Gavey v Mellor[2015] QDC 282

DISTRICT COURT OF QUEENSLAND

1. [1]
   On 7 August 2015 the appellant filed a notice of appeal in respect of the sentence imposed upon him, on 9 July 2015, in the Magistrates Court at Maroochydore and in respect of his guilty plea to an offence of failing to supply goods within a reasonable time. Such conduct may be an offence, pursuant to s 92 and s 16 of the Fair Trading Act 1989,  as it can be noted that s 16 of the Fair Trading Act has the effect of adopting certain laws of the Commonwealth of Australia, including the Australian Consumer Law, as set out in Schedule 2 of the Competition and Consumer Act 2010 (Cth) and applying those provisions as the Australian Consumer Law (Queensland) and as a law of this State.

2. [2]
   The offence admitted by the appellant is set out in s 158(7) of the Australian Consumer Law,^[1]as follows:

“(7) A person commits an offence if:

1. (a)
   the person, in trade or commerce, accepts payment or other consideration for goods or services; and

1. (b)
   the person fails to supply all the goods or services:

1. (i)
   within the period specified by or on behalf of the person at or before the time the payment or other consideration was accepted; or

2. (ii)
   if no period is specified at or before that time - - within a reasonable time.

Penalty:

1. (a)
   if the person is a body corporate - - $1,000,100; or

1. (b)
   if the person is not a body corporate - - $220,000.”

3. [3]
   Here the appellant was personally charged, having regard to the provisions of s 96 of the Fair Trading Act, which and subject to some exceptions which are, in the context of the appellant’s guilty plea, irrelevant, deems a director of a body corporate that commits such an offence to have “committed the offence” and to be “liable to be proceeded against and punished accordingly.”

4. [4]
   Proceedings for such offences are to be taken in accordance with s 94 of the Fair Trading Act and because the prescribed maximum penalty for the offence provision, is at the “higher level penalty amount”, the offence may, at the election of the prosecutor, be prosecuted on indictment or, as was the election here, in a summary way, under the Justices Act 1886. In that instance and pursuant to s 94(3), of the Fair Trading Act, the applicable maximum penalty is half of that stated for the offence and in this case was $110,000.

5. [5]
   Accordingly, this appeal is brought pursuant to s 222 of the Justices Act and must necessarily be a complaint as to the excessiveness of the penalty that was imposed by the Acting Magistrate^[2], being a fine of $10,000, with recovery of that fine being referred to SPER and no conviction recorded.

6. [6]
   Pursuant to s 223 of the Justices Act and in the absence of leave granted, on special grounds, to adduce fresh additional or substituted evidence, the appeal is to be conducted as a rehearing on the record of the proceedings below. This court is required to conduct a review of the sentencing hearing and ultimately correct any error of the sentencing magistrate, determined on the basis of that review and this court’s own conclusions.^[3]Because the review is to be conducted in respect of an exercise of sentencing discretion, the following principles, as extracted from House v The King,^[4]apply:

“It must appear that some error has been made in exercising the discretion. If the Judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the material for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred.”^[5]

7. [7]
   The essence of the offence committed by the appellant is captured in the particulars provided in the complaint, as follows:

“1. Ernest John Gavey, the defendant was sole and active director of the company Solazone Pty Ltd, trading as ‘Solazone’ and through this business the defendant provides and installs solar systems and accoutrements.

2. On or about 12 October 2013 Mr Keith William Lawrence Barney of Lowmead in Queensland approached Mr Gavey to view the failing solar system on his rural property.

3. The defendant verbally advised Mr Barney that the system was failing after being struck by lightning and needed swift replacement.

4. On 18 November 2013 the defendant provided Mr Barney with a tax invoice requesting payment of $14,042 for battery sets, ‘4 sets absolyte and AGM 790 aH 24 v’, to be installed on Mr Barney’s rural property.

5. On 19 November 2018 a direct payment of $14,042 was made to a bank account held by the defendant under the name ‘Solazone Pty Ltd’ for the consumer’s battery set.

6. On 22 November 2013 Mr Gavey provided the consumer with a report dated 17 November 2013 which stated ‘I would recommend that the entire battery bank be replaced immediately, to ensure proper operation, and the safety of the occupants of the home’.

7. On 29 November 2013, the defendant made a part payment to a battery wholesaler of $1,000 on the battery sets for the consumer.

