Button, G. v Suregold Pty Ltd
[1988] FCA 316
•17 JUNE 1988
Re: GREGG BUTTON
And: SUREGOLD PTY LTD; STEPHEN PANAGOPOULOS and JOHN BOWDEN BUZZA
Nos. WAG 53-55 of 1987
Trade Practices
COURT
IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION
French J.(1)
CATCHWORDS
Trade Practices - penalty - supply of product in contravention of consumer product safety standard - BMX type bicycles - failure to supply assembly manuals - numerous defects - including brakes and chain - relevant factors in fixing penalty in consumer product safety cases.
Trade Practices Act 1974 s.63AA(1)
Consumer Affairs Act 1971 (WA)
Hamlyn v Norman Ross Stores Pty Ltd (1985) ATPR 40-414
HEARING
PERTH
#DATE 17:6:1988
Counsel for the Prosecutor: Mr S.W. O'Sullivan
Solicitors for the Prosecutor: Director of Public Prosecutions
Counsel for the Respondents: Mr H. Szklarz
Solicitors for the Respondents: Mossenson Szklarz & Co.
ORDER
Suregold Pty Ltd is fined the sum of $5,000 on the first count and $3,000 on the second to be paid to the Registrar within 28 days.
Stephen Panagopoulos is fined $2,000 on the first count and $1,000 on the second count to be paid to the Registrar within 28 days.
John Bowden Buzza is fined the sum of $2,500 on the first count and $1,500 on the second count to be paid to the Registrar within 28 days.
The defendants are to pay the costs of the prosecution to be taxed as one set.
Note: Settlement and entry of orders is dealt with in
order 36 of the Federal Court Rules.
JUDGE1
In 1986 Suregold Pty Ltd ("Suregold") sold a number of imported BMX style bicycles which did not comply with a Consumer Product Safety Standard prescribed by the Attorney General under s.63AA(1) of the Trade Practices Act 1974. The company and its two directors and sole shareholders, John Bowden Buzza and Stephen Panagopoulos, have each been charged with a contravention of s.62(1)(a) and its successor provision, s.65C(1)(a). The defendants have pleaded guilty to all charges and the question for determination is the appropriate penalty in each case.
Fact Situation
The prosecutor and each of the defendants have, for the purposes of penalty, agreed certain facts which cover most of the circumstances of these offences. The agreed facts were supplemented by oral evidence.
The bicycles in question have a rather long and convoluted history. They were manufactured in the Peoples Republic of China and imported into Australia unassembled and packed in cartons. The importer was Austryder Pty Ltd ("Austryder"), whose managing director, Mr F.J. Borrello, gave evidence in these proceedings. Some 1,200 were imported and with them, although separately packed, came 1,500 manuals containing assembly instructions. The precise date of their importation did not emerge from the evidence, although it seems that it was probably some time in 1982. Upon opening 30 of the cartons, Austryder found the bicycles to be defective in various respects. It submitted two unopened cartons to Wait Aid Ltd, a consulting service company associated with what was then the Western Australian Institute of Technology and is now the Curtin University of Technology. The Wait Aid report, which was prepared by a civil engineer, was dated 20 March 1983. He listed a number of "major deficiencies" in relation to the bicycle which he tested. These were such as to contravene the Standards. Austryder then sued the manufacturers of the bicycles and obtained some form of summary judgment, the detail of which was not in evidence. From the time at which the defects were discovered it appears that Austryder wanted nothing more to do with them and the bicycles were later offered for sale.
