FEDERAL COURT OF AUSTRALIA

Director of Consumer Affairs Victoria v The Reject Shop Ltd [2018] FCA 211

ORDERS

THE COURT DECLARES BY CONSENT THAT:

1.    Between 24 January 2014 and 30 October 2015, the Respondent, in trade or commerce, supplied to consumers “Spy UFO Toy Helicopter” projectile toys when, during the period of the supply:

(a)    the toys were subject to the Consumer Product Safety Standard: Children’s Projectile Toys, Consumer Protection Notice No. 16 of 2010 (Standard); and

(b)    the toys did not comply with the requirements of cl [4.18.3(e)] of the Standard, read in conjunction with [C.2.15] of the Standard, as the toys were not accompanied by instructions for use which drew attention to the hazard of aiming the toys at the user’s eyes or face, and of using projectiles other than those supplied or recommended by the manufacturer,

and by doing so, the Respondent contravened section 106(1) of the Australian Consumer Law and section 106(1) of the Australian Consumer Law (Vic).

2.    On 26 October 2015, the Respondent, in trade or commerce, offered for supply the “Spy UFO Toy Helicopter” projectile toys when, on that date:

(a)    the toys were subject to the Standard; and

(b)    the toys did not comply with the requirements of cl [4.18.3(e)] of the Standard, read in conjunction with [C.2.15] of the Standard, as the toys were not accompanied by instructions for use which drew attention to the hazard of aiming the toys at the user’s eyes or face, and of using projectiles other than those supplied or recommended by the manufacturer,

and by doing so, the Respondent contravened section 106(2) of the Australian Consumer Law and section 106(2) of the Australian Consumer Law (Vic).

3.    Between 24 May 2015 and 26 October 2015, the Respondent, in trade or commerce, supplied to consumers “Let’s Party Balloon Helicopter” projectile toys when, during the period of the supply:

(a)    the toys were subject to the Standard; and

(b)    the toys did not comply with the requirements of cl [4.18.1(b)] of the Standard, as the toy failed to have its high speed propeller in the form of a ring, in order to reduce the risk of injury,

and by doing so, the Respondent contravened section 106(1) of the Australian Consumer Law and section 106(1) of the Australian Consumer Law (Vic).

4.    On 26 October 2015, the Respondent, in trade or commerce, offered for supply the “Let’s Party Balloon Helicopter” projectile toys when, on that date:

(a)    the toys were subject to the Standard; and

(b)    the toys did not comply with the requirements of cl [4.18.1(b)] of the Standard, as the toy failed to have its high speed propeller in the form of a ring, in order to reduce the risk of injury,

and by doing so, the Respondent contravened section 106(2) of the Australian Consumer Law and section 106(2) of the Australian Consumer Law (Vic).

THE COURT ORDERS BY CONSENT THAT:

5.    Pursuant to s 232(1) of the Australian Consumer Law and s 232(1) of the Australian Consumer Law (Vic), The Reject Shop, by its servants or agents or otherwise:

(a)    will implement its revised Compliance Policy, which is Annexure A to this order;

(b)    for a period of three years from the date of this order:

(i)    will, as part of the annual review referred to in clause 5.15 of its revised Compliance Policy, engage an independent compliance specialist with expertise in the Australian Consumer Law, other than a person who, as at the date of this order, has designed or advised upon the Respondent’s Compliance Policy, or the Respondent’s compliance with the Australian Consumer Law (Independent Compliance Specialist), to:

1.     identify any areas where the Respondent is at risk of breaching section 106, section 118 and section 136 of the Australian Consumer Law and the Australian Consumer Law (Vic);

2.     assess the likelihood of any such risks occurring and the consequences of such risks to the business operations of the Respondent should they occur;

3.     identify where there may be gaps in the Respondent’s existing procedures for managing such risks; and

4.     provide recommendations for action having regard to the assessment in paragraphs 5(b)(i)(2) and 5(b)(i)(3) above;

(ii)    will, at its own expense, cause to be provided to the Applicant copies of any reports produced in accordance with order 5(b)(i) above within 21 days of receiving such reports; and

(iii)    will, on an annual basis, engage an Independent Compliance Specialist, with expertise in the Australian Consumer Law, to provide a report addressing any instances of non-compliance or potential non-compliance by Buyers employed by the Respondent with section 106, section 118 and section 136 of the Australian Consumer Law and the Australian Consumer Law (Vic).

