Temperley, Raymond John v Playground Supplies Pty Ltd

[1980] FCA 81

Re: RAYMOND THOMAS TEMPERLEY
And: PLAYGROUND SUPPLIES PTY. LIMITED
Nos. G7-12 of 1980
Penalty

COURT

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Franki J.

CATCHWORDS

Penalty. Relevant consideration in fixing amount of penalty. More than one summons based on the same incident.

Trade Practices Act 1974, ss. 79, 53(a), 55.

HEARING

SYDNEY

#DATE 9:6:1980

JUDGE1

Mr Temperley, the prosecutor, with the consent of the Minister, laid six informations against Playground Supplies Pty Limited, the defendant. The defendant is a company of which the only two directors and shareholders are James Forrest and Richard Forrest. James Forrest is the Managing Director and both the directors are involved in the day to day operations of the defendant.

The charges allege offences under s.79 of the Trade Practices Act 1974 ("the Act"). Each charge is laid in respect of an advertisement published in a journal, "The Open Road", a publication of the National Roads and Motorists' Association of New South Wales and having a circulation at the relevant time of over 1 million copies.

Three of the charges allege a contravention of s.53(a) of the Act and the other three allege a contravention of s.55 of the Act. Under s.53(a) a false representation that the goods were of a particular standard, quality or grade was alleged and under s.55 conduct liable to mislead the public as to the nature and characteristics of the goods was relied upon. The advertisements were published on 14 February 1979, 10 April 1979 and 5 June 1979. Each advertisement was in the same form and two informations have been laid in respect of each advertisement, one under s.53(a), and the other under s.55.

The particular product advertised was what was called a "COMFY-SAFE' booster seat. This seat is designed for young children to sit upon in a car and it is to be placed on the seat of the car and the ordinary lap-sash seatbelt is used when the child is sitting in the "COMFY-SAFE" booster seat. The particular contravention alleged in each case was that the advertisement contained a statement in bold letters that "COMFY-SAFE is manufactured to meet the requirements of Australian Standard 1754". This standard was revised and issued as AS1754 in 1975, and by amendment No.2 of March 1978, standards were inserted (para 2.19.1) for the combustion characteristics of the textile materials with which the seat was covered.

In each case a plea of guilty was entered and a document setting out agreed facts was tendered. Mr James Forrest gave oral evidence and an affidavit by him was tendered. It was amitted that the "COMFY-SAFE" booster seats offered for sale by the defendant between February and July 1979 were not manufactured to meet the combustion characteristics of the textile material required by the amended specification. It was also agreed that between January 1979 and 31 July 1979 the defendant sold 725 of the booster seats.

Early in 1978 the defendant became interested in the manufacture of these seats and in May 1978 it enquired from the Standards Association of Australia about getting its approval for the seat. The Standards Association has a certification trade mark and it grants licences to approved persons to use that mark. Approval was ultimately received from the Standards Association on 15 October 1979 for the defendant to use its certification mark for the booster seats. In May 1978 Mr James Forrest spoke to Mr Greenhalgh, a senior technical officer of the Standards Association, about obtaining a licence to use the mark and an application was made on 14 June 1978. In July 1978 Mr Greenhalgh referred to the necessity to carry out tests to ensure that the combustion characteristics of the fabric to be used for the seat covers met those prescribed in AS1754. On 7 August 1978 a report was obtained from a Dr. Hickie of Unisearch Ltd, which set out tests he had carried out, and showed that the standards for the combustion characteristics of the fabric required had not been met and that the fabrics tested could not be classified as low fire hazard type.

Mr James Forrest, when interviewed in July 1979 by the prosecutor, said that Dr. Hickie told him that the fabrics "had only just failed". No technical evidence to explain the report was before me but, except in one instance, this statement seems likely to be in accordance with the result of Dr. Hickie's tests.

Mr James Forrest said that he had great difficulty in getting suitable fabrics and that he unsuccessfully approached 12 different suppliers in an endeavour to find a fabric which would measure up to the required combustion characteristics and also meet the defendant's commercial requirements. It seems that other manufacturers were experiencing a similar problem. No other complaint was made by the prosecutor about the defendant's product.

Evidence was given of a conversation on 10 January 1979 between Mr James Forrest and Mr Greenhalgh when a draft advertisement was being discussed. Mr Forrest suggested that Mr Greenhalgh had expressed at least a measure of approval of the wording in the proposed advertisement upon which the prosecutions are based. Mr Greenhalgh and Mr Forrest gave somewhat conflicting evidence on this conversation but I do not consider that it is of any particular significance. Mr Greenhalgh's approval of the offensive words would be of little significance in a prosecution under the Act. In any event I am not satisfied that Mr Greenhalgh gave any approval to the use of the relevant words. Eventually in June 1979 a fabric was obtained which met the combustion characteristics of AS1754, and, at least prior to the licence to use the certification mark being obtained, the seats were covered with a fabric which met the requirements. I am satisfied that at all relevant times Mr James Forrest knew that the seats advertised in the advertisements, the subject of these proceedings, did not measure up to AS1754.

