Reporting requirements for defective productsGovernment notification
What requirements are there to notify government authorities (or other bodies) of defects discovered in products, or known incidents of personal injury or property damage?
Australia introduced mandatory reporting requirements for suppliers of consumer goods on 1 January 2011. Pursuant to section 131 of the ACL, if a supplier becomes aware of the death, serious injury or illness of any person and considers that this incident was caused, or may have been caused, by the use or foreseeable misuse of the consumer goods, or becomes aware that a person other than the supplier considers that the incident was caused by the use or foreseeable misuse of the consumer goods, the supplier must provide written notification of the incident to the minister. Given the requirement of death or personal injury or illness, the existence of a serious safety defect in a product is not sufficient in itself to trigger the reporting requirement - there must be an incidence of death, serious injury or illness. Further, property damage alone is not a trigger of the mandatory reporting requirement - therefore a fire caused by a defective clothes dryer that solely damaged property would not be reportable.
In addition to the mandatory reporting requirements, section 128 of the ACL requires a person to give the minister notice within two days following a voluntary recall. The ACL contains no definition of ‘recall’, therefore there is a degree of imprecision. In practice, however, the regulator gives a very expansive definition to the term so that, for example, if a supplier voluntarily asks consumers to carefully dispose of or return defective goods for a refund or replacement, then that is regarded as a recall. The same applies if a supplier asks consumers or other suppliers to return the goods for some form of modification if a defect is safety-related.
It is worth noting that the recall notification obligations arising under the ACL relate only to instances where a product is recalled because:
- the consumer goods will or may cause injury to another person;
- a reasonably foreseeable use (including a misuse) of the consumer goods will or may cause injury to any other person;
- a safety standard for the consumer goods is in force and they do not, or it is likely that they do not, comply with the standard; or
- an interim ban, or a permanent ban, on the consumer goods is in force.
If a product is recalled for some other reason, it would not be subject to the ACL recall provisions.
The other means by which a corporation may be required to notify authorities of defects or injuries arises under section 133D of the CCA. Under this section, the minister or an inspector may give a disclosure notice to a supplier of consumer goods if the person giving the notice has reason to believe that:
- the consumer goods of that kind will or may cause injury to any person; or
- that a reasonably foreseeable use (including a misuse) will or may cause injury to any person, and that the supplier is capable of giving information, producing documents or giving evidence in relation to those consumer goods.
Once this threshold has been met, the minister has broad powers to require the corporation to furnish information, produce documents or give evidence (either written or oral).
There are also a number of industry-specific reporting requirements. By way of example, the Therapeutic Goods Act 1989 (Cth) establishes rigorous reporting requirements in relation to medicines and medical devices. Additional organisations which may need to be notified for specific product groups include:
- Food Standards Australia New Zealand (for food products);
- Department of Infrastructure and Regional Development and Local (for motor vehicles);
- Australian Pesticides & Veterinary Medicines Authority (for agricultural and veterinary products);
- state and territory electrical regulators (for electrical products); and
- state and territory gas regulators (for gas appliance products)
What criteria apply for determining when a matter requires notification and what are the time limits for notification?
The criteria for determining whether notification is required under the mandatory reporting requirement are discussed in question 4. The obligation is triggered by awareness of a ‘death or serious injury or illness’ that was caused, or may have been caused, by the consumer good. Serious injury or illness is defined as ‘an acute physical injury or illness that requires medical or surgical treatment by, or under the supervision of, a medical practitioner or a nurse (whether or not in a hospital, clinic or similar place)’. The ACL provides that the obligation does not apply in certain circumstances including where the supplier, or another person, is required to notify the death or serious injury or illness in accordance with a law of the commonwealth, a state or a territory that is a law specified in the regulations. An example of such a law is the Therapeutic Goods Act 1989 (Cth), which requires notification in relation to drugs and medical devices.
The time limit for mandatory notification under section 131 is within two days (not business days) of awareness.
In the absence of any intervention by a regulatory authority, the decision to commence a voluntary product recall is based upon common law criteria. Once a decision has been made to commence a voluntary recall, then the obligations set out in section 128 will apply. The specific obligations are discussed further below. Specific provisions also exist for the provision of information in the case of mandatory recalls. These are discussed further below.Competent authority
To which authority should notification be sent? Does this vary according to the product in question?
The ACL formally requires notification of voluntary recalls of consumer goods (section 128) and mandatory product reports (section 131) to be submitted to the minister. However, in practice there is an expectation that notification will be given to the ACCC, which acts on the minister’s behalf. Notification is also provided in the case of voluntary recalls to:
- the fair trading agencies in relevant states and territories; and
- where relevant, industry regulators such as the TGA (such notification often being required by law).
The ACCC has established an online portal for the provision of notifications under sections 128 (available at www.productsafety.gov.au/contact-us/for-retailers-suppliers/submit-a-recall) and 131 (available at www.productsafety.gov.au/contact-us/for-retailers-suppliers/mandatory-injury-report). Guidelines issued by the ACCC in relation to Product Safety Recalls provide that if a business cannot submit a recall notice using the online form, it should contact the ACCC on 1300 302 502.Notification information
What product information and other data should be provided in the notification to the competent authority?
