computer law & security review 34 (2018) 1314–1332

Available online at www.sciencedirect.com

journal homepage: www.elsevier.com/locate/CLSR

Proving liability for highly and fully automated

vehicle accidents in Australia ✩

Tom Mackie∗
TC Beirne School of Law, The University of Queensland, Australia

a r t i c l e i n f o a b s t r a c t

Article history: This article considers how liability questions will be resolved under current Australian laws
for automated vehicle (‘AV’) accidents. In terms of the parties that are likely to be held re-
sponsible, I argue that whether the human driver remains liable depends on the degree to
Keyword: which the relevant AV is automated, and the degree of control the human driver had over the
Automated vehicle events leading up to the particular accident. Assuming therefore that human drivers would
Artificial intelligence not be held liable for the majority of highly and fully automated vehicle accidents, plaintiffs
Liability will have to establish liability on part of those who manufacture, maintain or contribute to
Product liability the operation of AVs, under the claims available in Australia’s product liability regime.
This article then turns to the problems of proof that plaintiffs are likely to face in estab-
lishing AV manufacturer liability in negligence, or in a defective goods claim under Part 3–5
of the Australian Consumer Law (‘ACL’). Firstly, it may be difficult to determine the cause of
the AV accident, due to the technical complexity of AVs and due to ongoing concerns as to
the explainability of AI-decision making. Secondly, plaintiffs may struggle to prove fault in
a negligence claim, or that the vehicle was defective for the purposes of Part 3–5 of the ACL.
Essentially, under both actions, manufacturers will be held to a duty to undertake reason-
able testing of their AVs. Given that it is currently impracticable to completely test for, and
eliminate all AV errors, and due to the broader social utility the technology is likely to offer,
plaintiffs may face evidentiary challenges in proving that the manufacturer’s testing was
unreasonable.
© 2018 Tom Mackie. Published by Elsevier Ltd. All rights reserved.

✩
This article is based upon a research project submitted in fulfilment of the requirements for the LLB (Hons) at UQ. I would like to thank
Associate Professor Mark Burdon for his supervision whilst teaching at UQ and for his invaluable guidance more broadly. I would like to
thank Professor Kit Barker for his comments. All remaining errors remain my own.
∗
LLB, TC Beirne School of Law, The University of Queensland, Brisbane, Queensland, 4072, Australia.
E-mail address: t.mackie@uq.edu.au

https://doi.org/10.1016/j.clsr.2018.09.002
0267-3649/© 2018 Tom Mackie. Published by Elsevier Ltd. All rights reserved.
 computer law & security review 34 (2018) 1314–1332
1. Introduction
Automated vehicle (‘AV’) technology is set to take up an ever-
larger role on Australian roads. At present, there are com-
mercially available vehicles equipped with driver assistance
or partial automation technology,1 and testing initiatives for
more advanced automated vehicles are currently taking place
in most of Australia’s states and territories.2 The technology
has been touted to play an important role in addressing the
significant social and economic harm that is currently caused
by motor vehicle accidents. In 2016 alone, over 1300 deaths
were recorded on Australian roads3 and the Australian Trans-
port Council has estimated that vehicle accidents cost the
Australian economy up to $27 billion per annum.4 Further-
more, by some estimates over 90% of road accidents are princi-
pally caused by human error.5 Automated vehicles, which are
equipped with sensors that react faster than human drivers,
are constantly attentive and can perceive 360° around the car,
therefore have the potential to reduce the frequency of these
accidents.6
However, the potential benefits of AVs are not merely
safety-related. The next generation of highly and fully auto-
mated vehicles,7 which constitute the focus of this article, will
1
National Transport Commission, ‘Regulatory Reforms for Au-
tomated Vehicles’ (Policy Paper, National Transport Commission,
November 2016) 7, 10.
2
Austroads, Trials, <https://austroads.com.au/drivers-and-
vehicles/connected- and- automated- vehicles/trials>. In relation
to how state and federal authorities have addressed liability in
these testing initiatives, see footnote 15, below.
3
Bureau of Infrastructure, Transport and Regional Economics,
‘Road Deaths Australia – December 2016’ (Statistical Report, De-
partment of Infrastructure and Regional Development, December
2016) 1. See, also, World Health Organisation, ‘Global Status Report
on Road Safety, 2016’ (Report, World Health Organisation, 2015) xi,
which estimates that the worldwide annual road death toll ex-
ceeds 1.2 million.
4
Australian Transport Council, ‘National Road Safety Strategy
2011-2020’ (Report, Australian Transport Council, May 2011) 23.
See also Thomas Oriti, ‘Government Estimates Road Crashes Cost-
ing the Australian Economy $27 Billion a Year’, ABC News (on-
line), 2 January 2017 <http://www.abc.net.au/news/2017- 01- 02/
road- crashes- costing- australian- economy- billions/8143886>.
5
National Highway Traffic Safety Administration, ‘National Mo-
tor Vehicle Crash Causation Survey’ (Report to Congress, US De-
partment of Transportation, July 2008) 23-24, noting that the criti-
cal cause of 5,096 out of 5,471 crashes analysed could be attributed
to the driver.
6
Paul Cleary, ‘End of the Road Toll: Driverless Cars Could
Save Lives’, The Australian (online) 29 December 2016 <http://
www.theaustralian.com.au/life/end- of- the- road- toll- driverless-
cars- could- save- lives/news- story/83a2d2ad016f2d263b7317a6a
341f589>; John Markoff, ‘Google Cars Drive Themselves, in Traffic’,
New York Times (online), 9 October 2010 <http://www.nytimes.com/
2010/10/10/science/10google.html>; Mike Ramsay, ‘Self-Driving
Cars Could Cut Down on Accidents, Study Says’, Wall Street
Journal (online), 5 March 2015 <http://www.wsj.com/articles/
self- driving- cars- could- cut- down- on- accidents- study- says-
1425567905>.
7
This report adopts the Society of Automotive Engineers’ taxon-
omy of automated vehicles, which categorises types of automated
vehicles by degrees of automation. See, SAE International, ‘Taxon-
omy and Definitions for Terms Related to Driving Automated Sys-
1315
dispense of the need for a human driver to supervise the driv-
ing task whilst the vehicle is engaged in autonomous mode.8
These advanced self-driving cars are expected to be intro-
duced from 2020,9 and offer the potential for individuals to
reclaim commuting time for productive purposes, as well as
providing mobility benefits for those who are currently unable
to drive conventional cars, such as the blind, disabled, youth,
and elderly.10
Although, despite these predicted far-reaching benefits,
automated vehicles will not be entirely immune to failure.
They have already caused a handful of accidents,11 and it is
reasonable to assume that they will continue to do so.12 In the
wake of these events, questions have arisen as to how current
liability principles will apply to accidents caused by this next
generation of autonomous car. Firstly, who is likely to be held
liable for injury or damage that may result? Secondly, on what
basis will these parties be held liable? Finally, will prospec-
tive plaintiffs struggle to successfully claim under our current
liability laws in respect of loss flowing from an AV-caused ac-
cident?
In Australia, these questions have been partly considered
by the National Transport Commission (‘NTC’), an indepen-
dent statutory body which develops land transport reform
proposals for Australia’s Federal and State governments. In
2015, the NTC was tasked with identifying regulatory bar-
riers associated with the introduction of automated vehi-
cles to Australia.13 With respect to liability, the NTC recom-
mended in their 2016 policy paper14 that assigning fault for
crashes involving AVs could be ‘complex,’ but that at this
stage, in essence, only the first of the above three questions
requires a ‘clarification,’ or reform of Australian laws. Specif-
ically, the NTC recommended that “whether human monitor-
ing of an automated vehicle constitutes legal control of the
vehicle requires clarification”, and for the purposes of road
rules and insurance schemes, the legal definition of a ‘driver’
should be clarified on the same basis.15 It is argued that legal
tems for On-Road Motor Vehicles’ (Recommended Practice Report
J3016, SAE International, September 2016).
8
Ibid 23-24.
9
National Transport Commission, above n 1, 10.
10
James Anderson et al, ‘Autonomous Vehicle Technology: A
Guide for Policymakers’ (Research Report, RAND Corporation,
2016) 16-33.
11
See, eg, Google, ‘Google Self-Driving Car Project Monthly
Report: February 2016’ (Report, Google, 29 February 2016)
<https://static.googleusercontent.com/media/www.google.com/
en//selfdrivingcar/files/reports/report-0216.pdf>; Jim Kerstetter,
‘Daily Report: Tesla Driver Dies in ‘Autopilot’ Accident’ New York
Times (online), 1 July 2016 <http://www.nytimes.com/2016/07/02/
technology/daily-report-tesla-driver-dies-in-autopilot-accident.
html>.
12
Alexander Hevelke and Julian Nida-Rumelin, ‘Responsibility
for Crashes of Autonomous Vehicles: An Ethical Analysis’ (2015)
21(3) Science and Engineering Ethics 619, 620.
13
National Transport Commission, above n 1, 8.
14
Ibid.
15
Ibid 59-60, see also Chapter 3 at 32-36; Chapter 5 at 43-
48. On a separate note, in relation to liability issues during
AV trials in Australia, the NTC has not recommended regula-
tion on this point but have issued guidelines for testing. In
the guidelines, the NTC recommends at 4.1 that to obtain a
1316 computer law & security review 34 (2018) 1314–1332
reform of this sort will, in turn, clarify responsibility for a
crash.16
By contrast, there is a body of literature in the United States
which argues that beyond clarifying who is in control of an
automated vehicle, there is an underlying need for reform of
US product liability law.17 Many of these scholars suggest that
due to the uniquely adaptive, and at times unforeseeable na-
ture of AI-decision making, existing US product liability laws
are ill-equipped to protect plaintiffs who have suffered injury
or damage following an AV accident, and that this might de-
mand a ‘new approach’18 to liability. Similarly, in Australia,
some scholars are suggesting that a new system of liability
is required, whereby the automated vehicle manufacturer is
deemed to be at fault.19
In addressing the three questions posed above, and the
emerging debate in the literature, this article firstly argues that
whether the human driver remains liable depends on the de-
gree to which the relevant AV is automated, and the degree
of control the human driver had over the car in the events
leading up to the accident. Thus, I argue that for accidents
caused by highly and fully automated vehicles, plaintiffs will
primarily have to bring claims against the parties which man-
ufacture, maintain or somehow contribute to the operation of
AVs. Liability would generally have to be established under the
various claims available in Australia’s product liability regime.
Whilst contractual warranties and statutory guarantees will
be available to those who have purchased an AV, those outside
the contract of sale will have to bring a claim of negligence or
a defective goods action under Part 3–5 of the Australian Con-
testing permit, the trialling organisation should demonstrate
that they have appropriate insurance, including public liabil-
ity or product liability insurance. See, National Transport Com-
mission, ‘Guidelines for Trials of Automated Vehicles in Aus-
tralia’ (2017) <https://www.ntc.gov.au/Media/Reports/(00F4B0A0-
55E9-17E7-BF15-D70F4725A938).pdf>. This approach has been fol-
lowed in AV trial legislation in Victoria (Road Safety Amendment (Au-
tomated Vehicles) Bill 2017 (Vic)) and New South Wales (Transport
Legislation Amendment (Automated Vehicle Trials and Innovation) Act
2017 (NSW), and was already the approach taken in South Aus-
tralia (Motor Vehicles Act 1959 (SA), section 134H).
16
Ibid 60.
