Laws Related To The Product Liability In Australia

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Laws Related To The Product Liability In Australia

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Laws Related To The Product Liability In Australia

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1. For those injured, explain the basis of possible liability in the tort of negligence that any manufacturer or distributor of the Thermomix appliance might have to those users. Leave aside the question of the amount of damages, but in your answer refer to common law legal principles and (where relevant) to any relevant civil liabilitystatute provisions that apply in your State.

2. What role do the relevant caps on personal injuries damages play in limiting the extent of possible tort of negligence liability that might be owed to the injured users? In your answer, refer to the relevant civil liability statute provisions that apply in your State.

3. Do the injured users have possible rights under Part 3-5 of the Australian Consumer Law (ACL) against any manufacturer or distributor of the Thermomix appliance? If so, on what grounds could they bring such an ACL action and what defences might a sued manufacturer or distributor have? Leave aside any question of the amount of damages under the ACL.
Answer:

1.Laws related to the product liability in the Australia are considered as the mixture of the common law and legislation. In case, any person suffered injury or any other loss or damage has right to file suit for compensation on the grounds stated below:

Person can file case under common law tort of negligence which is based on the fault.
Under contract law.
Under contravention of the provisions of the Australian Consumer Law.

Generally, this rule is accepted by the law that manufacturer of the product owes duty of care towards the ultimate consumer of the product, and also obligated to ensure safety of the user against the foreseeable risk of injury while using the product. It is not allowed to retailers, importers, and distributors to test the product which is supplied by the manufacturer in the sealed containers, and these containers usually opened by the ultimate consumers only. However, in these situations retailer of the products still obligated towards the consumer to safeguard themselves against the foreseeable injuries. It must be noted that, in case any party related to the supply chain modified the product such as labeling, packaging, etc. then such party will also be held liable under tort of negligence towards the consumers in context of those changes.
In case, Donoghue v Stevenson [1932] A.C. 562, [1932] UKHL 100, 1932 S.C. (H.L.) 31, 1932 S.L.T. 317, [1932] W.N. 139, which was a Scottish dispute, considered as famous case in English law which mainly shape the law of tort and doctrine of negligence. In this case, the central issue decided by Court was “whether any duty of care was owned by manufacturer towards the plaintiff that was Mrs. Donoghue in case when no contractual relations were established”. This case was mainly considered as the test case through which liability of the manufacturer will determine in context of damage caused from the product.
This case was important because scope of the tort of negligence was very narrow and was applicable only if there was some established contractual relationship between the parties.
In former case law Mullen v AG Barr & Co Ltd 1929 S.C. 461, 1929 S.L.T. 341 which involves two children and floating mice, Court stated that in absence of the contract manufacturer does not own any duty of care towards the consumer while offering the product for sale, except in following situations:

Manufacturer possessed the knowledge that product was dangerous in nature because of the presence of any defect and this information was concealed from the consumer and this is considered as the fraud, or
The product was danger in nature and manufacturer failed to inform about the same to the consumer.

However, in case of Mrs. Donoghue, Court does not follow the opinions of the Judge in case of Mullar, and leading judgment was given by the Lord Atkin with the 3:2 majority. Decision of this case introduces various components. First, Court held that negligence was different and separate in tort. Second, contractual relationship was not necessary for establishing the duty of care between the parties, and third, manufacturer of the product owes duty of care towards the ultimate consumer who was using the product and in this context, Court also develops neighbor principle.
It must be noted that this rule, that person must love their neighbor becomes the law, and this rule stated that a person must not cause any injury or damage to their neighbor. Person must take reasonable care by avoiding any act or omission which a person reasonable foresees would cause injury or damage to the neighbor. In this context, neighbor was the person who was closely and directly affected by the act or omission of the person in question. In this case, Mrs. Donoghue proved her claims and manufacturer of the ginger bottle will be held liable.

It can be said that, this case was not the first case which attempt to abolish the dependence of negligence under tort law on the contractual obligation between the parties. This case mainly established all these rules which were stated below:

Court held that negligence was different and separate in tort.
Contractual relationship was not necessary for establishing the duty of care between the parties.
Manufacturer of the product owes duty of care towards the ultimate consumer who was using the product.

