Possible Liability Of Manufacturers And Distributors In Tort Of Negligence

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 liability statute 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.

An Australian company named Thermomix in Australia Pty Ltd imports kitchen appliances from a German company named Vorwerk & Co. KG. The German company is the manufacturer of kitchen appliances and it exports it to Thermomix in Australia Pty Ltd and Thermomix in Australia Pty Ltd in turn sells their imported goods within Australia through authorized persons deputed by them for selling the same to trade and retail customers.

Thus, Thermomix in Australia Pty Ltd are the imports and sellers of the goods. Now, as per section 7 of the Australia Consumer Law, a manufacture is a person who imports goods in Australia when the manufacture does not have place in Australia, puts goods together, holds himself to be the manufacture of the goods or puts its name on the goods[1].

Now, Vorwerk & Co. KG does not have a place of business in Australia and Thermomix in Australia Pty Ltd imports goods in Australia, thus, Thermomix in Australia Pty Ltd must be considered as a manufacture and any action under law of negligence, Civil liability Act or the Australian Consumer law can be brought against Thermomix in Australia Pty Ltd as it is a deem manufacture.

The appliances sold by the Thermomix in Australia Pty Ltd are not proper and thus as reported by Choice there were around 87 incidences which clarifies that the appliances are not proper and 18 persons were injured physically which required medical treatment. Hence due to the above said facts there is breach of norms of the ACL and Civil Liability Law 2002 etc.

Role of Personal Injury Damages Caps in Limiting Liability

 As per the content of the article published byhttps://www.choice.com.au/home-andliving/kitchen/all-in-one-kitchen-machines/articles/accc-takes-thermomix-to-federal-court160617, the report had been prepared which analyze the various laws that had been violated.

As per law of negligence no person should perform the acts in such manner that his acts would harm any third person. Every defendant has a duty that his acts must be performed in such a manner so that his acts must not harm anybody.

The law of negligence holds the manufacturer (including retailers) liable when damages are caused to the actual consumers because of the use of the defective product of the manufacture. The three ingredients of negligence if established hold the manufacture. The same are[2]:

1. Duty of care on the part of manufacture - The first ingredient to hold a manufacture negligent is that there must be duty of care imposed upon the manufacture. The duty of care implies that the manufacture must act in a proper manner so that no injury from his acts should be caused to any third person who is in proximity to the manufacture and who can be reasonably foreseeable by the manufacture. In Donoghue v Stevenson[3] the duty of care can be imposed when there are presence of two elements:
2. When the injured consumer is neighbor of the manufacture. The consumer is in such a position that the acts of the manufacture will affect the consumer. The parties are in proximity with each other so that the manufacture will have impact the consumer and is held in Baar v Snowy Mountains Hydro-Electric Authority[4].
3. When the consumer is reasonably foreseeable to the manufacture. It is necessary that the consumer must be reasonably foreseeable. In Haley v London Electricity Board[5] it was held that every consumer is reasonably foreseeable by the manufacture of the product.

In Coregas Pty Limited v Penford Australia Pty Limited (2012) it was rightly held that all the manufacturer, importer, supplier and seller all owe duty of care towards their customers and thus must act in such manner so that the duty is not violated in any of the situations.

1. Breach of Duty of care – The second step towards the negligence is Breach of duty of care. A person is said to had breached the duty when he does not take care and thus performs the acts without even taking the care that he should had adopted. Also even if the care was taken by him the level of care is to be seen as to whether the care taken by him was reasonable as per the situation. The level of care can be analyzed by taking into account the level of care a reasonable prudent person would had taken in the like situation. If the level of care of manufacturer matches with same then he cannot be said to have breached the duty of care. The standard of care depends upon the risk involved and is held in the leading case of Wyong Shire Council v Shirt[6].[7]

• Damages because of the breach of duty of care - The third step towards the negligence is the injury caused to the injured by the act of the manufacture. In case the injury is caused to the injured due to breach of duty of care on the part of the manufacturer then the manufacturer is liable, but the injury must be caused due to the breach of duty of care of the manufacturer. In case the same is not the case then the manufacture cannot be held liable and in case the injury caused is too remote then also the manufacturer is not liable for the injury caused to the inured.

When all these three steps are satisfied then only the manufacturer can be held liable under the law of negligence.

As per the facts of the case the company

Thermomix in Australia Pty Ltd was under the duty of care to sell those goods to customers which should not harm them in any way. As an importer it was his duty to sell the proper products. The duty is towards all the customers as they are the neighbor of the consumer as rightly held in Donoghue v Stevenson. The injury can be caused to the customers as they are in proximity with the company and thus the damage caused to them by using the product is reasonably foreseeable and not too remote.