A notification under section 131 must identify the consumer goods, and must include information about the following matters to the extent that it is known by the supplier at the time the notice is given:
- when, and in what quantities, the consumer goods were manufactured in Australia, supplied in Australia, exported into Australia or exported from Australia;
- the circumstances in which the death or serious injury or illness occurred;
- the nature of the serious injury or illness suffered by any person; and
- any action that the supplier has taken, or is intending to take, in relation to the consumer goods.
Notification of a voluntary recall under section 128 may be undertaken by way of a section 128 online form (which is available online at www.productsafety.gov.au/contact-us/for-retailers-suppliers/submit-a-recall). Persons can also choose to prepare their own notifications should they wish. To be considered sufficient, such a notification must state that the consumer goods are subject to recall, and:
- if the consumer goods contain a defect or have a dangerous characteristic - set out the nature of the defect or characteristic;
- if a reasonably foreseeable use or misuse of the consumer goods is dangerous - set out the circumstances of that use or misuse;
- if the consumer goods do not, or it is likely that they do not, comply with a safety standard for the goods that is in force - set out the nature of the non-compliance or likely non-compliance; and
- if an interim ban, or a permanent ban, on the consumer goods is in force - state that fact.
Other information that may be provided includes:
- a clear description of the product including the name, make, model and serial number, with a photograph or drawing if available;
- full contact details of the supplier;
- a statement of the hazard and the associated risk;
- dates when the product was available for sale;
- the number of products affected;
- where the product has been distributed and exported;
- the action that the corporation proposes to take (including copies of any proposed recall advertisements);
- what actions the other suppliers and consumers should take; and
- detailed information about using or storing the product.
Some industry bodies have their own notification forms. For example, defects in medicines are reported to the TGA using the medicine report form, while problems with medical devices are reported using a medical device incident report.Obligations to provide updates
What obligations are there to provide authorities with updated information about risks, or respond to their enquiries?
There is an expectation that corporations will keep the ACCC informed of progress, developments and outcome following the implementation of a recall. Indeed, corporations that have conducted a recall can expect to be audited. Where the authorities have requested information from a corporation using a statutory provision such as section 133D of the CCA, there is a legal obligation to respond. Failure to respond can lead to the imposition of significant penalties.Penalties
What are the penalties for failure to comply with reporting obligations?
Failure to provide notification of a voluntary recall is an offence punishable on conviction by a fine not exceeding A$3,330 for an individual, or A$16,650 for a body corporate (section 201). A similar offence exists in relation to a failure to comply with the mandatory reporting obligations (section 202). Both offences are offences of strict liability. Alternatively, the court may impose a pecuniary penalty for contravention of the section under section 224. Conduct of an individual in contravention of the requirement can also lead to the imposition of a disqualification order under section 248 (see question 3).
Refusal or failure to comply with a notice requesting information under section 133D of the CCA is an offence punishable on conviction by a fine not exceeding 200 penalty units (A$42,000) for a body corporate and 40 penalty units (A$8,400) for a person other than a body corporate (section 133F CCA). Should a person knowingly provide information in purported compliance with a section 133D notice that is false or misleading in a material particular, then that person is guilty of an offence punishable on conviction by a penalty of 60 penalty units (A$12,600) or imprisonment for not longer than 12 months, or both. The penalty for a body corporate is 300 penalty units, or A$63,000 (section 133G CCA).Public disclosure
Is commercially sensitive information that has been notified to the authorities protected from public disclosure?
Typically, when a corporation notifies information to the authorities there is not an expectation that it will be made public. However, the Freedom of Information Act 1982 (Cth) (the FOI Act) provides individuals with a legally enforceable right to obtain access to documents held by ministers and government agencies. This right to access is not unlimited. Access to documents under the FOI Act is subject to prescribed exemptions such as documents evidencing confidential business affairs. Where such documents are requested by an individual, then the corporation to which the documents relate has a right to submit to the minister that the documents should be exempt from disclosure.Use of information in prosecution
May information notified to the authorities be used in a criminal prosecution?
Pursuant to section 131(6), the giving of notice in accordance with the mandatory reporting requirement is not to be taken for any purpose to be an admission by the supplier of any liability in relation to:
- the consumer goods; or
- the death or serious injury or illness of any person.
Information, evidence or documents provided by an individual under, or obtained by the authorities in accordance with, section 133D of the CCA are not admissible in evidence against the person in any proceedings instituted by the person, or in any criminal proceedings, other than proceedings against the person for a contravention of a provision of section 133F or 133G. That is to say, it may only be used to prosecute an individual for one of the offences discussed in question 9. The provisions of section 155 of the CCA also need to be considered. This section entitles the ACCC to obtain information, documents and evidence in certain circumstances.