Ann's Rights: Negligence, ACL And Liability Of Supermarkets Pty. Ltd.

Issue A: Ann's Rights Against Smallgoods Pty. Ltd. under the Tort of Negligence and s54 and 138 of the ACL

1. Smallgoods Pty. Ltd. is a manufacturer of processed meat products including salami. During the manufacturing process, the salami is put through a treatment process that kills bacteria which is known in the small goods industry to form in the salami during production. The bacteria is very small and cannot be seen with the human eye. During the manufacture of a particular batch of salami marked "use by 31 July 2018", Smallgoods Pty Ltd omitted to put the batch through the bacteria treatment process. The salami was then packaged in air-tight plastic packaging which allows the purchaser to see the salami. 

This batch of salami was sold to Supermarkets Pty. Ltd. for sale in its supermarket in Melbourne. On 20 July 2018, Ann purchased a package of salami which was marked "use by 31 July 2018" from the supermarket. Above the smallgoods section of the supermarket was a large sign which read "The Liability of Supermarkets Pty. Ltd." for any loss or damage caused by any product it sells is limited to the cost of replacing the product". 

Ann properly stored the salami in the refrigerator but did not look at the "use by" date. On 7 August 2018, she consumed part of the salami which contained bacteria and she became very ill. She required hospitalisation, incurring large medical expenses and was unable to go to work for two months.

(a) Compare Ann's rights against the salami manufacturer under the tort of negligence with her rights under ss54 and 138 of the ACL .

(b) Aside from the rights discussed above, explain whether Ann has any (and if so, what) rights against Supermarkets Pty. Ltd. under the ACL in relation to the contaminated salami . 

2. For some years, Shanti had worked night shift at the U-Bewt Shoes factory, where she was the cutting-machine operator. Her shift started at 3pm and finished at llpm. She travelled to work by car, and the factory had a car park in which she parked. When she left work at 1 1pm, the car park was fairly empty, and quite dark. She was the only one leaving at that time, and she had to walk over 100 metres to reach her car. Shanti had, in the past, caught a glimpse of a person in the bushes surrounding the car park, but had never been able to identify the person, since the carpark was unlit. Shanti had mentioned her concerns about walking in the car park at night to her manager, Mr Collins, and suggested that the factory erect some lights, but he had told her that there was nothing to worry about. The car park was fenced, and there was a security guard at the gateway to the car park. Shanti replied that the security guard was not of much help to her, since he was 500 metres from the actual car park. Shanti also told Mr Collins that everyone knew that some cars had been broken into. Mr Collins said that he had heard about the problem but said that nothing more needed to be done, since the car park was secure. 

A week after this conversation, Shanti was walking to her car when she saw a figure at one of the other cars. When she caught a clearer view she saw that it was a man, and that he was clearly breaking into her car. She yelled out, and the man ran towards her and punched her and knocked her to the ground. He then kicked her, and grabbed her handbag before running off. 

As a result of the injuries that Shanti suffered during the attack she was unable to work for several months. She blames the factory for the attack, and wants to sue. Advise Shanti about the likely success of her action .

Issue A: Ann's Rights Against Smallgoods Pty. Ltd. under the Tort of Negligence and s54 and 138 of the ACL

1. There are two major issues that are raised in the given scenario and both the issues are dealt individually.

Can Ann sue the manufacturer of the salami both under?

1. The Australian Consumer law – section 54 and section 138
2. The Law of negligence

In the famous case of (Donoghue v. Stevenson, 1932), the nature, scope and application of the law of negligece was rightly analysed by Lord Atkin making specficic reference to the neighbourhood principle. The court of appeal decided that every manufcaturer owns a duty of care towards his neighbour. If the duty is not comply with by such manufcatyrer resulting in injury to his neighbour then it is nothing but an act that comes within the preview of negligence. in the leading case of (Caparo Industries PLC v Dickman , 1990) and (Anns v Merton London Borough Council , 1978) there are three basic principles that were evolved that are required to prove an action of negligence agiant the manufcatuter/defendant. The elements includes: (Plunkett, 2018)

