Written by Peter CarterNovember 22, 2014
The baby’s mother had purchased a gel pack which she used to treat a burn to his hand in 2008.
In her momentary absence, four-year-old Jason Mellare bit into the skin of the pack, puncturing it and ingesting its toxic contents. He deteriorated rapidly and was treated for kidney failure with dialysis, under a medically induced coma. As a long-term consequence, he acquired a brain injury that resulted in cognitive impairment and inability to control his emotions.
Through his parents, he sued United Pacific Industries – a privately owned Victorian health industry supplier – whose Thermoskin product was the cause of the devastating injuries. The claim under s 75AD of the Trade Practices Act 1974 (Cth) resulted in a damages verdict of $685k, plus payment of his solicitors’ costs agreed at $215k.
UPI – who had not conducted any tests of its own on the product or the gel within – sought an indemnity for the full $900k it was required to pay from the company it had contracted in Taiwan for its manufacture.
The many representations over the years from Taiwan Stanch Co – who began the supply of the product UPI in 1999 – identified the gel as propylene glycol, an inert non-toxic substance.
We have tested our gel by SGS and proved it to be non-toxicate gel. Therefore, it does not affect the human body in any way if accidentally swallow it. However, to swallow it in quantity may cause slight diarrhoea and there will be no other side effects.
Again, in relation to its effect on health if swallowed:
No health effects are expected … if symptoms develop, such as diarrhoea, nausea, vomiting, cramps, weakness, collapse. Drink large amounts of water and get medical attention.
Even its invoices to UPI specified “all products contain non-toxic gel”.
But tests by Therapeutic Goods Administration after the accident, demonstrated the Thermoskin pack contained not the benign propylene glycol as claimed but rather, highly toxic ethylene glycol.
Having been sued under the TPA, the court took the view that UPI’s cross claim was also required to be determined under that law. In the absence of any federal law concerning cross claims for contribution, it noted the law of New South Wales was “picked up” and should be applied under s 79 and s 80 of the Judiciary Act 1903 (Cth).
UPI alternatively claimed damages against Taiwan Stanch for breach of contract.
Stanch’s defence asserted its representations as to the nature of the gel were not terms of the contract between the parties and that in any event Taiwanese law applied.
Justice Joseph Campbell of the Supreme Court of New South Wales held that because the representations as to the nature of the gel were not merely “representational” but were “promissory” in character, they formed a term of the contract. “I am satisfied to the necessary, high degree that it was a term of the contract that the gel contained propylene glycol and was non- toxic in nature”.
His Honour was also of the view that the claim by UPI against Taiwan stanch could be disposed of summarily and entered judgment on application without trial for $900k plus UPI’s costs. He also ruled that it was unnecessary to decide whether the law of Taiwan or that of Australia applied to the contract because there was no evidence that Taiwanese law was materially different.
There was no contractual condition to that effect and “no evidence before me to suggest that the general law of contract under Taiwanese law is different from the general law of contract at common law”.
In the context that Taiwan stanches neither opposed nor supported the application for summary judgment, he was prepared to rule in such circumstances on the presumption that the law was the same in both places without resolving what the proper law of the contract was.
The Taiwanese manufacturer had already agreed to fund an Australia wide product recall of UPI’s Thermoskin gel packs.
Mellare v United Pacific Industries Ltd  NSWSC 1626 Campbell J 12/11/2014 – view decision