Commissioner for NSW Fair Trading, Department of Finance and Services v Luo

THE EVIDENCE

1. A joint Court Book containing the pleadings, evidence and written submissions was tendered as Exh. A at the hearing.

THE FACTS

1. An agreed statement of facts was tendered by the Prosecutor ("the Agreed Facts") in the following terms: Introduction 1.1. Infinity Cable Co. Pty Ltd ACN 135 069 402 ("the Company") was registered with ASIC (date of registration 23 January 2009). The Company went into voluntary liquidation on 26 September 2013. 1.2. The Company was in the business of importing electrical cable, not manufacturing electrical cable. In particular, the Company imported and supplied thermoplastic insulated and thermoplastic sheathed flat cable commonly known as "TPS" and round orange thermoplastic and thermoplastic sheathed cables commonly known as "orange round" ("the Orange Round cable"). 1.3. These products are not 'declared' electrical articles. The Act does not prescribe testing as a mandatory legislative requirement prior to them being offered for sale or supply in Australia. However the products must be known to meet the applicable standards prior to their being offered for sale or supply in Australia. 1.4. During the time of the Company's registration the defendant was the sole director and sole secretary of the Company and had been since its registration. 1.5. The defendant was also the managing director of the Company and was responsible for the day-to-day running of the business including ensuring its cables met compliance and safety standards. Electrical cabling 2.1. On or about 7 February 2012, the defendant, on behalf of the Company, signed a supplier form with Masters Home Improvement Pty Ltd ("Masters") to sell electrical cable to Masters. At all relevant times, Masters was a national retail hardware chain. 2.2. During the period 1 May 2012 to 30 June 2013 the Company sold TPS 2.5mm² Twin and Earth cable ("the TPS 2.5mm² Twin and Earth cable") to Masters who made it available for sale to the general public in 4 Masters stores in NSW, 7 Masters stores in Queensland, 1 Masters store in South Australia, 9 Masters stores in Victoria and 1 Masters store in Western Australia. 2.3. In particular to the offence, on or about 25 January 2013 the Company sold the TPS 2.5mm² Twin and Earth cable to a Masters store in Gregory Hills (630 Camden Valley Way, Gregory Hills, NSW). The manufacture of the TPS 2.5mm² Twin and Earth cable was originally commissioned by the Company in December 2010. It was manufactured by an entity in China, namely China Feizhou Group Co Ltd ("China Feizhou"). Prior to commissioning of the manufacture, the defendant provided the relevant Australian Standards and the specifications used by another manufacturer, Olex, to China Feizhou with instructions to manufacture the cable to those standards. The usual supplier of cables to the Company did not manufacture that type of cable. At the time of ordering the TPS 2.5mm² Twin and Earth cable from China Feizhou, the defendant was informed by China Feizhou that while it had not previously manufactured cabling to that specification, it could supply the specified TPS 2.5mm² Twin and Earth cable to the Company. China Feizhou had not previously supplied any product to the Company or any other entity associated with the defendant. 2.4. In or around the end of 2011 or the beginning of 2012 the Company, via its Chinese import/export company, Hangzhou H & F Import & Export Co Ltd (Hangzhou Company), began to import into but had not yet supplied in Australia the TPS 2.5mm² Twin and Earth cable manufactured by China Feizhou. 2.5. From about 1 May 2012 Infinity supplied the TPS 2.5mm² Twin and Earth cable to Masters. Prior to this supply, the Company had not arranged for testing of the cable for compliance with the applicable standards. 2.6. On or about 16 May 2013 the Australian Cablemakers Association Ltd ("Cablemakers") lodged a complaint with NSW Fair Trading alleging that the TPS 2.5mm² Twin and Earth cable supplied by the Company to Masters was non-compliant with the applicable safety standard. 2.7. As a result of the complaint, NSW Fair Trading commenced an investigation into the matter. 2.8. Prior to this time, in the period 1 October 2012 to 31 December 2012, Senior Investigator Toole from NSW Fair Trading had engaged in discussions with the defendant regarding a technical non-compliance issue regarding the cable conductor size of the TPS 2.5mm² Twin and Earth cable not meeting the value in an applicable standard entitled AS/NZS 1125. This was a separate issue from than the allegation the subject of the offending (that is the TPS 2.5mm² Twin and Earth cable failing to meet AS/NZS 3820:2009). 2.9. In that correspondence, on 24 October 2012, Mr Toole requested the defendant to explain the likely cause of that discrepancy and to provide test reports / certificates to demonstrate the TPS 2.5mm² Twin and Earth cable complied with current Australian standards. On 7 November 2012 the defendant provided an explanation to NSW Fair Trading for the technical under-sizing of the cable and stated "we are checking samples of newly manufactured cables and expecting results shortly for you to reference." 2.10. As a result of this correspondence with NSW Fair Trading, the defendant attempted to get the TPS 2.5mm² Twin and Earth cable tested for compliance with current Australian standards. The defendant first approached the laboratory at Chatswood called "Testing and Certification Australia." However this laboratory had closed down at that time. The defendant then approached TUV Rheinland Australia Pty Ltd ("TUV") which is a facility accredited by the National Association Testing Authorities ("NATA") for testing electrical cables, including the TPS 2.5mm² Twin and Earth cable. At that time TUV advised the defendant that it was moving its laboratory and place of business from Adelaide to Melbourne and was temporarily unable to provide the testing service. 2.11. Consequently, the defendant organised for the testing to be undertaken by Guangdong Testing Institute of Product Quality Supervision in Guangdong China ("the Guangdong Institute") which is a CNAS (China National Accreditation Service for Conformity) accredited testing facility, accredited to undertake cable testing under Australian Standards. The defendant did not directly supply samples of the TPS 2.5mm² Twin and Earth cable that had already been supplied to Masters or samples of the TPS 2.5mm² Twin and Earth cable that the Company had already imported into Australia for future supply to Masters to the Guangdong Institute. Instead the defendant arranged for a sample of what was said to be the same TPS 2.5mm² Twin and Earth cable manufactured by China Feizhou to be taken directly from her exporter in China, namely Hangzhou Company, to the Guangdong Institute. 2.12. The sample tested by the Guangdong Institute was not from the same batch of TPS 2.5mm² Twin and Earth cable that the Company had already imported into Australia and supplied to Masters. The defendant assumed the cable supplied to the Guandong Institute for testing would have been made to the same specifications as the cable previously or since supplied to the Company by the Hangzhou Company manufactured by China Feizhou. 2.13. Prior to 12 December 2012 Guangdong Institute notified the defendant of the results of that test. The Guangdong Institute certified the sample of TPS 2.5mm² Twin and Earth cable it tested was compliant with the applicable safety standard AS/NZS 5000.2. A copy of the test report dated 28 November 2012 was sent to Glenn Toole on 12 December 2012. Mr Toole considered that report in the context of the separate and unrelated technical matter regarding the cable conductor being undersized. The report indicated that that matter had been addressed and Mr Toole notified his acceptance of the report. At that time Mr Toole replied that "Fair Trading will monitor compliance in the future." 2.14. In order to test for compliance with AS/NZS 5000.2 ageing tests requiring the ageing of a sample of cable in an oven for 504 hours (21 days) are required. Because the issue raised by Senior Investigator Toole from NSW Fair Trading was to do with an issue to do with cable conductor size, ageing tests were not required to address this issue. In order to deal with the issue that had been raised, the defendant commissioned testing without the ageing test. This testing resulted in the test report dated 28 November 2012. 2.15. At the same time as commissioning the testing which resulted in the test report dated 28 November 2012 the defendant commissioned a full report (which included the ageing test) to test for compliance with AS/NZS 5000.2. These tests resulted in a report dated on or about 17 December 2012 ("the second report"). The second report showed the samples tested met the requirements of AS/NZS 5000.2. The samples tested for the second report were sent at the same time and in the same manner as the samples tested for the test report dated 28 November 2012. The defendant relied on the second report. The defendant assumed the cable supplied to the Guandong Institute for testing would have been made to the same specifications as the cable previously or since supplied to the Company by the Hangzhou Company manufactured by China Feizhou. 