Question 1

Whether the Manager can deny refund on the ground Mary did not purchase the wine

The facts state that Marie was denied a refund by the manager on the basis that she did not purchase the wine directly with her own money. The famous English case of Donoghue v Stevenson [1932] UKHL 100 has already established the legal principle in tort law in common law that, a manufacturer owes a duty of car to not only the purchase but the ultimate consumer as well.

The facts of Donoghue, in brief, are that the plaintiff had suffered serious gastritis and nausea from shock after consuming a half a bottle of ginger beer with the dead body of a snail decomposing inside the body. The fact that the bottle was purchased by the plaintiff’s friend was the main legal defense sought to be established. However, the Court rejected the defense and order damages, holding the defendant liable. Lord Atkin established his landmark Legal principle called the ‘Neighbour Principle’ and held that a manufacturer owes a duty of care to the ultimate consumer regarding the reliability and efficacy of the product to not only the purchaser, but anyone who may be the ultimate consumer.

Thus, applying the ‘Neighbour Principle’ our case, the Manager of Yarra Valley Mountain Wines Pty Ltd. owes a duty of care to Mary as the ultimate consumer – the fact that the bottle of wine was paid for by Michael is inconsequential.

Whether Mary can exercise Australian consumer guarantees

Volume 3, Schedule 2, Chapter 3, Part 3-2, Division 1 (A) Section 56 of the Competition and Consumer Act 2010 (Cth) (hereinafter referred to as “the ACL”) provides a consumer guarantee that when a good is being supplied to a consumer by description, then the good is guaranteed to correspond with the description supplied.

In the facts of our present case it has been clearly mentioned that in addition to a verbal guarantee by the manager that the wine was “not too dry but with a hint of citrus”, the same description of the wine was clearly written in the label on the bottle. It is well known that that wine is classified and selected by matching the description or advice about the taste of the wine and whether it matches to the palate of the user. Thus the description that that wine was “not too dry but with a hint of citrus”, was clearly meant as a description to sell the product.

Since the wine clearly contained a written description, there was guarantee to match that description as per Section and thus Mary is entitled invoke Australian consumer guarantees.

How long does Mary have to exercise her rights?

The limitation period for actions against manufacturers of goods for failure to comply with consumer duties is 3 years from the point when the people can be reasonably said to ought to have been aware that a consumer guarantee has been breached. Thus, according to cautious estimates, Mary has 3 years from the date of purchase of the wine to exercise her consumer guarantee rights.

Question 2

Broadly speaking, if a product or service is faulty or falls short of the description promised, then consumers have the three basics rights to ask for a repair, replacement or a refund as appropriate, under Australian Consumer law.

As per the ACCC website, a consumer is entitled to a replacement or a refund when the problem is major. One of the situations when a problem can be categorised as major is when the product is significantly different from the description provided by the manufacturer. In our present case, that facts state that the bottle had a written description as being ‘not too dry but with a hint of citrus’. Whereas, in reality, the wine was very dry and bitter tasting.

Below is a discussion on the specific provisions of law providing the remedies according to the ACL and its corresponding penalties.

Application for Injunction

Under Section 232(1) of the ACL, a Court may grant injunctions for violations of Chapter 2, 3 or 4 of the ACL.

Section 232(5) authorises the Court to pass an injunction in the nature of a restraining order prohibiting the defendant(s) to carry on a business supplying goods or services indefinitely except on some specified terms and conditions, or for a specified period of time.

As provided by Section 232 (6), injunctions may require the defendant to refund money, transfer property, honour a promise or destroy or dispose of goods.

Section 234 of the ACL makes provision for interim injunction pending determination of the suit in question.

Action for damages

It has already been established above that in our present case there has been a breach of consumer guarantees under Section 56, Chapter 3 of the ACL.

Section 236 of the ACL states that an action for damages may be sought in case of a contravention of Chapter 3 of the ACL (as in our present case), whereby a claimant may recover loss or damages suffered from the person in contravention of the ACL.

Application for compensation orders

Section 237 of the ACL provides, in case of a violation of Chapter 3 of the ACL, on an application made by an injured person who has suffered or is likely to suffer any loss or damage due to the act of the defendant, the Court may ‘such order or orders as the court this appropriate’ to compensation the injured person and prevented or reduce the damage suffered or likely to be suffered.

Section 239 also explicitly states that in cases of contraventions of Chapter 2, the Court on application can even compensate non-parties to the contract for damages suffered or likely to be suffered and for preventing or reducing such loss or damage.