This essay aims to define the concept of foreseeability as it operates within Victorian consumer law. The primary legislative framework governing this area is the Australian Consumer Law (ACL), which is given effect in Victoria by the *Australian Consumer Law and Fair Trading Act 2012* (Vic). The concept of foreseeability is central to determining the extent of a supplier’s liability for loss or damage suffered by a consumer as a consequence of a failure to comply with a consumer guarantee. This essay will first outline the statutory context of consumer guarantees and the remedies available to consumers. It will then define the test of “reasonable foreseeability” as stipulated in the ACL, comparing it with the established common law principles of remoteness in contract law. Finally, it will examine how Victorian courts and tribunals have interpreted and applied this test, using case examples to illustrate the practical meaning of foreseeability in claims for consequential loss.
The Statutory Framework for Consequential Loss
The Australian Consumer Law provides consumers with a set of non-excludable rights known as ‘consumer guarantees’ when they acquire goods or services (Competition and Consumer Commission, 2020). These guarantees include, for instance, that goods will be of acceptable quality and fit for any specified purpose, and that services will be rendered with due care and skill. When a supplier fails to meet one of these guarantees, a consumer is entitled to a remedy. The nature of the remedy depends on whether the failure is classified as a ‘major failure’ or not.
Beyond the core remedies of repair, replacement, or refund, the ACL provides for the recovery of consequential loss. This is where the concept of foreseeability becomes crucial. Section 259(4) of the ACL, which deals with goods, states that a consumer “may recover damages from the supplier for any loss or damage suffered by the consumer because of the failure to comply with the guarantee if it was reasonably foreseeable that the consumer would suffer such loss or damage as a result of such a failure”. A near-identical provision exists for services in section 267(4).
These provisions establish a statutory cause of action for damages that flow from the supplier’s breach. The critical limiting factor on the extent of these damages is that the loss must have been “reasonably foreseeable”. This statutory test codified the consumer’s right to compensation for additional losses, moving it beyond the complexities and variable applications of the common law of contract (Corones, 2019). The legislation itself, however, does not define what “reasonably foreseeable” means, leaving its interpretation to the courts.
Defining “Reasonably Foreseeable”
The test of “reasonable foreseeability” under the ACL is a statutory one, but its interpretation has been heavily influenced by the common law principles of remoteness of damage in contract law, particularly the rule established in *Hadley v Baxendale* (1854). In that case, the court established a two-limbed test for determining which damages were not too remote to be recoverable for a breach of contract. The first limb covers loss “arising naturally, that is, according to the usual course of things,” from the breach. The second limb covers loss that “may reasonably be supposed to have been in the contemplation of both parties, at the time they made the contract, as the probable result of the breach of it” (*Hadley v Baxendale* 1854, p. 354).
The Explanatory Memorandum to the legislation that introduced the ACL clarifies that the statutory test for foreseeability is intended to be “at least as broad as the common law test for damages in contract” (Explanatory Memorandum, 2010, para 10.36). It explicitly references the two limbs of *Hadley v Baxendale*, suggesting that the ACL test encompasses both types of loss. Therefore, a loss is reasonably foreseeable if it is a natural and direct consequence of the supplier’s failure (the first limb) or if the supplier had special knowledge of the potential for that loss at the time of the transaction (the second limb).
However, there is a distinction. The contractual test is often framed in terms of what was in the “contemplation” of the parties at the time of contracting. The ACL test, by contrast, focuses on what was “reasonably foreseeable” as a result of the *failure* to comply with the guarantee. This suggests an objective test based on what a reasonable person in the position of the supplier would have foreseen as a potential consequence of the breach (Paterson et al., 2020). It is not about what the specific supplier actually foresaw, but what they ought to have foreseen. The courts have generally interpreted the test as being similar to the second limb of *Hadley v Baxendale*, concerning what is “not unlikely to result” or a “serious possibility” (see *Koufos v C Czarnikow Ltd* [1969]).
The Application of Foreseeability in Victorian Cases
The practical definition of foreseeability under the ACL is best understood by examining decisions from courts and tribunals, particularly the Victorian Civil and Administrative Tribunal (VCAT), which handles many consumer disputes. These cases demonstrate the types of consequential loss that are considered reasonably foreseeable.