Therefore, this doctrine is mainly based on the law and morality, and the impact of this case on the tort of negligence cannot be understated.
In the present case, manufacturer of the product TM31 is Vorwerk & Co. KG and the distributor of the product is the Australian company Thermomix in Australia Pty Ltd. (“TIA”). Because of this product there are number of persons who suffer severe injury and other losses. In this case, it is possible to hold the manufacturer liable for the product TM31 which cause injury to the consumers.
Manufacturer of the TM31 owned duty of care towards their ultimate consumers because there is closeness between the manufacturer and consumer, and any product manufactured by the manufacturer will ultimately use by the consumer. In the present case, risk related to the products is foreseeable in nature and manufacturer breach duty of care own towards the consumer.
In this case, consumers are considered as the neighbor of the manufacturer and distributor because they are the persons who are directly affected from the acts or omissions of the manufacturer. As stated above, person must love their neighbor becomes the law, and this rule stated that a person must not cause any injury or damage to their neighbor. Person must take reasonable care by avoiding any act or omission which a person reasonable foresees would cause injury or damage to the neighbor.
On the basis of above facts, it can be said that both manufacturer and distributor of the product will be held liable under tot of negligence for the injury or damage caused to the consumer after using that product
2.Caps on damages are defined as limit imposed on the amount of damages in context of personal injury claims, and these caps are applicable on all types of damages except economic damages. In other words, these caps are applicable on the non-economic damages suffered by the party. It must be noted that, there are two types of damages which the plaintiff claimed for loss that are economic damages and non-economic damages. Economic damages are those damages under which plaintiff incurred any specific cost for their injury and non-economic damages are those damages under which indirect cost of damages are includes such as pain, distress, etc (ALRC, 2018).
It must be noted that when one person cause any injury of damage to another person, then person who suffered injury or damage has right to seek compensation for personal injury caused to them. In this situation, generally plaintiff choose those claim which provide higher award for damages and also ensures that person who suffer injury get adequate damages for their loss. Caps on damages are considered as those provisions which mainly restrict the amount in context of non-economic damages claimed by the plaintiff. In terms of personal injury damages, caps are imposed by the jurisdictions and each jurisdiction decides its own caps. The main aim of damages is to prevent the party from seeking unnecessary compensations in context of personal injury, which means, generally plaintiff choose those claims in their suit which provide highest amount as compensation in lieu of personal injury and this cherry picking of the damages disrespect the main aim of this provision. The higher rates of awards not only imposed burden on the defendant but also imposed burden on the complete economy, because if awards are more than the actual loss then definitely manufacturer transfers the liability on the consumers and if affects the whole economy in the Australia. Therefore, it is necessary that caps must be imposed on the damages for preventing the unnecessary burden on the economy.

However, views related to the damage caps are not same, as there are number of persons who oppose the caps on the damages of personal injury and those also are there who support these caps. Many authorities are there which stated that damage caps are not fair in nature in context of the plaintiff and those who file suit.
On the basis of above facts, damage caps are considered as an effort which manage the high cost related to any business and prevent the person from suit lottos. In case damages caps are not imposed on the amount of damages then it became easy for the people to claim for high amount of compensation in comparison of the actual loss suffered by them. Therefore, it can be said that damage caps play most important role in the personal injury claims because it prevents the parties from seeking any undue advantage of the situation of another party (Berryman, 2009).
3.Australian consumer law is the document which recognizes the rights provided by both common law and legislature to the consumers of Australia. This legislation ensures the consumer protection from the undue practices conducted by the manufacturer and seller of the product. Part 3-5 of the ACL recognize the liability of the manufacturer in context of the safety defect occurred in the product which means, all the products which are supplied to the consumer must be safe in the nature and complied with all the guarantees provided by the ACL. Manufacturer must considered that it is not -possible to sell any such product which are banned, and manufacturer must ensure that their products and services must meet mandatory standards of the Act before they offered for sale to the consumer (ACCC, n.d.).

It must be noted that, manufacturer or importer related to the product are liable but in case of the other suppliers such as retailers are not able to identify the manufacturer or importer of the product then they are held liable for the damages. However, safety defect in the product not only deals with the poor quality of the product but it also includes any other type of defect which can cause damage to the person. it is possible for the suppliers to reduce their product liability action by using these responsible and sensible practices of the business:

Manufacturer and importer must conduct the reviews related to the product design and process on regular basis.
Manufacturer and importer must implement and review their quality assurance procedures.
Manufacturer and importer must test their products on regular basis against the mandatory standards prescribed by the government, and it also includes the batch testing.
Manufacturer and importer must conduct the marketing on the basis of appropriate standards.
Must provide clear and exact instructions for using the product.
In case any defect arise in the product, then must recall the products which have safety defect.

