BETWEEN : WEST COAST PROPERTY INVESTMENTS PTY LTD

Jurisdiction : MAGISTRATES COURT OF WESTERN AUSTRALIA

File No : PE 54827 of 2005, PE 54828 of 2005, PE 54829 of 2005, PE 54830 of 2005, PE 54831 of 2005, PE 54832 of 2005, PE 54833 of 2005, PE 54834 of 2005

Criminal law - Appeal against sentence - Magistrate erred in taking into account an incorrect maximum penalty - Determination of correct maximum penalty where statute limits the penalty that may be imposed for multiple offences of the same, or similar nature

Fair Trading Act 1987 (WA), s 12(1)(d), s 61, s 61(4), s 69(1), s 69(1)(a), s 69(3)

Sentencing Act 1995 (WA), s 6(2), s 40(5), s 54

Trade Practices Act 1974 (Cth), s 79(2)

Re-sentenced to a single fine of $8,000 for the four offences under Fair Trading Act 1987 (WA), s 12(1)(d)

No sentence imposed in respect to each of the four offences under Fair Trading Act 1987 (WA), s 61

Respondent : Department of Consumer & Employment Protection

Hartnell v Sharp Corporation of Australia Pty Ltd (1975) 5 ALR 493

Harvey v Robertson [1999] WASCA 120

Smith v The Queen (1992) 7 WAR 527

"M" v The Queen [2004] WASCA 236

Dragut v The West Australian Conference of the Seventh Day Adventist Church, unreported; FCt SCt of WA; Library No 950523S; 29 September 1995

Heferen v The Queen [1999] WASCA 81

McLachlan v The Queen [1999] WASCA 255

R v Gray [1977] VicRp 27; [1977] VR 225

Verschuren v The Queen (1996) 17 WAR 467

1 The appellant, West Coast Property Investments Pty Ltd, pleaded guilty to four charges of falsely representing that a person had agreed to acquire particularised services, contrary to the Fair Trading Act 1987 (WA) ("FTA"), s 12(1)(d) read with s 69(1)(a) and four charges of inaccurately providing information in respect of services, contrary to the FTA, s 61 read with s 69(1)(a). The four charges under s 12(1)(d) related to the publication of four fictitious testimonials on the respondent's website. The offences under s 61 related to the same four testimonials.

2 The Magistrate sitting in the Magistrates Court at Perth on 20 January 2006 imposed a global fine of $20,000 for the eight offences. On appeal the appellant contends that the Magistrate erred in regarding the maximum aggregate fine as being $240,000 when he should have found that it was $30,000 and that the fine was manifestly excessive. I uphold the appeal and re-sentence the appellant.

3 An appeal from a decision of a Magistrate will not be allowed unless an error has been made by the Magistrate that is such as to demonstrate that a miscarriage of justice has occurred, or, that the proceedings were fundamentally flawed: Smith v The Queen (1992) 7 WAR 527. There must be shown to be a link between any error made by the Magistrate and the conviction recorded or sentence imposed on the appellant.

4 Each offence carries a maximum penalty upon summary conviction of $6,000; FTA, s 69(1). However that is increased to five times that amount for each offence where the offender is, as in this case, a body corporate; Sentencing Act 1995 (WA), s 40(5). This results in a maximum penalty per offence of $30,000. Pursuant to the Sentencing Act 1995 (WA), s 54 the Magistrate had the power to impose one fine for all offences which was not more than the sum of the maximum statutory penalty for each offence. That sum is $240,000. The Magistrate appeared to have this provision in mind when he said that the "maximum global penalty" was $240,000.

5 However two other provisions of the FTA operate to ameliorate that maximum. The first is FTA s 69(3) which provides:

(a) a person is convicted, on the same or separate occasions, of 2 or more offences constituted by, or relating to, contraventions of the same provision of this Act; and

(b) the contraventions are of the same or a substantially similar nature and occurred at or about the same time (whether or not the person is also convicted of other contraventions of that provision that were of a different nature or occurred at a different time),

A court shall not impose on the person for those offences fines that, in the aggregate, exceed the maximum fine that would be applicable for a single offence against that provision."

6 It is not in dispute that the four offences against s 12(1)(d) fell into the category of offences referred to in s 69(3) or that the four offences against s 61 also fell into this category. The appellant submits that the effect of s 69(3) is to reduce the maximum penalty for each of the two groups of offences to $30,000 (or an aggregate of $60,000). On the other hand the respondent submits that the effect of s 69(3) is not to limit the maximum penalty for each offence but rather to place a ceiling on the final penalty that may be imposed. For example, in respect to the four charges contrary to s 12(1)(d), if the Magistrate had considered that having regard to the maximum fine of $30,000 per offence, a fine of $20,000 for each offence, or $80,000 in total, should be imposed, s 69(3) operated so as to require the Magistrate to instead impose a fine or fines that in total would not exceed $30,000. In respect to this issue I agree with the respondent.

