Secretary, Department of Health and Ageing v Prime Nature Prize Pty Ltd

Secretary, Department of Health and Ageing v Prime Nature Prize Pty Ltd - [2010] FCA 597 - FCA 2010 case summary — Zoe

[6]

In the period 31 May 2006 to 13 December 2006 the First Respondent contravened s 42EA of the Therapeutic Goods Act 1989 (Cth) by supplying in Australia 'OsteoMax-7', being a counterfeit therapeutic good in that its packaging included the text 'AustL 122296' which represented, falsely, that OsteoMax-7 was included on the Australian Register of Therapeutic Goods. 2. In the period 31 May 2006 to 13 December 2006 the First Respondent contravened s 19D(1)(a)(iv) of the Therapeutic Goods Act 1989 (Cth) by supplying in Australia 'OsteoMax-7', a therapeutic good for use in humans, in circumstances where the therapeutic good was not listed on the Australian Register of Therapeutic Goods and none of the subparagraphs in s 19D(1)(b) applied. 3. In the period 31 May 2006 to 13 December 2006 the First Respondent contravened s 42EA of the Therapeutic Goods Act 1989 (Cth) by manufacturing in Australia 'OsteoMax-7', being a counterfeit therapeutic good in that its packaging included the text 'Aust L 122296' which represented, falsely, that it was included on the Australian Register of Therapeutic Goods. 4. In the period 31 May 2006 to 13 December 2006 the First Respondent contravened s 19D(1)(a)(iii) of the Therapeutic Goods Act 1989 (Cth) by manufacturing in Australia 'OsteoMax-7', a therapeutic good for use in humans, in circumstances where the therapeutic good was not listed on the Australian Register of Therapeutic Goods and none of the subparagraphs in s 19D(1)(b) applied. 5. In the period 31 May 2006 to 4 January 2007 the First Respondent contravened s 19D(1)(a)(iv) of the Therapeutic Goods Act 1989 (Cth) by supplying in Australia 'Plamax', a therapeutic good for use in humans, in circumstances where the therapeutic good was not listed on the Australian Register of Therapeutic Goods and none of the subparagraphs in s 19D(1)(b) applied. 6. In the period 31 May 2006 to 13 December 2006 the First Respondent contravened s 21B(3) of the Therapeutic Goods Act 1989 (Cth) by causing 'Aust L 122296' to be displayed on the packaging of 'OsteoMax-7', thereby representing that a therapeutic good was included in the Australian Register of Therapeutic Goods when the therapeutic good was not so included. 7. On 1 December 2006 the First Respondent contravened s 21B(3) of the Therapeutic Goods Act 1989 (Cth) by providing officers of the Therapeutic Goods Administration with a fabricated Certificate of Medicine Listing which purported to certify that 'Plamax' was listed on the Australian Register of Therapeutic Goods, thereby representing that a therapeutic good which was not included in the Australian Register of Therapeutic Goods was so included. 8. The First Respondent contravened s 54AC of the Therapeutic Goods Act 1989 (Cth), by, falsifying a Certificate of Medicine Listing for the therapeutic good, 'Plamax', being a document that was purportedly created for purposes that included the purposes of the Therapeutic Goods Act 1989 (Cth), which falsification was likely to interfere with the proper administration of the Therapeutic Goods Act 1989 (Cth). 9. In the period 31 May 2006 to 13 December 2006 the Second Respondent pursuant to s 42YC contravened s 42EA of the Therapeutic Goods Act 1989 (Cth) by aiding, abetting, counselling or procuring the First Respondent's contraventions of that section (by supplying the counterfeit therapeutic good 'OsteoMax-7') as set out in declaration 1 above. 10. In the period 31 May 2006 to 13 December 2006 the Second Respondent pursuant to s 42YC contravened s 19D(1)(a)(iv) of the Therapeutic Goods Act 1989 (Cth) by aiding, abetting, counselling or procuring the First Respondent's contraventions of that section (by supplying 'OsteoMax-7' in circumstances where the therapeutic good was not listed on the Australian Register of Therapeutic Goods) as set out in declaration 2 above. 11. In the period 31 May 2006 to 13 December 2006 the Second Respondent pursuant to s 42YC contravened s 42EA of the Therapeutic Goods Act 1989 (Cth), by aiding, abetting, counselling or procuring the First Respondent's contraventions of that section (by manufacturing the counterfeit therapeutic good 'OsteoMax-7') as set out in declaration 3 above. 12. In the period 31 May 2006 to 13 December 2006 the Second Respondent pursuant to s 42YC contravened s 19D(1)(a)(iii) of the Therapeutic Goods Act 1989 (Cth) by aiding, abetting, counselling or procuring the First Respondent's contraventions of that section (by manufacturing 'OsteoMax-7' in circumstances where the therapeutic good was not listed on the Australian Register of Therapeutic Goods) as set out in declaration 4 above. 13. In the period 31 May 2006 to 4 January 2007 the Second Respondent pursuant to s 42YC contravened s 19D(1)(a)(iv) of the Therapeutic Goods Act 1989 (Cth) by aiding, abetting, counselling or procuring the First Respondent's contraventions of that section (by supplying 'Plamax' in circumstances where the therapeutic good was not listed on the Australian Register of Therapeutic Goods) as set out in declaration 5 above. 14. In the period 31 May 2006 to 13 December 2006 the Second Respondent pursuant to s 42YC contravened s 21B(3) of the Therapeutic Goods Act 1989 (Cth) by aiding, abetting, counselling or procuring the First Respondent's contraventions of that section (by falsely representing that 'OsteoMax-7' was included in the Australian Register of Therapeutic Goods) as set out in declaration 6 above. Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. The text of entered orders can be located using Federal Law Search on the Court's website.

