Product Liability
in 29 jurisdictions worldwide
Contributing editors: Harvey L Kaplan,
Gregory L Fowler and Simon Castley
2014
Published by
Getting the Deal Through
in association with:
Ajumogobia & Okeke
Anderson Moˉri & Tomotsune
Araquereyna
Boyanov & Co
Bühlmann Attorneys at Law Ltd
Bulló – Tassi – Estebenet – Lipera – Torassa – Abogados
Carroll Burdick McDonough LLP
Cassels Brock & Blackwell LLP
Clayton Utz
Cliffe Dekker Hofmeyr
DWF Fishburns
EBA Endrös-Baum Associés
Formosa Transnational Attorneys at Law
Gianni, Origoni, Grippo, Cappelli & Partners
Gorrissen Federspiel
Headrick Rizik Alvarez & Fernández
ILA Pasrich & Company
Jones Day
Jun He Law Offices
Londoño & Arango Abogados
Mayora & Mayora, SC
Nobles, LLC
Rojs, Peljhan, Prelesnik & Partners
Shin & Kim
Shook, Hardy & Bacon LLP
Souto, Correa, Cesa, Lummertz & Amaral Advogados
Van Diepen Van der Kroef Advocaten
Yigal Arnon & Co
CONTENTS
Global Overview
Product Liability 2014
Contributing editors:
Harvey L Kaplan, Gregory L Fowler
and Simon Castley
Shook, Hardy & Bacon LLP
Getting the Deal Through is delighted to
publish the seventh edition of Product
Liability, a volume in our series of annual
reports, which provide international analysis
in key areas of law and policy for corporate
counsel, cross-border legal practitioners and
business people.
Following the format adopted throughout
the series, the same key questions are
answered by leading practitioners in each
of the 29 jurisdictions featured. New
jurisdictions this year include Argentina, the
Dominican Republic and the Netherlands.
Every effort has been made to ensure
that matters of concern to readers are
covered. However, specific legal advice
should always be sought from experienced
local advisers. Getting the Deal Through
publications are updated annually in print.
Please ensure you are referring to the latest
print edition or to the online version at www.
gettingthedealthrough.com.
Getting the Deal Through gratefully
acknowledges the efforts of all the
contributors to this volume, who were
chosen for their recognised expertise. We
would also like to extend special thanks
to contributing editors, Harvey L Kaplan,
Gregory L Fowler and Simon Castley
of Shook, Hardy & Bacon LLP for their
continued assistance with this volume.
3
Dominican Republic
Harvey L Kaplan
Shook, Hardy & Bacon LLP
Roberto Rizik and Jaime M Senior
Headrick Rizik Alvarez & Fernández
Argentina5
England & Wales
Mariano E de Estrada and Daniel B Guffanti
Bulló – Tassi – Estebenet – Lipera –
Torassa – Abogados
Simon Castley and Jon Hudson
Shook, Hardy & Bacon International LLP
52
58
France64
Australia10
Colin Loveday and Greg Williams
Clayton Utz
Florian Endrös
EBA Endrös-Baum Associés
Germany72
Brazil17
Jorge Cesa, Roberta Feiten and
Fernanda Girardi
Souto, Correa, Cesa, Lummertz & Amaral
Advogados
Bulgaria23
Kina Chuturkova and Stela Sabeva
Boyanov & Co
Canada29
Glenn Zakaib, Emily Larose and
Peter Henein
Cassels Brock & Blackwell LLP
China36
Weining Zou
Jun He Law Offices
Colombia41
Maximiliano Londoño, Daniel Arango,
Natalia Tobón and Mauricio Moreno
Londoño & Arango Abogados
Denmark46
Søren Stæhr and Christian Holm Madsen
Gorrissen Federspiel
Simon Wagner
Carroll Burdick McDonough LLP
Guatemala79
Conchita Villeda and Laura Sánchez
Mayora & Mayora, SC
India85
Amir Singh Pasrich, Vinita Chhatwal and
Vaijayant Paliwal
ILA Pasrich & Company
Ireland95
Aoife Gaughan
DWF Fishburns
Israel103
Barak Tal and Ruth Loven
Yigal Arnon & Co
Italy109
Michela Turra and Alessandra Chimienti
Gianni, Origoni, Grippo, Cappelli & Partners
Japan116
Tetsuro Motoyoshi and Ryohei Ikeda
Anderson Mo
ˉri & Tomotsune
Getting the Deal Through
London
June 2014
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Published by
Law Business Research Ltd
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Tel: +44 20 7908 1188
Fax: +44 20 7229 6910
© Law Business Research Ltd 2014
No photocopying: copyright licences do not apply.
First published 2008
Seventh edition
ISSN 1757-0786
The information provided in this publication is
general and may not apply in a specific situation.