7 The FTA, s 69(3) is modelled upon the Trade Practices Act 1974 (Cth), s 79(2). Section 79(2) was, according to Fox R and Frieberg A, Sentencing: state and federal law in Victoria 2nd ed 1999 at 391 - 392, enacted following the case of Hartnell v Sharp Corporation of Australia Pty Ltd (1975) 5 ALR 493 in order to limit the possibility of massive fines resulting from prosecutions for separate offences for multiple representations. In Hartnell's case the defendant was fined $10,000 for each of ten offences relating to the publication of two sets of deceptive words.

8 In my opinion s 69(3) is a statutory embodiment of the principle of totality applied to the imposition of fines for multiple offences. The principle of totality includes the one transaction rule which is that sentences for offences that arise out of the same set of facts or have common elements should properly be made concurrent, whereas sentences for offences that disclose entirely distinct conduct should attract separate and therefore cumulative punishment. The totality principle also provides that the general rule that individual crimes must be punished proportionately to their gravity is qualified by the principle that consecutive sentences passed for individual crimes must not be allowed to result in an aggregate sentence which is inappropriately long, having regard for the course of criminal conduct viewed as a whole: Pearce v The Queen (1998) 194 CLR 610 at [40]. Whilst these rules are most often referred to in respect to sentences of imprisonment; as statements of principle they apply, with appropriate modification, to fines for multiple offences: see the discussion in Fox and Frieberg, (supra) at 4.226 and the cases cited therein. So, for example, the totality principle as applied to fines requires that the principle that individual crimes must be punished proportionately to their gravity is qualified by the principle that consecutive fines passed for individual crimes must not be allowed to result in an aggregate fine which is excessive, having regard for the course of criminal conduct viewed as a whole.

9 The effect of s 69(3) is not to reduce the maximum penalty for each offence so that the sum of the penalties does not exceed $30,000 as this would mean that there was a different maximum penalty for an offence depending upon the number of similar offences with which a defendant was charged. This would be an absurd result. It would also mean that the seriousness of an offence may never be able to be reflected in the fine imposed. For example if there were 10 similar offences, the Magistrate would have to set a penalty for each offence on the basis that the maximum penalty for each offence was $3,000 rather than the $30,000 provided for by the legislature. Thus the maximum penalty for each offence remains at $30,000 and for the purposes of the Sentencing Act, s 54 a Magistrate may impose a single fine of not more than the sum of the maximum statutory penalties for each offence, subject to the ceiling which is imposed by the FTA, s 69(3). Consequently, a Magistrate should assess the fines or single fine having regard to the maximum penalty for each offence but after doing so he or she must give effect to the ceiling in s 69(3) and not impose a fine or fines that, in the aggregate, exceed the maximum fine that would be applicable for a single offence against the relevant provision. If, by the first process, a penalty is arrived at beyond the ceiling, the Magistrate is required to confine the penalty to the ceiling.

10 Section 69(3) does not require the sentencing authority to impose only one fine for a number of offences but it does require the sentencing authority to reduce fines for multiple offences when the accumulation of them would exceed the maximum fine that would be applicable for a single offence against the relevant provision. Thus, s 69(3) is directly relevant where the Magistrate sets individual fines for each offence. After determining what the appropriate fine is having regard to ordinary sentencing principles, the limit in s 69(3) must be had regard to.

11 Where the Magistrate decides to impose a global fine the position is not very different. Section 69(3) does not warrant him or her setting the fine as if the maximum aggregate penalty was the maximum penalty for one offence but it does require the Magistrate, after determining what the global fine should be, to reduce it, if necessary, so as not to impose a penalty that exceeds the maximum penalty for one offence, if it would otherwise exceed that maximum penalty.

12 Section 69(3) does not absolve the Magistrate from the obligation to take into account the totality principle, where it is applicable, in assessing the fine. It would be an error to fail to do so, regardless of the existence of s 69(3). This is because the sentencing principle is potentially relevant to all cases involving sentences for multiple offences, not only to those where the aggregate fine is going to exceed the maximum penalty for one offence. Ten fines of $500 or a global fine of $5,000 for 10 minor offences which are part of the one transaction or have many common elements may offend the principle just as 10 fines of $5,000 or a global fine of $50,000 for 10 serious offences may do. The latter situation is accommodated for by s 69(3), whereas the first one is not. Thus the Magistrate deciding on penalty is required to apply the relevant principles so as to ensure that the ultimate penalty is just. As fines cannot be ordered to be paid concurrently this may result in some fines being reduced or a fine not being imposed for some offences.

