Trade Practices Commission v Elken Pines P/L

[1993] FCA 163

IN THE FEDERAL COIJRT OF AtlSTRALTA ) Nos. VG 306-322 of 1991

1            VG 324 of 1991

VICTORIA DISTRICT REGISTRY i VG 326-327 of 1991

1            VG 329 of 1991

GENERAL DIVISION	)	VG 332-335 of 1991 VG 351-359 of 1991
B E T W E E N :

TRADE PRACTICES COMMISSION

Prosecutor

ELKEN PINES PTY LTD and JACK KRANZ

Defendants

JUDGE :	Heerey J
DATE:	29 March 1993
PLACE :	Melbourne  RECEIVED

MINUTES OF ORDERS 3 0 MAR 1993

FEDERAL COURT OF

AUSTRALIA PRINCIPAL REGISTRY

THE COURT ORDERS THAT:

1. In respect of the charges the subject of applications VG 306, 307, 310, 312, 316, 319, 321 and 322 of 1991 the defendant Elken Pines Pty Ltd is convicted and fined $100 on each charge.

2. In respect of the charges the subject of applicatkons VG 324, 327, 329, 333, 351, 356, 358 and 359 of 1991 the defendant Jack Kranz is convicted and fined $20 on each charge.

NOTE :	Settlement and entry of orders is dealt with in
Order 36 of the Federal Court Rules

3.   The defendants pay the prosecutor's costs including reserved costs.

IN THE FEDERAL COURT OF AnSTRALTA ) NOS. VG 306-322 of 1991

1             VG 324 of 1991

VICTORIA DISTRICT REGISTRY 1 VG 326-327 of 1991

1             VG 329 of 1991

GENERAL DIVISION

B E T W E E N :

TRADE PRACTICES COMMISSION

Prosecutor

ELKEN PINES PTP LTD and JACK KRANZ

Defendants

JUDGE :	Heerey J
DATE :	29 March 1993
PLACE :	Melbourne

REASONS FOR JUDGMENT

The first defendant Elken Pines Pty Ltd (Elken Pines) is a company owned and controlled by the second defendant Jack Kranz ( M r Kranz). Elken Pines has pleaded guilty to eight charges of contravening s.53(c) of the Trade Practices Act 1974 (the Act) by representing in connection with the supply of goods, that the goods had approval they did not have.

The goods in question are coin telephones which were sold kith

the Telecommunications Act 1989. A permit for a prototype of	a representation that they complied with a permit issued under
such telephones had been granted but the telephones sold by Elken Pines had been received from the Taiwanese manufacturer with the internal circuitry altered and did not comply with the permit.
M r Kranz has pleaded guilty to eight corresponding charges
under s.79(l)(d) of the Act as being directly or indirectly knowingly concerned in or a party to the contravention by Elken Pines.
The maximum fines applicable at the time of the offences, which occurred in the first half of 1991, were $100,000 for a corporation and $20,000 for an individual. The prosecutor accepts that the eight charges should be seen as being "of the same nature or a substantially similar nature and to have occurred at or about the same time" within the meaning of s.79(2) of the Act. As a consequence the fines in the aggregate cannot exceed the amounts mentioned.
Elken Pines acted as an importer and wholesaler and sold the telephones through distributors in Victoria, New South Wales and Queensland. The wholesale price of the phones varied from $300 to $400 and retailed at about $750 to $1,000.
The complaints made by customers were that coins jammed in the
charged fox the call but not receive the coins. Mr James Helm phones with the result that the owner of the phone would be
the investigations manager of Austel, who gave evidence for the prosecution, said that the different circuitry meant that the telephone was vulnerable to surges of power from causes such as lightning strikes or power lines going across the line and that that affected the capacity of the telephone to withstand a minimum voltage and protect the user from death or injury. In cross examination however he gave the following evidence :

"MR GALBALLY: You were asked by his Honour, Mr Helm, about the type of injury that may flow from either a power surge or a lightning strike on the line. You gave an answer that said that death might or could result? - That's correct.

But that you are not in a position to say whether that - the true case or not? - That's correct.

And what I want to say to you is that the risk of that happening is very, very slight. Are you able to comment or not comment? - I am not able to .

comment ---

Right --- in relation to that.

Because you are not qualified and you have no knowledge of it? - Well, I have no statistics or knowledge of amounts of this happening.

No. And in effect you have no knowledge of what type of injury would flow at all? - No personal knowledge, no.

No. And you are not qualified to give that evidence? - No.

In the event, having regard to the applicable standard of

proof, I am not persuaded that the telephones presented a

significant danger to users. Nor is there any basis on which
I could find that Mr Kranz knew or ought to have known that

I

such danger existed. Mr Kranz, as Mr Helm admitted, when	first alerted to the fact that the telephones were not in
accordance with the permit, set about immediately to rectify the problem. The phones were recalled and purchasers were advised that a replacement could be issued. In the middle of 1991 Mr Kranz retained an electronics engineer who examined the problem and redesigned a new telephone for which a permit was issued in August 1991. This phone was given to those customers who were prepared to accept a replacement.
Mr Kranz admitted convictions for offences of dishonesty in
1972, 1974, 1976 and 1982. Quite apart from the lengthy time that has passed, I do not think I should take these matters into account as the present offences are not ones requiring a criminal intent and the circumstances of the case made out against Mr Kranz do not involve any allegations of dishonesty.
He was also convicted in 1985 of "maintaining appliances .for transmitting and receiving in contravention of the Wireless and Telegraph A c t " , a total of six charges, and fined $20 on each charge. Nothing more emerged about those offences. I am not persuaded they bear on the present issues. There was also evidence of a very substantial investment by Mr Kranz and Elken Pines in the coin phone project.
There will be some claim for compensation by customers which it was agreed would be dealt with after penalties were imposed. In all the circumstances, and having particular regard to the lack of any personal fault on behalf of Mr danz
regard these offences as being towards the serious end of the and his genuine attempts to rectify the situation, I do not
scale. In respect of each offence by Elken Pines I will impose a penalty of $100, a total of $800. In respect of each offence by Mr Kranz there will be a fine of $20, a total of $160. There will be an order that the defendants pay the cost of the prosecutor, including reserved costs.

I certify that this and the preceding (4) four pages are a true copy of the reasons for judgment of his Honour Mr Justice Heerey.

Dated: 2,f	/7?5
Ldtbfl	-

Appearances

Counsel for the prosecutor:	Mr T Hurley
Solicitor for the prosecutor:	Director o f Public Prosecutions (Commonwealth)
Counsel for the respondent:	Mr D Galbally
Solicitor for the respondent:	Galbally & O'Bryan
Date of hearing:	3 February 1993