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[1998] FCA 180
Federal Court of Australia
1998-02-27
Emmett J
Original judgment source is linked above.
EX TEMPORE REASONS FOR JUDGMENT HIS HONOUR: Two proceedings have been heard together on the basis that evidence in one is evidence in the other. In the proceedings first commenced, the Australian Competition and Consumer Commission ("the Commission") seeks orders under section 80 of the Trade Practices Act 1974 (Cth) ("the Act") restraining the respondent, Glendale Chemical Products Pty Limited ("Glendale"), from engaging in conduct said to be contrary to sections 52 and 53(c) of the Act and orders under section 80A of the Act requiring Glendale to undertake remedial advertising and relabelling of a product distributed by Glendale, which is referred to as "Glendale Caustic Soda" ("the Product"). The proceedings were commenced as a consequence of loss and damage suffered by Mr Michael John Barnes ("Mr Barnes") when using the Product. In addition, the Commission seeks orders under sections 87(1B), 75AD and 75AF of the Act on behalf of Mr Barnes that Glendale pay compensation to Mr Barnes in respect of loss and damage suffered by him. The second proceedings were originally commenced in the District Court of New South Wales. I ordered that they be transferred to this Court. In those proceedings, Mr Barnes himself seeks damages from Glendale for negligence and under the Act. Mr Barnes' claim relates to the same loss and damage which is the subject of the proceedings brought by the Commission. FACTS GIVING RISE TO THE CLAIMS Mr Barnes and his family live in Tamworth. In May 1995, a drain in the shower recess of the bathroom in the house where they live was partially blocked. On 13 May 1995, Mr Barnes went to the Woolworths supermarket located in the "Shopping World" complex in Tamworth. Whilst doing his shopping at Woolworths, Mr Barnes ran into Mr Reg Phillips with whom he was acquainted. Mr Phillips had for many years owned his own hardware store in Tamworth. Mr Barnes apparently told Mr Phillips the problem he had with his drain and Mr Phillips directed him to a range of cleaning products on a shelf. In particular, he showed Mr Barnes a range which included the Product and a product known as "Drano". Mr Phillips told Mr Barnes that caustic soda had been used to clean drains for as long as he could remember and told him what to do. Mr Phillips told Mr Barnes that you pour hot water down the drain hole first and then tip the whole of the contents of the Product down. Based on what Mr Phillips told him, Mr Barnes believed that that was the appropriate way of proceeding to use the Product. Mr Barnes, having read the instructions on the label on the container of the Product, decided to buy 500 grams of the Product. He paid $4. Mr Barnes took the container home and, some time later, while in his kitchen, re-read the label. A copy of the label is set out in Appendix 1 to these reasons. At that time Mr Barnes believed that the blockage in the drain was a combination of hair and soap. On the same afternoon, Mr Barnes tipped approximately 1.8 litres of boiling water through a chrome cover over the shower recess waste pipe. He then went to the shed in his backyard to obtain a screwdriver to remove the chrome cover. After returning he knelt in the shower recess and proceeded to remove the cover from the top of the waste pipe. He noticed a brown scum lining the pipe. Mr Barnes then poured a further quantity of approximately 1.8 litres of boiling water down the drain pipe. He was unable to see any of the water which he had poured down. A short time later, Mr Barnes sprinkled some of the Product down the drainpipe. In an affidavit he said that he did that 5 minutes after he poured the second quantity of water down the drainpipe. That affidavit was sworn on 27 January 1996. However, on 8 July 1995 he had written a letter to the New South Wales Consumer Affairs Department in Tamworth saying that he put the Product down the drain about 20 minutes after putting the water down the drain. That difference may have some significance as to the circumstances in which the occurrence described below occurred. Mr Barnes sprinkled the Product down the drain while he was kneeling in the shower recess. He said that he sprinkled about one-third of the contents of the container down the drain. Immediately on sprinkling the Product down the drainpipe, Mr Barnes heard a whirring noise. Immediately after he heard that noise, he saw a light brown column of water rushing out of the pipe. The column of water struck him in the top half of the face which was approximately 600 millimetres above the floor of the shower recess. In cross-examination, Mr Barnes agreed that, in pouring boiling water down the drain, and tipping a third of the contents of the container of the Product down the drain, he relied on what Mr Phillips had said to him and on the Drano label which he had read in the store. He relied on nothing that was on, or was not on, the label of the container of the Product. Thus, in sprinkling the Product down his drainpipe, he relied not on any of the contents of the label on the container holding the Product but on what Mr Phillips had said and on what he had read on other containers in the Woolworths store. Mr Barnes had read the label on the container twice and understood that the label said to dissolve the Product in water before pouring it down the drain. Nevertheless, he thought that the method he adopted was appropriate and effective. He agreed that even if the label had something along the lines of "use cold water" he would still have gone ahead in the way in which he did because he thought it was effective. However, he said that if the label had said something along the lines of "Do not use hot water" he would not have used hot water, simply because the label said "Do not use hot water". He subsequently repeated that if it had said "Do not use hot water" he would not have used hot water, but would have questioned it with Mr Phillips. Mr Barnes said that if Mr Phillips had said "Do not worry, that is a generic brand. You can use it any way. Rely on me, I am the man who has had the hardware store for all those years", Mr Barnes might possibly still have relied on Mr Phillips. He would not agree that it was probable that he would have relied on Mr Phillips. As a consequence of the incident, Mr Barnes suffered injury comprising burns to his face and both eyes. Mr Barnes continues to suffer permanent disability in respect of that injury. It is common ground that the amount of Mr Barnes's loss is $106,000 made up as follows: General Damages, including interest: $55,000.00 Past Economic Loss, including interest: $11,000.00 Costs and Loss of Wages related to prospect $8,000.00 of future operation and medical care: Out-of-Pocket Expenses: $3,500.00 Future Economic Loss: $28,500.00 $106,000.00
