Importers, sellers and manufacturers face additional government oversight, potential prosecution and possible civil claims as a result of recently unveiled consumer safety legislation.
New Powers and Prohibitions
The Canada Consumer Product Safety Act (CCPSA), in force since June 2011, requires manufacturers, importers and sellers to:
- keep detailed information on the source and purchasers of products;
- report on incidents, product defects and labeling errors that resulted or could have resulted in death or serious adverse health effects; and
- recalls for human health or safety reasons in other jurisdictions.
Businesses must report to Health Canada within two days and provide a fulsome report 10 days after becoming aware of the incident or issue.
The CCPSA includes prohibitions on:
- the manufacture, importation, sale or advertisement of any consumer product posing a health or safety risk;
- advertising of consumer products known to be a danger to human health or safety; and
- deceptive advertising relating to product safety.
Those found in violation face, on indictment, up to five years in prison and fines within the court’s discretion court. Penalties on summary conviction include prison terms up to two years and fines up to $1 million. Each day the violation continues constitutes a separate offence.
The CCPSA also allows the Minister of Health to require manufacturers and importers to test products and provide test results. The Minister can order a recall of any product deemed to be a threat to human health or safety. In the case of non-compliance with a recall order, the Minister can order "any measure" to prevent a danger to human health or safety.
The CCPSA further empowers the Minister to disclose to the public without consent, confidential business information "essential to address" a "serious and imminent" danger to human health or safety. There is no requirement to provide the business advance notice that its confidential information is about to be disclosed.
McCarthy Tétrault Notes
The CCPSA presents several concerns for businesses apart from government sanction.
Manufacturers, importers and sellers could be subject to civil claims inspired and supported by investigations pursuant to the legislation. Product recalls may evidence a common issue for class actions, and the record keeping requirements could result in a treasure trove of documentary evidence for plaintiffs. Though there is no tort of breach of statutory duty, breaches of a statute can serve as evidence of a failure to meet the standard of care. Moreover, courts have accepted the tort of unlawful means conspiracy where multiple actors are accused of acting unlawfully by breaching a statute and causing injury as a result.
Businesses also face potential public relations problems arising from recalls and the disclosure of confidential information by government under the CCPSA. Manufacturers, importers and sellers should establish an internal process for monitoring, documenting and reporting incidents; to both comply with the short two and 10 day reporting windows, and to address potential dangers sufficiently in advance of any government involvement.