17
See, e.g.,; Kevin Funkhouser, ‘Paving the Road Ahead: Au-
tonomous Vehicles, Products Liability, and the Need for A New
Approach’ [2013] (1) Utah Law Review 437; Jeffrey Gurney, ‘Sue
My Car Not Me: Products Liability and Accidents Involving Au-
tonomous Vehicles’ [2013] (2) University of Illinois Journal of Law,
Technology and Policy 247; Andrew Garza, ‘Look Ma, No Hands!:
Wrinkles and Wrecks in the Age of Autonomous Vehicles’ (2012)
46(3) New England Law Review 581; Sophia Duffy and Jamie Hopkins,
‘Sit, Stay, Drive: The Future of Autonomous Car Liability’ (2013)
16(3) SMU Science and Technology Law Review 453; David Vladeck,
‘Machines Without Principals: Liability Rules and Artificial Intel-
ligence’ (2014) 89(1) Washington Law Review 117; cf, Gary Marchant
and Rachel Lindor, ‘The Coming Collision Between Autonomous
Vehicles and the Liability System’ (2012) 52(4) Santa Clara Law Re-
view 1321.
18
Funkhouser, above n 17.
19
See, eg, Lynden Griggs, ‘A Radical Solution for Solving the Liabil-
ity Conundrum of Autonomous Vehicles’ (2017) 25 Competition and
Consumer Law Journal 151; see also, Mark Brady et al, ‘Automated
Vehicles and Australian Personal Injury Compensation Schemes’
(2017) 24(1) Torts Law Journal 32.
sumer Law (‘ACL’)20 in respect of defects arising in the course
of manufacture, design and development, or marketing of the
vehicle.
In relation to the third question, I argue that prospective
claimants are likely to face two barriers to establishing liabil-
ity in a negligence or ACL defective goods claim. Plaintiffs may
firstly struggle to determine what the cause of the defect was,
and who should consequently be sued. This inability to de-
termine the cause of an AV accident can be partly tied to the
ongoing debate on the ‘explainability,’ or lack thereof, of AI
decision-making. Secondly, it may be difficult to prove that the
manufacturer was at fault in negligence, or that the automated
vehicle was defective for the purposes of Part 3–5 of the ACL. Es-
sentially, under both actions, manufacturers will be held to a
duty to undertake reasonable testing of their AVs. Given that it
is currently impracticable to completely test for, and eliminate
all AV errors, and due to the broader social utility the technol-
ogy is likely to offer, plaintiffs may face evidentiary challenges
in proving that the manufacturer’s testing was unreasonable.
This situation means that a plaintiff’s problem will be
largely evidentiary in nature when trying to bring a negligence
claim. However, with regards to the defective goods action in
Part 3–5 of the ACL, I argue that these barriers reflect an inher-
ent problem in the law if it is indeed to act as a ‘strict’ liabil-
ity action. Concerns about victims going uncompensated for
accidents, where the AV manufacturer could not reasonably
have undertaken further testing, and similar concerns about
liability for AI-decision making more broadly, might therefore
demand reconsideration of the ongoing debate in Australia
and abroad about the role of a strict product liability regime in
torts, or the necessity of specialised AV compensation scheme.
Part II of this article will provide an overview of automated
vehicle technology, with a particular focus on the machine
learning algorithms that enable AVs to make the decisions re-
quired to navigate the inherently complex road environment.
Part III will consider the parties which may be held liable for
AV accidents. Part IV will provide a descriptive overview of the
tort of negligence and the ACL defective goods action, under
which parties that manufacture, maintain or contribute to the
operation of the automated driving systems might be held li-
able. In Part V, the heart of this article, I will identify the com-
plexities that plaintiffs will likely face in negligence or Part
3–5 ACL claims, namely proving causation and fault. Finally,
Part VI will offer conclusions and potential ways forward for
addressing these barriers to proving liability.
2. How automated driving systems function
2.1. The decision-making process of an automated vehicle
Whilst there are inevitably some differences in automated ve-
hicle design between manufacturers,21 general observations
20
Competition and Consumer Act 2010 (Cth) sch 2 (‘Australian Con-
sumer Law’), pt 3–5.
21
See, e.g., the debate surrounding Tesla’s choice to rely solely
on radar and camera sensors, whereas most other manu-
facturers are incorporating an additional LIDAR laser sensor.
Olivia Solon, ‘Lidar: The Self-Driving Technology that Could
 computer law & security review 34 (2018) 1314–1332
can be drawn about how the next generation of highly and
fully automated driving systems are likely to function.
Automated vehicles are installed with an array of sensors
that gather data about the car’s surrounding environment.22
Cameras and radar units are widely used to detect nearby ob-
jects and the car’s distance from them, and Light Detection
and Ranging (‘LIDAR’) units may also be used, which generate
a 360° scanned image of the car’s surrounding environment
using laser rangefinders.23 Software algorithms then interpret
this data and control the vehicle’s course.24 The process by
which the algorithms drive the car can be simplistically de-
scribed to involve three stages, namely: (a) car localisation,
(b) obstacle detection and behaviour prediction, and (c) path
planning.25
The automated driving system firstly locates its position
in the world by way of GPS and an inertial navigation system
(INS), the latter using gyroscopes and accelerometers to cal-
culate the car’s position, orientation and speed.26 A number
of additional techniques may also be used to locate the car’s
position more precisely on the streetscape. For example, both
camera27 and LIDAR units28 can be used to detect lane mark-
ings and position the car appropriately. Furthermore, compa-
nies such as Ford29 and Google30 use techniques that compare
this sensor data with ‘prebuilt maps’ to further improve the
accuracy of car’s location on the road.31
In the second stage, the car’s sensors detect any poten-
tial obstacles in its path, such as other cars, cyclists, pedes-
trians and road construction sites.32 The driving system al-
gorithms, drawing heavily on machine learning programming
Help Tesla Avoid Another Tragedy’, The Guardian (online), 7
July 2016 <https://www.theguardian.com/technology/2016/jul/06/
lidar- self- driving- technology- tesla- crash- elon- musk>.
22
Anderson et al., above n 10, 58; Guilbert Gates et al,
‘When Cars Drive Themselves’, New York Times (online), 14 De-
cember 2016 <https://www.nytimes.com/interactive/2016/12/14/
technology/how- self- driving- cars- work.html>.
23
Anderson et al, above n 10, 58, 60–62; see also, Sebastian Thrun
et al, ‘Stanley: The Robot that Won the DARPA Grand Challenge’
(2006) 23(9) Journal of Field Robotics 661, 664, which provides a de-
tailed description of some of the machine learning techniques and
sensors developed by researchers during the DARPA Grand Chal-
lenge in 2005, many which are still used in automated vehicles
today. Sebastian Thrun, who was involved in the DARPA project,
was later recruited to head Google’s automated vehicle project.
24
Anderson et al, above n 10, 58.
25
Eric Jaffe, ‘The First Look at How Google’s Self-Driving
Car Handles City Streets’, CityLab (online), 28 April 2014
<http://www.citylab.com/tech/2014/04/first- look- how- googles-
self- driving- car- handles- city- streets/8977/>; see also, Anderson
et al, above n 10, 58–59.
26
Anderson et al, above n 10, 63–64.
27
See, eg, Samuel Gibbs, ‘What’s it Like to Drive with Tesla’s
Autopilot and How Does it Work?’, The Guardian (online), 1
July 2016 <https://www.theguardian.com/technology/2016/jul/01/
tesla- autopilot- model- s- crash- how- does- it- work>.
28
Albert Huang et al, ‘Finding Multiple Lanes in Urban Road Net-
works with Vision and Lidar’ (2009) 26(2) Autonomous Robots 103.
29
Tamara Warren, ‘We Took a Ride in Ford’s Self-Driving Car’,
The Verge (online), 13 September 2016 <http://www.theverge.com/
2016/9/13/12895690/ford- self- driving- car- ride- detroit- video>.
30
Jaffe, above n 25.
31
Anderson et al, above n 10, 64.
32
Jaffe, above n 25.
1317
techniques and probabilistic reasoning,33 categorise these ob-
jects and make predictions about how the obstacles are likely
to act. For instance, Google’s automated vehicle prototypes
have been trained to be able to identify a cyclist through cam-
era footage and recognise that a cyclist who holds their arm
out to one side is likely signalling their intent to turn.34 How-
ever, as automated vehicle manufacturers are not able to train
the algorithms to recognise every possible contingency that
might take place within the driving environment, the cars
must also be programmed to take into account anomalous
road situations. Automated vehicles have already faced road
situations as obscure as a cyclist performing a track-stand on
a fixed gear bike,35 and “a woman in a wheelchair, armed with
a broom, chasing a turkey.”36 In such novel circumstances,
whereby the algorithm is unable to make a probabilistically
confident decision as to what the perceived object is or how it
is likely to behave, the car will proceed conservatively or po-
tentially stop altogether, depending on the clarity of the situ-
ation.37
Finally, the driving system plans a path towards its desti-
nation. Machine learning techniques are again utilised at this
stage, with the actions of the vehicle being defined by over-
all priorities. For instance, Audi’s prototype automated vehi-
cle plans its decisions on the basis of two overall questions,
namely, (1) ‘is it possible?’ (safe and legal) and, (2) ‘is it ben-
eficial?’ (for a more comfortable ride).38 Thus, in planning its
path forwards, the vehicle avoids detected obstacles, whilst
also observing road rules, such as changes of traffic lights as
recognised through the camera sensor.39
2.2. Training and testing machine learning algorithms
One of the principal difficulties faced in the development of
automated vehicle technology is programming the cars to be
able to cope with the complex and dynamic nature of road
driving.40 Plainly, it would be impossible to code explicit rules
for the car to follow due to the sheer variety of road situations
that an automated vehicle will encounter. Automated vehi-
cle technology therefore “pervasively” uses machine learning
techniques,41 which allow an algorithm to make a prediction
or decision about something in the world without the need for
33
Thrun et al, above n 23, 662.
34
Jaffe, above n 25.
35
Matt McFarland, ‘How Fixed-Gear Bikes Can Confuse Google’s
Self-Driving Cars’, The Washington Post (online), 26 August 2015
<https://www.washingtonpost.com/news/innovations/wp/
2015/08/26/how- fixed- gear- bikes- can- confuse- googles- self-
driving-cars/?utm_term=.11f75e05e3c7>.
36
Alex Davies, ‘Google’s Lame Demo Shows Us How Far Its
Robo-Car Has Come’, Wired (online), 10 May 2015 <https:
//www.wired.com/2015/10/googles- lame- demo- shows- us- far-
robo- car- come/>.
37
Ibid; Jaffe, above n 25.
38
Alex Davies, ‘I Rode 500 miles in a Self-Driving Car and
Saw the Future: It’s Delightfully Dull’, Wired (online), 1 July
2015 <https://www.wired.com/2015/01/rode- 500- miles- self-
driving- car- saw- future- boring/>.
39
Jaffe, above n 25.
40
Anderson et al., above n 10, 60.
41
Thrun et al., above n 23, 691.