There is a gap in the history until May 1984. At that time Buzza and Panagopoulos became interested in tendering for the bicycles. They were co-directors of a company, Supoint Pty Ltd, which operated a business known as Statewide Removals. Their original purpose was to assemble the bicycles for sale during the winter months when the removal business tended to slacken off. Buzza rang Mr Peter Dawson of the Trade Practices Commission in Perth and discussed with him the compliance with the Standard. Dawson advised him to have the bicycles tested. He said he had already received a copy of the 1983 Wait Aid report, but declined to make it available to Buzza. There was no explanation in the evidence for Buzza's failure to acquire the original report from Austryder. In any event, he obtained a copy of Australian Standard 1927 - "Pedal Bicycles for Normal Road Use - Safety Requirements". He arranged, in or about October 1984, to get a sample of the bicycles from Austryder to be assembled and tested against the Standard by Wait Aid. The cost of the testing was $985.00. The report which refers initially to two bicycles but in some parts is written as though only one were tested, did not arrive until well into 1985. It is undated and the precise date of its receipt does not appear from the papers. It indicated that the bicycle or bicycles tested did not meet the requirements of the Standard. In particular, it or they, failed to meet minimum braking distance requirements and further redesign was necessary to eliminate "severe lateral instability that was seen to occur whilst the bicycle was being ridden over a rough and irregular surface". Almost all the fittings appeared to be of a quality and design that made their use "questionable". The instructions set out in the manual were said to contain errors, the brake handles were of "very poor quality" and anti-fray caps were not evident. On braking performance tests, the bicycle or bicycles had an average braking distance of 12 metres as against the requirement of 5.5 metres. Brakes suffered noticeable fading over the last two test runs and the tests were abandoned after the brake cable failed.
Buzza said that after he collected the bicycles which he had sent for testing he concluded that their lateral instability was due to incorrect assembly. He and Panagopoulos decided they would acquire the bicycles from Austryder, bring them up to the required standard and sell them. On 19 February 1985 Suregold Pty Ltd was incorporated for that purpose. Buzza and Panagopoulos were its directors and only shareholders.
On 11 March 1985 Suregold agreed in writing to purchase 1,100 of the bicycles from Austryder. Immediate delivery was to be taken of 300 at $25 each, with the balance of 800 to be taken up at the same price within 60 days. This represented a total outlay of $27,500.
The agreement contained an acknowledgement in the following terms:-
"It is acknowledged that there are defects in the bicycles in that they do not comply with the Australian Standards AS1927 1978 and AS2141 1978 and more particularly the reflectors contained in the bicycle kits do not comply with any requirements, regulations or standards for bicycles sold or constructed in Australia. It is the intention of Suregold Pty Ltd to acquire the parts, kits and bicycles only in broken down form and not to sell the parts, kits or bicycles to the general public until modified to comply with all relevant Australian Standards. The reflectors shall not be sold as bicycle reflectors."
Austryder sold the bicycles unassembled but according to Borrello, by an oversight the manuals which had not been requested, were not supplied with them. Buzza and Panagopoulos started working on a few of the bicycles, assembling them during their spare time. They did not make the progress they anticipated as the removal business did not experience the usual downturn in winter 1985. They were, according to Buzza, unable to go ahead with their marketing plans because they were far too busy on the removals work. He said that they did not get back to assembling bicycles until about the end of 1985. They purchased supplies of brake cables and reflectors which bore the necessary stamp of compliance with the Australian Standard. They were not able to get sufficient reflectors with that stamp and brought in another 250 unstamped reflectors from Melbourne. The assembly work was done by Buzza, Panagopoulos, a man called Dibb, who worked as a storeman for Statewide removals, and another fulltime worker. Buzza said he inspected every assembled bicycle before it went out.
Although Buzza in effect told the Court that he and Panagopoulos were unable to work upon the bicycles during winter because of the demands of the removal business, when Dawson rang him on 20 August he was told that all deficiencies identified in the Wait Aid report had been rectified and that bicycles supplied by Suregold would comply with the Standard.
In or about October 1985, Suregold began negotiating with a Mr Kenneth Wickham of Salisbury Heights Pty Ltd, for the sale of 500 of the bicycles. The company supplied him with a total of 226 bicycles over a 12 month period as follows:-
16/10/85 ... 22 at $55 each
24/10/85 ... 2 at $50 each
4/11/85 ... 2 at $50 each
24/10/86 ... 100 at $37.50 each
11/11/86 ... 100
The invoice for the 100 bicycles supplied on 24/10/86 bore the endorsement:-
"These bikes are sold on the understanding that they will not be sold to the public unless they conform to the ASA Standards".
and was signed by Mr Wickham. Neither Wickham nor his company have paid for these purchases. The bicycles supplied on 24/10/86 were not supplied with manuals that contained instructions for assembly use and maintenance, and in that respect, did not comply with the Standard.