[18]

APPLICATION FOR LEAVE - CORPORATIONS ACT S 471B 14 Prime Nature Prize Pty Ltd (PNP) is currently in liquidation. Pursuant to s 471B of the Corporations Act 2001 (Cth) the applicant requires leave to proceed against PNP. The application for leave was made by notice of motion filed on 31 March 2010 and was supported by the Sinnathurai affidavit of 31 March 2010. 15 The discretion to grant leave under s 471B is unconfined, however, in considering the issues the Court will be guided by previous decisions as to the relevant factors to be considered and the purpose of the statutory restriction. The purpose behind the statutory requirement for leave was explained by Lee J in Executive Director of the Department of Conservation and Land Management v Ringfab Environmental Structures Pty Ltd [1997] FCA 1484 (Ringfab) at 2, where his Honour said of a predecessor to s 471B: Section 500(2) of the Corporations Law requires the leave of the Court to be obtained before an action may be commenced against a company in liquidation. The purpose of such a provision is to prevent a company in liquidation being subjected to actions that are expensive and, therefore, carried on at the expense of the creditors of the company and, perhaps, unnecessarily: Fielding v Vagrand Pty Ltd (In Liquidation) (1993) 11 ACLC 172 at 174; Ogilvie Grant v East (1983) 1 ACLC 742 at 744; Maher v Taylor (1984) 8 ACLR 931 at 934; Re A J Benjamin Ltd (In Liquidation) (1969) 90 WN (Pt 1) (NSW) 107 at 110. In determining whether leave should be granted, the Court considers whether the balance of convenience lies in allowing the applicant to proceed by way of action to judgment, or whether the applicant should be left to pursue his claim by lodging a proof of debt with the liquidator. The matter is one of discretion and the onus is on the applicant to demonstrate why it is more appropriate, in respect of a particular claim, to proceed by way of action: Fielding v Vagrand at 174; Ogilvie Grant v East at 744; Stewart v Intercity Distributors Limited (1960) NZLR 944 at 946.

