Commissioner for Fair Trading, Office of Finance and Services v Hua Yang Australia International Trading and Investment Pty Limited and Huadi Bi

THE EVIDENCE

1. The parties tendered an evidence folder (Ex. A) which contained the majority of the affidavit and other evidentiary material which was relied upon.
2. The Commissioner relied on the following affidavits contained in Ex. A: 1. Peter John Kemp (an investigator with the Commissioner's office) of 23 September 2015 along with Ex. "PJK" to that affidavit; 2. Peter John Kemp of 29 September 2015; 3. Peter John Kemp of 19 October 2015; 4. Yong Xiong He of 29 September 2015.
3. The declared electrical articles which are the subject of the offences, namely three chargers and a travel adaptor seized from the defendants, were separately admitted as Ex. B.
4. The Commissioner also filed a Statement of Facts which essentially summarised the content of the affidavit material. Significantly however, that statement of facts also recorded the following: 5.8 Officer Kemp's examination of the four above declared electrical articles revealed: 5.8.1 The articles were of poor quality; 5.8.2 The constructions of these articles was such that they would never have passed testing in accordance with the required Australian Standards; therefore they were not only unapproved, but would not have met the essential electrical safety requirement; and 5.8.3 Markings which appear on these four articles were misleading in that those markings implied that each article was compliant and safe.
5. Both the first and second defendants relied upon an affidavit of Huadi Bi (who is the second defendant and the sole director and shareholder of the first defendant) of 13 October 2015. The second defendant was cross-examined at some length on the contents of that affidavit. I will return to that evidence in due course.

THE RELEVANT LEGISLATION

1. Before turning to the facts, it is appropriate that I set out the relevant legislative provisions.
2. Section 11 of the Electricity (Consumer Safety) Act 2004 (NSW) ("the Act") is in the following terms: 11 Approval of model of electrical article (1) The Secretary may, by order in writing, approve any model of electrical article (whether or not a declared electrical article) if: (a) an application for the approval is made in accordance with the regulations, and (b) in the case of a model of electrical article that is a declared electrical article-the Secretary is satisfied that an article of that model complies with any class specification for that article, and (c) the Secretary is satisfied that the model of electrical article complies with any other specification (other than a class specification) that the Secretary has determined should be applicable, or applicable in a modified form, to that model of electrical article. Note : If the Secretary determines a model specification under paragraph (c), section 7 provides that a class specification for an electrical article of that particular model will be taken not to include anything that is inconsistent with that model specification. (2) The Secretary may refuse to approve a model of electrical article unless an electrical article of that model has been lodged with the Secretary for testing or inspection. (3) The Secretary may approve a model of electrical article subject to it complying with a model specification. (4) If the Secretary approves a model of electrical article under this section, the Secretary must, by written notice given to the applicant for the approval, immediately provide the applicant with the following particulars: (a) the name of the model approval holder, (b) a description of the model, (c) the fact that the Secretary has approved the model, (d) the date of the approval, (e) the duration of the approval, (f) the mark (if any) approved by the Secretary for articles of the model, (g) such other particulars as the Secretary considers appropriate or that are prescribed by the regulations. (5) If the Secretary is not satisfied that a model of electrical article should be approved, the Secretary must, by written notice given to the applicant for the approval, inform the applicant within 21 days of the refusal: (a) that the Secretary has refused the application for approval, and (b) of the reasons for refusing the application.
3. Section 16 of the Act is in the following terms: 16 Electrical articles must meet certain standards before they can be sold (1) A person must not sell an electrical article if: (a) in the case of a declared electrical article-the article is not of: (i) a model of electrical article that has a model approval, or (ii) a class, description or model that has been approved or registered by the relevant authority for another State or a Territory, or (iii) a model of electrical article that has been approved or certified under a recognised external approval scheme (being an approval or certification that is evidenced by marking on the article), or (b) the article is not marked in accordance with the regulations, or (c) the article does not comply with any one or more of the following: (i) the class specifications (if any) for the article, (ii) the model specifications (if any) for the article, (iii) any other specifications prescribed by the regulations (if any) for the article, (iv) any other requirements prescribed by the regulations (if any) for the article. Maximum penalty: (a) in the case of a second or subsequent offence by a corporation-7,500 penalty units, or (b) in the case of a first offence by a corporation-5,000 penalty units, or (c) in the case of a second or subsequent offence by an individual-750 penalty units or imprisonment for 2 years, or both, or (d) in the case of a first offence by an individual-500 penalty units. Note : An offence against subsection (1) committed by a corporation is an executive liability offence attracting executive liability for a director or other person involved in the management of the corporation-see section 45. (2) The Secretary may, by order in writing and subject to such conditions, if any, as are specified in the order, exempt a person or persons of a specified class from the operation of any or all of the provisions of subsection (1).
4. Section 45 of the Act renders a director liable for offences by a corporation and is in the following terms: 45 Liability of directors etc for offences by corporation-offences attracting executive liability (1) For the purposes of this section, an "executive liability offence" is an offence against any of the following provisions of this Act that is committed by a corporation: (a) section 16 (1), (b) section 20 (1), (c) section 24 (1)-(3), (d) section 27 (4), (e) section 31 (1). (2) A person commits an offence against this section if: (a) a corporation commits an executive liability offence, and (b) the person is: (i) a director of the corporation, or (ii) an individual who is involved in the management of the corporation and who is in a position to influence the conduct of the corporation in relation to the commission of the executive liability offence, and (c) the person: (i) knows or ought reasonably to know that the executive liability offence (or an offence of the same type) would be or is being committed, and (ii) fails to take all reasonable steps to prevent or stop the commission of that offence. Maximum penalty: The maximum penalty for the executive liability offence if committed by an individual. (3) The prosecution bears the legal burden of proving the elements of the offence against this section. (4) The offence against this section can only be prosecuted by a person who can bring a prosecution for the executive liability offence. (5) This section does not affect the liability of the corporation for the executive liability offence, and applies whether or not the corporation is prosecuted for, or convicted of, the executive liability offence. (6) This section does not affect the application of any other law relating to the criminal liability of any persons (whether or not directors or other managers of the corporation) who are accessories to the commission of the executive liability offence or are otherwise concerned in, or party to, the commission of the executive liability offence. (7) In this section: "director" has the same meaning it has in the Corporations Act 2001 of the Commonwealth. "reasonable steps" , in relation to the commission of an executive liability offence, includes, but is not limited to, such action (if any) of the following kinds as is reasonable in all the circumstances: (a) action towards: (i) assessing the corporation's compliance with the provision creating the executive liability offence, and (ii) ensuring that the corporation arranged regular professional assessments of its compliance with the provision, (b) action towards ensuring that the corporation's employees, agents and contractors are provided with information, training, instruction and supervision appropriate to them to enable them to comply with the provision creating the executive liability offence so far as the provision is relevant to them, (c) action towards ensuring that: (i) the plant, equipment and other resources, and (ii) the structures, work systems and other processes, relevant to compliance with the provision creating the executive liability offence are appropriate in all the circumstances, (d) action towards creating and maintaining a corporate culture that does not direct, encourage, tolerate or lead to non-compliance with the provision creating the executive liability offence.
5. Finally, section 48 of the Act is in the following terms: 48 Nature of proceedings for offences (1) Proceedings for an offence against this Act or the regulations may be dealt with: (a) summarily before the Local Court, or (b) summarily before the Supreme Court in its summary jurisdiction. (2) If proceedings are brought in the Local Court, the maximum monetary penalty that the Local Court may impose for the offence is 200 penalty units, despite any higher maximum monetary penalty provided in respect of the offence.

