Comparison Of Ann's Rights Under Law Of Negligence And Under Ss54 And 138 Of ACL, And Rights Against Supermarkets Pty. Ltd Under ACL In Relation To Contaminated Salami.

Issue 1

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 11pm. She travelled to work by car, and the factory had a car park in which she parked. When she left work at 11pm, 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

Compare Ann’s rights against the salami manufacturer under the tort of negligence with her rights under ss54 and 138 of the ACL?

Under the law of negligence a manufacturer is held to be liable for the loss that is caused to the consumer because of his acts and omissions. In (Donoghue v. Stevenson , 1932), Lord Atkin submitted that a manufacturer is owned with the duty of care against that plaintiff who is: (Latimer, 2012)

1. The neighbour of the defendant, that is, the plaintiff and defendant are so closely connected to each other that the plaintiff will directly get affected by the acts of the defendant (Anns v Merton London Borough Council , 1978), and;
2. That the defendant can reasonably foresee the plaintiff (Topp v London Country Bus , 1993).

When against such plaintiff the level of care that is expected from the defendant is not met, that is, the level of care short fall the level actually required in the given situation, then, there is breach of the duty (Reid v Commercial Club (Albury) Ltd , 2014). Because of breach of duty there should be some loss that must be caused to the plaintiff. The loss must be caused is directly because of the acts of the defendant (causation) and is reasonably foreseeable (not remote) (Overseas Tankship (U.K.) Ltd. Moris Dock and Engineering Co. Ltd , 1961).

Further, as per section 54 of the Australian Consumer Law (ACL), every supplier or the manufacturer must make sure that the goods that are supplied to the consumer are of acceptable quality (Grant v Australian Knitting Mills , 1936). Acceptable quality can be analyzed by considering the finish, defects, appearance of the goods, whether the goods are fit for the purpose acquired, are safe and durable, etc (ACCC v Valve Corporation (No 3) , 2016). The quality of the goods can also be analyzed by considering any statement or claims that are made by the manufacturer or the supplier. (Gillies, 2004)

As per section 138 of ACL, if the consumer because of the defective goods suffers injury or death then it is the manufacturer who will be held liable for the same.

As pr the facts, Smallgoods Pty. Ltd is the manufacturer of the processed meat including Salami. During the production of Salami, its bacteria are killed, a process which is known in the industry. A batch of salami is produced with a mark “use by 31 July 2018’. But, this batch was not put through the bacteria treatment process. The salami was dispatched in a transparent air tight plastic packaging.  The Salami was sold to Supermarkets Pty. Ltd for further sale which was purchased by Ann who becomes ill after its consumption.

Now, under the law of negligence, Smallgoods Pty. Ltd is the manufacturer and thus as per (Donoghue v. Stevenson , 1932), the company must make sure that no act of it should cause harm to any consumer. The duty exits for the consumers as all the consumers of the salami are in proximate relationship with the company. However, the company forgets to put the salami in the treatment process. This act is nothing but the breach of its duty as it does not met the standard level of care that is expected in the given situation. Because of breach, Ann suffered loss and was hospitalized. Thus, the company is totally liable under the law of negligence.

Rule

Also, Anncan sue the company under section 54 of ACL as the Salami that is manufactured by the company is not of the acceptable quality as the name was not safe to consumer and is defective in nature. The goods are not fit for consumption and thus there is clear breach 54 of ACL.

Conclusion

Thus, Ann has the right to sue the Salami manufacturer both under the law of negligence and under section 54 of ACL. Ann can claim damages for the injuries that are caused to her under section 138 of ACL.

Whether Ann has any rights against Supermarkets Pty. Ltd. under the ACL in relation to the contaminated salami?

Section 3 of ACL submits that the provisions of ACL are applicable on those consumers who have acquired the good of value up to $40,000 for personal or household use.

As per section 7, every manufacturer and every supplier must comply with the consumer guarantees and as per section 64 such guarantees cannot be modified or restricted or excluded.

The major consumer guarantees includes (Mondaq, 2018):

1. as per section 52 every consumer has the right to an undisturbed possession of the goods so acquired (Healing (Sales) Pty Ltd v Inglis Electric Pty Ltd , 1968);
2. as per section 53 every good that is supplied by the supplier must be free from any encumbrance or charge or security;
3. as per section 55, if the consumer has disclosed the purpose for which the goods are so acquired then the goods that are actually supplied by the supplier must comply with such disclosed purpose. Also, the goods must be fit for the purpose which the supplier has represented (Griffiths v Peter Conway Ltd , 1939);
4. as per section 56, if the goods are supplied by any description, then, the goods actually sol must confirm to such description (Metal Roofing & Cladding Pty Ltd v Amcor Trading Pty Ltd , 1996);

Application of law

Now, it is submitted that Smallgoods Pty. Ltd  has manufacturer Salami with a mark  “use by 31 July 2018” and which was defective in nature as the Salami was not put in the treatment process. The salami is then supplied to Supermarkets Pty. Ltd for the sale.

