Lack of liability law action puts consumers at risk

PUBLISHED : Tuesday, 21 December, 2010, 12:00am
UPDATED : Tuesday, 21 December, 2010, 12:00am

When a consumer is harmed by a product, that person should be able to sue the company that made the defective product.

Sounds logical? A Law Reform Commission sub-committee certainly thought so in 1998. But its 'Civil Liability for Unsafe Products' report went nowhere. The government never put its ideas into practice. And today, any harmed consumer would still have little chance of suing the manufacturer for damages caused by a product.

Audrey Eu Yuet-mee SC, who chaired the sub-committee, said the conclusions were 'not radical at all' and reflected ordinary practice in many common law jurisdictions.

But the recommendations were met with fierce opposition, and a spokesman from the Commerce and Economic Development Bureau reiterated that the government had no plans to implement the report. 'As there are very divergent views on this matter in the community, the administration does not intend to take forward the recommendation,' the spokesman said.

Even in 1998, the sub-committee noted the alarming number of complaints against unsafe consumer products: 123 in 1993, 183 in 1994, 131 in 1995. Also, that Hong Kong law lagged behind many other common law jurisdictions in granting individuals access to legal remedies.

Since then, complaints about suspected unsafe products have risen. Between 2005 and this year, the number of complaints to the Consumer Council ranged from 289 to 426 a year. In addition, an estimated 1 per cent of all accident and emergency cases at hospitals are believed to be caused by unsafe products.

As the report put it: 'The number of injuries caused by unsafe or defective products would be considerable.'

As the law was then - and remains today - only the parties to a contract may initiate a civil claim. 'The major lacuna [gap in the law] ... arises from the rules of privity of contract under which only the immediate contracting party would be protected by the law,' the report said.

In other words, if you are harmed by a product, but did not buy it yourself, you have no legal protection. A claim may only be directed at the retailer, which would have to initiate a claim against the manufacturer, trying to prove negligence in production.

All in all, the report said, it's 'a formidable task'. 'Without the proposed legislation, some aggrieved users of unsafe products are effectively left without recourse for compensation ... Hong Kong lags behind many of its trading partners, some of which reformed their product liability law over 10 years ago,' the report stated.

The sub-committee proposed a 'defect approach'. The consumer would only have to prove there was a defect, as well as a causal relationship between the defect and the harm. That would make the manufacturer liable.

But trade representatives voiced strong objections, a government spokesman said. 'Some in the trade considered it unfair to hold a party, such as an importer, liable, if that party did not have full control over the safety of the product he supplied, while others were concerned about the likely increase in litigation and compliance costs,' the spokesman said. Given the 'very divergent views', the government decided against acting on the proposal.

But there is at least one area of consumer protection in which there appears to be some momentum for reform. In 2005, the Law Reform Commission made recommendations in a 'Privity of Contract' report that would rectify the problem of consumers having no legal remedies for breach of contract if they did not personally buy the goods or services - if, for example, they received the item as a gift.

A Department of Justice spokesman now says: 'The doctrine of privity of contract should be reformed by means of a comprehensive, systematic and coherent legislative scheme. The Department of Justice intends to prepare a bill to implement this proposal and will consult stakeholders on the draft legislation in due course.'

A Consumer Council spokesman said the changes should 'be implemented in due course as early as possible'.

The commission is now drafting its report on class actions, another area of the law that consumer protection activists are keen to see reformed. Consultation was conducted last year on this area, and the council is giving its endorsement. 'The council believes that a class-action regime would facilitate collective redress for consumers aggrieved by multiple wrongdoings of a business and thus strengthen consumers' rights.

'Class actions may also ... make consumer law more enforceable and effective in the deterrence of business malpractice.'

Slow motion

This is the last of a two-part report on the frustrating pace of law reform in Hong Kong.




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