However, while Glendale has expressed in open Court its regret for Mr Barnes's injury, it denies that it has any legal responsibility. LEGAL FRAMEWORK There are in fact two different categories of claim. The first is a consumer protection claim brought by the Commission in effect as parens patriae on behalf of the community generally. The second claim is a compensation claim relating to Mr Barnes' position specifically. Consumer Protection Claims Section 80 of the Act provides that where the Court is satisfied that a person has engaged in conduct that constitutes or would constitute a contravention of a provision of Part V, the Court may grant an injunction in such terms as it determines to be appropriate. Section 80(4) relevantly provides that the power of the Court to grant such an injunction may be exercised: (a) whether or not it appears to the Court that the person intends to engage again, or to continue to engage, in conduct of that kind; and (c) whether or not there is an imminent danger of substantial damage to any person if the first person engages in conduct of that kind. The Commissioner alleges that by making representations in connection with the supply of the Product which failed to include a statement that the Product may be mixed only with cold water, Glendale contravened sections 52 and 53(c) of the Act. More particularly, the Commission alleges that by supplying the Product in containers which were labelled with the same or similar words as appear in Appendix 1, Glendale contravened sections 52 and 53(c). Section 52 provides that a corporation must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive. Section 53(c) relevantly provides that a corporation must not, in trade or commerce, in connection with the supply of goods represent that the goods have performance characteristics, uses or benefits which they do not have. Section 80A of the Act provides that, without limiting the generality of section 80, where the Court is satisfied that a person has engaged in conduct constituting a contravention of Part V, the Court may make either or both of the following orders: (a) an order requiring that person to disclose to the public or to persons included in a particular class of persons, such information as is specified in the order; or (b) an order requiring that person to publish, at his own expense, in a manner and, at times specified in the order, advertisements, the terms of which are to be determined in accordance with the order. The Commission seeks orders under section 80A that Glendale: (1) affix a label to the lid of all containers containing the Product in the form set out in Appendix 2 to these reasons; (2) notify all retailers to whom it has supplied the Product in the last 12 months of the terms of any orders made by the Court on an interlocutory basis; (3) provide to all retailers to whom it has supplied the Products in the last 12 months a sufficient quantity of lid labels to enable all stock of the Product that is presently on shelves to be relabelled in the form set out in Appendix 2; (4) publish notices in accordance with the details set out in Appendix 3 to these reasons; (5) affix a new label to the side of all containers containing the Product which it supplies, such label to include the following representations: (i) that the Product should only be mixed with cold water; (ii) that the Product should never be mixed with warm, hot or boiling water; (iii) that the Product can be dangerous and cause injuries when not used correctly; (iv) that consumers should wear goggles, gloves and protective clothing when using the Product; (v) that consumers should read the safety instructions before using the Product; (vi) that the Product should not be mixed with other chemicals. (6) Relabel all units of the products supplied to wholesalers or retailers and not yet sold to members of the public with a label including the representations set out in the previous paragraph. The Commission sought interlocutory relief against Glendale and Glendale gave undertakings to the Court in the terms set out in Appendix 4 to these reasons. When the proceedings were called on for hearing, counsel for Glendale proffered a permanent undertaking in the terms of paragraph 1 of those undertakings. Intimation from counsel for Glendale was that it was the intention to satisfy that undertaking by complying with the second alterative, that is, ensuring that each container bears a label in the form of a label which is annexed to the undertaking. The undertaking so proffered was rejected by the Commission as being insufficient answer to its claim under section 80A. In any event, the issues raised concerning alleged contravention of sections 52 and 53(c) in terms of the factual background are identical to the issues raised in relation to the claim for an order that Glendale pay compensation to Mr Barnes to which reference is made below. Compensation Claims Section 87(1A) of the Act provides that the Court may, on the application of the Commission, make such order or orders as the Court thinks appropriate against a person who engaged in conduct in contravention of a provision of Part V, if the Court considers that the order or orders concerned will compensate a person on whose behalf the application was made in whole or in part for loss or damage which that person has suffered, or is likely to suffer, by that conduct. Under section 87(1B), the Commission is authorised to make an application under section 87(1A) on behalf of one or more persons who have suffered or are likely to suffer loss or damage by the conduct. The Commission must not make such an application except with the consent in writing given by the person on whose behalf the application is made. The contraventions of Part V alleged by the Commission are the contraventions of sections 52 and 53(c) referred to above. Section 75AD of the Act, which is in Part VA, provides that if a corporation supplies goods manufactured by it and they have a defect and, because of the defect, an individual suffers injuries, then the corporation is liable to compensate the individual for the amount of the individual's loss and damage suffered as a result of the injuries. Further, section 75AF provides that if a corporation supplies goods manufactured by it and they have a