Product Liability 2009 - Arnold & Porter LLP

New Zealand
240
Simpson Grierson New Zealand
Where negligence of the plaintiff and negligence of the defendants
materially contributed to a loss, the Contributory Negligence Act
1947 provides for apportionment of responsibility.
(d) Statutory Liability
In addition to tort and contract systems, product liability can also
arise under statute. The three most important statutes in this regard
are the Sale of Goods Act 1908, the Fair Trading Act 1986, and the
Consumer Guarantees Act 1993.
The Sale of Goods Act 1908 is based upon English legislation. It
supplements existing contractual relationships between contracting
parties by implying terms as to the merchantability or fitness for
purpose of goods sold by one person to another. The first major
type of statutory implied term arises if a buyer, expressly or by
implication, makes known to the seller a particular purpose for
which the goods are required, in such a way as to show that the
buyer is relying on the skill or judgment of the seller. If the goods
are of a description which it is in the course of the seller’s business
to supply, then there is an implied condition that the goods shall be
reasonably fit for their intended purpose. The second major type of
statutory implied term arises where goods are bought by description
from a seller who deals in goods of that description; a condition is
implied there that the goods will be of merchantable quality.
New Zealand has also enacted legislation bringing into effect in
New Zealand the Vienna Convention on the International Sale of
Goods - see the Sale of Goods (United Nations Convention) Act
1994. Different implied terms may arise as a consequence in
international sale transactions. The Convention does not apply to
claims for death or personal injury.
The Fair Trading Act 1986 prohibits misleading and deceptive conduct
in trade. Part III of the Act contains special provisions relating to
product safety including powers enabling the government to set
product safety standards and to declare goods “unsafe”. Section 32 of
the Act enables the relevant government minister to require a supplier
to recall goods, and to take other steps described later. The Act also
contains a variety of statutory remedies available through the courts,
including injunctive relief and compensation.
The Consumer Guarantees Act 1993 imposes additional obligations
on manufacturers and sellers. These obligations are referred to in
the Act as “guarantees”. The guarantees implied by the Act cover
acceptable quality, fitness for purpose, compliance with description,
compliance with sample (and sales by sample), reasonableness of
price, willingness to repair or supply spare parts, and as to title.
Although these statutory provisions have augmented conventional
tort and contract systems, the accident compensation legislation has
effectively prevented these other statutory measures being utilised
in most personal injury situations.
(e) Criminal Liability
In New Zealand criminal liability is imposed by statute, rather than
being governed by the common law. In relation to defective
products, criminal liability can arise either under the specific
provisions of the Fair Trading Act or under the wide-ranging
provisions of the Crimes Act.
Contravention of Part III of the Fair Trading Act is an offence
against that Act. Maximum fines of NZ$30,000 for individuals and
NZ$100,000 for corporations apply. Part III of the Fair Trading Act
includes the sections discussed earlier that deal with product safety
standards, goods declared to be “unsafe” and compulsory product
recalls.
Under the Crimes Act 1961, criminal liability applies in instances of
criminal nuisance and for breach of duties applicable to persons in
charge of dangerous things or required to avoid omissions
dangerous to life.
A criminal nuisance is committed when a person does an unlawful
act or omits to discharge a legal duty, and the act or omission was
known by the person to be one which would endanger the life,
safety or health of one or more individuals. Imprisonment for a
term not exceeding one year may result.
If a product fault or defect resulted in a person dying, then this
could constitute murder or manslaughter. Criminal responsibility
for murder or manslaughter arises only where the omission or
neglect is a major departure from the standard of care expected of a
reasonable person in the circumstances.
There are also a range of offences applicable in specific areas e.g.
the Food Act.
Product liability matters do not often give rise to criminal
proceedings in New Zealand.
1.2 Does the state operate any schemes of compensation for
particular products?
The uniquely comprehensive accident compensation regime in New
Zealand provides statutory compensation for most types of accidents,
for various occupational diseases, and for various treatment injuries.
The wide-ranging coverage of the accident compensation scheme
means that it applies to most (but not all) situations where personal
injury results from the supply of defective or faulty products.
Consequently, the state does not operate schemes of compensation
applicable solely in relation to particular products.
1.3 Who bears responsibility for the fault/defect? The
manufacturer, the importer, the distributor, the “retail”
supplier or all of these?
The manufacturer, the importer, the distributor, and the “retail”
supplier are all potentially liable where damage results from the
supply of defective or faulty products. Contractual liability will
apply as between the parties to a contract, and third parties for whose
benefit the contract was made may also sue on the contract under the
Contracts Privity Act. Liability in tort depends on the existence of a
duty of care, and can certainly be imposed on other parties in the
“supply chain” such as manufacturers. In relation to special statutory
liabilities: the Sale of Goods Act follows contractual relationships;
the Fair Trading Act requires only misleading or deceptive conduct in
trade and can apply to a range of parties including manufacturers; and
the Consumer Guarantees Act is specifically designed to cover a
range of parties in the “supply chain”. Criminal liability too can
apply in a wide range of relationships.
1.4 In what circumstances is there an obligation to recall
products, and in what way may a claim for failure to recall
be brought?
An obligation to recall a product may arise under the Fair Trading
Act or under the general law.
Section 32 of the Fair Trading Act applies where a person has in
trade supplied goods that either:
do not comply with a product safety standard; or
are of a kind which will or may cause injury to any person.
If a supplier has not recalled such goods or taken satisfactory action
to recall them, then the relevant government minister may require
the supplier to take various types of action. Relevant types of action
that the supplier may be required to take include recall of the goods,
public disclosure of information, repair or replacement of the
goods, or refunding all or part of the price paid.
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