Melbourne, Australia — An Australian food manufacturer is suing a packaging supplier's New Zealand-based insurer, alleging its garlic pastes were contaminated because the supplier's polyethylene closures were faulty.
So far, in what could be a long-running battle — despite the food manufacturer seeking damages of A$363,764 (US$290,000) — an Australian appeal court has overturned an earlier judgment the case be heard in New Zealand.
Melbourne-based Australian Gourmet Pastes Pty. Ltd. (AGP) is suing Auckland, New Zealand-based IAG New Zealand Ltd., product liability insurer for Endeavour Packaging Pty Ltd., a private company headquartered in Sydney, which has been under external administration since 2013.
Before administrators were appointed, Endeavour's gross sales for products supplied within Australia was A$7 million (US$5.6 million) and to New Zealand A$1 million (US$797,000). No products were manufactured in New Zealand, but a New Zealand-resident director arranged the insurance coverage.
In 2011 and 2012, Endeavour supplied AGP with PE caps and tamper-proof closures to seal its garlic paste jars. The caps were marketed to AGP as cheaper and, Endeavour claimed, identical to those AGP previously bought from a competiting packaging company.
But many of the caps did not maintain an airtight seal, resulting in product withdrawal costs to remove the jars from Australia's two major supermarket chains around the nation because the garlic paste became discolored.
An analysis of the seals found they were PE only "without any polar groups present to assist adhesion."
In 2015, the conditions of Endeavour's administration were altered to enable AGP to sue Endeavour's insurer direct. IAG wanted the case heard in New Zealand and the initial judge agreed, because, among other reasons, he erroneously believed Endeavour was based there, too.
Three appeal court judges overturned that decision on June 23. IAG has denied liability, arguing the claim is outside the policy conditions because Endeavour supplied defectively designed seals.
No court date has been set.