[23]

Public interest 22 It is evident from the objects of the TGA that the Act is an important public health and safety measure. As such, there is a significant public interest in declarations of contravening conduct and the imposition of penalties being on the public record. The penalties are directed to ensuring compliance with the Act not only in the future conduct of the contravenor but also by others. This deterrent function is not defeated by the fact that the company is in liquidation and unable to pay penalties; Australian Competition and Consumer Commission v SIP Australia Pty Ltd [2003] FCA 336 at [59]; see also Australian Competition and Consumer Commission v Leahy Petroleum Pty Ltd (No 2) (2005) 215 ALR 281 at [9] and [11]. 23 Apart from the important deterrent effect, the independent public interest in there being a public record of contraventions and penalties supports the granting of leave to proceed against a company in liquidation. The written submissions in support of the application for leave assert that "the desirability of making declarations may, itself, be sufficient to justify the grant of such leave". The applicant also argued that declarations "are an appropriate vehicle to record the Court's and the community's disapproval of the contravening conduct"; they "serve to vindicate the regulator's claim that the respondents contravened the relevant legislation"; and they "may inform the public of the dangers arising from a respondent's contravening conduct". 24 I accept all these factors as indicating that leave should be granted in the present circumstances. Section 471B contemplates that the court may impose terms upon the grant of leave under the section. The applicant's notice of motion envisages a condition that the applicant must not take any step to enforce any order for payment of money against the first respondent "whether by way of penalty, costs or otherwise, without the further leave of the Court". There is precedent for such a condition; see Commonwealth v Davis Samuel Pty Ltd (No 5) [2008] ACTSC 124 and Australian Competition and Consumer Commission v Link Solutions Pty Ltd [2008] FCA 1790. In my view it is appropriate here. I will therefore grant leave subject to the condition as formulated by the applicant.

[38]

Declarations 52 The applicant seeks detailed declarations in respect of each contravention by each respondent. The court has a broad discretionary power to make declarations under s 21 of the Federal Court of Australia Act 1976 (Cth) however declaratory relief is not given at large. In Minister for the Environment, Heritage and the Arts v PGP Developments Pty Limited [2010] FCA 58 I considered whether declarations should be made where, as here, the findings of fact depend largely on a statement of agreed facts and concessions made by the respondent(s). I do not propose to repeat what I said in that case. It is sufficient to note that I relied on the force given by s 191 of the Evidence Act 1995 to statements of agreed facts that conform to the requirements of s 191(3)(a). For the reasons given in PGP Developments I remain of the opinion that declarations may be made in the circumstances that pertained in that case and, if otherwise appropriate, in the present proceeding. 53 Earlier in these reasons I discussed the public interest reasons that supported the grant of leave under s 471B of the Corporations Act; see [22]-[23]. The reasons given there also support the making of declarations concerning the respondents' contraventions of the TGA. The applicant is charged with enforcing important public health and safety legislation. Declarations may play an important part in supporting a regulatory authority in that task. 54 In Australian Competition and Consumer Commission v The Construction, Forestry, Mining and Energy Union [2006] FCA 1730 at [6] Nicholson J listed a number of ways in which that support might be manifested by declarations sought including the matters referred to in [23] above. In addition his Honour referred to the deterrent effect of declarations and that they may be of assistance in clarifying the law. Nicholson J's list was adopted by French J in Australian Competition and Consumer Commission v Kokos International Pty Ltd (No 2) [2008] FCA 5 at [48]. 55 I am satisfied that the Secretary, being responsible for regulation under the TGA, has a real interest in the declaration being granted; Australian Competition and Consumer Commission v Goldy Motors Pty Ltd [2000] FCA 1885; (2001) ATPR 41-801. Moreover I am also satisfied that there has been a proper contradictor. The finding that they have contravened the TGA is a serious matter for the respondents. The fact that they have admitted the contraventions does not mean that they had no interest in opposing the allegations made by the Secretary. Rather it connotes a realistic acceptance of the evidence against them and of the advantages of co-operating with the applicant. In my view it is appropriate to make the declarations of contravention sought by the applicant in respect of each respondent.