The duty of care had been breached by the Thermomix in Australia Pty Ltd as the products supplied by it in the market lead to injury to its consumers. The company also did not followed the statutory provision as per which the company was to notify the defect in product within 48 hours of defect being coming to knowledge of the company.

As the consumers are affected by the use of product of the Thermomix in Australia Pty Ltd so they can claim the damage or loss suffered by them from the Thermomix in Australia Pty Ltd for the Thermomix in Australia Pty Ltd to be negligent under the law of negligence.

Hence the Thermomix in Australia Pty Ltd will have to pay the customers for the loss as per the law of negligence.

Rights of Injured Users under Australian Consumer Law

The Wrongs Act 1958, Victoria also applies the law of negligence.

The duty of care is imposed upon the manufacturer as he must comply with all the norms in order to evade liability as per law under the Wrongs Act 1958.

The part which is associated with the concept of duty of care to be adopted by a manufacturer is Part X of the Wrongs Act 1958. As per Section 48 of the wrongs Act 1958, each manufacturer is duty bound to provide safe and proper goods to its customer and must protect the consumers who are in proximity with the company from all reasonably foreseeable risks that might follow. The duty of care can only be imposed upon the manufacturer when the reasonable care as per the prudent person had not been taken by the manufacturer which the prudent person would had taken in the like situation. The level of care varies with the circumstances and situation.[8]

As per Section 49 of the Wrongs Act 1958 the liability upon the manufacturer can only be imposed if the loss caused to the customer is due to the act of the manufacturer. In case no injury or loss is caused or loss is caused due to some other reason than the manufacturer cannot be held liable under the Wrongs Act 1958.[9]

Thermomix in Australia Pty Ltd being an importer was aware that if the product was not proper then it may be harmful for the consumers. So as per section 50, the Thermomix in Australia Pty Ltd did not bought into the notice of the consumers that the product is not proper and thus had breached the duty of care which was on their part. As the Thermomix in Australia Pty Ltd there is breach section 48-50 as the injury had been caused due to the usage of goods of the Thermomix in Australia Pty Ltd to the consumers.

The Wrongs Act 1958 limits the damages to be paid to the injured by putting cap on the amount of damages to be paid to the injured. As in case the injured is to be paid under the negligence act for the injury suffered then this act will limit the amount to be awarded to the injured. The Wrongs Act 1958 limits the damages to the injured who face injury. The Wrongs Act 1958 applies to the injury caused due to negligence, breach of contract and breach of provisions of statues. The limit of awarding damages to injured is that the same is calculated as per section 281 of the Act, a) a discount rate of the percentage prescribed by the regulations; or (b) if no percentage is so prescribed—a discount rate of 5%. The above said limit is the maximum limit up to which the damages can be awarded under Act. The damages can be claimed under the head loss of earning capacity or loss of desire of financial support, but the amount can also be limited to the above said calculation.[10]

Importance of Compliance with Consumer Guarantees

The cap that had been restricted will only be beneficial for the persons coming under the high income group as the same will affect the lower income persons as the cap only grants the average of three times of weekly earnings. The 1958 Act provides advantage to the wrongdoers as the liability to be paid by them is thus limited by this Act.

Australian Consumer Law had been enacted for the benefit of the consumers in the society. Part 3-5 provides various rights to the consumers under the Australian Consumer Law. The rights can be availed by the consumers when the consumer guarantees as granted to them under part 3-2 are violated by the manufacturer of the product. The guarantees provided to a consumer cannot be limited under the act and no exclusion clause or limit clause can save the manufacturer in the Australian Consumer Law. In case exclusion clause is inserted by the manufacturer which puts limit on the consumer guarantees then same is considered to be void.[11]

The consumer guarantee is the guarantee that is applied to the manufacturer and the supplier or seller is duty bound to provide the details of the manufacturer to the consumer for the consumer to take action against the manufacturer. The consumer guarantees is applicable against the manufacture and if the information regarding the manufacture cannot be found then the supplier is the rightful person to approach. Section 7 includes a imported as manufacture when the manufacture has no place of business in Australia.

The product sold to the customer must be of the acceptable quality. In case the same are not of the acceptance quality then the same is in violation of Section 54 of the Australian Consumer Law. The product provide to the customer must be durable, safe to use and fit for the purpose for which they are bought by the consumer and is held in McWilliams Wines Ltd v Liaweena (NSW) Pty Ltd[12].

In case the buyer tells the seller the purpose for which he is buying the goods then the goods provided by the seller must be as in accordance with the purpose of the buyer if the same is not same then it is abuse of Section 55 of the Australian Consumer Law and not valid as per Australian Consumer Law.