2.16. On or about 25 January 2013 the defendant supplied further TPS cable to Masters from fresh batches manufactured by China Feizhou and supplied by Hangzhou Company. These batches were not tested for compliance with Australian safety standards. The Defendant assumed that the batches would have been manufactured to the original specifications. 2.17. The defendant held an honest belief at that relevant time that the TPS 2.5mm² Twin and Earth cable was compliant with the applicable safety standard. The defendant relied on the results of the test from the Guangdong Institute reported in the second report. 2.18. However the defendant accepts that, in the circumstances of the case, that belief was not reasonable and that the defendant failed to take all reasonable steps to prevent or stop the commission of the offence. Such steps included taking samples for testing from batches of cable actually supplied to the Company by Hangzhou Company, and undertaking a regular testing regime until such time as a history of compliance with Australian safety standards had been established. Between June and September 2012 the defendant had another cable, namely the XLPE cable (0.6K/1KV), imported from Hangzhou Company, and tested by TUV Australia for compliance with the standard AS/NZS5000.1:2005 (to see if it met AS.NZS 3820:2009). That cable failed the mechanical aging test suggesting its insulation and oversheath failed to meet requisite standards. The defendant was placed on notice at this time that there were heat issues with the PVC sheathing of XLPE cable from the manufacturer, China Feizhou. The defendant did not test a sample of the TPS 2.5mm² Twin and Earth cable that was in fact supplied to Masters. The Defendant honestly held a belief that there would have been no difference in batches given that she had provided the Olex sample and the specifications to China Feizhou. The defendant did not conduct routine, collective, or ongoing testing on different batches of TPS 2.5mm² Twin and Earth cable imported and intended for supply to Masters. The defendant did not ensure each batch of cable it supplied consistently met the requisite standards before selling its cable. Even though it is not a legislative requirement to do so, the cable must be known to meet the applicable standards prior to their being offered for sale or supply. The relevant cable purchase 2.19. On or about 18 June 2013, Senior Investigator Glen Toole travelled to the Masters Home Improvement store in Gregory Hills. He observed several rolls of flat white TPS 2.5mm² Twin and Earth cable labelled "FT3025" and marked "Infinity" available for sale. 2.20. On that day, Senior Investigator Toole purchased one roll of that TPS cable marked "Infinity" for $93. This is "the TPS Cable" relevant to the offence. 2.21. On 19 June 2013 the TPS Cable was provided to TUV for testing to see if it complied with relevant standards, in particular AS/NZS 3820 (and AS/NZS 5000.2). 2.22. On 23 July 2013 a report was compiled and signed by TUV Australia stating that the TPS Cable "failed at mechanical properties after ageing and sheath thickness requirements." The insulation and oversheath aspects of the cable failed to comply with AS/NZS 3820; in particular, clause 4.2(d) of the AS/NZS 3820 which is a specification prescribed by clause 23(1) of the Regulations. 2.23. Subsequently, between 14 and 16 August 2013 Senior Investigator Toole seized numerous samples of electrical cable manufactured by various companies from stores throughout NSW, including TPS cable supplied by the Company to AGM Electrical Croydon, Masters Chullora and Masters Gregory Hills. The samples were taken to Chemson Pacific Pty Ltd (accredited by the International Standards Organisation) for thermal stability testing of the PVC. This test is more commonly known as a "Congo Red Test". Among the samples were Infinity and Olsent branded TPS and Orange Circular. 2.24. These tests were 'blind' tests where all identification of branding was physically removed from the outer sheathing before the samples were passed to the tester. Of the 63 obtained, 16 samples were tested. 2.25. The TPS and Orange Circular Cable samples that failed the Congo Red Test were all Infinity and Olsent branded cables. Other brands of cables passed this indicative testing regime. 2.26. Failing the Congo Red Test demonstrates a lack of thermal stability of PVC for the cable. This is most likely the reason why the cable failed the "mechanical tests after ageing in air oven" as required by Australia and New Zealand National Standards . 2.27. The risk posed by the TPS cable was that when the TPS cable was installed including in high risk areas such as roof cavities, underfloors or other concealed areas of building construction, and particularly in areas of prolonged or fluctuating high temperature exposure, the insulation sheath would breakdown. This would cause live wires to be exposed resulting in a major risk of fire. This risk was made greater by the fact that the TPS cable was likely to be installed in concealed areas of buildings. 2.28. A further risk that could be created if the insulating sheath was to break down would be if any person or animal came into contact with the TPS cable. 2.29. On the 12 June 2013, the Defendant was contacted by NSW Fair Trading regarding the TPS 2.5mm² Twin and Earth cable failure to meet the applicable standards and calling her to a meeting. 2.30. Subsequently, the Defendant commissioned a test to occur with TUV which had by now re-established its testing laboratories. The Defendant forwarded a sample of the TPS 2.5mm² Twin and Earth cable directly from the Company's warehouse to the laboratory for testing. 2.31. On 9 August 2013 the Defendant received a Test report of the TPS cable from TUV which indicated that the product did comply with the Australian Standard. 2.32. On 14 August 2013 the Defendant (through her legal representative) received a Test report from TUV dated 28 February 2013 commissioned by NSW Fair Trading indicating that the cables had failed to comply with the Australian Standard. 2.33. On or about 16 August 2013 NSW Fair Trading requested that Ms Luo attend to a recall of all Infinity TPS cables and Orange Round cables. The defendant agreed to a voluntary recall of 3 batches of TPS cable product (limited to those that were subject to the testing at that stage). 2.34. On 13 September 2013 the defendant met with NSW Fair Trading to discuss results of the Red Congo test and Fair Trading's request to expand the recall into all TPS and Orange Round cables. 2.35. The defendant requested time to decide as this was the first time that the defendant was notified that the orange round product was to be included in a recall. 2.36. On 16 September 2013 the defendant requested a further extension of time to consider all matters now being put to her and the implications on the affairs of the Company. There was no further contact until 26 September 2013 when NSW Fair Trading was notified by ASIC that the Company had been placed into voluntary liquidation and liquidators appointed that day. As at 27 September 2013 the appointed liquidator was of the opinion that the Company was insolvent. 2.37. From 18 to 23 September 2013 the defendant was an inpatient at Psychiatric Emergency Care Centre which is co-located in the Emergency Department of Hornsby Ku-ring-gai Hospital. On discharge, she was certified as being unfit for usual activities until 11 October 2013. 2.38. On 2 October 2013 NSW Fair Trading served prohibition and recall notices on all Infinity TPS and Orange Round cables and a public warning was issued. 2.39. There has subsequently been a national recall of all Infinity supplied TPS and Orange Round cables. Subsequent action, remediation and harm 3.1. On 2 October 2013 NSW Fair Trading served prohibition and recall notices on all Infinity TPS and Orange Round cables and a public warning was issued. 3.2. There has subsequently been a national recall of all Infinity supplied TPS and Orange Round cables. 3.3. Infinity supplied approximately 1,154km of TPS and Orange Round cable in the NSW market during the relevant period. As at 31 July 2016, 75km of Infinity-supplied TPS and Orange Round cable had been recovered from warehouses, and 43km of TPS and Orange Round cable had been remediated in NSW premises. As at that date, 99km of TPS and Orange Round cable that had been supplied by Infinity in NSW was scheduled for future remediation, and 338 properties had been made safe as a result of remediation. 3.4. The prosecutor is unable to prove what proportions of the amounts specified in paragraph 3.3 above are of TPS cable. The defendant has no records which allow her to provide a breakdown of supply of each of TPS and Orange Round cable. The parties agree that a substantial quantity of TPS cable was supplied by Infinity in the NSW market. 3.5. The envisaged problems with TPS cable supplied by Infinity are estimated to commence after 6 years as it is estimated that the cable sheath of the TPS cable supplied by Infinity, for those batches affected by the subject of the recall, will start to break down around that time. Antecedents 4.1. The defendant has no prior convictions.

