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Introduction to the product liability framework

Australia's product liability laws are a mixture of the common law and legislation.

A person who claims to have been injured or who has otherwise suffered loss or damage caused by a product may commence an action for compensation on the following bases:

  1. the common law tort of negligence;
  2. contract; and
  3. breach of a number of consumer protection legislative provisions, the main one being the Australian Consumer Law (ACL).

The ACL is a federal (also known as Commonwealth) law that came into effect on 1 January 2011. It applies to transactions occurring on or after that date. The ACL is found in Schedule 2 to the Competition and Consumer Act 2010 (Cth) (CCA), which until 2011 was the Trade Practices Act 1974 (TPA). The ACL replaced a collection of federal and state consumer protection legislation with a single law that applies in all jurisdictions. The consumer protection regime, which was formerly found in the TPA, was transferred to the ACL with substantial modification.

The ACL imposes statutory obligations, including a strict liability regime for products that are said to have a 'safety defect' and statutory guarantees imposed on suppliers and manufacturers. State fair trading legislation exists to provide for the application of the ACL in each of the states and territories, as well as covering some additional areas, such as industry-specific regulation.

Typically, product liability claims for damage to persons will involve multiple causes of action variously based on negligence and breaches of numerous provisions of the ACL.

Regulatory oversight

In broad terms, there are three federal regulatory authorities in Australia that oversee areas relevant to product liability issues affecting consumers.

The Australian Competition and Consumer Commission (ACCC) has a number of important investigation and enforcement powers under the ACL. Relevantly, the ACCC is empowered to institute proceedings in relation to certain provisions of Parts 3-5 (defective goods actions) and 5-4 (remedies relating to guarantees), either in its own right or on behalf of those who have suffered or are likely to suffer loss as a result of contraventions of the ACL. The ACCC is also responsible for overseeing product recalls and the mandatory reporting of deaths, serious injuries or illnesses associated with consumer goods, and it has published extensive guidelines addressing both of those requirements. The penalty for non-compliance with either is substantial.

The ACL requires that a person taking action to recall consumer goods must notify the relevant minister within the Department of the Treasury (practically achieved by notifying the ACCC) within two days of taking that action. In practice, however, the ACCC (and any applicable industry-specific or state-based regulator) will expect to be engaged at an early juncture before steps to recall goods (including advertising a recall) have been taken. Unless the ACCC is properly notified and satisfied with the strategy adopted by the manufacturer or distributor, it takes a very proactive role in managing product recalls.

In addition, the mandatory reporting requirement mentioned above requires a supplier to notify the minister (usually via an online form) within two days of becoming aware of any death, serious injury or serious illness (as defined in the legislation) associated with or thought to be caused by use or foreseeable misuse of a consumer good.

The Therapeutic Goods Administration (TGA) is Australia's regulatory agency for therapeutic goods, including medicines, medical devices, blood and blood products. The TGA administers the Therapeutic Goods Act 1989 (Cth) and regulates therapeutic goods through pre-market assessment, post-market monitoring and enforcement of standards; licensing of Australian manufacturers; and verifying overseas manufacturers' compliance with the same standards as their Australian counterparts.

The Australian Securities and Investments Commission (ASIC) oversees Australian corporations and financial markets. In particular, ASIC regulates the provision of consumer credit, financial products and financial services; however, this chapter will focus on product liability for non-financial consumer products.

In addition to the above, there are a number of federal and state-based regulators with responsibility for administration of industry-specific regulation (e.g., motor vehicles, food or consumer electrical goods).