Commissioner for NSW Fair Trading, Department of Finance and Services v Luo

By a further amended summons the Commissioner for NSW Fair Trading, Department of Finance and Services (“the Prosecutor”) seeks the following orders:

A joint Court Book containing the pleadings, evidence and written submissions was tendered as Exh. A at the hearing.

An agreed statement of facts was tendered by the Prosecutor (“the Agreed Facts”) in the following terms:

Section 16 of the Electricity (Consumer Safety) Act 2004 (“the Act”) is in the following terms:

Section 45(1) of the Act provides that an executive liability offence is an offence against any of the following provisions of this Act that is committed by a corporation:

Section 45(2) of the Act provides as follows:

Clause 23(1) of the Electricity (Consumer Safety) Regulation 2015 (NSW) provided (at the material time):

The defendant, who did not give evidence, relied upon a report of Anita Duffy, Psychologist, who interviewed and assessed her on 24 October 2016. That report contains the following matters of background which, as I understand it, are not in dispute.

The defendant was born in South East China on 12 October 1983 and is now 33 years of age. She grew up with her parents with whom she had a close relationship, although it seems that she perceived that they were too strict in their expectations of her. The defendant’s father apparently loaned her money to help her establish the business that she was operating at the time of the offending. The defendant perceives that she will never be able to recoup that money and repay her father.

The defendant matriculated to the Zhe Jiang University of Technology in China where she completed a Bachelor of Arts Degree, majoring in English and studying international business and Japanese. She arrived in Australia in 2006 and was thereafter accepted into Macquarie University where she completed a Master of Arts majoring in Linguistics in 2008. She met her husband after her arrival in Australia. They married in 2009 and have two young children.

The company which the defendant and her husband formed to carry on the business which led to the offending was placed in voluntary administration on 26 September 2013. The defendant has not worked in any paid capacity since that time.

Ms Duffy took a history from the defendant regarding her mental health. In light of the competing positions of the parties in respect of the issue of the defendant’s mental health, and the impact of that issue on sentence, that history as recorded by Ms Duffy, along with her findings on testing and her conclusions, should be set out in full:

Ms Duffy then administered clinical psychological testing, the defendant’s response to which she described as follows:

Ms Duffy expressed (inter alia) the following conclusions:

It was submitted on behalf of the Prosecutor that the defendant’s offending had created a major safety hazard and that in these circumstances, two of the critical considerations on sentence were general and specific deterrence. In this regard, and in light of the submissions made on behalf of the defendant, counsel for the Prosecutor addressed the Court at some length in relation to the use which he submitted could properly be made of Ms Duffy’s report. He pointed, in particular, to the fact that the defendant had not given any evidence on oath, and he placed particular reliance on the observations of Smart AJ in R v Qutami [2001] NSWCCA 353 where his Honour said (at [58] – [59]):

The effect of counsel’s submission was that little or no weight should be given to the contents of Ms Duffy’s report.

It was submitted that the objective seriousness of the defendant’s offending was high, and was aggravated by the fact that there had been a cost to the community in identifying and remedying the safety hazard created by the installation of the cable in those premises in which it was known to have been installed. It was submitted that the offending was further aggravated by the fact that there remained an ongoing risk in those premises where cable may have been installed, but where such premises remained unidentified. Counsel further submitted that in all of the circumstances the defendant should have waited until proper testing had been completed before distributing the cables.

In all of these circumstances, it was submitted on behalf of the Prosecutor that the defendant’s criminality was “at the high end of the spectrum of objective seriousness”.

In advancing these submissions, counsel for the Prosecutor submitted that the objective seriousness of the present offending was substantially greater than that which I had cause to consider in Commissioner for Fair Trading, Office of Finance and Service v Hua Yang Australia International Trading and Investment Pty Limited and Huadi Bi [2016] NSWSC 1380 (“Hua Yang”). I will return to that submission in due course.

Counsel for the Prosecutor also submitted that the offence was committed without regard for public safety, and for financial gain, and that both of these factors were matters of aggravation.

