Glendale Chemical Products

Background Facts:

Michael Barnes bought a 500g of caustic soda called “DRANO” at a local store named Glendale Chemical Products Pty Ltd for him to use to unblock a pipe in the shower recess. Mr. Barnes, kneeling down, poured hot water to the drain and immediately sprinkled the caustic soda as advised by a friend. The mixture of hot water and the caustic soda caused a bad reaction that resulted the liquid to gush out of the drain and splashed in contact with his face and eyes. Glendale was not the manufacturer of the caustic soda but purchased bulk from Redox Chemicals and repackaged it with Glendale’s label on the goods. The packaging failed to warn the public users of the danger of the caustic soda if it’s not used in the right way.

There was no recommendation to wear protective gadgets in the case of reflux. Glendale was not actually the manufacturer of the caustic soda but since its label was on the goods, it was deemed to be the manufacturer in pursuant to the product liability provisions of the Trade Practices Act (Part VA).

The Act states in Section 74A(3) and 75AB that if a corporation causes or permits its name, or brand or mark of the corporation to be applied to the goods supplied, it is deemed for the purpose of Part VA to have manufactured the goods. This is in consistency with the intention of the Act which is to place equal responsibilities on suppliers as manufacturers. Sixty years after the verdict on Donaghue’ case, Australia passed a statutory code that deals with defective goods. The only completed action brought under Part VA was the case of ACCC v Glendale Chemical Products Pty Ltd on behalf of Barnes in respect of damages concerning the injuries suffered by him.

Barnes, separately, had commenced proceedings in the District Court of NSW. Both proceedings were transferred to the Federal Court and heard with the proceedings issued by the ACCC. The judgment on this case was delivered on February 27, 1998 six years after Australia passed a statutory code dealing with defective goods in 1992 sixty years after the verdict on the Donoghue v Stevenson’s case. The ACCC sought orders restraining Glendale from engaging in conduct contrary to Section 52 which states that a corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive. The action brought by the ACCC against Glendale based on Section 52 and 53(c) of the Act was unsuccessful.

There was insufficient evidence to demonstrate that Barnes did understand the label to constitute a representation in the form suggested. It was found that Glendale was negligent and in all circumstances, it was considered there was a duty on Glendale to include in the packaging a warning as to the consequences of using corrosive product with hot water in a confined space such as a drain. There was no specific defect with the caustic soda but the issue is whether it was defective within the meaning of Section 75AC. It was found by the court the label to be defective within the meaning of section 75AC. It was argued on behalf of Glendale that the damages should be reduced based on the fact that Barnes did not wear safety glasses while handling the product as suggested on the label.

Part VA allows for a reduction of damages for contributory negligence but on the evidence before the court there was no contributory negligence on the part of Barnes. The parties agreed quantum in the sum of $106,000 as an award in favor of Michael Barnes. In addition, orders were made in respect of packaging or labeling of products in the future. Included in the orders are the increased warning regarding the wearing of rubber gloves and goggles during and after use of the product and warning against using of product directly in a confined space such as a drain.

The judgment demonstrates the importance of careful packaging and marketing. Under Part VA, it’s not necessary that the product malfunction in order to be defective. The critical issue is safety and the objective expectations of the community. GLENDALE appealed to the Full Court of the Federal Court but the appeal was dismissed principally on the ground that the court was right in relation to Part VA. The ACCC was successful in its claim in this case.

ANALYSIS:

Glendale was proven to be negligent because of insufficient warning in the label of its product that resulted to damage Barnes physically. Under section 75AC of the Act, the lack of sufficient warning on how to handle a caustic soda was a “defect” within its meaning. The label of the product was found defective within the meaning of section 75AC where goods are defective when they do not provide the degree of safety which persons generally are entitled to expect. In this case, it was reasonably foreseeable that Barnes might have poured the caustic soda down the drain with a boiling water.

To breach the Trade Practices Act Part VA which refers to Product Liability Provisions, liability is strict and it’s no longer necessary for the plaintiff who suffered damages by the use of a product to prove negligence. In pursuant to Part VA, Glendale Chemical Products Pty Ltd was deemed to be a manufacturer of the product bought and used by Michael Barnes because even they only repackaged the product, they also put the company’s name in its label. In common law, tort of negligence also applies in this case.

Sources:
A guide to Business Law by Carvan, Miles and Dowler 17th Edition p.590 http://www.usyd.edu.au/lec/subjects/commercial/topic_notes/md03_commercial.PDF http://www.accc.gov.au/content/item.phtml?itemId=255578&nodeId=8a93f749f6dd44e5b42b78856468ab13&fn=accc%20view%20on%20represetative%20actions.pdf