On 24 July 1979 the prosecutor purchased three of the defendant's booster seats and had the combustion characteristics tested by the Australian Wool Testing Association. These tests showed combustion characteristics which appeared to be, at least in one regard, very substantially below those of the relevant specification. Again in the absence of technical information it is not possible for me to form any precise view as to the significance of this factor, but I am not prepared to view the matter in the same light as I might have, had I been satisfied that all the chairs to which the advertisements were directed were covered with fabric of the characteristics set out in Dr Hickie's report.

Apart from knowing that the fabric being used in the relevant period did not comply with AS1754 it appears that no proper attempt was made to provide any precise specifications to the supplier of the fabric, and although the supplier did not change during the relevant period, it is quite clear that the defendant had advertised chairs over a period as having been manufactured to meet the requirements of Australian Standard 1754 but had taken very inadequate, if any, steps to ensure that the fabric with which the chairs were covered was of a constant standard.

The offences to which the company has pleaded guilty cannot be regarded as mere technical breaches of a standard although I am not able to formulate any view about the extent of any possible hazard caused by the use of material on the defendant's booster chairs which did not comply with the standard. There was no suggestion that the sale of the relevant seats was contrary to law.

The prosecutor raised an issue of certain other advertisements by the defendant which he submitted were relevant background material. I do not consider that I should have regard to this submission. Firstly, there is no satisfactory evidence of any such advertisements and secondly, the period said to be involved would appear to have been outside the period of one year prescribed by s.21 of the Crimes Act 1914 within which a prosecution can be commenced.

I have also had regard to the fact that two informations, one in relation to s.53(a) and the other in relation to s.55, have been laid in respect of each advertisement. I consider that it is proper to fix fines which, when taken together, are appropriate in relation to each separate advertisement. The Court should not encourage multiple proceedings arising out of the same set of facts but should be careful it impose fines adequate to properly reflect the seriousness of the acts the subject of the proceedings.

The balance sheet of the defendant was in evidence and, although two sets of figures were before me which differed in some respects, it seems that at 30 June 1979 the company had a deficiency in shareholders funds and had liabilities which were in excess of its assets although certain of the liabilities were debts due to the two directors. It also appears that the company had uncalled capital of $9,000, its sales amounted to a quarter of a million dollars in the year ending 30 June 1979, but a small loss resulted. In Larmer v. Dome Lighting Products Pty. Ltd. 1978 A.T.P.R. 40-070 I had to fix a penalty for breaches of s.53(c) of the Act where a receiver had been appointed of the property of the defendant. In that case I referred to Hartnell v. Sharp Corporation Australia Pty. Limited 5 A.L.R. 493 and to the judgment of Nimmo J. in Larmer v. Power Machinery Pty. Limited, 14 A.L.R. 243.

It is always proper to have some regard to relevant factors in relation to the business of the defendant. The Full Court of this Court in Pye Industries Sales Pty. Limited v. Trade Practices Commission 1979 A.T.P.R., 40-124 at p.18326, when fixing a penalty under part 4 of the Act, cited the following quotation for the judgment in Trade Practices Commission v. Stihl Chain Saws (Aust) Pty. Ltd. 1978 A.T.P.R. 40-091:

"The penalty should constitute a real punishment proportionate to the deliberation with which the defendant contravened the provisions of the Act. It should be sufficiently high to have a deterrent quality and it should be kept in mind that the Act operates in a commercial environment where deterrence of those minded to contravene its provisions is not likely to be achieved by penalties which are not realistic. It should reflect the will of Parliament that the commercial standards laid down in the Act must be observed, but not be so high as to be oppressive."

I consider that this observation is equally relevant to the question of fixing a fine for an offence under part 5 of the Act.

It is common ground that the company has no record of any relevant prior conviction. I note the provisions of s.79(2) of the Act but I do not consider it is necessary to do more than say that I have taken those provisions into account.

A representation that a product is manufactured to meet the requirements of an Australian Standards specification, when this is not the fact, is a very serious breach of the Act and with a company differently situated a greater fine would probably be imposed. However, in the case of this defendant I consider that the following fines are appropriate.

I convict the company on each charge and impose the following fines:
In respect of No. G.7 of 1980 the sum of $1,000.
In respect of No. G.8 of 1980 the sum of $1,000.
In respect of No. G.9 of 1980 the sum of $1,000.
In respect of No. G.10 of 1980 the sum of $1,000.
In respect of No. G.11 of 1980 the sum of $1,000.
In respect of No. G.12 of 1980 the sum of $1,000.

making a total of $6,000 (six thousand dollars) and I also order the defendant to pay the costs of the informant in each case.

In accordance with Order 35 Rule 5 I order that the defendant pay the fines to the Registrar of the Court. I will permit submissions upon the question of the time within which the fines are to be paid.