1. The element of Duty of Care – The duty to gave protection and safeguard to the consumers by the manufacturer is the legal duty that is enshrined by Lord Atkin in the leading case of Donoghue v. Stevenson. But this legal duty which is casted on the mnufctaurer is applicable on the complinace of two elements:
2. The element of proximty which is also known as the neighborhood principle. The principle implies that the association between the manubfcatuer and the consumer is so close and proximte that the consumer is dieectly affected by any acts and omission on the part of the defenadnt and thus the consumer is considered to be the neighbor of the manufcature. The court held that every person has a legal duty to proetect his neighbouirs from his actions including omissions. Post Donoghue v. Stevensonthe neighbour hood principle is also analysed in (Anns v Merton London Borough Council , 1978).
3. The element of resonbale foreseeabilty muct also exists which submits that it is only those neighbours which can be resonbaly foresee by the manufcaturers that he owns a legal duty of care and not to any other person with whom he has no connections and is evaluated in (Tame v New South Wales , 2002).
4. The element of volition of the duty – The duty of care and protection is a very important duty. The failure to obey the duty to the level that is expected from manufacturer like a normal prudent man in the similar situation, if not met results in violation and is analysed in (Bolton v Stone , 1951)and (Blyth v Birmingham Waterworks Co , 1956).
5. The element of injuries – the violation should bring some loss to the consumer. The loss should be the direct results of the manufacturer’s action and is reasonably predicted by the manufacturer (no remoteness) as analysed in (Overseas Tankship (U.K.) Ltd. Moris Dock and Engineering Co. Ltd , 1961)and (South Australia Asset Management Co v York Montague , 1996).

The compliance of all the elements against the manufacturer makes him negligent.

It is not only in common law, but also in Australian Consumer Law (ACL), that certain duties are imposed on the manufacturer. As per section 3 of the ACL every person who is purchasing goods for value up to $40,000 for domestic use is a consumer. The ACL has imposed few implied guarantees that every manufacture must cater against the consumers.

One such implied guarantee is under section 54. As per section 54 the goods that are purchased by the consumer from the manufacture should be of acceptable quality and is analyses in (Grant v Australian Knitting Mills , 1936) It is the defects, durability, safety, appearance, finish of the goods that define whether the good are of acceptable quality of not and is analyzed in (ACCC v Valve Corporation (No 3) , 2016). Now, if the manufcaturer or the supplier has voilated section 54 and because of the defect the consumers faces any kind of injury or death then the consumer has the right to sue the manufcaturer and claim damages. (Gillies, 2004)

The law is now applied.

Smallgoods Pty. Ltd manufacturers Salami. The Salami is prepared by treating it through a process wherein all its bacteria rare killed which is not visible by normal eyes. Smallgoods Pty. Ltd produces a batch of salami which is to be consumed by 31^st July 2018 and the same is also marked on the packets of the salami. However, the batch was not put through the treatment and is thus not safe to consume. The manufacture supplied the salami to Supermarkets Pty. Ltd from where the same is purchased by Ann.

Issue B: Ann's Rights Against Supermarkets Pty. Ltd. under the ACL in Relation to the Contaminated Salami

Ann has purchased the salami for consumption and thus as per section 3 of ACL she is a consumer. Now, the Smallgoods Pty. Ltd must make sure that the salami that is produced by it should be safe and must be defect free and is accessible to consume. But, since the salami is not put through the treatment process and is not safe to eat. So, section 54 is violated. Since Ann become ill after eating the salami thus as per section 138, injury is caused to Ann because of breach of section 54, so, she can sue Smallgoods Pty. Ltd.

Now, Smallgoods Pty. Ltd is a manufacturer and thus by applying Donoghue v. Stevenson (1932), Smallgoods Pty. Ltd owns a duty of care against Ann because Ann is the consumer of the product manufactured by Smallgoods Pty. Ltd, so, there exist a relationship of proximity. Also, every manufacture (Smallgoods Pty. Ltd) can foresee its consumers (Ann). However, this duty is breached by Smallgoods Pty. Ltd as the salami is not put through the treatment process. So, the level of care  is not met as expected from Smallgoods Pty. Ltd. because of the breach, Ann suffered loss and thus, Smallgoods Pty. Ltd is negligent.

