[Home] [Databases] [WorldLII] [Search] [Feedback]

You are here: AustLII >> Databases >> Federal Court of Australia >> 2012 >> [2012] FCA 42

[Database Search] [Name Search] [Recent Decisions] [Noteup] [Download] [Help]

Last Updated: 8 February 2012

FEDERAL COURT OF AUSTRALIA

Secretary, Department of Health and Ageing v Export Corporation (Australia) Pty Ltd [2012] FCA 42

Citation: Secretary, Department of Health and Ageing v ExportCorporation (Australia) Pty Ltd [2012] FCA 42

Parties: SECRETARY, DEPARTMENT OF HEALTH ANDAGEING v EXPORT CORPORATION (AUSTRALIA)PTY LTD ACN 009 441 632

File number: ACD 38 of 2009

Judge: PERRAM J

Date of judgment: 3 February 2012

Catchwords: JUDGMENTS AND ORDERS – Civil penalty – impositionof civil penalty under the Therapeutic Goods Act 1989 (Cth)section 19D – discussion of relevant principles – agreedstatement of facts

HEALTH LAW – Therapeutic goods – importation andsupply of goods containing non-listed and non-registeredsubstances – imposition of civil penalty – discussion ofrelevant principles

Legislation: Crimes Act 1914 (Cth) s 4AATherapeutic Goods Act 1989 (Cth) ss 19D, 42YA

Cases cited: Australian Competition and Consumer Commission v ABBTransmission and Distribution Ltd [2001] FCA 383; [2001]ATPR 41-815 citedAustralian Competition and Consumer Commission v LeahyPetroleum Pty Ltd (No 3) [2005] FCA 265; (2005) 215 ALR301 citedAustralian Competition and Consumer Commission vMcMahon Services Pty Ltd [2004] FCA 1425; [2004] ATPR42-031 citedAustralian Competition and Consumer Commission v MSYTechnology Pty Ltd (No 2) (2011) 279 ALR 609 citedAustralian Competition and Consumer Commission vSampson [2011] ATPR 42-374 citedAustralian Competition and Consumer Commission vWillesee Healthcare Pty Ltd (No 2) [2011] FCA 752 citedBMI v Federated Clerks Union of Australia (1983) 6 IR 416citedConstruction, Forestry, Mining and Energy Union v Cahill[2010] FCAFC 39; (2010) 194 IR 461 citedWoolmington v Director of Public Prosecutions [1935]UKHL 1; [1935] AC 462 citedJ McPhee & Son (Aust) Pty Ltd v Australian Competitionand Consumer Commission [2000] FCA 365; (2000) 172ALR 532 citedMarkarian v The Queen [2005] HCA 25; (2005) 228 CLR357 citedNW Frozen Foods Pty Ltd v Australian Competition andConsumer Commission [1996] FCA 1134; (1996) 71 FCR285 citedR v Comax-Pharma Pty Ltd [2008] NSWDC 200 citedR v Pan Pharmaceuticals Pty Ltd [2008] NSWDC 221 citedRich v Australian Securities and Investments Commission[2004] HCA 42; (2004) 220 CLR 129 citedSecretary, Department of Health and Ageing v PagasaAustralia Pty Ltd [2008] FCA 1545 citedSecretary, Department of Health and Ageing v Prime NaturePrize Pty Ltd (in liquidation) [2010] FCA 597 citedTrade Practices Commission v CSR Ltd [1991] ATPR 41-076cited

Date of hearing: 28 June 2011

Place: Canberra

Division: GENERAL DIVISION

Category: Catchwords

Number of paragraphs: 92

THE COURT ORDERS THAT:

The parties bring in short minutes of order giving effect to these reasons within seven days.1.

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

REASONS FOR JUDGMENT

Counsel for the Applicant: Mr TM Howe QC, Mr TM Begbie

Solicitor for the Applicant: Australian Government Solicitor

Counsel for the Respondent: Mr AJ Payne, Mr SJ Free

Solicitor for the Respondent: McLachlan Thorpe Partners

IN THE FEDERAL COURT OF AUSTRALIAAUSTRALIAN CAPITAL TERRITORY DISTRICT REGISTRYGENERAL DIVISION ACD 38 of 2009

BETWEEN: SECRETARY, DEPARTMENT OF HEALTH AND AGEINGApplicant

AND: EXPORT CORPORATION (AUSTRALIA) PTY LTD ACN 009441 632Respondent

JUDGE: PERRAM JDATE OF ORDER: 3 FEBRUARY 2012WHERE MADE: SYDNEY (HEARD IN CANBERRA)

IN THE FEDERAL COURT OF AUSTRALIAAUSTRALIAN CAPITAL TERRITORY DISTRICT REGISTRYGENERAL DIVISION ACD 38 of 2009

BETWEEN: SECRETARY, DEPARTMENT OF HEALTH AND AGEINGApplicant

AND: EXPORT CORPORATION (AUSTRALIA) PTY LTD ACN 009441 632Respondent

JUDGE: PERRAM JDATE: 3 FEBRUARY 2012PLACE: SYDNEY (HEARD IN CANBERRA)

I. Introduction

The substantive question which arises in this case is the size of the civil penalty which should beimposed upon the respondent (‘Export Corporation’) for its actions in: first, importing into this countrysome 35 different products each of which was a ‘therapeutic good’ within the meaning of theTherapeutic Goods Act 1989 (Cth) (‘the Act’); and, secondly, the supply to various retailers of 36products which were also therapeutic goods. It is sufficient to observe at the outset that the quantitiesimported and then supplied were substantial reflecting, no doubt, the fact that the business of ExportCorporation consists of the import and supply of therapeutic goods.

1.

There is no disagreement between the applicant (‘the Secretary’) and Export Corporation as to thefacts of what happened. The Secretary seeks the imposition upon Export Corporation of total civilpenalties which fall in a range between $5.2 million and $8 million. For its part Export Corporationsuggests that a range between $1.2 million and $1.8 million or, perhaps, $1.4 million to $2.1 millionwould be more appropriate.

2.

In addition to the question of penalty there is also a subsidiary issue associated with the making ofdeclarations.

3.

I turn first to the statutory régime.4.

II. Statutory régime

The objectives of the Act are set forth in s 4 and include provision for the establishment andmaintenance of a national system of controls relating to the quality, safety, efficacy and timelyavailability of ‘therapeutic goods’ that are used in Australia. What are therapeutic goods? According tos 3 they consist of goods ‘that are represented in any way to be, or that are, whether because of theway in which the goods are presented or for any other reason, likely to be taken to be... for therapeuticuse’. What kind of use is that? The same section tells one that therapeutic use is ‘use in or inconnection with... influencing, inhibiting or modifying a physiological process in persons’. To put thematter plainly: this Act regulates the use of substances which are claimed to have some effect on thehuman body.

5.

The centrepiece of the regulatory apparatus is a register – the Australian Register of TherapeuticGoods (‘the Register’) – and it is erected by s 9A. The Register is divided into four parts (s 9A(3)) butonly two of these are presently material. The first is to contain therapeutic goods designated as‘registered goods’; the second, those referred to as ‘listed goods’ (s 9A(3)(a) and (b)).

6.

These separate folios in the Register reflect fundamentally different approaches to regulation. So far asregistered goods are concerned, there is required of them as a condition precedent to registrationexposure to a system of evaluation conducted by the Secretary which is reasonably astringent: s 25. If,on the other hand, entry is sought of a product only in the listed goods folio of the Register, there is noprocess of evaluation. So much flows from s 26A which deals with those therapeutic goods which aremedicines and provides that an application for listing must certify that: the medicine is eligible forlisting; it is safe for the purposes for which it is to be used; its presentation is not unacceptable;prescribed safety and quality standards have been complied with; the information included in theapplication is correct; and the applicant holds information or evidence to support the claims made inthe application. If the application meets the requirements in s 26A(1) (which include the applicant’scertifications in s 26A(2)), the Secretary must list the medicine. It will be seen that the Secretary’s onlyinquiry is into whether the appropriate matters have been certified. She is not concerned with whetherthe certifications are correct.

7.

