Hostile Takeovers Pty Ltd v Hudson
[2016] ACTSC 185
•12 July 2016
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Case Title: | Hostile Takeovers Pty Ltd v Hudson |
Citation: | [2016] ACTSC 185 |
Hearing Date: | 12 July 2016 |
DecisionDate: | 12 July 2016 |
Before: | Murrell CJ |
Decision: | Appeal allowed in part. Appellant fined a total of $36,000.00. See [49]–[51]. |
Catchwords: | APPEALS – CRIMINAL LAW – Whether sentence manifestly excessive – insanitary and unclean premises – s 27(1) Food Act 2001 (ACT) |
Legislation Cited: | Food Act 2001 (ACT) s 27 Australia New Zealand Food Standards Code – Standard 3.1.1 – Interpretation and Application 2009 (Cth) cl 4 Australia New Zealand Food Standards Code – Standard 3.2.2 – Food Safety Practices and General Requirements 2011 (Cth) cls 17, 19, 21 ACT Health, Register of Food Offences (9 March 2016) < |
Cases Cited: | House v The King (1936) 55 CLR 499 Hudson v Wong (2010) ACTSC 108 Kaye v Siddiq (2013) ACTSC 62 |
Parties: | Hostile Takeovers Pty Ltd (Appellant) Lyndall Hudson (Respondent) |
Representation: | Counsel Mr A McKenna (Appellant) Mr K Lee (Respondent) |
| Solicitors Ben Aulich & Associates (Appellant) ACT Director of Public Prosecutions (Respondent) | |
File Number: | SCA 25 of 2016 |
Decision under appeal: | Court/Tribunal: Magistrates Court of the ACT Before: Magistrate Campbell Date of Decision: 7 August 2015 Case Title: Hudson v Hostile Takeovers Pty Ltd Citation: [2015] ACTMC 4 |
MURRELL CJ:
The appellant was the proprietor of a restaurant business known as London Burgers and Beers in Canberra City. The appellant was charged that on 27 October 2011 it committed five breaches of the Australian and New Zealand Food Standards Code (the Food Code) in contravention of s 27(1) of the Food Act 2001 (ACT) (the Food Act).
After a defended hearing in May 2015, on 7 August 2015 the Magistrates Court found that the appellant was guilty of all offences. On 23 March 2016 the Court sentenced the appellant, imposing the following fines:
(a)Breach of cl 3.2.2(17) of the Food Code (easily accessible hand washing facilities for food handlers, appropriate hand washing facilities) $12,000.
(b)Breach of cl 3.2.2(19) of the Food Code (clean premises) $20,000.
(c)Breach of cl 3.2.2(21) of the Food Code (maintenance of premises and equipment) $12,000.
(d)Breach of cl 3.2.3(10) of the Food Code (floors to be designed to enable effective cleaning) $10,000.
(e)Breach of cl 3.2.3(11) of the Food Code (walls and ceilings to be designed to enable effective cleaning) $10,000.
The Court ordered the appellant to pay $165 per offence for the informant's costs, a total of $825 and allowed six months to pay the total fine of $64,000.
At the time of the offences, the maximum penalty for any breach of s 27(1) of the Food Act was $275,000 for a corporation and $75,000 for an individual. Currently, the maximum penalty applicable to a corporation is $375,000. I note that these fines apply to all breaches of the Food Code, covering a vast range of types of offending, all levels of seriousness in relation to particular offending conduct, and that the corporate fines extend to corporations of all sizes.
The appellant appealed on the grounds that the fines were manifestly excessive, and alternatively, that they were unreasonable or plainly unjust in the circumstances.
The Food Act is part of a legislative scheme to enforce the requirements of a national uniform food code. Its purpose is to protect public health by ensuring that restaurants, cafes and bars are clean, thereby minimising the risk of patrons contracting illness from eating contaminated food. Obviously, protection of the public is the primary sentencing purpose to be addressed by any penalty.
Section 27(1) of the Food Act provides:
27Compliance with food standards code
(1)A person commits an offence if the person contravenes a requirement of the food standards code in relation to—
(a)the conduct of a food business; or
(b)food intended for sale; or
(c)food for sale.
Maximum penalty: 500 penalty units.
Clause 4(1) of Standard 3.1.1 of the Food Code provides "The proprietor of a food business must ensure the food business complies with all the requirements of the Food Safety Standards”. Standard 3.2.2 of the Food Code deals with food safety practices at each step of the food handling process. Standard 3.2.3 deals with the cleanliness of food premises and equipment.
Facts
The Canberra City London Burgers and Beers restaurant was not registered with the Health Protection Service.