THE RELEVANT LEGISLATION

1. Section 16 of the Electricity (Consumer Safety) Act 2004 ("the Act") is in the following terms: (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).
2. Section 45(1) of the Act provides that 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).
3. Section 45(2) of the Act provides as follows: (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.
4. Clause 23(1) of the Electricity (Consumer Safety) Regulation 2015 (NSW) provided (at the material time): 23 Minimum requirements in general (1) The requirements with which an electrical article that is not a declared electrical article must comply for the purposes of sections 16 (1) (c) (iii), 17 (2) (b) (ii) and 18 (1) (b) (iii) of the Act are those set out in: (a) clauses 4.1, 4.2 and 4.3 of AS/NZS 3820:1998, and (b) if the article is a toy within the meaning of AS/NZS 3820:1998 - clause 4.4, and (c) clause 4.5 of AS/NZS 3820:1998, but only on and from 3 April 2007. (2) In this clause: AS/NZS 3820:1998 means the Australian and New Zealand Standard entitled AS/NZS 3820:1998, Essential safety requirements for electrical equipment, as in force from time to time, published jointly by Standards Australia and Standards New Zealand." AS/NZS 3820:1998 was superseded by AS/NZS 3820:2009 on 11 December 2009. On 28 August 2015 the Electrical (Consumer Safety) Regulations 2015 commenced implementing the same clause 23(1) with reference to the superseding AS/NZS 3820:2009. Clause 4.2(d) of AS/NZS 3820:2009 (or 3820:1998) provides that insulation shall be suitable for foreseeable conditions. Clause 5 of the AS/NZS 3820:2009 (or 3820:1998) provides that compliance with clause 4 (including 4.2(d)) is demonstrated by compliance with the relevant standards. A relevant standard at the material time is AS/NZS 5000.2:2006 (published on 19 July 2006) entitled "Electric Cables - Polymeric insulated Part 2: For working voltages up to and including 450 / 750V"