In terms of mitigating factors, Counsel for the Prosecutor submitted that there was no evidence of any remorse by the defendant, other than such remorse as was demonstrated by her plea of guilty. In that regard, counsel pointed out that the plea was entered on 15 September 2016, in circumstances where the matter had been listed for a three day hearing commencing on 26 September 2016. Although counsel for the Prosecutor did not suggest that the defendant’s plea was of no utilitarian value at all, he pointed to the timing of the plea as a factor which would operate to significantly reduce the level of any discount which might be applied. It was conceded that the defendant had no prior convictions, and that her supply of the electrical cabling was not ongoing.

Counsel for the defendant submitted that the objective seriousness of the offending was not as high as that which had been asserted by counsel for the Prosecutor. In particular, he pointed out that the offending did not involve actual knowledge on the part of the defendant of the fact that the cabling did not comply with relevant Australian standards, and that this was therefore not a case in which the defendant had exhibited a total disregard for her obligation, nor a case in which she had wilfully “shut her eyes” to any relevant factor(s).

In this regard counsel made specific reference to the following aspects of the Agreed Facts which, he submitted, established that prior to the time of the supply of the cabling the defendant had:

Counsel accepted that although the protection of the public was not strictly an element of the offence, it was clear that the legislation was directed towards achieving that end. However he submitted that in these circumstances it was necessary to take care to ensure that public safety considerations were not “double counted” in the sentencing exercise. It was further submitted that in circumstances where the Prosecutor had accepted that the belief of the defendant as to the compliance of the cabling with relevant safety standards was honest, this was not a case in which I would find that the offending was committed for financial gain.

In terms of mitigating factors, counsel for the defendant pointed to the fact that the defendant has no prior convictions and had, at the time of the offending, been involved in the importation and sale of electrical cabling for a period of a little less than 4 years.

It was submitted that I should conclude that the defendant was unlikely to reoffend, and that she had not attempted at any time to minimise her conduct. However counsel expressly accepted that there was no evidence of any expression of remorse by the defendant.

Counsel for the defendant did not take issue with the principles applicable to quantifying the discount to reflect a plea of guilty. However, he submitted that the plea entered by the defendant had “high utilitarian value” because (inter alia) it had saved the time and expense of having witnesses (including expert witnesses) appear over an estimated three day hearing. It was submitted that the entering of the plea needed to be viewed in the context of a case in which there may well have been some considerable complexity attaching to the proof of relevant facts. In all of the circumstances, it was submitted that a discount in the range of 15% to 20% was appropriate.

Finally, counsel for the defendant submitted that even though the defendant had chosen not to give evidence, the opinions of Ms Duffy, and her diagnoses, ought to be accepted. Counsel submitted that although Ms Duffy did not express a view that there was any causal link between those diagnosed conditions and the offending, the defendant’s mental state nevertheless remained a relevant factor, particularly in terms of determining whether or not she was a suitable vehicle for general deterrence. Counsel submitted that, accepting the opinions of Ms Duffy, the defendant was clearly suffering a mental illness which, even though it was not causally connected to the offending, meant that general deterrence was of limited significance in the sentencing exercise.

The maximum penalties set for this offence are indicative of the gravity with which it is viewed by the legislature. Viewed objectively, the defendant’s offending was obviously serious. The cabling in question did not meet the relevant safety standards prescribed in this country. Such standards are prescribed in an endeavour to ensure the safety of the public at large. The failure of the cabling to meet those standards posed a significant risk that the insulative sheath in the cabling would break down. That, in turn, created a risk of a major fire. As a consequence, the life of any person who might find himself or herself present in premises where the cabling had been laid would be placed in danger.

Those who sell (or who supply for sale) to the public items of this nature have an obligation to be vigilant in observing their responsibilities. One of the principal responsibilities of a person in the defendant’s position is to ensure that such items comply with relevant Australian standards. In Hua Yang I observed (at [92] – [93]):

Those observations are equally apposite in the present case.

Clearly, the defendant fell short of maintaining the level of vigilance which was required. As the owner of a business engaged in the commercial supply of electrical cabling, she had a responsibility to ensure that all aspects of the conduct of her business complied with the law: (Hua Yang at [68]).