A preliminary issue - evidence RELIED UPON BY THE COMMISSIONER

1. An issue arose in the proceedings as to the relevance of particular evidence, the tender of which was pressed on behalf of the Commissioner.
2. In short, counsel for the Commissioner submitted that the evidence established that a particular electrical item ("the yellow charger") which did not have model approval, and the use of which was said to have been connected to the death of Sheryl Aldeguer ("the deceased"), had been sold to the deceased by the first and/or second defendant. It should be noted that the alleged sale of this yellow charger forms no part of any of the charges before me. Counsel for the Commissioner further submitted that even if I was not satisfied that the yellow charger was sold to the deceased by the first and/or second defendant, the evidence established that it was essentially identical, in terms of its appearance, circuitry and component parts, to a red charger and a blue charger which form part of Ex. B, they being two of the items which are the subject of offences to which the defendants have pleaded guilty. It was submitted that if I came to the view that such items were identical, there was expert evidence which demonstrated the danger posed to members of the public by electrical articles which do not have model approval.
3. Counsel for the defendants submitted that the evidence fell substantially short of establishing that the yellow charger was sold by either defendant. However, counsel accepted that the evidence established that the yellow charger on the one hand, and each of the red and blue chargers on the other, were essentially identical, and that the expert evidence was relevant on the basis put by counsel for the Commissioner.
4. Having heard submissions, I rejected the Commissioner's position that the evidence established that one or other of the defendants had sold the yellow charger to the deceased. However I concluded that the evidence established that the construction of the yellow charger was essentially identical to that of each of the red and blue chargers, and that the expert evidence demonstrated the danger posed to members of the public by the sale of items of the kind which are the subject of the present charges, and which are not approved. I indicated that I would incorporate, into my final judgment, my reasons for reaching those conclusions. A summary of the evidence, and those reasons, now follow.
5. On 13 April 2014 the deceased met with a friend, John Crame. In a statement dated 5 August 2014 (Ex. PJK p. 52-53) Mr Crame stated (commencing at [8]): "The plan was to just hang out and spend time together. We went to my house and then Sheryl, Norman (who was a friend of mine) and myself attended the Campsie town centre. It's like a mini Westfields. We just walked around and looked around the shops. We came across a stall underneath the escalators. I saw that the stall was selling numerous types of phone accessories. Both Sheryl and I made the decision to purchase a USB style IPhone charger. I think Sheryl and I only paid $4.95 for this charger. I think Sheryl also purchased a stand for her phone and I bought myself a couple of USB cables for my car. I don't think the stall had a name however it was located precisely under the escalators on the ground floor opposite a jewellery store.
6. Mr Crame learned of the death of the deceased on 23 April 2014. Detective Henry, a police officer who attended the deceased's premises on that day, made a statement (Ex. PJK commencing at p. 57) in which he said (at [4] and following): "… We then took the deceased's white IPHONE 5 and yellow USB style phone charger from her room and took it to the kitchen. Using the yellow USB type charger which was inside the bedroom, we attempted to turn on the deceased's mobile phone which was dead. The deceased's mobile phone would not charge either. Once again, we just wanted to establish if the deceased had been using her mobile phone or anything else relevant just prior to her death. It's probably at this stage that we should have "twigged" that an electrical event may have occurred, however unfortunately we didn't identify this."
7. On the following day, Detective Henry was advised that a post mortem examination of the deceased had revealed burning injuries to various parts of her body, consistent with her having been electrocuted. Police then engaged John Gardener, an electrical engineer, to examine and test (inter alia) the yellow charger. Mr Gardener provided an expert certificate setting out the findings of his examination (Ex. PJK commencing at p. 73). At [40] of his certificate (Ex. PJK at p. 81 and following) Mr Gardener stated the following (noting that his references to the "USB adapter" were references to the yellow charger): The USB adaptor 40. A visual inspection of the yellow USB adaptor revealed that there were no approval numbers or compliance marks on the cover which indicated to me that it had not been subjected to any of the tests that are required before an electrical item or appliance is approved for sale and distribution in Australia as a Declared Article. I also noted that the word Adaptor was misspelt as "Adapeer", which confirmed to me that it was a counterfeit product. 41. When the USB adaptor was plugged in and power was connected it appeared to be working and the voltages on the internal wires appeared to be normal. However after about 30 seconds I noted the output voltage rose rapidly to about 160 volts and then there was a flash and loud "pop" from inside the adaptor, which was consistent with a "flashover" between the high voltage and low voltage components inside the USB adaptor. 42. The test was repeated that the "flashover" occurred instantly, indicating to me that the USB adaptor had self destructed, and that there must have been a prior internal defect or fault whereby the USB adaptor failed catastrophically when the normal operating voltage was applied. The plastic case was then cut open to reveal evidence of burning, soot deposits and carbonisation of the internal components. Opinion 1 I formed the opinion that the fault or defect in the USB adaptor developed progressively and may initially consisted of current intermittently "tracking" across a printed circuit board, or between components, from the 240 vaults power connections inside the adaptor. If so, it is highly likely that the 240 volts would then be transferred to the outer case of the Iphone, and this would then have exposed anyone holding the IPHONE to the risk of a severe or fatal electric shock.
8. Mr Kemp attended the police on 3 June 2014, at which time he was given access to the yellow charger. He made enquiries with the relevant State and Territory instrumentalities and said (at para. [10] of his affidavit of 23 September 2015) that no entity had issued any certificate of approval for the yellow charger. He also expressed a belief (at [11]) that the yellow charger did not comply, in terms of its construction, with the relevant Australian Standard(s).
9. On 28 September 2015 Mr Kemp forwarded a number of photographs of the yellow charger to Mr He, along with (inter alia) the red and blue chargers in Ex. B. Mr He is employed by the Commissioner and holds a Bachelor of Engineering Degree from the South China University of Technology. In his affidavit (Ex. A commencing at p. 305) Mr He explained that he undertook an examination of the red and blue chargers, which he then compared with the photographs of the inside and outside of the yellow charger. Mr He concluded that the red and blue chargers, and the yellow charger, were identical in their design and component parts.
10. Counsel for the Commissioner submitted that when taken as a whole, the evidence supported a conclusion that the deceased had purchased the yellow charger from the first and/or second defendant. Counsel pointed, in particular, to: 1. the evidence of Mr Crame as to the events of 13 April 2014; and 2. the fact that the yellow charger was similar in its construction and design to the red and blue chargers.
11. Counsel for the Commissioner appeared to acknowledge that acceptance of that submission would support a conclusion that a further offence against s. 16(1)(a) of the Act (or perhaps an even more serious offence) had been committed by one or other (or perhaps both) of the defendants, in circumstances where no such offence had been charged against either of them. However counsel emphasised that the evidence surrounding the yellow charger was not relied upon to aggravate the defendants' offending, or to establish the commission of a more serious offence, in circumstances where no such offence had been charged. Counsel also emphasised that the evidence was not relied upon in order to establish any causal link between the yellow charger and the deceased's death.
12. Counsel submitted that the evidence surrounding the yellow charger: 1. established that the defendants' offending was not isolated; 2. established that such offending was difficult to detect; and 3. highlighted the importance of the Act, and the danger posed to the community by the sale of electrical items which did not have the requisite approval.
13. Counsel for the defendants accepted that the appearance and component parts of the red and blue chargers were identical to those of the yellow charger. However, he submitted that the evidence fell short of establishing that the yellow charger had been sold by either of the defendants. Counsel also highlighted what he submitted was the impermissibility of this Court taking into account, as a circumstance of aggravation, a fact which, if proved, would warrant a conviction for a more serious offence. However, he accepted that the evidence of Mr Gardener established the danger of using unapproved items of the kind the subject of the present chargers.
14. The general proposition that a sentence imposed on an offender should take into account all of the circumstances of the offence is subject to a more fundamental and important principle, namely that no person should be punished for an offence for which he or she has not been convicted. In imposing a sentence, a court is entitled to consider all of the conduct of an accused, including that which would aggravate the offence. However the Court cannot take into account circumstances of aggravation which would warrant a conviction for a more serious offence: R v De Simoni (1981) 147 CLR 383; [1981] HCA 31 at 389 per Gibbs CJ.
15. There was some inconsistency between the stated position of the Commissioner as to the relevance of the evidence of the yellow charger, and the approach which was taken in argument. Such inconsistency was demonstrated in a number of ways.
16. Firstly, the disavowal of the proposition that the evidence surrounding the yellow charger was relied upon to establish the causal link referred to in [24] above was difficult to reconcile with the fact that such evidence included references to the circumstances of the deceased's death.
17. Secondly, and stemming from the first matter, if all the Commissioner was really seeking to do in pressing for the admission of the evidence was to highlight the fact that offending of this nature was difficult to detect, and to emphasise the danger posed to the community by the sale of electrical items which did not have the requisite approval, there was no need to make any reference whatsoever to the circumstances surrounding the death of the deceased, or the police investigation which was conducted in relation to it. The difficulty of detecting offending of this kind, and the danger posed by the use of unapproved electrical items, were matters which were capable of being established by reference to the evidence of Mr Gardener, Mr Kemp and Mr He, and without any reference at all to the deceased.
18. Thirdly the proposition that the evidence established that the present offending was not isolated tended to assume that an offence had been committed in respect of the sale of the yellow charger by one or other (or both) of the defendants. As noted in [15] above, the alleged sale of the yellow charger forms no part of any of the offences to which the defendants have pleaded guilty.
19. I am satisfied that a charger was purchased by the deceased from a stall at the Campsie Centre on 13 April 2014. Even if I was prepared to accept that such charger was purchased by the deceased from the defendants' stall, the evidence does not establish beyond reasonable doubt that it was the yellow charger which was so purchased. In particular, and as was expressly conceded by counsel for the Commissioner, no attempt was made to have Mr Crame identify the yellow charger, be it from a photograph or from viewing the item itself, as that which the deceased purchased at Campsie (apparently in his presence) on 13 April 2014. For these reasons I am not satisfied that the yellow charger was sold by the first and/or second defendant.
20. However, I am satisfied that the appearance, and the component parts, of the yellow charger are identical to those of the red and blue chargers in Ex. B. There is no dispute that the red and blue chargers were available for purchase at, and were seized from, the defendants' stall at the Campsie Centre in June 2014. Mr Gardener's testing of the yellow charger, and his opinion, is evidence of the danger posed by electrical articles which have not received the necessary approval. Put simply, that evidence establishes that any person who uses an item such as the red or blue charger is at risk of suffering a severe, or perhaps fatal, electric shock.
21. It is on that basis, and on that basis alone, that I admitted, and have had regard to, the evidence of the yellow charger. I make it clear that in determining penalty, I have not taken into account, as a circumstance of aggravation, the death of the deceased.

