Liability In Tort Of Negligence And Australian Consumer Law - Samsung Galaxy Note 7 Case

The Samsung Galaxy Note 7 smartphone was a product produced and marketed by Samsung Electronics and sold in Australia by Samsung Electronics Australia, and local electronics stores. Failures in the manufacturing process and design faults of the smarlphone's battery led to overheating problems. 

Paul Latimer. Australian Business Law ¶4-010 to 114-220: and ¶7-215

https://www.choice.com.autelectronics-and-technoloqviphonestmobile-phones/news/findinqs-samsunq-qalaxy-note7-investiqation and

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1. Explain the basis of any liability in the tort of negligence that any manufacturer or distributor of the Samsung Galaxy Note 7 might have to its Australian consumers. Leave aside any 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 would apply in your State. 

2. Do the Australian consumers you considered in question 1 have any rights under Part 3-5 of Australian Consumer Law (ACL) against any manufacturer or distributor? If so. on what grounds could They have brought such an ACL action and what defence might a sued manufacturer or distributor have? Again leave aside any question of the amount of damages.

3. Discuss the role that the relevant caps on personal injuries damages might have played in limiting the extent of any possible tort or ACL liability that you considered in question 1 and in question 2.

Liability in Tort of Negligence

Whether or not the manufacturer, along with the distributor of the device known as Samsung Galaxy Note 7, can be held liable for negligence due to the incident took place, towards the Australian Consumers?

A tort is considered as a civil wrong carried on and attracts civil liability, towards the person undertaking a tort (Statsky, 2011). One of torts in Australia is negligence. When an individual owes a duty of care towards the other person, due to the work undertaken by them, and this duty is contravened which causes some loss or injury to the other person, it is a case of negligence (Bailey, 2016). For establishing that a case of negligence is present, it has to be shown that there is a direct causation between the injury and the negligence of the party who owed the duty of care. Along with this, it has to be shown that the loss was foreseeable in a reasonable manner (Legal Services Commission, 2016). This is coupled with the essential elements of negligence, which have to be there to establish a case of negligence. These basic elements relate to the duty of care, contravention of duty of care, resultant injury or harm. Only when these elements are present, can a case of negligence be made, and damages can be claimed for the loss borne (Gibson & Fraser, 2014).

In the case of Donoghue v Stevenson [1932] UKHL 100, a prime example of the duty of care, which was owed by a manufacturer, towards their consumers, was established. The manufacturer, in this case, was Stevenson, who was the manufacturer of a ginger beer bottle. This manufactured ginger beer bottle was consumed by the consumer, Donoghue, while she was at a café. It was claimed upon by manufacturer that he did not owe any duty of care towards the consumer. However, the court held that being the manufacturer of the ginger beer bottle he had to ensure that the bottles were safe for consumption. When a dead snail was found inside the bottle manufactured by Stevenson, due to which, Donoghue fell sick, it depicted the breach of duty of care and a case of negligence was established. As a result of this, the manufacturer had to compensate the consumer for the losses, due to the presence of negligence (Latimer, 2012).

In the matter of Caparo Industries plc v Dickman [1990] 2 AC 605, 618, a threefold test was presented by the Court of Appeal, which requires that for making a claim of negligence, it has to be shown that there was a proximity between the injured and the duty breaching party, there was a reasonable foreseeability of the loss, and lastly, the imposed penalty is just, fair and reasonable in nature (Lunney & Oliphant, 2013). As a result of the lack of foreseeability in the conduct of defendant in Bolton v. Stone [1951] AC 850, [1951] 1 All ER 1078, the plaintiff was not awarded any damages by the court, as the defendant could not be held as negligent (Swarb, 2016).

Application of Tort of Negligence to Samsung Galaxy Note 7 Case

Once the duty of care is established, the breach of the same has to be shown. For this, the case of Paris v Stepney Borough Council [1951] AC 367 acts as a good example. In this case, Paris was blind in one eye and this was known to the Council, when he went on to work with them. One day, while he was working on a rusted bolt, it flew and hit him in his working eye, as a result of which, he was completely blinded. It was held by the court, that the Council, but not providing him with the safety gear, had contravened their duty of care, owed to Paris. And so, Paris was ordered to be compensated by the Council for their breach of duty of care, and the ensuing negligence (Martin & Lancer, 2013).