However I am unable to accept the submission advanced on behalf of the Prosecutor that the criminality of this defendant is greater than that of the defendants in Hua Yang. The offending in Hua Yang involved the sale of electrical chargers and adapters which did not have the requisite regulatory approval, and which had been constructed in such a way as to pose a significant safety risk to any member of the public who used them. I found (at [69]) that the second defendant in that case (who was the director of the first defendant) had abandoned her responsibilities as a supplier of such goods. I also found that such abandonment included a failure to make any enquires of her supplier as to whether or not the items which she was obtaining, and later offering for sale to members of the public, were relevantly approved. I concluded in the circumstances that neither defendant had paid any regard to important issues of public safety.

That could hardly be said to be the case here, particularly bearing in mind the Agreed Facts. Far from completely abandoning her responsibility, the defendant in the present case in fact took some - albeit inadequate – steps, in an effort to ensure that the cabling was compliant. Indeed, counsel for the Prosecutor conceded (in light of the Agreed Facts) that the defendant held an honest belief that this was so. There was no suggestion of any similar belief being held by the defendants in Hua Yang.

Further, and again unlike the defendants in Hua Yang who offered the items for sale in circumstances where there was no system whatsoever in place towards ensuring that they had the necessary regulatory approval, the present defendant did have some system in place, albeit one which was imperfect. It is also significant that there is no suggestion in the present case that the defendant has sought, at any time, to minimise her culpability. A finding to the contrary was made in respect of the second defendant in Hua Yang (at [81]).

None of these observations are intended to convey the suggestion that the offending of this defendant was not serious. Clearly it was. However the factors to which I have pointed demonstrate that the submission made by counsel for the Prosecutor that the present offending is of greater gravity than that of the defendants in Hua Yang is untenable.

I turn to consider, to the extent that they are applicable, the various aggravating and mitigating factors contained in s. 21A of the Crimes (Sentencing Procedure) Act 1999 (NSW) (“the Sentencing Act”).

I am not satisfied that the offence was committed for financial gain in the sense contemplated by s. 21A(2)(o). Although the extent to which it did so cannot be established by the evidence, it is clear that the defendant’s company did gain financially from the sale of the cabling. However there is no evidence which establishes that the offence was committed for that purpose. Once again in that respect, a useful contrast may be drawn between the position of the present defendant, and that of the defendants in in Hua Yang (at [49]; [73]).

The parties were at odds as to whether the fact that the offending was committed without regard to public safety was an aggravating factor under s. 21A(2)(i). Public safety is the “gist” of this offence, in the sense that the offence is premised on the fact that to engage in the conduct which constitutes it is to act without regard for public safety. To treat that as an aggravating factor under s. 21A(2)(i) would involve impermissible double counting: R v McMillan [2005] NSWCCA 28 at [38] Howie J (Santow JA and Bell J agreeing). Accordingly, whilst the fact that the offending was committed without regard to public safety is clearly a relevant factor on sentence, it is not an aggravating factor under s. 21A(2)(i).

In terms of mitigating factors, the offence was not part of planned or organised criminal activity and the defendant has no record of previous convictions. These are mitigating factors under ss. 21A(3)(b) and (e) respectively.

On the evidence before me, the company which had been incorporated to facilitate the supply of the cabling has been placed in administration. Moreover, for the reasons that I have already set out, the defendant had some, albeit not a full, appreciation of her responsibilities. In these circumstances I am satisfied that the defendant is unlikely to re-offend and that she has good prospects of rehabilitation. These are mitigating factors under ss. 21A(3)(g) and s. 21A(3)(h) respectively.

There is no evidence of any remorse shown by the defendant of the kind contemplated by s. 21A(3)(i). Accordingly, that is not a mitigating factor.

The defendant’s plea of guilty is a mitigating factor under s. 21A(3)(k). That plea was entered at a late stage, and indeed at a time which might be described as being at, or at least approaching, the eve of the hearing. I accept that the entering of the plea had some utilitarian benefit. However, one of the circumstances relevant to the assessment of the discount to be applied on account of a plea of guilty is the time at which the plea is entered. A discount towards the bottom of the range is appropriate for a late plea unless there are particular benefits arising from the prospective length and complexity of the trial: R v Thomson; R v Houlton (2000) 49 NSWLR 383; [2000] NSWCCA 309 at [153]–[156] per Spigelman CJ. In these circumstances, bearing in mind that the appropriate range for a discount is between 10% and 25%, the discount in the present case to reflect the defendant’s plea should be assessed at 10%.