The man Dibb, who had been employed by Statewide for a few months over December 1985, bought one of the bicycles for his son. Knowing that Suregold was trying to sell the bicycles, on his own initiative, he approached a firm called Ross' Salvage Exchange and persuaded it to purchase some of them at $40 each. On or about 22 May he delivered 133 of the bicycles to Ross' Salvage in a Statewide Removals truck and received a cheque made out to that firm. The cheque was subsequently deposited in Suregold's account. Panagopoulos gave Dibb $400 by way of commission for procuring the sale. The principal of Ross' Salvage Exchange is Mr C.D. Dodd. Although there was some debate about the precise nature of the legal relationship between Dibb and Suregold, it is admitted that the supply of the goods to Ross' Salvage was a supply by Suregold and that both Buzza and Panagopoulos were knowingly concerned in it.
About 100 bicycles were sold in the Northern Territory and a further 100 exported to Papua New Guinea. All told Suregold disposed of 920 bicycles to persons within Australia and exported 100.
On 11 June 1986, Mr Dawson from the Trade Practices Commission purchased two of the bicycles from Ross' Salvage. Correspondence and telephone calls were then exchanged between the defendants and the Commission. On or about 8 October 1986 the prosecutor submitted one of the bicycles purchased from Ross' Salvage, together with a fork from the other bicycle, to Technisearch Pty Ltd for testing as prescribed by the Standard. The bicycle as submitted was partially assembled with pedals reversed in the cranks and handlebars detached. Technisearch is a company operated by the Royal Melbourne Institute of Technology. It conducted the tests which disclosed significant deficiencies, amounting to 19 contraventions of the Standard.
On 28 November 1986, having received the Technisearch report, the Commission sought an undertaking from Suregold that it would not supply any more bicycles and would recall those already supplied. On 1 December, Suregold advised in writing that sale of the bicycles had been "suspended". It requested a copy of the Technisearch report but this was declined. However the Commission did provide a summary of the tests failed against relevant clauses of the Australian Standard. Details of supplies to Salisbury Heights were given to the Commission on 4 December 1986. The supply of the bicycles was prohibited for two periods of 28 days by orders made under the Consumer Affairs Act 1971 (WA) on 5 December and 31 December 1986. On 30 January 1987 their supply was permanently prohibited. All told Suregold supplied some 924 bicycles to persons in Australia and exported 100. It has not taken any action to recall the bicycles or to advise consumers of their defects.
The ChargesSuregold Pty Ltd is charged on two counts as follows:-
"1. THAT on or about 22 May 1966 at Perth in the State of Western Australia SUREGOLD PTY. LTD. of 72/74 Beechboro Road, Bayswater, aforesaid did commit an offence constituted by Section 79(1) of the Trade Practices Act 1974 ("the Act") by contravening Section 62(1)(a) of the Act in that on or about 22 May 1986 at Perth aforesaid, in trade or commerce, it did supply to Christopher Damian Dodd, trading as Ross' Salvage Exchange, goods which were of a kind likely to be used by a consumer, being goods in respect of which there was a prescribed consumer product safety standard, namely the prescribed consumer product safety standard in respect of pedal bicycles declared in the notice under Section 63AA(1) of the Act, published in the Commonwealth of Australia Gazette No. S189 dated 30 April 1986, which said goods did not comply with the standard, to wit, "Aust Baoyi Dragon" brand, BMX style, pedal bicycles.
2. AND FURTHER THAT between 1 October 1986 and 18 November 1986 at Perth in the State of Western Australia SUREGOLD PTY. LTD. of 7274 Beechboro Road, Bayswater, aforesaid did commit an offence constituted by section 79(1) of the Trade Practices Act 1974 ("the Act") by contravening section 65(1)(a) of the Act in that in trade or commerce, it did supply to Kenneth John Wickham goods which were of a kind likely to be used by a consumer, being goods in respect of which there was a prescribed consumer product safety standard, namely bicycles declared in the notice under section 63AA(1) of the Act, published in the Commonwealth of Australia Gazette No S189 dated 30 April 1986, which said goods did not comply with the standard, to wit, "Aust Baoyi Dragon" brand, BMX style, pedal bicycles."
