LAWS1114 Lecture 8

Product Liability

Introduction

  • Examples of products that have in the past caused injury: cars (eg Ford Pinto in USA); pharmaceuticals (eg Thalidomide); herbicides (eg Agent Orange); electric fans; cosmetics; processed meats; and food spreads.

Product Liability and Negligence

  • Winterbottom v Wright
    • Issue: in respect of repair
    • Counsel for the defendant at 403: ‘If the plaintiff may, as in this case, run through the length of three contracts, he may run through any number or series of them; and the most alarming consequences would follow the adoption of such a principle. For example, every one of the sufferers by such an accident as that which recently happened on the Versailles railway, might have his action against the manufacturer of the defective axle’. The proceedings in Winterbottom v Wright were heard on 6 June 1842.
    • The counsel for the defendant referred to the tragic accident that occurred on the Versailles to Bellevue Railway on 8 May 1842 in which at least 55 people were killed and another 40 to 50 were injured seriously.
    • The court held that the defendant was not liable because there was no contract between the plaintiff and the defendant. Abinger CB at 404: Liability would result in ‘an infinity of actions’; at 405: ‘Unless we continue the operation of such contracts as this to the parties who entered into them, the most absurd and outrageous consequences, to which I can see no limit, would ensue’. Alderson B at 405: ‘If we were to hold that the plaintiff could sue in such a case, there is no point at which such actions would stop’.
    • Indeterminate. Liability.
  • Donoghue v Stevenson
    • Do you really need a case note on this one??? Okkkay fine. I'll do one with ducks:
      • There once was a duck named Donoghue. Donoghue had a best friend named Francois le Duc. However, little did Donoghue know that Francesco had held a grudge against Donoghue for ten years. Since Donoghue was the fastest paddler back when they were young ducks, she always stole all the bread and left none for the other ducks. Suffice to say, Francois was pissed ever since and now had a cunning plan. They were on a green bank by the way. Francois called for his accomplice and asked that Donoghue be given a … wait. This is flawed. Would ducks care about snails? Hrmmm. Oooooh I can fix it!
      • Cut back to … "They were on a green bank by the way."
      • Now. It was a Monday and Francois knew a certain someone would visit them the next day at the UQ duck pond. So, being a cunning drake, Francois found a way to stick … something terrible into the bread this certain someone was planning on using to feed the ducks. So on Tuesday, this certain someone went to the duck pond as per usual (she … or he is rather predictable after all) and started to feed the ducks. Apparently this certain someone preferred Donoghue over the other ducks OH MY GOSH THIS JUST DOESN'T WORK BECAUSE IT'S NO LONGER NEGLIGENCE. Gah. Well, I tried?
      • WAIT! Okay:
        • There once was a duck named Donoghue. Donoghue decided one day that she wanted to try something different. Francois le Duc had raved on about how delicious snails were yesterday… so the pair went to the bank to find their snails. However, it turned out that there was GINGER BEER in Donoghue's snail! Negligently placed, of course. Stevenson, the park caretaker had fed the snail ginger beer. This caused poor Donoghue to suffer from gastroenteritis. BAM. CASE NOTE. AND SINCE DONOGHUE COULDN'T HAVE INSPECTED HER SNAIL TO SEE IF THERE WERE ANY DEFECTS, IT'S A PRETTY DARN AWESOME DUCKIFIED CASE NOTE.
    • Lord Atkin’s neighbour principle at 580: ‘You must take reasonable care to avoid acts or omissions which you can reasonably foresee would be likely to injure (your neighbour) … persons who are so closely and directly affected by my act that I ought reasonably to have them in contemplation …’
    • Lord Atkin’s ratio at page 599: ‘…by Scots and English law alike a manufacturer of products, which he sells in such a form as to show that he intends them to reach the ultimate consumer in the form in which they left him with no reasonable possibility of intermediate examination, and with the knowledge that the absence of reasonable care in the preparation or putting up of the products will result in an injury to the consumer's life or property, owes a duty to the consumer to take that reasonable care’.
    • Lord Atkin’s ratio is implicit in the reasoning of Lords Thankerton and Macmillian who are also in the majority.
    • Lord Tomlin (and Lord Buckmaster) in dissent in Donoghue v Stevenson [1932] AC 562 at page 600 agreed with the counsel for the defendant in Winterbottom that allowing recovery in negligence would result in ‘alarming consequences’ of indeterminate liability if not constrained by contract.
  • Grant v Australian Knitting Mills
    • The plaintiff (Grant) was a qualified medical practitioner who purchased two pairs of (ankle length) underpants and two singlets on 3 June 1931. Grant first wore one pair of underpants (and singlet) on the morning of Sunday 28 June 1931 and by that evening he felt itching on his ankles. The next day he started to scratch until his ankles bled. On Sunday 5 July 1931 he changed his underwear and put on the other pair of underpants. The first set was washed. On 12 July 1931 he changed again and put on the washed underwear. Grant consulted a dermatologist on 13 July but developed severe dermatitis and was hospitalised.
    • Grant sued for negligence (and breach of warranty concerning merchantable quality).
      • Went all the way up to the Privy Council.
    • Lord Wright noted at page 103 that Lord Atkin’s ratio ‘is in accord with the opinions expressed by Lord Thankerton and Lord Macmillan, who in principle agreed with Lord Atkin’.
    • At page 104: ‘…the essential factor (is) that the consumer must use the article exactly as it left the maker, that is in all material features, and use it as it was intended to be used. In that sense the maker may be said to control the thing until it is used’.
    • At page 105: ‘The principle in Donoghue’s case can only be applied where the defect is hidden and unknown to the consumer, otherwise the directness of cause and effect is absent…The presence of the (harmful) chemical in the pants, due to negligence in manufacture, was a hidden and latent defect, just as much as were the remains of the snail in the opaque bottle: it could not be detected by any examination that could reasonably be made. Nothing happened between the making of the garments and their being worn to change their condition. The garments were made by the manufacturers for the purpose of being worn exactly as they were worn in fact by the appellant: it was not contemplated that they should be first washed’.
    • At pages 106-107: ‘The decision in Donoghue’s case did not depend on the bottle being stoppered and sealed: the essential point in this regard was that the article should reach the consumer or user subject to the same defect as it had when it left the manufacturer’.

