Australia: Hefty fines for businesses in New South Wales that fail food safety standards

Two recent decisions of the New South Wales (NSW) Local Court reveal the serious consequences for businesses that fall foul of the Food Act 2003 (NSW) (the Act).

The first involved the prosecution of a noodle manufacturer for unhygienic practices, resulting in fines totalling $113,000. The second involved the prosecution of a food wholesaler for mislabelling food products, resulting in fines totalling $30,000.

The decisions are the latest in a string of successful prosecutions by the Food Authority and should serve as a reminder to businesses of the importance of complying with food safety obligations.

Making food safety your number one priority

A business, which manufactures popular food products (including noodles), was selling its products wholesale to restaurants and grocery stores across Australia.

In January 2016 the Compliance Investigation Unit of the NSW Food Authority began its "Fresh Noodle Manufacturers Project", designed to improve standards in the fresh noodle industry.

Between February and April 2016 the Food Authority visited the business on three occasions for the purpose of carrying out inspections as part of the Project. A number of poor hygiene and maintenance practices were identified, including dirt, food waste and mould on the floor, roof, and machinery; rodent droppings in cold storage and spice grinding areas; a broken hand washing basin; and flies on the wall in the food processing area.

After each inspection the business was issued with an improvement notice ordering it to take certain steps to address the problems identified during the inspections. The business had some prior history with the Food Authority, with a number of improvement and penalty notices issued to it between 2010 and 2012.

In light of this, the Food Authority initiated proceedings against the business in the Local Court. The business pleaded guilty to the charges but asked the Court to take into consideration what it proposed were "mitigating factors" in determining the applicable fine. These included that:

  • the business was small and family-owned
  • the breaches were not that serious
  • the business had been experiencing financial and production pressures
  • receiving the maximum penalty could lead to closure of the business (and loss of employment for its seven employees), and
  • the offences were not committed for financial gain.

Notwithstanding these arguments, the Court imposed fines for each offence, totalling $113,000 (which included a discount for the early plea) and ordered that the business pay costs associated with the proceedings.

Don't rely on supplier labelling

A Sydney-based business importing and wholesaling food products found itself on the wrong side of the law after a child was hospitalised by one of its products.

The child, who was allergic to peanuts, tree nuts and cow's milk, suffered an anaphylactic reaction after consuming a drink product that had been mislabelled as "dairy free".

The NSW Food Authority investigated the incident after being notified. It collected medical evidence, tested samples and requested that the business recall the mislabelled product. The business was slow in effecting the recall, and this weighed against it when the matter eventually arrived before the Court.

It was prosecuted by the Food Authority for:

  • labelling the product as dairy free when it did in fact contain dairy
  • not declaring the presence of a milk substance, and
  • not complying with the recall plan.

The business was convicted and fined $30,000 for the breaches. It was also ordered to pay more than $25,000 in costs.

In handing down the convictions and fines, the Court was critical of the business' reliance on the supplier of the product. It noted that overseas companies are often not subject to the same level of regulatory stringency that applies in Australia and found that the business had relied too heavily on the supplier's labelling and failed to check whether the beverage contained any milk products.

Other decisions of which to be aware

Some other safety prosecutions of which to be aware are:

  • On 28 June 2017 a Sydney chicken producer trading as Bill's Chicken was convicted and fined a total of $34,000 and ordered to pay $6,196 in professional costs after pleading guilty to twelve charges relating to failures in hygiene, maintenance and Food Safety Program monitoring. Inspectors from the Food Authority commenced proceedings after observing a number of dangerous health practices, including rusted equipment used to transport chicken meat intended for sale and unclean premises and utensils.
  • On 28 April 2016 a now closed-down Wollongong bakery named Betta Maid was convicted and fined $63,000 and ordered to pay $20,000 in professional costs for selling unsafe food and breaching hygiene standards. The charges were brought following a Food Authority investigation into a salmonella outbreak in ten aged care facilities across Australia, which led to two fatalities. The bakery's director was also convicted and fined in a separate proceeding.

The legislation and the Regulator

The Act aims to ensure that food for sale in NSW is safe and suitable for human consumption. It also requires businesses to comply with the requirements of the Food Standards Code, which sets out standards for food additives, food safety, and labelling.

Together with NSW Health, the Food Authority monitors food safety across the State to make sure all food produced and sold in NSW meets the minimum requirements. Its functions include:

  • monitoring food safety schemes under the Food Regulation 2015
  • licensing food businesses
  • investigating food-related complaints
  • coordinating recalls of food products, and
  • prosecuting businesses for offences under the Act.

Inspectors of the Food Authority have the power to enter and inspect food premises and take photos or audio recordings, among a range of other powers.

If inspectors find that the required food standards are not being met, they have the power to issue:

  • An improvement notice: Setting out the defects observed by the inspector, what action the business must take to comply and the date by which to complete the required action.
  • A prohibition order: Preventing the business from producing food or using particular equipment until they comply.

Each defect identified in the inspection is an offence under the Act and the majority attract an on-the-spot fine. If an offence is taken to court, a business can be liable to pay up to $275,000 per offence (although the Local Court can only fine a business a maximum of $10,000 per offence).

Also, some years ago the Government passed laws allowing the Food Authority to publish details of successful prosecutions on its website. The Authority makes good use of its power, publishing a "name and shame" register, which lists businesses that have breached or are alleged to have breached food safety laws.

Lessons for businesses

There are obligations under the Food Act in respect of licences, supervision and food safety standards. When running a business that involves serving or producing food, it is important to understand what exactly is expected of a business under the Act. The consequences of falling foul of food safety laws can be lasting financial and reputational damage. For example, businesses that are ordered to close under a prohibition order take on average three days to re-open, leading to loss of trade and diminishing the business's reputation.

Summary

The cases outlined above show the Food Authority will pursue breaches of the Act in court if that is what it takes to make sure businesses comply. This has resulted in a spate of cases where businesses have been slapped with convictions and fines, attracting media attention.

Businesses should get on the front foot when it comes to food safety obligations. In this regard, it is noted that other jurisdictions also have similar provisions. We recommend businesses become familiar with the obligations of running a food business as they apply in the states in which they operate.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Emails

From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.