What's in a name? Everything, if it's a food label

The NSW Food Authority has signalled it means business with a recent prosecution of two breaches of the NSW Food Act which led to a total fine of $30,000 plus $80,000 in costs, in a timely reminder for manufacturers of foods and beverages.

It's not a dram, it's a dud

Three sample bottles of Old McTavish Scotch Whisky in the warehouse of a liquor wholesale business were tested by the NSW Food Authority and found to contain 38.6 percent ethanol. If something is labelled as Scotch whisky in Australia, under the Food Standards Code it must comply with Scottish standards, which require a minimum 40 percent ethanol content.

Because the samples failed to meet Scottish standards, the NSW Food Authority prosecuted the liquor wholesaler for two breaches of the Food Act:

• section 18(3), which bans a person in the course of carrying on a food business from selling food that is packaged or labelled in a way that falsely describes the food ("food" in this case includes spirits); and
• section 21, which requires compliance with any relevant part of the Code (among other things, the Code says that Scotch whisky must comply with Scottish standards).

The guilty plea and the fine

The liquor wholesaler pleaded guilty in the Supreme Court of New South Wales.

The choice of court in this prosecution was extremely significant. Usually these cases come before the Local Court, which can only impose a maximum $10,000 penalty. The Supreme Court, unlike the Local Court, can impose a fine up to $275,000 for each of these breaches.

In setting the penalty the Supreme Court discounted the fine by 15 percent in recognition that the wholesaler had pleaded guilty. The Court also acknowledged that this was the wholesaler's first offence and that it had taken steps to improve its equipment for measuring ethanol content. The liquor wholesaler was fined $15,000 for each offence, or $30,000 in total penalties.

This wasn't the only cost imposed however - the liquor wholesaler also had to pay the prosecutor's costs of $80,000. If you factor in the wholesaler's own legal costs, these two breaches were expensive.

Lessons to learn

This decision is a wake-up call to review compliance with food labelling laws. The Court made two things very clear in this case:

• customers are entitled to have food accurately labelled; and
• the obligation to comply with the relevant provisions of the Food Act has to be treated very seriously, as do all breaches of the Act.

By bringing this action in the Supreme Court, the NSW Food Authority has also made it clear that it is ready to seek higher penalties than those available in the Local Court, and give the penalty provisions some teeth. Although the fines were nowhere near the maximum allowable for each breach, they are significantly more than those available in the Local Court - and even more significant given the prosecutor's costs of $80,000.