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Posted 17 December 2019
Category: Building Defects
Strata owners facing the cost of council orders requiring the replacement of combustible cladding are looking for potential solutions against the manufacturers under the Australian Consumer Law.
At present Federal Court Class Actions are on foot representing all person who are effected by the apparent failure of Alucobond and Vitrabond cladding panels to meet BCA fire standards.
Those cases, rely on alleged breaches of the guarantees section 54 of the Australian Consumer Law (“ACL” – Schedule 2 to the Competition and Consumer Act 2010 (Commonwealth)).
Under this section anyone who supplies goods to a consumer guarantees that the goods are of acceptable quality.
Acceptable quality means what a reasonable consumer would consider ‘acceptable’ having regard to the nature of the goods, the prices of the goods, any statements or representations about the goods (including statements on packaging) and such other circumstances as may be relevant.
Notions of fitness for purposes, appearance, safety and durability are also imported into section 54.
At face value the Federal Court has accepted that there may be an arguable case that combustible cladding may breach section 54. This occurred in the context of an application to serve the overseas manufacturer of Alucobond, 3A Composites GmbH, with a statement of claim. It remains to be seen whether the court will actually decide whether there has been a breach or not.
The use of Australian Consumer Law for what is essentially a building claim shows the breadth the ACL provides in terms of protection. Section 54 is only one of many provisions that may have application. The need for this breadth in the context of product liability more generally, was highlighted by recent (October 2019) statistics issued by the Australian Competition and Consumer Commission (“ACCC”):
‘Product Liability’ is a general term intended to cover the common law and statutory obligations which render manufacturers liable for placing a defective product into the hands of a consumer.
In Australia, there are three basic legal branches to product liability:
In addition to the ACL, there are numerous other pieces of legislation state and federal which may be relevant to specific industries, such as: food, pharmaceuticals, or cars.
Under the ACL a ‘consumer’ is defined a person to whom goods or services are or may be supplied, provided:
Manufacturer is given a very broad definition under the ACL, and can capture enterprises that do not in fact have a role in the manufacture of products, the definition includes:
Where the consumer does not know the name of the manufacturer, they can ask the supplier to identify the manufacturer. If the supplier does not provide the information within 30 days, the supplier is deemed to be the manufacturer.
The ACL is contained in Schedule 2 to the Competition and Consumer Act 2010 (Commonwealth). Each of the Australian states and territories have specifically adopted it. In New South Wales it is implemented by the Fair Trading Act 1987.
The ACCC is responsible for compliance and enforcement of the ACL.
The ACL covers a number of areas; the avoidance of unfair business practices, the provision of consumer guarantees, and the regulation of sales practices and unfair contract terms.
It also deals extensively with product safety in the form of; safety warning notices, bans of goods or product related services, mandatory safety standards, and product recalls.
Part 3-5 of the ACL deals specifically with product liability. Manufacturers responsible for unsafe products supplied in trade or commerce are liable to a person if:
These provisions remove some of the potential difficulties in the common law actions of contract (privity of contract) or negligence (duty of care). However, those common law actions may still be available, and may be useful of there is some doubt about whether the statutory requirements for a claim can be met. The common law alternatives may be pleaded as an alternative basis of claim.
The claims can be pursued in any the Federal Court of Australia, or Supreme, District or County state courts.
Under the ACL the limitation period is 3 years for product liability claim runs from the date from which the person became aware, or ought reasonably to have been aware, of the alleged loss or damage. This is subject to a longstop of 10 years from the date on which the manufacturer supplied the product.
Under the laws of contract or negligence and future consumer guarantees provisions referred to above the limitation period is 6 years from the date on which the cause of action accrued. Although in the case of personal injury claims this is limited to 3 years from the ‘date of discoverability’ of an injury or a death.
Section 9 of the ACL says that goods “have a safety defect if their safety is not such as persons generally are entitled to expect”.
This notion of community expectation regarding a level of safety is guided by ‘relevant circumstances’ including: the manner and purpose for which the goods have been marketed, the packaging, the use of any mark in relation to the goods, any instructions or warnings that accompany the goods, what it might reasonably be expected will be done with the goods, and the time of the supply by the manufacturer.
The ACL provides manufacturers with some statutory defences:
Manufacturers cannot rely on exclusion clauses to limit their liability under the ACL for product liability. To the extent that they may attempt to do so such provisions are void.
The ACL for product liability does not cover claims relating to:
***The information contained in this article is general information only and not legal advice. The currency, accuracy and completeness of this article (and its contents) should be checked by obtaining independent legal advice before you take any action or otherwise rely upon its contents in any way.