[45]

Multiple contraventions 62 The principle encapsulated in s 42Y(5) is that a person (individual or corporate) should not be penalised twice for the same conduct. The submissions made on behalf of the applicant address this issue by recognising that in the case of each respondent the same conduct is involved in supplying counterfeit therapeutic goods (OsteoMax-7) contrary to s 42EA and in supplying unlisted therapeutic goods (OsteoMax-7) contrary to s 19D(1)(a)(iv). Consequently the applicant seeks the imposition of a penalty for such supply only in respect of s 42EA and not in respect of s 19D(1)(a)(iv). No penalty is sought in respect of the contraventions listed in row 2 of the table above. 63 Similarly the same conduct is involved in manufacturing counterfeit therapeutic goods (OsteoMax-7) contrary to s 42EA and in manufacturing unlisted therapeutic goods (OsteoMax-7) contrary to s 19D(1)(a)(iii). Consequently the applicant seeks the imposition of a penalty for the manufacturing only in respect of s 42EA and not in respect of s 19D(1)(a)(iv). The applicant also recognises that for each respondent the conduct involved in falsely representing that OsteoMax-7 was on the Register contrary to s 21B(3)(a), was the same as that in relation to the supply and manufacture of OsteoMax-7. Therefore the applicant does not seek any additional penalty for that contravention. In summary, no penalty is sought in respect of the contraventions listed in rows 4 and 5 of the table above. 64 The contravention of s 19D(1)(a)(iv) involved in supplying the unregistered good, Plamax, by each respondent is conduct independent of the supply of OsteoMax-7. The applicant submits that a penalty in respect of this conduct should be imposed on each respondent. 65 Finally, PNP contravened ss 21B(3)(a) and 54AC in falsely representing that Plamax was on the Register and in creating a false certificate of medicine listing for Plamax. It was the same conduct of PNP that was in breach of both these sections and therefore only one penalty should be imposed in respect of that conduct. Consequently, the applicant seeks the imposition of a penalty in respect of the breach of s 54AC but not in respect of the breach of s 21B(3)(a), that is the contravention in row 8 in the table above. 66 I accept the applicant's submissions in this regard. I am satisfied that the applicant's approach is consistent with the direction in s 42Y(5) of the TGA.

[46]

Continuing course of conduct 67 It is clear from the facts outlined above, that the supply of Plamax and the supply and manufacture of OsteoMax-7 involved multiple instances of conduct that was in contravention of the TGA. These instances occurred over many months. However, there is a need to ensure that the respondents are not punished twice for what is essentially the same behaviour and therefore I accept the applicant's submission that these multiple contraventions should be viewed as a whole course of conduct. 68 Whether multiple instances should be seen as a single course of conduct is a matter for the discretion of the sentencing judge. In Construction, Forestry, Mining and Energy Union v Cahill [2010] FCAFC 39, Middleton and Gordon JJ said at [39]: The principle recognises that where there is an interrelationship between the legal and factual elements of two or more offences for which an offender has been charged, care must be taken to ensure that the offender is not punished twice for what is essentially the same criminality. That requires careful identification of what is "the same criminality" and that is necessarily a factually specific enquiry. Bare identity of motive for commission of separate offences will seldom suffice to establish the same criminality in separate and distinct offending acts or omissions. 69 Despite their Honours' clear exposition, the application of the principle can be difficult. For instance, it may be that the same or similar conduct, such as duress or bullying, through repetition becomes progressively more intimidating; see Mornington Inn Pty Ltd v Jordan (2008) 168 FCR 383 at [58] where Stone and Buchanan JJ said of such conduct: The fact that Mr Barry persisted, in circumstances where Ms Thompson was obviously distressed gives support to the idea that the repeat contraventions could be regarded progressively more seriously rather than less seriously. 70 In Cahill at [42] Middleton and Gordon JJ emphasised that a court is not compelled to utilise the principle and, moreover, even if the principle is applied, it does not follow that this in some way restricts the Court's discretion as to the amount of penalty to be imposed for that course of conduct. In this case I am satisfied that the multiple contraventions referred to in rows 1, 3, 6 and 7 of the table in [61] should be treated as each comprising a single course of conduct. This leads me to a consideration of the each respondent's individual position.