I turn to consider the issue of general deterrence. I have previously set out the findings reached by Ms Duffy. As I have said, the essence of the submission made by counsel for the Prosecutor was that in the absence of evidence on oath from the defendant, Ms Duffy’s findings were deserving of little or no weight.

Ms Duffy made reference to the fact that in August 2013 the defendant was rushed to hospital to give birth to her son. There is no dispute that on 18 September 2013 the defendant was admitted to the Psychiatric Unit of Hornsby Hospital where she remained for a period of 5 days (Agreed Facts at 2.37). The catalyst for that admission is not established by the evidence. No clinical or treatment notes in respect of it were tendered as part of the defendant's case. I am therefore unable to determine whether the cause of that admission arose from investigation into the offending, post natal complications or a combination of those (and perhaps other undisclosed) factors. Further, in the absence of clinical notes or related material, I am unable to determine what, if any, diagnosis was made following the defendant's admission to hospital, just as I am unable to determine what course of treatment (if any) was recommended.

Ms Duffy diagnosed the defendant as suffering from anxiety and major depression "in response to her current circumstances". It might be inferred that the "current circumstances" to which Ms Duffy referred encompass these proceedings. What else they might encompass is not something that I can determine. In any event, Ms Duffy stopped short of expressing the view that there was any causal connection between the defendant's anxiety and depression condition and her offending.

The opinion of Ms Duffy was obviously based, at least in part, upon the history provided by the defendant at the time of her examination. The fact that a psychiatric or psychological diagnosis is made wholly or partly on the basis of a subjective history is not unusual. In the present case however, it is apparent that Ms Duffy's diagnosis was also based upon the defendant's presentation at the time of examination, and her results following the completion of the Millon Clinical Multiaxial Inventory - III, described by Ms Duffy as "a comprehensive personality questionnaire comprising the measure of basic personality characteristics, more severe personality pathology as well as a number of clinical symptoms more transient and reactive to current circumstances". I have previously set out Ms Duffy’s account of the results of that testing.

I am conscious of the statements of Smart AJ in Qutami regarding the caution with which reports of this nature must be approached. However, his Honour did not go so far as to say that in each and every case, a report such as that of Ms Duffy is deserving of no weight. What weight might be attached to such a report will necessarily depend upon the circumstances of the case.

The defendant bears the onus of establishing any mitigating factor on the balance of probabilities: R v Olbrich (1999) 199 CLR 270; [1999] HCA 64. In the present case Ms Duffy’s report was tendered without objection, and in the absence of any request that she be available for cross-examination on its contents. In all of these circumstances, and particularly bearing in mind that Ms Duffy’s opinion was based on factors other than the subjective history provided to her, I am satisfied on the balance of probabilities that the defendant is suffering from the conditions she diagnosed.

The diagnoses of Ms Duffy are important, and of particular relevance to the issue of general deterrence. In Aslan v R [2014] NSWCCA 114 Simpson J (as her Honour then was) made reference (at [33]) to the principles governing the effect of an offender’s mental illness on sentence:

Her Honour then went on to say (commencing at [34]):

As I have already observed, the report of Ms Duffy does not establish any causal connection between the defendant’s offending and her mental state. However that does not mean that an offender’s mental illness is irrelevant to the issue of general deterrence: Iskandar v R [2013] NSWCCA 235 at [30] per the Court (Beazley P, R A Hulme and Bellew JJ) citing Director of Public Prosecutions (Cth) v De La Rosa (2010) 79 NSWLR 1; [2010] NSWCCA 194 per McClellan CJ at CL [42] and R v Engert (1995) 84 A Crim R 67 at 68 (per Gleeson CJ) and at 72 (per Allen J). In Engert, Gleeson CJ emphasised that the issue must not be approached on the basis that once it is established that an offender suffers from a mental illness, it automatically follows that general deterrence will assume less importance in determining the appropriate sentence. Whether that is the case will necessarily depend on the entirety of the circumstances.

In the present case, it is clear, having regard to the opinion of Ms Duffy that the defendant is suffering from a number of significant mental health issues. The extent of those issues is such that in Ms Duffy’s opinion they require professional intervention. In those circumstances, I am satisfied that the defendant presents as an unsuitable vehicle for general deterrence. For the same reasons, personal deterrence has little part to play in the sentencing of the defendant.

I make the following orders: