Grant v Australian Knitting Mills

In June 1931 Dr Grant purchased two pairs of woollen underwear and two singlets from John Martin & Co. There was nothing to say the underwear should be washed before wearing and Dr Grant did not do so. He suffered a skin irritation within nine hours of first wearing them. Dr Grant applied calamine lotion, but continued to wear the underwear for the rest of the week. He then wore the second pair for the next week and washed the first pair. This was in an era when changing his underwear only once a week was "the ordinary custom of ordinary people".[9]^{:at p. 470} The skin irritation got worse and developed into a severe case of dermatitis. Dr Grant blamed the underwear and sued John Martin & Co. for breach of contract, being the statutory warranties that the goods were fit for the purpose and were of merchantable quality.[10] Dr Grant also sued the manufacturer, Australian Knitting Mills,[11] alleging that they had been negligent in failing to take reasonable care in the preparation of the garments. The garments in question were alleged to contain an excess of sulphur compounds, variously described as sulphur dioxide and sulphites.

The case was heard in the Supreme Court of South Australia before Murray CJ over 20 days in November and December 1932 .[9] The issues to be determined in the case were whether the underwear caused Dr Grant's dermatitis, whether Dr Grant relied on the salesman's skill & judgment, giving rise to the statutory warranty the underwear was fit for purpose,[12] and the extent of the manufacturer's duty of care to the ultimate consumer. Murray CJ accepted evidence that the dermatitis was caused by exposure to sulphur compounds,[9]^{:at p. 463} and that the sulphur compounds were on the underwear from the scouring, bleaching and shrinking processes.[9]^{:at p. 467–8} Murray CJ held that the retailer was liable under the statutory warranty because Grant had asked for woollen underwear and relied on the salesman's skill in selecting the "golden fleece" brand manufactured by Australian Knitting Mills. The Sale of Goods Act,[12] was founded on the existence of a contract and did not apply to the claim against the manufacturer. Murray CJ applied the landmark decision of Donoghue v Stevenson,[8] which had been decided by the House of Lords less than 12 months previously,[13] holding that the manufacturer owed a duty of care to the consumer because (1) it intended the underwear would reach the consumer for wear in the same condition as when it left the manufacturer, (2) there was no reasonable possibility of testing for the presence of sulphur compounds and (3) Australian Knitting Mills knew that the absence of reasonable care in the preparation of the garments would result in an injury to the purchaser's health. The judgment does not articulate what a reasonable manufacturer would have done differently. Dr Grant was awarded £2,450 in damages.[9]^{:at p. 473}

Australian Knitting Mills and John Martin & Co appealed to the High Court, where the case was heard over a further 6 days. The majority, Starke, Dixon and McTiernan JJ, upheld the appeal.[14]

Starke J agreed with the findings of Murray CJ that (1) the manufacturing process was the source of some of the sulphur content, but it was not possible to determine the proportion,[14]^{:at p. 406} and (2) the dermatitis was caused by sulphur compounds in the garments.[14]^{:at p. 407} Starke J however upheld the appeal, finding that Australian Knitting Mills was not negligent as it adopted a process that was prudent and reasonable.[14]^{:at p. 409} Starke J held that it was unreasonable to expect James Martin & Co to exercise skill and judgement that the goods were free from irritant chemicals when they had no means of detecting the sulphur compounds.[14]^{:at p. 411}

Dixon J noted that, on one view the test from Donoghue v Stevenson was limited to circumstances where the manufacturer had excluded interference with or examination of the goods, whilst the other view was that it was sufficient if the manufacturer intended the consumer to receive the article as it left the manufacturer. Dixon J did not determine which view was correct, instead holding that the evidence did not establish that the underwear had the sulphur compounds of such a strength so as to have caused Dr Grant's dermatitis.[14]^{:at p. 428} McTiernan J, as he tended to do,[15] agreed with Dixon J, in this case writing a short concurring judgement.[14]^{:at p. 450}

Evatt J dissented, holding that Dr Grant's dermatitis was caused by sulphur compounds and that the manufacturer had failed to fully or completely carry out its washing process.[14]^{:at p. 436} Evatt J dismissed the contention that there was no "special relationship" between the manufacturer and consumer, noting that the manufacturer provided a "guarantee" to the purchaser that the garments would not shrink if washed in accordance with its directions.[14]^{:at p. 440}

One of the issues was whether specific identified goods were goods "bought by description" within the meaning of the Sales of Goods Act.[10] Dixon J,[14]^{:at pp. 417–8} McTiernan J agreeing, and Evatt J,[14]^{:at p. 448} held that because they were described by Dr Grant as woollen underclothing, the goods were bought by description, even though he was shown specific items.

The hearing before the Privy Council lasted 9 days, bringing the total hearing days to 35. Grant was represented by G.P Glanfield, argued that the manufacturer's duty was to render the garment safe, in terms reflecting a strict liability rather than a duty to take reasonable care. Australian Knitting Mills and James Martin & Co were represented by Wilfred Greene KC,[16] and the Australian barrister Wilbur Ham KC,[17] who had represented them before the High Court and had made the journey to London for the hearing.[18] The headnote writer in the authorised reports of Donoghue v Stevenson expressed the duty of care as being confined to ‘the manufacturer of an article of food, medicine or the like’,[19] an argument that was adopted for Australian Knitting Mills in seeking to distinguish the case from one in which an item of clothing was to be worn externally. The other way in which they sought to distinguish Donoghue v Stevenson the sealed bottle intentionally excluded interference with or examination of the ginger beer before it reached the consumer, whereas the clothing bought by Dr Gran "might be handled and inspected by others before reaching the" consumer.[1]^{:AC at p. 89}