1318 computer law & security review 34 (2018) 1314–1332
human intervention.42 The algorithm is designed to achieve
this through its ability to learn from data, fed to it by example
and through its own trial and error experience. On the basis
of this learned experience, the algorithm programs its own in-
ternal decision logic as to what the optimal way to complete
a task is.43
Once the algorithm has established an internal decision-
making logic, it is able to make its own driving decisions in
the inexorably changing driving environment, without human
intervention. For example, at the ‘obstacle detection’ stage,
it is by repeatedly feeding the algorithm camera footage of
a pedestrian that the algorithm begins to ‘learn’ the logic of
what a pedestrian looks like. A similar process would be used
to train the driving system to make predictions as to how
pedestrians are likely to behave.44 An example of machine
learning techniques at the ‘path planning’ stage can be seen
in how Google has taught its AVs to approach turns at an inter-
section, whereby the algorithm was presented with examples
showing how human-driven cars approach a turn differently
depending on whether the vehicle is approaching an intersec-
tion with a green light, or is turning from a stationary posi-
tion.45 As a result, the algorithm learned its own decision logic
as to how it should approach left-hand turns in the future to
optimise smooth driving and passenger comfort.
However, the fundamental problem posed by machine
learning techniques for the allocation of liability is that man-
ufacturers are not, in principle, capable of fully predicting the
future behaviour of the algorithms.46 This is due to the adap-
tive quality of the algorithms and precisely because they are
able to learn from their experiences and interactions with the
driving environment.47 Thus the decision logic by which they
operate is not fixed at the time of production, as it is partly
shaped by the experiences of the machine.48 There is there-
fore a possibility that automated vehicle accidents may occur
as a result of the automated driving system making an unfore-
seeable decision, based on logic partially adopted through its
own experience.
It should be noted however that it is inaccurate to think
of these machines as exercising unfettered discretion, or as
being able to set their own priorities. It is the manufacturers
and software engineers who create the parameters, or ‘space’
in which these machines exercise discretion.49 Whilst the pre-
42
Andreas Matthias, ‘The Responsibility Gap: Ascribing Re-
sponsibility for the Actions of Learning Automata’ (2004) 6
Ethics and Information Technology 175, 177; Michael Copeland,
‘What’s the Difference Between Artificial Intelligence, Ma-
chine Learning, and Deep Learning?’, Nvidia, 29 July 2016
<https://blogs.nvidia.com/blog/2016/07/29/whats-difference-
artificial- intelligence- machine- learning- deep- learning- ai/>.
43
Carol Reiley, ‘Deep Driving’, MIT Technology Review (online),
18 October 2016 <https://www.technologyreview.com/s/602600/
deep-driving/>; Matthias, above n 42, 179.
44
See, Jaffe, above n 25.
45
Ibid.
46
Matthias, above n 42.
47
Emad Dahiyat, ‘Intelligent Agents and Liability: Is It A Doctrinal
Problem or Merely a Problem of Explanation?’ (2010) 18(1) Artificial
Intelligence Law 103, 106.
48
Matthias, above n 42, 177, 182.
49
Ibid 182.
cise decision-making process of a machine learning algorithm
is often unclear, the programmer does define the overall pri-
orities by which it should make decisions, and has the ability
to tweak the weighting of factors by which it makes decisions.
One clear example can be seen whereby Google has incorpo-
rated into its automated vehicle algorithm decision-making
process the premise that buses and large vehicles have a lower
probability of yielding to a merging car than other types of ve-
hicles.50
However, what needs to ‘tweaked’ or modified in the al-
gorithm may not always be obvious, or foreseeable, until that
error has arisen under testing. Indeed, Matthias notes that er-
rors are an unavoidable feature of learning algorithms.51 Con-
sequently, algorithm testing constitutes one of the most im-
portant aspects of automated vehicle development as it high-
lights to manufactures how their automated driving systems
need refining.52 The importance of testing can be observed in
the emphasis that automated vehicle manufacturers place on
maximising the distance their algorithms have driven both on
the road and in simulations.53
However, it is not feasible to completely test the vehicles for
the indeterminate number of contingencies that may arise in
the driving environment.54 This is aptly summarised by the
CEO of Toyota’s Research Institute, who observed that even
after “testing millions of miles, which car manufacturers, in-
cluding us, are doing on physical cars, that doesn’t get you
anywhere near close coverage of possible things that could
happen to all cars in the world in the course of a year.” 55 Thus
automated vehicles are likely to operate with a small, but in-
herent degree of accident risk. The question then arises, how
much testing is enough? We will return to this question in fur-
ther detail, and its implications for establishing liability, in Part
V of this article.
3. Who will be held liable?
The majority of motor vehicle accidents on our roads today are
caused by human driver error,56 and this is reflected in the def-
50
Google, above n 11.
51
Matthias, above n 42, 182.
52
Evan Ackerman, ‘Toyota’s Gill Pratt on Self-Driving Cars and
the Reality of Full Autonomy’, IEEE Spectrum (online), 23 January
2017 <http://spectrum.ieee.org/cars- that- think/transportation/
self- driving/toyota- gill- pratt- on- the- reality- of- full- autonomy#
qaTopicSeven>; see also, Philip Koopman and Michael Wagner,
‘Challenges in Autonomous Vehicle Testing and Validation’ (2016)
4(1) SAE International Journal of Transportation Safety 15, which
outlines the crucial role that vehicle testing will play in ensuring
that automated vehicles are adequately safe for widespread use.
53
Ibid; Tim Higgins, ‘Google’s Self-Driving Car Program Odometer
Reaches 2 Million Miles’, Wall Street Journal (online), 5 October 2016
<http://www.wsj.com/articles/googles- self- driving- car- program-
odometer- reaches- 2- million- miles- 1475683321>; Google, ‘Google
Self-Driving Car Project Monthly Report: January 2016’ (Re-
port, Google, 31 January 2016) <https://static.googleusercontent.
com/media/www.google.com/en//selfdrivingcar/files/reports/
report-0116.pdf>.
54
Koopman and Wagner, above n 52.
55
Ackerman, above n 52.
56
National Transport Commission, ‘Regulatory Options for Au-
tomated Vehicles’ (Discussion Paper, National Transport Commis-
 computer law & security review 34 (2018) 1314–1332
initions of Australia’s various compulsory third-party (‘CTP’ )
insurance schemes.57 However, advanced automated vehicles
are likely to change this paradigm,58 and thus the question
arises, which parties are likely to be held liable for injury or
damage that might result from an AV accident?
3.1. Extent of human driver liability
This question firstly turns on the degree to which the relevant
car is automated and the level of control the human driver
had over the events leading up to the accident.59 There will be
differences in design between automated vehicle models and
the extent to which they will allow the human driver to switch
off from the driving task.
The Society of Automotive Engineer’s taxonomy of auto-
mated driving systems60 is instructive in clarifying these dif-
ferences between models, and also helps clarify when a hu-
man driver should remain liable. It is particularly necessary to
distinguish between conditionally automated vehicles (Level
3) and the next generation of highly (Level 4) and fully (Level
5) automated vehicles.
Conditionally automated driving systems, such as Audi’s
‘Highway Pilot,’ 61 are designed to operate autonomously on
the basis that a human driver remains alert and ready to re-
take control of the vehicle when either: (a) there is an evident
system failure, or (b) they are requested to intervene by the
automated driving system.62 For example, the automated sys-
tem may request the human driver to intervene when the car
has approached an anomalous road situation such as a con-
struction site or a passing emergency vehicle.63 For these level
3 automated vehicles, the human driver might still be held li-
able for an accident if, for instance, the vehicle requests them
to take control of the vehicle but they negligently fail to do
so due to distraction.64 However, there could be a number of
variables that come into play in determining whether, and to
what extent, a human driver ought to be held responsible in
a particular case, such as what the driver was distracted by,
what the proper/reasonable use of the vehicle was according
sion, May 2016) 98. In addition to driver error, vehicle accidents
might also be attributed to a vehicle malfunction or force majeure,
see, Marchant and Lindor, above n 17, 1326.
57
See, Mark Brady et al, ‘Automated Vehicles and Australian Per-
sonal Injury Compensation Schemes’ (2017) 24(1) Torts Law Journal
32.
58
Ibid. See Brady et al for a detailed consideration of how Aus-
tralia’s CTP regimes are unlikely to apply to automated vehicle ac-
cidents under existing definitions.
59
National Transport Commission, above n 1, 60; Marchant and
Lindor, above n 17, 1326;
60
SAE International, above n 7.
61
Audi USA, Piloted Driving <https://www.audiusa.com/
newsroom/topics/2016/audi- piloted- driving>; Davies, above
n 32.
62
SAE International, above n 7, 23.
63
See, eg, the following account of a test drive in one
of BMW’s level 3 automated vehicles, Tim Adams, ‘Self-
Driving Cars: From 2020 You Will Become a Permanent
Backseat Driver’, The Guardian (online), 13 September 2015
<https://www.theguardian.com/technology/2015/sep/13/
self- driving- cars- bmw- google- 2020- driving>.
64
Marchant and Lindor, above n 17, 1327.
1319
to the manufacturer’s instructions, and whether the car gave
the driver enough time to respond.65
In relation to human control over conditionally auto-
mated vehicles, Australia’s National Transport Commission
has adopted the position that the human driver of a Level 3
AV should be presumed to be in full legal control of the ve-
hicle, unless or until a new position is developed.66 It should
be noted though that this position was proposed mostly with
an eye to law enforcement, and the question of who should
be held responsible for breaches of road rules.67 It is unclear
whether the NTC’s approach would extend to civil liability, as
the human driver might not necessarily be at fault if, for ex-
ample, the ADS makes an erroneous decision without grant-
ing the driver the opportunity to retake control of the vehicle.
At this stage, the NTC has not revisited this policy position in
relation to civil liability, or in relation to the next generation
of highly and fully automated vehicles.
However, the focus of this article is on proving liability for
accidents involving the next generation of highly and fully au-
tomated vehicles. These automated driving systems will no
longer require a human driver to supervise the driving task or
to remain alert and ready to intervene.68 For example, Volvo’s
prototype level 4 automated driving system is marketed in a
way that implies that the driver will be able to read a newspa-
per, work, watch television or use a mobile phone whilst the
system is engaged.69 Furthermore, both Ford70 and Google71
are developing level 4 prototypes that are not equipped with
steering wheels or pedals, in which case there is no human
driver control of the vehicle in any relevant sense. Instead,
level 4 and level 5 systems will have inbuilt redundancy that is
able to pilot the car to a ‘minimal risk condition,’ and will no
longer rely on a fall-back human driver to prevent accidents.72
It should be noted though that level 4 automated vehicles,
as distinct from level 5 automated vehicles,73 will still be lim-
ited in use to a particular operational domain. These opera-
65
National Transport Commission, above n 1, 96.
66
National Transport Commission, above n 1, 11.
67
Ibid 32-36.
68
SAE International, above n 7, 23.
69
Volvo, Autonomous Driving <http://www.volvocars.com/intl/
about/our-innovation-brands/intellisafe/autonomous-driving>;
Alissa Walker, ‘Volvo Is Designing the Autonomous Car
That Could Eliminate All Traffic Deaths’, Gizmodo, 18
November 2015 <http://gizmodo.com/volvo- is- designing-
the- autonomous- car- that- could- elimin- 1743302437>.
70
Ford, Ford Targets Fully Autonomous Vehicle for Ride Shar-
ing in 2021 <https://media.ford.com/content/fordmedia/
fna/us/en/news/2016/08/16/ford-targets-fully-autonomous-
vehicle- for- ride- sharing- in- 2021.html>.
71
John Markoff, ‘Google’s Next Phase in Driverless Cars: No
Steering Wheel or Brake Pedals’, New York Times (online), 27 May
2014 <https://www.nytimes.com/2014/05/28/technology/googles-
next- phase- in- driverless- cars- no- brakes- or- steering- wheel.
html>.
72
Ibid.