The practical difference between listing and registration is significant. Generally speaking, the onlymedicines which are eligible for listing are those considered to be low-risk medicines which are mostlyavailable over the counter for self-treatment by consumers (such as vitamins, herbal substances,homeopathic preparations, throat lozenges and sunscreens). Save for some exceptions which areirrelevant to the present case, if a medicine is not eligible for listing it must be registered. In general

8.

terms, any medicine which contains potentially harmful ingredients can only be included in theRegister by being registered.In practice, the process necessary to obtain registration is a rigorous, complex, costly and quite oftenlengthy process for an applicant. Applications for the registration of a medicine are evaluated by theSecretary having regard to a range of matters including the quality, safety and efficacy of the goods,the presentation of the goods, whether the goods conform to any relevant standard and whether thegoods have been manufactured in accordance with applicable requirements. For example, with respectto safety considerations the applicant for registration will usually be required to provide information tosatisfy the Secretary as to: the chemical analysis of the medicine; toxicological data for the medicine;and satisfactory results of proper clinical trials of the medicine in humans.

9.

The Register is not merely ornamental. The Act proscribes the importation or supply of therapeuticgoods which are neither listed nor registered on pain of civil penalty. Section 19D(1) provides:

10.

19D Civil penalties relating to registration or listing etc. of imported, exported,manufactured and supplied therapeutic goods

Civil penalty relating to importing, exporting, manufacturing or supplying goods foruse in humans

(1) A person contravenes this subsection if:

(a) the person does any of the following:

(i) imports into Australia therapeutic goods for use inhumans;(ii) exports from Australia therapeutic goods for use inhumans;(iii) manufactures in Australia therapeutic goods for use inhumans;(iv) supplies in Australia therapeutic goods for use inhumans; and

(b) none of the following subparagraphs applies in relation to the goods:

(i) the goods are registered goods or listed goods in relationto the person;(ii) the goods are exempt goods;(iii) the goods are exempt under section 18A;(iv) the goods are the subject of an approval or authorityunder section 19;(v) the goods are the subject of an approval under section19A.

Maximum civil penalty:(a) for an individual—5,000 penalty units; and(b) for a body corporate—50,000 penalty units.

Resort to s 42YA informs one that s 19D(1) is a ‘civil penalty provision’ and s 42Y(1) authorises this11.

Court to impose a civil penalty for contravention of such a provision. Section 42Y(3) sets out thematters which must be considered in assessing any penalty:

(3) In determining the pecuniary penalty, the Court must have regard to all relevantmatters, including:

(a) the nature and extent of the contravention; and(b) the nature and extent of any loss or damage suffered as a result ofthe contravention; and(c) the circumstances in which the contravention took place; and(d) whether the person has previously been found by the Court inproceedings under this Act to have engaged in any similar conduct.

A penalty unit is defined in s 42YB to have the same meaning it bears in s 4AA of the Crimes Act1914 (Cth), i.e. $110. The maximum penalty for any contravention of s 19D(1) is, therefore, $5.5million.

12.

It is then necessary to turn to the circumstances of the contraventions.13.

III. The circumstances of the contraventions

Export Corporation is an Australian company which operates apparently from premises located at 9Foundry Street, Maylands which is in Western Australia. Although it is not clear who its shareholdersare it has only one director, a Mr Danny Allen Pavlovich.

14.

Export Corporation is one of eight-10 major wholesalers in the market of importing and distributingsports supplements in Australia. At the times relevant to this case it conducted its wholesale importand distribution business principally under the registered business name ‘Nutrition Systems’; for ashort period at the outset of the events involved in this case it also conducted its business under thename ‘BPG Imports’.

15.

In the conduct of its distribution business Export Corporation sells by way of wholesale to around 450retail accounts. The business is not small. During the period January 2007 to May 2008 ExportCorporation imported approximately US $10.9 million worth of goods into Australia which amounts toabout US $7.7 million per annum. It is relevant to note that all of the goods sold by ExportCorporation in Australia are imported by it; it is not involved in the distribution of locallymanufactured goods. Reflecting the significant size of these importing activities is ExportCorporation’s annual turnover in the years in question which was $14.2 million (in the year ending 30June 2007) and $19.5 million (in the year ending 30 June 2008).

16.

There is no question that all of the goods imported and then supplied by Export Corporation withwhich this case is concerned are ‘therapeutic goods’ within the meaning of s 3 of the Act. The labellingof each of the containers was in evidence and showed that the goods were presented in a way whichrepresented that they might, to use the language of s 3, be used ‘in connection with... influencing,inhibiting or modifying a physiological process in persons’. For example, the packaging for one of theproducts (Hypertest) looks like this:

17.

None of the goods the subject of these proceedings were included in the Register and it is this whichhas excited the Secretary’s desire to have imposed upon Export Corporation civil penalties. Apart fromthe products the subject of the present proceedings, however, it is also clear that Export Corporationhas an extensive history of dealing in products which are included in the Register and about whichthere is no evidence of any complaint by the Secretary. The matter is to be approached on the basisthat Export Corporation has, at least so far as this Court is concerned, a blemishless past.

18.

It is useful then to say something of the importation contraventions. There is no dispute that between19 January 2007 and 9 May 2008 Export Corporation imported a number of therapeutic goods whichwere not included in the Register. There were 80 separate acts of importation which occurred in thecourse of 19 separate shipments. In all 35 separate therapeutic goods were involved. Attached inSchedule 1 to these reasons is a full list of each of the goods in question, the dates of the importation,the number of importations and the total quantity imported. That schedule contains, by way ofexample, the following entry:

19.

A question immediately arises as to how Export Corporation, which undoubtedly conducts legitimatebusinesses, came to be engaging in such acts of unlawful importation. As it happens, its internationalsuppliers are based either in the United States or Canada. At the times giving rise to these proceedingsExport Corporation had in place an arrangement whereby its international suppliers would ship itssports supplements to it through businesses controlled by it in New Zealand who would then forwardthem to Export Corporation in Australia. Although the evidence did not entirely resolve this issue itseems likely that one of these businesses was conducted by Nutrition Systems NZ Pty Ltd which is acompany incorporated in New Zealand and of which Export Corporation is the sole shareholder. Atthe level of detail, Export Corporation used the services of freight forwarders who would arrange the

20.

Name of Good Period ofImportation

Instances ofImportation

Total QtyImported

Cellucor Muscle Growth R3 ExtremePro-Immune Technology (120capsules)

2/11/2007 to1/02/2008

2 240

importation of the goods including the preparation and provision of customs declarations on its behalf.The evidence does not directly disclose whether Export Corporation was aware that the 35 products itimported were not on the Register. The parties however did agree as a fact that the importation (andalso subsequent supply – see below):

21.

...was undertaken by Export Corporation based on a misunderstanding ofregulatory advice from consultants engaged by Export Corporation. As a result ofits misunderstanding of this regulatory advice, Export Corporation wrongly believedthat goods imported into Australia from New Zealand that complied with the NewZealand Dietary Supplement Regulation were exempted from the TherapeuticGoods Act by virtue of the Trans Tasman Mutual Recognition Act 1997.

(Emphasis added.)

This agreed fact does not perhaps shed as much light on the matter as might be hoped. It would not beirrelevant to the question of determining the magnitude of the civil penalty to know a little more aboutthe nature and origin of Export Corporation’s misunderstanding. That misunderstanding is an importantelement in the calculus of culpability but the agreed fact does not tell one whether themisunderstanding was a foolish one not likely to be made by a person responsibly attending to theadvice which had been proffered or, alternatively, an entirely understandable misunderstanding arisingform the abstruse nature of the advice proffered. On the former view, a species of blameworthinessmay be located in Export Corporation; on the latter it resides in part with its consultants.

22.

