Regal Pearl Pty Ltd v Stewart

Regal Pearl Pty Ltd (the appellant) appealed to the Court of Appeal of New South Wales against decisions made in favour of the importer (the second respondent) and the wholesaler (the third respondent) concerning claims arising from patrons contracting hepatitis A after eating prawns at the appellant's restaurant. The dispute centred on whether the prawns were adequately cooked, whether there was a failure to warn, and whether the prawns were of merchantable quality and fit for purpose.

The court was required to determine whether the appellant was negligent in its duty of care to its patrons, specifically regarding the foreseeability of harm from contaminated prawns and whether the prawns were adequately cooked. Furthermore, the court had to consider whether the appellant breached its contractual obligations under the Sale of Goods Act by supplying prawns that were not of merchantable quality or fit for the purpose for which they were required. A key issue was also whether the appellant was entitled to be indemnified by the wholesaler for any liability incurred.

The Court of Appeal found that the importer was not liable, dismissing the appeal against them. However, the appeal against the wholesaler was allowed. The court reasoned that the prawns supplied by the wholesaler were not of merchantable quality nor fit for the purpose of being served raw or lightly cooked in a restaurant, thereby breaching the contract. Consequently, the wholesaler was ordered to indemnify the appellant for its liability to the patrons.