Once a duty of care and its breach have been shown, the next requirement is to show that an injury or harm was caused due to the action which led to the breach of the duty of care. The loss needs to be significant in nature and cannot be too remote. In case the loss is held as being too remote, damages cannot be awarded even if a case of negligence is present. This is even true in such cases where there is no direct causation amid the contravention of duty of care and the injury received by the other person (Latimer, 2012). In the matter of Wyong Shire Council v. Shirt (1980) 146 CLR 4, the risk of an injury taking place was held as would have been held by a reasonable person, and it was held that the risk had to be foreseeable for a claim of negligence to hold (Jade, 2017a). As a result of the loss being too remote, the damages were not awarded for the negligence which took place in Overseas Tankship (UK) Ltd v Morts Dock and Engineering Co Ltd [1961] UKPC 2 (H2O, 2016).

Tort of negligence is covered under the common law. However, similar provisions are present in the statutory law of the Wrongs Act, 1958. Division 3 of this act provides the provisions pertaining to causation. Under section 18 of the Wrongs Act, an individual is deemed to have been negligence when such individual fails in taking the requisite precautions against the risk of harm, even when the risk was aptly foreseeable and even not insignificant in nature, and that in similar situations, a reasonable individual would have applied such precaution (Legislation, 2010).

The manufacturer, as highlighted above, owes a duty of care towards its consumers. And so, being the manufacturer of the device of Samsung Galaxy Note 7, based on Donoghue v Stevenson, a duty of care was owed. Hence, when the phone blasted, resulting in damages to the hotel and the individual in it, along with the losses faced by the other consumers, this duty was breached. And so, the manufacturer and distributor (as even they are responsible for ensuring the safety of products), would be held as negligent in this case. This is due to foreseeability of loss, as a result of overheating of battery and direct causation between the injury and the negligence.

Australian Consumer Law

Conclusion  

Hence, under the tort of negligence, the manufacturer and distributor are liable to the Australian Consumers.

Whether or not, the manufacturer or distributor is liable under the rights available to the consumers in Australia, under the Part 3-5 of Australian Consumer Law (ACL)?

Schedule 2 of the Competition and Consumer Act 2010 (CCA) provides the provisions for making certain that the trade if business is carried in a fair manner and the consumers are protected. This part of the CCA is famous as the Australian Consumer Law (ACL) (Coorey, 2015). The consumers, through the provisions of ACL are protected from issues in form of misleading or deceptive conduct, false representation and various other provisions (Corones, 2012).

In order to make a claim against the consumer, the first requirement is that the manufacturer has to be a manufacturer as per section 7 of this act and also has to be a supplier of goods under section 2. Though, it is not necessary that the individual is a consumer in terms of section 3. A safety defect, as per section 9 of the ACL also has to be present (Australasian Legal Information Institute, 2017).

The manufacturer is held as being liable for the goods manufactured by them for the effect in their safety as per Part 3-5 of the ACL. As per section 138 of the ACL, the manufacturer has to bear the liability for the damages or loss incurred by the other person, when the goods are supplied by such a manufacturer and the goods have a safety defect, as a result of which, the person is injured. The liability also arises for death of the individual on the manufacturer as per this section. When an individual suffers a loss or damage, as a result of another person being injured or from their death, due to the safety defect, the manufacturer is liable as per section 139 of this act. Section 140 provides the liability of a manufacturer for the safety defect which results in goods being damaged or destroyed. Section1 41 provides this liability, due to the safety defect, for the damage to fixtures, land or building of an individual (Australasian Legal Information Institute, 2017).

In Glendale Chemical Products Pty Ltd v Australian Competition & Consumer Commission & Anor [1998] FCA 1571, P put down boiling water in a blocked slower pipe, followed by the dry Glendale Caustic Soda through the pipe. Due to this, P burned his face and eyes. Under Part 3-5 of the ACL, P successfully made a claim against D. D was held liable as he labeled and repackaged the bulk caustic soda, which made him the manufacturer of the product and hence, liable (Jade, 2017b).

Certain defenses are provided in section 142 of the ACL to the manufacturer. For instance, section 142(a)(iii) provides that a manufacturer can evade their liability if it can be established that the product was absent of defects when the same was supplied. Under section 142(c), the lack of defect being visible as per the scientific or technical knowledge can also be shown. Along with this, the defect as being an omission of another can be established under section 142(d) of ACL.

Rights of Australian Consumers under Part 3-5 of ACL

The given case highlights that a claim can easily be made against the manufacturer owing to the sections quoted above. Along with this, as per Glendale Chemical Products Pty Ltd v Australian Competition & Consumer Commission & Anor, even the distributor is liable. And even though the defenses can be used by the manufacturer and distributor, given under section 142 of the ACL, the same would not provide much relief, due to the wide number of cases of failure of the device. So, they would have to compensate the people for their losses.