8. Despite ongoing requests by the consumer, the defendant did not provide to Mr Gavey the battery set in a reasonable time, and on 31 March 2014 Mr Barney lodged a formal complaint with the Office of Fair Trading.

9. After contact with the Office of Fair Trading initially failed to secure the battery system for Mr Barney, he made additional payment to the battery supplier himself to secure the battery system already purchased from the defendant.

10. On 24 February 2015 Mr Barney made contact with the Office of Fair Trading to advise that a refund of his original payment had been made to him by the defendant.”

8. [8]
   In addition and at the sentencing hearing:

1. (a)
   The prosecuting inspector emphasised:

1. (i)
   the importance to the consumer of the appellant’s undertaking to supply the batteries, so as to enable the operation of the only power supply at his property and that the appellant was well aware of this;

2. (ii)
   that on 19 November 2013, the amount of $14,042 was paid, by direct payment, to the appellant and in satisfaction of the appellant’s tax invoice (dated 18 November 2013) for the total cost of supplying installation of the system repair including a battery set;

3. (iii)
   that on 29 November 2013, the appellant placed an order, in the consumer’s name, with the supplier of the battery set but paid only a deposit (in the amount of $1,000) and otherwise retained the balance of the payment, including the balance of approximately $9,400 to be paid for the supply of the battery set;

4. (iv)
   the batteries were not supplied or installed within a reasonable time, despite numerous enquiries by the consumer and the lodgement of complaint with the Office of Fair Trading and that by July 2014 enquiry with the supplier of the battery set revealed that only a total of $3,000 had been paid out of a cost of approximately $10,400;

2. (b)
   it was common ground that the balance of the consumer’s payment to the appellant was subsumed by the expenses of the appellant’s struggling business and that ultimately, the company operating that business went into liquidation and that ultimately and after incurring the cost of operating his power system, by diesel generator over the many months involved, the consumer expended a further $10,400, in September 2014, to purchase the battery set from the supplier. It was also noted that on 24 February 2015 the consumer confirmed that the appellant had made a refund to him of the payment made to the appellant;^[6]and

3. (c)
   the appellant presented a number of documents to the Acting Magistrate^[7]in support of his explanation as to the downturn in the solar power industry, the particular difficulties that confronted his business and what he pointed to as his attempts to resolve the situation for this consumer, by payments made to the supplier, seeking loans to support his business and agreement reached through a mediation process in QCAT, in June 2014 and that when he was unable to fulfil his expectations in that regard and in September 2014, he put his residence up for sale, with a contract finalised in December 2014 and settlement in late 2015 and immediate repayment thereafter, of the consumer. He otherwise presented material in support of his general good character and particularly in respect of his charitable support of community projects, including in a low socio-economic area in the Philippines and particularly as to assistance with establishing reliance on solar energy.

9. [9]
   The prosecutor contended that through lack of appropriate management of the funds received from the consumer, the necessary payment to the battery supplier was not able to be made and that this problem continued over a considerable period and represented “an ongoing disregard for the situation of the consumer and the obligations he has in trade under the Australian Consumer Law”.^[8]That contention may be seen as having some substance, in the light of the appellant’s guilty plea to this offence, which in the first instance required proof of the appellant’s failure to supply the goods or services, for which payment was accepted, within a reasonable time and because s 158(8) of the Australian Consumer Law, also provides that:

“(8) Subsection (7) does not apply if:

1. (a)
   the person’s failure to supply all the goods or services within the period, or within a reasonable time, was due to the act or omission of another person, or to some other cause beyond the person’s control; and

2. (b)
   the person took reasonable precautions and exercised due diligence to avoid the failure.”

10. [10]
    The prosecutor also provided the Acting Magistrate with some details of three “comparatives”, in respect of offences pursuant to s 158(7) of the Australian Consumer Law, by way of one page summaries prepared in the Office of Fair Trading. Necessarily, that information was limited as to the detail provided. However and in summary that material established that:

“(a) on 12 April 2013, in the Southport Magistrates Court, an offender was fined $10,000 and ordered to pay compensation, in the sum of $14,445.75 and in respect of a failure to satisfy an agreement with the committee of a building body corporate, made in August 2011, to supply LED lights and the acceptance of 50% part payment, on 16 August 2011 and in the sum of $14,445.75 and a failure to have so supplied the goods or made any refund by 31 March 2012. This was in circumstances where the defendant (who was 43 years of age and had no history of prior offences) had initially indicated that the lights were in stock and could be delivered. This matter was heard ex-parte;

