Case: Woolcock Street Investments Pty Ltd v CDG Pty Ltd [2004] HCA 16 ; (2003) 216 CLR 515
Outcome: cited
argument for Naturalcare in tort commenced with the contention that, at least between 1995 and 2002, Pan made a number of representations to Naturalcare to the effect that Pan was ready, willing and able to continue to supply Naturalcare with therapeutic goods; that any risk to Naturalcare arising out of Naturalcare's reliance or dependence upon Pan for the supply of product was negligible or immaterial and that Pan was, and would continue to be, compliant with the requirements of the TGA. For the purposes of argument, that can be taken as a fair summary of the statements by Selim from time to time and from the dealings between the parties over many years. The following propositions were advanced: (1) The representations were made in circumstances in which Pan knew, or ought reasonably to have known, that the representations would be relied upon (referring to L Shaddock &amp; Associates Proprietary Limited v Council of the City of Parramatta [1981] HCA 59 ; (1981) 150 CLR 225; Mid Density Developments Pty Limited v Rockdale Municipal Council (1993) 44 FCR 290; Eade v Vogiazopoulos [1999] 3 VR 889 at [115] per Smith J; Perre v Apand Pty Limited [1999] HCA 36 ; (1999) 198 CLR 180 per McHugh J at [124]). (2) Naturalcare was vulnerable to Pan in the sense that it was unable to protect its own interests. Pan was in control of its own manufacturing processes and, to the extent that Naturalcare might have taken steps to protect its own interests, it was induced not to do so by Pan's express representations and conduct (referring to Woolcock Street Investments Pty Ltd v CDG Pty Ltd [2004] HCA 16 ; (2003) 216 CLR 515 at [23] ; Perre v Apand Pty Limited at [10] [13] per Gleeson CJ; at [42] per Gaudron J; at [118] [119] per McHugh J; at [216] per Gummow J; at [298] per Kirby J; at [416] per Callinan J; Fortuna Seafoods Pty Ltd (as trustee for the Rowley Family Trust) v Ship 'Eternal Wind' [2005] QCA 405). (3) Pan had actual foresight of the likelihood that Naturalcare could suffer harm in the event that it manufactured and supplied product otherwise than conformably with requirements of the TGA and the Code. Pan was supplying goods for sale to, and ingestion by, humans. Pan knew that Naturalcare was taking the lion's share of its products from Pan and would be damaged if that supply ceased ( Perre v Apand Pty Limited at [13] per Gleeson CJ; at [50]; and [133] per McHugh J). (4) The statutory scheme meant that Pan assumed, for its own advantage, particular responsibilities which would give comfort to sponsors in the circumstances of Naturalcare ( Moorabool Shire Council v Taitapanui [2006] VSCA 30 at [3] , [82], [159]). (5) The case falls within at least one of the standard categories in which the common law has previously recognised that a duty of care may arise, namely, the negligent supply of goods ( Perre v Apand Pty Limited at [96] per McHugh J). (6) The policy consideration relating to indeterminacy of liability does not arise in the present case. Naturalcare was a first line victim. (7) Imposing a duty of care of the kind alleged would not impose an unreasonable burden on Pan ( Perre v Apand Pty Limited at [133] per McHugh J). Taking these factors into account, it was submitted that Pan had a duty of care at least to take reasonable care to ensure that the goods it manufactured for supply conformed with the requirements of the TGA and the Code. Counsel for Pan has put forward a number of detailed reasons for its contention that the claim is misconceived. The most important is that Naturalcare was not 'vulnerable' in the sense required if that quality is to be a touchstone of liability as was submitted on behalf of Naturalcare. It would be necessary for Naturalcare to establish that it could not protect itself from the consequences of Pan's want of reasonable care, either entirely or at least in a way which would cast the consequences of the loss on the other party ( Woolcock Street Investments Pty Ltd v CDG Pty Ltd at [23] per Gleeson CJ, Gummow, Hayne and Heydon JJ; and Perre v Apand Pty Ltd per McHugh J at [120]). The risk of a supplier of goods not being able to maintain supply is an every day incident of commercial life. Many statutes regulate manufacturers and suppliers of goods. There is always a risk that if the statute is not complied with, the supply of goods may be prohibited or suspended. Various strategies to minimise risks of that kind and their impact are available to the intending purchaser. Particular contractual provisions can be framed, insurance can be sought, alternative suppliers located and so on. All available strategies were open to Naturalcare. The answer given on behalf of Naturalcare is that it was convinced by Selim's assurances not to take such prudent steps. That is no answer. It highlights the fact that the real complaint is about the alleged representations, not about failure to take reasonable care to ensure that the requirements of the Code were met.