Re Vernon John Gardam v George Wills & Co Ltd [1988] FCA 199 (16 June 1988)

FEDERAL COURT OF AUSTRALIA

Re: VERNON JOHN GARDAM
And: GEORGE WILLS & CO. LTD
No. WAG 18 of 1987
Trade Practices

COURT

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION
French J.(1)

CATCHWORDS

Trade Practices - penalty - consumer product safety standard - labelling of children's nightclothes for fire hazard - mislabelling by manufacturer - wholesaler prosecuted for supply to retailer - contraventions due to inadequacy in checking procedures - relevant factors in imposing penalty.

Trade Practices Act 1974 s.53(a), s.62(1)(a)

Gardam v Splendid Enterprises Pty Ltd (1987) ATPR 40-779

HEARING

PERTH
16:6:1988

Counsel for the Prosecutor: Mr S.W. O'Sullivan

Solicitors for the Prosecutor: Director of Public Prosecutions

Counsel for the Defendant: Mr A.V. McCarthy

Solicitors for the Defendant: Messrs. Parker & Parker

ORDER

As to the first count, the defendant is fined $1,500.

As to the second count, the defendant is fined $1,000.

As to the third count, the defendant is fined $1,500.

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

DECISION

On 10 June 1988 George Wills & Co. Ltd was convicted on each of two counts of contraventions of s.53(a) of the Trade Practices Act 1974 and one count of a contravention of s.62(1)(a) thereof. The convictions arose out of essentially one transaction, being the wholesale supply of children's nightdresses to a retailer, D.S. & M.E. Cooksley Pty Ltd. The nightdresses so supplied were not labelled, as required by the relevant consumer product safety standard, warning of their danger as a fire hazard. Instead they bore a label "Styled to Reduce Fire Danger". The fault for the mislabelling lies with the manufacturer of the garments, Splendid Enterprises Pty Ltd, and that company has already been fined a total of $5,000 on four counts arising out of its supply of the goods. As I observed in fixing the penalties in Gardam v Splendid Enterprises Pty Ltd (1987) ATPR 40-779 at 48,502, their level will vary according to the circumstances of the case. Relevant factors to be taken into account include:-

1. The objectives of the Act.

2. The importance of any untrue statement made.

3. The degree of wilfulness or carelessness involved in
making such a statement.

4. The extent to which the statements in question depart
from the truth.

5. The degree of their dissemination.

6. The resulting prejudice to consumers.

7. Whether any and if so what efforts have been made to
correct the statements.

8. The need to impose deterrent penalties.

2. I consider that the wholesaler in this case is somewhat less culpable than the manufacturer although, as the convictions indicate, I was not satisfied that it took reasonable precautions or exercised due diligence to avoid these contraventions. As I said in the Splendid case, the sections of the Act which provide for the declaration of consumer product safety standards and their enforcement are of the highest importance. The substitution of a reassurance as to compliance with the appropriate standard for a statutorily required warning, is a matter of considerable gravity. As in the Splendid case however, the offences were not committed wilfully or with intention to deceive. They resulted from the inadequacy of checking procedures within the defendant's organisation.

3. The prosecutor has told the Court that the defendant has co-operated with the Trade Practices Commission during its inquiries and voluntarily undertaken a recall of the Jolie brand nightdresses from those retailers it had supplied. There is no suggestion that anyone has suffered loss or injury as a result of the offences.

4. The defendant has taken steps to try to ensure that garments supplied to retailers will in future be correctly labelled. Two large signs measuring 1.2 x 0.6 metres in size and printed in red defining the categories of garment under AS1249-1983, have been placed in the bulk handling area where incoming merchandise is handled and on a fixture in the area where merchandise is displayed for sale. Each person on the staff responsible for handling such goods has read the relevant standards. Mr Ramsey, the defendant's merchandise manager, is personally checking all garments which fall into categories requiring the attachment of fire hazard warnings. None of the merchandise can be invoiced to retailers until such time as his approval has been given.

5. These matters, in my opinion, indicate a genuine concern about the contraventions which have occurred and a determination that they should not recur. There is no suggestion that the defendant has been previously prosecuted for any like offence. In the circumstances of this case, I propose to impose the following penalties:-

1. As to the first count $1,500.

2. As to the second count $1,000.

3. As to the third count $1,500.