13 The second relevant provision is FTA, s 61(4) which states:

"Where an Act or omission by a person is an offence against this section and is also an offence against section 12 and a person is convicted of the offence, the person is not liable to be punished twice in respect of the same Act or omission."

14 The parties agree that this provision means that the respondent was not liable to be punished twice in respect to the publication of each testimonial. Consequently it could only be sentenced for the offences under s 12(1)(d) or the offences under s 61, but not both.

15 Three propositions emerge from these statutory provisions:

(a) The maximum penalty for each of the eight offences was $30,000;

(b) Despite the maximum penalty for each offence the Magistrate could not impose fines totalling more than, or a single fine more than, $30,000; and

(c) The appellant could not be punished for the four offences under s 61 if he was sentenced for the four offences under s 12(1)(d), or vice versa.

16 The combination of these propositions mean that whilst the maximum penalty for each offence was $30,000, the Magistrate could only have imposed individual fines for four offences contrary to one section and the sum of those fines could not have exceeded $30,000. If the Magistrate decided, as he did, to impose a global fine he could have only punished the respondent for four of the offences contrary to one section and could not have imposed a global fine of more than $30,000.

17 Further, when sentencing the respondent the Magistrate was obliged, as a matter of ordinary sentencing practice, to consider whether the totality principle warranted a reduction in the individual fines or global fine he was minded to impose.

18 The parties agree that the Magistrate erred because he said that the maximum global fine he could impose was $240,000.00. The appellant submits that the maximum fine that the Magistrate could have imposed was $30,000. On one view of the statutory provisions that is correct. However, for the reasons given above, my preferred view is that the maximum fine for each offence remained at $30,000 or a global fine of $120,000 for four offences but the Magistrate could not have imposed a global fine that exceeded $30,000 or fines that in aggregate exceeded $30,000.

Did the Error lead to a Miscarriage of Justice?

19 In my view the Magistrate's error led to a miscarriage of justice. The starting point is that it is hard to imagine that a sentencing Magistrate would not be influenced by his incorrect doubling of the maximum penalty. A sentencing Magistrate is obliged to take into account the statutory penalty for the offence; Sentencing Act 1995 (WA), s 6(2). There is such a vast discrepancy between $120,000 and $240,000 that it is difficult for me to accept that it would not have resulted in the Magistrate scaling up the fine that he would have imposed had he appreciated that the maximum fine was $120,000. Secondly, the Magistrate's comment leads me to doubt that he was aware that he could not punish the respondent for four of the offences. If he had known this I feel sure that he would not have made the error concerning the maximum penalty that he did. Thirdly, the comment also leads me to believe that the Magistrate failed to apply the totality principle. Whilst I appreciate the Magistrate's mere failure to advert to the principle does not mean that he did not take it into account. However, his calculation of the maximum penalty merely as an arithmetical calculation of the maximum penalty for each offence multiplied by the number of offences is good evidence that the Magistrate did not have in his mind that four offences related to the same act or omission as the other four offences and the other four were of the same or a substantially similar nature as each other and occurred at the same time as one another.

20 Thus there was a departure from principle. I appreciate that the departure does not mean that the ultimate penalty is manifestly excessive but it is a sign that it is. However, to determine that I must assess for myself the appropriate range of penalties for these offences.

21 The facts of the offences were stated by the prosecutor as follows:

"PROSECUTOR; Your Honour the corporate defendant operates a business involving a lease option to purchase property scheme and the central premise of the business is that it enters into agreements with owners of investment properties, whereby it guarantees those owners rental income for a specified period of time, on the condition that the business or the company has an option to purchase those properties from the owners, again after a specified period of time, at a price to be agreed upon at the time of the initial contract.

In about December 2004, the company created a website to promote its services. In or about late February 2005, the website went live. One of the web pages on the website contained testimonials from four persons, who were purported to have utilised the company's services. As it transpires, the testimonials were fictional.

The testimonials remained on the website for approximately 5 weeks while the website was live."

22 The defendant had no prior convictions. In mitigation the Magistrate was told that the error was discovered by the appellant prior to the complainant bringing it to its attention. The appellant removed the material from the website, on its own initiative, within a month. Nobody had entered into the scheme as a consequence of the false material.

23 The Magistrate was told that the appellant's sole director had given his wife directions, on a couple of occasions, to ensure that the fictitious material, which was put on the test website, was removed prior to the website "going live". It was submitted that because of her personal problems at the time she did not do what had been requested of her.

24 On appeal, I admitted further evidence by affidavit which proves that the appellant's employee sent the website developer approval for the website to be made live subject to the removal of "the test info details". From the Bar table I was advised that this included the fictitious testimonials. The respondent did not dispute this.

25 Whilst this evidence clarifies an inaccurate factual picture that was put before the Magistrate it adds little to the matters going to mitigation. As the Magistrate said the gravamen of the offences lies in the appellant failing to ensure that the material was not put on the live website and if the appellant had complied with its obligations it would have checked the website either immediately before or after it went live. Clearly, on either factual scenario, the appellant failed to do this.