And Panagopoulos and Buzza are each charged on two counts of being knowingly concerned in the contraventions by Suregold.
The Statutory Framework
Prior to 1 July 1986, s.63AA of the Trade Practices Act provided that the Minister might by notice under his hand, published in the Gazette, declare that in respect of goods of a kind specified in the notice, a statement prepared by the Standards Association of Australia or another prescribed association or body, is a consumer product safety standard for the purposes of s.62. Upon publication of the notice the standard is deemed to be a prescribed consumer product safety standard. Section 63AA was replaced with effect from 1 July 1986 by like provisions in s.65E, found in the new Division 1A of the Act under the title "Product Safety and Product Information". Section 62 which was also repealed with effect from 1 July 1986, imposed a prohibition on the supply of goods intended or of a kind likely to be used by a consumer if the goods were of a kind in respect of which there was a prescribed consumer product safety standard and did not comply with that standard. That section was replaced in the new Division 1A with s.65C which, in the relevant parts, is in like terms. Section 79 which was amended with effect from 1 June 1986 imposed penalties for contravention of provisions of Pt.V of the Act, being a maximum of $10,000 for a natural person and $50,000 for a corporation. After 1 June, those maximum penalties rose to $20,000 and $100,000 respectively. Section 79 was also then amended to make provision for accessorial liability of persons "in any way, directly or indirectly, knowingly concerned in...the contravention". That liability previously derived from the provisions of ss.5, 7 and 7A of the Crimes Act 1914, whose operation is now excluded by virtue of s.79(5). Nevertheless the Crimes Act provisions still apply in relation to contraventions committed prior to the coming into force of the amendment.
The Prescribed Standard
and the ContraventionsBy notice dated 9 April 1986 the Attorney General declared that in respect of certain classes of pedal bicycle the Australian Standards AS1927-1978 and AS1927-1985, published by the Standards Association of Australia, would, subject to certain variations, apply as consumer product safety standards. He also declared a consumer product safety standard in respect of reflectors for pedal bicycles.
The standard AS1927-1985 supersedes AS1927-1978 and is the relevant standard for present purposes. It is entitled "Pedal Bicycles for Normal Road Use - Safety Requirements". Its scope is outlined in clause 1.1 which explains that it specifies safety performance requirements for the design, assembly and testing of pedal bicycles and sub-assemblies. It lays down guidelines for the instructions to be given in a manual on the use and maintenance of bicycles to which the standard applies and instructions for the assembly of bicycles offered for sale in a partially assembled state.
The bicycle purchased from Ross' Salvage Exchange and tested by Technisearch Ltd did not, as required by clause 1.5, carry markings stating the name and address of the Australian distributor. Nor, as a partially assembled bicycle, did it carry the warning statements specified in clause 1.6.3:-
"Caution - before riding attach pedals and align the handlebars correctly with the forks, adjust the height and tighten in accordance with the instructions in the manual."
No manual containing instructions for the use, maintenance and assembly of the bicycle was included with it as required by clause 1.7. Contrary to clause 2.3 the fork/stem and crank/spindle nuts were not fully engaged by their screws. Clause 2.5.1 which requires that the ends of inner control cables shall be provided with end protectors to prevent unravelling, was also not complied with, there being no cable end protectors provided. Nor was the requirement of clause 2.8.1 for the securing of wheels to the frame with a positive locking device met. Flat washers were used on both front and rear wheels. And there being no manual there was, of course, no specification of recommended torque, nor any statement in kilopascals of recommended tyre pressure (2.8.4). In relation to the drive chain, the open end spring link was not trailing (clause 2.10).
By clause 2.14.1 all bicycles are to be equipped with at least two brakes. Bicycles with two separately operated hand brakes are to have the lever for the front wheel brake on the right handlebar and that for the rear wheel on the left handlebar. On the bicycle tested the brakes were hand operated, drum and shoe brakes, the front brake being operated by the left hand lever.
