entered pleas of guilty to six offences against s 79(1) the Trade Practices Act 1974 (Cth) constituted by contraventions of s 65C(1)(a) of that Act at its Townsville store between 7 and 10 July 2000 and a plea of guilty to a further charge of a similar offence committed at its Richmond, Victoria store on 9 November 2000. 2 At the hearing before me, an agreed statement of facts and accompanying documents was put in evidence and an affidavit was received from Mr Brian Swersky, the joint managing director of Dimmeys Stores, a position he has held since 1996. He has also in the past been in private practice as a solicitor and has a current practising certificate. Counsel for the Australian Competition and Consumer Commission ("the Commission") cross-examined him. 3 Each offence is constituted by the offering for sale of various items of children's night clothes which did not comply with the prescribed consumer product safety Standards. 4 The Commission's case is that at all relevant times two safety Standards were prescribed for the clothing in question, AS1249-1990: Children's Nightclothes having reduced fire hazard and AS1249-1999: Children's nightwear and limited daywear having reduced fire hazard. The 1999 Standard came into effect from 1 November 1999 and will cease to operate some time in 2004, while the earlier 1990 Standard will cease to have effect from 1 September 2001. At the times of commission of the offences, both Standards were therefore prescribed in respect of the clothing in question. 5 On 7 July 2000, an officer of the Commission visited the Dimmeys Townsville store; she saw racks of children's nightwear displayed for sale there. Some items did not appear to her to comply with the labelling requirements of the Standards in that they bore no labels as to their level of fire hazard. She bought several different styles of the nightwear. On 10 July, she and another officer of the Commission returned to the store. They bought further items of children's nightwear. On 18 August 2000, the Commission officer sent some of the garments to the Australian Wool Testing Authority in Melbourne for testing as to their compliance with the Standards. These carried a "Just Dreamin" brand, as did a number of the unlabelled garments that the Commission officers had seen on display at the store but not buy. Reports dated 6 September 2000 were to the effect that the test garments did not comply with either the 1990 or the 1999 Standards. 6 After purchasing the second lot of garments on 10 July 2000, the Commission officer wrote to Dimmeys Stores about the non-complying garments and sought undertakings:

(a) To immediately remove from sale clothing not complying with the Standards from the Townsville store and

(b) To conduct an immediate review of all Dimmeys outlets to identify any clothing failing to comply with the Standards in any other stores and to remove from sale any such clothing.

