Trade Practices Commission v Kranz, J. Trade Practices Commission v Elken Pines Pty Ltd

[1993] FCA 809

JUDGMENT No. ........ .......,. I Y----. 809 93

CATCHWORDS

TRADE PRACTICES - Enforcement and Reniedles - charges under s 53(c) and s 79(l)(d) ot the Trade Praclices Acl - pleas ot g~lllty - representation ot approval of

telephones by reg~rlatoly	authority, Austel - company tlned $100 on each charge, total of
$800 - indw~clual	flned $20 on each charge, total of S160 - whether penalty mai~ifestly
inadequate

Yorl~e	v L~lcnr	(1985) 158 CLR 661
Giotgh~izi	V Tile Queet~	(1985) 156 CLR 473

R v Hill [l9791 V R 31 1

4 October 1993

TRADE PRACTICES COMVlISSION v JACK N-LlNZ

VG Nob 111 - 118 of 1993

T M D E PRACTICES COIVI~IISSION v ELKEhr PIAVELY PTY LTD

VG Nos 119 - 126 ot 1993

Black CJ, Sheppard and Foster JJ

Mclbournc

IN THE FEDERAL COURT OF AUSTRALIA	1
VTCrORIA DISTRICT REGISTRY	1 VG Nos 111 - 118,
GENERAL DIVISION	1 119 - 326 of 1993

On appeal from a judge of the Fcderal Coult of Australia

BETWEEN:  TRADE PRACTICES COMMISSION

Appellant

.TACT< KRANZ

Respondent

BETWEEN:  TRADE PRACTICES COMMlSSION
Appellant

EIXEN PINES PTY 12TD

Respondent

COURT:	BLACK CJ, SHEPPARD and FOSTER JJ
PLACE:	MELBOURNE
DATE:	4 OCTOBER 1993

MINUTES OF ORDER

THE COURT ORDERS THAT

l	The appeals bc allowed;
2	So much of the orders ot the sentenc~ng judgc .ivIiereby a t ~ n e of 57-0 was imposed
upon the respondent Jack Kranz in each of the proceedings numbered VG 324,
327, 329, 333. 353, 356, 35s and 359 ol 1991 he set as~de and that in licu thereof
the respondeilt Jack Kranz be fined $250 on each chargc;
3.	So much of the orders o l the sentencing judge whereby a tlnc of $100 was imposed upon the respondent Elken Plncs Pty Ltd in each of the ploccedlngs numbered VG 306, 307. 310. 312,3 16, 319, 321 and 322 of 1991 be set a s~dc and that in lieu thercot the respondent Elkcn Pines Pty Ltd be fined S1250 on each charge;
4.	There be a stay in relation to the payment of the f~ncs so lmp0sed of three
months: and
5.	There he no order as to costs.

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NOTE:	Settlement and entry of orders 1s dealt wlth in Older 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALTA	)
VICTORIA DISTRICT REGISTRY	1  VG Nos 111 - 118,
GENERAL DIVISION	1  119 - 126 of 1993

On appeal from a judge ol the Federal Court of Australia

BETWEEN:  TRADE PRACTICES COMMISSION

Appellant

JACK KRANZ

Respondent

BETWEEN:  TRADE PRACTICES COMMISSION

Appellant

ELKEN PINES PTY LTD

Respondent

COURT:	BLACK CJ, SHEPPARD and FOSTER JJ
PLACE:	MELBOURNE
DATE:	4 OCTOBER 1993

EX TEMPORE REASONS FOR JUDGMENT

These are appeals by the Trade Practices Cornmlssion agalnst sentences imposed by a

judge of this court for contravent~ons ol the Trflde Prflclrcc.~ Act 1974. Before the

sentencing judge the respondent, Elken Pines Pty Ltd ("Elken Pines"), a company owned and controlled by the respondent, Jack Kranz, pleaded gullty to elgllt chilrgcs of contravening S. 53(c) 01 the Trrrde Prrrcl~ce~ Act by representing in conncctiorl wlth the supply of goods that the goods had an approval that they dld not have. k1r Kranz pleaded gullty to eight corresponding charges under S. 79(l)(d) of the Trade Prncrice~ Act

as belng dlrcctly or indirectly knowingly concerned in or a party to the contravention by

Elken Pines.