73
It should be noted that arguably we’re still far away from tech-
nologically achieving full level 5 autonomy, defined as being able
to operate autonomously in any condition that a human driver
could. See, Ackerman, above n 52; SAE International, above n
7, 24. The Australian Driverless Vehicle Initiative has predicted
that level 4 autonomy is likely to be implemented by 2020-2025,
whereas level 5 autonomy can be expected by 2026 at the ear-
1320 computer law & security review 34 (2018) 1314–1332
tional domains will likely be defined by geo-fenced areas,74
such as operation within a pre-mapped central business dis-
trict or campus area,75 or on specified highways.76
The human driver might still be held liable if, for example,
they fail to exercise reasonable care by engaging the vehicle’s
automated driving mode against manufacturer instructions
in an improper operational domain, or in inclement weather
conditions, and this decision can be shown to have caused the
accident.77 It is worth noting though that at this stage it ap-
pears that many of the proposed level 4 automated vehicles
will not permit a human driver to engage the automated mode
outside these specified operational domains, and the driving
system will instead notify the driver when it is appropriate to
do so.78
However, assuming a human driver (if a driver is required
at all79 ) activates a level 4 or level 5 automated driving system
at the appropriate time, they are unlikely to be held liable for
an accident that occurs whilst the system is engaged.80
3.2. Other liable parties
Assuming human drivers would not be held liable for the ma-
jority of accidents involving highly (level 4) and fully (level 5)
automated vehicles, the parties that manufacture, maintain or
somehow contribute to the operation of the automated driv-
ing system would principally be held liable.
There are a number of parties that might potentially be in-
volved in manufacturing and operating automated vehicles,
and who might be responsible for accident-causing defects.
Automated vehicle manufacturers, or any subcontractors to
whom they may outsource tasks, such as the provision of soft-
ware engineering and mapping services, or the manufacture
of sensor components,81 might all cause an accident-causing
driving system defect, and may subsequently be held liable.
Similarly, providers of smart infrastructure systems, or road
authorities who fail to rectify a known flaw in road lane mark-
ings or signage (upon which automated vehicles will rely in
the future) might be held liable.82 Businesses might also be
held liable for conduct that did not contribute to an accident-
causing defect, but is nonetheless found to be negligent. For
example, this could arise where an operator of an automated
liest. See, ADVI, Levels of Automated Vehicles <http://advi.org.au/
australia/levels- of- automation/>.
74
Ackerman, above n 52.
75
See, eg, Ford, above n 70.
76
SAE International, above n 7, 23.
77
Marchant and Lindor, above n 17, 1327.
78
See, eg, Walker, above n 69.
79
See, Ford, above n 70; Markoff, above n 71.
80
Though, one could envisage exceptional circumstances where
the human driver engages in plainly negligent behaviour, such as
hacking or tampering with the automated driving system. See,
Steve Connor, ‘First Self-Driving Cars will be Unmarked so that
Other Drivers don’t try to Bully Them’, The Guardian (online), 30 Oc-
tober 2016 <https://www.theguardian.com/technology/2016/oct/
30/volvo- self- driving- car- autonomous>.
81
See, eg, the partnerships that Ford has developed with a LI-
DAR supplier, machine learning and computer vision companies,
as well as a 3D mapping startup. Ford, above n 70.
82
Clayton Utz, ‘Driving into the Future: Regulating Driverless Ve-
hicles in Australia’ (Report, Clayton Utz, August 2016), 17.
ride-sharing service83 fails to exercise reasonable care in se-
lecting an outsourced automated vehicle manufacturer.
Ultimately, the relevant party for liability purposes will de-
pend heavily on the specific facts of the case, and not all po-
tential liability exposures could be anticipated nor enumer-
ated in this article. Thus, as a matter of scope, this article fo-
cuses predominantly on potential claims against automated
vehicle manufacturers and their component and service sub-
contractors, as arguably, these parties will likely be held re-
sponsible most of the time.84
4. Potential product liability claims
Under current Australian law, claims against automated ve-
hicle manufacturers and their subcontractors would primar-
ily be handled through the various theories of liability avail-
able in Australia’s product liability regime. These include the
tort of negligence, the defective goods action under Part 3–5 of
the Australian Consumer Law,85 contractual warranties, and
statutory guarantees under Part 3–2 of the ACL.86 As a mat-
ter of scope, this article limits its analysis to tortious liability
and the ACL defective goods action. Actions on the basis of
contractual warranties and statutory guarantees would only
generally be available to claimants who have been party to
a contract of sale of an automated vehicle.87 These actions,
whilst providing significant benefits for eligible claimants due
to the lack of a fault requirement, would not provide an avenue
of redress for a wide range of other parties who might suffer
injury or damage from automated vehicle accidents, such as
third-party passengers or other road users.88
The tort of negligence is likely to be an important basis of
liability in the context of automated vehicle accidents. It is
accepted that manufacturers owe a duty to take reasonable
care in preventing their products from causing foreseeable in-
jury or damage to the ultimate user of that product.89 Further-
more, in the case of a defective vehicle, the scope of the man-
ufacturer’s duty may extend beyond the driver to cover injury
or damage suffered by a passenger or other third-party road
users.90
Assuming that automated vehicle manufacturers will
broadly owe a duty of care to road users, the question to be an-
swered in a given case would be whether the particular auto-
mated vehicle manufacturer breached this duty in producing
a defective vehicle. Under the statutory formula adopted by
Australia’s Civil Liability Acts (‘CLA’), a breach is found whereby
the risk of harm posed by the allegedly defective product was
83
Adam Thierer, ‘When the Trial Lawyers Come for the
Robot Cars’, Slate (online), 10 June 2016 < http://www.slate.
com/articles/technology/future_tense/2016/06/if _a_driverless_
car_crashes_who_is_liable.html>.
84
Marchant and Lindor, above n 17, 1327–1328.
85
Australian Consumer Law, pt 3–5.
86
Ibid pt 3-2.
87
See, Kit Barker et al, The Law of Torts in Australia (Oxford Univer-
sity Press, 5th ed, 2012) 633–4.
88
Ibid.
89
Donoghue v Stevenson [1932] AC 562, 599 (Lord Atkin).
90
Stennett v Hancock [1939] 2 All ER 578; Marschler v Masser’s Garage
(1956) 2 DLR (2d) 484.
 computer law & security review 34 (2018) 1314–1332
foreseeable and ‘not insignificant’, and a reasonable manu-
facturer in their position91 would have taken precautions to
alleviate this risk of harm.92 Determining whether a reason-
able manufacturer would have taken precautions requires the
consideration of a number of factors, such as the probability of
harm occurring if care were not taken, the likely seriousness of
the harm, the burden of taking precautions to avoid the risk of
harm and the social utility of the activity that creates the risk
of harm.93 The test is essentially the same as the risk-utility
calculus94 that is increasingly being employed in the United
States for product liability matters,95 in that it requires a cost-
benefit analysis balancing the risks inherent in the design or
formulation of a product against the costs of adopting a rea-
sonable alternative design.96 If the design of the system is not
itself unreasonably risky in these terms, then the issue will go
to the reasonableness of the warnings and information that
accompany the purchase or use of the AV.
Automated vehicle manufacturers might alternatively be
held liable under the defective goods action in Part 3–5 of the
ACL. When initially passed,97 the defective goods action was
intended to “introduce a strict product liability regime into
Australian law”98 and was modelled on the 1985 EC Product
Liability Directive,99 though Australian courts have rarely re-
ferred to European jurisprudence in their decisions.100 It was
argued during the reform process that a defective goods ac-
tion would be desirable to: (1) ensure that manufactures bear
the risks of defective products, as they are arguably in a better
91
In other words, “a reasonable person in the position of the de-
fendant”, see, Graham Barclay Oysters v Ryan (2002) 211 CLR 540,
[192] (Gummow and Hayne JJ).
92
Civil Law (Wrongs) Act 2002 (ACT) s 43(1); Civil Liability Act 2002
(NSW) s 5B(1); Civil Liability Act 2003 (Qld) s 9(1); Civil Liability Act
1936 (SA) s 32(1); Civil Liability Act 2002 (Tas) s 11(1); Wrongs Act 1958
(Vic) s 48(1); Civil Liability Act 2002 (WA) s 5B(1); see also, Wyong Shire
Council v Shirt (1980) 146 CLR 40, 47-48 (Mason J); Martin Davies,
‘Product Liability’ in Carolyn Sappideen and Prue Vines (eds), Flem-
ing’s The Law of Torts (Lawbook, 2011) 555, 557-558.
93
Civil Law (Wrongs) Act 2002 (ACT) s 43(2); Civil Liability Act 2002
(NSW) s 5B(2); Civil Liability Act 2003 (Qld) s 9(2); Civil Liability Act
1936 (SA) s 32(2); Civil Liability Act 2002 (Tas) s 11(2); Wrongs Act
1958 (Vic) s 48(2); see also Wyong Shire Council v Shirt (1980) 146 CLR
40, 47-48 (Mason J).
94
Under the risk-utility test, liability is established where it can
be shown that the “foreseeable risks of harm posed by the product
could have been reduced by the adoption of a reasonable alterna-
tive design”, see, Restatement (Third) of Torts: Products Liability §2(b)
(1998).
95
See, Aaron Twerski and James Henderson, ‘Manufacturer’s Li-
ability for Defective Product Designs: The Triumph of Risk-Utility’
(2009) 74(3) Brooklyn Law Review 1061, 1065.
96
See, above n 93; see also, Davies, above n 92, 557-558.
97
See, Trade Practices Act 1974 (Cth), Part VA. The defective goods
action was retained in substance in Part 3-5 of the Australian Con-
sumer Law, which replaced the Trade Practices Act 1974 (Cth) in
2011.
98
Marnie Hammond, ‘The Defect Test in Part VA of the Trade Prac-
tices Act 1974 (Cth): Defectively Designed?’ (1998) 6 Torts Law Jour-
nal 29, 29; citing Explanatory Memorandum to the Trade Practices
Amendment Bill 1992 (Senate).
99
Jocelyn Kellam and Luke Nottage, ‘Happy 15th Birthday, Part VA
TPA! Australia’s Product Liability Morass’ (2007) 15 Competition &
Consumer Law Journal 26, 26-27.
100
Ibid.
1321
position than victims to spread the losses that flow from prod-
uct defects; and (2) to reduce the costs of apportioning liabil-
ity for product-related losses.101 At the time, it was perceived
that the existing causes of action were unable to provide vic-
tims with appropriate remedies - in the case of negligence,
due to the complexities and difficulties of proving fault and
causation and the legal costs required to do so.102 However,
whether these objectives animated the final version of the de-
fective goods action (which lacks an objects clause), is not en-
tirely clear.103 The extent to which the defective goods action
indeed achieves these objectives and imposes truly ‘strict’ li-
ability, and the implications of this for AV liability, is further
discussed below.
In the context of automated vehicles, liability would be es-
tablished under Part 3–5 if an AV manufacturer supplies a ve-
hicle with a “safety defect”,104 and that defect causes loss.105
The relevant test for determining ‘defectiveness’ in a Part 3–
5 action is the consumer expectations test, which stipulates
that a good is defective if its “safety is not such as persons gen-
erally are entitled to expect” .106 The Part 3–5 defective goods
test is again broadly analogous to the consumer expectations
test that has historically been applied in the United States.107
Manufacturers may be held liable under either of these the-
ories for defects stemming from the process of manufacture,
design and development, or marketing.108 Potential examples
of such claims in the AV context will be discussed below.
