Application of the relevant sentencing principles
17 There was little, if any, difference between the positions taken by counsel for the prosecutor, and counsel for the defendants, concerning the sentencing principles which should govern this matter.
18 The object of the Act is set out in s 2. It is to "enhance the welfare of Australians through the promotion of competition and fair trading and provision for consumer protection". Section 65C is headed "Product safety standards and unsafe goods". As French J observed in Gardam v Splendid Enterprises Pty Ltd (supra) at 48,503 "[t]he sections of the Act which provide for the declaration of consumer product safety standards and their enforcement are plainly of the highest importance".
19 In Hamlyn v Norman Ross Stores Pty Ltd (1985) ATPR ¶40-514, a case which also concerned the supply of defective bicycles, Wilcox J stated at 46,162:
"The policy behind Pt V is that corporations engaged in trade and commerce bear the responsibility of compliance with the standards prescribed by or under that Part for consumer protection: of which personal safety is perhaps the most fundamental matter."
20 It is common ground that the commission of these offences by the defendants was the product of carelessness, and of lax management, rather than any deliberate attempt to flout the relevant Standards.
21 Neither defendant had imported or sold bicycles at any previous time. This does not absolve them from their obligations to comply with the Act.
22 Neither defendant made any inquiry as to whether there may have been a consumer product safety standard applicable to bicycles generally, or to bicycles of this type. 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.
23 Mr Zappelli, who acted on behalf of Starite as the importer of the goods into Australia, was not entitled simply to assume that bicycles of this type, purchased in China for next to nothing, would comply with Australian product safety standards merely because he had been told they had been made for the Australian market, and were part of a cancelled order. 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. It was a breach of the Act which was separate and distinct from the breaches of the Act committed by Starite.
24 Among the matters which I am required to take into account when imposing a penalty for offences of this kind is the need for general deterrence. In relation to crimes which lack premeditation, and which are committed in highly emotional circumstances, the question of general deterrence has sometimes seemed to me to be accorded greater weight than it should properly bear. In such cases there is no real likelihood that a substantial penalty will, in fact, deter others from committing similar offences. That is not, in my view, the position in relation to offences under Pt V of the Act. The imposition of substantial penalties, particularly those which are well publicised, can heighten the business community's awareness of the need to comply with product safety standards, and the dire consequences of any failure to do so.
25 In Miller v Cunningham's Warehouse Sales Pty Ltd (1994) ATPR ¶41-321 at 42,269 von Doussa J observed:
"I accept that since learning of the offences each of the defendants has taken appropriate steps to put in place compliance programs. … The likelihood of similar offences occurring in the future at the hands of either defendant is therefore reduced accordingly. It is, however, important when imposing a penalty for an offence of the kind now before the Court to remember the purpose of Pt V 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."
26 The offences committed by Starite and Dimmeys must, in my opinion, be regarded as being extremely serious. The conduct of the defendants has resulted in a significant number of defective bicycles being supplied to children, among the most vulnerable members of our community. The appearance of these bicycles is calculated to entice those who use them into still more danger. It may fairly be said that each of the bicycles supplied was, and is, an accident waiting to happen.
27 The cumulative effect of the many defects identified in evidence before me makes the breaches in this case significantly more serious than those which were the subject of prosecution in Hamlyn v Norman Ross Stores Pty Ltd (supra). I note that in that case the principal defendant was fined $20,000. This was at a time when the maximum penalty was $50,000. I note also that the maximum was raised from $50,000 to $100,000 in 1986. It was raised again in 1992 to the current figure of $200,000. The case provides a useful illustration of the gravity with which such breaches of the Act should be viewed.
28 In Pugh v Clark Rubber Ltd (1993) ATPR ¶41-258 the defendant was prosecuted for having failed to affix a warning notice and child resistant fasteners to bean bags which it had supplied. Heerey J was invited by counsel for the defendant to exercise his discretion under s 19B of the Crimes Act and to discharge the defendant without conviction, upon its entering into a recognisance. Alternatively, counsel for the defendant submitted, an appropriate penalty was a fine of $2,000.
29 His Honour responded as follows at 41,473:
"In my view the seriousness of these offences renders either proposal quite inadequate. As I have noted, the consumer product safety standard that was breached in the present case was one designed to protect human life and, moreover, human life at a stage of special vulnerability. In the present case the products sold were doubly dangerous. The presence of either the childproof fastener or the warning label would have lessened the risk, but these goods had neither. Seventy-one of the defective bean bags have passed into the community and are practically speaking beyond identification and recall. Some of them at least can be expected to remain in Victorian households for an indefinite period. The evidence does not disclose any harm that has occurred thus far. But that circumstance is a matter of good fortune rather than the consequence of any ameliorative conduct by the defendant which might tell significantly in its favour. Were a light penalty to be imposed because of this factor and some tragic event occurred subsequently, it would be too late to adjust the penalty.