Duty of care of manufacturers – Standard of care and Breach

  • Bull v Rover Mowers (Aust)
    • The plaintiff was using a self-propelled ride-on mower produced by the defendant. At the time he was mowing, he was going against a fence mowing. Came to the fence post and stopped the mower (to move the fence post). This mower did not have a front guard. While the plaintiff was before the mower, the mower kicked into gear, which caused his leg to be amputated.
    • Kelly J (with whom Connolly J agreed) at page 499: ‘The degree of care required by the manufacturer was then that which was reasonable in the circumstances, that which a reasonably prudent manufacturer would exercise in the circumstances…The duty of the manufacturer did not, however, extend to producing a product which was accident proof or which would not wear out, and it was not an insurer’.
      • Degree of care = standard of care (that which is reasonable in the circumstances)
      • Court concluded that there had not been a breach of duty
      • NB: The manufacturer is expected to exercise reasonable care in the circumstances. They are not expected to produce accident-proof products.
  • Sousaari v Steinhardt
    • Sousaari was the plaintiff and he worked on a sugar cane farm up in North Queensland. The defendant manufacturer manufactured trailers to transport cut sugar cane. To use the trailer, there was a mechanism… the level in this mechanism was difficult to use and keep your hand away from the metal cable.
    • The Court concluded that the placement of the lever could have easily been moved.
    • Cooper J (with whom Connolly and Ryan JJ agreed) at 488: ‘A manufacturer is not obliged to take precautions against a risk which may arise when the use to which the product is put is so unusual or improper as to make such a use wholly unforeseeable, it falling outside the range of any reasonable [person’s] contemplation…However, within the range of foreseeable risk a manufacturer is required to take reasonable care in the design and manufacture of the product’.
    • At 488, 489: ‘In undertaking the process of design a manufacturer is under a duty to design [the] machine so as to keep its inherent dangers to a minimum and so as to avoid the addition of further risks which [are] not inherent…Discharge of the duty requires the designer to think through the suitability of the design, the problems and risks associated with the design; the graver the foreseeable consequences of failure to take care, the greater the necessity for special [caution]’.
    • At 489: ‘The standard to be applied when one is dealing with a machine is that of a reasonably competent engineer. Where the risk is real, although the incidence of it may be low, the designer is under a duty to minimise the risk by taking all reasonable steps to eliminate it, particularly where the alteration to the design is simple and inexpensive. It is not sufficient to design a product which is satisfactory merely for the purpose for which it is intended to be used. The manufacturer is under a duty to take care to reduce the risk of injury as far as he reasonably can, and to eliminate it, if reasonably possible, when the product is being used to perform its usual or foreseeable function. The manufacturer must have regard to the dangers to the user arising out of such use, and to the means necessary to eliminate the risk, or to reduce it as far as he can’.
    • At 489, 490: ‘A manufacturer is under a duty not to put a product into circulation without bringing to it, in the case of machinery, the mind of a reasonably competent engineer to ascertain whether the design of the product is safe. If a competent engineer would have discovered the defect as one which unreasonably exposed the user to risk then the duty of the manufacturer is twofold: firstly, to actually see the risk, secondly, to take all reasonable steps to eliminate or minimise it, or if it cannot be eliminated or minimised, to clearly warn the user of its existence. A manufacturer who fails to take both of these steps breaches the duty of care owed to the user of the product’.

