Trade Practices - Offences - Appeal against conviction - Mens rea - Absence of proof of mens rea.

Trade Practices - Conviction - Appeal against quantum of fines - Second offence further manifestation of same fault - Trade Practices Act 1974 (Cth), ss. 53 (e), 79, 85. The appellant was a manufacturer and supplier of bread in Darwin. Until December 1979 it sold most of its bread in loaves of 750 grams and 500 grams. Having decided to alter its weights of loaves to 680 grams and 450 grams respectively it advertised the alterations in newspapers with the words "prices will be adjusted accordingly". It furthermore arranged for signs to be printed for display in retail outlets stating a change in weight with the notation "prices have been reduced according to the gazetted controlled prices". No reduction or adjustment in price in fact occurred. The appellant was charged with four offences of contravening s. 53 (e) of the Trade Practices Act 1974. In each case the appellant was fined $4,000 pursuant to s. 79 of the Act. Two charges concerned newspaper advertisements and two related to the display of signs in retail premises.

The appellant appealed against its convictions on the grounds that the trial judge had erred in holding that mens rea was not an essential element of a charge under s. 53 (e) of the Act. It also appealed against the quantum of the fine.

Held: (1) The offences created by s. 53 of the Act are offences of strict liability. Various statutory defences are available to a defendant under the Act. The absence of mens rea is, however, no defence.

Given v. C. V. Holland (Holdings) Pty. Ltd. (1977), 29 FLR 212, approved.

Riley McKay Pty. Ltd. v. Bannerman (1977), 31 FLR 129; Universal Telecasters (Qld) Ltd. v. Guthrie (1978), 32 FLR 360, referred to.

Cameron v. Holt [1980] HCA 5; (1980), 142 CLR 342, distinguished.

(2) The four convictions were in respect of two categories of offences. The appropriate sentence was imposed for one conviction in each of the two categories. The additional conviction in each category was another manifestation of the same fault and should not have attracted a like penalty.

Quinn v. Given [1980] FCA 23; (1980), 41 FLR 416, followed.

(3) In the circumstances the appropriate fines for each further manifestation of the same fault was $250 and to that extent the appeal was allowed.

Appeal against conviction and sentence in respect of four charges of contravening s. 53 (e) of the Act.

Cur. adv. vult.

Solicitors for the appellant: McCormack & Co.

Solicitor for the respondent: B. J. O'Donovan, Commonwealth Crown

1. The appeal against the convictions be dismissed.

2. The appeal against the sentences in Matters No. 7 and 8 of 1980 be dismissed.

3. The appeal against the sentences in Matters No. 9 and 10 of 1980 be allowed.

4. The orders made in Matters No. 9 and 10 of 1980 on 18 March 1981 be varied by the substitution of the following fines:

5. The respondent shall pay to the appellant one half of its costs of the appeal.

Darwin Bakery Pty Limited appeals against its conviction of four offences under the Trade Practices Act 1974 (the Act). Alternatively it appeals against the fines imposed in respect of those convictions.

In each case the appellant was charged with a breach of s.53(e) of the Act, in making a false or misleading statement with respect to the price of goods; in each case the appellant was fined $4,000 pursuant to s.79 of the Act. Two of the charges concerned newspaper advertisements and two related to the display of signs in shops.

The appellant is a company incorporated in the Northern Territory and since 1974 it has carried on business as a manufacturer and supplier of bread in Darwin. Until December 1979 most of the appellant's bread was sold at weights of 750 and 500 grams; other Darwin bakeries sold at other weights, mainly 680 and 450 grams. The appellant distributed its bread to a number of retail outlets and circulated a retail price list identifying its products by description and weight.

The Prices Regulation Act of the Northern Territory empowers the Controller of Prices to fix the maximum price at which "declared goods" may be sold. To more readily accord with bread prices fixed by the Controller, the appellant decided to change its weights from 750 and 500 grams to 680 and 450 grams respectively. In anticipation of this move it ordered a new bagging machine and other necessary equipment and its managing director, Mark Finocchiaro, arranged for signs to be printed for display in retail outlets. In essence the signs recorded the proposed change in bread weights with the comment: "Prices have been reduced according to the gazetted controlled prices". Those signs were displayed at Woolworths Supermarket and at Andrews Food Fair on 6 December 1979. In the "Northern Territory News" of 3 December 1979 and in "The Star" of 6 December 1979, the appellant published identical advertisements reciting that as from 3 December products previously packed in 750 and 500 gram weights would be altered to 680 and 450 gram weights. The advertisements continued: "Prices will be adjusted accordingly".