6.    Pursuant to s 246(2)(d) of the Australian Consumer Law (Vic), the Respondent cause to be published:

(a)    in a prominent and conspicuous place at each of its stores, at or near the customer entrance and exit, for a period of three months from the date of this order, a Public Notice in the form of Annexure B to the order (Public Notice). Each such notice:

(i)    be a minimum size of 29.7cm in width by 42cm in height (A3 size paper);

(ii)    use a minimum type size of 12 point Times New Roman or equivalent; and

(iii)    is in full colour; and

(b)    on its primary website (which as at the date of these orders is accessible via the Uniform Resource Locator (URL) at the web address www.rejectshop.com.au) (The Reject Shop Website), or if such URL is replaced or changed, the home page of the corresponding website, for a period of 60 days from the date of this order, the Public Notice, in a form which complies with the following specifications:

(i)     uses a minimum type size of 12 point Times New Roman or equivalent; and

(ii)     is in full colour.

The Respondent must use its best endeavours to ensure that the Public Notice published on The Reject Shop Website meets the following requirements:

(iii)     is viewable by clicking through a “click through” icon located on The Reject Shop Website;

(iv)     the “click through” icon is located in the top third of The Reject Shop Website’s web page that is first accessed when the user opens the home page of The Reject Shop Website;

(v)     the “click through” icon must contain the words “PRODUCT SAFETY – IMPORTANT NOTICE ORDERED BY FEDERAL COURT OF AUSTRALIA” (in capital letters and using minimum type size of 16 point Times New Roman or equivalent), clearly and prominently in red on a contrasting background, and the words “Click Here”; and

(vi)     the Public Notice occupies the entire webpage which is accessed via the “click through” icon referred to above.

7.     Pursuant to s 232(6)(a) of the Australian Consumer Law and the Australian Consumer Law (Vic), the Respondent pay a full refund to all persons returning any “Spy UFO Toy Helicopter” or “Let’s Party Balloon Helicopter” purchased from the Respondent during the period from 24 January 2014 to 30 October 2015.

8.     Pursuant to s 232(1) of the Australian Consumer Law and Australian Consumer Law (Vic), the Respondent:

(a)     for the period of four months after the Public Notice referred to in Order 6(b) is published on the Respondent’s website, notify an officer designated by the Applicant, in writing and on a monthly basis, of the details of any goods returned to the Respondent in accordance with Order 7 above; and

(b)     securely store all goods returned in accordance with Order 7 above for collection by the officer designated by the Applicant, as soon as is convenient after the expiry of the four month period referred to in Order 8(a) above.

9.     Pursuant to s 232(6)(d) of the Australian Consumer Law and Australian Consumer Law (Vic), the Applicant be permitted to destroy and dispose of:

(a)     the contravening goods which were seized by the Applicant; and

(b)     any goods returned to the Respondent in accordance with Order 7 above, and collected by the Applicant in accordance with Order 8(b) above.

10.     The Respondent pay to the State of Victoria a pecuniary penalty in the sum of $140,000 for the contraventions of the Australian Consumer Law (Vic).

11.     The Respondent pay a contribution to the Applicant’s costs, fixed at the amount of $15,000.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

ANNEXURE A

Compliance Policy

1. Purpose

This document sets out the framework and policy for The Reject Shop (“TRS”) to meet its compliance obligations, particularly the requirements contained in the Competition and Consumer Act 2010 (Cth).

2. Document Owner

This document is owned by the General Manager Merchandise Buying (who reports to the Chief Executive Officer of TRS) with specialist assistance provided by the compliance team. In the first instance, any questions should be raised with the head of the compliance team and, when necessary, escalated to the General Manager Merchandise Buying.

3. Review Date

The policy will be reviewed on or around 1 July each year in accordance with AS/ISO 19600:2015 (“Compliance Management Systems – Guidelines”).

4. Our Commitment

4.1     TRS is committed to:

4.1.1     implementing, maintaining and continually improving an effective and responsive compliance system to enable it to address all of its compliance obligations so as to “get it right”; and

4.1.2     observing all laws, regulations, codes, product standards and organisational standards including the provisions of the Competition and Consumer Act 2010 (Cth), which includes the Australian Consumer Law, and any state based consumer protection legislation (“Competition and Consumer Laws”)

4.1.3     maintaining a culture of compliance, and conducting its business activities lawfully and in a manner consistent with all its compliance obligations, including those set out in this policy.