Clause 2.15.1 provides for reflectors to be fitted to the front, rear, side and pedals of a bicycle in compliance with AS2124. The rear reflector bore the marking "MADE IN CHINA" and was 48o off vertical alignment as received. Clause 7 of the Reflector Standard AS2142 requires that each reflector be permanently marked with the registered name or trade mark of the manufacturer and the model number of the reflector. AS1927 also requires that the optical axis of the rear reflector shall be "directed rearwards within 5o of the horizontal/vertical alignment of the bicycle when the wheels are tracking in a straight line". The reflectors were, however, mounted on an adjustable bracket, so presumably that deficiency could be rectified. There was no marking on the side or pedal reflectors and no front reflector was fitted as required by clause 2.15.5.
The standard provides in clause 3.2 for appropriate levels of handling and parts performance on road testing:-
"When a bicycle is tested in accordance with Appendix C, it shall exhibit stable handling, turning, and steering characteristics without difficulty of operation, and there shall be no failure of any part of the bicycle nor shall there be any loosening or misalignment of the seat, handlebars, controls, or reflectors."
Over a 1 kilometre ride both cranks fell off and slotted nuts were difficult to tighten. The cranks were fitted further down the taper to continue riding tests. One nut was eventually lost.
Seat adjustment clamps are to be capable of securing the seat of the bicycle in any position to which it can be adjusted and when they are tested in accordance with Appendix G there is to be no permanent movement greater than 10 mm. at the point of application of the force (clause 3.4). In this case however on a vertical test there was a permanent deflection of 85mm and on movement normal to the vertical, there was permanent rotation in excess of 10 mm.
Clause 3.5.1 prescribes by reference to Appendix E of the Standard, a loading strength test and requires that when the handbrake system is tested in accordance with it, no visible fractures, failures, permanent deformation or misalignment shall result. In this case the loading test which provides for a force range from 180 to 450 newtons, led to breakage of the front brake cable at an applied force of 135 newtons.
Clause 4.7 provides that the drive chain including the connecting link or join for all bicycles shall withstand without failure a tensile force of 8kN. The Technisearch tests showed the drive chain to have a tensile braking load of 5.6kN.
Interestingly, the braking performance test showed that the average corrected stopping distance for the bicycle was well within the maximum allowable under the standard. However the Technisearch report did note that it was necessary to make the rear brake provide most of the braking efforts because the sprung rear wheel encouraged overturning when the front brake was applied.
Factors in MitigationBoth Buzza and Panagopoulos gave evidence on affidavit and orally. Buzza, although aware of the negative findings of the Wait Aid report, formed the view that many of the problems which arose during that round of testing were due to incorrect assembly of the bicycles. In the interests of safety, he said, he prepared a manual supplementary to that provided by the vendor of the bicycles and entitled "The Terrain Cycle". This rather unimpressive document, which was prepared for use only with the assembled bicycles, contained a congratulatory introduction, a statement of main specifications, some advice about safe riding and the rules of the road, and general directions under the hearing "Periodic Inspection and Maintenance". There was also in the booklet a diagrammatic "View of the Full Bicycle" with various parts numbered and described in an accompanying legend.
As to the reflectors, there was, on Buzza's evidence, difficulty in obtaining them to ASA standards. The unstamped reflectors were said to be as efficient as the marked reflectors. In any event, Buzza decided to take a pragmatic approach to the problem as he explained in his oral evidence:-
"...it was very difficult to tell them apart really as far as effectiveness was concerned; and it is a very very involved and scientific process to test them. So, you know, we thought that given a chance and how children deal with things - the first thing they do is to take all the mudguards, then the second thing is they strip any lights or bells or reflectors or anything off them and that is how they prefer to ride them. Now, we are not allowed to sell them like that - we were aware of that - but the fact is we did supply an effective reflector whether it complied or did not comply with the relevant standard was something which we had not proved."