The Secretary did not seek to submit either of these views and was content to rely upon the agreed facton its own terms. I am not in a position to draw any inferences about the matter either way and it isappropriate in that situation to resolve this matter by reference to the question of who bears the onusof proving wrongdoing. In a slightly different context, albeit still in a domain of discourse concernedwith civil penalties, the High Court has observed that certain privileges serve ‘the purpose of ensuringthat those who allege criminality or other illegal conduct should prove it’: Rich v Australian Securitiesand Investments Commission [2004] HCA 42; (2004) 220 CLR 129 at 142 [24] per Gleeson CJ,Gummow, Hayne, Callinan and Heydon JJ. That reflects an underlying theme that ultimately it is for aprosecuting authority to prove wrongdoing: cf. the remarks of Viscount Sankey LC in Woolmington vDirector of Public Prosecutions [1935] UKHL 1; [1935] AC 462 at 481; in this context, the conceptof prosecution extends to those seeking the imposition of civil penalties. In that circumstance, Ipropose to proceed on the basis that Export Corporation’s misunderstanding was a reasonable one.

23.

Thus far it has been sufficient to refer to the 35 products which were imported compendiously on thebasis that they all shared the common attribute of not being in the Register. However, it is part of theSecretary’s case that some of these importations are to be viewed more seriously due to the identity ofsome of their ingredients.

24.

To understand the submission it is necessary to say something of the ‘Poisons Standard’. The originalPoisons Standard was prepared by the National Drugs and Poisons Schedule Committee but is nowcontrolled by the Secretary: s 52D(2). Under the Poisons Standard, substances are classified intoschedules according to what level of regulatory control over the availability of the medicine orchemical is considered necessary to protect public health or safety. The parties agreed that generallyspeaking a medicine which contains an ingredient which is included on one of the schedules to thePoisons Standard will not be eligible for listing and must instead be registered for inclusion on theRegister.

25.

The ingredients in question in this case fall into one of three categories:26.

(a) substances appearing in Schedule 2 of the Poisons Standard. Substances of this kind are substances the

safe use of which may require advice from a pharmacist and which should be available from a pharmacy, orwhere a pharmacy is not available, from a licensed person;

(b) substances appearing in Schedule 4 of the Poisons Standard. These are prescription-only medicines thesupply or use of which should be by or on the order of persons permitted by State or Territory legislation toprescribe medicines and should only be available from a pharmacist on prescription; and

(c) ‘undeclared active ingredients’. These are substances with active ingredients which neither appear on thepackaging of the products nor in any of the schedules to the Poisons Standard.

As to the first category, the parties agreed that two of the 35 products imported contained ingredientsin Schedule 2. These were:

27.

(i) Nutrition Works Maximum Female (90 tablets). The Schedule 2 ingredient was folic acid and thepackaging indicated its presence.

(ii) Twinlab Women’s Ultra Daily (120 capsules). The Schedule 2 ingredient was folic acid and the packagingindicated its presence.

Additionally, it should be noted that the packaging of Cellucor Weight Loss L2 Extreme Pro-RenalTechnology (60 capsules) indicated that it contained the Schedule 2 substance folic acid. However, no folicacid was detected in the product and the parties treated it as not containing a Schedule 2 substance.

As to the second category, the parties agreed that nine of the products contained Schedule 4substances. These were:

28.

(i) BSN Thermonex Fat Loss & Energy Amplifier (120 capsules). This product contained the Schedule 4substance oxedrine, also known as synephrine. The presence of synephrine was disclosed on the packaging.

(ii) Cellucor Weight Loss L2 Extreme Pro-Renal Technology (60 capsules). This product contained theSchedule 4 substance arbutin, not expressly disclosed on the packaging. A separate bottle of this product wasalso imported as part of the Cellucor Weight Loss System which was a carton containing three productsincluding this arbutin.

(iii) Cellucor Weight Loss T7 Extreme Pro-Thyroid Technology (90 capsules). The packaging for thisproduct indicated the presence of selenomethionine. That substance corresponds to selenium which, at thelevels present, was a Schedule 4 substance. This product was also imported as part of the Cellucor WeightLoss System and the Cellucor Weight Loss System Stimulant Free.

(iv) CMI FireCaps (120 fire injected capsules). These contained the Schedule 4 substance oxedrine,disclosed on the packaging as synephrine.

(v) CMI NO3 Overload MM5T (120 super tabs). These contained the Schedule 4 substance vincamine, thepresence of which was disclosed on the packaging.

(vi) Muscletech Competition-Use Thermo Shred Muscle Defining Thermogenic (150 capsules). Thesecontained the Schedule 4 substance xanthinol nicotinate. This substance was included in the product ascaffeine, the presence of which was disclosed on the packaging.

(vii) Nutrex Lipo 6 (120 liqui-caps). These contained the Schedule 4 substances yohimbe (not expresslydisclosed on the packaging) and oxedrine (disclosed as synephrine).

(viii) STS Fit Woman Multi (100 capsules). These contained the Schedule 4 substance selenium, disclosed onthe packaging as selenomethionine.

(ix) Twinlab Immunity Booster (90 capsules). These also contained selenium, disclosed on the packaging.

As to the third category, there were three products which contained an active ingredient which wasnot to be found in the Poison Standard and whose presence was not indicated on the packaging. Thefirst two were Cellucor Eros Desire Female Enhancement Formula (20 capsules) and Cellucor ErosFire Male Enhancement Formula (20 capsules). Both of these contained xanthocanthrafil which is anunregistered and untested erectile dysfunction treatment. The Therapeutic Goods Authority (‘theTGA’) suspects that xanthocanthrafil may have the potential to cause harm to consumers.

29.

The third product was Cellucor Weight Loss T7 Extreme Pro-Thyroid Technology (90 capsules). Itcontained the unregistered substance 3,5-diiodo-4hydroxyphenylacetic acid whose harmful potential isunknown (it also contained the Schedule 4 substance selenium).

30.

The Secretary developed a submission that the contraventions involving these three categories weremore serious and, in particular, that the third category of undisclosed ingredients not contained in thePoisons Standard was the most serious. In that last regard, however, the parties agreed that ExportCorporation was at all times wholly unaware of the presence of these undeclared active ingredients. Ithad received written assurance from the manufacturers involved that the products had been thesubject of extensive testing and that they contained an identified list of ingredients which list, as ithappens, did not disclose the presence either of xanthocanthrafil or 3,5-diiodo-4hydroxyphenylaceticacid.

31.

In relation to the supply contraventions the situation is as follows: In Schedule 2 is a table setting outthe 36 products supplied. The schedule is divided into three parts: the first consists of goods suppliedbefore June 2008 and for which the Secretary can provide full particulars; the second of goodssupplied before June 2008 for which the level of particularisation is lower; the third, nine productssupplied after June 2008. As in the case of the importation contraventions, Export Corporation’s saleof these products arose from its misunderstanding of the regulatory advice it received. As with theimported products, various of the supplied products contained Schedule 2, Schedule 4 or undeclaredactive ingredients. There appear to have been eleven such products each of which, was inter-alia,considered above in the context of importation. Those were:

32.

(i) Nutrition Works Maximum Female (90 tablets). This contained folic acid (Schedule 2) which wasdisclosed on the packaging;

(ii) Twinlab Women’s Ultra Daily (120 capsules). This also contained folic acid (Schedule 2) which wasdisclosed on the packaging;

(iii) Cellucor Eros Desire Female Enhancement Formula (20 capsules). This contained, without disclosureon the packaging, the unregistered substance xanthocanthrafil;

(iv) Cellucor Eros Desire Male Enhancement Formula (20 capsules). This also contained xanthocanthrafilnot disclosed on the packaging;

(v) BSN Thermonex Fat Loss & Energy Amplifier (120 capsules). This contained oxedrine (Schedule 4)disclosed on the packaging;

(vi) Cellucor Weight Loss L2 Extreme Pro-Renal Technology (60 capsules). This contained arbutin(Schedule 4). The presence of arbutin was not noted on the package;

(vii) CMI FireCaps (120 fire injected capsules). This contained oxedrine (Schedule 4) disclosed on thepackaging.

(viii) CMI NO3 Overload MM5T (120 super tabs). This contained vincamine (Schedule 4) disclosed on thepackaging.

(ix) Muscletech Competition-Use Thermo Shred Muscle Defining Thermogenic (150 capsules). This

contained xanthinol nicotinate (Schedule 4) in caffeine disclosed on the packaging.

(x) STS Fit Woman Multi (100 capsules). This contained selenium (Schedule 4) disclosed on the packaging.

