Australian Competition and Consumer Commission v Hercules Iron Pty Ltd [2008] FCA 1182

  • Non-complying bunk beds, court orders, and the applicable penalties.

It is unusual for proceedings to be brought for contempt whether civil, which is punishable by fines, or criminal, which is punishable by imprisonment. In this case, the ACCC had obtained orders against Hercules some months earlier. Hercules had supplied bunk beds which did not comply with a mandatory product safety standard AS/NZA 4220:1994 under Consumer Protection Notice No. 1 of 2003. Orders had been made prohibiting Hercules from supplying non-compliant bunk beds for a period of three years.

These proceedings concerned three breaches of that injunction. The question for the court was whether the breach was deliberate, wilful disobedience of the orders. The court concluded that they were and had regard to the fact that no evidence was provided of the steps put in place to ensure compliance with the orders and that non-complying bunks remained in the respondents' warehouse. The court thought that the non-complying bunks simply should not have been there or should have been identified in a manner which prevented such a "mix up".

The ACCC sought fines of $10,000. The court had regard that Hercules had shown some willingness to recall the offending products and make amends to affected customers. In deciding the appropriate penalty, the court provided a check list of factors to be taken into account:

  • the person's personal circumstances;
  • nature and circumstances of the contempt;
  • effect of the contempt on the administration of justice;
  • the person's culpability;
  • need to deter the person and others from repeating contempt; and
  • absence or presence of a prior conviction for contempt.

In the present case, the court thought that more than a nominal penalty was appropriate for two reasons: specific deterrence and general deterrence. In relation to specific deterrence, the court noted that there was a history of evasion and non-compliance with past orders Justice Gordon did not think it likely that Hercules would comply with the orders in the future unless there was a concrete penalty. With respect to general deterrence, Justice Gordon noted that the Prescribed Standard addresses minimum safety requirements for bunk beds and that beds not complying with these requirements have a higher risk of collapsing or causing injury.

In these circumstances, the court though that the fines requested by the ACCC of $10,000 were necessary and appropriate in light of all the circumstances. It also ordered that the ACCC's costs be paid on an indemnity basis.

Footnote

1. Lord Chesterfield

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