Background
Fewstone Pty Ltd, trading as City Beach, operates about 70 Australian retail stores and an online business. Between 22 June 2022 and 24 October 2024, it sold 57,278 products that did not comply with mandatory safety or information standards for goods containing button or coin batteries. Of those products, 54,361 breached both standards, 2,459 breached only the information standard, and 458 breached only the safety standard.
City Beach admitted contraventions of s 106(1) of the Australian Consumer Law. Before the ACCC contacted its head office in August 2023, the company had no system for ensuring compliance with the mandatory standards and did not know retailers bore compliance obligations. Suppliers and state regulators had previously alerted staff to non-compliant products, but the information was not effectively escalated or translated into company-wide controls. The primary judge imposed the $14 million penalty sought by the ACCC; City Beach, which had proposed $3.15 million, appealed on 11 grounds.
The Court’s Holding
The Full Court dismissed the appeal and ordered City Beach to pay the ACCC’s costs. It held that the primary judge properly exercised the discretionary task of fixing a civil penalty through an instinctive synthesis of the relevant considerations. Appellate intervention required an error of the kind identified in House v R, or a result so unreasonable or plainly unjust that error could be inferred; disagreement about the weight assigned to individual factors was insufficient.
The Court rejected City Beach’s arguments concerning its modest direct profit from the non-compliant products, earlier penalty decisions, cooperation, recall efforts, continuing sales, and the finding that many products were marketed to children. Although the primary judge made a minor factual error by including certain “June products” among continuing contraventions, it did not affect the result because numerous other continuing contraventions supported the same conclusion. Given City Beach’s size, its absence of compliance systems, the number and seriousness of the contraventions, the danger posed to children, its delayed recall, and continued contraventions after regulatory intervention, the $14 million penalty was not manifestly excessive.
Key Takeaways
- A substantial retailer cannot treat ignorance of mandatory product-safety standards as an excuse, particularly when it has no compliance system and warnings received by staff are not escalated.
- A civil penalty aimed at deterrence is not limited by the contravener’s direct profit; courts may impose a much larger amount where needed to deter serious safety breaches.
- Penalty decisions are discretionary and multifactorial, so an appellant must establish a material error of fact or principle, an omitted mandatory consideration, reliance on an irrelevant matter, or a plainly unjust result.
Why It Matters
The decision underscores that retailers themselves must understand and implement applicable consumer-product safety obligations. Compliance structures must do more than respond to isolated warnings: they must ensure that safety information reaches senior decision-makers, non-compliant stock is identified and removed, recalls occur promptly, and further sales are prevented.
For penalty appeals, the judgment reinforces the limited role of an appellate court. Modest profits, cooperation, and remedial measures remain relevant, but they do not compel a lower penalty when the primary judge has weighed them against the need for specific and general deterrence arising from widespread, serious safety failures.