THE FACTS OF THE PRESENT OFFENDING

1. On 20 June 2014 Mr Kemp attended the Campsie Centre and observed a stall selling a number of electrical items on level 1 (affidavit of Mr Kemp of 23 September 2015 at [12]-[13]). He saw what he described as "identical" types of USB style chargers for sale (i.e. identical to the yellow charger).
2. Mr Kemp had a conversation to the following effect with a male at the stall who said his name was "Jackie": KEMP: Jackie I am an investigator with NSW Fair Trading. I have been informed that a woman purchased a phone charger from here and while using it she was electrocuted." JACKIE: Really? KEMP: And from what I have seen here I don't see anything for sale here that is legal. Displaying for sale is selling and by having all of these items, you may be committing an offence. JACKE: I do not own the store. I am just working here. KEMP: I suggest you remove all of these items from sale, I intend to take some of these items for examination and will give you some paperwork and a receipt.
3. The seizure notice issued by Mr Kemp at the time (Ex. PJK at p. 13) described four items which were seized: 3 x USB charger 1 x travel adapter
4. As noted, the items seized by Mr Kemp are Ex. B. Photographs of the entirety of the items which were on display at the stall appear at p. 16 - 21 of Ex. PJK. There is no issue that the first defendant was the lessee of the stall from which the items were seized (Ex. PJK at p. 35 and following).
5. None of the items in Ex. B were approved under s. 11 of the Act. Indeed, the statement of facts makes it clear that even if they had been submitted for approval, such approval would never have been forthcoming, an indication of the fact that they were inherently dangerous. Moreover, as I have discussed further below, markings which appeared on them were misleading.
6. On 28 September 2015 Mr Kemp attended the Campsie Centre again. No store within the centre was selling any electrical goods (Ex. PJK at p. 224).
7. Mr Kemp then made further inquiries regarding the conduct, by the first defendant, of its business. On 6 October 2015 he attended shops A9/A11 at the Westfield Hurstville Shopping Complex, an address from which he had been advised that the first defendant was conducting business. There were no electrical items for sale.