defect and, because of the defect, goods of a kind ordinarily acquired for personal, domestic or household use (not being the defective goods) are destroyed or damaged and a person who so used or intended so to use the destroyed or damaged goods, suffers loss as a result of the destruction or damage, then the corporation is liable to compensate the person for the amount of the loss. Section 75AC(1) provides that, for the purposes of Part VA, goods have a defect if their safety is not such as persons generally are entitled to expect. Section 75AC(2) relevantly provides that in determining the extent of the safety of goods, regard is to be given to all relevant circumstances including specific matters to which I shall refer later. Under section 75AA, the term "liability action" includes an action under section 75AD and an action under section 75AF. Section 75AQ provides that the Commission may commence a liability action on behalf of one or more persons identified in the application who has suffered the loss for whose amount the action is commenced. However, the Commission may only make an application under that section if it has obtained the written consent of the person on whose behalf the application is being made. It is common ground that the Commission had obtained the prior consent in writing of Mr Barnes for the purposes of both section 87(1B) and section 75AQ. The Commission alleges that the Product had a defect because the instructions or warnings with respect to the use of the Product failed to state that: (a) it should not be used with warm, hot or boiling water, when it might reasonably be expected that purchasers of the Product might use it with warm, hot or boiling water; (b) there was any danger attaching to the use of the Product when it was poured from a container in a solid state directly into a confined space such as a drain; (c) a face shield or goggles, gloves and protective clothing should be worn when using the product; and (d) the Product had a capacity to erupt when mixed with water, particularly warm, hot or boiling water. On the application of Glendale, I stayed the proceedings brought by Mr Barnes in so far as those proceedings claim relief under the Act. Those proceedings, in so far as they remain on foot, claim damages from Glendale for injury, loss and damage alleged to have been suffered as a result of negligence on the part of Glendale in the supply and sale to Mr Barnes of the Product. The negligence alleged is as follows: (i) Failure to warn Mr Barnes that the Product should only be mixed with cold water. (ii) Failure to warn Mr Barnes that the Product had the capacity to erupt and or explode. (iii) Failure to warn Mr Barnes that the Product should never be mixed with warm, hot or boiling water. (iv) Failure to warn Mr Barnes that he should wear goggles, gloves and protective clothing when using the goods. (v) Failure to warn Mr Barnes that the Product should never be poured from the container in a solid state directly into a confined space such as a drain. CAUSTIC SODA As the name of the Product indicates, it is the substance popularly known as caustic soda, the chemical name for which is sodium hydroxide. Evidence was given on behalf of the Commission by Professor George Crank, the director of the Centre for Chemical Analysis at the University of New South Wales. Professor Crank prepared a report which was in evidence before me. In his report, Professor Crank described some of the properties of caustic soda. There is no challenge to that evidence. One of the well known properties of caustic soda is the evolution of a considerable amount of heat when it dissolves in water. Each gram of caustic soda dissolving in water generates enough heat to bring to boiling point 3 millilitres of water initially at 20°C. Thus, 170 grams of caustic soda when dissolving in water produces heat to boil about 510 millilitres of water initially at 20°C. For water at 50°C, each gram of caustic soda can raise 5 millilitres to the boil. That is to say, 170 grams would bring 850 millilitres of water to boiling point. It should be noted that approximately 170 grams of caustic soda was poured into the drainpipe into which two jugs of 1.8 litres each of boiling water had already been poured. The possibility of rapid boiling when a relatively large amount of caustic soda is dissolved in a limited amount of water, such as that found in a drain, is predictable from the properties of the chemical. Caustic soda is classified chemically as a strong alkali. It is an extremely reactive substance and can neutralise acid. It can also react with and decompose a wide range of organic materials such as fats, proteins and carbohydrates which are important constituents of human tissue. That property makes caustic soda a dangerous substance for human use, both as a solid and in the form of aqueous solutions. Professor Crank considers that caustic soda is probably the most dangerous chemical normally used by the public. Caustic soda is extremely damaging to all body tissues. It not only damages the surface tissues but also penetrates reaching lower layers and virtually destroying the total tissues. If swallowed, it damages the mouth, oesophagus and stomach causing serious permanent injury or death. If splashed in the eye, it causes ulceration and possible destruction of the cornea. Blindness can result from caustic soda solutions contacting the eyes. In contact with the skin, caustic soda can cause severe deep-seated burns which can result in permanent scarring. The extent of damage caused to human organs depends on the concentration of the caustic soda solution and its temperature. The more concentrated a solution and the hotter it is, the more damage it will cause to human tissue. A concentrated boiling solution of caustic soda is potentially extremely damaging to human tissue. Such a solution will do its damage very rapidly and unless washed off immediately with running water could cause severe and permanent injury. In addition to describing the properties of caustic soda, Professor Crank also described an experiment which he conducted in an effort to duplicate the incident described by Mr Barnes. A glass tube approximately 4.5 centimetres in diameter, the approximate diameter of the drain pipe in question, was filled with water at 50°C to a height of about 47.5 centimetres, the estimated depth of the drain pipe to the S bend in Mr Barnes's shower drain. Professor Crank then sprinkled 170 grams of the Product into the tube of water. No visible reaction occurred for about 2 minutes after which time the solution in the tube