THE DEFENDANT'S CASE

1. The defendant, who did not give evidence, relied upon a report of Anita Duffy, Psychologist, who interviewed and assessed her on 24 October 2016. That report contains the following matters of background which, as I understand it, are not in dispute.
2. The defendant was born in South East China on 12 October 1983 and is now 33 years of age. She grew up with her parents with whom she had a close relationship, although it seems that she perceived that they were too strict in their expectations of her. The defendant's father apparently loaned her money to help her establish the business that she was operating at the time of the offending. The defendant perceives that she will never be able to recoup that money and repay her father.
3. The defendant matriculated to the Zhe Jiang University of Technology in China where she completed a Bachelor of Arts Degree, majoring in English and studying international business and Japanese. She arrived in Australia in 2006 and was thereafter accepted into Macquarie University where she completed a Master of Arts majoring in Linguistics in 2008. She met her husband after her arrival in Australia. They married in 2009 and have two young children.
4. The company which the defendant and her husband formed to carry on the business which led to the offending was placed in voluntary administration on 26 September 2013. The defendant has not worked in any paid capacity since that time.
5. Ms Duffy took a history from the defendant regarding her mental health. In light of the competing positions of the parties in respect of the issue of the defendant's mental health, and the impact of that issue on sentence, that history as recorded by Ms Duffy, along with her findings on testing and her conclusions, should be set out in full: In August 2013 she was rushed to hospital to give birth to her son at 38 weeks by Caesarean section. The baby remained in hospital for several weeks and was later cared for by her mother, after Ms Luo suffered a "breakdown" and was unable to deal with her child. She was unable to breast feed as she was not producing milk due to the stress, she had to bottle feed and was not able to look after him such that her mother became her baby's main carer taking him overseas for five months and bringing him back to Australia when he was 8 months of age. She described symptoms of insomnia, racing thoughts, tearfulness, indecisiveness, culminating in a suicide attempt by overdose on 18 September when her father found her unconscious on the floor of her home. She was taken to Hornsby Hospital Psychiatric Unit and remained there for several days until her discharge on 23 September. She was unable to use the phone and was sheltered from the contact with Fair trading officers who were demanding she recall the products. She consulted the psychiatrist and was prescribed anti-depressant medication Zoloft, which she took for several months. After her discharge she had visits from the Community Health nurse to monitor her mental state. She was thought to have suffered Post Natal Depression augmented by the ongoing stress and anxiety caused by the Fair Trading investigation and their demands that she recall all the cables from sale. She was reliant on her mother to care for her son as it proved to be too difficult for her to cope with the pressures of the business as well as dealing with a newborn baby. She could not even hold her child and her mother also assisted with the care of her daughter. She had never experienced such problems with her daughter after her birth and attributed her difficulties with her son to the additional stressors in her life. Even after the business was placed into liquidation her symptoms of depression have persisted as she experiences the guilt of having lost all funds including a considerable amount of money invested by her father. It has caused some friction and her parents and she was upset when her father blamed her inexperience as well as the manufacturers. She noticed that she has become more short tempered, is easily aroused to anger and anxiety and still has sleeping problems. She is more likely to snap at her children and at her husband and described a deterioration in her relationship with him, and they have many arguments. She expressed fears that their relationship had been irrevocably damaged by the events of the past few years which have caused financial as well as emotional problems.
6. Ms Duffy then administered clinical psychological testing, the defendant's response to which she described as follows: "Her response style indicated that she was consistent, and was not attempting to portray herself in an overly positive light. She showed a tendency to over endorse psychological problems, which is often seen as a reflection of the level of psychological distress and as a 'cry for help'. Adjustments were made to her final results which can be regarded as a valid reflection of her personality functioning. Across the basic personality scale she revealed significant elevation on measures of Avoidant and Dependent characteristics. On measures of more serious personality pathology indicative of personality disorders, her result was significant on the Borderline scale. Ms Luo's profile reflects an individual who may not feel capable and confident to function independently and therefore creates strong bonds with people whom she perceives as being able to lead and care for her. She may not feel capable of making decisions, feels inadequate and insecure and has low self-esteem. She identifies with stronger people and defines herself in terms of these people. She is very sensitive to rejection and to maintain friendships, will be submissive and cooperative, covering up unpleasant emotions out of fear of alienating others. She will be passive, timid and docile in her interaction with others. Internally she may have a limited range of competencies in reducing tension and dealing with stressors. She may suffer symptoms of an anxiety disorder which can include panic attacks and phobias often related to and triggered by the fear of separation. On the measures of clinical symptoms that suggest the need for treatment, her highest score was on the Anxiety scale which was well into significance. She also had elevations on Dysthymia and Post-Traumatic Stress Disorder scales. On measures of more severe clinical symptoms she attained a highly significant score on the scale of Major Depression. Ms Luo is currently experiencing symptoms associated with the emotional and physiological concomitants of anxiety. She is very tense, has difficulty relaxing, is apprehensive and fearful. She may have a highly sensitive startle response, and somatic symptoms can include insomnia, palpitations, appetite disturbances, upset stomach and nausea. The PTSD elevation highlights her hypervigilance to threat or harm, hyperarousal, irritability and difficulty in regulating her emotions. The Major Depression and Dysthymia elevations reflect severe depression which has affected her daily living. She may have psychological symptoms including feelings of guilt, worthlessness, hopelessness, ruminating and fear of the future. Somatic symptoms might include insomnia, weight loss, poor concentration, psychomotor slowing or agitation and loss of sexual desire".
7. Ms Duffy expressed (inter alia) the following conclusions: Vida Luo's presentation at our session, the history she provided and the results of an objective personality assessment reveal a person with pronounced symptoms consistent with Anxiety and Major Depression in response to her current circumstances. She is facing sentencing for importing and supplying cables that have been found to fail compliance tests in accordance with safety standards in Australia. … In response to your specific questions: 1. Ms Luo does have a history of anxiety especially in the realm of achievement and living up to the expectations of her family in particular. She noted periods of "nervousness and tension" if she failed to meet her parents' approval and was consequently admonished or punished during her childhood and adolescence if she did not perform well enough in her studies. 2. Ms Luo was understandably nervous about taking on the role as company director in a field where she had no knowledge of the product. She described herself as "naïve and brave" to take on this responsibility and perhaps was overly reliant on the advice of her associate Jimmy, who was an electrician, but also is not experienced in importation of cables and the requirements involved. Her levels of anxiety were thus elevated when she was conducted by the Fair Trading in 2012 and required to take further tests and maintain compliant standards. She did have the product tested in China but was so stressed and anxious when she had to attend the meeting with them that she could not go. 3. The way in which the Fair Trading officers conducted their investigation and their communications with her by terse email also induced anxiety in Ms Luo as she felt overwhelmed by their demands and was unable to respond adequately. Her lack of familiarity of this technical field and her unassertive, submissive personality characteristics and feelings of inadequacy enhanced by this investigation process all contributed to escalate her feelings of helplessness and anxiety, such that she became emotionally unstable and depressed, culminating in a suicide attempt and admission to a psychiatric ward. 4. It is considered that Ms Luo continues to suffer anxiety and major depression and had developed some post trauma symptoms following the period of investigation and perceived bullying and harassment by the Fair Trading Officers. She has strong feelings of failure, sleeps badly and has difficulty in managing her emotions such that she has temper outbursts consistent with increased irritability and arousal. Her relationship with her husband and children have deteriorated and she has continuous guilt over her parents' loss of money due to their investment in the business. Her self-esteem is affected and she has lost confidence. 5. Ms Luo requires professional intervention to deal with the anxiety, depression, and post trauma symptoms that occurred during the process of negotiations with Fair Trading and the subsequent demise of her business. She will need at least ten sessions with a clinical psychologist to work on the sequelae of her business failure and the depression, guilt and anxiety that it engendered. Underlying issues involving the quality of her interactions and relationships with her family, particularly her parents need to be addressed, as she retains considerable guilt over the problems she has caused them. Therapy would include improving her communications to become assertive rather than aggressive or submissive, dealing with negative emotions, self soothing and regulation of anxiety and stress, improving health and sleep, and planning positive goals in terms of family and career. Financial difficulties are also a continual source of stress and she may need a financial counsellor to help with debt management. It is envisaged that the process of her recovery will be lengthy but after her sentence she will be in a better position to evaluate her future and plan more effectively.