It is the reference, in the case of the signs to the reduction of prices, and in the case of the advertisements to the adjustment of prices, that is the gravemen of the charges. The appellant changed the weight of its bread but did not reduce the price nor adjust the price accordingly, accepting that an "adjustment" in these circumstances would necessarily be a reduction in price.

On 7 September 1979 there came into force Order No. 5 of 1979 made by the Controller of Prices, fixing the maximum price for bread by reference to type and weight. In a news release on 13 November 1979 the Controller announced that the control established by that order would be relaxed and that a new order was envisaged setting a maximum retail price for a "standard loaf" (a wrapped unsliced milk loaf) of 63 cents for 680 gram loaves and 50 cents for 450 gram loaves. On the same day the Controller wrote to the appellant to this effect.

By Order No. 8 of 1979 published in the Northern Territory Gazette on 30 November 1979, the Controller revoked Order No. 5 and fixed the maximum price at which milk bread unsliced could be sold by retail at 63 cents for a 680 gram loaf and 50 cents for a 450 gram loaf. The revocation of the earlier order had the effect of removing price control from all other classes of bread. On and after 3 December 1979 the prices of the appellant's products did not alter to take account of the changed weights except for milk bread unsliced as to which the appellant complied with Order No. 8 of 1979. In other words the appellant, while reducing the weight of its bread, made no corresponding reduction in price. Indeed, with the lifting of price control over most bread the price of some of the appellant's products increased.

The complaint of the appellant's conduct on and after 3 December 1979 was not that it was charging prices to which it was not entitled. The complaint was that in respect of each sign and advertisement the appellant had published a misleading statement that prices had been reduced or would be reduced but that no reduction took place.

Before the learned trial judge it was argued that the statements contained in the signs and advertisements were not misleading in fact. His Honour rejected that submission and it was not pursued on appeal.

It was also argued before the learned trial judge "that mens rea was a necessary ingredient of a contravention of s.53(e)" of the Act. His Honour rejected that submission; before this court it was the substantial argument against conviction. The notice of appeal simply asserts:

(a) find (sic) that mens rea is not an element of the offences"

The notice of appeal does not elaborate this contention nor was it greatly elaborated during argument. The court was referred to several authorities to which we shall in turn refer, but there is an initial question of just what is meant by saying that mens rea is not an element of a charge under s.53(e) of the Act. Through counsel the appellant disavowed any intention to rely upon any of the defences provided by s.85 of the Act. In particular the appellant did not contend that the contravention in respect of which each proceeding was instituted was due to reasonable mistake. In the course of his reasons the learned trial judge commented:

"In my view the offences were quite deliberate . . . I do not accept the statement set out in the Managing Director's affidavit sworn on 19 September 1980 to the effect that the advertisements and notices were not intended to mislead."

The appellant complained of this comment, especially his Honour's rejection of the statements in the affidavit without first giving the appellant's managing director the opportunity to give oral evidence in support of what appeared. In our view the complaint is not justified, particularly when regard is had to what follows in his Honour's reasons:

"I accept that when the notices were drafted it was to meet a completely different purpose, but at the time of their publication all the material facts were known to the Managing Director and Mr. Lewis, (Mr Lewis was a director and secretary of the appellant) and the notices had then become inappropriate and likely to mislead if published without amendment."

As we understand it, it was not the respondent's case that, at the time the signs were placed in the retail outlets and at the time the advertisements were submitted to the newspapers, the appellant had any intention to mislead. Rather it was that, by reason of the appellant's own conduct in the fixing of prices, those signs and those advertisements became misleading. In the absence of a defence of reasonable mistake it is not easy to identify the role that it was said mens rea should have played in the prosecution of the appellant. The appellant did not identify the role with any precision before this court. Apparently what was being said was that the appellant, having decided on the prices it proposed to charge for bread on and after 3 December 1979, failed through inadvertence to remove or correct the offending signs and advertisements.

The appellant took as its starting point the decision of the Full Court of the Supreme Court of South Australia in Holt v. Cameron (1979) 38 F.L.R. 226, affirmed on appeal in Cameron v. Holt [1980] HCA 5; (1980) 28 A.L.R. 490. The Supreme Court of South Australia held that mens rea, consisting of either a knowledge of the falsity of the statement, or at least reckless indifference as to its truth or falsehood, was an element of the offence created by s.138(1)(d) of the Social Services Act 1947 of making or presenting to an officer a statement which is false in any particular. The High Court refused special leave to appeal from that decision on the ground that nothing in the language of s.138, read with the rest of the statute, warranted displacement of the presumption that in creating the criminal offence in s.138(1)(d) the legislature intended a guilty intent, appropriate to the nature of the offence, to be an ingredient.