(xi) Cellucor Weight Loss T7 Extreme Pro-Thyroid Technology (90 capsules). This contained selenium(Schedule 4) which was disclosed on the packaging. It also contained the undeclared active ingredient3,5-diiodo-4-hydroxyphenylacetic acid, not disclosed on the packaging.

Items (vi) and (xi) were also included as parts of combinations of multiple products sold as ‘systems’.33.Again, and for the same reasons, the Secretary accepted that Export Corporation was wholly unawareof the presence of the undeclared active ingredients.

34.

So much for the circumstances of the contraventions. It is now necessary to consider their nature.35.

IV. The nature of the contraventions

Plainly enough Export Corporation has committed a very large number of contraventions, possibly –as the Secretary noted in her written submissions – numbering into the thousands. That fact combinedwith the terms of s 19D(1) gives rise to the potential for injustice in the imposition of a penalty. Thedifficulty is that each act of importing or supplying products will constitute a separate contravention.The prescribed civil penalty for a corporation – 50,000 penalty units – currently equates, as I havenoted above, to $5.5 million. If Export Corporation’s conduct is treated as a single contravention then$5.5 million will mark the upper limit of any penalty; on the other hand, if what is disclosed arehundreds or thousands of incidents of contravening conduct then the maximum penalty will runpotentially into hundreds of millions of dollars.

36.

Observations of that kind have provided the impetus for ascertaining, as best as can be done, thedegree of wrongdoing involved as an inquiry separate from and distinct to the simple and oftenarbitrary process of merely summing the actual number of contraventions. Particularly in regulatorycontexts involving laws directed towards various species of consumer protection, this factor in thepenalty fixing process is likely to be by far the most important from a numerical perspective. This is aresult of the large number of contraventions to which systemic failures can give rise and thecorrespondingly multiplicative effect that this can have on any penalty.

37.

This Court has therefore accepted in the context of civil penalties that whether multiple instancesshould be seen as a single course of conduct or in some other way is essentially a factual inquiry forthe judge imposing the penalty. But it is an inquiry whose lodestone points to the need to avoid doublepunishment for the same wrongdoing. Middleton and Gordon JJ explained the ‘course of conduct’principle this way in Construction, Forestry, Mining and Energy Union v Cahill [2010] FCAFC 39;(2010) 194 IR 461 at 473 [39]:

38.

... It is a concept which arises in the criminal context generally and one which maybe relevant to the proper exercise of the sentencing discretion. The principlerecognises that where there is an interrelationship between the legal and factualelements of two or more offences for which an offender has been charged, caremust be taken to ensure that the offender is not punished twice for what isessentially the same criminality. That requires careful identification of what is “thesame criminality” and that is necessarily a factually specific enquiry. Bare identityof motive for commission of separate offences will seldom suffice to establish thesame criminality in separate and distinct offending acts or omissions.

As is often the case with principles stated at a high level of generality the parties were in basicagreement as to the principle but not as to its application. The Secretary was inclined to view theongoing activity of importing each product as a single course of conduct. Since 35 distinct products

39.

were imported it followed there were 35 courses of conduct. Treating multiple importations of thesame product as being part of a course of conduct relating to that product did have the consequence atan arithmetical level that there were as many courses of conduct as there were products. The Secretarytook the same position in relation to the supply contraventions where the fact that 36 distinct productswere involved was said to give rise to 36 courses of conduct. This resulted in 71 contraventions in totalwith a theoretical maximum penalty, therefore, of $390.5 million.On the other hand, Export Corporation submitted that there were in substance only twocontraventions: one for import and one for supply. This was said to be so for a number of reasons thechief, but not sole, of which was the fact that all of the contraventions arose from its misunderstandingof its consultants’ advice as to the operation of the Trans-Tasman Mutual Recognition Act 1997 (Cth).The concession that there were two courses of conduct flowed, one assumes, from the fact that thefactual matters making up the import and supply contraventions are inevitably distinct (I leave for nowExport Corporation’s further submission that because the business was an import/supply business arisk of overlap was present here too).

40.

There is no doubt that each contravention has its origins in the misunderstanding that ExportCorporation laboured under. In that sense it is not meaningless to say not only that its motives for eachcontravention were the same but also that those motives were largely innocent ones. But the passagefrom Cahill which I have quoted above shows that bare identity of motive for the commission ofseparate contraventions will ‘seldom’ suffice to establish the same wrongdoing in those separate acts.

41.

On the other hand, it seems to me that the Secretary’s position that there is a separate contraventionfor each product imported and supplied (that is, 71 separate contraventions) is extravagant and wellbeyond anything which might be viewed as the objective seriousness of the matter. The assuredcorrectness of that observation is underscored by a contemplation of the $390.5 million maximum totalcivil penalty which to my mind could not conceivably serve as the maximum penalty in the worst ofthe present kind of case. In saying that I accept, of course, the sentiment underpinning the Minister’sremarks about the civil penalties on the second reading of the Therapeutic Goods Amendment Bill(2005) (Cth) that ‘[h]igher penalty levels attach to civil penalties because they are designed to provideadequate incentives, especially in relation to well-resourced corporate entities, for deterring breachesof regulatory requirements under the act’. But even so I do not think the Parliament had incontemplation the imposition of a maximum civil penalty whose magnitude would not be out of placein an appropriations bill.

42.

In this case it seems to me appropriate to accept that each of the import and supply contraventions wassusceptible to further factual distinguishment as follows:

43.

(a) Goods not containing Schedule 2 or Schedule 4 poisons or undeclared substances;

(b) Goods containing Schedule 2 substances;

(c) Goods containing undeclared substances;

(d) Goods containing Schedule 4 substances; and

(e) Goods containing both Schedule 4 substances and undeclared substances.

I take this approach because the risks posed to the public by each of these categories was different andthose differences thereby provide a meaningful criterion for distinction. There is, I think, a realdifference between importing a medicinally harmless muscle growth factor, on the one hand, and, onthe other, importing a weight loss system containing drugs usually available only under prescriptiontogether with drugs which are neither lawfully available in this country nor whose presence isdisclosed on the packaging.

44.

It will follow that, in principle, I accept that there were 10 distinct courses of conduct. In theory, themaximum penalty therefore is $55 million. I am prepared to accept that in a worst case – perhapsdeliberate importation of poisonous non-registered substances by a large scale corporation resulting in

45.

widespread consumer deaths – such a penalty could be appropriate. For reasons I am about to give Ido not think that a penalty of anything like that order is called for.To begin with I accept that there is a very high degree of overlap between the import and supplycontraventions. These are, of course, distinct but by virtue of the fact that Export Corporation did notsupply anything which it had not imported there is a real risk that by punishing both sets ofcontraventions equally double punishment will occur. It is true that the overlap is not complete. Two ofthe products supplied before June 2008 are not the subject of import contraventions, nor are four ofthose supplied after June 2008. Nevertheless this does imply that a significant majority of the supplycontraventions relate to importation contraventions too. In Secretary, Department of Health andAgeing v Prime Nature Prize Pty Ltd (in liquidation) [2010] FCA 597 Stone J accepted a submissionthat contraventions constituted by the supply of counterfeit goods were identical to contraventionsconstituted by the supply of an unlisted good and thereby treated them as one (at [62]). I would not gothat far here – supply and import in this business were closely related but they were not the same andthere does not appear to be a complete overlap in terms of products. Nevertheless, the overlap is anelement which must be taken into account. For completeness I regard the degree of overlap betweenthe importation and supply matters as being at the upper end of the range.

46.

I turn then to the factors which are required by law to be taken into account in assessing the penaltywhich is to be imposed.

47.

V. Matters which are to be considered in assessing the penalty

Section 42Y(3) requires that the Court must have regard ‘to all relevant matters, including’:48.

(a) the nature and extent of the contravention; and(b) the nature and extent of any loss or damage suffered as a result of thecontravention; and(c) the circumstances in which the contravention took place; and(d) whether the person has previously been found by the Court in proceedingsunder this Act to have engaged in any similar conduct.

In addition to those four statutory matters it seems to me that the following are also relevant to theformulation of a penalty under s 42Y:

49.