4.1. Manufacturing defects
A manufacturing defect, or ‘bench error’, refers to an inadver-
tent error in the production process which results in a flawed
product. In cases where a defect in manufacture is alleged,
the product typically does not meet the manufacturer’s own
intended design specifications.109 Therefore, Davies observes
that in such cases the acceptable standard of safety for the
particular type of product is not in issue,110 as distinct from
design defects.
In the automated vehicle context, a manufacturing defect
might firstly arise in a ‘faulty workmanship’ style case.111 For
example, this type of defect might occur where a component
part, such as an AV LIDAR sensor, is carelessly wired together
and a resulting malfunction causes an accident. For an action
101
Kellam and Nottage, above n 99, 27–28; citing, Australian Law
Reform Commission, ‘Product Liability’ (Report No. 51, Australian
Law Reform Commission, 1989), para 7.06.
102
Hammond, above n 98, 29; Barker et al, above n 87, 649.
103
See, Hammond, above n 98.
104
Australian Consumer Law ss 2(1); 138(1).
105
Ibid ss 139–141.
106
Ibid s 9(1).
107
Defectiveness under the US test is established where “the dan-
ger posed by the design is greater than an ordinary consumer would ex-
pect when using the product in an intended or reasonably foreseeable
manner.” See, Terrence Kiely and Bruce Ottley, Understanding Prod-
ucts Liability Law (LexisNexis, 2006), 135; cited in Funkhouser, above
n 17.
108
Davies, above n 92, 557.
109
Ibid; Barker et al, above n 87, 643.
110
Davies, above n 92, 557.
111
See, e.g. Phillips v E W Lundberg & Son (1968) 88 WN (Pt 1) (NSW)
166.
1322 computer law & security review 34 (2018) 1314–1332
of negligence, mere proof that a person has suffered loss due
to a defective LIDAR sensor would not be itself conclusive of a
manufacturer’s liability. Plaintiffs will also have to prove that
the relevant manufacturer or subcontractor caused the defect.
Difficult questions of causation may therefore arise, as the de-
fect may have arisen subsequent to the product leaving the
manufacturer’s control, for instance from ordinary wear and
tear, intervening repairs, tampering, improper handling from
an intermediate party, or a range of other possible causes. This
issue is considered in more depth in Section V, below.
Manufacturing defects might also arise from inadequate
quality control. An example in the AV context could be an
unintended software bug which impairs the operation of the
driving system. For instance, Hynes notes that inadvertent
mistakes such as typographical errors made by programmers
could be characterised as defects arising in the course of man-
ufacture.112 However, it is also recognised that the removal of
all bugs or errors from a computer program may often be im-
possible,113 and thus the relevant breach that might have to be
alleged in certain cases may cut to the question of whether a
reasonable amount of testing was undertaken to detect errors.
In this regard, the distinction between manufacturing and de-
sign defects may to some extent break down when consider-
ing software defects and errors.114
4.2. Design and development defects
A plaintiff might also look to establish that an automated ve-
hicle manufacturer should be held liable for a design or devel-
opment defect. These defects arise as a result of an error of
judgment in the design or formulation process of a product.
A useful illustration of a potential design defect claim in
the AV context can be seen in the well-publicised fatal ac-
cident involving a Tesla vehicle in Florida,115 and the design
choices behind Tesla’s Model S ‘autopilot’ driving system.116
In the accident, the Tesla car’s camera sensors failed to dis-
tinguish the white side of a semi-trailer from the ‘brightly lit
112
Paul Hynes, ‘Doctors, Devices and Defects: Products Liability for
Defective Medical Expert Systems in Australia’ (2004) 15 Journal of
Law, Information and Science 7.
113
Ibid.
114
Ibid.
115
Mike Spector and Ianthe Dugan, ‘Tesla Draws Scrutiny
After Autopilot Feature Linked to a Death’, Wall Street Jour-
nal (online), 30 June 2016 <https://www.wsj.com/articles/
tesla- draws- scrutiny- from- regulators- after- autopilot- feature- is-
linked- to- a- death- 1467319355>; Alex Davies, ‘Tesla’s Autopilot
has had it’s First Deadly Crash’, Wired (online), 30 June 2016 <https:
//www.wired.com/2016/06/teslas- autopilot- first- deadly- crash/>.
116
It should be noted that Tesla’s autopilot feature is considered
to provide only level 2, or partial driving automation, see Will
Oremus, ‘Is Autopilot a Bad Idea?’ Slate (online), 6 July 2016
<http://www.slate.com/articles/technology/future_tense/2016/
07/is_tesla_s_style_of _autopilot_a_bad_idea_volvo_google_and_
others_think_so.html>; SAE International, above n 7, 23. However,
in the context of liability, this effectively only raises questions as
to the ability of the human driver to intervene prior to a crash, as
discussed in Part IIIA, above. The example is still pertinent to the
question of an alleged design defect if it is assumed the human
driver could not intervene, or if one assumes a hypothetical
that the same design choice was made in the design of a level 4
automated vehicle.
sky’ behind it, and the driving system consequently failed to
brake when the semi-trailer pulled in front of the car.117 Tesla
had made two design decisions which arguably were key con-
tributing factors to the accident, namely: (1) to rely solely on
camera and radar sensors, rather than incorporating a further
LIDAR sensor;118 and; (2) for the decision-making algorithm to
treat the camera sensor as a ‘primary’ source of information,
with the radar sensor’s data being merely ‘supplementary.’119
Tesla subsequently updated their algorithm to also classify
the radar data as a primary source of information, which Elon
Musk later noted, would likely have prevented the accident.120
Furthermore, some commentators have claimed that LIDAR
sensors might be a necessary AV design choice, in order to
balance the shortcomings of camera and radar sensors and to
improve the obstacle detecting accuracy of automated driving
systems overall.121
If such an accident were to occur in Australia, claimants
might be more likely to succeed in alleging that the deci-
sion to treat the camera as the primary source of decision-
making data constituted a design defect attracting liability
in negligence or under Part 3–5 of the ACL. In this respect,
it is well known in the industry that camera sensors alone
have their limitations and there is a risk that they may be
unable to collect useful data in certain ambient conditions,
such as in fog, heavy rain, or when faced with direct and
bright light.122 Furthermore, the costs of tweaking the algo-
rithm so that the radar data was treated as an equal primary
source would presumably not be great, particularly in com-
parison to the foreseeable and serious risks of relying solely
on camera data. Finally, the requirement of such a standard
of care would arguably not be so burdensome so as to crip-
ple the industry’s ability123 to provide a potentially life-saving
technology.124 The fact that there was an alternative and safer
design available which was relatively cost-effective to imple-
ment could overall lead to a conclusion that Tesla’s design was
defective.125
A plaintiff might face more difficulty in establishing fault or
defectiveness with respect to Tesla’s omission of LIDAR sen-
sors in its driving system design. The courts can be reticent
to decide questions that cut to the appropriateness of a de-
liberate design decision made on the basis of cost and a cer-
tain probability of risk, both for claims of negligence126 and
117
Tesla, A Tragic Loss, June 30 2016, < https://www.tesla.com/blog/
tragic-loss>.
118
Solon, above n 21.
119
Harrison Weber, ‘Elon Musk unveils ‘massive’ Tesla Autopilot
8.0 update using existing radar and fleet learning’, Venture Beat
(online), 11 September 2016 <http://venturebeat.com/2016/09/11/
elon- musk- unveils- massive- tesla- autopilot- 8- 0- update- using-
existing- radar- and- fleet- learning/>.
120
Ibid.
121
Solon, above n 21.
122
Anderson et al, above n 10, 61; Solon, above n 21.
123
Most automated vehicle manufactures do not currently design
their vehicles to rely primarily on a single camera sensor, see, e.g.,
Gates et al., above n 22 (Google); Warren, above n 29 (Ford); Adams,
above n 63 (BMW).
124
See, Cleary, above n 6; Ramsay, above n 6.
125
Abouzaid v Mothercare (UK) Ltd [2000] EWCA Civ 348; see also,
Barker et al, above n 87, 654.
126
Davies, above n 92, 558-559; Barker et al, above n 87, 644–645.
 computer law & security review 34 (2018) 1314–1332
under the consumer expectations test127 adopted by Part 3–5
of the ACL. The concern is that such issues can be ‘polycen-
tric’ 128 and that they may involve the court going beyond the
limits of the particular case by effectively setting an accept-
able level of risk and precaution for the activity across soci-
ety. These questions of economic and social policy might con-
demn how a large part of an industry does business, and may
ultimately deprive society of those products.129 Indeed, the LI-
DAR question might present such a polycentric issue, as the
LIDAR sensors that Google uses can cost up to $70,000 each.
Furthermore, Tesla appears to embrace a design methodology
that relies on making its vehicles affordable for consumers at
present, and requiring the use of LIDAR could be prohibitive
to this approach.130 Their design methodology looks to max-
imise the amount of everyday driving to which Tesla algo-
rithms are exposed through ‘fleet learning’, whereby the algo-
rithms are trained using the data provided by its fleet of con-
sumer drivers using a ‘beta’ autopilot feature.131 In doing so, it
could be argued that the system will ‘learn’ quicker from this
large pool of data and that the technology will progress faster
than by merely testing with a small number of test drivers,
and for this reason, the use of LIDAR is unnecessary.132 How-
ever, other factors may emerge as the technology develops
that could influence such a determination, such as a decline
in the cost of LIDAR,133 or the development of a common in-
dustry practice.134
4.3. Information defects and the duty to warn
Finally, automated vehicle manufactures might be held liable
in negligence for failing to warn consumers of the dangers as-
sociated with the use of their AVs. As was observed in Part
IIIA above, many automated driving systems will only be suit-
able for use in a particular operational domain. In this regard,
manufacturers will have a duty to warn consumers of the lim-
itations of their automated driving systems, such as whether
they ought to only be activated in certain conditions, or in cer-
tain geographical areas. Should the manufacturer’s warnings
127
Davies, above n 92, 574.
128
Lon L Fuller ‘The Forms and Limits of Adjudication’ (1978) 92(2)
Harvard Law Review 353, 394–400.
129
Davies, above n 92, 558–559; Barker et al, above n 87, 644–645.
130
See, Anderson et al, above n 10, 61–64, where it is noted that
most individual sensors have limitations and that different combi-
nations of sensors offer different levels of capability, however cost
is a key constraint in determining which sensors are ultimately
used.
131
Hope Reese, ‘Tesla’s new Autopilot makes a big bet on
radar’, TechRepublic (online), 16 September 2016 <http://www.
techrepublic.com/article/teslas- new- autopilot- makes- a- big-
bet- on- radar- musk- said- system- would- have- prevented-
deadly-crash/>.
132
Ibid. It should be noted as well that the Tesla fatality was the
first in 130 million miles of Autopilot operation, whereas the fatal-
ity rate for conventional vehicles worldwide is estimated as one
fatality per 60 million miles, so Tesla’s design could well be a de-
fensible balance of cost and risk, see, Tesla, above n 117; see also,
Solon, above n 21.
133
See, Solon, above n 21.
134
See, Cross v TNT Management (1987) 46 SASR 105; Middleton v
Erwin [2009] NSWSC 108.
1323
or instructions be negligently inadequate, and a human driver
uses the automated mode improperly as a result, the manu-
facturer could be held liable for any resulting loss or damage.