7 By letter of 12 July 2000, Mr Swersky gave undertakings in the terms requested. In further correspondence between the Commission and Dimmeys between 18 July and 3 August 2000, the Commission sought and Dimmeys initially resisted, the placement by Dimmeys of recall notices in respect of the non-complying clothing in the Townsville newspaper. Dimmeys initially offered to place recall notices only inside the Townsville store. On 3 August, however, Dimmeys advised the Commission of its agreement to place recall notices in the local newspaper in a form acceptable to the Commission. Dimmeys withdrew from sale in the Townsville store 525 garments, of which 172 were branded "Just Dreamin". 8 On 9 November 2000, another officer of the Commission went to the Dimmeys store at Richmond, saw some children's nightdresses without labelling as to fire hazard on display for sale among similar garments, some of which were labelled "High Fire Danger" and some of which were labelled "Low Fire Danger". Some of the unlabelled garments carried the "Just Dreamin" brand. This officer purchased some of the unlabelled nightdresses, informed the store manager that they did not appear to comply with the new Standard and should be removed from sale, which the manager then did. The 9 November purchases by the Commission were also tested by the Australian Wool Testing Authority, which reported that they did not comply with the 1999 Standards. Between 15 November 2000 and 16 January 2001, Dimmeys published further recall notices in forms acceptable to the Commission in various newspapers. As a result of the Commission's actions in November 2000, Dimmeys advised the Commission that "in the order of 236 nighties were removed from shelves". 9 None of the items of clothing the subject of the present charges bore any label of the kind required by either the 1990 Standard or the 1999 Standard. It was common ground at the hearing that none of these garments could properly bear the "Low Fire Danger" label provided for by both Standards because of their overall flammability characteristics. But, though each garment should have carried the "High Fire Danger" label provided for by both Standards, it was not part of the Commission's case that any of the garments in fact had high overall flammability characteristics. The contraventions are thus not merely technical ones in the sense that Dimmeys' only misconduct involved the offering of unlabelled, but fire hazard free, garments. But the Commission has not sought to make out a case that, though the goods should have been labelled "High Fire Risk", they were in fact highly flammable and thus a significant risk to public safety. If this had been the Commission's case, then Dimmeys could in the circumstances of the case have expected penalties close to the maximum imposable in respect of all seven offences. 10 In August 1999, Dimmeys Stores was convicted on its plea of guilty and fined $60,000 for a breach of s 79 the Trade Practices Act 1974 (Cth) constituted by a contravention of s 65C(1): it offered for sale children's pedal bicycles which did not comply with the prescribed consumer product safety Standard: Australian Competition and Consumer Commission v Dimmeys Stores Pty Ltd (1999) ATPR 41-716. The offence was apparently committed on 6 November 1998 when a Commission officer bought one of the offending bicycles. Dimmeys had in stock over 500 bicycles. Immediately upon receipt of the Commission's advice of non-compliance with the Standard, Dimmeys withdrew the bicycles from sale and published recall notices in the press. 11 In sentencing Dimmeys for this offence, Weinberg J said that:

"the cumulative effect of these breaches of the Standard was that the bicycles in question were potentially dangerous, and posed particular risks to the children for whose use they were intended.

While no injuries are known to have occurred, and the majority of the defective bicycles sold to the public have been recalled, not all have been accounted for. It is likely that a number of those bicycles are still in use."

12 His Honour also observed that the Commission of this offence by Dimmeys "was the product of carelessness, and lax management, rather than any deliberate attempt to flout the relevant Standards". Weinberg J concluded:

"Neither defendant [Dimmeys Stores and the importer of the cycles] had imported or sold bicycles at any previous time. This does not absolve them from their obligations to comply with the Act.

… Both defendants were aware of the existence of product safety standards in relation to other merchandise typically handled by them. Their failure to make the appropriate inquiries in relation to a large consignment of children's bicycles is simply inexcusable.

… Dimmeys took no steps to ensure that the bicycles imported by Starite on behalf of Dimmeys complied with any such standards. That was an act of gross irresponsibility on its part."

13 Mr Swersky swore an affidavit filed in those proceedings in August 1999 in which he made the points that the bicycles in question were not ordinarily sold by Dimmeys, that they had been acquired at a reduced price because they were the subject of a cancelled order by another trader. He said that "many of Dimmeys' lines of product are supplied by reputable Australian companies. Further, the nature of Dimmeys' lines of product is such that they are affected largely only by the standards relating to clothing and cosmetics. These standards are concerned substantially with labelling requirements." He added:

"I am and at all relevant times have been well familiar with the substance of the standards relating to clothing and cosmetics and possess copies of them in my office. There are a few other product lines sold by Dimmeys which attract the operation of prescribed standards. Children's nightwear and toys for children under three are examples. We are and at all relevant times, have been familiar with the substance of the standards relating to these products."