Legal advice should always be sought before
taking any legal action based on the information
provided. This information is not intended to
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1
CONTENTS
Korea123
Slovenia149
Ukraine171
Ghyo-Sun Park, Gea Sung Yang and
Bo Kyung Lim
Shin & Kim
David Premelč and Jakob Ivančič
Rojs, Peljhan, Prelesnik & Partners
Volodymyr Yakubovskyy and
Alexander Weigelt
Nobles, LLC
South Africa
Netherlands130
Michael Gerrits and Anne van Hilten
Van Diepen Van der Kroef Advocaten
155
United States
Pieter Conradie
Cliffe Dekker Hofmeyr
177
Gregory L Fowler and Marc E Shelley
Shook, Hardy & Bacon LLP
Switzerland159
Nigeria138
Babatunde A Sodipo
Ajumogobia & Okeke
Venezuela185
Lukas Bühlmann and Adrian Süess
Bühlmann Attorneys at Law Ltd
Taiwan165
Russia145
Sergei Volfson
Jones Day
2
Pedro Ignacio Sosa Mendoza and
Rodrigo Moncho Stefani
Araquereyna
Jackson Shuai-Sheng Huang
Formosa Transnational Attorneys at Law
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Cassels Brock & Blackwell LLP
CANADA
Canada
Glenn Zakaib, Emily Larose and Peter Henein
Cassels Brock & Blackwell LLP
Civil litigation system
1 What is the structure of the civil court system?
Each Canadian province and territory has its own court system. Each
province’s and territory’s superior courts have inherent jurisdiction
to hear cases on any subject except those that are specifically limited
to another level of court by statute (eg, small claims courts, which
hear civil matters involving claims below a set monetary amount).
As a result, virtually all civil claims are heard by these provincial or
territorial superior courts.
In addition, Canada has a parallel federal court system. The
Federal Court of Canada has civil jurisdiction, limited to matters
identified in specific federal statutes. Except to the extent that the
federal government or a federal ministry or Crown agency (such as
Health Canada) is a party to the claim, product liability cases will be
heard by provincial or territorial courts.
2 What is the role of the judge in civil proceedings and what is the
role of the jury?
Canada has an adversarial justice system. Judges are impartial decision makers who interpret the law, assess the evidence presented and
control procedural matters in motions, hearing and trials.
Judges of provincial and territorial superior courts, the Federal
Court and the Supreme Court of Canada are appointed by the federal government. Once appointed, a judge is eligible to serve on the
bench until the age of retirement and can be removed only if an
independent investigation shows good reason.
There is no constitutional right in Canada to trial by jury in
civil matters. Except in the province of Quebec, parties may request
juries, but the courts have broad discretion to deny jury trials and
may do so, particularly if cases involve complex legal or factual
issues.
One of the implications of the rarity of civil jury trials is that
trial decisions are communicated in, often lengthy, written reasons
for decisions from trial judges. These can be helpful in developing
jurisprudence, but they can also pose potential risk to companies
defending multiple actions in multiple jurisdictions. For example,
reasons for decisions generally include the trial judge’s summary and
assessment of the evidence and issues (including expert reports, corporate witness credibility and scientific or causation findings), which
could have significant implications on related proceedings in other
jurisdictions.
3 What are the basic pleadings filed with the court to institute,
prosecute and defend the product liability action and what is the
sequence and timing for filing them?
• claim – the plaintiff serves and files the originating pleading,
often called a statement of claim. This document is first filed
and then served on every named defendant. The claim document
must generally contain a recitation of the causes of action, the
damages sought, the material facts and identification of the statutes to be relied upon. Claims must be filed with the court within
the applicable limitation period;
• defence – once properly served, defendants respond to statements
of claim (or their equivalents) by way of a responsive pleading
called, at least in a number of provinces, a statement of defence.
In their defensive pleadings, defendants specifically admit, deny
or state an absence of knowledge with respect to each allegation
made in the plaintiff’s pleading. Where a defendant intends to
prove a version of the facts different from that pleaded by the
plaintiff, the defendant must generally articulate its own version
of the facts in the defence. The defendant must also plead any
affirmative defences upon which it intends to rely. The timing for
the service of defences varies from jurisdiction to jurisdiction.
In Ontario, for example, a statement of defence must be served
within 20 days of receipt of a statement of claim served within
the province (or 30 days if a notice of intent to defend is served
within the initial 20 days). Statements of claim served elsewhere
in Canada or in the United States must be defended within 40
days. Statements of claim served in the rest of the world must be
defended within 60 days. These timelines are routinely extended
by agreement of the parties;
• reply – plaintiffs may file a reply. In Ontario, these must be
served within 10 days; and
• other pleadings – defendants may also file counterclaims, crossclaims against co-defendants and third party claims against new
parties.
In Quebec, lawsuits are instituted through the filing of an application called a motion to institute proceedings. Defendants must then
file an appearance and the parties must reach an agreement as to the
conduct of the proceedings (which establishes the schedule).
4 Are there any pre-filing requirements that must be satisfied before
a formal law suit may be commenced by the product liability
claimant?
There are no pre-filing requirements to be satisfied before filing a
claim against a private entity or individual on behalf of a product
liability claimant. Proceedings against the Crown (ie, a provincial or
territorial government, or the federal government or a ministry of
such a government) generally must be preceded by a notice in the
required form.
Pleading requirements in each Canadian province and territory,
and in the Federal Court are governed by the applicable Rules of
Civil Procedure in that jurisdiction. Generally speaking, these Rules
require the following in respect of an action:
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5 Are mechanisms available to the parties to seek resolution of a
case before a full hearing on the merits?