It is also worth noting that an automated vehicle manufac-
turer’s duty to warn may extend to warning consumers of the
inherent, though improbable, risk of a driving system failing
due to a defect or from an incorrect decision made by the al-
gorithm. Such a duty might be imposed for the reason that it
would “at least give the user an informed choice whether to
run the risk” of using the product.135 Thus, if a manufacturer
doesn’t provide adequate warnings about this irreducible (al-
beit potentially small) degree of risk, and a plaintiff who has
suffered damage can successfully assert that they would not
have used the automated vehicle, or would have used it dif-
ferently had proper warnings been given,136 the manufacturer
might be held liable.
5. Complexities of proof arising under
Australia’s product liability regime
This section of the article seeks to assess the extent to which
Australia’s product liability regime will be able to handle
claims arising from AV accidents and appropriately balance
the interests of plaintiffs and manufacturers when apportion-
ing liability. Whilst these issues were not explicitly raised in
the NTC’s 2016 policy report as a regulatory barrier to the in-
troduction of AVs into Australia, the NTC recognised that this
position might need to be revisited if “evidence emerges of a
market failure that impedes the efficient and reliable assign-
ment of fault.”137
I argue that plaintiffs will likely face two critical barriers to
recovery following automated vehicle accidents, namely: (1)
identifying the source of the defect and proving what caused
the accident; and (2) actually proving fault on part of the au-
tomated vehicle manufacturer in a negligence claim, or that
the AV was ‘defective’ for the purposes of Part 3–5 of the ACL,
especially where an accident is caused by a decision made by
the automated driving system algorithm.
5.1. Difficulties in proving causation
Determining what caused a particular AV accident may not
be straightforward for plaintiffs. This could be the case due to
the multiplicity of parties involved in the production, mainte-
nance and operation of automated vehicles (all who may have
caused the defect), as well as our current technological inabil-
ity to analyse machine learning algorithms in order to deter-
mine how or why they have made a particular decision.
Firstly, establishing who caused an automated vehicle ac-
cident may be complex where the process of manufacturing
the vehicle or relevant defective component was distributed
across a number of different parties within a chain of supply.
Unlike the developing doctrine in the United States,138 there is
135
Davies, above n 92, 559.
136
Chappel v Hart (1998) 195 CLR 232; Rosenberg v Percival (2001) 205
CLR 434.
137
National Transport Commission, above n 1, 62.
138
Vladeck, above n 17, 147-148; Davies, above n 92, 568.
1324 computer law & security review 34 (2018) 1314–1332
no trend in Australian case law to hold the manufacturers of
a finished product vicariously liable in negligence for defects
that stemmed from subcontractors upstream in the produc-
tion process.139 Thus for example, if a plaintiff sought to prove
negligence in respect of an allegedly defective LIDAR sensor,
they might struggle to identify where the cause of the defect
arose from, and subsequently who to sue, if the automated
vehicle manufacturer outsources the production and instal-
lation of the LIDAR sensors to a number of different subcon-
tractors.140 However, the doctrine of res ipsa loquitur (the neg-
ligence speaks for itself) may be of some assistance to plain-
tiffs, particularly in ‘manufacturing defect’ type cases referred
to above.141 The presumption is available in circumstances
where, despite a lack of evidence as to how or why the defect
exactly arose, a logical inference can be drawn that a particu-
lar manufacturer or subcontractor, or someone for which they
are vicariously liable, must have negligently caused the de-
fect.142 However, this causal inference is not always available
and plaintiffs will have to exclude on the balance of proba-
bilities that the malfunction did not arise due to a different
cause, such as from the faulty fitting of the LIDAR sensors by
a subsequent party143 or from intervening repairs.144
A second complexity may arise where the accident is
caused by an error in the decision-making process of the
automated driving system’s algorithms. At present, machine
learning systems are incapable of explaining, or being anal-
ysed to reveal, precisely how or why they have reached a par-
ticular decision. This is because the algorithms lack an explicit
representation of their decision-making process,145 which is
necessary so that they can make decisions without the need
for human input, and which allows machine learning algo-
rithms to quickly make sense of large volumes of data in ways
that humans cannot. The former head of machine learning
at Uber succinctly summarises the problem in observing that
“you can’t look back into it… it’s almost impossible to explain
139
Peake v Steriline Manufacturing Pty Ltd [1988] Aust Torts Re-
ports 80. Note however that manufacturers of the finished prod-
uct would still be subject to a duty to reasonably minimise the
risk of injury and damage from these components, though prob-
ing tests of the components are not necessary and the standard
of care required is less stringent than what testing is required of
the component manufacturer, see Taylor v Rover Co Ltd [1966] 2
All ER 181 (Baker J). Furthermore, the manufacturer of the overall
product would be under a duty to ensure that component suppli-
ers/specialists are competent, see Davies, above n 92, 567–568.
140
See, e.g., above n 81.
141
Barker et al, above n 87, 644.
142
Grant v Australian Knitting Mills Ltd (1935) 54 CLR 49, 62 (Lord
Wright); Phillips v E W Lundberg & Son (1968) 88 WN (Pt 1) (NSW)
166; Martin v Thorn Lighting Industries Pty Ltd [1978] WAR 10; Hill
v James Crowe (Cases) Ltd [1978] 1 All ER 812; see also, Kilgannon v
Sharpe Bros Pty Ltd (1986) 4 NSWLR 600; Fletcher v Toppers Drinks Pty
Ltd [1981] 2 NSWLR 911.
143
See, eg, Evans v Triplex Glass [1936] 1 All ER 283, whereby a shat-
tered car windscreen could not be proven to be caused by defective
fabrication on the balance of probabilities, as opposed to the faulty
installation of the windscreen.
144
See, eg, Phillips v Chrysler Corp (1962) 32 DLR (2d) 347.
145
Matthias, above n 42, 178; Ackerman, above n 52; Dahiyat, above
n 47, 106.
why you get the outcome you get.”146 Often, even the engi-
neers who have designed a machine learning system cannot
pinpoint the reasoning behind a single action taken,147 and in-
stead the decision-making process of the automated driving
system’s algorithms can only be deduced by observing and in-
terpreting the behaviour of the vehicle.148
Given that automated driving system algorithms will be
weighing a multitude of different factors and sources of data
in their decision-making processes, the probable cause, or
causes, of an algorithm’s erroneous decision might then not
always be clear.149 One example of the diversity of factors
that automated driving systems might be weighing up can
be seen in the work of the start-up, BRAIQ, which is devel-
oping an algorithm that, using in-cabin sensors, can read a
passenger’s emotional comfort or discomfort and adjust the
driving style of the automated vehicle accordingly.150 With
an automated driving system weighing up everything from
the predicted behaviour of other road users to the emotional
states of its occupants, it might be difficult to determine what
actually caused the incorrect algorithm decision and conse-
quently, who should be held responsible.
However, whilst the decision-making processes of AI sys-
tems currently take place in somewhat of a ‘black box,’ there
has been a recent push across disciplines towards making
AI decision-making more transparent and accountable. There
has been significant work in the computer science field on re-
searching ‘explainable AI,’151 for instance, systems that are ca-
pable of explaining the factors animating their actions and
decisions (i.e. why the decision was made) to a human-in-
the-loop, as distinct from explaining how the decision was
made.152 In the legal sphere, the General Data Protection Reg-
146
See, Devin Coldewey, ‘Affectiva and Uber want to Brighten
Your Day with Machine Learning and Emotional Intelligence’,
Tech Crunch (online), 13 September 2016 <https://techcrunch.
com/2016/09/13/affectiva- and- uber- want- to- brighten- your-
day- with- machine- learning- and- emotional- intelligence/>.
147
Will Knight, ‘The Dark Secret at the Heart of AI’, MIT Technol-
ogy Review (online), 11 April 2017 <https://www.technologyreview.
com/s/604087/the- dark- secret- at- the- heart- of- ai/>.
148
See, Matthias, above n 42, 178–179; 182.
149
Dahiyat, above n 47, 106.
150
Andrew Thomson, ‘Emotionally intelligent computers may
already have a higher EQ than you’, Tech Crunch (online), 2 Decem-
ber 2016 <https://techcrunch.com/2016/12/02/emotionally-
intelligent- computers- may- already- have- a- higher- eq-
than-you/>.
151
See, eg, DARPA’s work in this space, David Gunning, ‘Ex-
plainable Artificial Intelligence’ (Program Update, November
2017, DARPA) <http://explainablesystems.comp.nus.edu.sg/wp-
content/uploads/2018/03/XAI%20for%20IUI%202018.pdf>; see for
a summary, Wojciech Samek, Thomas Wiegand and Klaus-Robert
Müller, ‘Explainable Artificial Intelligence: Understanding, Visual-
izing and Interpreting Deep Learning Models’ (2017) Special Issue
1, ITU Journal 1.
152
Ibid; see also; Doshi-Velez, ‘Accountability of AI Under the
Law: The Role of Explanation’ (Harvard Public Law Work-
ing Paper No. 18-07, 2017, Berkman Klein Center Working
Group on Explanation and the Law); Emerging Technology
from the arXiv, ‘AI Can Be Made Legally Accountable for Its
Decisions’, MIT Technology Press (online), 15 November 2017
<https://www.technologyreview.com/s/609495/ai- can- be- made-
legally-accountable-for-its-decisions/>.
 computer law & security review 34 (2018) 1314–1332
ulation153 has introduced rights in relation to automated
decision-making.154 The GDPR may also provide EU citizens
with a ‘right to explanation’ of AI-decision making that relates
to them,155 however that the decision must be ‘based solely on
automated processing’ and must ‘significantly affect’ the indi-
vidual are key limitations to the scope of the right.156 Certainly
for Level 3, 4 and 5 automated vehicles, many, if not all of the
decisions involved in the driving task would be made ‘solely’
on the basis of the ADS’ automated processing. It ought to be
noted however that some have questioned the extent to which
a right to explanation can properly be said to exist in the text
of the GDPR.157
Under Australian liability laws, the ACL defective goods ac-
tion may mitigate the above two problems for plaintiffs to
some extent, as a claimant would merely need to prove that
the manufacturer supplied the defective vehicle, as opposed
to proving that the particular manufacturer caused the defect.
Furthermore, a ‘manufacturer’ is defined in the ACL to cover
potentially anyone in the supply chain,158 including compo-
nent manufacturers and importers (if the actual manufac-
turer is based entirely outside Australia).159 Prospective plain-
tiffs would therefore merely have to demonstrate that any
of these parties ‘supplied’ the automated vehicle in trade or
commerce and that it was defective.160 They would then be
required to prove that the automated vehicle was ‘defective’
however, which is discussed below.
5.2. Difficulties in proving fault and/or defectiveness for
accidents caused by a driving system decision
5.2.1. Accidents caused by an underdeveloped algorithm
The question of whether an automated vehicle manufacturer
should be held liable becomes significantly more complex in
respect of accidents caused by an on-road decision of the au-
tomated driving system algorithm. Plaintiffs may struggle to
prove the requisite fault or defectiveness for a negligence or
defective goods claim, even where it can be shown that the
accident was caused by an underdeveloped algorithm.
The problem can be illustrated well by applying current
product liability principles to the first accident caused by of
one of Google’s automated vehicle prototypes (‘Google AV’ ).161
In February 2016, a Google AV was driving down the outermost
lane of a busy road in Mountain View, California, when it de-
tected sandbags on the road ahead. The sandbags were lying
153
General Data Protection Regulation (EU) 2016/679 ("GDPR").
154
Ibid, Art. 22.
155
Ibid, Recital 71.
