Product
Liability
In 20 jurisdictions worldwide
Contributing editors
Harvey L Kaplan, Gregory L Fowler and Simon Castley
2015
Product Liability 2015
Contributing editors
Harvey L Kaplan, Gregory L Fowler and Simon Castley
Shook, Hardy & Bacon LLP
Publisher
Gideon Roberton
gideon.roberton@lbresearch.com
Subscriptions
Sophie Pallier
subscriptions@gettingthedealthrough.com
Business development managers
Alan Lee
alan.lee@lbresearch.com
Adam Sargent
adam.sargent@lbresearch.com
Dan White
dan.white@lbresearch.com
Law
Business
Research
Published by
Law Business Research Ltd
87 Lancaster Road
London, W11 1QQ, UK
Tel: +44 20 3708 4199
Fax: +44 20 7229 6910
© Law Business Research Ltd 2015
No photocopying without a CLA licence.
First published 2008
Eighth 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 create, nor does
receipt of it constitute, a lawyer–client relationship.
The publishers and authors accept no responsibility
for any acts or omissions contained herein. Although
the information provided is accurate as of July 2015,
be advised that this is a developing area.
Printed and distributed by
Encompass Print Solutions
Tel: 0844 2480 112
CONTENTS
Global Overview
5
Italy63
Harvey L Kaplan
Shook, Hardy & Bacon LLP
Michela Turra and Alessandra Chimienti
Gianni, Origoni, Grippo, Cappelli & Partners
Australia7
Japan69
Colin Loveday and Greg Williams
Clayton Utz
Tetsuro Motoyoshi and Ryohei Ikeda
Anderson Moˉri & Tomotsune
Austria13
Korea75
Lukas A Weber and Linda Poppenwimmer
Brauneis Klauser Prändl Rechtsanwälte GmbH
Ghyo-Sun Park, Gea Sung Yang and Bo Kyung Lim
Shin & Kim
Bulgaria18
Mexico80
Kina Chuturkova and Stela Sabeva
Boyanov & Co
Alfonso Sepúlveda and Habib Díaz
Sepúlveda y Diaz Noriega
Canada23
Nigeria84
Glenn Zakaib, Emily Larose and Peter Henein
Cassels Brock & Blackwell LLP
Babatunde A Sodipo
Ajumogobia & Okeke
Dominican Republic
29
Roberto Rizik and Jaime M Senior
Headrick Rizik Alvarez & Fernández
England & Wales
Portugal90
Martim Morgado and João Pimentel
Campos Ferreira, Sá Carneiro & Associados
34
Slovenia95
Simon Castley and Jon Hudson
Shook, Hardy & Bacon International LLP
David Premelč, Jakob Ivančič and Peter Golob
Rojs, Peljhan, Prelesnik & Partners
France39
Switzerland101
Florian Endrös
EBA Endrös-Baum Associés
Lukas Bühlmann and Adrian Süess
Bühlmann Attorneys at Law Ltd
Germany46
Taiwan106
Mirjam Schorr
Kennedys
Jackson Shuai-Sheng Huang
Formosa Transnational Attorneys at Law
Guatemala51
United States
Conchita Villeda and Laura Sánchez
Mayora & Mayora, SC
Gregory L Fowler and Marc E Shelley
Shook, Hardy & Bacon LLP
111
Ireland56
Aoife Gaughan
DWF
2
Getting the Deal Through – Product Liability 2015
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?
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:
• 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, cross-claims
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 lawsuit 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.
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 or motions for summary trial –
motions for summary judgment or summary trial 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 the Rules of Practice in Ontario, the court may require
that viva voce evidence be presented. Plaintiffs 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;
• 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
23
www.gettingthedealthrough.com
© Law Business Research Ltd 2015
CANADA
•
Cassels Brock & Blackwell LLP
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; and
pretrials – while practices vary from court to court, judges frequently
encourage parties to use pretrials as an opportunity to explore the
possibility of settlement in addition to addressing procedural matters
relating to the trial.
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.
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;
• 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.
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?
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 pretrial 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 postincident state. While the law on spoliation of evidence in Canada continues
to develop, it appears that two 2014 decisions (Nova Growth Corp v Andrzej
Roman Kepinski (2014 ONSC 2763) and Forsey v Burin Peninsula Marine
Service Centre (2014 FC 974) have provided some further structure to analysing the impact of destroyed evidence in litigation. Among other things,
the missing evidence must be relevant; have been destroyed intentionally
at a time when litigation must have been ongoing or contemplated; be
reasonable to infer that the evidence was destroyed in order to affect the
outcome of the litigation.
24
Getting the Deal Through – Product Liability 2015
© Law Business Research Ltd 2015
Cassels Brock & Blackwell LLP
CANADA
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 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.
10 How is evidence presented in the courtroom and how is the
evidence cross-examined by the opposing party?
