Product Liability 2009 - Arnold & Porter LLP

Chapter 33
New Zealand
Simpson Grierson
1 Liability Systems
1.1 What systems of product liability are available (i.e. liability
in respect of damage to persons or property resulting from
the supply of products found to be defective or faulty)? Is
liability fault based, or strict, or both? Does contractual
liability play any role? Can liability be imposed for breach
of statutory obligations e.g. consumer fraud statutes?
New Zealand has an internationally unique regime in the field of
product liability. The New Zealand regime combines traditional
concepts of tort, contract and criminal law based on the English
common law model with wide-ranging statutory departures -
notably New Zealand’s distinctive accident compensation
legislation. The accident compensation regime effectively bars
claims for compensatory damages for most types of personal injury,
while still allowing claims for exemplary damages, compensatory
damages claims for some breaches of the New Zealand Bill of
Rights Act 1990, damages claims for mental injury not associated
with physical injury or work or certain criminal offences, damages
claims for property damage and business losses, some damages
claims resulting from events before the accident compensation
regime came into force, and some claims resulting from personal
injuries arising under approved clinical trials.
(a) Accident Compensation
The accident compensation legislation initially passed in 1972, and
in effect in various forms since 1974, effectively abolished the right
to sue for compensatory damages for most types of personal injury
suffered after 31 March 1974. Where the legislation applies, statefunded
“no fault” compensation is provided and claims for
compensatory damages are barred. However, where cover under
the accident compensation regime does not apply, product liability
claims seeking compensatory damages for personal injury may still
be brought.
Cover under the accident compensation regime is available for
personal injuries caused by accidents, various occupational diseases
and various treatment injuries. The cover for various occupational
diseases has also been extended to include periods prior to the
inception of the accident compensation regime.
Efforts to circumvent the accident compensation regime by issuing
proceedings overseas for torts committed in New Zealand have
generally been unsuccessful when tested at appellate level - see for
example Amaca v Frost [2006] NSWCA 173, (2006) 4 DDCR 88.
Personal injury claims that are not covered by the accident
compensation regime, and are not therefore barred, include,
amongst others, claims for exemplary or punitive damages (as they
are non-compensatory) and most claims for mental injury where the
ICLG TO: PRODUCT LIABILITY 2009
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Robert Gapes
Sarah Devoy
claimant has not also suffered physical injury. The scope of cover
was increased in 2005 in relation to victims of crime and injuries
caused by medical treatment.
The questions of whether exemplary damages should be available
in negligence cases and, if so, whether conscious wrongdoing or
subjective recklessness must be proven, are under consideration by
the Supreme Court following the second hearing before that Court
in the Couch v Attorney-General litigation (in March 2009).
(b) Contract
New Zealand contract law has its origins with the common law of
England. The general law of contract has, however, been
significantly amended in New Zealand by legislation such as the
Contractual Remedies Act 1979 and the Contracts (Privity) Act 1982.
In sale of goods situations, additional liabilities are also imposed by
the Sale of Goods Act, the Fair Trading Act, and the Consumer
Guarantees Act (all discussed later). Despite the addition of various
statutory bases for claim, contract law remains one of the most
important bases for product liability claims in New Zealand.
The Contractual Remedies Act 1979 amends the common law in
relation to pre-contractual misrepresentations and in relation to
remedies available for breach of contract and wrongful
cancellation. Under the discretion conferred on the court, a range
of factors may be taken into account.
The Contracts (Privity) Act 1982 confers contractual rights on third
parties for whose benefit the contract has been entered into. This
enables these third parties to proactively enforce a contract made by
others. It does not, however, give the parties to the contract the
right to impose aspects of their contract on third parties.
(c) Tort
As with contract law, New Zealand tort law has its origins with the
common law of England. Differences between New Zealand and
English tort law have progressively widened as a result of court
decisions and statutory changes in each country. The most significant
tort in the product liability field is the tort of negligence. Liability in
negligence arises where, as a result of the relationship between two
parties, one owes a duty of care to the other and the duty is breached
in a manner which causes damage that is not too remote. The
Supreme Court in Couch v Attorney-General [2008] 3 NZLR 725
indicated that the Courts should be prepared to consider duties of care
in novel circumstances, particularly where the law is confused or
developing, without being too ready to strike out a claim before trial.
Negligence liability may arise not only in respect of a defect in a
product, but also for a failure to warn or for a misleading statement.
A claim for negligent misstatement must be founded on a special
relationship denoted by the interdependent concepts of assumption
of responsibility and reliance.
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