Effectively, it was operated by two partners who ran it through the vehicle of a corporation.
The premises were inspected on 27 October 2011, when the five offending circumstances were observed and photographed.
Clause 3.2.2(17) – Easily accessibly hand washing facilities for food handlers
The photographs that relate to this offence are photographs 38 and 91 in Exhibit A. At the kitchen basin there was no soap, and there were no single use towels or other means of effectively drying hands.
Further, the hand washing basin in the front bar area was used to store a basket of cutlery. The magistrate observed that "the washing facilities were inadequate and not designed to encourage or even facilitate good hygiene practices in staff" and that, "[h]aving the correct facilities readily available to kitchen staff in a restaurant is absolutely vital to ensure that thorough hand washing takes place and thus the risk of food borne illness is reduced."
I agree with those observations. However, while the condition of the kitchen basin (the lack of soap and appropriate towels) and the bar basin was inadequate, the breaches were of a temporary nature. There is no evidence of a continuing breach.
Clause 3.2.2(19) – Clean premises.
A raft of photographs illustrates this breach. The photographs show cigarette butts outside the back entrance, an accumulation of spilt chemicals, mould on the cool room fan units and ceiling surface, accumulated dirt and grease on kitchen walls and around cooking appliances, a dirty fridge, unclean food utensils, an accumulation of food waste in the grill above the food preparation area, an unclean microwave, an unclean food preparation bench and an unclean bain-marie.
The magistrate correctly identified this as the most serious offence. Her Honour observed that, "it is obvious that no effective cleaning system was in place." This observation was pertinent because it refers to the widespread and systemic breach of cleanliness requirements that obviously applied at the premises.
Clause 3.2.2(21) – Maintenance of fixtures.
Exhibit A photographs 23, 56, 80, 83 and 84 illustrate this breach. Light fittings were not properly fixed to a ceiling, the ice machine was dirty and had taped-on plastic sheeting, the latch handles on the fridge were broken, the fridge shelf was damaged, exposing bare rusted metal, and a dishwasher container was broken.
The magistrate noted, "a concerning lack of regard for the general state of repair of the premises" and observed that the standard was designed to avoid the accumulation of dirt, grease and waste. I agree with those observations.
The poor standard of maintenance was consistent with the generally poor state of the premises. However, the lack of maintenance applied to a limited number of items.
Clause 3.2.3(10) – Floors to be designed and maintained to enable effective cleaning.
Exhibit A photographs 3, 4, 81, 82 and 90 illustrate this breach. There were two areas of missing floor tiles and associated ponding of water and accumulation of food particles in those areas. There was also an unfilled area around a drain pipe.
I agree that the condition of the floor was unsatisfactory and would have interfered with effective cleaning. However, this was a relatively minor breach of the relevant requirement.
Clause 3.2.3(11) – Walls and ceilings to be designed and maintained to enable effective cleaning.
Exhibit A photographs 5, 6, 22, 23 and 24 illustrate this breach. The walls and ceiling in a back food and drink storage area and corridor to the kitchen were unsealed and a telecommunication board was hanging out of the storage area wall. There was no ceiling above the kitchen leading into the office space and two walls had missing tiles. One of those areas was above the food preparation area. There were also holes in the ceiling area.
In relation to the design and maintenance of walls and ceilings, the magistrate noted that the relevant obligation was, "designed to ensure easy and effective cleaning of the surfaces and thus minimise the possibility of food contamination". Her Honour observed that in this case the breaches were not merely technical breaches but there was a real risk of pests and dirt getting into the kitchen and bacteria growing in broken tiles or under unsealed surfaces.
I agree with these observations. However, the problematic areas were limited in number and there was no evidence that vermin or pests had actually infiltrated the relevant areas.
Following the inspection on 27 October 2011, a prohibition order was served that effectively prohibited the company from trading. On the next day, a representative of the company attended the Health Protection Service. Subsequently, the premises reopened. They continued trading until February 2014, when a fire in nearby premises terminated the operation.
The company opened three other businesses, one of which closed because of market conditions. Another London Burgers and Beers restaurant at Tuggeranong was inspected in January 2014. As a result, an improvement notice was issued. There were several follow-up attendances and the matters of concern were addressed by March 2014. In February 2015, inspection of a temporary food stall identified that it did not have an appropriate food thermometer. Neither of these matters resulted in a prosecution. In other words, following these offences, the appellant was generally compliant with food requirements, with the two relatively minor exceptions to which I have just referred.
In her sentencing remarks, the magistrate made the following apposite general observations:
The 95 photographs tendered by the prosecution show a woeful state of affairs in an area used for the cooking and preparation of food at the premises of the London Burgers and Beers in 2011. There is an unacceptable build-up of dirt, grease and substances which presumably are food remnants on many of the surfaces, fixtures and fittings... it is clear that the photos do not depict minor or isolated examples of oversights or lapses in attention to detail which might occur in a busy working kitchen which... this one clearly was.
The general appearance of clutter and untidiness and the lack of clearly defined storage areas mean that it would be difficult to keep all areas and surfaces clean or free from debris, pests, or other contaminants... the defendant either did not know about or paid little heed to the basic obligations imposed on it by the Food Act. There seems to have been little regard for the basic standards of cleanliness and hygiene, let alone the more rigorous ones imposed by the Food Act on the proprietor of the food business.
It is true to say that there is nothing to suggest that the relevant authority had received any complaints from the restaurant’s clientele about the unclean state of the premises and thankfully no allegation of anyone becoming unwell after eating its food. It would be difficult to say that this outcome was attributable to any significant commitment by the defendant to ensure that the premises were kept in a clean and well‑maintained condition.
...
[T]he state of the premises in the current matter are truly awful... I doubt that any health conscious patron who actually saw the state the kitchen was in would be prepared to eat anything prepared in it.
Those observations were warranted.
In her sentencing remarks, the magistrate discussed the objective seriousness of the offences, directing her remarks particularly to the objective seriousness of the most serious matter, the failure to keep clean premises. Her Honour correctly identified that there had been systemic uncleanliness and disregard for the cleanliness requirements of the Food Act.
In her sentencing remarks, her Honour discussed the importance of the sentencing purposes of general deterrence, specific deterrence and denunciation, and the difficulty of addressing those purposes where the only available penalty is a fine.
Her Honour noted the need to ensure that the overall penalty reflected the overall criminality. Her Honour repeatedly referred to the principal purpose behind the requirements of the legislation, namely the protection of public health through maintaining cleanliness in restaurants and similar premises.
The evidence before the magistrate showed that the appellant company had two director-shareholders and an average taxable income of less than $100,000. The principals in the company at the time of the offences were the manager and the chef, who were directly involved in the day-to-day operation of the business.
The magistrate noted that there was nothing to suggest that the company would be threatened by the imposition of a significant financial penalty. On the other hand, she was aware that the company was relatively small and would not be able to absorb a significant financial penalty in the same way that a large corporate entity could do so.
There was an extraordinary delay of four years between the commission of the offences and the sentencing exercise. The delay was due to a number of factors, including a delay in charging, a delay in the matter being processed through the Magistrates Court and a delay caused by the offending corporation acquiring information regarding its financial circumstances.
The appeal
The appeal comes before the Supreme Court pursuant to ss 207(1)(a) and 208(1)(e)(ii) of the Magistrates Court Act 1930 (ACT). On such an appeal, the appellant must show an error of fact or law, either express or implied, in accordance with the principles in House v The King (1936) 55 CLR 499.
In this case, the appellant argued that having regard to the individual and overall sentences, the court should infer that there had been an error in the exercise of the sentencing discretion.
On a manifest excess appeal, the issue can be expressed as whether the sentences are unreasonable or plainly unjust in the circumstances, or whether the sentences lie outside the available sentencing range. It is trite to say that the appellate court should not allow an appeal simply because the appellate court would have imposed a more lenient sentence.
Was the sentence manifestly excessive?
Whether a sentence is manifestly excessive must be considered in the context of the legislated maximum penalty, the objective seriousness of the offence, the subjective circumstances of the offender, any relevant statutory provisions and the relevant sentencing purposes. Regard may be had to the sentences imposed in comparable cases in order to determine the usual sentencing pattern (without assuming that that pattern is necessarily correct).
Factors that courts in the ACT and other jurisdictions have considered when determining the objective seriousness of food code breaches have included:
(1) The general state of cleanliness of the premises. In this case, the general state was very poor.
(2) Whether pests or vermin were found. In this case, no pests or vermin were found.
(3) The cause of the uncleanliness; whether it was due to staff or management problems. In this case, the managers were the staff and the problems were related to poor management. That is also apparent from the nature of the breaches, which included both a lack of cleanliness and a lack of maintenance and proper design.
(4) Whether the breach was an isolated incident or part of a systemic failure. A number of these breaches reflected a systemic failure, particularly the cleanliness breach and the breaches involving lack of proper maintenance.
The parties made submissions concerning the delay in finalisation of these proceedings in the Magistrates Court. As noted above, the delay was due to a variety of reasons. Delay can inform sentencing in a number of ways. In this case, it is relevant in relation to the issue of rehabilitation. In the more than four years since the commission of the offences, the offender continued to operate similar businesses but did not breach Food Code requirements except on two occasions when there were minor infringements.
Overall, the breaches were of significant seriousness. The facts referred to unclean floors, unclean cooking equipment, storage containers and cool room, food that had been stored uncovered, lack of soap and towels for hand washing, broken tiles behind the sink and other matters.
The magistrate was taken to the prior good character of the offending individual and the fact that, after the offences, he spent a significant sum of money to improve the premises.
The magistrate referred to the decisions in Kaye v Siddiq (2013) ACTSC 62 and Hudson v Wong (2010) ACTSC 108. I have been taken to those cases. In the former case, Nield AJ upheld an appeal against the inadequacy of a sentence and substituted a fine that had a starting point of $12,500. The maximum available penalty in that case was $55,000 as the offender was an individual, not a corporation. In the latter case, Nield AJ upheld an appeal based on the manifest inadequacy of sentences for three separate breaches and imposed fines which, in each case, had a starting point of $3,500. The facts referred to meat being left outside to defrost and vegetables being stored outside, grease on various surfaces and an unclean food preparation area, food being stored in dirty containers and decaying food and rubbish on the floor.
The magistrate was not referred to the ACT Health Register of Food Offences (Register). I have been referred to the Register as at 9 March 2016. It provides a comparison with other offenders sentenced in the ACT for offences against s 27 of the Food Act. It shows the fines imposed in individual cases as well as the total of the fines imposed as a result of a single incident of offending behaviour. Most of the offenders on the Register were corporations who operated small suburban restaurants, i.e. offenders of a generally similar nature to the appellant in this case. The Register shows that penalties were generally in the range of $1,000 to $5,000, except in the case of Poppopyum Catering Services Pty Ltd, where fines of $10,000 were imposed for each of six offences, making a total of $60,000. That matter proceeded ex parte and the Court has no further information about the background to that matter.
Like the ACT Health Register of Food Offences, the ACT Sentencing Database statistics may be useful as a yardstick. However, statistical information does not provide the details of the cases referred to and the fact that a range of penalties has been imposed is not a statement that those penalties were correct. With those qualifications, I note that the sentencing statistics showed that the medium fine per offence imposed on corporations was about $2,500 and the majority of fines were in the range of $1,000 to $5,000. The highest fine was that imposed in Poppopyum Catering Services, a fine of $10,000.00.
Similarly, in New South Wales for breach of the equivalent provision, s 21 of the Food Act 2003 (NSW), for which the same maximum applied, the statistics for the Local Court show that many corporations received fines of between $1,000 and $2,000 and the maximum fine imposed was $10,000.
In Western Australia, the corresponding provision, s 22(1) of the Food Act 2008 (WA), provides for a maximum penalty of $250,000 for a corporation. In Hungry Jacks Proprietary Limited v City of Bayswater [2013] WASC 199 an appeal against a fine was allowed and a fine of $40,000 was substituted. In that case, a consumer had found a metal screw bit in an onion ring. That matter can be distinguished on two bases. First, it involved a very large corporation. Second, the facts disclosed an immediate threat to the well being of a consumer.
Using the yardstick of the decisions in the ACT and other jurisdictions, it is difficult to understand the significant departure from the standard level of fines, at least in respect of the less serious offences, i.e. Charges 1, 3, 4 and 5. The position is different in relation to Charge 2 because that offence captures the most serious aspects of the offender’s conduct and the offender’s conduct demonstrated a breach of the Food Code that was systematic and posed a serious risk to public health.
However, it is my view that the penalties imposed for the other offences were manifestly excessive and that if I failed to set aside those penalties, the appellant would be left with a strong and justifiable sense of grievance because the penalties differed vastly from penalties imposed in the ACT and elsewhere for matters of a similar nature, where similar maximum penalties apply.
Decision
In relation to Charge 2 the appeal is dismissed and the fine of $20,000.00 is confirmed.
In relation to Charges 1, 3, 4 and 5, the appeal against sentence is allowed and the penalty imposed by the Magistrates Court is set aside. In lieu, I impose the following fines:
(a)Charge 1 - $3,000.00;
(b)Charge 3 - $5,000.00;
(c)Charge 4 - $3,000.00;
(d)Charge 5 - $5,000.00
The total fine is $36,000.00. The appellant is allowed six months to pay.
| I certify that the preceding fifty-one [51] numbered paragraphs are a true copy of the Reasons for Judgment of her Honour Chief Justice Murrell. Associate: Date: 26 July 2016 |
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