At a glance: the sources of product liability law in Canada

Sources of law

Is there a statute that governs product liability litigation?

There is no 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.

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. Product liability claims may also include allegations relating to misleading advertising, as regulated by Canada’s federal Competition Act.

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.

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.

Are any novel theories available or emerging for product liability claimants?

Since 2004, claims of ‘waiver of tort’ have been routinely made 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 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 insuffcient to warrant certification.

In 2020, the Supreme Court of Canada clarified that waiver of tort is not an independent cause of action, but rather an election of remedies dependent on the plaintiff being able to prove a valid tort claim before having the option to elect for the restitutionary remedy.

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.

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.

Who may be found liable for injuries and damages caused by defective products? Is it possible for respondents to limit or exclude their liability?

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.

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 contribution’ 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 (because of 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.

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. Warnings must be adequate, communicated clearly and understandably in a manner calculated to inform the user of the nature and risk and extent of the danger.

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 regulatory regimes and legislation that 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.