Thus, as per 7 of ACL, a supplier must also comply with the implied guarantees of ACL. Thus, Supermarkets Pty. Ltd must also honor the guarantees. However, there are few guarantees that are violated by Supermarkets Pty. Ltd and thus Ann can sue the supplier:

1. Section 55 of ACL is violated as Ann when purchasing the Salami indirectly discloses the purpose that the same is bought by her for consumption purposes. Thus, the supermarket must make sure that the goods that are actually supplied by it must comply with such disclosed purpose. However, the goods are not fit for the purpose which the same are represented, that is, consumption. So, there is clear breach of section 55.
2. Section 56 of the ACL is violated as it was described by the supermarket that the salami is fit for consumption but in reality it was not. Thus, Ann can sue the supermarket.

It is submitted that the sign which is pasted by Supermarkets Pty. Ltd and which reads ‘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”, is not effective as per section 64 as no implied guarantees can be restricted or modified by using any exclusion clause.

Conclusion

Thus, apart from section 54, Ann has the right to sue the supermarket under section 55-56 of the ACL. The disclaimer that is relied upon by the supermarket is not valid as per section 64 of ACL.

Whether Shanti can sue the factory for her attach?

In the law of tort, normally a defendant is held liable for the loss that is caused to the plaintiff for his wrongful actions.

Application of Law

But, at times the employer is also held liable for the loss that is incurred to the plaintiff because of the acts of his employee. This shift of liability from the shoulders of the employee to employer is present under the law of the vicarious liability.

Vicarious liability is only applicable when: (MCCARTHY, 2004)

1. That there is presence of an association of an employee and an employer. If there is no such relationship then the law of vicarious liability is not applicable (Scott v Davis , 2000)
2. That the employee is appointed by the employer to carry out creation acts and represent him in front of the third parties.
3. The acts of the employer are carried out specifically under the command of the employer;
4. All the acts are within the scope of employment (Hollis v Vabu , 2001).
5. By complying with the commands of the employer there is some act which is undertaken by the third party;
6. The third party must have suffered loss because of the acts or omission of the employee.
7. The acts that are carried don by the employee are not his personal actions;
8. The acts of the employee must also not of any criminal nature.

When all the requirements are met then any loss that is suffered by the plaintiff because of the acts of the employee will not make the employee liable for the same, rather, the liability will be imposed on the employer. The basic preposition behind vicarious liability is that since it is the employer who gains benefits for the acts of the employee, so, it is the employer only who must suffer because of the acts of the employee provided the acts are within the employment course.

As per the acts,

Shanti is working U-Bewt Shoes factory. He is working in the night shift. She use to travel by car and park her car at the factories parking lot. After completing her work shift, at around 11PM, when she leaves for work then at that time the parking lot was quite empty and dark. She is the only one leaving at that time and had to walk over 100 meters to reach her car. Mr Collins was the manager of the factory for which she works. Now, Shanti can sue the factory for the losses that are caused to her under the law of vicarious liability mainly because:

1. Mr Collins is the manager of the factory. Thus, Mr Collins is the employee of the factory and works as per the directions of the factory.
2. Shanti was feeling unsafe while moving in the parking as she has saw a glimpse of a person. She mentioned her concern to Mr Collins.  She even suggested that some lights must be placed but Mr Collins stated that there are no worries and the parking is safe as it is fenced and there is a security guard.
3. However, Mr Collins has not acted in the diligent manner as the security guard is not much help as he was 500 metres from the actual car park. Also  everyone knew that some cars had been broken into and still Mr Collins has not taken any action;
4. Because of such omission, one day when Shanti was moving towards her car, she saw a man breaking into her car. When she interrupted the man punched her and knocked her to the ground. Thus, the damage that is caused to Shanti is mainly because Mr Collins has not taken active actions against the trespass which is known to him and was also complained by Shanti many a times;
5. The omission by MR Collins was conducted during his course of employment and under the directions of the factory.

Thus, it is because of the non compliance of active efforts by Mr Collins that injuries are suffered to Shanti. Mr Collins was acting on behalf of the factory as they share a employer and employee relationship.

Thus, Shanti has very right to sue the factory under the law of negligence.

Conclusion

Mr Collins was working for the factory as he was the employee of the factory. It was during his course of employment that omission is incurred which has resulted in the loss to Shanti. Thus, Shanti has every right to sue the factory under the law of vicarious liability.

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

Anns v Merton London Borough Council (1978).

Donoghue v. Stevenson (1932).

Drummond v Van Ingen (1887).

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

Grant v Australian Knitting Mills (1936).

Griffiths v Peter Conway Ltd (1939).

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

Hollis v Vabu (2001).

Latimer, P. (2012). Australian Business Law. CCH Australia Limited. .

MCCARTHY, L. (2004). "VICARIOUS LIABILITY IN THE AGENCY CONTEXT." . Vol 4 No 2 (QUTLJJ).

Metal Roofing & Cladding Pty Ltd v Amcor Trading Pty Ltd (1996).

Mondaq. (2018). Mondaq. Retrieved september 18, 2018, from Mondaq: https://www.mondaq.com/australia/x/170794/Consumer+Law/Statutory+Guarantees+Under+the+Competition+and+Consumer+Act+A+Can+of+Worms+Part+1

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

Reid v Commercial Club (Albury) Ltd (2014).

Rowland v Divall (1923).

Scott v Davis (2000).

Topp v London Country Bus (1993).