started to boil at the interface between the undissolved caustic soda material in the bottom of the tube and the water. The boiling became quite violent and hot caustic solution was ejected from the tube to a height of about 50 centimetres. Although the exact temperature of the water in the pipe at the time of addition of the caustic soda by Mr Barnes is not known, Professor Crank assumed that it was likely to have been quite warm considering that Mr Barnes used boiling water. Professor Crank said that his assumption of a temperature of 50°C for the water in his experiment was considered reasonable, but he believed that the solution would have boiled even if the water temperature had been lower. Even then, it is by no means certain that Professor Crank's experiment duplicated the occurrence experienced by Mr Barnes. Mr Barnes said that the drain was emptying slowly. Further, he could not see in the drain the boiling water which he tipped down. It seems likely, therefore, that there may not have been 47 centimetres of water in the drain as provided for by Professor Crank in his experiment. Further, Professor Crank observed that two minutes elapsed before the eruption of water occurred. Mr Barnes evidence was that the eruption occurred immediately after he poured the product into the drain. That difference may have been explained by the fact that there was more water in the glass tube and the temperature of the water in the drain was hotter than that in the glass tube. Inconsistencies in Mr Barnes' evidence suggest that his recollection is not completely reliable. Accordingly, it is difficult to reach any conclusion as to precisely what occurred at the time when Mr Barnes suffered his injury. Nevertheless, it is clear that there was an eruption from the drain which resulted from the mixing of the Product with hot water in the drain and that eruption caused the injury to Mr Barnes. GLENDALE AS MANUFACTURER Section 75AD and section 75AF impose liability on Glendale only if it is established that Glendale supplied goods manufactured by it. Under section 75AA, the term "manufactured" includes grown, extracted, produced, processed and assembled. The evidence before me indicates that Glendale did not in fact manufacture caustic soda. The Product was purchased from Redox Chemicals and repackaged by Glendale for sale. The label itself, although it contains a logo comprising the word "Glendale" and a depiction of a centaur also contains the notation "Packed by: Glendale Chemical Products Pty Limited". Glendale contended that, on the basis of that evidence, the Product was not manufactured by it within the meaning of Part VA. However, the effect of section 74A(3) and section 75AB of the Act is that if a corporation causes or permits the name of the corporation or a brand or mark of the corporation to be applied to goods supplied by the corporation, the corporation is to be deemed for the purposes of Part VA to have manufactured the goods. It is not disputed that Glendale's name was applied to the Product. Nevertheless, it was contended that sections 75AB and 74A(3) cannot have effect in circumstances where there is a clear statement to the effect that Glendale did not manufacture the Product but that the Product was merely packed by it. It was said that if the Commission's contention as to the effect of those provisions were correct, a label on a product supplied by a corporation stating expressly that the product was not manufactured by the corporation would have no effect. Of course in the present case Glendale did not go as far as that. Nevertheless, I consider that that is just what the section is intended to do. A corporation which is not the manufacturer is deemed to be the manufacturer for the purposes of Part VA even if it is clearly not. One can understand the policy reasons for the Parliament imposing such an obligation. That is to say if a corporation is prepared to lend its name to a product by having its name or its logo affixed to the product, an individual injured by defect in that product need look no further than that corporation. The effect may well be to impose onerous obligations on any corporation which supplies a product with its name or logo applied to the product. Be that as it may, that appears to me to be the clear meaning and intent of the provision. Accordingly, I conclude that the Product is deemed to have been manufactured by Glendale. DEFECT The facts which I have recounted above indicate that caustic soda is an extraordinarily volatile and dangerous substance when mixed with hot water. That was not in dispute. The essential question in the proceedings concerned the adequacy of the label set out in Appendix 1 to warn consumers of the possible dangers attendant upon use of caustic soda. The essence of the complaint by the Commission is that the label on the container for the product contained no warning of the dangers involved in the use of caustic soda with hot water, particularly in a confined space such as a drain pipe. While consumers might generally be expected to know that caustic soda is corrosive and that contact with eyes and skin is potentially highly dangerous, all of which is stated explicitly on the label, ordinary consumers would not be expected to know of the dangers attendant upon the use of caustic soda with hot water in such a confined space. Accordingly, it was contended by the Commission that the goods, comprising caustic soda in the container which I have described, had a defect because the safety of such goods is not such as persons generally are entitled to expect. In particular, when regard is given to the absence of any instructions or warning concerning the use of the contents of the container with hot water, the goods are unsafe. The Commission relied on the evidence of Professor Christopher Winder, Associate Professor in Chemical Safety in the Department of Safety Science at the University of New South Wales. Professor Winder prepared a report which was in evidence. Professor Winder's report deals with the hazardous properties of caustic soda. His evidence confirms that of Professor Crank. However, Professor Winder's particular expertise is in relation to hazardous substances control and work place exposure to chemicals. He has been extensively involved in the development of the national model regulations for the control of hazardous substances in the workplace, which included the development of guidance notes and codes for practice for among other things, classification of hazardous chemicals, labels and Material Safety Data Sheets ("MSDS") for hazardous substances. The