26 The only matter which aggravates the offences is the publication of the material for four to five weeks. The respondent submits that the level of fine was appropriate having regard to the following matters:

1. The nature and prevalence of the offence;

2. The disapproval of the community for the criminal behaviour;

3. The need for deterrence, both general and personal;

4. The antecedents of the offender; and

5. The need to ensure that a fine is not simply a tax risk to be paid if caught: Harvey v Robertson [1999] WASCA 120.

"14. In the circumstances of the present case, the nature of the offence was such that:

14.1. the testimonials giving rise to the representations were fictitious and highly deceptive;

14.2. the display of the testimonials on the website had the potential to mislead numerous persons (although there is no evidence that any person was actually misled);

15. With the advent of the Internet (a relatively unregulated area) and in particular, Internet advertising and e-commerce, it is important that person operating in that area operate with integrity and honesty; offences, therefore, should be dealt to provide an appropriate deterrent.

16. The offences are economic in nature. They were committed by a corporation in the course of trade or commerce. It was important that any fine imposed not be perceived as a mere business expense incurred as a result of being convicted.

17. The first named appellant did plead guilty at an early opportunity and is entitled to a discount in terms of the sentence that would otherwise have been imposed had it not been for these pleas.

18. Any discount for a plea of guilty is within the discretion of the Court, there being no fixed tariff for the plea: R v Gray [1977] VicRp 27; [1977] VR 225 at 232.

19. A discount on the basis of a plea of guilty however needs to be considered in the light of the strength of the prosecution's case: Verschuren v The Queen (1996) 17 WAR 467 at 469-470 and 484-485; Heferen v R (1996) 106 A Crim R 89; [1999] WASCA 81 and McLachlan v R [1999] WASCA 255. Generally, the stronger the case, the lower the discount.

20. In this case, the discount should have been significant as the prosecution's case was strong and accordingly, a conviction highly likely ... ; Heferen v R (1996) 106 A Crim R 89; [1999] WASCA 81 and McLachlan v R [1999] WASCA 255.

21. With respect, the learned Magistrate should have calculated an appropriate fine on the basis that there were effectively four charges before him, each of which provided for a maximum penalty of $30,000. Provided the penalty that is ultimately imposed is not greater than $30,000, s69(3) is not infringed.

22. Although the offending conduct was not particularly sophisticated, conduct of that type is difficult to consumers and law enforcement agencies to detect."

28 The appellant submits that the following matters should be taken into account in mitigation:

"(a) there was no evidence that any person was misled by the representations other than the Respondent;

(b) there was no evidence that any person was induced to act to their detriment as a result of the representations;

(c) the period of offending particularised in each of the offences was for one day only;

(d) the Appellant acted reasonably in endeavouring to ensure the representations did not appear on the website and had it not been for the default of the website creator, the representations would have been removed prior to the website going 'live' (see Collins' and Houghton-Smith Affidavits); and

(e) the representations appeared on the website through oversight and it was never intended that any person be misled by them."

29 Additionally the appellant's pleas of guilty and the fact that it had no prior convictions must be taken into account.

30 Having regard to all these matters I conclude that the fine imposed by the Magistrate was outside the appropriate range of penalties for these offences. Importantly the offences were committed inadvertently rather than intentionally. The appellant removed the offending materially, on its own initiative, as soon as the publication came to its attention. To the best of anyone's knowledge nobody suffered harm as a result of the publication and the appellant receives credit both for its plea of guilty and its good character. Further, the offences were all part of the one transaction. Although the Magistrate was required to sentence the appellant for four offences each offence had much in common with the others in that each testimonial was placed on the test website at the same time for the same legitimate purpose and each offence was committed at the same time when through the one act the website was made live whilst each fictitious testimonial was still on the website. However, these common matters do not mean that the appellant should be sentenced as if it committed only one offence. The presence of four fictitious testimonials, as opposed to one, greatly increased the risk of a reader being misled by the material and should have meant that much greater care should have been taken to remove the fictitious testimonials before the website went live.

31 These matters greatly temper the effect of the important sentencing principles to which the respondent has referred. Having regard to all the relevant material I am of the opinion that whilst a fine of $5,000 is within the range of appropriate penalties for one offence of this nature a fine of $20,000, or four times that amount, for the whole of the offending behaviour is manifestly excessive. In particularly such a fine appears to me to fail to have regard to the totality principle.

32 I therefore proceed to re-sentence the appellant by imposing one fine of $8,000 for the four offences under the FTA, s 12(1)(d). In order to give effect to the FTA, s 61(4) no sentence is imposed in respect to each of the four offences under the FTA, s 61.