Happy 15th Birthday, Part VA TPA! Australia's Product Liability Morass

Abstract

In early 2007, the Productivity Commission (PC) embarked on a public Inquiry into Australia's Consumer Policy Framework. This article argues that a core aspect, product liability of manufacturers for their defective goods, has become a legal morass. Multiple causes of action persist: common law negligence (including a little-noticed revival of claims for breach of statutory duty); Trade Practices Act (TPA) claims on a contractual basis; and TPA Part VA claims on a strict liability basis, modelled on the EC Product Liability Directive (generally understood as a statutory tort). The picture is further complicated by state legislation, and various "tort reforms" implemented differently in various states and in the TPA since 2002. Case law has also slowly built up, even under TPA VA since it was enacted in 1992. However, it has been little analysed, and does not draw much on judgments or commentaries analysing similar provisions in Europe or indeed the Asia-Pacific region. Australia's tort reforms are likely to significantly close off opportunities for claimants to bring allegations of defective products before the courts, who might then begin addressing the ever-growing complexities. This is true even for class actions, also introduced into Australian federal courts in 1992, and anyway generating their own complications. The resultant higher transaction costs cannot be good for manufacturers and their insurers, nor for most consumers.

The article therefore concludes that Australia's product liability law urgently needs a comprehensive overhaul, involving a range of stakeholders including the PC and the Australian Law Reform Commission. As the latter pointed out in 1989, product liability law needs to minimise transaction costs and to send clear signals so firms can internalise the costs of product-related accidents. As well as legislative reform, stakeholders should elaborate a "Restatement of Strict Product Liability Principles". To guide courts and policy-makers, this would synthesise experiences and ideas emerging from commentators as well as case law not only in Australia, but also other jurisdictions with provisions similar to Part VA. Thanks to such initiatives, other areas of consumer law in Australia may improve too. Otherwise, the morass risks turning into a swamp.

Keywords: comparative law, consumer law, consumer policy, tort law, product liability, class actions

JEL Classification: D18, K13, K10