(e) the size of the contravening company;

(f) the deliberateness of the contravention and the period over which it extended;

(g) whether the contravention arose out of the conduct of senior management of the contravenor or at somelower level;

(h) whether the contravenor has a corporate culture conducive to compliance with the Act as evidenced byeducational programmes and disciplinary or other corrective measures in response to acknowledgedcontravention;

(i) whether the contravenor has shown a disposition to cooperate with the authorities responsible for theenforcement of the Act in relation to a contravention;

(j) whether the contravenor has engaged in similar conduct in the past;

(k) the financial position of the contravenor, including any benefits derived;

(l) whether the contravening conduct was systematic, deliberate or covert;

(m) the maximum penalty; and

(n) whether any forfeiture order has been made.

These factors are largely drawn from decisions concerned with s 76 of the formerly entitled TradePractices Act 1974 (Cth): Trade Practices Commission v CSR Ltd [1991] ATPR 41-076 at52,152-52,153 per French J; NW Frozen Foods Pty Ltd v Australian Competition and ConsumerCommission [1996] FCA 1134; (1996) 71 FCR 285 at 292-294 per Burchett and Kiefel JJ, Carr Jagreeing; J McPhee & Son (Aust) Pty Ltd v Australian Competition and Consumer Commission[2000] FCA 365; (2000) 172 ALR 532 at 574 [150] ff per Black CJ, Lee and Goldberg JJ. There isnothing in the scheme of that Act when compared to the scheme of the present Act which wouldrequire a different attitude to be taken to these matters. I have, however, excluded from the list abovethe matters of the degree of market power and the effects on a functioning market which are referredto in those decisions but which appear to have little relevance in the current field of discourse. So faras (m) is concerned: see Markarian v the Queen [2005] HCA 25; (2005) 228 CLR 357 at 372 [31] perGleeson CJ, Gummow, Hayne and Callinan JJ. So far as the benefit referred to in (k) is concerned, itmight be noted that its relevance arises because of the need to ensure that the payment of civilpenalties does not come to be seen merely as a cost of doing business: Australian Competition andConsumer Commission v ABB Transmission and Distribution Ltd [2001] FCA 383; [2001] ATPR41-815 at 42,938 [13] per Finkelstein J; Australian Competition and Consumer Commission vMcMahon Services Pty Ltd [2004] FCA 1425; [2004] ATPR 42-031 at 49,228 [15] per Selway J;Australian Competition and Consumer Commission v Leahy Petroleum Pty Ltd (No 3) [2005] FCA265; (2005) 215 ALR 301 at 309 [39] per Goldberg J. In that context it is important to keep in mindthat a civil penalty is not an allowable deduction against assessable income: s 26.5 of the Income TaxAssessment Act 1997 (Cth). It might be noted that (j) is somewhat broader than (d).

50.

Turning to the matters to be considered: as to (a), the contraventions and their extent appear inSchedules 1 and 2 of these reasons. I return below to the question of how they should be characterised.As to (b), no loss was suffered by anyone in consequence of the contraventions.

51.

As to (c) (the circumstances in which the contraventions took place), I have already indicated the factthat all of the contraventions occurred as a result of a misunderstanding which, given the state of theevidence, I have assumed to have been a reasonable one. Further, insofar as the goods containedundeclared substances Export Corporation had been told that this was not the case by its suppliers.That will raise in the minds of some the question of whether it is an adequate compliance arrangementto rely upon the word of suppliers as to the content of goods which are being imported. There is nodirect evidence as to whether that is so. There is no way directly to discern, therefore, in relation to thequestion of undeclared ingredients whether what took place was an inadequate compliancearrangement suffering an entirely predictable failure or whether, instead, what was involved was anadequate compliance arrangement which suffered an unforeseeable bout of bad luck. The evidencedoes, however, disclose that Export Corporation has subsequently acknowledged that it did not takesufficient steps to ensure compliance with the Act. I infer from that, therefore, that its earlierprocedure of relying upon the suppliers’ explanations of the contents of the various products was notadequate.

52.

As to (d), the parties accepted that Export Corporation has not been found to have contravened thisAct before.

53.

As to (e) (the size of the contravening company): Export Corporation’s gross turnover in the two yearsending 30 June 2007 and 2008 was $14.2 million and $19.5 million respectively. The parties agreed itwas one of the eight-10 major wholesalers in Australia. The evidence does not disclose the number ofstaff it employs, the number of its shareholders or its profitability. Proceeding by inference from theturnover figures I conclude that Export Corporation is a medium size business; in all likelihood at thelarger end of that spectrum.

54.

As to (f) (the deliberateness of the conduct), as I have said already the conduct was not deliberate.55.

As to (g) (the management level at which the conduct arose): the evidence only disclosed that theconduct occurred as a result of the misunderstanding to which reference has already been made. Theidentity of the person who formed that misunderstanding was not disclosed (nor, indeed, the nature ofthe misunderstanding). The evidence does disclose that the misunderstanding arose from a failure tograsp the true impact of advice obtained from consultants. It can be inferred, in a medium size businesssuch as Export Corporation, that the function of receiving such advice would have been towards thetop of the management structure. The only other evidence which may be relevant is the fact thatExport Corporation has a single director, Mr Pavlovich. Although it is possible that Mr Pavlovich mayhave been the person with the misunderstanding I do not feel that the material is sufficient enough forme to draw that conclusion.

56.

It is, however, sufficient to permit the drawing of the inference that someone at, or just under, MrPavlovich’s level was responsible: it was an error made at a high level. This, of course, increases itsseriousness.

57.

As to (h) (the extent of a compliance culture) the following should be observed: at the time of thecontraventions such a culture does not appear to have been in place. As mentioned above, ExportCorporation admitted that it had not taken sufficient steps to ensure compliance with the Act prior toFebruary 2008. Further, prior to the present matter there were some events which took place betweenthe TGA and Export Corporation which signal a degree of nonchalance on its part at that time towardscompliance. In 2006 the TGA expressed concerns about the extent of Export Corporation’scompliance with the regulatory scheme. Export Corporation now agrees that its response to thosematters was inadequate and based upon a mistaken belief that the TGA’s concerns could be addressedby taking certain steps which it now accepts were not sufficient. These steps included the hiring of afull-time employee tasked with ensuring compliance. Based on these matters my conclusion is that, atthe relevant times, Export Corporation did not appreciate the seriousness of the requirements whichlay upon it and was inclined not to incur the expense necessary to ensure appropriate compliance.This, to my mind, is a serious matter particularly when combined with the level of seniority at whichthe difficulties arose.

58.

A further matter bears this out. In relation to the nine supply contraventions arising after June 2008 itis to be noted that these occurred even after the TGA had written to Export Corporation informing itthat the supply of the goods should desist. The further supply occurred in circumstances where ExportCorporation failed to arrange for the proper quarantining of the goods the subject of the TGA’s letter.The conduct was not deliberate but it exemplifies the deficiencies in the compliance culture.

59.

As to (i) (the degree of co-operation) one should observe the fulsome degree of cooperation which hasbeen offered and the earliness at which it was made. Export Corporation’s officers, employees andcontractors cooperated with the TGA’s investigation by:

60.

(a) providing assistance to the TGA during the execution of search warrants at its premises includingprovision of supply records which, the parties agree, may not otherwise have been readily obtainable by theTGA. Those records have formed the basis upon which the supply contraventions were brought andparticularised;

(b) with the TGA’s knowledge and at no charge, storing the goods seized by the TGA for a period of aboutfour months;

(c) making full and frank admissions about a range of matters;

(d) filing a defence admitting the Amended Statement of Claim in its entirety together with agreeing upon anagreed statement as to facts. There are two aspects of this which deserve particular emphasis. First, it did soat the first available opportunity when the Secretary desisted from pursuing a number of other allegations.Secondly, it did these things without having reached agreement with the Secretary as to penalty. It did notseek to parley its ability to put the Secretary to proof for advantage. By agreeing the facts in that way it hasexposed itself to the full consequences of its admissions. This demonstrates a willingness to confront theconsequences of its actions and to accept responsibility for them. The same action has averted the

expenditure of money and time which would have been required to pursue the matter at a trial. So viewedthere has been a significant social saving. Furthermore, in response to the present proceeding ExportCorporation has put in place an adequate compliance system. From October 2008 it has undertaken areorganisation and upgrading of its compliance department. It now has 1.8 full time employees dedicated toits regulatory and compliance requirements. New work procedures were introduced to address all compliancemeasures during the process of developing new products including, importantly, reviews of ingredients, labelsand promotions. The present head of compliance is a person with 18 years experience in the Australianpharmaceutical, foods and consumer goods industries and with 12 years experience in the pharmaceuticaland medical device industries. Following this rearrangement, Export Corporation now spends about$280,000 per annum on its compliance staffing costs. It would be fair to say that Export Corporation nowhas in place appropriate arrangements.