Most jurisdictions in Canada employ a number of different methods
by which to seek early resolution of a case before a full hearing on
the merits, as follows:
• mediation – in many jurisdictions, parties are mandated to
attend mediation after the close of pleadings, but before pretrial;
• motions for summary judgment – motions for summary judgment may be brought by defendants who wish to have all or
parts of the claim against them dismissed on the basis that there
is no genuine issue requiring trial. The procedure and test for
summary judgment differs from jurisdiction to jurisdiction.
Typically, such motions are brought on the basis of affidavit evidence, including, in some cases, affidavits from experts. Pursuant
to recent amendments to the Rules of Practice in Ontario,
the court may require that viva voce evidence be presented.
Plaintifs may bring equivalent motions on the basis that no trial
is required because their case (in whole or in part) is proven.
Quebec courts do not hear motions for summary judgment; and
• motions to strike – motions to strike may be brought by defendants who wish to have all or parts of a claim against them struck
on the basis that the pleading does not contain an actionable
cause of action against it (even if all of the facts, as plead, were
true). Plaintiffs may bring equivalent motions to strike defences.
6 What is the basic trial structure?
Canadian trials are adversarial in nature. Parties are typically represented by counsel, who act as their advocates in the trial. Trials generally commence with the making of opening statements by counsel
for each of the parties (starting with counsel for the plaintiff) outlining the evidence they expect to present and the legal issues to be
raised. Evidence is then put before the judge, as described in question
10, and finally, closing statements are made.
Trials generally run on consecutive days, but it is not unusual
in the case of very lengthy trials for there to be breaks lasting days,
weeks or even months during the trial.
Unless a specific sealing order is issued, trial proceedings are
open to the public.
In the case of trials by judge alone, the role of the judge is to
determine issues of admissibility of evidence, to weigh the facts and
evidence and make a ruling on the questions in issue. In the case of
trials by jury, the judge will provide direction to the jury with respect
to the questions they will be required to answer, instruct the jury on
the law to be applied and deliver a charge to the jury to provide them
with directions on their deliberations.
7 Are there class, group or other collective action mechanisms
available to product liability claimants? Can such actions be
brought by representative bodies?
Class actions are actively promoted in Canada by both the judiciary
and the various levels of government.
Provincial courts have jurisdiction to hear class proceedings concerning most civil actions. The constitutional capacity of provincial
courts to assert jurisdiction over extra-provincial class members and
defendants, however, remains an open question.
All Canadian jurisdictions can support class actions as a result
of the Supreme Court of Canada’s decision in Western Canadian
Shopping Centres v Dutton, [2001] 2 SCR 534 (Dutton). This case
effectively authorised class proceedings in all Canadian jurisdictions
and provided them with a procedural blueprint. Most provinces have
provincial class proceedings statutes (or, in the case of Quebec, collective recourse provisions in its Civil Code). Prince Edward Island,
and the three Canadian territories, however, still rely on Dutton for
the structure of their class actions regime. The federal court system
has class action procedures enshrined in its Rules of Court.
30
Provincial and federal regimes are largely uniform, with only
a few significant differences, primarily concerning class definition
(‘opt-in’ or ‘opt-out’?), costs awards (can representative plaintiffs
have costs awarded against them?) and remuneration for class counsel (contingency fees or fee multipliers?). Fundamentally, a statutory
class action is an individual action to which members of a plaintiff class are added at the moment the action is certified as a class
proceeding.
Generally speaking, class action statutes in the common law
provinces and the federal courts have five requirements in order for
an individual action to be certified as a class action:
• the pleadings must disclose a reasonable cause of action;
• there must be a class capable of clear definition;
• there must be issues of law or fact common to all class members;
• a class action must be the preferable procedure to advance the
litigation of the class members; and
• the representative plaintiff must adequately represent the interests of the class.
A plaintiff class in Canada need only be capable of clear definition
and have two or more members. There is no ‘numerosity’ threshold
to meet in order to justify a class proceeding. Similarly, there is no
‘predominance’ threshold. Canadian courts are satisfied to certify a
class action simply to resolve a few issues relevant to advancing the
litigation of individual members of the class (known as a ‘common
issues’ trial).
Quebec is an outlier in terms of class proceedings procedure.
In Quebec, class actions are not individual actions, which become
class actions if certified, but are rather class actions from the very
inception of the action. They may be struck entirely if certification
is unsuccessful. The test for authorisation of class proceedings in
Quebec is similar to that in the common law jurisdictions, with some
significant differences. For example, the court need not consider
whether or not a class proceeding is preferable to another form of
proceeding. It is merely necessary for the moving party to show that
joinder and representative proceedings with the mandate of class
members are both impracticable.
Quebec permits the bringing of a class proceeding by a representative body rather than a class representative who must have a
valid cause of action against the defendant or defendants. In other
provinces, not including Ontario, the court may appoint a person
who is not a member of the class (such as a representative body) if
it is necessary to do so to avoid a substantial injustice to the class.
For class proceedings the main stages of the litigation (aside
from any appeals) will generally consist of the following procedures
in the common law provinces:
• commencement of the litigation through the issuance of a statement of claim;
• pre-certification motions with leave of the court, which may
include motions to strike pleadings or challenging of jurisdiction;
• exchange of certification motion materials and argument of the
certification motion;
• giving of notice of certification and running of the opt-out
period;
• documentary and oral discovery;
• trial of the common issues; and
• trial of any individual issues on individual causation and
damages.