4.2     The Competition and Consumer Laws apply to all the business activities of TRS. This includes TRS business dealings with customers, suppliers and competitors. It is critical that anyone that has such interactions understands the provisions of the Competition and Consumer Laws and their impact on our business, and acts in accordance with their obligations under these laws.

4.3     As part of our commitment, TRS has nominated the General Manager Merchandise Buying as the officer with principal accountability for compliance. Together with the business teams, the head of the compliance team will be responsible to implement, maintain and continually improve a company-wide compliance program in accordance with the applicable Australian Standards (“Compliance Program”).

5. Compliance Program

The Compliance Program involves:

Procedures

5.1     TRS assessing the risk level of each product it sells. TRS recognises that for products classified as “high risk”, TRS needs to take steps over and above the usual steps it takes to ensure compliance with the Competition and Consumer Laws.

5.2     Ongoing training of TRS employees as to their obligations under the Competition and Consumer Laws and the impact on their individual areas of responsibility, including testing of their understanding of the obligations.

5.3     Training records are kept to ensure all applicable employees have attended training which includes a test that all attendees need to complete.

5.4     TRS teams having access to TRS’s Compliance Manual and relevant compliance checklists that provide guidance on Australian Mandatory Standards, testing requirements and documentation requirements to ensure products meet these requirements before being offered for sale.

5.5     Procedures for managing recalls and withdrawals, Mandatory Reporting, supplier management, packaging standards and new starter induction.

5.6     Customer complaint policy and procedure.

5.7     Contact details where staff can escalate consumer law complaints.

Reporting

5.8     The General Manager Merchandise Buying will provide reports to each meeting of the board of TRS and each meeting of the audit and risk committee, which is a committee of the board of TRS.

Training

5.9     TRS will make every effort to ensure that each of its employees receives training and becomes involved with the compliance program.

Concerns and Protections

5.10     All team members are required to report any Compliance Program related issues, and any concerns about the Competition and Consumer Laws, to the General Manager Merchandise Buying.

5.11     Any team member acting as a whistle-blower in connection with this policy will not be disadvantaged in any way and their report will be kept confidential and secure.

5.12     TRS will take action internally against any persons who are knowingly or recklessly concerned in a contravention of the Competition and Consumer Laws and will not indemnify them in the event of any court proceedings in respect of that contravention.

Product Safety

5.13     TRS will:

5.13.1     maintain up-to-date copies, at its Store Support Centre, of all consumer product safety standards and consumer information standards made or declared under the Australian Consumer Law, Schedule 2 to the Competition and Consumer Act 2010 (Cth) that relate to products TRS supplies (“Standards”);

5.13.2     ensure that the products supplied that are subject to the Standards, comply with the relevant Standards; and

5.13.3     develop, implement and maintain recall procedures that enable products supplied by TRS that do not comply with the Standards to be efficiently and effectively withdrawn from the market and returned to TRS.

Culture

5.14     With the ongoing operation of the TRS compliance program, TRS aims to foster a high level of goodwill with its customers in the marketplace whilst at the same time reduce the risk of breaching Competition and Consumer Laws.

Annual Review

5.15     TRS will, at its own expense, cause an annual review of the Compliance Program (“Review”) to be carried out in accordance with each of the following requirements:

5.15.1     the Review will be broad and rigorous enough to ensure that the Compliance Program complies with this policy, particularly paragraph four of this policy;

5.15.2     the Review will be carried out by a suitably qualified, independent compliance professional with expertise in competition and consumer law; and

5.15.3     the Review will be completed before 30 June each year (other than in 2017).

5.16     The General Manager Merchandise Buying will submit a report (including a copy of the Review) to the July meeting of the board of TRS. The report from the General Manager Merchandise Buying will provide recommendations necessary to enhance the Compliance Program having regard to any comments provided in the Review and any developments in the Competition and Consumer Law.

ANNEXURE B

REASONS FOR JUDGMENT

NORTH J:

1    A person must not, in trade or commerce, supply or offer for supply goods which do not comply with a safety standard (s 106(1) and (2) of the Australian Consumer Law and the Australian Consumer Law (Vic) (the Act)).

2    The applicant, the Director of Consumer Affairs Victoria (the Director), alleges that the respondent, The Reject Shop Limited (The Reject Shop), supplied and offered for supply two types of children’s toy which did not comply with the safety standard and thereby The Reject Shop contravened s 106(1) and (2) of the Act.

3    The Reject Shop admits the contraventions.

4    The parties have filed a Statement of Agreed Facts and Admissions (the agreed statement), joint submissions and a minute of order by consent. The Director filed supplementary submissions following the penalty hearing.

