Hamlyn, E.J. v. John Sands Ltd [1985] FCA 123

) ) NEW SOUTH WALES DISTRICT REGISTRY ) Nos. G316 and G317 of 1984 ) GENERAL DIVISION )

BETWEEN : EVALINE JILL HAMLYN Prosecutor AND: JOHN SANDS LIMITED Def endant MORLING Jd. 4 April 1985

These are two prosecutions brought under 3. 79 of the

Trade Practices Act 1974 against the defendant for breaches of

3.62(1)(a) of that Act. The defendant has pleaded guilty to

the charges which have, by consent, been heard together.

The defendant company carries on business as, inter alia. an importer and distributor of games and allied leisure goods. In January 1983 it acquired the business of Hong Kong Handarts Company Pty Limited, a company which for some years had imported inflatable products from Taiwan and supplied them to major Australian retailers. The defendant, through a newly

formed division trading as Hong Kong Handarts, thereafter

Mr R.V. Thomas, who had been the general manager of Hong Kong Handarts Pty. Limited became business manager of the Hong Kong Handarts Division of the defendant company after January 1983. In December 1983 Mr Thomas became the general

manager of this Division of the company's business.

Some years before the defendant company acquired the Hong Kong Handarts business, Mr Thomas, in his then capacity as general manager of Hong Kong Handarts Company Pty Limited, wrote to that company's agent in Taiwan advising it of the wording to be placed upon inflatable products to comply with the prescribed safety standards for buoyancy aids. At that time a Consumer Product Safety Standard for the purposes of

3.62 of the Trade Practices Act had been declared in respect of

goods intended to be used primarily by a young person asa buoyancy aid in water. The safety standard consisted of the

requirement that the goods and their packaging carry a

in legible block capital letters not less than 6 millimetrea in height, in a colour contrasting with the colour of the goods or

package as the case may be, and in a conspicuous position.

The abovementioned regulations were repealed and replaced by the Trade Practices (Consumer Products Safety Standards) Regulations in July 1979. The new regulations included a prescribed consumer product safety standard in respect of buoyancy aids for the purpose of 3.62 of the Trade Practices Act. This safety standard consisted on the same

requirement as wag set out in the repealed regulation.

In July 1983 officers of the Trade Practices Commission conducted a survey of children's buoyancy aids in the retail market. During the survey inflatable buoyancy aids carrying the name of Hong Kong Handarts Co. Pty. Limited were found on sale in Sydney. Some of the products failed to carry the words of warning specified in the Trade Practices (Consumer Product Safety Standards) Regulations. The Commission was advised by the defendant company that at the time it acquired the business of Hong Kong Handarts Pty. Limited there had been nil inventory of inflatable products and thersfore no such products had been supplied during 1983 by the defendant company. The defendant gave an undertaking that all inflatable products imported by it would carry the warning as prescribed

in the Consumer Products Safety Standard for buoyancy aids.

On 22 December 1983 the prosecutor, an officer of the Trade Practices Commission, purchased a "Leisure 7" brand Surf

Rider from Woolworths Limited at 540 Gaorge Street, Sydney.

The inflatable product was folded inside a sealed clear plastic

bag, in which was also a card carrying a description and colour photograph of the product. This card carried the prescribed warning in letters of the correct height. However, the inflatable itself carried only the words -

"NOT TO BE USED AS A LIFE PRESERVER MADE IN TAIWAN"

These words were in lettering only 2 mm. high, around the air vaive. A copy of the product was tendered in evidence and it is obvious that the words written on the inflatable itself

On 4 January 1984 another officer in the Commission's Perth office purchased two similar articles from a Woolworths' store in Western Australia. These two products were packaged similarly to the one purchased in Sydney and the products were

endorsed with the same words, the letters being some 3 mm.