In Quebec, the litigation follows a slightly different path:
• filing of a motion for authorisation;
• initial case management hearing and request for leave to bring
motions such as leave to examine the representative plaintiff and
for leave to adduce evidence;
• argument of the motion to authorise the bringing of a class
action;
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• giving of notice of authorisation and running of the opt-out
period;
• delivery of a formal authorised class claim and service of a
response;
• documentary and oral discovery;
• trial of the common issues; and
• trial of any individual issues on individual causation and
damages.
to compel the other party to respond. Parties can suffer sanctions if
they refuse to answer proper questions. For example, in Ontario a
party’s pleading can be struck entirely.
In most provinces, parties are permitted to seek an order from
the court to allow the examination of a non-party to the action who
would have relevant and necessary evidence.
8 How long does it typically take a product liability action to get to
the trial stage and what is the duration of a trial?
Evidence can be presented in the courtroom in two ways in Canada,
either orally or by way of affidavit evidence. The manner by which
evidence is adduced will depend on the type of proceedings. For trials, evidence is presented by way of oral testimony. Some types of
proceedings, such as motions brought in the course of litigation, are
argued on affidavit evidence (known as a ‘paper record’).
At trial, all witnesses provide oral testimony before a judge (and,
if it is a jury trial, to the jury as well). Witnesses are examined in
chief and then cross-examined by the opposing party. Where appropriate, the party calling the witness can re-examine the witness to
address new issues raised in the cross-examination. In rare cases,
and subject to leave of the court, evidence of a dying witness may
be taken before trial and evidence of foreign witnesses may be taken
by letters of request. The circumstances under which such leave will
be granted are limited and may include issues relating to convenience of the parties, unavailability of the witness for the trial or the
expense of or inability to bring a particular witness to trial. Evidence
may also be delivered at trial by reading in testimony from the oral
examinations taken before trial during the discovery phase.
For proceedings heard on ‘paper records’, cross-examinations take place outside of court. The transcripts of such crossexaminations are usually filed as part of the record before the
decision-maker.
The amount of time it takes for a product liability action to get to
trial varies widely from jurisdiction to jurisdiction and depends on
several factors including the nature of the case, whether the case
proceeds with a jury or with a judge alone, the number of parties,
the kind of allegations made, the nature of the product, the extent
of expert evidence and the urgency with which the plaintiff pursues
the case.
Typically, cases take two to three years to get to trial, although
they can take much longer. Trials usually last two weeks, although
the duration may increase depending on any or all of the factors
listed above. Further, if a product liability action is brought as a class
proceeding, then timing will likely be much longer to reach a common issues trial as discussed in question 7. Once an action proceeds
through a common issues trial, individual trials may be required.
Evidentiary issues and damages
9 What is the nature and extent of pretrial preservation and
disclosure of documents and other evidence? Are there any
avenues for pre-rial discovery?
Discovery in Canada consists of both documentary discovery and
oral depositions. There is an obligation to preserve and produce
records relevant to the issues in the litigation and e-discovery is also
applicable. There is equally an obligation to preserve the product in
issue in its unaltered post-incident state.
Generally, litigants must produce records following the exchange
of pleadings in the action. Discovery obligations in Canada are broad
and parties are therefore required to produce all relevant documents,
subject to the limitations set out below. In most Canadian provinces,
parties are obliged to deliver an affidavit of documents, namely, a
sworn affidavit listing all relevant documents in the party’s possession, control or power. The documents are listed in three categories
– those which are producible, those which are protected by any form
of privilege (and therefore not producible) and those which would
be producible but which are no longer within the party’s possession,
control or power. Parties can try to agree on the scope of production in order to narrow the issues in the litigation and ensure that
production obligations are proportional to the claim.
The obligation to produce relevant documents is continuous
and, therefore, includes any relevant documents that are obtained
after parties have already produced their respective affidavits of
documents.
Following the exchange of documentary productions, parties
must make themselves available for oral examinations by the opposing party. The examinations are conducted under oath. In general,
only one representative of each named party is examined. That representative must inform himself or herself of the issues in the litigation. If the representative is unable to respond to specific questions
being posed, he or she may provide an undertaking to make inquiries and provide answers, usually in writing, subsequent to the oral
examination. Questions can also be refused or taken under advisement, which is treated as a refusal unless it is subsequently answered.
If a party refuses to answer a proper question, or fails to fulfil an
undertaking given at discovery, the other party can make a motion
10 How is evidence presented in the courtroom and how is the
evidence cross-examined by the opposing party?
11 May the court appoint experts? May the parties influence the
appointment and may they present the evidence of experts they
selected?
Regardless of the type of proceeding, expert witnesses generally prepare written reports setting out their opinion. In the case of trials,
this report is served prior to the commencement of the trial. In the
case of ‘paper record’ proceedings, this report is usually appended to
an affidavit from the expert and filed as part of the proceeding (and
the expert is cross-examined out of court in the same manner as a
lay witness).