5    The parties agree that the Court should make orders which can be seen in the final form of the orders made by the Court.

6    The question before the Court is whether the agreed orders are appropriate in the circumstances of the contraventions. The agreed statement includes the matters which s 224(2) requires to be taken into account. The following description of the circumstances of the contraventions is based upon the agreed statement.

7    One of the toys was the Spy UFO / Action Copter toy with barcode 0 336672 174833 (the UFO Toy), and the other was the Let’s Party Balloon toy with barcode 9 336672 249135 (the Balloon Toy).

8    The Australian/New Zealand Standard AS/NZS ISO 8124.1:2002 (Safety of toys Part 1 – Safety aspects related to mechanical and physical properties) (the Standard), applied to both toys by operation of the Consumer Product Safety Standard for Children’s Projectile Toys (Consumer Protection Notice NO 16 of 2010).

9    The UFO Toy allows the operator, by pulling on a string, to launch a ring shaped plastic propeller. Paragraph C.2.15 of the Standard applied to the UFO Toy and provided:

Toys with projectiles should be accompanied by instructions for use which draw attention to the hazards of aiming at eyes or face and of using projectiles other than those supplied or recommended by the manufacturer.

10    The UFO Toy was supplied with a single page instruction sheet. The sheet included a prominent warning under the heading “WARNING For SAFE FLIGHT” which stated:

•    Do not put hand or fingers on propeller when it is spinning.

•    Do not point or directly aim the UFO at people, animals or other objects when launching.

•    Do not aim UFO at yourself and others.

•    Make sure your surrounding area is clear of people before launching.

•    Once you start to pull the string, do not stop halfway.

•    UFO will launch with a gentle pull of the string, using a greater amount of force when pulling the launching string can break the string.

•    Let the string scroll back slowly.

•    Only launch UFO Outside, do not use indoors.

11    The warning on the instruction sheet did not contain any express warning about the hazard of aiming the toy at eyes or face, or of using projectiles other than those supplied or recommended by the manufacturer.

12    The Reject Shop had two test reports for the UFO Toy which stated that the toy passed the European standard. The Reject Shop did not require the UFO Toy to be tested against the Australian standard.

13    Between 24 January 2014, and 30 October 2015, The Reject Shop supplied 44,664 UFO Toys from 326 of its stores and earned a profit of $93,833 from the transactions. On 26 October 2015, inspectors conducted a compliance inspection on The Reject Shop stores. There were a further 6,289 UFO Toys offered for supply.

14    The Balloon Toy comprises a propeller, which has a tubular component, around which the neck of an inflated balloon is fitted by the user. When the user releases their grip on the neck of the balloon, air escapes from the balloon through the tube, turning the propeller of the Balloon Toy. If the Balloon Toy is released perpendicular to the ground, it lifts vertically dropping to the floor when the air has escaped from the balloon. The Balloon Toy has a high speed propeller within the meaning of para 4.18.1 of the Standard. As a consequence, the propeller of the Balloon Toy is required to be designed so that the perimeter of the propeller is in the form of ring in order to reduce the risk of injury. In fact, the Balloon Toy’s propeller did not have its perimeter in the form of a ring.

15    The Reject Shop had one test report for the Balloon Toy which stated that it passed the European standard applicable to Balloon Toys. It did not test against the section relating to projectile toys. The Reject Shop did not obtain any test report against the Australian standard.

16    Between 24 May 2015 and 26 October 2015, The Reject Shop supplied 7,696 Balloon Toys from 326 of its stores and earned a profit of $9,054 from the transactions.

17    In October 2015, The Reject Shop had a compliance manual which required that toys must comply with the Standard and that projectile toys include a warning label stating “Don’t aim at eyes or face and of using projectiles other than those supplied or recommended by manufacturer”.

18    The Reject Shop acted promptly upon advice from the inspectors that the toys did not comply with the Standard. It immediately withdrew both toys from sale. All the stock of Balloon Toys was destroyed. The UFO Toys were relabelled with a warning complying with the Standard and then returned for sale. Following the inspection in October 2015, The Reject Shop has cooperated with the Director, in particular by agreeing to the facts stated. The Reject Shop also took steps to improve its compliance program following the events.

19    Non-complying projectile toys present a risk of injury to the public including the risk of eye and face injuries. The parties are not, however, aware of any injury, loss, or damage to any member of the public caused by either the UFO Toy or the Balloon Toy.