As to (j), there is nothing to suggest the Export Corporation has done anything similar in the past.61.As to (k) (the financial position of the contravenor), the agreed facts showed that in the period January2007 to May 2008 the goods the subject of the proceedings constituted 15% of Export Corporation’stotal imports and 14% of its total supplies. These figures do not include the nine supply contraventionsarising after June 2008 about which there is no evidence. This resulted in net earnings of $694,539.00.I infer from those figures that Export Corporation’s net total earning for the same 17 month periodwere about $5 million.

62.

As to (l) (whether the conduct was systematic, deliberate or covert), I have already recorded my viewthat it was not deliberate. And, whilst it may be described as an error of systems control, I do not thinkit deserves to be characterised as systematic.

63.

As to (m), in the view that I have taken of the matter there are in existence 10 contraventions – fivefor supply and five for importation. That being so, the theoretical maximum penalty is, as I havealready noted, $55 million.

64.

As to (n) (whether any forfeiture order has been made) no such order will be made. However, it isrelevant to note that Export Corporation has surrendered all of the goods in question to the Secretary,making such an order unnecessary. There is no evidence as to the value of the goods but since theymay not be sold or exported they are likely to be of little value.

65.

VI. The appropriate penalties

The purpose of the penalty of the present kind is punishment and, by punishment, deterrence.Deterrence of the wrongdoer, no doubt, but also deterrence of others who might be tempted to makethe same mistake. There is then about proceedings of the present kind an element of public spectaclewhose theatre is directed not at the contravenor but rather at others involved in the importation oftherapeutic goods. In this case these twin aims have sharply differing outcomes. I do not believe thatExport Corporation is in need of deterrence: its lesson has been learnt and it is contrite. But whateverpunishment is imposed upon Export Corporation will serve as a message to the industry. One of themany questions which therefore arise is what the nature of that message should be.

66.

In the process of assessing the appropriate penalties I can see no reason not to apply the approach tosentencing laid down by the High Court in Markarian which I would summarise as follows:

the Court’s assessment of the appropriate penalty is a discretionary judgment based on allrelevant factors (Markarian at 371 [27]);

1.

careful attention to the maximum penalties will almost always be required, first, because theParliament has legislated for them; secondly, because they invite comparison between the worstpossible case and the case before the Court at the time; thirdly, because in that regard they doprovide, balanced with all of the other relevant factors, a yard stick (at 372 [31]);

2.

it will rarely be appropriate for a Court to start with the maximum penalty and proceed bymaking a proportional deduction from that maximum (at 372 [31]);

3.

the Court should not adopt a mathematical approach of increments or decrements from apredetermined range or assign specific numeric or proportionate value to the various relevantfactors (at 373-374 [37]);

4.

67.

it is not appropriate to determine an objective sentence and then adjust it by some mathematicalvalue given to one or more factors such as the plea of guilty or assistance to authorities (at373-374 [37]);

5.

the Courts ‘may not add and subtract item by item from some apparently subliminally derivedfigure’ to determine the penalty to be imposed (at 375 [39]);

6.

since the law plainly favours transparency, accessible reasoning is necessarily in the interests ofall. While there may be occasions where some indulgence in arithmetical process will betterserve that end, it is unlikely to apply where there are numerous and complex considerations thatmust be weighed (at 375 [39]).

7.

I turn then to the appropriate penalties.68.I have set out the categories of contraventions, as I view them, at [43] above. The first category ofcontraventions consists of the import of some 20 therapeutic goods into Australia in various quantities.These goods did not contain any undeclared substances or Schedule 2 or Schedule 4 poisons. Thequantities varied from as little as five bottles of Twinlab Vital Memory to 5,500 bottles of CellucorWeight Loss D4 Extreme Pro-Adrenal Technology SAMPLES. In all 20,003 products were imported.The imports were, on any view, substantial and took place over an extended period of time. In myopinion, an appropriate penalty for this course of conduct is $1.25 million.

69.

The second category consisted of goods which were imported and which contained Schedule 2poisons. There were only two such products – Nutrition Works Maximum Female and TwinlabWomen’s Ultra Daily. The total quantity imported was 140 products. It seems to me that anappropriate penalty would be $50,000.

70.

The third category consisted of goods which contained undeclared substances but no Schedule 2 or 4poisons. There were two such products –Cellucor Eros Desire Female Enhancement Formula andCellucor Eros Fire Male Enhancement Formula. In all 420 bottles were imported. An appropriatepenalty for this is, in my opinion, $190,000.

71.

The fourth category was those goods which contained Schedule 4 poisons. A significant number ofsuch products were imported, some 30,779. The smallest importation was of five packages of TwinlabImmunity Booster and the largest, 26,064 bottles of Nutrex Lipo 6. An appropriate penalty would be$2.205 million.

72.

The final import category was those goods containing both Schedule 4 and undeclared substances.There was one such product, packaged and sold in three different ways (one individual, the other twoas part of ‘weight loss systems’) and in all 1500 packages were imported. It seems to me appropriate toimpose a penalty of $600,000.

73.

This will result in total penalties for importation of $4.295 million.74.I turn then to the supply contraventions. I begin by observing that most, but by no means all, of thesupply contraventions correspond with import contraventions. To the extent that they do correspondthe numbers involved are broadly similar but not identical; in most cases the supply quantities areslightly less. Overall, fewer products are involved.

75.

As to the first category, 23 individual products were supplied in quantities amounting to 13,019packages. All but six – Omega Slim Stimulant Free Fat Burner; Six Star Body Fuel All-Day Energy;Axis Labs Creatine Ethyl Ester; Muscletech Aplodan; Muscletech Leukic Advanced AnabolicActivator and Nutrex Niox Extra Strength Liquid Nitric Oxide Muscle Mass Stimulator – were thesubject of corresponding importation contraventions. In this first category, there were no Schedule 2 orSchedule 4 poisons and no undeclared substances. There being a substantial overlap in the nature ofthe wrongdoing as between the import and supply contraventions I have determined that a penalty of$400,000 is appropriate.

76.

The second category consists of the supply of two products in a combined quantity of 238 packages.The products contained Schedule 2 substances. I have concluded that a penalty of $6,000 isappropriate given the overlap with the import contraventions.

77.

The third category consists of two products containing undeclared substances (the ‘Cellucor Eros’products). In all 197 of these were supplied. Given the overlap with the importation of these sameproducts I have concluded that a penalty of $25,000 will be sufficient.

78.

The fourth category consists of products containing Schedule 4 substances. There were six suchproducts supplied in a total quantity of 3,599. Again there is a substantial overlap with the importcontraventions. An appropriate penalty is $60,000.

79.

The final category consists of products which contain Schedule 4 poisons and undeclared ingredients.Again, there was one such product sold in three separate packages and 536 packages imported. Eachproduct supplied was also imported. An appropriate penalty is $25,000.

80.

The supply penalties therefore total $516,000. In all the supply and import penalties total $4.811million. To this I propose to apply a reduction of 35% reflecting the very high degree of cooperationafforded by Export Corporation to the Secretary. This will result, in principle, in a penalty of$3,127,150. I pause to consider whether this penalty is consistent with the overall extent of thewrongdoing involved. Bearing in mind the high maximum penalty of $5.5 million per contraventionand the extent of the import and sale activities I believe that it does.

81.