At trial, experts will usually be called to give oral testimony on
the evidence and issues addressed in the expert report. The expert
must be qualified to give the opinions expressed in the expert report
and, unless the parties agree to the qualifications of the expert, must
first be examined and cross-examined on his or her qualifications.
A ruling will then be made by the court with respect to the expert’s
qualifications in a particular subject area. The expert will be subject to cross-examination by opposing counsel. In limited cases, and
with leave of the trial judge, expert evidence may be presented by
affidavit.
When expert evidence is filed as part of a ‘paper record’, the
issue of qualification of the expert is not formally dealt with by way
of a preliminary ruling by the court. Rather, the evidence is filed
as part of the record, and any determinations with respect to the
qualifications of the expert are dealt with by the court in its decision.
Although courts may appoint their own experts to provide
advice to the judge as trier of fact, this rarely happens. The parties
may also agree to appoint a mutually selected expert to assist the
court in understanding the issues in the litigation by investigating
and reporting on any question of fact or opinion relevant to an issue
in the action.
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12 What types of compensatory damages are available to product
liability claimants and what limitations (if any) apply?
The intention of the tort damages regime in Canada is to place
claimants in the position they would have been in but for the injury
sustained as a result of the product.
Product liability claimants who have suffered an injury may
seek to assert claims for damages for pain and suffering (ie, general
damages). Claimants may also seek damages for specific pecuniary
losses sustained (ie, special damages) as well as losses expected to
be sustained in the future. Claimants also typically assert claims for
financial losses including loss of income, both past and future, loss of
opportunity, loss of profits, cost of medications, medical treatment,
care expenses and property damage.
The claims for non-pecuniary damages in cases of personal
injury will include an amount to compensate for the pain and
suffering sustained by the plaintiff, loss of amenities of life and
loss of expectation of life. General damages claims are capped at
C$100,000 (adjusted for inflation). With inflation, the present value
of a catastrophic claim is in the order of C$350,000.
Most jurisdictions provide a statutory cause of action for family
members of injured or deceased plaintiffs.
13 Are punitive, exemplary, moral or other non-compensatory
damages available to product liability claimants?
Punitive damages are available where the court finds the defendant’s
conduct to be sufficiently reprehensible. Such awards in Canada tend
to be modest: in the tens of thousands, rather than in the millions.
Litigation funding, fees and costs
in the event of success and these regulations will vary between jurisdictions. Some jurisdictions require the approval of a contingency
fee by the court. In class action claims, all fee arrangements must be
approved by the court at the time of approval of a settlement.
17 Can the successful party recover its legal fees and expenses from
the unsuccessful party?
Canada’s court system is a ‘loser pays’ system except with respect to
class proceedings. While there is entitlement to recovery of legal fees
and expenses, commonly referred to as ‘costs’, the level of recovery
will vary and will not equate to a full recovery.
In most cases, the award of costs is on a partial indemnity basis,
which equates to about a 50 per cent recovery of legal costs. In some
cases, courts may be inclined to grant a higher scale of recovery,
which in Ontario is referred to as substantial indemnity costs. This
may equate to up to 75 per cent to 80 per cent of legal costs. Costs
remain discretionary on the part of the court. Settlement offers made
before trial by either party may have an impact upon the scale of
costs awarded.
In Quebec, the scale of costs awarded relates to court costs,
which include expert fees, but not legal fees. Quebec’s general recovery of costs is significantly lower than in the common law provinces.
In class actions, dependent upon the applicable provincial legislation, costs may or may not be recoverable on a certification
motion. Ontario, Alberta, Quebec, New Brunswick, Nova Scotia
and the provinces without class action legislation permit the court,
at its discretion, to award the costs of a certification motion. The
remaining provinces are considered no-costs regimes in that it is only
in rare circumstances that any costs may be awarded by the court.
14 Is public funding such as legal aid available? If so, may potential
defendants make submissions or otherwise contest the grant of
such aid?
Sources of law
While legal aid is available in most provinces and territories in
Canada, it is not readily available for the purposes of pursuing
a product liability claim. Legal aid is predominantly reserved for
the defence of criminal charges. The only publicly available funding for civil litigation is in Ontario and Quebec in respect of class
proceedings.
There is not a specific Canadian statute that governs product liability litigation. At the provincial and territorial level, there are statues
that do address liability from the perspective of sale of goods and
consumer protection. Generally, these require privity of contract.
Additionally, because it is a civil law jurisdiction, product liability
claims in Quebec are governed by its Civil Code.
At the federal level, there is legislation that governs a number of
product categories including consumer products, hazardous products, motor vehicles and health products (including drugs, medical
devices and natural health products). While none of these statutes
explicitly create an independent cause of action, they do, among
other things, set product standards to address issues of safety, which
can be a foundation for a product liability claim in negligence.
15 Is third-party litigation funding permissible?
Litigation funding by third parties is generally permitted subject to
considerations of champerty and maintenance. There are third-party
companies that fund litigation disbursements for law firms generally
and there are also well-recognised third-party funding arrangements
in class proceedings.