contentious part of his report related to his observations and conclusions concerning the adequacy of the label on the Product. No allegation was made that, in connection with the supply of the Product, Glendale contravened any regulatory control. There are in fact several controls imposed under the Poisons Act 1966 (NSW) and the Dangerous Goods Act 1975 (NSW), although at present there is no need to comply with the Occupational Health and Safety (Hazardous Substance) Regulation 1966 (NSW). Nevertheless, Professor Winder expressed the view that a manufacturer or supplier of chemical products should provide customers with useful and helpful information for the safe and effective use of their product. He expressed the opinion that where information required by statute is "insufficient", the manufacturer or supplier should provide additional information to attempt to ensure that any "inadequacies" are addressed. The issue, of course, is what are the standards by reference to which insufficiency or inadequacy is to be determined. Professor Winder considered that the label on the Product was defective in the provision of proper health and safety information and that it should be amended so that it states that it must not be used for the purpose of clearing blocked drains. He said that the main problem with the label was that at least one important use of the Product, as a drain unblocker, had been effectively ignored and no real warnings or safety information were available for that particular use. One of his conclusions was as follows: If the product label had stated that the product should not be used to unblock drains, or if it warned that caustic soda should not be mixed with hot water, or if it advised that the possibility of violent reaction was possible if the product was mixed with hot water, or that all possible steps to reduce exposure should occur (including the possibility of violent reaction or splashing), then it might be concluded that the label was adequate. That opinion seems to say unequivocally that any one of four statements would have rendered the label adequate. However, in the course of giving oral evidence, Professor Winder resiled from that opinion and said that he did not intend that any one of the alternatives would be regarded as adequate. One difficulty with relying on evidence such as Professor Winder's in the circumstances in which it was given is that he was informed of all of the circumstances giving rise to this claim, the claims that were being made in the proceedings and the extent of the injury suffered by Mr Barnes. To that extent, of course, Professor Winder had the benefit of hindsight. While the bona fides of Professor Winder is not doubted, the circumstances in which he was briefed to advise tend to detract from the weight which should be attached to the opinions which he has expressed. A distinction can be drawn between information contained in a label which describes the most efficient method of use and information comprising warnings against a particular use. Such a distinction was recognised by Dr Frank McDonald who gave evidence on behalf of Glendale. Dr McDonald has post graduate qualifications in organic chemistry and has had considerable experience in relation to the marketing of cleaning products. Dr McDonald was of the opinion that changes to the labels of substances such as caustic soda should depend upon whether directions on the label had resulted in an accident. If an accident resulted from following directions contained on a label, the label should be changed. The contention appeared to be that if an accident occurs from the use of a product otherwise than in accordance with the directions, that is not a basis for concluding that the label is inadequate from the point of view of consumer safety. However, such a contention misses the point. It may not be sufficient for a supplier of goods to set out directions for use which, if followed, will cause no harm. The question is whether, if the goods are capable of being used in a way, and are reasonably likely to be used in a way, which can cause damage, a warning against such use should be included as well. I do not consider that the evidence of Professor Winder and Mr McDonald is of much assistance. The Court is clearly much benefited by evidence as to the chemical properties of substances such as caustic soda. Further, the Court is equally benefited by evidence as to the harm and damage which might be occasioned to human tissue as a consequence of contact with caustic soda. However, the adequacy of labels to warn consumers of such dangers is ultimately a question for the Court. Expert evidence may be of assistance in describing what is habitually done by organisations which are involved in the handling or use of substances such as caustic soda. Whether those practices are adequate by reference to some standard, however, is a question for the Court. The standard to be adopted in respect of the definition of "defect" in section 75AC is an objective one based upon what the public at large, rather than any particular individual, is entitled to expect. On the other hand, one cannot foresee all possible uses to which consumers will put the goods. The explanatory memorandum published in connection with the Trade Practices Amendment Bill 1992 (Cth) which inserted Part VA says that section 75AC(1) does not require goods to be absolutely free from risk. The level of safety required is that which the community is entitled to expect. It is thus the objective knowledge and expectations of the community which are to be assessed, not the subjective knowledge and expectations of an injured party (see paragraphs 13 and 14). In his speech on the Second Reading of the Bills, the Minister said: A manufacturer or importer of goods is to be strictly liable for defects in those goods. Goods are defective when they do not provide the degree of safety which persons generally are entitled to expect, taking into account all the circumstances including the way the goods were marketed or labelled, and the likely uses to which the goods will be put. This is an objective test: it is the objective knowledge and expectations of the community which determine whether a product is defective, not the subjective knowledge and expectations of the claimant. The claimant will not have to prove negligence. The difficulty in proving negligence is one of the factors identified in existing law which can lead to injustice. A product will not be held to be defective simply because a better, safer product is subsequently put into circulation. This should