MLL217 Study Guide - Final Guide: Aust, Finished Good, Objective Test
2 Jun 2018
School
Department
Course
Professor
Liability of manufacturers for goods with safety defects
Part 3-5 – Introduction – Liability for Manufactures of goods with safety defects
▪ Designed to provide persons with remedies in the event that products they acquire
prove to have a safety defect and cause injury or loss
▪ The new provisions are the same in substance as those they replace, so that the
existing case law decided under the previous legislation continues to be applicable
▪ Formerly Part VA of the Trade Practices Act
▪ Provides causes of actions for persons who have suffered loss or damage as a result
of a safety defect in a good
▪ Important limitation of Part 3-5:
Applies only to unsafe or dangerous goods i.e. goods that have a safety defect.
Economic loss (the reduction of value in the goods) not recoverable must use Part 3-2 for
this
Limitations of Part 3-5
▪ Does not apply to goods which are merely less valuable because of a defect in
quality (Part 3-2 is the applicable regime if the complaint is that the good is not of the
expected or acceptable quality)
▪ Does not provide a cause of action for recovery of economic loss caused by a
diminution in the value of the defective product itself
Negligence and Part 3-5
▪ A negligence action will still be available
▪ Two main advantages of Part 3-5 over negligence law:
1. Negligence law does not impose a form of strict liability on the
manufacturer, whereas pt 3-5 only needs to show a defective good and
that it caused a loss (Mayes v Australian Cedar Pty Ltd)
2. The onus of proving that the defect in the product came about because of
negligence on the part of the manufacturer rests with the plaintiff, whereas
pt 3-5 once the applicant establishes that the goods have a defect that
has caused the relevant loss, the onus shifts to the respondent
manufacturer to prove a defence under s 142 (Effem Foods Ltd v
Nicholls)
Definition of Manufacturer
▪ Concurrent liability usually someone will always be considered to be a
manufacture, allowing a party to commence proceedings easily
▪ There are 5 ways in which a person can be held liable as a manufacturer under s
7(1):
▪ if the person has actually manufactured the goods;
▪ if the person holds himself or herself out to the public as the manufacturer;
▪ if the person causes or permits their name, brand or mark to be applied to
goods;
▪ if the person permits another person to hold the first person out to the public
as the manufacturer of the goods; or
▪ if the person who is not the manufacturer of the goods imports them into
Australia, and at the time of importation, the manufacturer does not have a
place of business in Australia.
Glendale Chemical Products Pty Ltd v ACCC
- The person causes or permits their name, brand or mark to be applied to goods
find more resources at oneclass.com
find more resources at oneclass.com
o Glendale was liable as a manufacturer of the cleaning product even though it was
merely the packager and distributor of the product and did not actually itself
manufacture it, as it had affixed its brand to the packaging
▪ The Court recognised that if packagers were not caught by the Act it would be
very easy to avoid liability simply by making it the responsibility of the
packager to provide all instructions and warnings in relation to the product.
▪ It is notable that in Glendale the manufacturer of the caustic soda, Redox,
was not sued, probably because it could rely on the defence that the defect
was comprised only in the instructions or warnings given by Glendale
Manufacturer
Section 147 deeming extension
▪ Deems a supplier of goods to be a manufacturer where the applicant has served a
notice on his or her supplier requesting particulars of the actual manufacturer or that
suppliers supplier, and the supplier has failed to provide those particulars within 30
days
▪ Limitation in this provision
▪ Providing with purchaser a name of the supplier or manufacture
▪ Could meet the requirements by providing the name of the supplier who is
overseas/foreign
▪ Manufacturer must generally be a corporation
▪ White v Canberra Furniture Manufacturing Pty Ltd
▪ Plaintiff can sue both actual manufacturer and deemed manufacturer
concurrently/dually
▪ Leeks v FXC Corporation [2002] FCA 72
• Only available for part 3-5 (safety defects) and not 3-2 (consumer guarantees)
Goods must have a defect
▪ Central to all of the substantive liability sections in Part 3-5 is the requirement that
the goods have a defect
▪ See Section 2(1) Definition of goods
▪ See also Section 2(1)(a), which adopts the Section 2(1) definition of a good as
including goods which are affixed to land or premises
▪ Section s 9(1) - goods have a defect if their safety is not such as persons generally
are entitled to expect
▪ Section 9(2) a non-exhaustive list of circumstances that are to be taken into
account in determining whether this test is met”
(a) the manner in which, and the purpose for which, they have been marketed
(b) their packaging
(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 in relation to them
(e) what might reasonably be expected to be done with or in relation to them
(f) the time and when they were supplied by their manufacture
An objective test, based on community standards of safety (rather than the reasonableness
of the defendants conduct).
