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R410A and R32 legal questions you should get independent advice - June 5, 2014

With the introduction of a new flammable refrigerants like R32, brings with it safety concerns regarding fire and highly toxic gases like hydrofluoric acid and carbonyl halides when the product thermally decomposes.

As R410a is made up of 50% R32 (difluoromethane) it is now also in the spotlight with R32. The Elephant that is in the room that know one wants to talk about is THE LAW!

The following is a list of Legal questions that have come up as I have been talking with air-conditioning contractors about the new refrigerant. Please understand that this Blog is not intended to give you legal advise and Im am a refrigeration mechanic not a Lawyer.

If I didn’t tell my customers about the safety concerns regarding R410a and R32 thermal decomposition creating hydrofluoric acid and carbonyl halides, and later they find out the flammability and toxic dangers, could my conduct be seen as a breach of an implied term to act in good faith and can I be in trouble for negligence?

Lord Atkin said in Donoghue v Stevenson.

“The rule that you are to love your neighbour becomes in law you must not injure your neighbour; and the lawyer’s question ” Who is my neighbour ?” receives a restricted reply. You must take reasonable care to avoid acts or omissions which you can reasonably foresee would be likely to injure your neighbour. Who then in law is my neighbour ? The answer seems to be persons who are so closely and directly affected by my act that I ought reasonably to have them in contemplation as being so affected when I am directing my mind to the acts or omissions which are called in question.”

The Australian Consumer Law (ACL) imposes non-excludable consumer guarantees and certain standards of conduct. The ACL imposes a duty on those selling to be honest and not misleading in the promotional stage.

What if one of the large air-conditioning manufactures that is launching small AC units with R32 into Australia, has reiterated that the refrigerant’s mild flammability need hold no fear for installers. Is this Misleading and deceptive conduct?

Misleading and deceptive conduct

Section 18 of the ACL states that a person must not, in trade or commerce, engage in conduct that is misleading and deceptive or likely to mislead or deceive. The effect of section 18 is the same as that of section 52 of the TPA and, as such, the existing jurisprudence relating to section 52 remains applicable under the ACL.

Definition

The terms “misleading” and “deceptive” are not defined in either Act, and the courts have not given a precise definition ofmisleading and deceptive conduct. The overall impression created by the alleged conduct determines whether it is likely to lead a significant number of people into error or has the tendency to deceive such persons. In general, misleading someone may include conduct ranging from lying to them, to making false or inaccurate claims, to creating a false impression, to leading them to a wrong conclusion, to omitting important information.

Importantly, it is not necessary to establish that the trader intended to mislead or deceive. A person or corporation may have engaged in conduct that was misleading or deceptive even if they have acted honestly and reasonably.

Test

An objective test is used to decide whether conduct is misleading and deceptive. The court or tribunal will consider whether the conduct was likely to mislead or deceive members of the class or group of persons to whom the conduct was directed.

Silence
Silence may constitute misleading and deceptive conduct but this will depend on the circumstances of the case. For example, the courts have held that a failure to disclose information was not misleading where it was not deliberately withheld.

Puffery

“Puffery” is a term used by the courts to describe enthusiastic or exaggerated claims used by advertisers to promote products and services when it is obvious that the claims should not be taken seriously. The courts have held that mere “puffery” will not constitute misleading or deceptive conduct. Generally, a statement is considered to be mere “puffery” if no reasonable person would take it seriously or act upon it. Examples of puffery might include phrases such as “making your dreams come true”, or “best ever”.

Future matters

The prohibition of misleading and deceptive conduct also extends to representations about future matters. The FTA requires a person who has made a statement about a future matter to show that they had reasonable grounds for making it, or it will be taken to be misleading (s 4 ACL).

Disclaimers and fine print

A person or corporation cannot simply rely on a disclaimer or exclusion clause against a misleading and deceptive conduct claim. However, it appears that in some circumstances, an express disclaimer that is prominently displayed may exclude liability for making misleading and deceptive statements in an advertisement.

In Butcher v Lachlan Elder Realty Pty Ltd [2004] HCA 60, an advertisement containing two disclaimers was held to make it sufficiently clear that the real estate agent was not the source of the information that was said to be misleading in its advertisement for a property and that it was simply passing on information supplied by others. In these circumstances, the real estate agent was held not to be liable for the misleading statements contained in the advertisement.

In contrast, in Australian Competition and Consumer Commission v Telstra Corporation Limited [2007] FCA 1904, Telstra made various claims about its Next G mobile network, including that it had “coverage everywhere you need it”. In its defence, Telstra argued that some of the advertisements directed consumers to its website, where various disclaimers about the extent of its network’s coverage could be found. The court held that this disclaimer did not prevent the conduct from being misleading or deceptive, as it did not sufficiently communicate the information to potential customers.