20    The joint submissions identify the factors relevant to the relief agreed by the parties. For present purposes they may be briefly summarised as follows.

21    The Reject Shop noted that whilst the number of items supplied were significant, it was a small percentage of the total number of items dealt with by The Reject Shop. In the year ending 28 June 2015, The Reject Shop completed over 60 million transactions.

22    Whilst the warning accompanying the UFO Toys was not in the terms of the Standard, it did come fairly close to the substance of the required warning.

23    The Reject Shop did have in place at the time of the contraventions a compliance program which was designed to avoid such incidents.

24    The contraventions were a result of human error rather than intentional non-compliance.

25    Senior management was not involved in the contravention.

26    The Reject Shop has over 330 retail stores in Australia and employs over 6,000 employees. In the year ending 28 June 2015, The Reject Shop generated an annual profit of $14,239,000.

27    The Reject Shop has a culture of compliance with the consumer law. It implemented a compliance program from 2009 as part of an enforceable undertaking given to the Australian Competition and Consumer Commission (ACCC). The program was regularly reviewed by a specialist consulting firm. The program was administered by a compliance manager. The Reject Shop maintained a compliance manual, and staff responsible for compliance matters were required to attend compliance training conducted by external lawyers. As a result of the present contraventions, The Reject Shop has reviewed and updated the program and engaged additional compliance staff.

28    The agreed statement disclosed that in 2008, The Reject Shop supplied a toy containing excessive lead levels and supplied a cosmetic without providing a list of ingredients. That conduct led to The Reject Shop providing an enforceable undertaking to the ACCC. The undertaking required The Reject Shop to establish a compliance program for three years from 12 January 2009.

29    It emerged in oral submissions that in 1999 and 2012, The Reject Shop was convicted of contraventions of the consumer laws in New South Wales. The New South Wales contraventions were not disclosed in the agreed statement. In a supplementary submission of the Director, filed following the hearing as required by the Court, it emerged that the Director had considered the prior New South Wales contraventions when agreeing to the relief now sought.

30    There was some debate about the operation of s 224(4)(b) of the Act. That section provides that a person is not liable to more than one pecuniary penalty under the section in respect of the same conduct.

31    The Director argued that, in this case, the supply contravention and the offer of supply contravention for each of the two types of toys should be counted as two courses of conduct. The Reject Shop argued that the supply contravention and the offer of supply contravention for each of the two types of toys should be counted as the same course of conduct. On the Director’s argument, The Reject Shop was to be penalised for conduct of four types, each attracting a maximum penalty of $1.1 million, a total of $4.4 million. On the Reject Shop’s analysis, it was to be penalised for two types of conduct each attracting a maximum penalty of $1.1 million, a total of $2.2 million. At the same time, counsel for The Reject Shop accepted that there were four contraventions which would as such attract a maximum penalty of $4.4 million.

32    It was rightly accepted that the resolution of this matter has no practical effect on the outcome of this case. The Director raised the argument for the purpose of guidance in future cases. It is sufficient to say that whether conduct falls within s 224(4)(b) as amounting to a course of conduct is a matter of fact in each case. In the present case, the supply and the offer for supply in respect of each of the types of toys is separate conduct because each related to different individual toys. Those toys which were supplied were different from those which were offered for sale. If the supply contravention and the offering for supply contravention were both alleged in relation to the same toys then the two types of contraventions would be part of the same course of conduct. In any event, as the agreed penalty is such a small fraction of the maximum, whether it be $2.2 million or $4.4 million, and the amount of the penalty would not be effected whether one or other figure was used, there is no occasion for further consideration of the argument.

33    On the basis of these matters summarised, the parties agreed to the proposed orders. In accordance with Commonwealth v Director, Fair Work Building Industry Inspectorate [2015] HCA 46, the Director provided the following explanation why the proposed pecuniary penalty of $140,000 is appropriate:

75.    The Director accepts that the contraventions by TRS [The Reject Shop] were not deliberate, systematic or covert. As the SOAFA [the agreed statement] shows, TRS staff have at all times co-operated with the Director’s investigations.

76.    After proceedings were instituted, the matter was resolved by agreement between the parties. TRS has chosen not to defend the proceeding and has acknowledged liability. This has saved significant time and resources for both the Director’s office and the Court.