2. (b)
   on 26 September 2014, in the Toowoomba Magistrates Court, a defendant was fined $17,500 and ordered to pay compensation in the sum of $3,732.15. That defendant, who was the sole director of a company conducting an IT business, accepted payment of $3,732.15 for the replacement of a server and a 36 month servicing agreement. It is simply recorded that despite multiple attempts to obtain the goods and services and numerous excuses, nothing was supplied. There had been no co-operation with inspectors and rather evasive conduct in the investigation, but the defendant had no prior enforcement action recorded nor any criminal history. As a note which may serve to somewhat explain the higher penalty in this case, it was recorded to be “noted that the financial detriment in this case was considerably higher to that in the comparisons provided.”; and

3. (c)
   on 9 October 2014, in the Maroochydore Magistrates Court, a defendant was fined $12,500 and ordered to pay compensation in the sum of $8,263.20. That defendant operated a business through a company offering to undertake professional estimates and costing summaries. Between 8 February 2013 and 12 May 2014 he offered such an administrative service directly to consumers and required upfront payment before supplying the summaries. It is recorded that he asked consumers to pay into four different bank accounts and then did not supply the estimates or summaries, within the agreed timeframes and also did not provide refunds for services he had failed to supply. That defendant had no prior convictions and it was noted that although he had provided a letter with reasons for failing to supply the services, he had continued to trade and commit offences for a long time, which did not reflect well on him. It was further observed that the defendant had shown “no remorse for the offences that a heavy penalty should apply”.

11. [11]
    It may also be noted that the prosecuting inspector specifically made the following acknowledgment in respect of these “comparatives”:

“I do, of course, acknowledge that with these particular comparatives there were compensation orders attached because no money was forthcoming from the traders, and, of course, in this case, although it took a very long time, there has now been a return of the initial funds that were paid by Mr Barney to Mr Gavey. So these three comparatives, for instance, do differ from this case in that particular circumstance”.

12. [12]
    The reasons for the penalty imposed by the sentencing Magistrate were briefly expressed, as follows:^[9]

“BENCH: Well, I accept the plea of guilty, take into consideration the facts and submissions that was put before the court. [indistinct] the comparative sentences, so – as a guide for other similar offences. The fact that the money has been refunded is also taken into consideration. However it did take some time. The fact that the defendant when he received the $14,000 from Mr - from the complainant - - -

MS MELLOR: Mr Barney your Honour.

BENCH: Mr Barney – but for the purpose of batteries that only a $1,000 deposit was placed with the company and then the balance of the funds went astray or kept in the defendant’s possession until such time as the batteries were – well, subsequently were provided by another – from another source. Well in the circumstances the defendant’s convicted and fined $10,000, ordered to pay $83.90 costs of court, in default referred to SPER, and a conviction is not recorded.”

13. [13]
    On this appeal the appellant made the following relevant contentions:

1. (a)
   In the context of suggesting that the need for prosecution in this instance was dubious, he contended that he had “already been punished for the sin of trying to keep my business afloat against the odds. I have lost my business, I have lost my family, my house, my shops where we were working and my income. There is enormous pain and regret going through all this and I’ve been apologetic to the customer the whole time whilst promising a solution that he would not lose his money. Secondly, as a disincentive to do it again, a fine makes no difference to the shame and regret that I feel for not being able to deliver on my promise to provide batteries earlier.”^[10]

2. (b)
   He added that he was not likely to reoffend “as it was not a crime of greed or malice but rather the mismanagement of one customer’s account during a very difficult business climate. In 32 years of trading I’ve never before had this problem. The second point I’d like to make is the customer was in contact with me throughout all of this and was actually me who suggested that he kept the batteries directly from the supplier and me to repay him for his outgoings.”^[11]

3. (c)
   He suggested that the amount of the fine was excessive and should be dropped to $2,000, which he contended was still “a huge penalty” for him in the circumstances but one that he could manage to pay and retain his driver’s licence and keep working.^[12]