ensure that the regime does not stifle product development or innovation. Section 75AC(2) of the Act provides that in determining the extent of the safety of goods, regard is to be given to all relevant circumstances including six specific matters, four of which appear to have relevance to the present case as follows: (a) the manner in which, and the purpose for which, the goods have been marketed; (b) the packaging of the goods; (d) any instructions for, or warnings with respect to, doing, or refraining from doing, anything with or in relation to the goods; (e) what might reasonably be expected to be done with or in relation to the goods. Section 75AK also has some bearing on the construction to be given to section 75AC, although no reliance was placed on section 75AK by Glendale. Section 75AK(1)(c) provides that in a liability action, it is a defence if it is established that the state of scientific or technical knowledge at the time when goods were supplied by their actual manufacturer was not such as to enable a defect to be discovered. Thus, goods can have a defect even if a supplier was not aware of it, so long as scientific or technical knowledge would enable the defect to be discovered. That is rather confirmatory of the proposition advanced by the Minister in his speech that the manufacturer is to be strictly liable and that it is not necessary to prove negligence. On the other hand it is clear that the provisions of Part VA are not intended to be an insurance policy against all loss and that if the defect is such as scientific or technical knowledge would not enable a supplier to discover it, the section will not apply. However, a mere absence of knowledge of the defect is not sufficient to excuse liability under Part VA. Glendale contended that if the circumstances which occurred were not reasonably foreseeable, the safety of goods may be such as the community was entitled to expect. Reliance was placed on a number of factors which can be summarised as follows: (a) Caustic soda is a legal product which has been around for a long time and is applied in a variety of uses. (b) The container in question complied with all regulatory controls as to labelling and warnings. (c) There was no evidence of accidents such as this occurring in the past. In particular, Mr Eugene Desouza, the quality assurance manager of Glendale, gave unchallenged evidence that, after enquiry, he was not aware of any prior incident where a person had suffered injury as a result of using Glendale caustic soda. (d) The directions on the label to avoid contact with eyes and skin and that rubber gloves and safety glasses always be worn were in concise and clear language. (e) The labels of other general caustic soda products are in very similar terms to those of the Glendale label. On the other hand, there was evidence that manufacturers of caustic soda habitually circulate MSDS. The evidence is not totally satisfactory as to the form of such documents which had been circulated prior to May 1995. There were versions of such documents bearing dates after that time. Examples of those documents contained warnings such as the following: · Handling: avoid generating mist or dust. Keep solid sodium hydroxide away from water. 'DO NOT USE WATER' signs in areas of use. When diluting or preparing solution, add caustic to water in small amounts to avoid boiling and splattering. · Beware of heat and splashes caused by water reactions (dissolution heat) or neutralisation. · The product is fully soluble in water and generates heat. · Because of a chemical reactivity, coupled with the often unknown contents and configurations of plumbing systems, improper application of chemical drain cleaners can result in unexpected chemical reactions, splashes and other effects which may result in personal injury and/or property damage. [My emphasis.] There was nothing to suggest that the warning contained in such documents, some of which were in the possession of Glendale, were new or recent. Further, the facts disclosed by the evidence of Professor Crank would have been readily available to Glendale. I conclude that it was generally well known, or at least ought to have been well known, to a supplier of caustic soda that mixing of caustic soda with water produces heat and splashing and that such reactions would be exaggerated by an increase in the temperature of water. There is, of course, no suggestion that, as caustic soda, the Product as used by Mr Barnes was defective. However, section 75AC deals with a different question. Goods will not be safe even if, having regard to the goods, they operate as intended. Section 75AC(2) makes it clear that the section applies even if there is no inherent defect in the goods in question. Thus, it is clear that a substance which is, for example, marketed as being suitable for a particular purpose without warnings as to the particular way in which that purpose should be achieved may have a defect because use in some ways would not be safe. Glendale admitted that a purpose of the marketing of the Product by it was for: (1) Its use in cleaning domestic household drains. (2) Its use in cleaning domestic household shower drain pipes. (3) Its use in removing grease from domestic household drain pipes and gully traps. (4) Its use in removing grease from domestic household shower drainpipes and gully traps. Thus, Glendale was marketing the Product for the purpose for which it was in fact used by Mr Barnes. While there may be no prior evidence of an incident such as this, it is quite foreseeable that caustic soda may have been poured down a drain which had hot water in it. I consider that the possibility of reaction with hot water was one which was sufficiently well known for a conclusion to be drawn that it was not safe for caustic soda to be marketed in a package for the purposes of use such as that described without a warning against using it in hot water in a confined space. The label contains a statement under the heading "General cleaning (drains, floors, etc.)" that 110 grams dissolved in 2 litres of water makes a very effective cleaning liquid for the removal of grease from drainpipes, gully traps and other things. That is precisely the use for which Mr Barnes acquired the Product. It is certainly the case that warm water might be expected to be found in a drain. Thus, if there were a blockage immediately after a shower had been used, it would be reasonable to expect that the water in the drain would be warm. Similarly, if there were a drain in a kitchen sink, there would be every reason to expect that hot water might have