In the Supreme Court of South Australia, the approach of King C.J. may be found in this passage:

"The word 'false' is capable of meaning merely 'incorrect' or 'inaccurate', and the word 'misleading' is capable of meaning 'innocently misleading'. But when the two words are found together in a penal statute, as they are in s.138(1)(a), they carry a distinct flavour of dishonesty. The three placita of sub-s. (1)(a) all carry at least a hint of deliberate purpose and the second expressly refers to deception. The offence of which the appellant was convicted is found in the same section as other offences which likewise possess the flavour of dishonesty." (at p.230)

In the High Court, Mason J., with whom Stephen and Aickin JJ. agreed, said:

"I agree with King CJ that the language of paras (a) and (c) of s 138(1) makes it clear that the offences which they create involve the existence of a dishonest intention. In my opinion the language of para (c) is particularly significant. It makes it an offence to obtain various benefits 'by means of a false or misleading statement or by means of impersonation or a fraudulent device'. In this context 'false or misleading' must mean 'knowingly false or misleading' so as to reflect the element of dishonest and fraud which is so plainly expressed by the concluding words of the paragraph. The same meaning should be given to 'false' in para (d) so that the word bears a uniform meaning in paras (a), (c) and (d). It is appropriate that when the three paragraphs are so construed they should attract the common penalty, by no means small, which is prescribed in respect of each offence created by the sub-section." (at p.494)

Mason J. was of the view that the ordinary requirement of mens rea as an essential element of a criminal offence was not negated because the sub-section under which the defendant was charged was aimed at the protection of the revenue.

There is little direct authority under the Act. In Given v. C. V. Holland (Holdings) Pty Ltd (1977) 15 A.L.R. 439, which concerned a breach of s.53(a) of the Act in falsely representing that goods were of a particular quality, Franki J. held that it was not necessary to establish mens rea as an ingredient of the offence. His Honour took the view that s.85 of the Act pointed to an intention by the legislature to displace the presumption that mens rea was a necessary ingredient of an offence arising from a contravention of s.53(a). He attached considerable importance to Tesco Supermarkets Ltd v. Nattrass [1971] UKHL 1; (1972) A.C. 153, where the House of Lords, considering a prosecution based on the provisions of the Trade Descriptions Act 1968, took the view that the existence of an express statutory defence in cases such as mistake, reliance on information supplied or the taking of reasonable precautions and exercise of due diligence pointed otherwise to an offence of strict liability.

In Riley McKay Pty Ltd v. Bannerman (1977) 15 A.L.R. 561, an application for a declaration under the Act that certain questions asked of a company were not proper requests to furnish information within the meaning of the Act, Bowen C.J. commented:

"The significance of this in the present case is that the notice refers to matters that constitute or may constitute contraventions of ss 52, 53(a) and 53(c). These provisions prescribe absolute breaches. . . . If a corporation does make such a representation there is a breach of s 53(a) and it is irrelevant whether there was a guilty mind or not. However, in the case of a prosecution, in respect of a contravention of s 53(a), though not in civil proceedings, it is a defence if the person charged can establish that the contravention was due to reasonable mistake or due to a reasonable reliance on information supplied by another person or certain other matters . . ." (at p.566)

It is true that the learned Chief Judge's comments were probably obiter but they must carry considerable weight. The same approach is implicit in remarks by Bowen C.J. in Universal Telecasters (Qld) Ltd v. Guthrie (1978) 18 A.L.R. 531 when, dealing with the meaning and operation of s.53(e) of the Act, his Honour said:

"It may be suggested that this interpretation places a heavy burden upon television stations. However, it is no doubt because of this burden that the defences in s 85 are provided." (at p.533)

While it is relevant to see Part V of the Act as a piece of consumer protection legislation, we do not regard that as sufficient of itself to displace the ordinary requirement of mens rea. Section 53 does use language comparable in certain respects to that considered by the High Court in Cameron v. Holt (supra) and there can be no doubt that s.79 prescribed a penalty, indeed a very heavy one. Nor can there be any doubt that a contravention of a provision of Part V, other than s.52, results in a "conviction".