Product Liability and Part VA of the Trade Practices Act 1974 (Cth)

  • NB: It’s a Cth statute. Commonwealth Parliament can only pass a statute within an area of its express or implied constitutional power under the constitution. Because of this constitutional issue, Commonwealth had to look to a constitutional head of power to support the act. Main one found was corporation power. Corporations = registered company (Pty, Ltd etc.)
  • These Constitutional requirements do not apply to common law negligence.

Part VA—Liability of manufacturers and importers for defective goods

75AC Meaning of goods having defect
(1) For the purposes of this Part, goods have a defect if their safety is not such as persons generally are entitled to expect.

(2) In determining the extent of the safety of goods, regard is to be given to all relevant circumstances including:

  • (a) the manner in which, and the purposes for which, they have been marketed; and
  • (b) their packaging; and
  • (c) the use of any mark in relation to them; and
  • (d) any instructions for, or warnings with respect to, doing, or refraining from doing, anything with or in relation to them; and
  • (e) what might reasonably be expected to be done with or in relation to them; and
  • (f) the time when they were supplied by their manufacturer.

(3) An inference that goods have a defect is not to be made only because of the fact that, after they were supplied by their manufacturer, safer goods of the same kind were supplied.

(4) An inference that goods have a defect is not to be made only because:

  • (a) there was compliance with a Commonwealth mandatory standard for them; and
  • (b) that standard was not the safest possible standard having regard to the latest state of scientific or technical knowledge when they were supplied by their manufacturer.
  • Criticism: safety is a relative concept and an objective standard is needed against which it can be tested.

75AD Liability for defective goods causing injuries—loss by injured individual
If:
(a) a corporation, in trade or commerce, supplies goods manufactured by it; and
(b) they have a defect; and
(c) because of [COVERS CAUSATION] the defect, an individual suffers injuries; then
(d) the corporation is liable to compensate the individual for the amount of the individual’s loss suffered as a result of the injuries; and
(e) the individual may recover that amount by action against the corporation; and
(f) if the individual dies because of the injuries—a law of a State or Territory about liability in respect of the death of individuals applies as if:

  • (i) the action were an action under the law of the State or Territory for damages in respect of the injuries; and
  • (ii) the defect were the corporation’s wrongful act, neglect or default.
  • 75AD: covers if a plaintiff suffers personal injury
    • Corporation in trade or commerce – a requirement.
  • Under Part 5A, there is no need on the part of the plaintiff to prove fault on the part of the manufacturer
  • In negligence, in the breach stage, you need to prove fault.