When Suregold agreed to supply bicycles to Salisbury Heights Pty Ltd, its principal, Wickham, was told that in their original form they did not comply with the standard. He was also advised that the main faults related to the braking system and the reflectors. According to Buzza he was provided with replacement brake cables to be fitted to the bicycles. As to the lack of manuals, Buzza says that there was a manual in every box that he had to open. It would, he said, have been impracticable to open each of the boxes. This evidence is not consistent with Borrello's testimony that the manuals were, by oversight, not included with the bicycles supplied by Austryder to Suregold. In any event it is admitted on the agreed facts that the manuals were not included with the bicycles supplied to Ross' Salvage and to Wickham.
Panagopoulos in his affidavit said that it was his understanding, evidently derived from Buzza that many of the negative results in the Wait Aid test report were the result of incorrect assembly. So far as the supply to Salisbury Heights was concerned, he believed that reflectors, brake cables and copies of the All Terrain cycle manual had been provided.
Buzza gave some detail of his personal financial position and that of Suregold. As he explained it, Suregold was incorporated solely to acquire and sell the bicycles in question and has not traded since the permanent ban was imposed in 1986. For the year ended 30 June 1986, Suregold's accounts show a profit of $1,100. There is still some $9,375 said to be owing by Mr Wickham or his company. Suregold has no assets apart from that apparently unrecoverable money, and a sum of $271 in the bank. Its liabilities amount to $7,509. According to Buzza if the company is required to pay a substantial fine it will be unable to meet payments of its debts and it will go into liquidation. Neither he nor Panagopoulos had derived any great financial benefit from the supply of the bicycles. Buzza told the Court in his affidavit that he is presently engaged as the manager of Vost International Moving and Storage Pty Ltd and is a director of that company. He draws $450 per week and supports two dependents, being his wife and 16 year old son. He is also liable to meet substantial legal costs in relation to these proceedings. He has no substantial assets other than a house which is subject to a mortgage. Vost International Moving and Storage Pty Ltd presently employs 10 people, six of whom are employed in a full time capacity and the remaining employed on a part time basis. If he is required to pay substantial fines in relation to these proceedings then, according to Buzza, the continued existence of Vost International and the continuing employment of the employees of that company will be placed in jeopardy.
Panagopoulos told the Court that he is 39 years old and the father of five children, two of whom, together with a step-daughter, live with him and his second wife. He is responsible for the maintenance of three children of his first marriage who live with their mother in Victoria. He is presently employed by Supoint Pty Ltd which trades as Statewide Removal Services. He is a director of that company. He draws $425 per week net and is required to support six dependent children on that wage. His wife works parttime and earns approximately $90 per week. He has significant liabilities he says, including mortgage repayments in the sum of $1,400 per month. He has no other significant assets apart from the house which is subject to the mortgage. Like Buzza he will be responsible for the payment of significant legal fees as a result of the proceedings. Statewide Removal Services presently employs 14 full time employees and 20 parttime employees in various capacities. If he is required to pay a substantial fine then, according to Panagopoulos, it is likely that Supoint Pty Ltd will be wound up, with resulting loss of employment to his staff. He has given personal guarantees in relation to liabilities of Supoint Pty Ltd to the extent of approximately $250,000. It was never, he says, his intention to deliberately infringe the requirements of the consumer product safety standards and he believes that that arose because of his naive reliance on Buzza's assurances that the bicycles did comply with the standard.
Criteria for PenaltySection 79 of the Act as it was and as amended, provides for very substantial maximum penalties for contraventions of Pt.V. The possible penalty range defined by the maxima can be taken to reflect two objectives:-
1. To allow for discrimination among the types of contravention covered by the section and the conduct underlying them.
2. To ensure that substantial penalties are imposed across the range of possible contraventions.
Within that framework due weight must be given to the objective and significance of the provision contravened. It has been said and I respectfully adopt the view that the policy behind Pt. V is that corporations engaged in trade and commerce bear the responsibility of compliance with the standards prescribed and that those relating to consumer safety are perhaps the most fundamental - Hamlyn v Norman Ross Stores Pty Ltd (1985) ATPR 40-414, 44,162 (Wilcox J.).