The goods in question were coln tclcpho~les which were sold with the represeiltatlon that

they colnplled wlth a permit ~ssucd under S. 118 of the Tclecomt~~~rtt~cr~tiotzs Acr 1989 by

the regulatory authority, the Australian Teleconin~un~cation\ Author~ty or "Au\tcl". A perrnlt for a prototype of such telephones had been granted by Austcl but the telephones

sold by Elken Pines had been received from the Ta~wanese lnanufacturer w~tli the internal clrcultry altered and did not comply with the perilut. There had also been

alterations to the cxternal appearance o l the telephones.

The lnaximuin fines applicable at the tlrne ol the olicnccs, which occurred in the tlrst half

oC 1991, wcrc 5100.000 for a corporation and $20,000 for an tnd~v~dual Before the sentencing judge the prosecutor acceptcd that the elght charges should be seen as bclng

same tiine" wlthln the meanlng of s 79(2) ol the Y'~o(le Pr(~clices~lc/. As a consequence.	"oC the sanic naturc or a substantially similar nature and to have occurred at or about the
as the judge noted, the fincs In question could not 111 the aggregate exceed the nl;Luimum amounts rncntloned.
The evldence was that Elken Pines acted as an importer and wholesaler and sold the
telephones through distributors in Vlcto~la. New South Wales and Queensland. The wholesale prices of the telephones varlcd froin S300 to $400 and the~r cla~l prlces were between about $750 to $1000. The learned judge consldcred that in rcspcct of each offence by Elken Plnes the appropriate pcnalty was $100, maklng a total ot $800, and that in respcct of cach offence by Mr Kranz thcre should be a tlne ot $20. mak~ng a total of $160. He ordered that the respondents pay the costs of the prosecutor. Including reserved costs. We pause to note here that those costs would obviously be s~~bstantial.
Thc Trade Practices Commlsslon now appeals aga~nst he penalties lmposed on e x h of
the rcspondcnt\ on thc following grounds F~rst, that the learned sentcnclng judge erred In law 111 lmposlng a penalty on the respondents whlch was manifestly inndequate.
Secondly, that the judge erred in law in falling to consider the factor of general deterlencr 111 assessing the penalty to be imposed. Thlrdly, that the judge erred in law
In failing to take into account in determining the penalty that the reprcscntatlons alleged
to have bccn made amounted to a reckless disregard of the l~censing system created by
the Telecornn~u~~r~uizo~~s~lct and, finally, that the judge erred in law lu talllng to take Into
account in determ~ning the penalty the conduct of the rcsponclcnt in a particular respect
as set out in one of the exhibits.
We direct our attention tlrst to the penalties imposed upon the respondent Mr Kranz.
It 1s cle:1r that the judge was substant~;~lly mflucnced in his conclusion by what he regarded as a lack oC any personal fault on the part of Mr Kranz and his genulne attempts to rectify the sltuatlon brought about by the salc of the telephones wlilch were defectlve in operation and which d ~ d not have the appropriate Austel perm~t. But on this
appeal the Trade Plactices Comm~ss~on s ~ ~ b i ~ ~ i t s that he plea ot gullty was an admission of all the elements in the offence, that a sentencing j~idge cannot adopt a view of the facts which conflicts with that plea: see R v H111 [l9791 VR 311 at 312, and that the
offences to which thc respondent, Mr Kranz, pleaded guilty necessarily involved an
intentional participation in the contravention of S. 53(c) of the Trade P1a~1ice.v Act.
Thls was not, however, the way in which the matter was put by the Trade Practices
Cornn~~ssion before the sentencing judge iind at the t~ ia l the Commission was content to
put the case on the basis that Mr Kranz was recklessly or wilfully blind as to the falsity
of the representation that the telephones were approved by Austcl. Sce as to
recklessness and wllful blindness, Giox~nirizr v The Queen (1985) 156 CI-R 473 at 487 per
Gibbs CJ. and Sir Daryl Dawson, "Recent Common LW Dcvclopn~cnts in Crin~~nal Law"
(1991) 15 Criitz W 5 at 14-15. Moreover, the course taken by the partles before the
sentencing judge had the tcndcncy to obscure some of the factual issues.
In these ciicumstances we would first conbider the submission that in any event the