156
See, Bryce Goodman and Seth Flaxman, ‘European Union Reg-
ulations on Algorithmic Decision-Making and a "Right to Explana-
tion"’ (2017) 38(3) AI Magazine 50.
157
Sandra Wachter, Brent Mittelstadt and Luciano Floridi, ‘Why a
Right to Explanation of Automated Decision-Making Does Not Ex-
ist in the General Data Protection Regulation’ (2017) 7(2) Interna-
tional Data Privacy Law 76.
158
See, Australian Consumer Law ss 2, 7.
159
Ibid s 7(e).
160
Ibid ss 138-141.
161
Chris Ziegler, ‘A Google Self-Driving Car Caused a Crash
for the First Time’, The Verge (online), 29 February 2016
<http://www.theverge.com/2016/2/29/11134344/google-self-
driving- car- crash- report>.
1325
next to a storm water drain and were blocking the AV’s path
down the lane. The vehicle came to a stop while it waited for
an opportunity to merge to the inner lane. After allowing some
cars to pass, the Google AV incorrectly predicted that a bus
travelling down the inner lane would yield for it and whilst an-
gling in to merge, the Google AV struck the side of the bus. In
their subsequent monthly report, Google stated that they later
refined their algorithm to “more deeply understand” that as a
matter of probability, large vehicles are generally less likely to
yield than other types of vehicles.162
Say for instance, this situation played out in Australia and
the company who operates the damaged bus sought compen-
sation for the damage. What is the nature of the defect that
would have to be alleged by the plaintiff?
The first thing to note is that from Google’s report, it ap-
pears that the problem which caused the accident was not an
unintended software bug. Rather, the algorithm functioned as
designed but was not yet sophisticated enough and had not
yet been trained to accurately predict the yielding patterns of
large vehicles. As such, a plaintiff would be required to bring
a design or development defect type claim.163
Per the statutory formula, an action of negligence would
involve consideration of the foreseeability and magnitude of
the risks inherent in the design,164 as well as a cost-benefit
analysis that balances the risk of harm involved in the design
against the costs of minimising that risk through a different
design.165 As has been noted, this calculus is broadly similar
to the risk utility test that is increasingly used in United States
jurisdictions for design defect claims.166
The first breach that might be alleged in this instance is
that Google unreasonably exposed the plaintiff to a foresee-
able and “not insignificant” risk of harm by failing to take pre-
caution in their design process with respect to the automated
vehicle’s lack of ‘understanding’ of large vehicle yielding pat-
terns, with the reasonableness of Google’s conduct requiring
a balancing of the risks of harm with the costs of taking alle-
viating action.167
In the early stages of the technology, it might be difficult
for plaintiffs to succeed in an argument that a reasonable au-
tomated vehicle manufacturer ought to have foreseen traffic
risks as specific as those associated with merging in front of
large vehicles, and ought to have pre-emptively refined their
algorithm on this basis. This road risk is but one amongst a
countless number of contingencies that automated vehicles
will face on the roads. Thus, expecting too high a standard
of foresight and care from automated vehicle manufacturers,
too early, would likely cripple the development of the poten-
tially life-saving technology, a factor that would run strongly
162
Google, above n 11.
163
See, Sven Beiker, ‘Legal Aspects of Autonomous Driving’ (2010)
52(4) Santa Clara Law Review 1145, 1152, “As the vehicle navigates
itself through traffic, it makes ’mission-critical’ decisions, which,
in a narrow range of circumstances, can and will contribute to ac-
cidents. Such an event cannot necessarily be classified as a tech-
nical failure, however, the same way as, for instance, a damaged
tire.”
164
See, above n 91.
165
See, above n 92-93; see also, Davies, above n 92, 557–558.
166
See, above n 94–96.
167
Ibid.
1326 computer law & security review 34 (2018) 1314–1332
against an inference of negligence.168 However, it may be that
this duty on manufacturers to pre-emptively refining their al-
gorithms and eliminate risks could become stricter over time
as the technology matures.
The plaintiff might instead look to allege a defect in the
course of developing the algorithm, on the basis that Google
failed to take reasonable steps to test their system in order to
uncover that the algorithm did not account for the risk.169
The question is then: what amount of testing is reason-
able? It is hard to predict in advance of the widespread im-
plementation of AV technology what a reasonable standing of
testing will be. However, in this scenario, Google could quite
likely argue effectively that their testing procedure complied
with the state of the art at the time,170 and as a consequence,
that reasonable steps were taken towards discovering the al-
gorithm deficiency. Plaintiffs may thus face evidentiary chal-
lenges during the early implementation of AVs in proving neg-
ligent fault on part of AV manufacturers.
Over time, an accepted industry practice171 might develop
and provide a benchmark which could assist in such a deter-
mination. Importantly though, it will be impossible to com-
pletely test these algorithms for the immeasurable number
of contingencies that they will face on the roads,172 and thus
automated driving systems will assumedly always contain a
certain degree of safety imperfection in their decision-making
process.
Other factors may be significant in relieving manufacturers
from liability, such as the potential impracticability of testing
for, and eliminating every possible error, and that on a society-
wide scale, AVs are predicted to have great utility.173 Finally,
AV design defect questions could involve the court addressing
the sorts of ‘polycentric’ issues noted above,174 and the courts
may be reticent to condemn testing methods that are widely
used in the industry.
In an ACL defective goods claim, a similar obstacle to re-
covery for plaintiffs may lie in the development risks defence.
Under this defence, manufacturers are excused from liability
where it can be shown that “the state of scientific or techni-
cal knowledge at the time when the goods were supplied by
their manufacturer was not such as to enable that safety de-
fect to be discovered.”175 Barker et al observe however that in
interpreting this provision, Australian courts have effectively
imported a reasonableness requirement,176 as the defence has
been held to be available where a risk was not practically dis-
168
Davies, above n 92, 557–558.
169
See, Cuckow v Polyester Reinforced Products Pty Ltd (1970) 19 FLR
122, 143 (Fox J); Vacwell Engineering Co Ltd v BDH Chemicals Ltd [1971]
1 QB 88, 109 (Rees J); Peterson v Merck Sharpe & Dohme [2010] FCA 180.
170
See, Abalos v Australian Postal Commission (1990) 171 CLR 169, 172
(McHugh J); cf, Vacwell Engineering Co Ltd v BDH Chemicals Ltd [1971]
1 QB 88; Cuckow v Polyester Reinforced Products Pty Ltd (1970) 19 FLR
122.
171
Cross v TNT Management Pty Ltd (1987) 46 SASR 105; see also,
Vladeck, above n 17, 136.
172
Koopman and Wagner, above n 52.
173
See, above n 93; see Funkhouser, above n 17, 457.
174
See, above n 126–132.
175
Australian Consumer Law s 142(c).
176
Barker et al, above n 87, 654–657.
coverable,177 as opposed to being possibly discoverable in light
of available knowledge at the time.178 This application of the
development risks defence by Australian courts, as distinct
from the position taken in other jurisdictions’ applications of
the EC Directive defence,179 is one aspect in which the Part 3–5
defective goods action may not operate as a truly ‘strict liabil-
ity’ scheme,180 and in this case may only require reasonable
testing of AV manufacturers.
The outcome of an ACL claim may also be uncertain for a
second reason: it is not clear how the consumer expectations
test would apply. Specifically, it is difficult to pinpoint what
the ‘consumer’, as an objective standard,181 is ‘entitled to ex-
pect’ in relation to complex design defect cases and special-
ist technical questions such as algorithm training and test-
ing approaches and their implications for ADS safety risks.182
As Kevin Funkhouser observes,183 the average consumer may
have bought into the ‘hype’ 184 surrounding AVs and may ex-
pect infallible safety standards, which could differ from the
reasonable expectations of an informed mechanic or software
engineer. Some have argued that in order to make the con-
sumer expectations test workable in complex design defect
cases, the courts ultimately resort to a cost-benefit analysis185
and that the test potentially imposes a standard of liability
which is effectively ‘indistinguishable’ from common law neg-
ligence.186 If the consumer expectations test as applied to au-
tomated driving system errors imposes a standard of liability
that is indeed indistinguishable from the negligence standard,
then similar obstacles might face plaintiffs relying on the Part
3–5 defective goods action to those noted with respect to neg-
ligence claims, above.
In sum, plaintiffs are likely to face a number of evidentiary
problems in proving negligent fault on part of AV manufac-
177
Ryan v Great Lakes Council [1999] FCA 177 (Wilcox J); Peterson v
Merck Sharpe & Dohme [2010] FCA 180.
178
Barker et al, above n 87, 656.
179
See, eg, European Commission v United Kindgom [1997] 3 CMLR 923;
A v National Blood Authority [2001] 3 All ER 289.
180
Kellam and Nottage, above n 99.
181
Carey-Hazell v Getz Bros & Co (Aust) Pty Ltd [2004] FCA 853, [186].
182
Tsui notes relevantly with respect to alleged design defects re-
lating to pharmaceuticals: “The idea of a consumer or a person, no
matter how reasonable, determining the acceptable legal standards for
goods as complex as pharmaceuticals does give rise to legitimate con-
cerns. The test has been described as the statutory replication of a major
shortcoming of negligence: being vague, indeterminate and difficult to es-
tablish prior to a court hearing… Griffiths acknowledges the rationale of
consumer protection, and although the test might make sense in manu-
facturing defects, how would a consumer know about safety in design?...
The idea of a consumer determining drug design standards is absurd, es-
pecially when manufacturers themselves are unable to reasonably foresee
all side effects of their creations, due to the unique interaction with each
individual patient’s biology.”; see, Mabel Tsui, ‘An Analysis of Aus-
tralia’s Legal Regime for Imposing Liability on Manufacturers of
Pharmaceutical Drugs’ (2014) 21 JLM 700, 713–714.
183
Funkhouser, above n 17, 456.
184
See also, Vladeck, above n 17, 136.
185
Roger O’Keefe, ‘Is the Concept of ‘Defect’, Defective?’ (1994) 5
Australian Product Liability Reporter 84, 87.
186
Barker et al, above n 87, 656; see also, Hammond, above n 98;
O’Keefe, above n 185; Jane Stapleton, ‘Products Liability Reform –
Real or Illusory?’ (1986) 6(3) Oxford Journal of Legal Studies 392, 393–
405.
 computer law & security review 34 (2018) 1314–1332
turers. However, as the technology matures, and as industry
standards emerge, stricter standards of care may be imposed
on manufacturers regarding the degree to which they are ex-
pected to pre-emptively eliminate, and test for algorithm de-
fects. Furthermore, the National Transport Commission is cur-
rently undertaking extensive work in developing mandatory
ADS safety standards, and whilst the substance of this work
is beyond the scope of this article, the standards will likely be
important in establishing a baseline standard of care for AV
safety.187
5.2.2. Accidents arising from ‘learned’ machine logic
Plaintiffs could face further barriers to recovery where an acci-
dent is caused by an on-road decision of the automated driv-
ing system, and where this decision has stemmed from the
‘learned’ logic of the machine learning algorithm.
The following hypothetical may serve to demonstrate how
this could occur. Say a Google AV drives over a large, water-
filled pothole, which causes the vehicle to lose traction of the
road and collide into a parked vehicle. Furthermore, assume
the vehicle was programmed with an ‘anomaly algorithm,’ in
that it was the manufacturer’s intention that if the driving sys-
tem were faced with an anomalous road situation that it could
not make confident predictions about, such as a pothole, the
vehicle would proceed cautiously or avoid the obstacle en-
tirely. However, in the course of its 2 million miles of opera-
tion,188 the vehicle algorithm has been exposed to a number
of shallower pools of water and has ‘learned’ that it can, in
general, safely drive across what appears to be a shallow pool
of water. On the basis of this learned logic, the algorithm de-
cided that the pothole was not an anomalous road situation,
which ultimately caused the accident.