Within that general policy framework factors relevant to penalty for failure to comply with a consumer product safety standard will include:-
1. The level and nature of the risk to members of the public flowing from the contravention.
2. Whether the contravention was inadvertent or intentional and the degree of carelessness or recklessness, if any, which is involved.
3. The monetary benefit derived from the contravention.
4. The extent to which members of the public have been supplied with the non-complying goods.
5. The prevalence and difficulty of detection of the contravention.
6. Whether any and if so what efforts have been made to recall defective products and otherwise warn consumers.
7. The need for general deterrence.
8. Factors personal to the defendants, including the ability to pay a fine and any record of prior conviction.
These factors are not exhaustive but indicative of some of the matters which a Court should address in determining penalty. In the present case the bicycles supplied to Ross' Salvage were supplied without assembly manuals, and in the case of the test bicycle, with a significant number of defects. The bicycle tested discloses a serious deviation from the Standard. The risk associated with these defects, especially in relation to the brakes and chain, must involve the possibility of a loss of control of the bicycle while it is being ridden. The absence of an instruction manual, which is a factor common to the supply of the bicycles to Wickham and to Ross' Salvage, must give rise to a risk of incorrect assembly. On Buzza's evidence, incorrect assembly can lead to lateral instability on rough surfaces, as in the case of the bicycle submitted to Wait Aid in 1985. Again the possibility of loss of control and consequential danger in the use of the bicycle is apparent.
The contraventions have been associated with a cavalier approach to compliance with the Standard. The defendants, Buzza and Panagopoulos, were, it seems to me, intent on pushing the bicycles into the market place for a quick return as a sideline to their principal interest which was the business of Statewide Removals. Mr Buzza's rationale for not complying with the reflector requirement was at least, in part, that children prefer to ride the bikes without lights, bells or reflectors. That reasoning speaks volumes for his approach to the question of compliance.
On the other hand I do take into account that in connection with the supply of bicycles to Wickham, Panagopoulos expressly drew his attention to the need for the bicycles when supplied to the public, to conform to ASA Standards.
The monetary gain from the whole exercise seems to have been negligible although, in the circumstances of this case, I do not give that factor great weight.
The possibility of extensive dispersal of the products to members of the public seems to have been headed off to a degree by the bans placed on them by the Commissioner of Consumer Affairs in Western Australia. This however is not a consequence which is attributable to the defendants who appear to have taken no steps, beyond a suspension of sales, to limit that dissemination or to warn consumers. The bans were imposed at a time when Suregold had disposed of most of the bicycles which it had purchased from Austryder.
No evidence was put before the Court to suggest that the contraventions of the kind alleged in this case are particularly prevalent or difficult to detect. It does appear to the credit of the defendants, that Buzza initiated contact with the Trade Practices Commission as early as 1984 to discuss the question of compliance with the standard. It is surprising in the light of that conduct that he and Panagopoulos did not take greater care to ensure that the letter of the Standard was adhered to.
As to factors personal to the defendants, it appears that the imposition of a fine on Suregold will have little practical effect beyond perhaps leading to its liquidation. Whether it is in a position to pay any fine may ultimately be a matter for determination in other proceedings. In the circumstances I will impose fines without regard to that possible consequence as no question of any oppressive impact was raised in relation to this company.
Of the two directors, Buzza seems to have been the prime mover and the person largely responsible for determining whether or not the bicycles did comply with the Standard. It is appropriate therefore to draw some distinction between him and Panagopoulos. I do have regard to his personal financial circumstances and that of his family and the business which he now operates. Panagopoulos appears, if anything, to be in a financially more vulnerable position than Buzza and I have regard to his personal circumstances also. Having regard also to the need for penalties to have a general deterrent effect, I will impose fines for these contraventions as follows:
1. Suregold Pty Ltd is fined the sum of $5,000 on the first count and $3,000 on the second to be paid to the Registrar within 28 days.
2. Stephen Panagopoulos is fined $2,000 on the first count and $1,000 on the second count to be paid to the Registrar within 28 days.
3. John Bowden Buzza is fined the sum of $2,500 on the first count and $1,500 on the second count to be paid to the Registrar within 28 days.
4. The defendants are to pay the costs of the prosecution to be taxed as one set.
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