A clear example can be found in *Cain v bencorp.com.au Pty Ltd* [2012]. The applicant purchased a satellite dish system to receive a specific television service. The supplier failed to provide a system that worked, constituting a breach of the consumer guarantee that goods be fit for purpose. The applicant claimed damages not just for the cost of the system, but also for the cost of a replacement Foxtel subscription he had to take out to watch the programs he wanted. The Tribunal found that it was “eminently foreseeable” that a person who purchased a television reception system that did not work would have to seek an alternative, and that this would involve cost (*Cain v bencorp.com.au Pty Ltd* [2012], para 33). The cost of the replacement service was therefore a reasonably foreseeable loss flowing from the supplier’s failure. This demonstrates the application of the first limb of the *Hadley* principle: the loss arose naturally from the failure.
The concept can also extend to non-economic loss, such as inconvenience, stress, and disappointment. In *Medtel Pty Ltd v Courtney* [2003], a case concerning defective pacemakers under the previous *Trade Practices Act 1974* (Cth), the Full Federal Court held that damages for distress and anxiety could be awarded. The court found it was foreseeable that the failure of a life-saving medical device would cause significant mental distress to the patient. While this was not a Victorian case, its principles have been applied in Victorian consumer law matters. For such a claim to succeed, the loss must be a direct result of the failure and not be too remote. For example, the ordinary annoyance of a defective toaster would be unlikely to be compensated, but the significant stress caused by the failure of a home security system during a burglary might be. The key is what a reasonable person would foresee as a “not unlikely” result of the specific failure in question.
Conversely, losses that are considered too remote will not be recoverable. If a consumer buys a faulty kettle which causes a minor delay in their morning routine, leading to them missing a bus and then a flight for a job interview, the loss of the potential job would almost certainly be considered too remote. It is not something a supplier of a kettle could reasonably be expected to foresee as a consequence of the product’s failure. The chain of causation is too long and contains too many intervening events. The loss must be sufficiently linked to the failure itself.
Conclusion
In conclusion, foreseeability under Victorian consumer law is a statutory test defined by section 259(4) and 267(4) of the Australian Consumer Law. It determines a consumer’s right to recover damages for consequential loss arising from a supplier’s breach of a consumer guarantee. While the ACL does not provide a definition, the anaylsis of case law and the relevant Explanatory Memorandum show that the test is an objective one, asking what loss a reasonable person would have foreseen as a “not unlikely” consequence of the failure.
The test is heavily informed by, and at least as broad as, the common law principles of remoteness from *Hadley v Baxendale*. It covers losses arising naturally from the breach as well as those contemplated by the parties due to special circumstances. As demonstrated in cases like *Cain v bencorp.com.au Pty Ltd*, this allows consumers to claim for a range of directly related economic losses, such as the cost of alternative services. It can also extend to non-economic losses like stress and anxiety where such a reaction is a foreseeable result of the specific failure. Ultimately, foreseeability acts as a crucial, fact-dependent mechanism that fairly balances the consumer’s right to full compensation against the need to limit a supplier’s liability to those consequences that can be reasonably anticipated.
References
*Cain v bencorp.com.au Pty Ltd (Civil Claims)* [2012] VCAT 1326.
Competition and Consumer Commission. (2020) Consumer guarantees. ACCC.
Corones, S.G. (2019) *The Australian Consumer Law*. 4th edn. Thomson Reuters.
Explanatory Memorandum, Trade Practices Amendment (Australian Consumer Law) Bill (No. 2) 2010 (Cth).
*Hadley v Baxendale* (1854) 9 Exch 341.
*Koufos v C Czarnikow Ltd (The Heron II)* [1969] 1 AC 350.
*Medtel Pty Ltd v Courtney* [2003] FCAFC 151.
Paterson, J., Robertson, A. and Duke, A. (2020) *Principles of Contract Law*. 6th edn. Thomson Reuters.
**Legislation**
*Australian Consumer Law and Fair Trading Act 2012* (Vic).
*Competition and Consumer Act 2010* (Cth), Schedule 2 (‘The Australian Consumer Law’).
*Trade Practices Act 1974* (Cth).