At present, approval of funding arrangements has been recognised in a number of class action cases. There have been some
written judgments in which the courts have specifically held that a
litigation funding agreement does not violate the rule against champerty and maintenance and, in fact, provides access to justice for
plaintiffs who may not otherwise have the resources to pursue litigation. In general, the principles applied by courts in assessing the
propriety of a litigation funding agreement include:
• non-interference by the litigation funder in the litigation so as to
interfere with the plaintiff’s right to control the litigation or the
duty of the lawyer to the client;
• undertaking and duty of confidentiality by the litigation funder;
• a determination that funding of the litigation is necessary to provide access to justice; and
• fair and reasonable financial terms.
16 Are contingency or conditional fee arrangements permissible?
Contingency fee arrangements are permissible in Canada. There are
regulations relating to contingency fees with respect to payment only
32
18 Is there a statute that governs product liability litigation?
19 What other theories of liability are available to product liability
claimants?
Product liability claims are traditionally founded in the tort of negligence or in contract or both.
Typical theories of product liability include negligent design,
negligent manufacture and failure to warn (see question 23). Product
liability claims may also include allegations relating to misleading
advertising, as regulated by Canada’s federal Competition Act.
20 Is there a consumer protection statute that provides remedies,
imposes duties or otherwise affects product liability litigants?
At the provincial and territorial level there are sale of goods and consumer protection statutes. These statutes typically impose implied
warranties that:
• the goods will be reasonably fit for the general purposes such
goods serve; and
• the goods are of merchantable quality.
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CANADA
These implied warranties are subject to certain exceptions, depending on the nature of the seller, the nature of the buyer and the extent
to which the buyer examined the goods and ought to have identified
a defect, etc.
There are also a number of federal product safety regimes applicable to different product categories including consumer products
(Canada Consumer Product Safety Act), food, health products and
cosmetics (Food and Drugs Act), motor vehicles (Motor Vehicle
Safety Act), hazardous products (Hazardous Products Act) and pest
control products (Pest Control Product Act). Under each of these
regimes there are standards for product safety and duties imposed on
sellers, importers, etc (including, in some cases, pre-market authorisation requirements or mandatory incident reporting requirements,
or both). These regimes also grant significant enforcement powers to
federal government agencies.
To the extent a manufacturer fails to comply with a product
safety standard in the applicable product safety regulatory regime
or is the subject of enforcement activity of the applicable regulator,
there are potential product liability (and class action) implications.
21 Can criminal sanctions be imposed for the sale or distribution of
defective products?
Canada’s Criminal Code does not contain a crime specific to product safety. However, companies as well as their officers, directors
and even certain employees can be convicted of criminal negligence
where they are proven to have done something (or have failed to do
something it was their legally imposed duty to do) in a manner that
shows wanton or reckless disregard for the lives or safety of others.
A number of other statutory regimes provide for the prosecution of corporations and their officers, directors, etc, in the event
that they fail to meet applicable statutory requirements, including
the Canada Consumer Products Safety Act, the Food and Drugs Act,
the Motor Vehicle Safety Act and the Competition Act.
22 Are any novel theories available or emerging for product liability
claimants?
Since 2004, claims of ‘waiver of tort’ have been standard in Canadian
product liability class actions. Waiver of tort is a remedy that permits
restitution to plaintiffs on the basis of the defendant’s wrongful conduct. Harm need not be established for it to succeed.
The uncertainty around waiver of tort has led judges to certify
cases as class actions on the basis that there may be an action in
waiver of tort, even if the remainder of the plaintiff’s pleadings are
insufficient to warrant certification. Waiver of tort is a common law
doctrine, and has not been applied in Quebec.
23 What breaches of duties or other theories can be used to
establish product defect?
In Canada’s common law jurisdictions, product liability negligence claims typically fall into one or more of the following three
categories:
• design defect – the product, as designed, poses an unreasonable
risk of harm to foreseeable users that could have been averted or
mitigated through the use of a reasonable alternative design;
• manufacturing defect – the product was not manufactured in
accordance with the applicable design or specifications; and
• warning defect – the manufacturer failed to warn product users
(sufficiently or at all) of dangers it knew or ought to have known
were associated with the foreseeable use of the product.
In Quebec, the Civil Code specifically provides for a warranty at the
time of sale against latent defects that render the product unfit for
the use intended or so diminishes its usefulness that the purchasers
would not have bought or paid as high a price if they had been made
aware of the defect. There is also provision for a warranty of safety
in respect of products that do not afford a reasonably expected
standard of safety.
24 By what standards may a product be deemed defective and who
bears the burden of proof? May that burden be shifted to the
opposing party? What is the standard of proof?
In a product liability claim alleging a product defect, the plaintiff
must prove that on a balance of probabilities the risk outweighs the
benefits of the product and the product poses an unreasonable risk
of harm to foreseeable users.
If the plaintiff cannot establish that the product in question is
defective (usually through expert evidence), his or her claim should
fail.
There is no strict liability in Canada’s product liability law; if
a plaintiff does establish that a product is defective, he or she must
still establish that the defendant was negligent and that this negligence caused that defect. This is not typically a significant hurdle
for a plaintiff. Accordingly, once a defect has been established, the
evidentiary burden of proving that the defect is not the result of
manufacturer negligence is essentially passed to the manufacturer.
25 Who may be found liable for injuries and damages caused by
defective products?
All parties in the supply chain are exposed to liability for a defective
product including the manufacturers (of the product and its component parts), importers, distributors and retailers. Liability along the
chain of distribution may be passed back to the original manufacturer, unless there is a break in the chain of causation.