But we are of the opinion that the existence of s.85 in regard to contraventions of Part V of the Act points to a policy on the part of the legislature that in the absence of one of the defences there mentioned the liability imposed by s.53 is strict. More particularly, in the case of s.53(e) it is unnecessary to establish knowledge of the falsity of the statement or reckless indifference as to its truth or falsehood. The range of defences in s.85 is wide - reasonable mistake; reasonable reliance on information supplied by another; contravention due to the act or default of another or to an accident or some cause beyond the defendant's control where the defendant has taken reasonable precautions and exercised due diligence. There are particular defences in the case of publication of an advertisement and in the case of goods not complying with a standard. In addition, s.85(6) confers upon the Court a general exculpatory power where a person other than a body corporate has acted honestly and reasonably and ought fairly, in all the circumstances of the case, to be excused.

The breadth of these defences hardly accords with a situation in which liability depends in any event upon establishing mens rea. Rather, it assumes a liability arising from conduct objectively measured but which may be avoided by the proof of matters peculiarly within the knowledge of the defendant.

In our opinion the learned trial judge was right in rejecting the defence of mens rea. He was right in doing so because s.53 creates an offence of strict liability subject to the defences available under s.85 upon which the appellant did not rely.

We turn now to the alternative ground of appeal, that the penalties imposed were excessive. This court was referred to remarks by the Full Court of the Federal Court in Quinn v. Given [1980] FCA 23; (1980) 41 F.L.R. 416 at pp.420,421, endorsing earlier comments by a Full Court of the Federal Court in R. v. Tait and Bartley (1979) 24 A.L.R. 473 at p.476:

"An appellate court does not interfere with the sentence imposed merely because it is of the view that that sentence is insufficient or excessive. It interferes only if it be shown that the sentencing judge was in error in acting on a wrong principle or in misunderstanding or in wrongly assessing some salient feature of the evidence. The error may appear in what the sentencing judge said in the proceedings, or the sentence itself may be so excessive or inadequate as to manifest such error . . ."

In imposing a fine of $4,000 in respect of each offence, his Honour took the view that the offences were quite deliberate. We have some reservations about that finding although we think it must be read in the context of remarks, some of which have already been referred to, suggesting that what his Honour meant was that the appellant did nothing to displace the misleading nature of the signs and advertisements when it ought to have known that at the time they were first displayed and published they had become misleading by reason of the appellant's own conduct in fixing prices for its products.

The offences arose out of a failure by the appellant to amend or remove the signs and a failure to amend or remove the advertisements, to take into account the change in its earlier intention to "reduce" or "adjust" prices. It may be thought that there was only one offence, that of misleading the public in regard to the price of the appellant's bread at the time of the change from 750 and 500 grams to 680 and 450 grams. But in reality there were two categories of offences; one, the newspaper advertisements, apt to mislead the Darwin community generally and the other, the signs, apt to mislead prospective purchasers at the two retail outlets. And the language of the purchasers at the two retail outlets. And the language of the advertisements and of the signs differed in several respects.

Seen this way, we are of the opinion that the learned trial judge imposed an appropriate fine in respect of one conviction in each of the two categories. However, the additional conviction in each category was in truth for another manifestation of the same fault (Quinn v. Given supra, at p.425) and ought not to have attracted a like penalty.

Section 79(2) of the Act provides that where a person is convicted of two or more offences relating to the same provision of Part V, "being contraventions that appear to the Court to have been of the same nature or a substantially similar nature and to have occurred at or about the same time", the court shall not impose fines that in the aggregate exceed the maximum applicable to one offence. The appellant being a body corporate, the maximum fine for a contravention of s.52 was $50,000. It does not appear from his Honour's reasons when imposing sentence whether he regarded the provision as applicable. It had been drawn to his attention by the respondent "as a matter that may well be borne in mind" and was mentioned by the appellant although hardly in terms of a positive submission.

Before this court the appellant relied upon s.79(2). Its operation appears to have been conceded by counsel for the respondent "as an indication to the appeal court and in fact the sentencing court, that it would look at the totality in relation to that substantially similar conduct" (transcript p.62). We do not find it necessary to determine the relevance of s.79(2). Our decision to substitute different fines in respect of two of the convictions is for the reasons already given. That decision would be the same whether or not s.79(2) applied.

To reflect the relationship between the offences, a fine of $250 is appropriate for the conviction on each of the informations 9 of 1980 and 10 of 1980 and the appeal will be allowed to that extent.

As the appellant failed in its appeal against the convictions and has succeeded only on the question of penalty in respect of two of the informations, it is reasonable that the appellant recover only one half of the costs of this appeal. The order made by the trial judge that the appellant pay the costs of the proceedings before him will stand.