Trade Practices Act Actions and The Civil Liability Act - August 2004

Sunday, August 1, 2004

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Plaintiffs are attempting to avoid the limitations on damages in the Civil Liability Act , particularly for small claims, by pleading breaches of the Trade Practices Act and seeking damages at large, where the Federal legislation takes precedence over the State Act.

Part VA of the Trade Practices Act provides statutory rights of actions against the "manufacturer" in favour of persons suffering injury, loss or damage caused by dangerous goods. The basis of liability is that the goods in question have a "defect" because of which injury, loss or damage occurred.

Section 75AD provides that the manufacturer is liable to compensate the individual for the amount of the individual's loss suffered as a result of the injuries.

Lisa Johnson -v- Golden Circle Ltd was a decision of Black J in the District Court of New South Wales on 17 December 2003.

On 2 May 2002 Mrs Johnson and her husband visited the Woolworths supermarket at Plumpton. At the supermarket a representative of Golden Circle was offering samples of orange juice. The juice was poured from a plastic bottle into plastic cups, typical of the type used at sample tastings. The plaintiff drank her sample and in the process a piece of plastic, which had come from another plastic cup, stuck in her throat. It had probably broken off the base of one of the plastic cups.

The plaintiff pleaded in both negligence and under the Act, claiming that there was a manufacturing defect under section 75AD. The judge accepted negligence but did not consider that the plaintiff would achieve the 15% most extreme case threshold. She choked on the piece of plastic, could not breathe and went blue in the face. Her husband thumped her back which caused her to cough up the plastic. When checked by her doctor there was some inflammation of the throat but no damage. She had a persistent sore throat for some months, an occasional irritating cough and gastro-oesophaegeal reflux. If the Act applied she would have only have obtained out-of-pocket expenses and two days off work which totalled a little over $1,000.

The judge then considered section 75AD and whether the act of pouring the orange juice from a plastic container into a plastic cup constituted manufacturing within the section.

Section 75AA defines manufacture as including "grown, extracted, produced, processed and assembled". His Honour considered the Federal Court case Glendale Chemical Products Pty Ltd -v- The Australian Competition and Consumer Commission 1999 ATPR 41-672. The case concerned caustic soda which had been repackaged by Glendale. The complaint concerned inadequate instructions on the packaging. The Full Court of the Federal Court found that the repackaging brought the activities of the defendant within the meaning of a manufacturer in section 75AD.

His Honour was persuaded by the reasoning in Glendale to accept that the pouring of the orange juice from one container to another, the second container containing the defect, to fall within the definition. He found defect under section 75AD.

The judge then accepted that entitlement to compensation under section 75AD was an entitlement to damages at large. He found General damages at $10,000. The ultimate award in favour of the plaintiff was $11,372.10 plus costs.

The Commonwealth Government has a number of Bills presently before the Federal Parliament to bring the assessment of damages under the TPA in line with the Civil Liability Act or at least provide similar restraints. The two Bills are as follows:

  • Trade Practices Amendment (Personal Injuries & Death) Bill 2003 :

This Bill is to prevent actions for damages for death or personal injury for conduct contravening Division 1 of Part 5, being sections 52 to 65A e.g. misleading and deceptive conduct.

Amendments have been proposed by the Opposition and the Democrats to alter the Bill not to exclude personal injury and death claims, but rather to provide that the damages awarded are those recoverable under the Civil Liabilitylaw of the State where the event giving rise to the loss occurred.

  • Trade Practices Amendment (Personal Injuries & Death) Act (No. 2) 2004:

These provisions relate to Part VA and therefore include section 75AD. Provisions have been introduced similar to those in the Civil Liability Act , but with a maximum amount of economic loss at $250,000 indexed annually by reference to the CPI. As in New South Wales the threshold is 15% of a most extreme case, and there is a sliding scale to 33%.

The provisions do not apply in respect of actions relating to smoking or the use of tobacco products.

The Act commenced on 13 July 2004. It relates to contraventions of the Act after that date.

The insurer in the Lisa Johnson case did not take the matter on appeal, given the relatively low damages.

Patrick Thompson
10 August 2004

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