26 What is the standard by which causation between defect and
injury or damages must be established? Who bears the burden
and may it be shifted to the opposing party?
In Canada, the general, but not conclusive, test for causation is the
‘but for’ test. This test asks whether ‘but for’ the defendant’s negligence, would the plaintiff would have been harmed?
The Supreme Court of Canada has acknowledged that an
alternative test (the ‘material contribution’ test) may be applied in
appropriate circumstances (eg, in the event there are multiple potential tortfeasors). The ‘material contributions’ test asks whether the
defendant’s negligence materially contributed to the occurrence of
the injury. The ‘material contribution’ test will only be applied in
those cases where:
• it is impossible (due to factors beyond the plaintiff’s control)
for the plaintiff to prove that a specific defendant’s negligence
caused the plaintiffs injury using the ‘but for’ test; and
• the defendant breached a duty of care owed to the plaintiff,
thereby exposing the plaintiff to an unreasonable risk of injury,
which the plaintiff suffered.
27 What post-sale duties may be imposed on potentially responsible
parties and how might liability be imposed upon their breach?
A manufacturer has an continuous duty to warn consumers of dangers inherent in the use of its products of which it is, or ought to be,
aware.
Once a duty to warn is recognised, it is manifest that the warning must be adequate. In the case of Buchan v Ortho Pharmaceutical
(Canada) Ltd (1986) 25 DLR (4th) 658, the court stated:
It should be communicated clearly and understandably in a manner
calculated to inform the user of the nature of the risk and the extent
of the danger; it should be in terms commensurate with the gravity
of the potential hazard, and it should not be neutralized or negated
by collateral efforts on the part of the manufacturer. The nature and
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extent of any given warning will depend on what is reasonable having regard to all the facts and circumstances relevant to the product
in question.
Courts in Canada have held that the duty to warn is a continuous
one, which requires that the manufacturer warn, not only of dangers known at the time of sale, but also of dangers discovered after
the product has been sold and delivered. The duty is discharged by
the appropriate warning and cannot lead to the imposition of strict
liability.
In the case of manufacturers of what are considered to be more
dangerous products such as prescription drugs, the manufacturer is
deemed to be an expert in the field and subject to a continuing duty
to keep abreast of scientific developments pertaining to its product
through research, monitoring of adverse reaction reports, scientific
literature and other available methods.
In addition to the common law duties, there are, pursuant to the
regulatory regimes identified in question 20, obligations arising from
legislation, which may require that manufacturers and others in the
supply chain take steps with respect to products in the marketplace.
These can include providing warnings or supplemental information
to consumers, recalling products and stopping sales.
Limitations and defences
28 What are the applicable limitation periods?
Limitation periods for contract and negligence claims are set out
in the statutes of each province and territory. In general, limitation
periods range from between two and six years. In some provinces,
the triggering point for the commencement of the running of the
limitation period is when the claim was, or ought to have been, discovered. In others, it is from the date the cause of action arose. Some
provinces also provide for an ultimate limitation period. For example, in Ontario, the ultimate limitation period is 15 years.
Quebec’s limitation period is three years from the date of becoming aware of the alleged defect in the product.
29 Is it a defence to a product liability action that the product
defect was not discoverable within the limitations of science and
technology at the time of distribution? If so, who bears the burden
and what is the standard of proof?
At present, no such defence is recognised in Canada. However, a
manufacturer could raise this argument in the course of defending
a negligence claim. The test for negligence in Canada requires the
following:
• the plaintiff must show that the manufacturer owed a duty of
care to the plaintiff and that the manufacturer breached that
duty of care; and
• to show that the duty of care was breached, the plaintiff must
show that the manufacturer did not meet the standard of care of
the manufacturer of such a product.
In defending a claim of negligence, a manufacturer could argue that
it would not be within the reasonable standard of care for it to have
discovered the defect in issue given the limitations of science and
technology at the time of the distribution.
31 What other defences may be available to a product liability
defendant?
There are numerous defences available to a product liability defendant in Canada. These include:
• no causation – the defendant can argue that there was no causation connecting the product to the plaintiff’s injuries. This is
commonly known as the ‘but for’ test;
• contributory negligence – the defendant can argue that the plaintiff’s own acts or omissions contributed to his or her injuries.
The effect of arguing this defence is that the defendant’s liability is reduced by the percentage of the plaintiff’s contributory
negligence;
• misuse or alteration of a product – where a plaintiff misuses
or alters a product, the defendant can argue that it is not liable
for any corresponding failure in the product. This is in effect a
subset of contributory negligence;
• voluntary assumption of risk – a defendant can argue that, in
using the product, the plaintiff agreed to assume the risk of such
use;
• contractual limitations on the defendant’s liability – a defendant
can limit its liability by requiring that a party using its product sign a waiver or limitation of liability. Courts will enforce
the language where it explicitly sets out the risks the plaintiff is
assuming, including injury and, in some cases, even the risk of
death;
• the expiry of a limitation period – the defendant can argue that
the applicable limitation period has expired;
• the intervention of a learned intermediary, such as a physician
– according to the Supreme Court of Canada in Hollis v Dow
Corning Corp, [1995] 4 SCR 634 ‘the “learned intermediary”
rule applies where an intermediate inspection of the product is
anticipated because the product is highly technical in nature or
where a consumer is placing primary reliance on the judgment
of a “learned intermediary” and not the manufacturer’. In such
cases, manufacturers may satisfy their duty to warn by providing full and up-to-date information to the learned intermediary.