It is likely to be nearly impossible for plaintiffs to assert
in this instance that a reasonable automated vehicle manu-
facturer ought to have known about, or foreseen, the specific
latent risk that was being gradually learned by the algorithm.
As the machine’s decision-making logic is partly shaped by
its own experience and interaction with the driving environ-
ment,189 the behaviour of the algorithm is fundamentally dy-
namic and not precisely foreseeable.190 Furthermore, it would
be difficult to argue that the manufacturers should have been
able to analyse the algorithm to forecast its behaviour, as by
their nature, machine learning algorithms lack an explicit rep-
resentation as to why they make a decision and are thus diffi-
cult to analyse.191 A negligence claim would therefore be un-
likely to be founded on the basis of an argument that the man-
ufacturer ought to have pre-emptively tweaked the algorithm
to address the risk. Indeed, in the scenario above, Google had
accounted for the road risk posed by the pothole by way of the
‘anomaly algorithm,’ but the adaptive nature of the machine
rendered this precaution ineffective in the circumstances.
187
See, National Transport Commission, ‘Safety Assurance for Au-
tomated Driving Systems: Consultation Regulation Impact State-
ment’ (Regulation Impact Statement, National Transport Commis-
sion, May 2018).
188
Higgins, above n 53.
189
Dahiyat, above n 47, 106; Matthias, above n 42, 177.
190
Dahiyat, above n 47, 114.
191
See, above n 145-157.
1327
It is also difficult to envisage what reasonable amount of
testing could be expected to reveal such dynamic design risks.
It would currently be impossible to undertake a test that could
pinpoint the nature and timing of these evolving safety de-
fects in all situations, as the algorithm logic is constantly
changing on the basis of information that itself acquires and
analyses.192 Such testing would have to be undertaken contin-
uously, even after the automated vehicle has left the control
of the manufacturer, and the courts might be reticent to en-
force such a high standard that may, once again, threaten the
development of the technology.
These difficulties of proof are also likely to face plaintiffs
who seek to claim under Part 3–5 of the ACL. The develop-
ment risks defence would likely be invoked, as manufactur-
ers could well argue that the state of scientific or technical
knowledge is not such as to enable that latent defect could be
practically discovered, or that it would be impracticable to un-
dertake testing that could identify errors in the ever-evolving
decision-making logic of the AI system. The criticisms raised
above as to whether the defective goods action merely im-
poses a negligence standard in complex design defect cases
would again be relevant, and would merely hold AV manufac-
turers to a standard of reasonable testing.
Thus, the courts are likely to be hesitant to impose a stan-
dard of care on manufacturers that would require them to ex-
pose many of these possible ‘learned’ algorithm risks. To be
clear, manufacturers would still be required to undertake a
reasonable amount of testing. But assuming this reasonable
amount of testing would not be able to practically uncover all
risks that arise from the machine’s adaptive nature, there will
likely be a class of plaintiffs who will have no recourse under
a claim of negligence or under Part 3–5 of the ACL following
AV accidents.
6. Conclusions and ways forward
In summary, I have argued that the critical factor for deter-
mining who is held liable for an automated vehicle accident
will be the degree of control that the relevant party has over
the events leading up to the accident. Thus, for highly (level
4) and fully (level 5) automated vehicles, the focus of this ar-
ticle, plaintiffs will generally be required to pursue AV manu-
facturers for compensation, and using the actions available in
Australia’s product liability regime.
In relation to the ongoing debate as to the adequacy of Aus-
tralia’s product liability laws to resolve AV accidents, I have
highlighted two difficulties that plaintiffs are likely to face in
a negligence action, or an ACL defective goods action. Firstly,
it may be challenging to identify the source of the defect and
the probable cause of the accident, particularly where an in-
quiry into an allegedly incorrect decision of the driving sys-
tem is required. As shown in Part V above, the reasoning of
machine learning based techniques currently take place in
somewhat of a ‘black box,’ and it may be unclear who plain-
tiffs should pursue in a negligence claim if a number of parties
have contributed to designing and maintaining the ADS. How-
ever, there is technical and legal work being done in this space
192
Vladeck, above n 17, 121; Dahiyat, above n 47, 110.
1328 computer law & security review 34 (2018) 1314–1332
to ensure that AI systems are explainable, and the ACL defec-
tive goods action may alleviate problems of proving causation
to some extent.
Secondly, plaintiffs will likely face challenges in proving
fault on part of the AV manufacturer in a negligence claim,
or that the automated vehicle was defective in a Part 3–5 ACL
claim. In relation to negligence actions, the problem is essen-
tially an evidentiary one. Plaintiffs will be required to prove
that the automated vehicle manufacturer failed to undertake
reasonable testing of their AV algorithms. However, given that
it is impracticable for AV manufacturers to completely test for,
and eliminate all potential ADS errors, and that on a macro-
scale AV technology is predicted to provide great social utility,
the courts may be reticent to impose too burdensome a stan-
dard of care (especially during the early development of the
technology). One can thus foresee similar evidentiary prob-
lems arising for plaintiffs seeking compensation for AV ac-
cidents to what has been observed in relation to liability for
alleged pharmaceutical design defects.193
These evidentiary challenges are likely to be even more
pronounced in relation to AV accidents that have resulted
from the learned decision-making logic of the driving sys-
tem. At present, no reasonable amount of testing could reveal
all dynamic risks of this sort, and as manufacturers will be
merely held to a reasonable standard of testing, there may be
a number of plaintiffs who go uncompensated for their losses.
It is important to keep in mind however that compensation is
but one objective of the tort of negligence, and furthermore,
the formulation of the negligence calculus is chiefly directed
at sanctioning careless, or negligent, conduct.194
Plaintiffs are likely to face similar evidentiary challenges
under a defective goods action in Part 3–5 of the ACL. As has
been noted, there is concern that the consumer expectations
test, when applied to complex design defect cases, can begin
to resemble a reasonableness test and may impose a stan-
dard of care that is broadly similar to the tort of negligence.
The shortcomings of the consumer expectations test in this
respect has been well documented in US decisions195 and by
US scholars.196 Furthermore, the wide application of the de-
velopment risks defence by Australian courts will again likely
hold AV manufacturers to a standard of reasonable testing in
the nascent stages of the technology.197 Thus, under the de-
193
See, Claudia Newman-Martin, ‘Manufacturers’ Liability for
Undiscoverable Design Flaws in Prescription Drugs: A Merck-Y
Area of the Law’ (2011) 19 Torts Law Journal 26, 31–32 (‘(i) Negli-
gence’).
194
See, Rosalie Balkin and Jim Davis, Law of Torts (LexisNexis But-
terworths, 3rd ed, 2004) 200.
195
See, e.g. Soule v. General Motors Corp., 882 P.2d 298 (Cal. 1994), 309-
310; Montag v Honda Motor Co, 75 F.3d 1414 (10th Cir. 1996); Pruitt v
General Motors Corp., 86 Cal. Rptr. 2d 4 (Ct. App. 1999), 6; Potter v
Chicago Pneumatic Tool Co. 694 A.2d 1319 (Conn. 1997), 1333.
196
See, e.g., Marchant and Lindor, above n 17, 1324; Kiely and Ot-
tley, above n 107, 139; David Owen, ‘Design Defects’ (2008) 73 Mis-
souri Law Review 291, 292. Note also that the Restatement (Third) of
Torts ultimately dispensed with the consumer expectations test as
the prevailing test for design defects on the basis that “consumer
expectations do not constitute an independent standard for judg-
ing the defectiveness of product designs,” see, Restatement (Third)
of Torts: Products Liability §2 cmt. g (1998).
197
See, above n 176–180.
fective goods action, plaintiffs who have suffered loss follow-
ing an AV accident may face similar challenges to establishing
liability to those described in relation to negligence, above.
This represents an inherent problem in the law if Part 3–
5 of the ACL is indeed to act as a ‘strict’ liability action with
the objective of ensuring that manufacturers bear the costs of
defective products.198 Furthermore, recovery might come at a
significant cost to plaintiffs due to the complexity of the litiga-
tion required. The cost-benefit deliberations required to deter-
mine the reasonableness of an AV manufacturer’s design, or
testing process, could require the enlistment of a several ex-
pert witnesses such as software engineers and economists,199
the cost of which could be excessive for those pursuing com-
pensation for fairly minor damage to their car.
Whilst perhaps the policy argument for a strict defective
goods action applicable across all of society is not settled,200
there may be a policy argument for a more specialised scheme
applicable to AV accidents on the basis of the considerations of
this article. Specifically, both Australia, and other jurisdictions
whose product liability regimes rest heavily on the notion of
reasonable manufacturer conduct (such as the United States),
should consider the merits of a strict AV liability scheme, or
a specialised compensation scheme funded by state govern-
ments and/or the entities responsible for maintaining the ADS
(‘ADSE’). Such a scheme might not necessarily be limited to
covering losses arising from AV accidents, but might also cover
liability for AI decision-making more broadly. Decisions made
on the basis of machine learning reasoning will become ubiq-
uitous over the coming decades. Not only will algorithms be
piloting our cars, but they are likely to be making consequen-
tial decisions such as cancer diagnoses, what insurance pre-
mium a person should pay, or whether a person is granted
bail.201 And whilst the technology will likely be transforma-
tive and has the capacity to bring immense good to society, it
will not be infallible.
A specialised strict liability or compensation scheme to
which ADSEs contribute could well be justified on the basis
that the manufacturers are in a better position to internalise
losses caused by automated vehicle accidents, as they would
be able to reflect the costs of insuring the vehicles through
pricing.202 It could ensure that victims are compensated ef-
198
In other words, a loss-spreading objective. See, Kellam and Not-
tage, above n 99, 27-28; citing, Australian Law Reform Commission,
‘Product Liability’ (Report No. 51, Australian Law Reform Commis-
sion, 1989), para 7.06.
199
Vladeck, above n 17, 138.
200
See, Barker et al, above n 87, 657–658.
201
See, eg, Agence France Presse, ‘Computer learns to detect
skin cancer more accurately than doctors,’ The Guardian (online),
29 May 2018 <https://www.theguardian.com/society/2018/may/
29/skin- cancer- computer- learns- to- detect- skin- cancer- more-
accurately- than- a- doctor>; Alston Ghafourifa, ‘AI and insur-
ance: Exchanging privacy for a cheaper rate,’ Venture Beat
(online), 26 March 2017 <https://venturebeat.com/2017/03/26/
ai- and- insurance- exchanging- privacy- for- a- cheaper- rate/>;
Sam Corbett-Davies, Sharad Goel and Sandra González-
Bailón, ‘Even Imperfect Algorithms Can Improve the Crim-
inal Justice System,’ New York Times (online), 20 Decem-
ber 2017 <https://www.nytimes.com/2017/12/20/upshot/
algorithms- bail- criminal- justice- system.html>.
202
See, eg, Davies, above n 92, 572; Vladeck, above n 17, 146–147.
 computer law & security review 34 (2018) 1314–1332
ficiently, that the costs of erroneous AI decision-making are
spread equitably, and that AV manufacturers or other compa-
nies employing AI-based decision making for matters conse-
quential to an individual’s wellbeing are held to account and
are incentivised to ensure the quality, safety and fairness of
their systems.
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