Section 138 of the ACL defines the liability of the manufacturer in context of the plaintiff, if product supplied by the manufacturer includes any safety defect and because of that safety defect, plaintiff suffer loss or injury. It must be noted that, plaintiff must suffered injury mainly because of the safety defect then only this liability is arise on the manufacturer. However, this section of the ACL only defined the manufacturer’s liability in context of the safety defect occurred in the product. This section defines the direct liability of the manufacturer of the product.
It must be noted that, part 3-5 of the ACL is based on the EC Directive on Defective Products, 1985 and mirrors the old Part VA of the TPA, except that it now state the person instead of the corporation. As stated consumer guarantees which are discussed above, it is not possible to modify or exclude the provisions. These provisions allowed the plaintiff to file claim against the manufacturer when goods related to the safety defect cause any injury or loss to the plaintiff. In case, any difficulty is bear by the plaintiff for identifying the manufacturer in context of the defective product then it is allowed by the ACL to the plaintiff to make formal request to the supplier for the purpose of identifying the name of the manufacturer that supplied the goods (ACCC, n.d.).

Part 3-5 of the ACL also defines the situation in which plaintiff can file suit against the manufacturer and these situations are based on the damage suffered by the plaintiff:

In case consumer suffered any personal injury then such person has right to file suit against the manufacturer for seeking the compensation.
In case, consumer die because of the safety defect then person related to the deceased has right to file suit against the manufacturer for seeking the compensation.
Loss related to the other goods of the consumer then such person whose other goods are damaged can seek compensation from the manager in this context. It also includes the loss related to the land, building, and fixtures, privately acquired by the consumer.

For evaluating the compensation amount payable to the plaintiff, court must consider the extent up to which act or omission of the plaintiff contributes in the loss or injury as it thinks right.
In the present case, manufacturer and importer of the Thermomix breach section 138 of the Act and they are liable under part 3-5 of the ACL. As defined above, Part 3-5 of the ACL recognize the liability of the manufacturer in context of the safety defect occurred in the product which means, all the products which are supplied to the consumer must be safe in the nature and complied with all the guarantees provided by the ACL. Manufacturer must considered that it is not -possible to sell any such product which are banned, and manufacturer must ensure that their products and services must meet mandatory standards of the Act before they offered for sale to the consumer.
In the products supplied, safety defect occurred which causes damage to the number of consumers, and this create liability on the manufacturer or importer for safety defense occurred in the product under section 138.
However, manufacturer of the product can use various defenses which are stated under section 142 and 148 of the Act:

Defect arises after the supply of the product from the manufacturer of the product.
Defect arises because consumer fails to follow the mandatory instructions provided by the consumer.
State of scientific or technical knowledge of the manufacturer was not sufficient at the time when goods are supplied by the manufacturer, as manufacturer understands the defect.

References:
ACCC. Product liability. Retrieved on 20th May 2018 from: https://www.productsafety.gov.au/product-safety-laws/legislation/product-liability.
ACCC. Product safety. Retrieved on 20th May 2018 from: https://www.accc.gov.au/business/treating-customers-fairly/product-safety.
ALRC, (2018). Damages and remedies. Retrieved on 20th May 2018 from: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2006586.
ALRC. Negligence. Retrieved on 20th May 2018 from: https://www.gotocourt.com.au/personal-injury/nsw/negligence/.
Berryman, J. (2009). Rethinking Damages for Personal Injury: Is it Too Late to Take the Facts Seriously?. Retrieved on 20th May 2018 from: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2006586.
Competition and Consumer Act 2010- Section 138
Competition and Consumer Act 2010- Section 142
Competition and Consumer Act 2010- Section 148
Donoghue v Stevenson [1932] A.C. 562, [1932] UKHL 100, 1932 S.C. (H.L.) 31, 1932 S.L.T. 317, [1932] W.N. 139.
Morrinson, A. & loveday. C. (2015). Product Liability. Retrieved on 20th May 2018 from: https://www.claytonutz.com/articledocuments/178/ICLG-Product-Liability-Australia-2015.pdf.aspx?Embed=Y.
Mullen v AG Barr & Co Ltd 1929 S.C. 461, 1929 S.L.T. 341.
Thomson Reuters. Product Liability. Retrieved on 20th May 2018 from: https://legal.thomsonreuters.com.au/product/AU/files/720502336/chapter_23.pdf.

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