If was common ground Chat Woolworths and other purchasers probably would have acquired several thousand of the surf riders from the defendant. Some of the articles were recovered by the defendant prior to them being sold by retailers, but it was also common ground that, in all probability, many thousands of them were gold hy retail to

Following the acquisition of Hong Kong Handarts Co. Pty. Limited by the defendant it retained the same Taiwan agent, New Unity Enterprises Limited, who had been advised of

the words to be placed on inflatable products so as to comply

Me Thomas gave~ evidence as to the circumstances in which the offences were committed. He said that it was his practice to go to Taipei about three times a year to look at products. When he is in Taipei and after he has examined the products available, he writes out on a sheet of paper for the company's agent the type of products and design required by the defendant. He specifies the exact wording, the size of the wording and the position of the wording which is required on the goods 30 as to comply with the relevant provisions of the regulations. He ordered the goods, the subject of the charges, when he was in Taipei in April] 1983. He then wrote out the prescribed words of warning which were to be placed on each article. He said that as far as he knew, the words of warning were passed onto the Taipei manufacturer by the agent. It seems certain that this must have been the case, since the manufacturer placed a card containing the required words in the prescribed size in each package containing the article. Mr Thomas said that when he ia in Taipei he frequently emphasises to the agent and to the manufacturer of the goods the necessity

for proper words of warning to be affixed to products and the

Beriousness of the consequences if there is no compliance with

The good3 which are the subject of the charges were received into the defendant's warehouse at French's Forest. The defendant employed a person at the warehouse who wa3 responsible for quality control and for general checking of shipments 80 as to ensure compliance with, inter alia, the regulations. This person was Mr Brian Aubrey, the Marketing Services Manager, who had been an employee for some 30 years prior to his leaving the company in August 1984. It was Mr Aubrey's practice to take a sample from each shipment so as to ensure that it complied both with quality requirements and with Consumer Product Safety Standards, Apparently the foreman at the warehouse would extract a specimen from each shipment and

It 18 clear that the checking system broke down with respect to the items which are the subject of the charges. on the evidence, it seems that the breakdown was due to the failure of the foreman to take a specimen of the articles to Mr Aubrey for him to check. The evidence shows that, at the relevant time, the warehouse waa working under difficult conditions. These were due in part to a build-up in atock and algo to a problem in delivering goods to customers because of industrial action being taken by employees at the premises of

the cuatomer, It nad originally been intended that tae

articles which are the subject of the charges would be

delivered to Woolworths in the containers in which they arrived

from Taiwan. If this had been done there would have been no opportunity for the defendant to check the goods. Hovever, because of industrial action, the containers could not be delivered direct to the Woolworths store and, instead, they

were taken to the French's [Torest premises where they were

The defendant company has a substantial business in importing and selling and distributing goods and this is the first occasion on which it has been found to be in default in complying with the regulations. I am satisfied that the

default was unintentional and was due to the faiflure of one or

more of its employees to perform duties that had been assigned

to them. I am also satisfied that the defendant's breaches of the regulations were not designed to, and did not in fact,

Nevertheless, the defendant cannot escape the consequences of the failure by its employees to do their duty. Since the articles were designed to be used by children, it was important that they bear the prescribed words of warning. It igs true that the prescribed words were, in fact. included ona ecard in the packet in which each article was enclosed. Thus each purchaser of the article received a plain warning, in the

prescribed terms, that the article could not be relied upon a2

difficult to pelisve that any int ...igent asuit could ro32lrly

believe that the articles could of relied upon as lifesavino

obvicusly escape if the small piua which is insertea anto the air valve is vemoved. Thus no normal aault would be mzsled py the absence of the words of warning on the article iteelr. Nevertheless, the words may provics gome warning to children old enough to read them ana mature enough to appreciate their

seriousness of the offences and aiso the importance of complying with Trade Fractices (Consumer Product Safety Standards) Requlations. Counsél for the wvrosecutor agresa that, although there were two offences, it would pe broner co regard then as asiaing from th® cons non-compliance watn Line regulations, in these clrruxstances I think it 2s

appropriate 7o 'mpose the major weenalty in respeer 95 one ct

the offences. and to impose a more op lesa nominal canality in

appropriate tc impose a penalty cP 33,500 in matter No. Gsle of

1564 and a penalty of sS5u0 in matter Ho. G3217 of Lsed.