been used in the sink. Further, it is not unreasonable to expect that a householder could pour very hot, even boiling water down a drain in order to dislodge a blockage. The question is whether it could reasonably be expected that a substance marketed for the purposes of cleaning drains could possibly have been used in a way in which it was used by Mr Barnes. In other words, would it be reasonable to expect that a consumer, despite the directions on the label, albeit not in the form of a warning, would use the substance in a different way for much the same purpose. Persons generally are entitled to expect to be warned of a danger or lack of safety in respect of a use to which goods might reasonably be expected to be put. The description of the method for using caustic soda to make a cleaning liquid for the removal of grease from drain pipes and gully traps contains no hint of warning that caustic soda should only be used in that way for cleaning drains. While there is a warning that the contents of the container are corrosive and that contact with eyes and skin should be avoided, that is not adequate having regard to the nature of caustic soda and the purpose for which it was marketed. SECTIONS 52 And 53(c) The allegations in the Commissioner's statement of claim as to contravention of section 52 are as follows: 1. On 13 May 1995 Mr Barnes purchased a container of the Product which was a white plastic bottle with a label printed on it and a red plastic lid. 2. The label was in the form set out in Appendix 1 of these reasons. 3. The label failed to state that the use of hot or boiling water with the Product in a confined space such as a drain would rapidly increase the temperature of the water and the water pressure within the drain, to the extent that a stream of a mixture of the Product with water at a high temperature may erupt from the confined space. 4. The said label failed to state that there was any danger attaching to the use of the Product when it was combined with water other than cold water. 5. By reason of those matters, Glendale engaged in conduct in contravention of section 52 of the Act "by making the representations" set out in the previous two paragraphs. The pleading is somewhat elliptical. The pleading alleges that the making of representations constitutes the contravention. However, there are no representations made in the paragraphs to which reference is made. Those paragraphs simply specify omissions. In the course of oral address, senior counsel for the Commission developed an argument that the label was misleading in so far as it disclosed certain dangers but failed to disclose other dangers. The contention appeared to be that by stating expressly that the Product was corrosive and that contact with eyes and skin should be avoided, there was impliedly a statement that there was no other warning which should be given. Such a representation is not pleaded. Further, I am not satisfied that such a representation is to be implied. On the other hand, it may be possible to find an implied representation by a supplier of a dangerous substance that the supplier is unaware of any danger which is not disclosed on the label. Thus even if, prior to the incident involving Mr Barnes, Glendale could fairly say that it was unaware of the danger of eruption if caustic soda was put in a blocked drain with hot water, it is now aware of that possibility. Accordingly, in so far as there is a representation that the label discloses all dangers of which the supplier is aware, it is now false. That is significant in relation to the consumer protection relief sought by the Commission. Nevertheless, there are difficulties in concluding that there was a contravention of Section 52 prior to Mr Barnes accident. Further, I am not persuaded that, even if there were conduct of Glendale which constituted a contravention of section 52, that Mr Barnes suffered loss or damage by that conduct. There was no evidence that Mr Barnes understood the label as constituting a representation such as those suggested. There was certainly no evidence that Mr Barnes relevantly relied on such a representation in doing what he did. Of course, one might be able to draw the inference that if there had been a warning in express terms against use of the Product with hot water in a confined space, Mr Barnes may well not have done what he did. That, however, is a different question from whether Mr Barnes was induced to act as he did in reliance upon an implied representation in the label. The statement of claim also alleges that by reason of the matters referred to, Glendale, in contravention of section 53(c) of the Act, represented that the Product had performance characteristics, uses and/or benefits which it did not have unless used with cold water. The contention on behalf of the Commission was that the fact that the Product was safe to use was a performance characteristic. There is considerable difficulty with such a proposition. I do not regard that as a performance characteristic within the meaning of section 53(c). There is no representation about the safety of the Product. There was, of course, an implied representation that it was safe to use in the way described in the instructions. However, there is no complaint about that. In any event, I do not consider that such a representation is as to its performance characteristics. I do not consider that the label constitutes a representation about the performance of the substance except to the extent that it constitutes a representation that the substance may be used to make hard soap, to make soft soap, for general cleaning and to remove old paint. There is no suggestion that it is did not do any of those tasks. That is the extent of the representation constituted by the label. Accordingly, I am not satisfied that there was a contravention of section 53(c). NEGLIGENCE There is no evidence that the phenomenon experienced by Mr Barnes has previously been experienced by anyone else using caustic soda in drains. There may be any number of explanations for that. It may well be that no inquiry has been made and I am not able to draw the inference from the absence of such evidence that such a phenomenon has never occurred. It is also significant that no labels on any of the caustic soda products in evidence warned against the use of caustic soda with hot water or in a confined space. That is consistent with the absence of any evidence from which the occurrence might have been predicted. On the other hand Professor Crank said that the eruption question was something which could be predicted from the