THE EVIDENCE OF THE DEFENDANTS

1. The first and second defendants relied on an affidavit of Huadi Bi, the second defendant, of 13 October 2015 (Ex. A at p. 318 and following).
2. The first defendant was incorporated on 7 November 2011. In or about July/August 2012 it entered into a three year lease of retail premises in Hurstville from which it sold crystal products, speakers and costume jewellery. That business did not offer any phone accessories for sale, other than mobile phone cases. It was not particularly successful and was ultimately closed.
3. In June/July 2013 the first defendant entered into what the second defendant described (at para. [13] of her affidavit) as "a pop up store at the Campsie Centre". The first defendant in fact entered into three separate lease agreements in relation to that store. The first two were for periods of five months each. The third was for a period of two months from 1 May 2014 to 30 June 2013. The first defendant operated a business at the Campsie Centre for a total of approximately 51 weeks. The business was closed following Mr Kemp's issue of the seizure notice, although the first defendant continued to pay rent for the space until August 2015.
4. The second defendant, who is the sole director and shareholder of the first defendant, was born on 4 May 1971 in Guangdong, China. In December of 2010 she was granted a business visa by the Australian Government. She travelled to Australia in February 2011 with a view to setting up a business. Thereafter, she travelled to and from China sourcing stock.
5. Commencing at para. [16] of her affidavit the second defendant said (inter alia): "16. The pop up store at Campsie Centre was used by me to sell crystal products, costume jewellery and speakers. These items I imported from China. In addition I sold mobile phone cases and accessories. I purchased the mobile phone cases and accessories from Flemington Markets where I was able to buy those items in bulk. 17. At some stage in 2014 after requests were made by potential customers I purchased some chargers from Flemington Markets for use with the speakers that are sold. These were purchased at a price of three or four items for $5. I then offered for sale these items at $5 per unit and I would describe them as being small chargers. I did not offer the chargers for sale to be used for mobile phones, they were only offered for sale for use with the speakers. 18. In additional to these small chargers I also purchased what I would describe as larger chargers for re-charging mobile phones. … 20. After becoming aware of the danger of the chargers I immediately ceased to operate the pop up store and accordingly stopped trading at approximately 9 days prior to my lease expiring. 21. I continued to operate a store. That store is located at Hurstville Shopping Centre. It sells costume jewellery, crystal products and telephone accessories. 22. I no longer purchase chargers from Flemington Markets and instead obtain them from a company that I believe to be a reputable supplier being Sansai Australia Pty Limited at 24/25-33 Alfred Road Chipping Norton. These chargers are compatible with mobile phones. … 24. After being made aware of the dangers of selling the items I purchased at Flemington Markets I feel very sorry for selling or offering for sale items that like. I had not sold any of the chargers that I had previously purchased at the Flemington Markets. … 28. I presently owe to St George Bank approximately $432,270. 29. My husband does not work as he arrived in Australia at approximately 1 year ago. He is presently studying English in the hope of obtaining gainful employment. I have had had to rely upon my two (2) oldest children working to meet the mortgage repayments for the unit at Sixth Avenue, Campsie. 30. I am very sorry for offering for sale charges that were dangerous. … I now make sure that what I sell complies with Australian law by buying such equipment from a reputable supplier."
6. The second defendant maintained that the chargers sold from the stall which form part of Ex. B were for use in conjunction with speakers that were also for sale. She agreed in cross-examination (at T35 L43-45) that before the first defendant had started its business at Hurstville she made no enquiries regarding the laws governing the conduct of businesses in NSW. She also agreed (at T36 L3-21) that when the first defendant's business was commenced at the Campsie Centre, she, as the sole director of the first defendant: 1. took no steps to ensure that any electrical products which were offered for sale to members of the public complied with any applicable law or standard; and 2. put no systems in place to ensure that items that were sold complied with such laws.
7. The second defendant said (at T37 L42-48) that she first started purchasing electrical chargers from a supplier at Flemington Markets in the two month period leading up to June 2014. She specifically agreed that until Mr Kemp's visit on 20 June 2014 she had given no specific consideration to the issue of the safety of those items when purchasing them from that supplier. She accepted (at T39 L36-38) that she did not make any enquiries with that supplier regarding the safety of such items.
8. As previously noted, the second defendant (at para. [16] of her affidavit) made reference to being able to buy "accessories" for mobile phones "in bulk" from her supplier. It is evident from para. [17] that such accessories included chargers of the kind in Ex. B. The second defendant agreed (at T40 L3-5) that it was important to her to buy stock in this way because doing so was likely to generate a larger profit. She was asked (commencing at T40 L18): "Q. Specifically you say in paragraph 17 that you purchased the USB chargers at a price of three or four items for $5? A. INTERPRETER: Yes. Q. And then you offered for sale these items at $5 per unit, so $5 each? A. INTERPRETER: Yes. Q. Did you offer those items for sale at your stall during that two month period that you were purchasing those items from the Flemington Markets? A. INTERPRETER: Yes. Q. So at any given time during that two month period that you were offering these items for sale you were making between three and four times profit on each charger. Would that be fair to say? A. INTERPRETER: Yes. Q. Now, three to four items for $5 is quite cheap, would you agree? A. INTERPRETER: Yes. Q. Were you not suspicious as to why they were so cheap? A. INTERPRETER: No. Q. Did you ask the Flemington supplier why they were so cheap? A. INTERPRETER: No. Q. Did it not occur to you that they were that cheap because they were counterfeit products? A. INTERPRETER: No."
9. The second defendant also agreed (at T43 L44-50) that in circumstances where she had asserted in her affidavit (at para. [17]) that the chargers were only offered for sale for use with speakers, there were no signs erected at her stall which indicated that was the case. According to the second defendant (at T47 L32-34) she was not aware that these items had any capability to charge a mobile phone.
10. The second defendant was then asked (commencing at T49 L12): Q. Let me ask you this. You knew when you were selling these coloured chargers which are part of exhibit B, that they were electrical products, didn't you? A. INTERPRETER: This I know. Q. And because they were electrical products you knew that in order to use them in any way that they would have to be plugged into a power point? A. INTERPRETER: I know. Q. And you were selling these to members of the public, weren't you? A. INTERPRETER: Yes. Q. And you knew as a matter of common sense if an electrical product was in any way dangerous it could cause very serious consequences to anybody who used it? A. INTERPRETER: I do not know. Q. When you bought these chargers from the Flemington Markets did you think you had a responsibility to make sure that they were safe to use before you sold them to members of the public? A. INTERPRETER: I do not know. Q. Did you think you had a responsibility to make sure that they complied with Australian laws before you sold them to members of the public? A. INTERPRETER: I do not know. Q. You purchased three or four of these at a time for about $5, is that right? A. INTERPRETER: Yes. Q. So they were a little more than a dollar each when you bought them, is that right? A. INTERPRETER: Yes. Q. And you sold them for about $5 each, correct? A. INTERPRETER: Yes. Q. You have seen phone chargers for sale in retail stores, haven't you? A. INTERPRETER: Yes, I saw many. Q. And you know that phone chargers which are for sale in retail stores cost a great deal more, generally speaking, than $5, don't you? A. INTERPRETER: Yes. Q. Did it ever occur to you in those circumstances that because of the difference in price that these items could potentially have something wrong with them? A. INTERPRETER: I didn't think. Q. Did it ever occur to you that because of the difference in price between what you were selling these chargers for and what other retailers were selling them for that they may not comply with Australian laws? A. INTERPRETER: I do not know. Q. Is it the case that you were just trying to undercut the other retailers and make a profit without caring as to whether or not they comply? INTERPRETER: I'm sorry, could you please repeat that? Q. Is it the case that you were just trying to undercut other retailers in price and that you didn't care whether they complied? INTERPRETER: Ask me to repeat. Q. Is it the case that you were more interested in undercutting other retailers in price than concerning yourself with whether these charges complied with Australian law? A. INTERPRETER: I not clear if it's not comply with Australian law. Q. Is it the case that your primary concern in selling these chargers was just making a profit, madam? A. INTERPRETER: If someone sell it, I will sell it. Q. So all you were worried about was selling it and making a profit, is that right? A. INTERPRETER: Yes, make a profit.
11. The first defendant's stall at the Campsie Centre was closed following Mr Kemp's attendance on 20 June 2014 (at T62 L2). The second defendant gave evidence that upon receipt of the seizure notice by Mr Kemp, she took all of the items which were nominated in the notice to her home and put them away. She specifically stated that she did this because she understood that in light of the notice, she was unable to sell them (at T64 L25 to T65 L26).
12. The second defendant confirmed (commencing at T69 L42) that following the issue of the seizure notice she changed her supplier from a person at Flemington Markets to a company that she believed to be reputable. When asked what led her to that belief, she said it was that the fact that the company was registered, and that was a "big company" (at T70 L1-4). She also said (at T71 L1-7) that the items purchased from her current supplier carried an endorsement on the packaging which indicated (at least to her) that they complied with applicable Australian standards (at T71 L35-44). The second defendant also said that such compliance was confirmed by enquiries she had made with other people who were engaged in selling the same type of merchandise (at T71 L 46-50).

