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.