14 He concluded by saying that Dimmeys had no proposal to sell bicycles again. The thrust of his affidavit was to suggest that the offence involving the bicycles concerned the sale of a product which it was unusual for Dimmeys to carry, that most of their product lines for which there were labelling requirements imposed by relevant Standards consisted of clothing, including children's nightwear, and that he had been careful to keep himself informed of the Standards prescribed for these commonly carried lines. The suggestion clearly enough was that Dimmeys, though careful to comply with the Standards applicable to their established product lines, were caught out by selling a one-off line of goods. 15 In assessing an appropriate penalty for the various offences now before me, it is, I consider, relevant to take into account the fact that the July offences at Townsville were committed by a company which, eleven months previously, had been convicted and heavily fined for an offence of the same kind and that, in seeking to mitigate the penalty then imposed, Mr Swersky deposed to both his and Dimmeys' familiarity with product Standards applicable to the lines of product commonly carried by Dimmeys, which included children's nightdresses of the kind the subject of the present charges. Section 16A(2)(a) and (b) the Crimes Act 1914 (Cth) justify that course; it is also justified by the Court's general power, not restricted by s 16A(2), to take into account all the circumstances relevant to the fixing of the proper penalty. 16 Mr Swersky, in the affidavit put in evidence before me, describes the practical problems of ensuring compliance by Dimmeys Stores with relevant Standards, in view of the fact that the organisation sells approximately 5,000 individual lines at its forty-two retail outlets around Australia in which a total of 900 employees work, nearly half of whom are casuals who work only very limited hours. But that Dimmeys Stores sells a large range of items, not all on a regular basis, and that many of its employees are young casuals, likely to have a low level of product knowledge, does not explain even in part why Dimmeys Stores have so frequently infringed the laws here relevant. The offences of November 1998, July 2000 and November 2000 were constituted by the display for sale of large numbers of bicycles and nightwear. Responsibility to ensure that that mass of items conformed to relevant Standards must, in a properly managed retail organisation, rest with a relatively small number of executive and supervisory staff. The action Mr Swersky himself took in promulgating his Trade Practices Compliance Manual with its direction in paragraph 6 limited to "All buyers" to check all product lines purchased by them for Standards compliance suggests as much. So far as the practical difficulties for Dimmeys in complying with the relevant Standards is concerned, it appears very likely that if only Mr Swersky had insisted upon relevant staff, including particularly Dimmeys' buyers, complying with the directions in his Manual, including those in paragraph 6, Dimmeys would not now be facing prosecution. 17 In response to a suggestion by senior counsel for the Commission that the remedial action which Mr Swersky referred to as having been taken to ensure that garments that did not comply with the relevant Standards were removed from display in all Dimmeys Stores was only taken after the November 2000 complaint by the Commission in respect of the Richmond store, counsel for the defendant referred to Mr Swersky's memorandum to Dimmeys children's wear buyers and management staff dated 14 July 2000 and the summary of Australian Standards prepared by Mr Swersky which was attached to that memorandum. He referred also to his memorandum of 3 August 2000 to all Dimmeys' buyers requiring them to complete and return to him a checklist of all goods purchased by each for which there were prescribed Standards and to three documents exhibited to his affidavit before me, one of which is a memorandum from a Dimmeys manager, Mr Bower, of 13 July 2000 to Dimmeys Townsville directing it to return all stock with the "Just Dreamin" label to a designated supplier for crediting (apparently so that it could be relabelled by the supplier for