• ACCC v Glendale Chemical Products Pty Ltd
o ACCC on behalf of Barnes
o Barnes poured boiling water down the drain and then the cleaning soda,
stream of the liquid came back up and damaged his eyes and skins
o Contact with the eyes and skin, should use safety glasses and rubber gloves
when handling the product
find more resources at oneclass.com
find more resources at oneclass.com
o Did not disclose to not use with hot water
o Did not have a defect, rather that it lacked instructions and warnings
o Objective test of what the reasonably person of the community would expect
one cannot foresee all possible uses of the good that one may use will not
have to prove negligence, may cause injustice can be unsafe even if it is
used in its proper purpose contains no hint of usage that it would be
dangerous with hot water not adequate that a person should use gloves
and goggles
• Skerbic v McCormack
o Supporting bracket of roller door came away, and the roller door hit plaintiff
on the head
o Safety in its everyday use was compromised by the inadequate installation
must have been taken to have been unsafe plaintiff entitled to
compensation
o Instructional defects
• Carey-Hazell v Getz Bros & Co (Aust) Pty Ltd
o Instructional defects in patient booklet, that it failed to warn regarding the side
effects
o Establish the defect in goods and the cause of injury
• McDermott v Robinson Helicopter Company
o (TOPIC GUIDE SUMMARY HAS BEEN OVERTURNED still appropriate)
o At first instance plaintiff did not establish
o Was found to have a safety defect
• Cook v Pasminco
o Fumes did not have a defect in s 9 the emissions were unsafe, however
they were meant to be therefore people would expect them to be unsafe
▪ Section 9(3) - goods are not to be inferred as having a safety defect only because
safer goods of the same kind were later supplied
▪ Section 9(4) provides that an inference that goods have a safety defect is not to be
made only because there was compliance with a Commonwealth mandatory
standard and that standard does not represent the latest scientific or technical
knowledge
Have a defect
▪ Goods do not have to be completely safe, and are not defective merely because
carry an inherent risk to safety
▪ Thus, the test is not whether the community would expect the product to be
completely safe or whether they would tolerate some risks of harm for reasons of
social utility, so as not to make the manufacturing process prohibitively expensive,
BUT a warning of the inherent risks might be reasonably expected, at least where the risks
are not well known and understood in the community
o Glendale Chemical Products Pty Ltd v ACCC
E.g. pharmaceutical products, tobacco products, fast food, sharp implements
Three broad categories of safety defects
Design defects defects relating to the form, structure or composition of the goods
o Middleton v Erwin
▪ Plaintiff was severely injured when a defendant lost control of the
second defendants truck and drove into the plaintiff
▪ Design was as safe as the ordinary person would expect when you
take into account that the truck had travelled over 2 million kilometres,
and had not been serviced in over three years
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
Liability of manufacturers for goods with safety defects. Applies only to unsafe or dangerous goods (cid:1679) i. e. goods that have a safety defect. Economic loss (the reduction of value in the goods) not recoverable (cid:1679) must use part 3-2 for this. Australia, and at the time of importation, the manufacturer does not have a place of business in australia. It is notable that in glendale the manufacturer of the caustic soda, redox, was not sued, probably because it could rely on the defence that the defect was comprised only in the instructions or warnings given by glendale (cid:1684)manufacturer(cid:1685) Instructional defects: carey-hazell v getz bros & co (aust) pty ltd. But a warning of the inherent risks might be reasonably expected, at least where the risks are not well known and understood in the community: glendale chemical products pty ltd v accc. E. g. pharmaceutical products, tobacco products, fast food, sharp implements.