properties of caustic soda. There was a foreseeable risk that a consumer of the Product might use it in the way in which Mr Barnes did. The direction did not say that the only way which the Product could be used to clean drains was in solution as described. Further, the evidence to which I have referred above, leads to the conclusion that when used in such a way the Product could boil up and erupt. The substance is inherently dangerous. I consider that in those circumstances, there was a duty on Glendale as the supplier of the Product, to include in the label a warning as to the consequences of using the Product with hot water in a confined space such as a drain. That duty arises from the knowledge that the Product was being marketed for use in connection with cleaning drains and that there would be a reasonable possibility that there could be hot water in the drains. Glendale failed to discharge that duty. It follows that Mr Barnes is entitled to recover damages for the loss and damage suffered as a consequence of that breach of duty. CONTRIBUTORY NEGLIGENCE In answer to the liability claims under Part VA, Glendale relies on section 75AN. Section 75AN provides that if the loss in a liability action was caused by both an act or omission of the individual who suffers the injuries concerned and a defect of the goods whose supply and defect is alleged in the action, the amount of the loss is to be reduced to such extent (which may be to nil) as the Court thinks fit, having regard to the individual's share in causing the loss. In addition, Glendale relies on contributory negligence on the part of Mr Barnes as entitling it to a reduction in any judgment against it for breach of any common law duty to take care. The essence of the contention on behalf of Glendale is that Mr Barnes, being an adult who had no deficiency in comprehension of English, read the label twice, had plenty of time to consider his proposed course of action and seek a second opinion. Nevertheless, he chose to follow the suggestion made to him by Mr Phillips and in doing so, chose to ignore the warning about the use of safety glasses. When Mr Barnes read the label on the container of the Product in the store he read the warning that it was corrosive and he read the direction to avoid contact with eyes and skin. He also read the notation "Always wear rubber gloves and safety glasses when handling caustic soda". He read it again at home shortly prior to the use of the Product. Mr Barnes said that he did not wear rubber gloves and safety glasses because he was not mixing the product. The explanation he gave as to why he did not wear rubber gloves and safety glasses, because as far as he was concerned he was not mixing it and he did not think he was going to get splashed with the substance. On the other hand he conceded that he was "handling caustic soda". Further, he knew what safety glasses were and that, although he did not have a pair of safety glasses he could quite easily have made searches at the Woolworths store or at the hardware store on the way home and got some safety glasses. The conclusion that I have reached in relation to liability is that there was a defect, having regard to the manner in which and the purposes for which the product was marketed and what might reasonably be expected to be done in relation to it. The defect under section 75AC was the failure to warn against use of the Product with hot water in a confined space. On the other hand, the only warning was in relation to the handling of the Product. The Commission contended that Mr Barnes never "handled" the Product in the sense that his hands never came into contact with it. That is true in a sense. However, the significant matter is that a reasonable consumer could be excused for assuming that the reason for the instruction concerning safety glasses was to prevent injury consequent upon contact between gloved hands or eyes or dust from the product rising and floating into the eyes. Even if Mr Barnes had been wearing safety glasses, he could be excused for having taken them off in order to peer down the drain to see the result of his efforts. The direction did not say that safety glasses should be worn even after the handling of the Product was complete by being put into the drain. That is to say, the failure to wear safety glasses did not cause the loss suffered by Mr Barnes. The loss occurred because of the consequences of putting the Product in the drain. The suggested usage of the Product cannot be construed as a warning by the supplier that that is the only way in which it should be used. I do not consider that use in the way in which it was used was unreasonable. I do not consider that it was an act which, in a relevant sense, resulted in the loss or damage. Nor do I consider that the failure to wear safety glasses in the act of examining the drain to see whether the treatment was effective was an omission which would attract the operation of section 75AN. For the same reasons, I do not consider that Mr Barnes was, in the circumstances, guilty of contributory negligence. CONCLUSION It follows that I would find that the Commission is entitled to an order under section 75AD that Glendale compensate Mr Barnes in respect of the loss or damage referred to above. Alternatively, Mr Barnes would be entitled to damages for negligence in that sum. However, a question of election may arise. I shall defer making any orders until I have heard further from counsel in that regard. A question also arises as to whether consumer protection relief should be ordered on the Commission's application. As I have said, I have some reservations as to the contravention of section 52 alleged and a question may arise as to whether, in the circumstances of the undertaking to the Court proffered by Glendale, it is appropriate to grant any relief. Again, it is appropriate that I defer making any orders in that regard until I have heard further from counsel. Costs would normally follow the event. However, having regard to the multiplicity of claims, there are further issues as to the costs of the proceedings which require consideration. Accordingly, I propose to invite counsel to address further on the question of costs in the light of the conclusions which I have reached. I certify that this and the preceding twenty-five (25) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett.
Counsel for the Applicant: D.M.J. Bennett QC D.G. Staehli Solicitor for the Applicant: Australian Government Solicitor
Solicitor for the Respondent: Dunhill Madden Butler
Dates of Hearing: 23, 24, 25 and 26 February 1998