Failure of toy to comply with safety standards — small parts — sentencing — ability of defendant to pay a fine — limited financial means — Fair Trading Act 1986, s 30 — Production Safety Standards (Children's Toys) Regulations 2005 — Sentencing Act 2002, s 40 — Commerce Commission v The 123 Mart Ltd [2017] NZDC 23286 — Commerce Commission v Mega Import and Export Ltd [2018] NZDC 2355. The defendant company was sentenced in respect of two charges under s 30 of the Fair Trading Act relating to the supply of a toy by the defendant company. The company supplied over 300 units of a toy that failed testing under the safety regulations. The toy was labelled as not being suitable for children under the age of three; however the court determined that the toy was a plaything for children up the age of three years with regard to the type of toy, the size, weight and colours and the use of the word "baby" in the title. The court noted that labelling the toy as not suitable for children under three was not a defence and did not operate as a mitigating factor. In determining the penalty, the court referenced the culpability factors of the Act's objective, the defendant's failure to comply, a careless assumption as to the safety of the product, the number of defective products and the risk of exposing an infant to risk. The court took a starting point of $75,000 and turned to assess the mitigating factors. The court noted that it was not relevant or a mitigating factor that the defendant company was not the importer of the goods as the Act imposed obligations on any distributor including importers, wholesalers and importers; nor was the fact that the defendant company would not make a profit on the goods. Mitigating factors were the defendant's cooperation, lack of previous convictions and a full credit for guilty plea. The court then turned it's mind the defendant's ability to pay a fine with reference to s 40 of the Sentencing Act. The court noted that, where appropriate, the financial capacity of a defendant must be considered, and that the capacity of a defendant may have the effect of increasing or decreasing the amount of a fine. It was also acknowledged that the fine needed to be balanced between the defendant's ability to pay, and the importance of the fine being a deterrent that was more than a "licence fee". The court concluded that the ability to pay should not be given a lesser weight simply because a financial penalty was the only penalty for the regulatory offending. The defendant company was a family business of modest means and the court found that it would be wrong in principle to impose a fine that would threaten its ongoing solvency and viability. The court therefore took a starting point of $75,000 and applied deductions for cooperation, lack of previous convictions, guilty plea and limited financial means. The defendant was fined $17,500 on each charge resulting in a total fine of $35,000. Judgment Date: 23 April 2018.