Submissions of the Prosecutor

1. It was submitted on behalf of the Prosecutor that the defendant's offending had created a major safety hazard and that in these circumstances, two of the critical considerations on sentence were general and specific deterrence. In this regard, and in light of the submissions made on behalf of the defendant, counsel for the Prosecutor addressed the Court at some length in relation to the use which he submitted could properly be made of Ms Duffy's report. He pointed, in particular, to the fact that the defendant had not given any evidence on oath, and he placed particular reliance on the observations of Smart AJ in R v Qutami [2001] NSWCCA 353 where his Honour said (at [58] - [59]): [58] There is one further general observation. In this case reliance appears to have been placed on statements made by the prisoner to psychiatrists and the psychologist. While those statements are admissible in evidence, very considerable caution should be exercised in relying upon them when there is no evidence given by the prisoner. In many cases only very limited weight can be given to such statements. [59] There has been a noticeable and disturbing tendency of more recent years for prisoners on a sentence hearing not to give evidence and to rely on statements made to experts. Prisoners should realise that if this course is taken great caution will be exercised in respect of the weight, if any, given to those statements.
2. The effect of counsel's submission was that little or no weight should be given to the contents of Ms Duffy's report.
3. It was submitted that the objective seriousness of the defendant's offending was high, and was aggravated by the fact that there had been a cost to the community in identifying and remedying the safety hazard created by the installation of the cable in those premises in which it was known to have been installed. It was submitted that the offending was further aggravated by the fact that there remained an ongoing risk in those premises where cable may have been installed, but where such premises remained unidentified. Counsel further submitted that in all of the circumstances the defendant should have waited until proper testing had been completed before distributing the cables.
4. In all of these circumstances, it was submitted on behalf of the Prosecutor that the defendant's criminality was "at the high end of the spectrum of objective seriousness".
5. In advancing these submissions, counsel for the Prosecutor submitted that the objective seriousness of the present offending was substantially greater than that which I had cause to consider in Commissioner for Fair Trading, Office of Finance and Service v Hua Yang Australia International Trading and Investment Pty Limited and Huadi Bi [2016] NSWSC 1380 ("Hua Yang"). I will return to that submission in due course.
6. Counsel for the Prosecutor also submitted that the offence was committed without regard for public safety, and for financial gain, and that both of these factors were matters of aggravation.
7. In terms of mitigating factors, Counsel for the Prosecutor submitted that there was no evidence of any remorse by the defendant, other than such remorse as was demonstrated by her plea of guilty. In that regard, counsel pointed out that the plea was entered on 15 September 2016, in circumstances where the matter had been listed for a three day hearing commencing on 26 September 2016. Although counsel for the Prosecutor did not suggest that the defendant's plea was of no utilitarian value at all, he pointed to the timing of the plea as a factor which would operate to significantly reduce the level of any discount which might be applied. It was conceded that the defendant had no prior convictions, and that her supply of the electrical cabling was not ongoing.