Conclusion  

So, both the manufacturer and distributor of the device are liable to the Australian consumers under the Part 3-5 of ACL. Further, the available defenses would not prove to be much helpful.

Whether or not, are there any applicable caps regarding the personal injuries applicable in the cases highlighted above?

The Wrongs Act, 1958, has been recently amended through the Wrongs Act, 2015, as a result of which, a number of provisions have been changed to the legislation for personal injuries in the state of Victoria. According to this amended act, the threshold for the impairment level has been brought down for both spinal, as well as, psychiatric injuries. Hence, for the spinal injuries the level is set at or equal to 5%, and for the psychiatric injuries, the level is set at or equal to 10%, for accessing the damages owing to non-economic losses, where the same were unavailable in the past. The cap has been increased to $577,050 under section 28G of this act (Thomas, 2015). There has to be presence of significant injury for a claim to be made under the Wrongs Act for the damages (Law Handbook, 2015).

The provisions, under section 28F(2) of this act, regarding the economic losses also have been changed. The economic losses to the maximum, which can now be awarded, stand at the value which is three times the average minimum weekly earnings of the person. And for the claims which have been raised by the dependant of the deceased, before the cap is applied, the deduction for personal living expenses of the deceased has to be applied. For the loss of capacity of care of another, the damages have been allowed under section 28ID (Thomas, 2015).

Here, the individual whose hand was burnt or the hotel, whose property was destroyed, can claim for damages under the act, based on the limits prescribed above (Griffith, 2016).

Conclusion  

To conclude, there are certain applicable caps regarding the personal injuries applicable in the cases highlighted above.

References

Australasian Legal Information Institute. (2017). Competition and Consumer Act 2010 - Schedule 2. Retrieved from: https://www.austlii.edu.au/au/legis/cth/consol_act/caca2010265/sch2.html

Bailey, J. (2016). Construction Law (2^nd ed.). Oxon: Routledge.

Coorey, A. (2015). Australian Consumer Law. London, United Kingdom: LexisNexis Butterworths.

Corones, S.G. (2012). The Australian Consumer Law. New South Wales: Lawbook Company.

Gibson, A., & Fraser, D. (2014). Business Law 2014 (8^th ed.). Melbourne: Pearson Education Australia.

Griffith, C. (2016). Exploding Samsung Note7 ruins Australian hotel room. Retrieved from: https://www.theaustralian.com.au/business/technology/exploding-samsung-note7-ruins-australian-hotel-room/news-story/093d67da670f8c1ed20df88aafbb2f66

H2O. (2016). Wagon Mound (No. 1) -- "The Oil in the Wharf Case". [Online] Retrieved from: https://h2o.law.harvard.edu/collages/4919

Jade. (2017a). Wyong Shire Council v. Shirt. Retrieved from: https://jade.io/article/66842

Jade. (2017b). Glendale Chemical Products Pty Ltd v Australian Competition & Consumer Commission & Anor [1998] FCA 1571; 90 FCR 40. Retrieved from: https://jade.io/j/?a=outline&id=116054

Latimer, P. (2012). Australian Business Law 2012 (31^st ed.). Sydney, NSW: CCH Australia Limited.

Law Handbook. (2015). Key legislation: the Wrongs Act. Retrieved from: https://www.lawhandbook.org.au/10_01_02_key_legislation_the_wrongs_act/

Legal Services Commission. (2016). Negligence. Retrieved from: https://www.lawhandbook.sa.gov.au/ch01s05.php

Legislation. (2010). Wrongs Act 1958. Retrieved from: https://www.legislation.vic.gov.au/Domino/Web_Notes/LDMS/LTObject_Store/LTObjSt5.nsf/DDE300B846EED9C7CA257616000A3571/F1F5385B484503F3CA2577C1001B5BE4/$FILE/58-6420a103.pdf

Lunney, M., & Oliphant, K. (2013). Tort Law: Text and Materials (5^th ed.). Oxford: Oxford University Press.

Martin, J., & Lancer, D. (2013). AQA Law for AS Fifth Edition (5^th ed.). Oxon: Hachette UK.

Statsky, W.P. (2011). Essentials of Torts (3^rd ed.). New York: Cengage Learning.

Swarb. (2016). Bolton v Stone: HL 10 May 1951. Retrieved from: https://swarb.co.uk/bolton-v-stone-hl-10-may-1951/

Thomas, K. (2015). Significant changes to personal injuries legislation in Victoria. Retrieved from: https://www.sparke.com.au/insights/significant-changes-to-personal-injuries-legislation-in-victoria/