There is, of course, an inherent tension in determining penalties. On the one hand, justice must beindividualised so that the specific circumstances of the contravenor may be examined; on the otherhand, justice must be uniform – everyone must be treated the same – for consistency is an element offairness. These contradictory notions mean that regard should be had, if possible, to comparable tariffs.Only four were suggested: the imposition by Stone J of a civil penalty under the Act of $7.25 million inPrime Nature Prize; by Flick J in Secretary, Department of Health and Ageing v Pagasa AustraliaPty Ltd [2008] FCA 1545 of penalties totalling $198,242.75; a fine for criminal offences in R v PanPharmaceuticals Pty Ltd [2008] NSWDC 221 which related to the crime of issuing false certificates inrespect of pharmaceutical products; and the imposition of a fine by the District Court in R v Comax-Pharma Pty Ltd [2008] NSWDC 200 for guilty pleas to charges of knowingly manufacturingcounterfeit goods. These last two decisions are of no relevance arising, as they do, from afundamentally different field of discourse, viz criminal procedure. I am able to derive little assistancefrom the first two civil penalty decisions either, however, as the facts of those cases were far removedfrom the present. Prime Nature Prize involved the counterfeiting and sale as a listed therapeutic goodof two products, one including substances derived from sheep placenta and the other a herbal aid tojoint mobility. Pagasa involved a container load of facial soaps, scrubs, creams and cleansers. I do notfind the circumstances of the penalties imposed by the Court in those cases to be analogous to thepresent case in a way which might be useful in comparing the penalties. In addition, it is to be notedthat in neither matter did the Court have the benefit of a contradictor to the Secretary (the former wasundefended; in the latter the penalties were agreed).

82.

In the present case I am not unaware that the penalties which have been arrived at substantiallyexceed the net earnings made by Export Corporation from the contravening activities. This is afunction of the size of the penalty prescribed. The size of the penalties contemplated by s 19D(1) andthe result in this case will underscore that non-compliance with this particular Act is likely to havedisastrous consequences for the business involved. This is what Parliament has determined.

83.

The Secretary also sought the making of two declarations in the following forms:A declaration that in the period 19 January 2007 to 9 May 2008 [Export Corporation]committed 80 contraventions of section 19D(1)(a)(i) of [the Act] by importing into Australiatherapeutic goods for use in humans as specified in Schedule A to the Further AmendedApplication, in circumstances where the therapeutic goods were not listed on the AustralianRegister of Therapeutic Goods and none of the subparagraphs in section 19D(1)(b) applied.

1.84.

...

A declaration that in the period 1 January 2007 to 2 October 2009 [Export Corporation] contravenedsection 19D(1)(a)(iv) of [the Act] by supplying in Australia therapeutic goods for use in humans asspecified in Schedule B to the Further Amended Application, in circumstances where the therapeuticgoods were not listed on the Australian Register of Therapeutic Goods and none of the subparagraphsin section 19D(1)(b) applied.

3.

Export Corporation consented to the second of these but not to the first. In regard to it, ExportCorporation submitted that the declaration did not reflect the pleading. It does, however, reflect myconclusions.

85.

In Australian Competition and Consumer Commission v MSY Technology Pty Ltd (No 2) (2011) 279ALR 609 I concluded that the Full Court’s decision in BMI v Federated Clerks Union of Australia(1983) 6 IR 416 bound me not to make declarations by consent. I also expressed the view, on thatoccasion, that this should not be the case and that BMI was wrongly decided. Since then two membersof this Court have concluded that BMI does not have that effect: Australian Competition andConsumer Commission v Willesee Healthcare Pty Ltd (No 2) [2011] FCA 752 per Dodds-Streeton J;Australian Competition and Consumer Commission v Sampson [2011] ATPR 42-374 per Tracey J.MSY (No 2) is presently the subject of a reserved decision in the Full Court. What I propose to do is toindicate that if I have the power to make the second declaration sought by consent I would be contentto make it. I will make the other orders, including the first declaration, which are necessary to disposeof the rest of the case but direct that those orders not be taken out. On the delivery by the Full Courtof its decision in respect of MSY (No 2) I will finalise the matter.

86.

VII. An Interlocutory Application

After judgment was reserved the Secretary sought leave to amend the form of her pleadings. Veryshortly these amendments were as follows:

87.

(a) the dropping of a claim for a forfeiture order; and

(b) the addition of nine further products to the particulars provided to the supply allegations.

Export Corporation consented to the amendments. At the same time, both parties joined in seeking toput on a further agreed statement of facts. It related to:

88.

(a) revised net earnings of Export Corporation;

(b) the facts relating to the nine further products; and

(c) the fact that all of the goods in question had been surrendered to the Commonwealth.

Plainly, the amendments to the pleadings should be permitted. If they were not, separate proceedingswould need to be commenced. In circumstances where the amendments are consented to this would belikely to increase delay and expense. For that reason I granted leave prior to judgment.

89.

The proposed agreed statement of facts in part contradicts an earlier agreed statement of fact.Consequently, leave is required for its reception: s 191(2) of the Evidence Act 1995 (Cth). The partiesare in agreement that the earlier statement was in error. This provides a sufficient reason for grantingleave. The Further Statement of Agreed Facts will be Exhibit 2.

90.

VII. Costs

In all the circumstances, it is appropriate that Export Corporation pays the Secretary’s costs of theproceedings. Although Export Corporation submitted that this and its own costs should be taken intoaccount in assessing the penalty I do not think that that submission should be accepted in this case.Whilst there may be cases where it is appropriate to take costs into account, generally such anapproach may provide an economic incentive to resist in civil penalty proceedings which wouldundermine the policy sought to be served by giving a discount for cooperation; put another way, itwould not be wise to create a régime which engenders an expectation that increased expenditure ondefence costs might result ultimately in a decreased penalty.

91.

The parties are to bring in short minutes of order within seven days giving effect to these reasons.92.

Associate:

Dated: 3 February 2012

Schedule 1

I certify that the preceding ninety-two(92) numbered paragraphs are a truecopy of the Reasons for Judgmentherein of the Honourable JusticePerram.

Name of Good Period ofImportation

Instances ofImportation

Total QtyImported

Axis Labs Hyper TEST Hypertrophic TestosteroneComplex (120 Capsules)

28/12/2007 1 360

Axis Labs SesaMAX Sesamin Plus 3X Fish Fats (90softgels)

28/12/2007 1 240

BSN Axis-HT Pro-Testosterone Amplifier (120tablets)

9/3/2007 to21/12/2007

6 2,910

BSN Cheaters Relief Pre-&Post-Meal CalorieControl (120 capsules)

19/01/2007 to21/12/2007

8 3,780

BSN Thermonex Fat Loss & Energy Amplifier (120capsules)

9/3/2007 to1/02/2008

7 3,630

Cellucor Eros Desire Female Enhancement Formula(20 capsules)

2/11/2007 to1/02/2008

2 240

Cellucor Eros Fire Male Enhancement Formula (20capsules)

2/11/2007 to1/02/2008

2 180

Cellucor Muscle Growth R3 Extreme Pro-ImmuneTechnology (120 capsules)

2/11/2007 to1/02/2008

2 240

Cellucor Muscle Growth System (Cellucor MuscleGrowth P6 Extreme Pro-Androgenic Technology(120 capsules), Cellucor Muscle Growth Island PunchM5 Extreme Pro-Cellular Technology (460g) andCellucor Muscle Grown R3 Extreme Pro ImmuneTechnology (120 capsules))

16/11/2007 to1/02/2008

2 480

Cellucor Weight Loss D4 Extreme Pro-AdrenalTechnology (120 capsules)

2/11/2007 to1/02/2008

2 420

Cellucor Weight Loss D4 Extreme Pro-AdrenalTechnology (120 capsules) SAMPLES

16/11/2007 to2/11/2007

3 5,500

Cellucor Weight Loss L2 Extreme Pro-RenalTechnology (60 capsules)

1/02/2008 to2/11/2007 [sic]

2 240

Cellucor Weight Loss System (Cellucor Weight LossD4 Extreme Pro-Adrenal Technology (120 capsules),Cellucor Weight Loss T7 Extreme Pro-Thyroid