sentenccs imposcd were rnaniCcstly inadequate Wc have comc to the conclusion that
they were. Mr Kranz's plea of guilty to a contravention of s. 79(l)(d) of thc T r d e
Prmcrices Act must be taken to have lnvolved an acceptance of at least some degree of
personal fault on his part in rcspcct of breaches of an important provision (11 thc Act and
an acceptance of gu~lty knowledge that the aitlcles, at least to some eutent. did not
conform to the approval: scc Y o r k v Lrl~ar (1985) 158 Cl-R 661
The importance ot p~ovlsions such as S. 53(c) of the Trnde P~ficlrcc'r Act I \ highlighted in
a case such as thls where a statement that a telephone 1s approved by Austel wlll be acted upon by reta~lers and by a public that has been instructed to look for such a
statement. A false attr~but~on f approval by the regulatory authority of a telephone that
IS intended for sale and for connect~on to the Australian telephone network 1s a serlous
matter. The publlc must be able to rely w ~ t h confidence on the authenticity of a
statement of Austel's approval. For thcse reasons alone we consider that a fine of $20 for each offence was manifestly madequate, but we are confirmcd in that conclusion by
the fact that Mr Kranz has prlor conv~ctions which were admitted before the lcarncd judge. Most relevantly, he has a relat~vely recent convlctlon for d~shonesty, in that in
1982 he was conv~cted before the Co~lnty Court at Mclbournc on two accounts of
obtalnlng property by deception for which he served a telm of imprisonment.
Ncvcrthelcss, we would not regard these offences as hclng towurcis the most serious end
of the scale ot contraventions of S. 79(l)(d) and in all the circumstances, taklng into account the way In which the mutter was conducted before the sentencing judge and the matters in mitlgatlon put before us by counsel lor Mr ICranz on thls appeal, we cons~der
that an appropriate penalty is $250 for cach contravent~on, a total ot $2000
the company are manltestly inadequate and should be set aside. Such knowledge as Mr
Wc are also of the view that the penalties ot $100 for each contravention ~lnposed upon
Kranz had waq the knowledge ol thc company Moreover, it is of great Importance that
companles should appreciate the signific:~nce o l thclr obligations to cnsure that the consumer protection provlslon5 of the Tr(idr Pr(icrices Act arc str~ctly complied with. It is not sufficlcnt that companles adopt a passlve approach to such quest~ons, and
particularly this is so where the mattel in lssue 1s something as Important as the
attribution of approval by regulatory authority. In all the c~rcunlst;lnces. and again taking into account the way in which this matter was conducted before the sentencing judge, we consider that the appropriate penalty for each contravention by the company is $1250, a total of $10.000.
Accordingly, the orders of the Court arc as Lollows The appeals are allowed. So much
of the orders of the sentencing judge whereby a fine of $20 was lmposed on the respondent Jack Kranz in each ot the proceedings numbered VG 324,327,329,333,351,
356, 358 and 359 of 1991 be set as~de and that in lieu thereof it be ordered the
respondent Jack Kranz be fined $250 on each charge. So much of the orders of the sentenang j~idge whereby a tine ol 5100 was imposed upon the iespondent Elken Pines Pty Ltd in each of the proceedings numbered VG 306, 307, 310, 312, 316, 319, 321 and
322 of 1991 be set aside and that in lieu thereof it be ordered that the respondent Elken
Pines Pty Lid be flned $1250 on each charge.
On the application ot the respondents, there w~ll be an order that there be a stay in
relation to the payment 01 the fincs so Imposed ot three months.
On the application of the Trade Practices Commission there will be no order as to thc
costs of the appeal.

I certify that this and the preceding 5 pages are a true copy o l the Reasons for Judgment herein of the Court.

A\sociate: U

Date: 4 October 1993

APPEARANCES

Counsel for the Applicant:  Mr R. Redllch QC

w~th Mr T.V. Hurley

Instructed by:	Commonweallh D~rector	of Publlc Prosecut~ons
Counsel for the Respondents:	Mr D.N. Galbally
Instructed by:	Galbally and O'Bryan
Date ot Hearing:	4 October 1993
Dalc o f Judgment:	4 Octobcr 1993