If I sell an air-conditioner with R410a or R32 isn’t the Guarantee as to acceptable quality the manufactures problem?

Consumer guarantees on products and services

Since 1 January 2011, the following consumer guarantees on products and services apply.
Products must be of acceptable quality, that is:

  • safe, lasting, with no faults
  • look acceptable
  • do all the things someone would normally expect them to do.

Acceptable quality takes into account what would normally be expected for the type of product and cost.

Products must also:

  • match descriptions made by the salesperson, on packaging and labels, and in promotions or advertising
  • match any demonstration model or sample you asked for
  • be fit for the purpose the business told you it would be fit for and for any purpose that you made known to the business before purchasing
  • come with full title and ownership
  • not carry any hidden debts or extra charges
  • come with undisturbed possession, so no one has a right to take the goods away or prevent you from using them
  • meet any extra promises made about performance, condition and quality, such as life time guarantees and money back offers
  • have spare parts and repair facilities available for a reasonable time after purchase unless you were told otherwise.

Who to claim a remedy from?
Products
You can claim a remedy from the retailer if the products do not meet any one or more of the consumer guarantees, with the exception of availability of spare parts and repair facilities.
The remedies you can seek from the retailer who sold you the product include a repair, replacement, or refund and in some cases compensation for damages and loss.
The retailer can’t refuse to help you by sending you to the manufacturer or importer.
You can claim a remedy directly from the manufacturer or importer if the goods do not meet one or more of the following consumer guarantees:

  • acceptable quality
  • matching description
  • any extra promises made about such things like performance, condition and quality
  • repairs and spare parts – the manufacturer is responsible for ensuring that spare parts and repair facilities (a place that can fix the consumer’s goods) are available for a reasonable time after purchase unless you were told otherwise. How long is ‘reasonable’ will depend on the type of product.

You are only entitled to recover costs from a manufacturer or importer, which include an amount for reduction in the product’s value and in some cases compensation for damages or loss.

Manufacturers’ liability.
The party responsible for most of the defects in goods is the manufacturer. It is, however, the air-conditioning contractor with whom the consumer deals, and under the common law/sale of goods approach, the consumer has rights against the contractor, who has rights against the wholesaler/manufacture. The consumer has no contract with the manufacturer and, because of common law privity of contract doctrine, can take no action against the manufacturer except by way of a tortious action.

Do I really need to worry about ACL and the ACCC? Isn’t it all just a storm in a teacup!
Courts emphasise responsibility of senior management- in parent and subsidiary companies
Whilst warranties issues took much of businesses’ attention, 2012 saw the Courts at pains to emphasise the core responsibility of senior management- whether in Australia or overseas- to ensure corporate compliance with all aspects of the Australian Consumer Law.
In December, the Federal Court penalised ‘Cotton On Kids’ $1million for the sale (and associated mis-labelling) of children’s nightwear that did not comply with the mandatory flammability standard. The serious nature of the potential consequences of the breach, involving infants and children, was a factor that weighed heavily on the significance of the penalty. The penalties imposed were the highest imposed against a company for breaches of a mandatory product safety standard. The Court emphasised the responsibility of senior management to ensure effective compliance systems are in place- managers who in that case had ‘manifestly failed to comply with this important aspect of their duties’.
And the Courts were not prepared to demonstrate leniency to management of foreign corporations. In the penalty proceedings against technology giant Apple in June, Justice Bromberg stated: ‘Multi-national corporations who (through their subsidiaries or otherwise) operate in and profit from the Australian market, must respect that market and the laws which serve to regulate it and protect its participants. Those who design global campaigns, and those in Australia who adopt them, need to be attuned to the understandings and perceptions of Australian consumers and ensure that representations made by such campaigns will not serve to mislead. The penalty imposed in this case [$2.25 million], needs to make that message clear.’
Record penalties for advertising breaches
2012 was notable for the number – and size – of penalties for misleading sales and advertising practises in 2012. The Federal Court imposed significant penalties against corporate big fish such as Optus ($3.61 million) and Apple ($2.25 million), and pulled no punches against smaller fry such as Energy Watch ($2 million), EDirect Pty Ltd (trading as VIPtel Mobile) (in liquidation) ($2.5 million for misleading sales tactics with consumers in remote communities who actually had no network coverage) and home-business opportunity promoter Hakalia Pty Ltd (and its director Mr Hann) (a total of $900,000 for misrepresentations in the promotion and sale of a parcel delivery business).

AIRAH and TAFE Now is the Time for Leadership - November 19, 2013

Did you find Hydrogen Fluoride in anything AIRAH, CCN, TAFE, Fujitsu, and Daikin has given you?

Go over the talks, the documents, anything they have given you about the dangers of working with R32 – nothing? read on…