14. [14]
    As the respondent correctly contends, a difficulty for the appellant is in the identification of error in the orders of the Acting Magistrate and particularly such as to warrant the interference of this court. In particular, it must be recognised that the fine that was imposed represented only 1/11^th of the maximum penalty that was available. It is also clear that the offence is not concerned with issues of dishonesty or fraud but rather mismanagement of obligations in trade and commerce and that it can be readily discerned that the purpose of the legislation in providing for this offence is particularly in consumer protection and deterrence of similar conduct, including by others. It is also clear that despite the focus of the appellant on his efforts to resolve the situation, it did drag on over a considerable period, to the considerable detriment of the consumer.^[13]

15. [15]
    It may also be noted that the maximum penalty is provided not just in respect of an expectation of a range of severity of culpability of offending but also of personal circumstances of offenders and the observation may be made that the level of appropriate penalty, by way of fine, may reasonably vary according to considerations as to all of the circumstances, including the wealth or capacity of an offender to pay.

16. [16]
    It can be discerned that a particular concern of the appellant is as to whether his acceptance of responsibility and remorse, particularly as reflected in his efforts to resolve the situation and the ultimate repayment to the consumer, after the sale of his residence, were factors appropriately taken into account. In particular and although it is inconceivable that the fact of the appellant’s guilty plea, escaped the attention of the Acting Magistrate, there is nothing in the sentencing remarks to indicate how this was taken into account pursuant to s 13 of the Penalties and Sentences Act 1992 and the only specific reference to any of the matters raised by the appellant was:

“The fact that the money has been refunded is also taken into consideration. However, it did take some time.”

17. [17]
    In Cameron v The Queen,^[14]it was observed:^[15]

“It is well established that the fact that an accused person has pleaded guilty is a matter properly to be taken into account in mitigation of his or her sentence. In Siganto v The Queen it was said:

“a plea of guilty is ordinarily a matter to be taken into account in mitigation; first, because it is usually evidence of some remorse on the part of the offender, and second, on the pragmatic ground that the community is spared the expense of a contested trial. The extent of the mitigation may vary depending on the circumstances of the case.”

It should at once be noted that remorse is not necessarily the only subjective matter revealed by a plea of guilty. The plea may also indicate acceptance of responsibility and a willingness to facilitate the course of justice.

Although a plea of guilty may be taken into account in mitigation, a convicted person may not be penalised for having insisted on his or her right to trial……

Reconciliation of the requirement that a person not be penalised for pleading not guilty with the rule that a plea of guilty may be taken into account in mitigation requires that the rationale for that rule, so far as it depends on factors other than remorse and acceptance of responsibility, be expressed in terms of willingness to facilitate the course of justice and not on the basis that the plea has saved the community the expense of a contested hearing.”

18. [18]
    It may be seen that the contention that the penalty that was imposed by the Acting Magistrate was not inappropriate to these circumstances, even having due regard to the matters raised by the appellant, in conjunction with his guilty plea, is not without some considerable weight. In particular and in the context of the need for an appropriately deterrent punishment and having regard to the burden that is to be placed on an offender, it may be noted that s 48 of the Penalties and Sentences Act 1992 is directed at both the amount of a fine and the way it is to be paid. Here, there was no requirement for any immediate or lump sum payment. However, the expectation is that the amount will be paid over time, by appropriate arrangements made pursuant to the State Penalties Enforcement Act 1999 and it is apparent that this will be a burden of some significance for the appellant.

19. [19]
    However, the better view is that, on the materials that were before him and in the absence of the expression of reasons as to how these matters were appropriately taken into account and particularly in the context of the comparative cases, the Acting Magistrate has failed to take into account the full significance of the appellant’s guilty plea and his remorse and ultimate repayment of the consumer, after his earlier efforts to organise the supply of the battery set, had failed. Notwithstanding that the comparative cases merely provide assistance by way of yardstick and as individual responses in other generally similar cases,^[16]it should be further concluded that the imposition of an appropriate penalty here and having due regard to all of the relevant circumstances, would be something less than $10,000 by way of fine, particularly in order to distinguish these circumstances from those comparatives where there was absence of remorse and substantial amounts remained outstanding and unpaid before sentence. In that sense, the outcome is, manifestly, an excessive penalty, within the meaning of s 222(2)(c) of the Justices Act 1886.

20. [20]
    Accordingly, the appeal will be allowed and the order will be that the orders of the Acting Magistrate made on 9 July 2015 be varied so that the amount of the fine is $8,000.