77.    Importantly, TRS has agreed with the Director to implement a revised Compliance Policy and, at its own expense, to have that revised Compliance Policy reviewed annually for a period of three years by an independent compliance specialist with expertise in the Australian Consumer Law. TRS has significantly increased its investment and resources for its product safety and other compliance obligations. Further, as part of the agreement TRS has consented to the imposition by the Court of an injunction obliging it to revise and conduct the annual review of its compliance policy. TRS is aware of the possible serious consequences for breach of a Court Order. These matters have provided confidence to the Director that TRS is very serious about its commitment to:

a)    implementing, maintaining and continually improving an effective and responsive compliance system for all of its compliance obligations so as to ‘get it right’; and

b)    maintaining a culture of compliance and conducting its business activities lawfully and in a manner consistent with its compliance obligations.

34    It can be seen that the Director laid stress on the co-operation of The Reject Shop, and its enhancement of its compliance program together with its agreement to an injunction in relation to the review and revision of its compliance policy. These aspects were emphasised in oral submissions.

35    The agreed statement demonstrates a tendency towards enslavement by checklist. It has become regular practice in such cases to laboriously tick off the checklist supplied from past cases in order to assess the appropriateness of the amount of the penalty. Too often that process diverts attention from the factors which are of real significance to the case under consideration. What is required is an assessment of the weight of the relevant factors pertaining to the case under consideration not simply an exercise in ticking boxes, some of which have only marginal relevance to the facts in issue. That exercise requires a qualitative judgement rather than a mechanistic reference to preordained factors. There are several aspects of the circumstances of this case which call for attention in that regard.

36    It is obviously essential for The Reject Shop to have a compliance program in place. It is a large retailer dealing in goods which maybe a risk to the safety of people, including children, and which are subject to regulation by the Standard. Without a proper and adequate organisational mechanism to control the quality of its products, The Reject Shop would expose itself, not only to prosecution for contravention of the consumer laws, but also to civil liability at the suit of injured parties. Thus, it is a matter of self-interest for The Reject Shop to have an effective compliance program in place. That being so reduces the value of the offer of a compliance program as a reason for mitigating a pecuniary penalty.

37    What is significant in this case is the offer of an injunction which provides a means of enforcement of the obligation, and therefore, a verification of the Director’s view that The Reject Shop is serious about its compliance program. Without that signal from The Reject Shop there would be a basis for doubt about the commitment to an effective program because the contraventions occurred despite the existence of such a program with specific requirements which related to the very incidents which occurred. There are grounds for thinking that the Director overvalued the benefit of the compliance program as a basis for ameliorating the pecuniary penalty. Having said that, it should be noted that the chairman of the board of The Reject Shop, Mr Stevens, the chief executive officer of The Reject Shop, Mr Sudano, the chief financial officer and company secretary, Mr Briggs, and general counsel for The Reject Shop, Mr Freier, attended Court for the hearing as a tangible signal to the Court that the matter was treated seriously by The Reject Shop. Further, at the hearing the Reject Shop filed, by consent, an affidavit sworn on 29 January 2018 by Baljinder Singh Thandi, the manager of quality assurance, providing up to date details of the steps taken by The Reject Shop to improve the compliance program.

38    Another factor which tends to indicate that the agreed penalty is inappropriately low is that the amount of the proposed penalty, $140,000, is not significantly more than the profit made from the sale of the toys, namely, $103,000. It is true that The Reject Shop is also bound to refund the purchase price to purchasers of the contravening toys if they come forward. However, the UFO Toys were sold for $4 each and the Balloon Toys for $2 each. The sales were made over two and a half years ago. It is not likely that many customers will claim a refund of $2 or $4 paid so long ago. It would not serve the purpose of deterrence, either general or specific, if suppliers believed that the monetary penalty for contravening the Act was likely to involve no more than a disgorging of the profit earned from the contravening conduct.

39    Then, the prior contraventions in 2009 make the occurrence of the present contraventions more serious, even if the New South Wales contraventions are left out of the account.

40    Whilst the matters just outlined suggest that the proposed pecuniary penalty is too low, there are other circumstances which should be taken into account. In particular, the contraventions in relation to the UFO Toys were minor. It is true that the words of the Standard were not used in the warning, but most of the substance of the words of the Standard was included in the form of the warning used. It would be surprising if the Director had proceeded to Court if the only contraventions were those in relation to the UFO Toys. The sale of the UFO Toys yielded most of the profit in question, that is to say, $93,833, as against $9,054 for the Balloon Toys. It is ultimately this aspect of the circumstances of the case which satisfy me that the pecuniary penalty of $140,000 is appropriate.

41    As the result, orders will be made in accordance with the agreement of the parties.

Associate:

Dated:    2 March 2018