Product safety and liability

Safety and environmental

What are the most relevant automotive-related product compliance safety and environmental regulations, and how are they enforced? Are there specific rules for product recalls?

Product compliance and safety

The MVSA was recently amended to introduce broad powers for Transport Canada to order manufacturers to submit a notice of defect or non-compliance when Transport Canada considers it would be in the interest of safety. The Motor Vehicle Regulations Enforcement Branch conducts post-market surveillance and oversight of the regulated community through programmes of compliance inspection, testing, corporate audits, and the investigation of alleged safety-related defects and recall monitoring.

National Safety Marks (NSMs) are used to indicate the compliance of a vehicle or equipment with the MVSA and the related regulations and safety standards. Transport Canada authorises their use and any company that intends to use an NSM must apply to Transport Canada to obtain this authorisation.

The Canada Motor Vehicle Safety Standards (CMVSS) prescribe the minimum performance levels that vehicles and equipment must meet. Each CMVSS standard includes performance requirements against which regulated vehicles and equipment are measured and compliance determined. These standards may include Transport Canada-approved Motor Vehicle Safety Test Methods, Technical Standards Documents or third-party published test methodologies.

The Defect Investigations Group has a mandate under the MVSA to investigate complaints relating to alleged manufacturing safety defects. At times these investigations may lead to safety recall campaigns or safety advisory publications.

Environmental regulations

Vehicular greenhouse gas emissions in respect of light duty vehicles are regulated under the federal Environmental Protection Act. There are plans to regulate heavy duty vehicles and engines for model year 2019 and beyond. In addition, the federal On-Road Vehicle and Engine Emission Regulations and the Sulphur in Gasoline Regulations impose stringent national emission standards.

At the end of 2017, a federal government agency, Environment and Climate Change Canada, released a regulatory framework outlining the proposed design of Canada’s Clean Fuel Standard (Standard), which is aimed at assisting in meeting Canada’s goal of lowering greenhouse gas emissions to a target of 30 per cent below 2005 levels by 2030 as part of Canada’s participation in the Paris Agreement. The Standard will include reductions in the carbon footprint of transportation fuels and will require increases in renewable fuel content or the purchase of credits that can be generated through the deployment of energy sources that offset fossil fuels, such as electric vehicles.

Product liability and recall

Describe the significance of product liability law, and any key issues specifically relevant to the automotive industry. How relevant are class actions or other consumer litigation in product liability, product recall cases, or other contexts relating to the automotive industry?

Product liability

There are three key categories of claims typically made in the nature of product liability claims: claims against manufacturers alleging negligence in the design or manufacture of vehicles; claims against manufacturers and dealers alleging the breach of express or implied warranties of fitness and quality; and claims against manufacturers and dealers seeking consumer protection remedies based on unfair business practice provisions of consumer protection legislation or breach of the misleading advertising provisions in the federal Competition Act.

In negligence, a plaintiff may recover for bodily injury or property damage (and in some specific circumstances, economic loss) if the plaintiff can establish a duty of care, a breach of the applicable standard of care, and damages caused by the alleged breach. These claims typically assert negligence in design, manufacture or failure to warn potential users of the product’s inherent dangers.

A party to a purchase or supply contract is entitled to sue for damages for breach of contract or breach of an express warranty, or both, if the product does not comply with express contractual or warranty terms. In some jurisdictions, legislation imposes implied warranties regarding the fitness and quality of the automotive products sold. This legislation commonly prohibits exclusion of these statutory warranties and conditions from contracts for the sale of products to consumers. In some jurisdictions, legislation implies statutory warranties in favour of consumers by manufacturers and others in the distribution chain in certain circumstances, even in the absence of contractual privity.

The federal Competition Act provides a civil right of action for damages caused by misleading advertising in specific circumstances. Some provincial jurisdictions provide remedies to consumers against automotive dealers, manufacturers or distributors for ‘unfair practices’, including the making of false, misleading or deceptive representations. Provincial consumer protection legislation may provide consumers with relaxed criteria for recovery.

It is not uncommon for a class action alleging negligence and breach of express or implied warranties to follow a product recall. Class actions seeking consumer protection remedies are also common. To date, many class actions have been certified but relatively few class actions have proceeded to trial in Canada (outside Quebec), though this number has increased in recent years. It remains to be seen whether the availability of class actions will result in larger punitive damage awards or other changes in substantive laws. Automotive class action litigation in the consumer context is discussed in further detail below.