return to Dimmeys). Another is a query from the West Footscray store team leader to Mr Swersky of 11 July 2000 about his concerns over apparent inconsistencies in the labelling of children's nightwear on sale there. The date on the third document (apart from the year 2000) is illegible: it refers to the "Just Dreamin" brand of children's sleepwear "recalled last year [ie, in October 1999] to be relabelled … because it lacked any fire warnings". Counsel also referred to Mr Swersky's response of 21 July 2000 to a query from the Commission of 18 July 2000 in which he refers to the Trade Practices Compliance Manual that he prepared and circulated to relevant staff. 18 I accept that, after August 1999 and, prior to the commission of the offences in July 2000, Mr Swersky took action intended to draw to the attention of staff the importance of complying with relevant Standards and that, after the offences in July 2000, he took further action in that respect. 19 However, the submission made to me on Dimmeys' behalf accurately enough depicts the quality of the effort put into ensuring compliance with relevant Standards: counsel submitted that the commission of the offences with which I am concerned was "the product of carelessness and/or of lax management rather than any deliberate attempt to flout the relevant Standards". I accept that submission, but against the background of Weinberg J's finding in August 1999 to the same effect, it is a consideration which serves to mitigate to a limited extent only the seriousness of the July 2000 offences. In my opinion, for Mr Swersky to allow that laxness of management to continue unremedied after July 2000, with the result that the offence of November 2000 was then committed, serves to aggravate rather than mitigate the seriousness of the November 2000 offence. And it is just that lax system which Mr Swersky allowed to continue after August 1999 and more particularly, after July 2000 too. 20 Following the recall by Dimmeys Store in October 1999 of "Just Dreamin" sleepwear that was not labelled in accordance with AS1249:1990, Mr Swersky produced and circulated his Compliance Manual. In paragraph 6, he identified the items in Appendix 1, which included "children's night clothes", as either having compliance Standards applying to them or as being subject to banning orders". Clause 6 went on to direct that "all buyers are expected to retain a copy of this list [Appendix 1] and be aware of the relevant standards. If a buyer comes across any item that falls within that list, then written approval must be obtained from Brian Swersky to the effect that the product complies with the standards and that all appropriate inquiries have been made, and that if necessary, appropriate warranties and indemnities have been obtained from the supplier". The Commission, in its letter of 18 July, queried when these procedures were introduced and sought copies of Mr Swersky's written approvals approving the sale of the children's night clothes in question, including those the subject of the Commission's action at Townsville in July. Other queries arising out of paragraph 6 of the Manual were also then made. It is apparent from what Mr Swersky, in his response of 21 July, did say that the procedures which he formulated and which are set out in paragraph 6 of his manual were not enforced by him: in lieu of the written approval procedure specified, Mr Swersky said that he gave approvals orally, with no written records being kept. In response to the Commission's query (c): "if no such written approval was given, the basis upon which the nightclothes were made available for sale without such authority", Mr Swersky's reply was: "I am unable to provide you with a specific explanation at this point in time save to say that we commenced highlighting these Trade Practice type issues to our buyers towards the middle of 1999." 21 In his response of 13 July 2000 to a Commission query of 12 July 2000 about why, notwithstanding the Commission's complaint of 10 July 2000 about the display in the Townsville store of unlabelled children's nightwear and Mr Swersky's response of earlier on 12 July, 330 sets of unlabelled nightwear were still on display in the Townsville store, at 3.00 pm on 12 July, Mr Swersky said:

