In the wake of a court case that saw dollar store retailer The 123 Mart fined $337,000, resulting ultimately in its liquidation, the Commerce Commission wants to remind retailers that they have a responsibility to make sure the products they sell comply with all relevant safety and consumer information standards.
The 123 Mart was prosecuted by the Commerce Commission for selling unsafe goods, and was convicted on Friday 13 October. The chain, which was founded in 1995, had a $337,000 fine imposed.
It sold approximately:
- 9,000 units of seven types of toys that did not comply with the safety standard for children’s toys and were unsafe for children aged 36 months and under
- 1,200 items of children’s sleeping pants, which did not have the required fire danger labels
- 11,000 items of clothing, which failed to comply with consumer information labelling requirements for care, origin and content.
In sentencing at the Auckland District Court, judge Rob Ronayne noted that The 123 Mart was twice warned by the Commerce Commission, “and even after prosecution commenced it continued to offend and lied as a cover-up. Its behaviour had been cavalier and brazen.”
The company had been placed into liquidation on September 21. In response to this, judge Ronayne commented that he did not know if there will eventually be an ability to pay the fine imposed, “but it is appropriate to send the right message in this case.”
The liquidators appointed, Tony Maginness and Jared Booth of Staples Rodway, attributed the liquidation to the Commerce Commission’s prosecution, and an application by Inland Revenue to the High Court to have the company placed into liquidation owing nearly $840,000 in unpaid tax.
At the time of liquidation, the company operated 18 retail stores plus two warehouses, but originally around 60 retail stores had been operated by The 123 Mart under its own name, plus three additional brands: Dollar Store 123, King Dollar Store and Max!Out.
In Maginness and Booth’s first report, they estimate that The 123 Mart owed staff around $189,675 in unpaid wages and holiday pay, and Inland Revenue is owed approximately $839,011. A further $328,929 is owed to BNZ, and a number of security interests are held by suppliers.
Ritchie Hutton, the Commerce Commission’s Head of Investigations, says other retailers should keep an eye out for items which fail to comply with safety standards. Toys fail to comply with the standard and are unsafe if they have small parts that present choking hazards for young children, or parts which might break off during reasonably foreseeable handling and become a choking hazard.
“With Christmas approaching, the Commission urges toy importers, distributors and retailers to ensure that the products they sell comply with all of the mandatory standards and most importantly, are safe for use by young children.”
The prosecution arose from the Commerce Commission’s programme of unannounced visits to retail stores. The 123 Mart won’t be the last retailer to be investigated or litigated against in this way, says Hutton.
“Product safety is an enduring priority for the Commission and our current investigations are likely to result in prosecutions,” Hutton says. “The aim of this work is awareness and deterrence. We want to make importers, distributors and retailers aware of the standards they must comply with, and aware of the consequences of not doing so.”