The defendant was a retailer experienced with goods of this description. No satisfactory explanation has been established as to just how the breach occurred. In all the circumstances I consider a penalty of $25,000 on each charge to be appropriate."
30 The maximum penalty applicable at the time of the commission of the offences in that case was $100,000.
31 A number of the points made by Heerey J in the passage set out above are directly applicable to the present case. One factor which is different is the lack of any prior experience on the part of either defendant in dealing with bicycles. As against that, however, both Starite and Dimmeys are well acquainted with product safety and product information standards.
32 Mr Wheelahan, on behalf of the defendants, submitted that I ought to differentiate in the penalties which are to be imposed by extending leniency to Starite. He submitted that Dimmeys had always been the intended recipient of the bicycles. Starite had, in effect, acted as no more than a conduit for Dimmeys. He submitted that having regard to Starite's limited role, it would be appropriate that I exercise my discretion under s 19B(1) of the Crimes Act, and that I discharge Starite without proceeding to conviction. Dimmeys alone would then be subjected to the imposition of a pecuniary penalty.
33 I am clearly of the view that Mr Wheelahan's submission should be rejected. The offence committed by Starite was entirely separate from, though related to, the offence committed by Dimmeys. To import into Australia a large number of bicycles, designed for children, without even having inspected them (other than by seeing them in a photograph) and without having endeavoured to ascertain whether they complied with product safety standards was, in my view, an extremely serious breach of s 65C of the Act. None of the criteria set out in s 19B(1)(b) of the Crimes Act make it appropriate to exercise the powers contained therein.
34 I turn then to the question of penalty. It was common ground before me that each defendant has substantial assets. Each defendant is well able to pay any fine which might be imposed in relation to these offences. Section 16C of the Crimes Act requires a Court to take into account the financial circumstances of the person who is to be fined before imposing any such fine. I have examined the financial statements tendered on behalf of each defendant. They confirm the strong financial position of each of Starite and Dimmeys. I take these matters into account.
35 Ms Strong, who appeared for the prosecutor, conceded as she was bound to do that there were a number of mitigating circumstances which each defendant was entitled to call in aid. These include their pleas of guilty, which were entered at the earliest possible time, the extent of their cooperation with the investigating and prosecuting authorities, their lack of any prior convictions, and the steps taken by Dimmeys to recall the defective bicycles when their dangerous condition was drawn to its attention. The evidence discloses that Dimmeys spent approximately $25,000 in publicising the defects as part of its recall process. That too, is a matter properly to be taken into account.
36 Mr Wheelahan submitted that the evidence showed that neither defendant had any intention of importing or supplying bicycles in the future. Moreover, since these offences were committed, Dimmeys had taken steps to ensure that its buyers were aware of all relevant product safety standards. It was unlikely that there would be a recurrence of the breaches of the Act.
37 Ms Strong responded by submitting that it was really a case of too little too late. She submitted that little weight should be given to Dimmeys' belated acknowledgment of the need to instruct its staff in the importance of complying with the Act.
38 In my view, Dimmeys has taken reasonable steps to ensure that the conduct which is the subject of this proceeding is not repeated. I noted the presence of Mr Zappelli on behalf of Starite, and of Mr Swersky on behalf of Dimmeys, in Court during the course of the proceedings. I accept Mr Wheelahan's submission that each defendant is remorseful for its actions. I propose to take that remorse into account in reducing the penalties which would otherwise have been imposed.
39 Ms Strong submitted that I should not differentiate between the penalties imposed upon each defendant. I reject that submission. The evidence establishes clearly that Starite is beneficially owned by Mr Zappelli and the members of his family. He and his family also have a substantial interest in Dimmeys. By fining each defendant separately, the Court is, in effect, punishing Mr Zappelli and his interests twice. Their conduct may warrant separate punishment, but some recognition should be accorded to the fact that the two offences are closely related. In my view these factors warrant the imposition of a somewhat lower penalty than would otherwise be merited upon one of the defendants. I accept Mr Wheelahan's submission that the defendant to benefit should be Starite.
40 Having regard to all of the circumstances, I consider that, in proceeding number V 187 of 1999, Dimmeys Stores Pty Ltd should be fined the sum of $60,000. In proceeding number V 188 of 1999, Starite Distributors Pty Ltd should be fined the sum of $30,000. There will be orders in each proceeding that the defendant pay the prosecutor's costs.
I certify that the preceding forty (40) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Weinberg.