Conclusion 

Since Smallgoods Pty. Ltd has not complied with its duty of care resulting in loss to Ann, thus, Smallgoods Pty. Ltd is negligent. Also, Smallgoods Pty. Ltd is in violation of section 54 as the goods are defective. So, Ann can sue Smallgoods Pty. Ltd for breach of ACL guarantees.

Can Ann sue Supermarkets Pty. Ltd for violation of the implied guarantees under ACL?

As per section 3 of the ACL every person who is purchasing goods for value up to $40,000 for domestic use is a consumer. The ACL has imposed few implied guarantees that every manufacture must cater against the consumers. As per section 7 of the ACL, the implied guarantees are not only be comply with by the manufacturer but also by the suppliers of the product. Some of the impaled guarantees comprises of: (Gillies, 2004)

The manufacture must make sure that the goods that are purchased by the consumer must be possessed by him without any disturbance and is held under section 52 (Healing (Sales) Pty Ltd v Inglis Electric Pty Ltd , 1968). Further, the goods that are purchased by the consumer should not be attached with any kind of security, charge, and encumbrance and is held in section 53 of ACL. The manufacturer must make sure that if the consumer has specified his use for which he is purchasing the goods then the manufacturer must make sure that the goods must be fit for such disclosed purpose and is held in section 55 of ACL and is analyzed in (McWilliams Wines Ltd v Liaweena (NSW) Pty Ltd , 1988). Also, if the consumer has specified ay description, then, the good supplied must match with such description as per section 56 of ACL (Ferraro v DBN Holdings Aust Pty Ltd T/As Sports Auto Group , 2015).

Conclusion

As per section 64, these guarantees are not to be modified or excluded and any clause of such nature is void.

Smallgoods Pty. Ltd produces a batch of salami which is to be consumed by 31^st July 2018 but the batch was not put through the treatment and is thus not safe to consume. The manufacture supplied the salami to Supermarkets Pty. Ltd from where the same is purchased by Ann.

Now, Supermarkets Pty. Ltd is the supplier and the implied guarantees will also apply on it as per section 7. But, Supermarkets Pty. Ltd is in violation of the giantess as the salami which is consumed by Ann was not adequate and fit for consumption, the reason for which the same is bought by Ann and thus section 56 is beached. Also, the quality is not adequate making it unsafe and defective and thus section 55 is also breached.

Supermarkets Pty. Ltd cannot rely on its exclusion clause as the same is in violation of section 64 of ACL.

Conclusion

So, Supermarkets Pty. Ltd has breached several guarantees and the same cannot be excluded, so, Ann can sue Supermarkets Pty. Ltd.

Can the factory be held liable for the loss that is incurred by Shanti?

In the civil law, there are numerous kinds of laws that prevails and some of the most important laws that govern the raised issue are the law of negligence, the law of vicarious liability and the Civil liability Act 2002.

The law of negligence in (Donoghue v. Stevenson, 1932) has establihed that every defendant has the legal duty to carry out his acts and makes sure that because of his acts there should not be any kind of harm that is caused to the plaintiff. The plaintiff are the persons who are his neighbours, that is, with whom he shares a relationhsip of proximty and who he can foresee resonbaly. When this duty is imposed then it must be comply with consiering the  level and stabrd of care that is expected from him in the given situtiuon. When this level of duty fall short of the stabdrad then there is vpialtion of duty. (Plunkett, 2018)

Further, as per section 5B of the Civil Liability act 2002, the standard of care is not met considering the probability of harm. The probability is considered by considering the level of precautions that are likely to take or the seriousness of the harm, etc.

It is necessary that because of the voilation of duty, the plaintiff have suffered harm which is not rempte and is caused because of the breach of the defendant. when these elements are comply with then the defendant is negligent (Scott v Davis , 2000)

But, a defendannt can protect himslef by sttaing that the loss that is cused to the plaintiff is also caused beacsue he himslef has contrbuted to his owj loss and thus the liabilty can be rediced proppryionalty.