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 cross-examinations are usually filed as part of the record before the decision-maker.
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.
12 What types of compensatory damages are available to
product liability claimants and what limitations 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
14 Is public funding such as legal aid available? If so, may
potential defendants make submissions or otherwise contest
the grant of such aid?
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.
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.
25
www.gettingthedealthrough.com
© Law Business Research Ltd 2015
CANADA
Cassels Brock & Blackwell LLP
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 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 nocosts regimes in that it is only in rare circumstances that any costs may be
awarded by the court.
Sources of law
18 Is there a statute that governs product liability litigation?
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 Quebec
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.
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.
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
26
Getting the Deal Through – Product Liability 2015
© Law Business Research Ltd 2015
Cassels Brock & Blackwell LLP
CANADA
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?
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.
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.
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?
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 a 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 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
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.
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).
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.
27
www.gettingthedealthrough.com
© Law Business Research Ltd 2015
CANADA
Cassels Brock & Blackwell LLP
Update and trends
In 2015 the federal government passed into law the first
substantive amendments to the Food and Drugs Act in decades.
These amendments strengthen the Minister of Health’s
powers with respect to therapeutic product oversight including
recalls, mandatory labelling revisions and mandatory testing.
The amendments also substantially increase the penalties for
offences under the Act and contemplate mandatory reporting of
therapeutic product incidents by healthcare institutions. Counsel to
manufacturers and distributors of therapeutic products (defined as
drugs and devices, but not natural health products) are monitoring
the implementation of these changes and any impacts on related
product liability litigation cases.
The relationship between counsel and experts has also been
scrutinised by a very closely followed decision of the Ontario Court
of Appeal in 2015 (Moore v Getahun 2015 ONCA 55). The Court of
Appeal clarified that it is not inappropriate for counsel to review
and discuss draft expert reports. The Court also ruled that – except
where a party can show reasonable grounds of inappropriate
interference – communications between counsel and experts are
litigation privileged and need not be disclosed to opposing parties.
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
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 past few years, claims have followed allegations of widespread defect and late or insufficient product
recalls, particularly in the automotive sector. In 2014, Canada saw an
increase in failure to warn cases involving pharmaceutical companies and
product claims involved implanted medical devices. That said, recent case
law in both Ontario and British Columbia suggests a shift to a stricter and
more thorough analysis of proposed class action claims in pharmaceutical
cases, making the path to certification harder on plaintiffs’ counsel.
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 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.
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 of them are heard by a judge who produces written reasons, there is
instructive jurisprudence in this area.
Glenn Zakaib
Emily Larose
Peter Henein
gzakaib@casselsbrock.com
elarose@casselsbrock.com
phenein@casselsbrock.com
Suite 2100, Scotia Plaza
40 King Street West
Toronto
Ontario M5H 3C2
Canada
Tel: +1 416 869 5300
Fax: +1 416 360 8877
www.casselsbrock.com
28
Getting the Deal Through – Product Liability 2015
© Law Business Research Ltd 2015
Getting the Deal Through
Acquisition Finance
Distribution & Agency
Labour & Employment
Public Procurement
Advertising & Marketing
Domains & Domain Names
Licensing
Real Estate
Air Transport
Dominance
Life Sciences
Restructuring & Insolvency
Anti-Corruption Regulation
e-Commerce
Mediation
Right of Publicity
Anti-Money Laundering
Electricity Regulation
Merger Control
Securities Finance
Arbitration
Enforcement of Foreign Judgments
Mergers & Acquisitions
Securities Litigation
Asset Recovery
Environment
Mining
Ship Finance
Aviation Finance & Leasing
Executive Compensation &
Employee Benefits
Oil Regulation
Shipbuilding
Banking Regulation
Outsourcing
Shipping
Cartel Regulation
Foreign Investment Review
Patents
State Aid
Climate Regulation
Franchise
Pensions & Retirement Plans
Structured Finance & Securitisation
Construction
Fund Management
Pharmaceutical Antitrust
Tax Controversy
Copyright
Gas Regulation
Private Antitrust Litigation
Tax on Inbound Investment
Corporate Governance
Government Investigations
Private Client
Telecoms & Media
Corporate Immigration
Insurance & Reinsurance
Private Equity
Trade & Customs
Cybersecurity
Insurance Litigation
Product Liability
Trademarks
Data Protection & Privacy
Intellectual Property & Antitrust
Product Recall
Transfer Pricing
Debt Capital Markets
Investment Treaty Arbitration
Project Finance
Vertical Agreements
Dispute Resolution
Islamic Finance & Markets
Public-Private Partnerships
Also available digitally
Online
www.gettingthedealthrough.com
iPad app
Available on iTunes
Product Liability
ISSN 1757-0786
Official Partner of the Latin American
Corporate Counsel Association
Strategic Research Sponsor of the
ABA Section of International Law