[47]

The second respondent 71 The first thing that may be said about Mr Kim is that there is no evidence that he has ever been involved in contraventions of the TGA other than those the subject of this proceeding. An important element to be taken into account in determining the applicable penalties for both respondents is the degree to which they have cooperated with the applicant in the investigation of the contraventions of the TGA. In relation to the second respondent the written submissions of the applicant state: Mr Kim has provided cooperation at all stages in the investigation of the contravention, including through providing documents, participating in interviews, and making full admissions to the contravening conduct. Furthermore, Mr Kim indicated a willingness to co-operate in the present proceedings at the earliest opportunity and the proceedings have been commenced and progressed on a fully agreed basis, save as to the submissions on penalty. To this end Mr Kim has filed an Amended Defence admitting the contravention in full and joined with the Secretary in filing an Agreed Statement of Facts describing the facts relevant to its contravention. Additionally, it should be noted that Mr Kim has made significant admissions that, were the matter to have proceeded to a contested hearing, [it] would have required the calling of considerable evidence. Further, in relation to some admissions it is also likely that the Secretary would simply not have been able to obtain evidence of those matters by other means. For example, Mr Kim made admissions relating to his personal involvement in the contraventions by PNP, his knowledge of PNP's contravening conduct and the significant amount of money made through sales of the two products. These admissions have assisted significantly in enabling the contraventions proved (by reason of the Statement of Agreed Facts) and also involved frank acceptance of matters which had an aggravating effect on the penalty to be imposed. Accordingly, Mr Kim is to be given full credit for those admissions. These matters reflect an acceptance of responsibility, a willingness to facilitate the course of justice and contrition on the part of Mr Kim. In the circumstances, the Secretary submits that Mr Kim should be entitled to a significant discount for co-operation in the order of 25%. .

[53]

Forfeiture 79 The applicant has also sought an order that the therapeutic goods Plamax and OsteoMax-7 be forfeited to the Commonwealth under s 54 of the TGA. Section 54 of the TGA provides: Offences and forfeiture (3) If a court: (a) convicts a person of an offence against this Act; or (b) orders a person to pay a pecuniary penalty for the contravention of a civil penalty provision; in relation to any therapeutic goods, the court may order that the goods be forfeited to the Commonwealth and, if an order is made, the goods become the property of the Commonwealth. (4) Where goods are so forfeited, the Secretary may cause notice of the forfeiture to be published in the Gazette. (5) Goods forfeited under an order referred to in subsection (3) are to be disposed of in such manner as the Secretary directs. 80 The precondition for the exercise of the power to order forfeiture has been met by the imposition on both respondents of pecuniary penalties. In Secretary, Department of Health and Ageing v Pagasa Australia Pty Ltd [2008] FCA 1545 at [60]- [72] Flick J considered the factors relevant to the exercise of the Court's discretion to order forfeiture in considerable detail. His Honour accepted however, at [72], that the factors to be taken into account will vary according to the circumstances and added: In the present proceeding there were no detailed submissions as to the manner in which s 54(3) was to be construed or applied. It is thus prudent to express no more than tentative views as to the ambit of the discretion there conferred. It is unnecessary to go beyond reaching a state of satisfaction in the present proceeding that the occasion for the exercise of the discretion has arisen and that it would be a judicial exercise of that discretion to order forfeiture. 81 In this proceeding also there were no detailed submissions in relation to s 54(3). In the circumstances, I respectfully agree with his Honour that prudence dictates reticence. However, in this case, it seems to me that the issues in regard to forfeiture are comparatively simple. I have found that the supply of Plamax and the OsteoMax-7 was contrary to the TGA. It follows that these products cannot be supplied in the future without further contravention of the TGA. Forfeiture of those products that have not been supplied is the most effective means of ensuring that they do not find their way into the supply chain. In my view, it is appropriate to order their forfeiture. 82 I shall make orders and declarations in accordance with the above reasons. I certify that the preceding eighty-two (82) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Stone.

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