Many a times, the loss that is acused to the plaintiff is caused because of the negligent actions of the emplyee. In such situation, the liabilty that is imposed on the emplyee can be shifted to the emplyer if the acts that are carried out by the emplyee is within the course of the emplyment.

The law oif vicarious liabilty submits that the emplyer and the emplyee are in the relationhsip of a master and servant. That the emplyee is carrying out his action son the comand of the emplyer and the acts are not in his personal capacity (Hollis v Vabu , 2001). When the acts are carrie doyt by the emplyee under his course of emplyemnt and such acts when cause loss to the plaintiff which is resonably forseeale by him and with whom he share proximite relationhsip, then, such loss is not cater by the emplyee but by the emplyer under the law of vicarious liabilty (Honeywill and Stein Ltd v Larkin Brothers Ltd , 1934).

U-Bewt Shoes factory has employed Shanti. She is working at later hours of the day. She parks her car at the parking of the U-Bewt Shoes factory which is managed by its manager Mr Collins.

Now, Mr Collins can be held negligent for causing harm to Shanti because of the following reasons;

1. Mr Collins owns a duty of care against Shanti. Mr Collins is aware that Shanti uses the car parking at later nights. Thus, Mr Collins a relationship of proximity with Shanti and he can also reasonably foresee Shanti. Thus, there is a legal duty which must be cater by Mr Collins so that no harm is caused to Shanti;
2. Now, this duty is not met by Mr Collins. This is because Shanti has told Mr Collins that he can anticipate the presence of some unidentified men in the parking lot. There was also news of the presence of some unknown men the parking that is breaking the cars of the people. However, knowing this fact Mr Collins still did nothing to make the parking lot a safer place conserving the warning that are coming from people and from Shanti. The level of care that is required is not met by Mr Collins.
3. Shanti suffered loss when the unidentified men while breaking into the car of Shanti hit her. This loss is caused to Shanti because of the non - compliance of the duty of care on the part of Mr Collins.

So, Mr Collins is liable under the law of negligence.

But, this liability can be shifted to U-Bewt Shoes factory because;

1. Mr Collin is the employee of U-Bewt Shoes factory and is carrying on his duties as per the command of U-Bewt Shoes factory.
2. It is under the command of U-Bewt Shoes factory that Mr Collin is satisfying Shanti that the car parking is a safe place.
3. While catering his duties as an employee, Mr Collins has indulged in actions which has caused loss to Shanti.

So, by applying vicarious liability the loss that is caused to Shanti will not be inflicted on Mr Collins but it is the factory, that is, U-Bewt Shoes factory which is liable for the loss that is faced by Shanti.

But, the U-Bewt Shoes factory can rely on the defense of contributory negligence as Shanti is aware that the parking is not a safe place to move but knowing the said fact she still choose to convey her commutation from the parking lot only. Thus, Shanti herself has contributed to her own loss.

Conclusion

Shanti can sue Mr Collins under the law of negligence. But the liability that can be imposed on Mr Collins can be shifted to U-Bewt Shoes factory under the law of vicarious liability as the acts of Mr Collins are carried under the course of employment and commnd of U-Bewt Shoes factory. So, U-Bewt Shoes factory is liable. But, U-Bewt Shoes factory can rely on the defense of contributory negligence as Shanti herself is also liable for the loss that is incurred to her.

ACCC v Valve Corporation (No 3) (2016).

Anns v Merton London Borough Council (1978).

Blyth v Birmingham Waterworks Co (1956).

Bolton v Stone (1951).

Caparo Industries PLC v Dickman (1990).

Donoghue v. Stevenson (1932).

Ferraro v DBN Holdings Aust Pty Ltd T/As Sports Auto Group (2015).

Gillies, P. (2004). Business law. . Australia: Federation Press.

Grant v Australian Knitting Mills (1936).

Healing (Sales) Pty Ltd v Inglis Electric Pty Ltd (1968).

Hollis v Vabu (2001).

Honeywill and Stein Ltd v Larkin Brothers Ltd (1934).

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

Overseas Tankship (U.K.) Ltd. Moris Dock and Engineering Co. Ltd (1961).

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

Scott v Davis (2000).

South Australia Asset Management Co v York Montague (1996).

Tame v New South Wales (2002).