Submissions of the defendant

1. Counsel for the defendant submitted that the objective seriousness of the offending was not as high as that which had been asserted by counsel for the Prosecutor. In particular, he pointed out that the offending did not involve actual knowledge on the part of the defendant of the fact that the cabling did not comply with relevant Australian standards, and that this was therefore not a case in which the defendant had exhibited a total disregard for her obligation, nor a case in which she had wilfully "shut her eyes" to any relevant factor(s).
2. In this regard counsel made specific reference to the following aspects of the Agreed Facts which, he submitted, established that prior to the time of the supply of the cabling the defendant had: 1. caused the company to provide all relevant Australian standards and specifications to the manufacturer of the cabling (Agreed Facts at para 2.3); 2. provided instructions to manufacture the cabling according to those standards (Agreed Facts at para 2.3); 3. sought (unsuccessfully) to have relevant testing done in Australia, at the testing facility which had been used by the Prosecutor (Agreed Facts at para 2.7-2.10); 4. resorted to an accredited testing facility in China (Agreed Facts at para 2.11 - 2.14); and 5. obtained a report from that accredited testing facility in China which asserted that the samples tested met the requirements of the safety standards which had been provided (Agreed Facts at para 2.15).
3. Counsel accepted that although the protection of the public was not strictly an element of the offence, it was clear that the legislation was directed towards achieving that end. However he submitted that in these circumstances it was necessary to take care to ensure that public safety considerations were not "double counted" in the sentencing exercise. It was further submitted that in circumstances where the Prosecutor had accepted that the belief of the defendant as to the compliance of the cabling with relevant safety standards was honest, this was not a case in which I would find that the offending was committed for financial gain.
4. In terms of mitigating factors, counsel for the defendant pointed to the fact that the defendant has no prior convictions and had, at the time of the offending, been involved in the importation and sale of electrical cabling for a period of a little less than 4 years.
5. It was submitted that I should conclude that the defendant was unlikely to reoffend, and that she had not attempted at any time to minimise her conduct. However counsel expressly accepted that there was no evidence of any expression of remorse by the defendant.
6. Counsel for the defendant did not take issue with the principles applicable to quantifying the discount to reflect a plea of guilty. However, he submitted that the plea entered by the defendant had "high utilitarian value" because (inter alia) it had saved the time and expense of having witnesses (including expert witnesses) appear over an estimated three day hearing. It was submitted that the entering of the plea needed to be viewed in the context of a case in which there may well have been some considerable complexity attaching to the proof of relevant facts. In all of the circumstances, it was submitted that a discount in the range of 15% to 20% was appropriate.
7. Finally, counsel for the defendant submitted that even though the defendant had chosen not to give evidence, the opinions of Ms Duffy, and her diagnoses, ought to be accepted. Counsel submitted that although Ms Duffy did not express a view that there was any causal link between those diagnosed conditions and the offending, the defendant's mental state nevertheless remained a relevant factor, particularly in terms of determining whether or not she was a suitable vehicle for general deterrence. Counsel submitted that, accepting the opinions of Ms Duffy, the defendant was clearly suffering a mental illness which, even though it was not causally connected to the offending, meant that general deterrence was of limited significance in the sentencing exercise.