The goods sold must be as per the description provided by the seller to the buyer if the same is not followed by the seller then he is in violation of section 56 of the Australian Consumer Law and is held in Varley v Whipp[13].

Limitations on Liability Imposed by Wrongs Act 1958, Victoria

As the Thermomix in Australia Pty Ltd is in breach of the consumer guarantees as by putting exclusion clause the said Thermomix in Australia Pty Ltd cannot get away with the liability on their part. As the Thermomix in Australia Pty Ltd is the importer and the products are being manufactured in Germany by a German company so the Thermomix in Australia Pty Ltd will have to comply with the provisions of the Australian Consumer Law.

In case the guarantees that are not be violated as per part 3-2 of the Australian Consumer Law are being violated then in such case the consumer can approach the forum under the Australian Consumer Law under part 3-5 of the Australian Consumer Law for claiming under the said act.

In case the goods sold by the seller are faulty then he must replace or repair them in case if he denied same then he is in violation of the Australian Consumer Law, it is a consumer guarantee which is with the buyer of the product when he buys the product.

The goods sold by Thermomix are not of proper and acceptable quality and hence there is violation of section 56 of the Australian Consumer Law. Moreover the goods are also not safe to use and dies not also fit the purpose for which they had been bought hence the sections and provisions of the Australian Consumer Law had been breached.

Also the Thermomix has not provided for any replacement or return procedure so that is also a breach as per the Australian Consumer Law.

The consumer guarantees had been breached by the German Company who is the manufacturer of the goods hence the consumers can claim from Germany Company being the manufacturer under the Australian Consumer Law.

In case of injury the consumer can move the forum for the losses suffered by him as per the Australian Consumer Law and the supplier or the manufacturer as the case may be liable for the fault to the consumer for the loss suffered by the consumer.

The manufacturer can protect himself by taking plea that the product was not faulty when the same was sold and thus became faulty afterwards. Also he can take plea that the technology had advanced and the defect which exist in the product could not be traced with such technology as due to change of technology the same is visible and there is no fault on the end of the manufacturer.

As due to various violations by Thermomix the ACCC had initiated legal action against it. ACCC can impose costs, penalties and seek declaration and injunction against the Thermomix. Court ruled in favor of ACCC and Thermomix and $4.6 million was imposed upon the Thermomix in April 2018 for deceptive conduct of company against the customers.

Reference Lists

Books/.Articles/Journals

Barnett, K and Harder, S. 2014. Remedies in Australian Private Law. Cambridge University Press.

Corones, S. 2012. The Australian Consumer Law. Lawbook Company.

DeLaune, C; Ladner, P; McTier, L; Tollefson, J; Lawrence, J. 2016. Fundamentals of Nursing: Australia & NZ Edition – Revised. Cengage AU.

Gibson, A and Fraser, D. 2013. Business Law 2014. Pearson Higher Education AU.

Latimer, P. 2011. Australian Consumer Law 2012. CCH Australia Limited.

Plunkett, J. 2018. The Duty of Care in Negligence, Bloomsbury Publishing.

Case Laws

Baar v Snowy Mountains Hydro-Electric Authority (1970).

Donoghue v Stevenson (1932).

Haley v London Electricity Board (1965).

McWilliams Wines Ltd v Liaweena (NSW) Pty Ltd (1988).

Wyong Shire Council v Shirt (1980).

Varley v Whipp (1900)

[1] Paul Latimer. 2011. Australian Consumer Law 2012. CCH Australia Limited.

[2]  Andy Gibson and Douglas Fraser. 2013. Business Law 2014. Pearson Higher Education AU.

[3] Donoghue v Stevenson (1932).

[4] Baar v Snowy Mountains Hydro-Electric Authority (1970).

[5] Haley v London Electricity Board (1965).

[6] Wyong Shire Council v Shirt (1980).

[7] James Plunkett. 2018. The Duty of Care in Negligence, Bloomsbury Publishing.

[8] ue Carter DeLaune, Patricia K. Ladner, Lauren McTier, Joanne Tollefson , Joanne Lawrence. 2016. Fundamentals of Nursing: Australia & NZ Edition – Revised. Cengage AU.

[9] Katy Barnett and  Sirko Harder. 2014. Remedies in Australian Private Law. Cambridge University Press.

[10] Paul Latimer. N1.

[11] Stephen Corones. 2012. The Australian Consumer Law. Lawbook Company.

[12] McWilliams Wines Ltd v Liaweena (NSW) Pty Ltd (1988).

[13] Varley v Whipp (1900).