"… I confirm that upon receipt of your fax of 10 July an email was immediately forwarded to all stores highlighting the issue to them. All stores have responded and it would appear that the only store that had the product on show without the correct labelling was our Townsville store. Many of our other stores responded that they did have the product, but in fact it had been correctly labelled. …

In any event Townsville have now been directed to return the product to Time Out Clothing for appropriate relabelling and/or a credit."

22 (Mr Bower's memorandum to the Townsville store of 13 July 2000 already referred to appears to constitute this direction.) 23 Notwithstanding all these problems in July 2000, by November 2000 the Richmond store had a quantity of unlabelled "Just Dreamin" brand child's nightwear garments on display. The fact that so soon after the Commission's complaints in July 2000, the Dimmeys Stores in Richmond could have on display not only children's nightwear that did not comply with the labelling requirements of the Standards, but non-complying garments carrying the same brand "Just Dreamin" as the garments displayed a little earlier in Townsville is eloquent evidence of the quality of the effort Dimmeys' senior management put into dealing with an onerous but essential requirement of the regulatory regime in which it has to operate prior to November 2000. This poor quality oversight by Dimmeys senior management is relevant to the assessment of penalty even though the Commission has not established that the display of the offending garments at the Richmond store was in breach of the undertaking given on 12 July 2000 by Mr Swersky: there is no evidence that those items were then in store at Richmond. 24 Although the Commission's complaints arising out of the display of offending garments at the Townsville store in July 2000 led Mr Swersky to instigate additional action to impress on staff the importance of allowing to be displayed for sale items in respect of which there were prescribed Standards only if they complied with those Standards, I do not accept that Dimmeys did that which it should have done in the circumstances or which reasonably could have been expected of it to prevent the display in any of its stores of children's night garments that did not comply with the two Standards here in question. It was only subsequent to the November 2000 offence that I think Mr Swersky implemented extensive action likely to be effective, if properly enforced by Dimmeys' senior management, to control the problem of displaying for sale products, including children's nightwear, that do not conform with the requirements of relevant Standards. 25 In July 2000 and again in November 2000, Dimmeys committed offences constituted by a failure to comply with Consumer Product Safety Standards in contravention of the provisions of the Trade Practices Act 1974 (Cth) which have been said to be "plainly of the highest importance". See Gardam v Splendid Enterprises Pty Ltd (1987) ATPR 48,495 at 48,503. 26 So far as the July offences are concerned, I reject the Commission's submission that the maximum penalties imposable in respect of each of the six charges is not that fixed by s 79(2) the Trade Practices Act 1974 (Cth): each of these contraventions took place within the space of three days, each was constituted by the same conduct of Dimmeys Stores in allowing the same range of garments, which included the offending garments, to be displayed for sale during that period. The maximum aggregate penalty which I can therefore impose in respect of the six July 2000 offences is $200,000. 27 I take into account, in favour of Dimmeys Stores, that on each occasion when the Commission drew its attention to its having infringed the Act in July and November 2000, it promptly took action required by the Commission to minimise the potentially harmful consequences of its conduct. I also take into account the fact that it co-operated with the Commission in that it never sought to place any impediment in the way of the Commission's investigation and that promptly upon the issue of proceedings by the Commission, it indicated its intention to plead guilty to the charges. I think these matters justify discounting by a third the fines that would otherwise be appropriate in respect of the July and November offences. I have noted the diminished profitability of Dimmeys in recent times, although it is apparent that it is able to afford to pay substantial penalties, so that no further reduction in penalty is warranted. 28 Weinberg J, in August 1999, imposed a penalty of $60,000 for the breach by Dimmeys Stores of the same provisions of the Trade Practices Act 1974 (Cth) in respect of the non-complying bicycle. It is apparent that, in arriving at this penalty, his Honour gave Dimmeys Stores the benefit of the conventional substantial discount of about one-third for Dimmeys co-operation and prompt plea of guilty. But for that, it can be expected that his Honour would have imposed a penalty of about $90,000 on that occasion. 29 There is, in my opinion, nothing to justify the imposition of a lesser penalty in respect of the July offences and much to require an increased penalty. However, I take into account that, in addition to a substantial fine, I intend to impose an injunction binding not only on the offender but also on its directors which will operate for a substantial future period of time, not only to mark the Court's disapproval of the defendant's conduct, but also to act as an additional deterrent to further similar offences. I also take into account that while the defendant's breaches of s 79(1) are serious, I would not be justified in sentencing the offender on the basis that the offences are further aggravated by having exposed members of the public to proven risk of serious harm. 30 I will therefore adhere to the provisional suggestion I made in argument that a total penalty of about $90,000 was a proper one in respect of the six July offences. I will discount this by one-third and will therefore impose in respect of each of the six July offences a fine of $10,000, ie, $60,000 overall. 31 The one November 2000 offence, for the reasons given, requires the imposition of a significantly heavier fine. $150,000 is, I think, the appropriate starting point. This will be discounted by one-third with the result that Dimmeys Stores will be fined $100,000 in respect of that offence. 32 An injunction of the kind sought under s 80(4) the Trade Practices Act 1974 (Cth) by the Commission can issue whether or not it appears that the person may engage again in conduct of the kind complained of. In Trade Practices Commission v Mobil Oil Australia Ltd (1984) 4 FCR 296 at 300, Toohey J recognised the appropriateness of exercising this power: "to mark the court's disapproval by an injunction as well as a monetary penalty" of the offender's conduct. Dimmeys put little serious effort into ensuring that product lines, including in particular its regular lines such as children's nightwear, were only displayed for sale in circumstances in which they complied with relevant Standards, in the period between the Court hearing of August 1999 and July 2000. This lack of serious effort persisted until the offence of November 2000 became the subject of Commission action. This is therefore a proper case for the Court to grant an injunction to mark the Court's disapproval of Dimmeys Stores' conduct, even though it is necessary that substantial fines also be imposed. The separate justification for injunctive relief because there is a risk that the offender may continue to offend also clearly exists here. 33 Given the matters I have referred to, I will issue an injunction appropriately framed directed to Dimmeys Stores and to its directors and employees. The Commission must bring into Court an appropriate order. 34 In addition to penalties and the injunction, Dimmeys will also be ordered to implement the compliance program proposed by the Commission so that there will be an order in terms of the Commission's draft in that respect. 35 Dimmeys Stores must also pay the Commission's costs of and incidental to the entire action, including reserved costs.

