Dimmeys back in court over unsafe goods, forced to recall products

Famous Melbourne discount store Dimmeys is in trouble again, this time it has been forced to publicly recall some of its products following a decision by the Federal Court.

The court ordered Dimmeys refund customers for a number of the unsafe products including bath toys, children’s sleepwear and skincare packs.

The case against Dimmeys was brought by consumer action group Consumer Affairs Victoria, but the final decision won’t be heard until September 16, as the court adjourned the case yesterday.

The products in question were on sale between January 2011 and March 2012 and included squeezy duck and turtle bath toys which were a potential choking hazard, basketball rings which did not meet safety standards, Moonlight Shimmer and Garden Retreat skincare packs where the ingredients were not properly listed and girls swimwear without appropriate safety labels.

Should the case go in favour of Consumer Affairs Victoria, Dimmeys and its distributor, Starite, both owned by Doug Zappelli, would be banned from selling items which require warnings or high safety standards for six years.

Dimmeys also faces fines of up to $1.1 million per offence for selling the unsafe goods.

This isn’t the first time the iconic retailer has found itself in hot water with the courts. In 2001 and 2011 it was fined for similar offences.

In 2001, Dimmeys was fined $160,000 for selling children’s sleepwear which did not meet fire safety standards, with some of the clothes not bearing any labels indicating its level of fire hazard; between November 2000 and January 2001, 236 nighties were removed from its shelves.

In 2011, Dimmeys copped a $400,000 fine when it once again sold nightwear without fire safety warnings, or attached the labels in the incorrect position. Dimmeys was also made to pay $60,000 extra to cover the legal costs of the Australian Competition and Consumer Commission.

Given this history, Consumer Affairs Victoria is pushing for the retailer to be banned from selling any potentially hazardous products along with declarations, injunctions and orders for the destruction and disposal of the products.

Acting director of Consumer Affairs Victoria, Phil D’Adamo, told SmartCompany that Consumer Affairs Victoria is pleased that the Federal Court has ordered Dimmeys to publish recall and refund notices through a number of media, including on its website, in its August catalogue and in all its stores.

This follows the commencement of court proceedings against Dimmeys Stores Pty Ltd and others for alleged breaches of product safety laws, after inspections in New South Wales and Victoria in December 2011 indicated that Dimmeys sold four categories of products which contravened the Australian Consumer Law.

Consumer Affairs Victoria is seeking declarations, injunctions, orders for the destruction and disposal of the products, civil pecuniary penalties, adverse publicity orders and a disqualification order.

SmartCompany contacted Dimmeys and Starite, but received no response prior to publication.

TressCox Lawyers partner Alistair Little told SmartCompany this could be the first case of its kind in Australia.

“One of the issues we’re dealing with is the Australian Consumer Law has only been in place since January 2011, so provisions of the law are relatively new, but I’m unaware of any similar action having been sought previously under Australian Consumer Law or the Trade Practices Act.

“Generally cases like this are unlikely because there aren’t many retailers which would fall into a category such as this where they’ve had so many warnings and fines,” he says.

Little says cases like this have the potential to harm a business’s reputation, but with the multiple previous breaches, Dimmeys has so far weathered the storm.

“The fact Dimmeys has survived a number of previous orders says consumers will still buy its goods.

“If you look at Optus and Telstra, they’ve had findings made against them by the courts, but they trade merrily on, so it doesn’t seem to be too destructive to their level of reputation,” he says.

Due to Dimmeys’ previous offences, Little says it’s likely Consumer Affairs Victoria saw banning the retailer from selling potentially hazardous products as the only effective method to curb its practices.

“The only option is to take the products off the shelves.

“You’d think if found guilty, the fines imposed would be substantial and be greater than the previous fines, it’s also more likely to order an injunction,” he says.

Little says retailers need to be aware they’re liable for non-compliant products.

“There are very few cases where you can raise defences.

“You may be able to avoid a major penalty if you’ve carried out lab testing on the products and been told they’re compliant, but if you haven’t done any testing, you will have strict liability and there is no way to get out of it.”