Submissions on behalf of the Commissioner

1. Counsel for the Commissioner submitted that in determining an appropriate penalty, it was important to bear in mind that the underlying purpose of the Act was to ensure that electrical articles offered for sale were approved, and therefore safe for use by members of the public. Counsel submitted that consumers had a right to be confident about the safety of such items, and that the prescribed maximum penalties were an indication of the seriousness with which the Parliament viewed offending of this nature. It was submitted that in a case such as this, community safety and protection were paramount considerations, and that there was an important need for any penalty imposed to incorporate a strong measure of general deterrence. Counsel further submitted that I should have particular regard to the fact that detection of this type of offending is generally difficult.
2. Counsel for the Commissioner submitted that I should conclude that the first defendant had no system(s) in place to ensure that items such as those in Ex. B, which were sold or offered for sale to the public, had the requisite approval. It was submitted that the second defendant, as the sole director and shareholder of the first defendant, bore the responsibility of ensuring the implementation, and observance, of such systems. Counsel submitted that the evidence established that such responsibility had not been discharged by the second defendant, either properly or at all.
3. It was submitted that all of these matters supported a conclusion that both defendants had acted without regard for public safety, which is an aggravating factor under s. 21A(2)(i) of the Crimes (Sentencing Procedure) Act 1999 (NSW) ("the Sentencing Act"). It was further submitted that the evidence supported a conclusion that the offending had been committed for financial gain, an aggravating factor under s. 21A(2)(o) of the Sentencing Act.
4. In terms of mitigating factors, counsel for the Commissioner conceded that the pleas of guilty were entered by each defendant at an early stage, but submitted that any discount to reflect the utilitarian value of those pleas should be less than 25%. It was submitted that counsel who was originally briefed to appear for the defendants had objected to the entirety of the evidence relating to the yellow charger, but that counsel who had ultimately appeared at the hearing had accepted that such evidence was relevant on a limited basis. It was submitted that the raising of such a factual dispute disentitled the defendants to the maximum discount.
5. Counsel for the Commissioner accepted that neither defendant had any prior convictions, and that the first defendant's stall had been taken down within a day of the offending being detected. However, counsel submitted that there was no evidence of genuine remorse on the part of either defendant. It was further submitted that second defendant's evidence tended against a conclusion that either defendant had good prospects of rehabilitation, or was unlikely to reoffend.

Submissions on behalf of the defendants

1. Counsel for the defendants submitted that there was no impediment to each defendant receiving the benefit of a 25% discount to reflect the utilitarian value of the early pleas of guilty which had been entered. Counsel pointed out that although there had been some dispute as to factual material relied upon by the Commissioner, such dispute had essentially been resolved in favour of the defendants.
2. Counsel for the defendants expressly accepted that the evidence did not support a finding that either defendant was genuinely remorseful. He also conceded, with commendable candour, that it was open to me to conclude that the second defendant had attempted, when giving evidence, to minimise her culpability.
3. Notwithstanding those concessions, counsel for the defendants submitted that there had been some acknowledgment on the part of the second defendant of the seriousness of her conduct. In this regard, he pointed to the evidence of steps taken by her to remove all items for sale and close the stall within a short time of Mr Kemp's visit. He also pointed to the decision made by the second defendant to change her supplier to one whom she believed was reputable.
4. Counsel for the defendants accepted that the underlying purpose of the Act was to ensure consumer safety and protection, in the context of offending that is difficult to detect. He accepted that in these circumstances there was a need for any penalty to have regard to the need for general deterrence. He also accepted that the evidence of Mr Gardener demonstrated the potentially serious consequences of offending of this kind.
5. Notwithstanding all of these matters, counsel submitted that there were a number of mitigating factors, including the absence of any previous convictions recorded against either defendant. He also submitted that I should find on the whole of the evidence that the defendants had good prospects of rehabilitation and were unlikely to offend again.
6. In terms of the assessment of any fine to be imposed, counsel urged me to have regard to the means of each defendant. He pointed, in particular, to the second defendant's evidence which, he submitted, established that she was a person of modest financial circumstances.
7. Finally, counsel submitted that in determining penalty I should have regard to the manner in which the Commissioner had approached these proceedings. He submitted that the matters could have been appropriately dealt with, in a far quicker time, in the Local Court and that this should be taken into account as a mitigating factor.

CONSIDERATION

1. The system of model approval provided for by s. 11 of the Act, and the creation of the offences in s. 16, form part of a legislative scheme which is obviously directed towards ensuring public safety. The seriousness with which Parliament views a breach of s. 16 is evident from the prescribed maximum penalties. It is also important to bear in mind that the system of approval created by s. 11 of the Act is a preventative safety measure. Exposure to a risk which arises from non-compliance with such a safety measure is inherently serious: Department of Fair Trading v Reject Shop [1999] NSWSC 62 per Grove J at [20].
2. Irrespective of the nature of an outlet from which electrical articles might be purchased, members of the public have a right to expect that such articles will have the requisite regulatory approval, and be safe to use. In the present case, not only did the items in Ex. B not have the necessary approval, they were so generally sub-standard in their construction and design that such approval would never have been forthcoming even if it had been sought. Had any member of the public used (at least) either the red or blue charger in Ex. B, he or she would have been at risk of suffering a serious, or perhaps fatal, electric shock. Any further observation about the danger posed by the sale of such items would be superfluous.
3. The gravamen of the offending of the first defendant is that it offered electrical articles for sale in circumstances where it had no system in place which was directed towards ensuring that such articles had the necessary approval, so as to ensure the safety of members of the public who purchased them. The second defendant, as the sole director and shareholder of the first defendant, allowed that to occur.
4. Any business owner has a responsibility to ensure that every aspect of the conduct of such business complies with the law. That necessarily includes ensuring that items which are offered for sale are approved and safe to use. The second defendant failed to discharge that obligation. Indeed in my view, she completely abandoned her responsibilities. That abandonment of responsibility included a failure to make any enquiry of her (then) supplier as to whether the articles were compliant. Neither defendant had any regard whatsoever for public safety.
5. It is also of some significance that each of the red and blue chargers in Ex. B is endorsed with the words: "Caution: for use with information technology equipment".
6. Although it was not the subject of cross-examination, the presence of such endorsement tends completely against the evidence of the second defendant (referred to at [47] above) that the items were offered only for sale for use in conjunction with speakers, and that she was unaware of any capability of the chargers to be used in conjunction with a mobile phone.
7. It is also relevant to note that each of the three chargers in Ex. B had a number of symbols imprinted next to the electrical pins. There was no cross-examination of the second defendant in relation to that issue and no evidence has been put before me as to whether those symbols are a facsimile of any official symbol used to denote a compliance with a relevant Australian Standard. In all of these circumstances I am unable to conclude that in acting as they did, either or both of the defendants set out to actively and knowingly mislead members of the public into thinking that the articles were approved. However, the appearance of those symbols clearly had that capacity.
8. I am satisfied that the offending of both defendants was motivated by financial gain. The evidence of the second defendant was that up to 400% profit was derived on the sale of each charger. I do not accept her evidence that the price at which she was able to obtain the items from her original supplier was not such as to raise any suspicions in her mind as to their safety. Further, I do not accept her assertion that she was unaware that the sale of a dangerous electrical article to the public carried with it the possibility of serious consequences. Both of those propositions are contrary to common sense.
9. On any view, the offending of both defendants was serious. It was aggravated by the fact that it was committed for financial gain, and without regard for public safety.
10. In considering the various mitigating factors I turn firstly to the pleas of guilty in each case. There is no dispute between the parties that each defendant is entitled to a discount to reflect the utilitarian value of those pleas. The issue concerns the amount of that discount.
11. I have already set out (at [14]-[34]) the ambit of a preliminary issue that I was asked to determine. It was always the position of the first and second defendants that the evidence did not establish that either of them was responsible for selling the yellow charger. Counsel for the Commissioner pressed for a conclusion to the contrary. Ultimately, that issue was resolved in favour of the defendants.
12. True it is that in the course of submissions, counsel who appeared for the first and second defendants (who was not counsel originally briefed in the matter) conceded that the expert evidence concerning the examination of the yellow charger was relevant to demonstrate the potentially dangerous consequences which could be visited upon a consumer as a result of this type of offending. However the fact remains that the primary position advanced by the Commissioner was rejected, and the issue resolved in favour of the defendants. Moreover, the pleas of guilty were entered at a time which I would regard as the first available opportunity. There is no reason in these circumstances why each defendant should not have the benefit of a discount of 25%.
13. Neither defendant has any record of previous convictions. That is a mitigating factor under s. 21A(3)(e) of the Sentencing Act.
14. On the evidence before me, the second defendant has taken steps to minimise the likelihood of any re-offending. Importantly, those steps have included changing her supplier. In all of the circumstances, I am satisfied that each defendant is unlikely to re-offend and has reasonable prospects of rehabilitation. These are mitigating factors by virtue of ss. 21A(3)(g) and (h) respectively of the Sentencing Act.
15. The issue of remorse is more problematic. In her affidavit (at para. [30]) the second defendant said: "I am very sorry for offering for sale the chargers that were dangerous. I will now make sure what I sell complies with Australian law".
16. Taken by itself, that statement might be regarded as an expression of remorse. It was not the subject of any specific cross-examination. At the same time, the evidence must be viewed as a whole. In particular, the statement must be viewed against what was a clear reluctance on the part of the second defendant, when giving evidence, to acknowledge the seriousness of her offending, and accept responsibility for her actions.
17. Section 21A(3)(i) of the Sentencing Act provides that remorse shown by an offender is a mitigating factor only if: 1. the offender has provided evidence that he or she has accepted responsibility for his or her actions, and 2. the offender has acknowledged any injury, loss or damage caused by his or her actions and made reportion for such injury, loss or damage (or both).
18. Counsel for the second defendant conceded that there was limited evidence of remorse. That was an appropriate concession. I am not satisfied in all the circumstances that the second defendant has accepted responsibility of her actions, or is otherwise generally remorseful. There is similarly no evidence of remorse on the part of the first defendant.
19. As previously noted, it was submitted that I should take into account the financial circumstances of the defendants (particularly that of the second defendant) when assessing any fine to be imposed. Annexure "A" to the affidavit of the second defendant purported to be "financial statements" of the first defendant for the year ending 30 June 2014. However, that material was ultimately not relied upon. I am therefore left in a position where there is no evidence at all of the financial position of the first defendant.
20. In terms of the second defendant, her affidavit establishes that: 1. she is 44 years of age and married; 2. her husband does not work; 3. she has three children aged 16, 20 and 23 years; 4. her two eldest children assist her in meeting her mortgage payments; 5. she lives at Campsie in premises which she owns; and 6. those premises are subject to a mortgage to the St George Bank of approximately $432,270.00.
21. Any fine must be determined by reference to the gravity of the offence for which it is imposed. However, if a court is satisfied that an offender would be unable to pay the amount of fine determined, it may reduce that amount to take into account the offender's means and impecuniosity: R v Rahme (1989) 43 A Crim R 81 at [87] per Finlay J (Studdert J agreeing) cited in EPA v Barnes [2006] NSWCCA 246 at [66] per Kirby J (Mason P and Hoeben J (as his Honour then was) agreeing). Beyond the matters to which I have referred, there is no evidence which establishes the present financial position of either defendant. In particular, there is no evidence of either defendant's income. I have taken into account the fact that any fine that I impose will constitute only part of the overall penalty imposed on the defendants. This is due to the fact that pursuant to an agreement between the parties, the first and second defendants will be liable for the Commissioner's costs of these proceedings in an agreed sum of $25,000.00.
22. Finally, counsel for the defendants submitted that I should have regard to the fact that it was open to the Commissioner to commence these proceedings in the Local Court. Counsel submitted, in effect, that the decision to bring the proceedings in this Court had resulted in them becoming more protracted than would otherwise have been the case, and that this was a mitigating factor. Counsel for the Commissioner, whilst acknowledging that the Local Court had jurisdiction to deal with matters of this kind, submitted that the circumstances of this case were such that the commencement of the proceedings in this Court was justified. Counsel submitted that the Commissioner had taken that course due to the fact that the offences were "objectively very serious because the risk to the community of electrical items without model approval being distributed into the community exposes members of the community not only to injury but also to death from electrocution".
23. In R v Palmer [2015] NSWCCA 349 Hall J (with whom Grove J and Smart AJ agreed) set out (at [15]) the principles which apply in these circumstances: 15 The written submissions on behalf of the applicant and those also on behalf of the respondent refer to a number of decisions of this Court. For the purposes of this application, they are stated in short form as a series of propositions or principles as follows:- (a) The first is that a judge in the District Court is not bound by the jurisdictional limit imposed on the Local Court when dealing with an offence on indictment which was capable of summary disposal, but may have regard to that limit when the case is one which could appropriately have been disposed of in the Local Court: Regina v. Crombie [1999] NSWCCA 297 at [16]; Regina v. LPY (2002) 136 A. Crim. R. 237 at 240 and Regina v. El Masri [2005] NSWCCA 167 at [30]. (b) Secondly, the fact that a matter could have been dealt with in the Local Court, had the prosecuting authority not elected otherwise, remains a relevant consideration in the exercise of the discretion reserved to the sentencing judge: Crombie (supra) at [15]. (c) Thirdly, however, the relevant decisions that establish that principle do not go so far as to require the sentencing judge to proceed upon the basis that the maximum available sentence is that which could have been imposed in the Local Court. At most they establish that the circumstance identified is to be taken into account. Depending upon the objective and the subjective criminality of the offender, it may properly be regarded as calling for some mitigation of the sentence that would otherwise be imposed in the District Court for an offence prosecuted upon indictment. Where it appears that that circumstance has been entirely overlooked by the sentencing judge, it may properly justify the granting of leave to appeal: Crombie (supra) at [16]. (d) Fourthly, the significance of the loss of the chance of the matter being dealt with in the Local Court varies from case to case. In some cases it would contribute to mitigation of sentence. It is a matter to be taken into account, but is not a universal factor for the reduction of sentence: Regina v. Doan [2000] NSWCCA 317; (2000) 50 NSWLR 115. (e) Fifthly, the failure by a sentencing judge to mention the matter in his or her remarks on sentence and the length of the sentence does not necessarily establish that the sentencing judge failed to have regard to the matter. In some circumstances the length of the sentence may not suggest that the matter was overlooked: Regina v. Depoma [2003] NSWCCA 382 at [17]. (f) Finally, in circumstances where a sentencing judge has made no reference to the summary disposal argument in his or her remarks on sentence, it is necessary to consider whether that omission is indicative of error. One way of testing that proposition is to consider whether the sentence itself appears manifestly excessive in all the circumstances of the case - if the factor had been taken into account and given appropriate weight, a substantially lesser sentence was appropriate in the case: El Masri (supra) at [45] per Johnson, J. (with whom Hunt, AJA. and Hulme, J. agreed).
24. I am unable to accept the submission advanced by counsel for the Commissioner as to the basis upon which it was determined that these proceedings should be brought in this Court. All offending of this nature carries with it the risk to which counsel referred. Acceptance of counsel's submission would be tantamount to accepting the proposition that each and every instance of this offending would, without more, justify proceedings being brought in this Court as opposed to the Local Court.
25. That said, and in light of the findings that I have made, the criminality of the defendants in this case, particularly that of the second defendant, is high. The nature and extent of that criminality justified the proceedings being brought in this Court rather than the Local Court. It follows that the fact that the Local Court would have had jurisdiction to deal with these matters is not a matter to be taken in to account in mitigation of penalty. As Johnson J observed in R v El Masri [2005] NSWCCA 167 at [29]: 29 It is a well-established sentencing principle that a court dealing on indictment with a matter which was capable of summary disposal may have regard to that fact on sentence: R v Sandford (1994) 72 A Crim R 160 at 195; R v Griggs [1999] NSWCCA 381; (1999) 109 A Crim R 484 at 485-6; Crombie, at paragraph 16; Doan, at 123ff (paragraph 35ff); R v LPY [2002] NSWCCA 464; (2002) 135 A Crim R 237 at 240. But it is not a universal rule (Sandford, at 195) nor a factor which operates universally to reduce sentence (Doan, at 124). In some circumstances, the Court may conclude that the offender's criminality was too serious to be dealt with in the Local Court and that the matter was properly before the District Court: R v Hanslow [2004] NSWCCA 163 at paragraph 21. The significance of the loss of a chance to be dealt with in the Local Court will vary from case to case: R v Depoma [2003] NSWCCA 382 at paragraph 13.

ASSESSMENT OF PENALTY

1. Principles of totality must be applied in assessing the appropriate penalty. For the reasons that I have already set out, the culpability of the second defendant was substantially greater than that of the first defendant. The imposition of a penalty on the second defendant is capable of serving the objectives of both specific and general deterrence. Persons in the position of the second defendant must clearly understand that offending of this nature will produce real consequences in terms of penalty, and that the Court will hold them, as individuals, responsible for contraventions of a corporation in which they have been knowingly involved: ACCC v Clinica Internationale Pty Limited (No. 2) [2016] FCA 62 at [237] per Mortimer J.
2. Those who sell electrical items to members of the public for commercial gain have a responsibility to ensure such items have the requisite statutory approval, and are therefore safe to use. The nature of that responsibility was expressed by Einfeld J in McInnes v Global Imports Pty Limited [1992] FCA 590 in the following terms (at [25]): "There is an important public interest at stake and although the standards are arbitrary, the existence of such standards is widespread around the western world if not virtually universal. Business people must be conscious of their responsibilities in this regard, even if it means factoring into their price structures the cost consequences of having to ensure that their products are safe and rejecting those that are not".
3. Those observations were made in the context of a case involving the sale of unsafe children's toys. They assume even greater significance in the present case, for the simple reason that electrical articles are able to be used by a far broader section of the community. All of these factors mean that general deterrence an important consideration in determining penalty. The commercial community must be deterred from the philosophy of selling at all costs: Global Imports (supra) at [22].

ORDERS

1. For the reasons outlined I make the following orders: 1. In respect of the offence particularised in paragraph 1a of the Summons, the first defendant is fined the sum of $3,000.00. 2. In respect of the offence particularised in paragraph 1b of the Summons, the first defendant is fined the sum of $3,000.00. 3. In respect of the offence particularised in paragraph 3a of the Summons, the second defendant is fined the sum of $9,000.00. 4. In respect of the offence particularised in paragraph 3b of the Summons, the second defendant is fined the sum of $9,000.00. 5. The fines in Orders 1 to 4 are to be paid within 28 days. 6. The first and second defendants are to pay the costs of the prosecutor in the sum of $25,000.00. 7. The costs in order 6 are to be paid within 28 days.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 04 October 2016