36 I have given consideration to the form of the injunction that is appropriate in this case. Dimmeys Stores contravened s 65C the Trade Practices Act 1974 (Cth) in November 1998 and was convicted and fined heavily for that offence in August 1999. The offence was committed in respect of bicycles. Dimmeys was convicted again before me in these proceedings in respect of contraventions of s 65C committed in Townsville in July 2000 and then in respect of a contravention committed in November 2000 at Richmond, Victoria. On the latter two occasions, all the offences were committed in respect of children's nightwear. 37 The evidence shows over the whole period, November 1998 to November 2000, a lack of any serious commitment by Dimmeys' senior management to implementing procedures likely to ensure compliance with s 65C. This omission did not occur only in relation to a particular class of goods. It was, in my opinion, a systemic management failure throughout the period. 38 In ICI Australia Operations Pty Ltd v Trade Practices Commission (1992) 38 FCR 248, in a case not dissimilar from this, ICI was convicted of a number of breaches of the resale price maintenance provisions of the Trade Practices Act 1974 (Cth), committed in 1987. It had previously been convicted of other breaches of the same section of that Act in 1983. An injunction was issued. Lockhart J, at 261 in a passage which had the agreement of the other two members of the Full Court, said of the power conferred on the Court by s 80:

"… in an appropriate case the court may grant an injunction to restrain the respondent from engaging in the practice of resale price maintenance notwithstanding that only some of the acts which are included in paragraphs of subs (3) of s 96 of the Act are found to have been committed. A case where the respondent has committed earlier serious contraventions of the resale price maintenance provisions of the Act may be an appropriate case where an injunction in this general form may be granted."

39 The Court there issued an injunction in respect of a wide range of conduct constituting resale price maintenance: it did not accept that s 80 limited the Court's power to enjoining only a repetition of the specific kinds of conduct constituting the contraventions of the Trade Practices Act 1974 (Cth) that were the subject of the proceeding before it. 40 Though the situation in ICI involved deliberate breaches, here the circumstances in which the various offences were committed, in so far as they show a systemic management failure on the part of Dimmeys, can equally be regarded as revealing a very serious position so far as non-compliance with the relevant provisions of the Trade Practices Act 1974 (Cth) are concerned. 41 I will therefore issue an injunction in wider terms than the narrow injunction now proposed by the Commission which is directed only to the conduct described in each of the counts in the two summons.

I certify that the preceding forty-one (41) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Drummond.

Solicitor for the Prosecutor: Commonwealth Director of Public Prosecutions

Dates of Hearing: 22 February and 16, 20 and 22 March 2001

Dates of Judgment: 20 and 22 March 2001

Trade Practices Act 1974(Cth)ss 65C(1), 79, 80

Crimes Act 1914(Cth)s 16A(2)(a)

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