An importer of goods who has no knowledge of any defects in the goods does not necessarily owe a duty of care to end consumers.
In issue
- Liability and quantum in respect of damage due to a fire in the kitchen of the plaintiff’s home which was caused by the internal electrical failure of the icemaker within a fridge imported by the defendant.
The background
In April 2006 Dr Alizadeh (the applicant) bought a new LG side by side refrigerator from Harvey Normal Electrical. The refrigerator had its own unique serial number.
The fridge was manufactured by LG Electrical in Korea (LG Korea) and imported by LG Electronics Australia (the defendant) which was the sales and marketing subsidiary of LG Korea.
The defendant had no manufacturing or design involvement in the refrigerator. It simply imported refrigerators from LG Korea and sold them to its various distributors within Australia including Harvey Norman Electrical.
In June 2011 the defendant issued a Voluntary Product Safety Recall of certain side by side refrigerators. The refrigerators were identified by model and serial number. The product recall was due to concerns that there was a defect with the microswitch in the ice making component of the refrigerator which could cause a fire.
The product recall notice invited consumers to search the internet page for the affected serial numbers of the refrigerators.
LG Korea supplied the models and serial numbers to the defendant to include in the notice. The serial number of the plaintiff’s fridge was outside the range of affected serial numbers, so it was not included in the recall notice.
On 11 March 2019 (by which time the refrigerator was 13 years old, and the recall notice had been issued 8 years previously), the refrigerator caught fire and caused substantial property damage to the plaintiff’s house and contents.
The plaintiff sued the defendant in negligence to recover property damage losses alleging the fire was due to an internal electrical failure of the icemaker within the fridge.
Importantly no claim was available under the Australian Consumer Law as it was out of time.
The allegations against the defendant were that they were negligent in not including the plaintiff’s fridge in the recall notice. It was not sufficient to simply rely on information provided by LG Korea, they were required to carry out their own assessment as to the accuracy of the information provided by LG Korea.
The defendant’s position was that it had no way of identifying the serial numbers itself, and was totally dependent, and reasonably dependent, on the information provided by LG Korea when issuing the recall notice.
The decision at trial
The court first identified the relevant duty of care, namely the duty was one requiring reasonable steps to be taken by the defendant to avoid the risk of harm occurring to past purchasers of refrigerators.
The risk of harm was identified as the risk of loss or damage being caused by fire in the refrigerator related to the defect the subject of the 2011 recall.
The primary question to consider was firstly whether the defendant owed the plaintiff a duty of care. The plaintiff asserted the defendant owed a duty of care to them as purchaser of a refrigerator in its capacity as importer, marketer, distributor and supplier.
The defendant denied there was a duty of care. It relied on the decision of McPherson’s Limited v Eaton 2005 NSWCA 435, where it was found that the non-manufacturing distributor of goods that is ignorant of a dangerous defect does not owe the same duty of care as that of a manufacturer, there must be 'something more'.
The court in McPherson’s case found that a retailer of goods has no duty of care to persons who might ultimately be affected by those goods, unless there is some additional factor, generally a factor associated with the creation of risk or knowledge of risk involved in the goods.
In this case the defendant knew about a fire that occurred in 2010 and by the time of the recall notice had identified a potential safety issue in relation to the microswitch in the icemaking component of the refrigerator and this led to the product recall.
In those circumstances the court found the defendant owed a duty of care because knowledge of the defect provided the 'something more' necessary to impose a duty of care on the defendant to purchasers of refrigerators it had supplied to retailers.
As to whether the duty of care was breached, the plaintiff asserted the defendant ought to have made further enquiries of LG Korea, namely asking whether there were other refrigerators that may suffer from the same defect and why the serial number range for the recall excluded refrigerators within the same model.
Even if the defendant had questioned the model and serial number identified by LG Korea as being subject of the product recall, it had no way of testing any response given its limited knowledge and resources compared to LG Korea.
The court found that a reasonable person in the position of the defendant could rely on the information/advice provided by its parent company about which models of refrigerators had a safety defect and needed to be recalled.
The court held that it was not appropriate for the scope of liability to extend this far, given that the fire occurred almost 13 years after the fridge had been purchased. A supplier’s legal liability cannot continue indefinitely for sound policy reasons.
Implications for you
The importer of electrical goods which is not involved in the manufacturing or design of those goods does not necessarily owe a duty of care to end consumers of those products. Something more is required, normally some knowledge of the defect and the risks.
Even if a duty of care exists, the legal liability of an importer cannot continue indefinitely for policy reasons.
Alizadeh v LG Electronics Australia Pty Ltd [2025] NSWDC 271