This can apply in the case of highly technical products intended
to be used only under the supervision of experts, or where the
nature of the product is such that the consumer will not realistically receive a direct warning from the manufacturer before use;
and
• the defendant met all applicable standards, regulatory or otherwise – this defence is usually raised in the course of arguing that
the defendant met its applicable standard of care, as discussed in
question 29.
32 What appeals are available to the unsuccessful party in the trial
court?
Each Canadian province and territory has its own court of appeal
in which the appeals of most trial decisions will be heard. Decisions
of those provincial and territorial courts of appeal may be appealed,
with leave, to the Supreme Court of Canada, the country’s highest
appellate court.
In at least some provinces there are multiple lower levels of
appeal. The specific levels of appeal will differ based on the type of
proceeding and the level of the decision-maker whose decision is
being appealed.
Jurisdiction analysis
30 Is it a defence that the product complied with mandatory (or
voluntary) standards or requirements with respect to the alleged
defect?
Yes, insofar as the defendant can argue that it met the applicable
standard of care (see questions 24 and 29 for a discussion of the test
for negligence).
34
33 Can you characterise the maturity of product liability law in terms
of its legal development and utilisation to redress perceived
wrongs?
Canada’s product liability law is continuing to mature, particularly
as new products issues are addressed through class proceedings.
Although there is not a particularly high volume of product liability
trials, because almost all are heard by a judge who produces written
reasons, there is instructive jurisprudence in this area.
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CANADA
Update and trends
Spoliation
Canadian courts do not generally impose sanctions against a party
for the destruction or loss of evidence. However, the law of spoliation
of evidence, which refers to the intentional destruction or alteration of
relevant evidence when litigation is existing or pending, is a developing
area. Courts have used this doctrine to draw an adverse inference
against the spoliating party, order the production of an expert’s file and
preclude or strike evidence from being used or relied upon where the
expert has carried out destructive testing or analysis in the absence
of interested parties (see Cheung v Toyota Canada Inc [2003] OJ 411
(Ont Sup Ct)). More recently, in the case of Stilwell v World Kitchen
2013 ONSC 3354, the court held that where the preconditions of
spoliation are established, the principal remedy is the imposition of a
rebuttable presumption of fact that the missing evidence would have
been unfavourable to the party that destroyed it. Quoting from the
Alberta Court of Appeal in McDougall v Black & Decker Inc 2008 ABCA
353 [2009] 1 WWR 257 (Alta CA) the court noted that:
34 Have there been any recent noteworthy events or cases that
have particularly shaped product liability law? Has there been
any change in the frequency or nature of product liability cases
launched in the past 12 months?
The trend of copycat product liability litigation in Canada, following United States litigation continues. In the last few years, claims
have followed allegations of widespread defect and late or insufficient product recalls, particularly in the automotive sector.
35 Describe the level of ‘consumerism’ in your country and
consumers’ knowledge of, and propensity to use, product liability
litigation to redress perceived wrongs.
Canadians use product liability litigation to address perceived
wrongs, however, the degree and intensity of such claims is modest relative to the United States. The scale of damage awards and
Glenn Zakaib
Emily Larose
Peter Henein
Spoliation does not occur merely because evidence has been
destroyed. Rather, it occurs where a party has intentionally
destroyed evidence relevant to ongoing or contemplated litigation
in circumstances where a reasonable inference can be drawn that
the evidence was destroyed to affect the litigation. Once this is
demonstrated, a presumption arises that the evidence would have
been unfavourable to the party destroying it.
Economic loss
Recently, claimants in product liability cases have attempted to seek
claims for pure economic loss in non-injury cases. Canada’s present
stance on economic loss claims is that such claims are only permitted
in cases where dangerous goods are involved, or where there is
physical harm or damage to property. In October 2013, the Ontario
Court of Appeal in Arora v Whirlpool Canada LP (2013) ONCA 657,
affirmed the dismissal of claims for pure economic loss in negligence
for allegedly defective, non-dangerous consumer goods.
Canada’s loser-pays system are both deterrents to individual litigation. As such, there is a greater propensity for consumer litigation to
be brought as a class proceeding. This is also due to the relative ease
of certification.
36 Describe any developments regarding ‘access to justice’ that
would make product liability more claimant-friendly.
In 2013, the Supreme Court of Canada released its decision in a trilogy of price-fixing class action cases. Those decisions affirmed that
at the certification stage, courts do not need to conduct an assessment of the merits of the claim, provided there is some basis in fact
for the claim. Many commentators consider this to have lowered the
threshold for certification. This, coupled with the approval of third
party funding agreements discussed in question 15, has increased
access to the courts for product liability claimants.
gzakaib@casselsbrock.com
elarose@casselsbrock.com
phenein@casselsbrock.com
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Tel: +1 416 869 5300
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Fax: +1 416 360 8877
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PRODUCT LIABILITY 2014
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