2/11/2007 to1/02/2008

2 840

Schedule 2

PART 1 – DETAILED PARTICULARS OF SUPPLY

Technology (90 capsules) and Cellucor Weight LossWS1 Extreme Pro-PPAR Technology (148 capsules))Cellucor Weight Loss System Stimulant Free(Cellucor Weight Loss T7 Extreme Pro-ThyroidTechnology (90 capsules), Cellucor Weight Loss WS1Extreme Pro-PPAR Technology (148 capsules),Cellucor Weight Loss L2 Extreme Pro-RenalTechnology (60 capsules))

2/11/2007 to1/02/2008

2 420

Cellucor Weight Loss T7 Extreme Pro-ThyroidTechnology (90 capsules)

2/11/2007 to1/02/2008

2 240

Cellucor Weight Loss WS1 Extreme Pro-PPARTechnology (148 capsules)

2/11/2007 to1/02/2008

2 180

CMI Fire Caps (120 fire injected capsules) 1/02/2008 1 120CMI NO3 Overload MM5T (120 supertabs) 1/02/2008 1 120Inner Armour LipoRIP Hardcore (120 tablets) 23/02/2007 1 600Inner Armour LipoRIP Hardcore (60 tablets) 23/02/2007 1 600Inner Armour Testosterone Test-9-Metho Andogenic(90 capsules)

23/02/2007 to1/02/2008

4 1,266

Muscletech Competition-Use Thermo Shred MuscleDefining Thermogenic (150 capsules)

10/08/2007 to7/12/2007

3 480

Nutrex Lipo 6 (120 liqui-caps) 19/01/2007 to9/05/2008

5 26,064

Nutrex Vitrix Maximum Impact TestosteroneStimulator (90 fast-acting liquid-caps)

10/08/2007 to23/11/2007

2 484

Nutrex Vitrix with NTS-5 Natural Testesterone [sic]Stimulator (180 liqui-caps)

19/01/2007 to23/01/2007

3 1,738

Nutrition Works Maximum Female (90 Tablets) 2/11/2007 1 120STS BCAA 250 XP (120 Vegetarian capsules) 28/12/2007 1 120STS Fit Woman Multi (100 capsules) 28/12/2007 1 120STS GCHA (90 capsules) 28/12/2007 1 240STS Methylcobalamin B-12 5000 (90 lozenges/mixedberry)

28/12/2007 1 120

STS Vitamin E 400 (90 perlecaps) 28/12/2007 1 120Twinlab Immunity Booster (90 capsules) 23/02/2007 1 5Twinlab Vital Memory (45 tablets) 23/02/2007 1 5Twinlab Women’s Ultra Daily (120 capsules) 23/02/2007 1 20VPX AEX NO (180 capsules) 28/12/2007 to

9/05/20082 360

VPX BCAAEX (180 caplets) 9/05/2008 1 120VPX Glucosa Cream (NET WT 8oz (227g)) 9/05/2008 1 120

PART 2 – GENERAL PARTICULARS OF SUPPLY

Name of Good Supplyperiod

Instances ofSupply

Net numberof goodssupplied

Cellucor Eros Desire Female Enhancement Formula(20 capsules)

711/07 to1/02/08

26 65

Cellucor Eros Fire Male Enhancement Formula (20capsules)

7/11/07 to31/01/08

37 110

Cellucor Muscle Growth R3 Extreme Pro-ImmuneTechnology (120 capsules)

7/11/07 to8/02/08

27 56

Cellucor Muscle Growth System (Cellucor MuscleGrowth P6 Extreme Pro-Androgenic Technology(120 capsules), Cellucor Muscle Growth Island PunchM5 Extreme Pro-Cellular Technology (460g) andCellucor Muscle Grown R3 Extreme Pro ImmuneTechnology (120 capsules))

22/11/07 to9/04/08

61 151

Cellucor Weight Loss D4 Extreme Pro-AdrenalTechnology (120 capsules)

7/11/07 to8/02/08

69 192

Cellucor Weight Loss L2 Extreme Pro-RenalTechnology (60 capsules)

7/11/07 to5/2/08

39 94

Cellucor Weight Loss System (Cellucor Weight LossD4 Extreme Pro-Adrenal Technology (120 capsules),Cellucor Weight Loss T7 Extreme Pro-ThyroidTechnology (90 capsules) and Cellucor Weight LossWS1 Extreme Pro-PPAR Technology (148 capsules))

7/11/07 to9/04/08

106 342

Cellucor Weight Loss System Stimulant Free(Cellucor Weight Loss T7 Extreme Pro-ThyroidTechnology (90 capsules), Cellucor Weight Loss WS1Extreme Pro-PPAR Technology (148 capsules),Cellucor Weight Loss L2 Extreme Pro-RenalTechnology (60 capsules))

7/11/07 to9/04/08

48 91

Cellucor Weight Loss T7 Extreme Pro-ThyroidTechnology (90 capsules)

7/11/07 to21/01/08

39 77

Cellucor Weight Loss WS1 Extreme Pro-PPARTechnology (148 capsules)

7/11/07 to5/02/08

34 52

Name of Good Supply period Total quantityof further

supplyBSN Axis-HT Pro-Testosterone Amplifier (120tablets)

1/01/2007 to12/02/2008

2,219

BSN Cheaters Relief Pre- & Post-Meal CalorieControl (120 capsules)

1/01/2007 to12/02/2008

3,151

BSN Thermonex Fat Loss & Energy Amplifier (120capsules)

1/01/2007 to12/02/2008

2,910

CMI Fire Caps (120 fire injected capsules) 1/01/2007 to12/02/2008

36

PART 3 – PARTICULARS OF SUPPLIES AFTER JUNE 2008

CMI NO3 Overload MM5T (120 super tabs) 1/01/2007 to12/02/2008

30

Inner Armour LipoRIP Hardcore (120 tablets) 1/01/2007 to12/02/2008

392

Inner Armour Testosterone Test-9-Meth Androgenic(90 capsules)

1/01/2007 to12/02/2008

1,175

Muscletech Competition-Use Thermo Shred MuscleDefining Thermogenic (150 capsules)

1/01/2007 to12/02/2008

480

Nutrex Vitrix Maximum Impact TestosteroneStimulator (90 fast-acting liqui-caps)

1/01/2007 to12/02/2008

282

Nutrex Vitrix with NTS-5 Natural Testesterone [sic]Stimulator (180 liqui-caps)

1/01/2007 to12/02/2008

1,075

Nutrition Works Maximum Female (90 tablets) 1/01/2007 to12/02/2008

76

Omega Slim Stimulant Free Fat Burner (120 soft gels) 1/01/2007 to12/02/2008

534

Six Star Body Fuel All-Day Energy (60 caplets) 1/01/2007 to12/02/2008

58

STS Fit Woman Multi (100 capsules) 1/01/2007 to12/02/2008

29

STS Vitamin E 400 (90 perlecaps) 1/01/2007 to12/02/2008

24

Twinlab Vital Memory (45 tablets) 1/01/2007 to12/02/2008

34

Twinlab Women's Ultra Daily (120 capsules) 1/01/2007 to12/02/2008

162

Name of Good Supplyperiod

Instances ofSupply

Net numberof goodssupplied

Axis Labs Creatine Ethyl Ester (120 capsules and240 capsules)

2/07/08 to14/11/08

20 224

Axis Labs SesaMAX Sesamin Plus 3X Fish Fats (90softgels)

29/07/08 to6/08/09

19 178

Inner Armour LipoRIP Hardcore (60 tablets) 2/07/08 to12/08/08

17 210

Muscletech Aplodan (111 caplets) 1/07/08 to6/08/09

121 835

Muscletech Leukic Advanced Anabolic Activator(180 caplets)

1/07/08 to28/08/08

153 1,251

Nutrex Niox Extra Strength Liquid Nitric OxideMuscle Mass Stimulator (180 liqui caps)

2/07/08 to8/01/09

74 615

STS BCAA 2500 XP (120 vegetarian capsules) 9/07/08 to11/12/08

10 41

AustLII: Copyright Policy | Disclaimers | Privacy Policy | FeedbackURL: http://www.austlii.edu.au/au/cases/cth/FCA/2012/42.html

STAS GCHA (90 capsules) 7/07/08 to2/10/09

18 106

STS Methylcobalamin B-12 5000 (90 lozenges/mixedberry)

31/07/08 to30/03/09

11 68