CONSIDERATION

1. The maximum penalties set for this offence are indicative of the gravity with which it is viewed by the legislature. Viewed objectively, the defendant's offending was obviously serious. The cabling in question did not meet the relevant safety standards prescribed in this country. Such standards are prescribed in an endeavour to ensure the safety of the public at large. The failure of the cabling to meet those standards posed a significant risk that the insulative sheath in the cabling would break down. That, in turn, created a risk of a major fire. As a consequence, the life of any person who might find himself or herself present in premises where the cabling had been laid would be placed in danger.
2. Those who sell (or who supply for sale) to the public items of this nature have an obligation to be vigilant in observing their responsibilities. One of the principal responsibilities of a person in the defendant's position is to ensure that such items comply with relevant Australian standards. In Hua Yang I observed (at [92] - [93]): [92] 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'. [93] 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 is 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].
3. Those observations are equally apposite in the present case.
4. Clearly, the defendant fell short of maintaining the level of vigilance which was required. As the owner of a business engaged in the commercial supply of electrical cabling, she had a responsibility to ensure that all aspects of the conduct of her business complied with the law: (Hua Yang at [68]).
5. However I am unable to accept the submission advanced on behalf of the Prosecutor that the criminality of this defendant is greater than that of the defendants in Hua Yang. The offending in Hua Yang involved the sale of electrical chargers and adapters which did not have the requisite regulatory approval, and which had been constructed in such a way as to pose a significant safety risk to any member of the public who used them. I found (at [69]) that the second defendant in that case (who was the director of the first defendant) had abandoned her responsibilities as a supplier of such goods. I also found that such abandonment included a failure to make any enquires of her supplier as to whether or not the items which she was obtaining, and later offering for sale to members of the public, were relevantly approved. I concluded in the circumstances that neither defendant had paid any regard to important issues of public safety.
6. That could hardly be said to be the case here, particularly bearing in mind the Agreed Facts. Far from completely abandoning her responsibility, the defendant in the present case in fact took some - albeit inadequate - steps, in an effort to ensure that the cabling was compliant. Indeed, counsel for the Prosecutor conceded (in light of the Agreed Facts) that the defendant held an honest belief that this was so. There was no suggestion of any similar belief being held by the defendants in Hua Yang.
7. Further, and again unlike the defendants in Hua Yang who offered the items for sale in circumstances where there was no system whatsoever in place towards ensuring that they had the necessary regulatory approval, the present defendant did have some system in place, albeit one which was imperfect. It is also significant that there is no suggestion in the present case that the defendant has sought, at any time, to minimise her culpability. A finding to the contrary was made in respect of the second defendant in Hua Yang (at [81]).
8. None of these observations are intended to convey the suggestion that the offending of this defendant was not serious. Clearly it was. However the factors to which I have pointed demonstrate that the submission made by counsel for the Prosecutor that the present offending is of greater gravity than that of the defendants in Hua Yang is untenable.
9. I turn to consider, to the extent that they are applicable, the various aggravating and mitigating factors contained in s. 21A of the Crimes (Sentencing Procedure) Act 1999 (NSW) ("the Sentencing Act").
10. I am not satisfied that the offence was committed for financial gain in the sense contemplated by s. 21A(2)(o). Although the extent to which it did so cannot be established by the evidence, it is clear that the defendant's company did gain financially from the sale of the cabling. However there is no evidence which establishes that the offence was committed for that purpose. Once again in that respect, a useful contrast may be drawn between the position of the present defendant, and that of the defendants in in Hua Yang (at [49]; [73]).
11. The parties were at odds as to whether the fact that the offending was committed without regard to public safety was an aggravating factor under s. 21A(2)(i). Public safety is the "gist" of this offence, in the sense that the offence is premised on the fact that to engage in the conduct which constitutes it is to act without regard for public safety. To treat that as an aggravating factor under s. 21A(2)(i) would involve impermissible double counting: R v McMillan [2005] NSWCCA 28 at [38] Howie J (Santow JA and Bell J agreeing). Accordingly, whilst the fact that the offending was committed without regard to public safety is clearly a relevant factor on sentence, it is not an aggravating factor under s. 21A(2)(i).
12. In terms of mitigating factors, the offence was not part of planned or organised criminal activity and the defendant has no record of previous convictions. These are mitigating factors under ss. 21A(3)(b) and (e) respectively.
13. On the evidence before me, the company which had been incorporated to facilitate the supply of the cabling has been placed in administration. Moreover, for the reasons that I have already set out, the defendant had some, albeit not a full, appreciation of her responsibilities. In these circumstances I am satisfied that the defendant is unlikely to re-offend and that she has good prospects of rehabilitation. These are mitigating factors under ss. 21A(3)(g) and s. 21A(3)(h) respectively.
14. There is no evidence of any remorse shown by the defendant of the kind contemplated by s. 21A(3)(i). Accordingly, that is not a mitigating factor.
15. The defendant's plea of guilty is a mitigating factor under s. 21A(3)(k). That plea was entered at a late stage, and indeed at a time which might be described as being at, or at least approaching, the eve of the hearing. I accept that the entering of the plea had some utilitarian benefit. However, one of the circumstances relevant to the assessment of the discount to be applied on account of a plea of guilty is the time at which the plea is entered. A discount towards the bottom of the range is appropriate for a late plea unless there are particular benefits arising from the prospective length and complexity of the trial: R v Thomson; R v Houlton (2000) 49 NSWLR 383; [2000] NSWCCA 309 at [153]-[156] per Spigelman CJ. In these circumstances, bearing in mind that the appropriate range for a discount is between 10% and 25%, the discount in the present case to reflect the defendant's plea should be assessed at 10%.
16. I turn to consider the issue of general deterrence. I have previously set out the findings reached by Ms Duffy. As I have said, the essence of the submission made by counsel for the Prosecutor was that in the absence of evidence on oath from the defendant, Ms Duffy's findings were deserving of little or no weight.
17. Ms Duffy made reference to the fact that in August 2013 the defendant was rushed to hospital to give birth to her son. There is no dispute that on 18 September 2013 the defendant was admitted to the Psychiatric Unit of Hornsby Hospital where she remained for a period of 5 days (Agreed Facts at 2.37). The catalyst for that admission is not established by the evidence. No clinical or treatment notes in respect of it were tendered as part of the defendant's case. I am therefore unable to determine whether the cause of that admission arose from investigation into the offending, post natal complications or a combination of those (and perhaps other undisclosed) factors. Further, in the absence of clinical notes or related material, I am unable to determine what, if any, diagnosis was made following the defendant's admission to hospital, just as I am unable to determine what course of treatment (if any) was recommended.
18. Ms Duffy diagnosed the defendant as suffering from anxiety and major depression "in response to her current circumstances". It might be inferred that the "current circumstances" to which Ms Duffy referred encompass these proceedings. What else they might encompass is not something that I can determine. In any event, Ms Duffy stopped short of expressing the view that there was any causal connection between the defendant's anxiety and depression condition and her offending.
19. The opinion of Ms Duffy was obviously based, at least in part, upon the history provided by the defendant at the time of her examination. The fact that a psychiatric or psychological diagnosis is made wholly or partly on the basis of a subjective history is not unusual. In the present case however, it is apparent that Ms Duffy's diagnosis was also based upon the defendant's presentation at the time of examination, and her results following the completion of the Millon Clinical Multiaxial Inventory - III, described by Ms Duffy as "a comprehensive personality questionnaire comprising the measure of basic personality characteristics, more severe personality pathology as well as a number of clinical symptoms more transient and reactive to current circumstances". I have previously set out Ms Duffy's account of the results of that testing.
20. I am conscious of the statements of Smart AJ in Qutami regarding the caution with which reports of this nature must be approached. However, his Honour did not go so far as to say that in each and every case, a report such as that of Ms Duffy is deserving of no weight. What weight might be attached to such a report will necessarily depend upon the circumstances of the case.
21. The defendant bears the onus of establishing any mitigating factor on the balance of probabilities: R v Olbrich (1999) 199 CLR 270; [1999] HCA 64. In the present case Ms Duffy's report was tendered without objection, and in the absence of any request that she be available for cross-examination on its contents. In all of these circumstances, and particularly bearing in mind that Ms Duffy's opinion was based on factors other than the subjective history provided to her, I am satisfied on the balance of probabilities that the defendant is suffering from the conditions she diagnosed.
22. The diagnoses of Ms Duffy are important, and of particular relevance to the issue of general deterrence. In Aslan v R [2014] NSWCCA 114 Simpson J (as her Honour then was) made reference (at [33]) to the principles governing the effect of an offender's mental illness on sentence: [33] This Court has frequently had to grapple with the effect on sentencing (especially with respect to serious or violent crimes) of mental illness, intellectual handicap or other mental or emotional impairment or disability. The compassion and sympathy that such a condition engenders collide with the need for sentences to reflect the objective gravity of the offence in question, the community's interest in general deterrence, and that criminal conduct must be met with appropriate denunciation and retribution. Over the years, the applicable principles have evolved. They were most recently re-stated by McClellan CJ at CL in Director of Public Prosecutions (Cth) v De La Rosa [2010] NSWCCA 194; 79 NSWLR 1 at [177]. They are as follows: '[Principle 1] Where the state of a person's mental health contributes to the commission of the offence in a material way, the offender's moral culpability may be reduced. Consequently the need to denounce the crime may be reduced with a reduction in the sentence ... [Principle 2] It may also have the consequence that an offender is an inappropriate vehicle for general deterrence resulting in a reduction in the sentence which would otherwise have been imposed ... [Principle 3] It may mean that a custodial sentence may weigh more heavily on the person. Because the sentence will be more onerous for that person the length of the prison term or the conditions under which it is served may be reduced ... [Principle 4] It may reduce or eliminate the significance of specific deterrence ... [Principle 5] Conversely, it may be that because of a person's mental illness, they present more of a danger to the community. In those circumstances, considerations of specific deterrence may result in an increased sentence ... Where a person has been diagnosed with an Antisocial Personality Disorder there may be a particular need to give consideration to the protection of the public ...' (internal citations omitted, italics added)
23. Her Honour then went on to say (commencing at [34]): [34] It will be observed that none of these principles is stated as absolute. What is recognised is the potential effect, in any given case, of a mental disability. It does not follow that, because an offender suffers from some mental impairment or disability, his or her moral culpability is reduced (principle 1); nor that he or she is an inappropriate vehicle for general deterrence (principle 2); nor that a custodial sentence will weigh more heavily upon him or her (principle 3); nor that the significance of specific deterrence is reduced or eliminated (principle 4). Nor, on the other hand, does it follow that a person with mental impairment is a danger to the community, indicating a need for community protection (principle 5). Too often, the mere fact of mental illness is advanced to this Court as necessarily calling for a more lenient sentence. What the principles spelled out by McClellan CJ at CL do is direct attention to considerations that experience has shown commonly arise in such cases. There is, however, no presumption. It remains necessary for the sentencing court to examine the relevant facts in order to determine whether, in the specific case, the mental condition has the consequence contended for. [35] A central question (but not the only question) is whether the mental illness or other condition had a causative role to play in the commission of the offence or offences for which the offender is to be sentenced. Counsel who appeared for the applicant accepted that this was the principal issue in this case. If it is concluded that there was a causal connection, then the offender's moral culpability may be reduced (see principle 1). That connection may also warrant lesser attention being paid to the need for the sentence to reflect considerations of general deterrence (principle 2).
24. As I have already observed, the report of Ms Duffy does not establish any causal connection between the defendant's offending and her mental state. However that does not mean that an offender's mental illness is irrelevant to the issue of general deterrence: Iskandar v R [2013] NSWCCA 235 at [30] per the Court (Beazley P, R A Hulme and Bellew JJ) citing Director of Public Prosecutions (Cth) v De La Rosa (2010) 79 NSWLR 1; [2010] NSWCCA 194 per McClellan CJ at CL [42] and R v Engert (1995) 84 A Crim R 67 at 68 (per Gleeson CJ) and at 72 (per Allen J). In Engert, Gleeson CJ emphasised that the issue must not be approached on the basis that once it is established that an offender suffers from a mental illness, it automatically follows that general deterrence will assume less importance in determining the appropriate sentence. Whether that is the case will necessarily depend on the entirety of the circumstances.
25. In the present case, it is clear, having regard to the opinion of Ms Duffy that the defendant is suffering from a number of significant mental health issues. The extent of those issues is such that in Ms Duffy's opinion they require professional intervention. In those circumstances, I am satisfied that the defendant presents as an unsuitable vehicle for general deterrence. For the same reasons, personal deterrence has little part to play in the sentencing of the defendant.

CONCLUSION

1. I make the following orders: 1. The defendant is fined the sum of $18,000.00. 2. The fine in Order (1) is to be paid within 28 days. 3. The defendant is to pay the Prosecutor's costs as agreed in the sum of $15,000.00

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: 12 April 2017