75AE Liability for defective goods causing injuries—loss by person other than injured
Individual
(1) If:
(a) a corporation, in trade or commerce, supplies goods manufactured by it; and
(b) they have a defect; and
(c) because of the defect, an individual suffers injuries; and
(d) a person, other than the individual, suffers loss because of:

  • (i) the injuries; or
  • (ii) if the individual dies because of the injuries—the individual’s death; and

(e) the loss does not come about because of a business relationship between the person and the individual; then:
(f) the corporation is liable to compensate the person for the amount of the person’s loss; and
(g) the person may recover that amount by action against the corporation.
(2) For the purposes of this section:
(a) a profession is taken to be a business; and
(b) a relationship between employer and employee or a similar relationship is a business relationship.

  • 75AF: covers loss related to other goods (defect on the part causing loss to another party)
  • 75AG: covers buildings
  • 75AJ: Unidentified manufacturer.
    • If a person who suffers loss does not know who the manufacturer is and cannot find out, they can go back to whoever supplied it to them (ie. if you bought it from a department store)
  • 75AK: Defences
    • If it was not at the time of the defect (ie. scientific knowledge which is discovered later), the actual manufacturer is not liable.
  • 75AO: Time for commencing actions
    • From the time you become aware of the defect with the product, you have three years to commence an action; however, there’s a maximum of 10 years within which an action can be commenced from the time of first supply.
    • Maximum 10 years has the effect of reducing backing the three year period.
    • Following the Ipp Report, Part VIB was introduced (places restrictions with time and amount that is recoverable)
    • NB: Part VIB is NOT examinable!!! So please don't go off and memorise it. I know you're going to have the burning desire to do so but maybe go and feed the ducks instead. They'll appreciate it! AND MAKE MANDA SOME POPCORN. AND CUPCAKES!
      • Claims for damages or compensation for death or personal injury (NOT property damage).
  • 75AR: In a statute, if there’s a reference to the unwritten law in a State or Territory, it’s a reference to the general law (which includes common law and equity).

Part VA and common law negligence

  • Barnes v Glendale Chemical Products Pty Ltd
    • The plaintiff Mr Barnes lived in Tamworth, New South Wales, and he had a blocked drain in his shower recess. He went to the local shopping centre and he met a friend. The friend had previously owned a hardware store. The plaintiff told the friend about his problem. The friend took him to the shelf where a product was and told him to use it. The product was called Draino and the friend told the plaintiff to pour boiling water then pour the Draino in. The plaintiff went home and read the label. The label said ‘Always wear rubber gloves and safety glasses when handling caustic soda’. The dude poured 1.8 L of boiling water into the drain. He then poured the Draino in. He then heard this noise (a whirring sound), which was because of the chemical reaction. The water shot up straight into his face and the plaintiff received burns and lost sight partially in one eye.
    • The issue: whether this container of Caustic Soda had a defect. Was its safety not one people would generally expect. Did that label contain sufficient instructions/a proper warning? If not, the defendant would be liable.
    • There was no suggestion that the actual product was defective
    • The plaintiff submitted that if the label had said ‘do not use with hot water’, he would not have used it.
    • The judge concluded that there should have been some kind of warning about not using the Caustic Soda with hot water.
    • The court held that the fact that the product was caustic soda was important. Caustic soda is inherently dangerous. There should have been a proper warning about using it with hot water.

Product Safety and Product Information

  • This. Is. Not. Examinable.
  • Part V Division 1A.
  • www.recalls.gov.au
    • Hinchy has ordered us to each write a thesis on how hot the hot topics are on this site. Seriously.

Conclusion and issues for consideration

  • Product liability via negligence or Part VA?
  • Advantages/disadvantages of negligence?
  • Ditto for Part VA?
  • Fault
  • Limitation periods
  • ‘Trade and commerce’ issue
  • Liability of importers (not available for negligence claims).