Introduction

A recent decision of the British Columbia Supreme Court1 illustrates the unwillingness of courts to impose private law duties on governmental agencies tasked with regulatory authority over consumer products and consumer safety. It will be interesting to see if this unwillingness continues given the recent introduction of the Canada Consumer Product Safety Act (CCPSA), which imposes obligations and duties on manufacturers and importers of consumer products, and similarly provides the government with greater regulatory abilities concerning consumer products sold and distributed in Canada, including the power to order the recall of unsafe consumer products.

Background

The case arose after four cases of shigella, an infection that can be caused by contaminated food, were reported. The Canadian Food Inspection Agency (CFIA) investigated and advised the public not to eat products distributed by the plaintiff on the basis that they might be contaminated with shigella. The CFIA also alerted the US Food and Drug Administration (FDA) to the situation, and the food products were promptly taken off the market by a retailer in both Canada and the United States.  The plaintiff sued the CFIA alleging the agency had breached its duty of care by making a public announcement without sufficient information to support the announcement. It was also alleged that the CFIA had failed to conduct a proper investigation and failed to report test results to the plaintiff before issuing the advisory and contacting the FDA.

Analysis

On a motion by the CFIA to dismiss the negligence claim, the court determined that the duty of care asserted by the plaintiff did not fall within any duty of care category recognized in Canadian law, stating that, "The proposition that a duty of care is owed by any government official to all who may be injured in any way by any negligent inspection without restriction is too broad."

The question therefore was whether the circumstances of an investigation give rise to a relationship of proximity between the agency and a person who alleges injury. In considering the proximity analysis, the court found that the question of whether a regulator like the CFIA may owe private law duties requires reference to the statutory scheme that creates and defines these duties and regulates the conduct of a public authority. The court acknowledged that when the legislation imposes duties that are owed only to the public, "Regulators will generally not owe a duty of care to regulated entities if the purpose of the regulatory scheme is to promote the public interest and the regulatory scheme does not disclose an intention that in exercising their powers regulators are to take care to protect the interests of persons affected by the scheme of regulation."

The CFIA is established by the Canadian Food Inspection Agency Act (the Act), and the court found that the purpose of the Act is to protect the safety of food, with the object of protecting the public and preventing disease. Therefore, the primary purpose of the Act is to promote the public interest. In this context, duties of care could not be concurrently owed to the regulated entities because the powers under which government acts "are consistent only with the imposition of duties owed to the public as a whole and not with a duty of care to individuals." Nothing in the statute imposed an obligation on the CFIA to protect the commercial interests of the plaintiffs.

Rejection of duty of care argument

The court went on to reject several arguments put forward by the plaintiff as being indicators that a duty of care existed under the Act. First among these arguments was that the Act’s preamble, which disclosed the desire of the Government of Canada to promote trade and commerce, was an indication that the Act may have in mind the interests of persons other than consumers. The court found that argument unpersuasive, ruling it is improper to presuppose that each purpose in the preamble is a factor the CFIA must take into account in carrying out its enforcement responsibilities.

Second, it was argued that since the Act authorizes the government to appoint an advisory board that includes personnel from sectors such as agriculture, food processing and food distribution, the intention to consider the interests of the food industry is clearly present in the Act. The court found that, on the contrary, membership on the advisory board only indicated that such persons could usefully contribute to fulfilling the CFIA’s mandate, and nothing more.

Third, the plaintiffs argued that a duty of care exists because the Act contained neither an immunity clause, which usually makes explicit Parliament’s intention that a duty of care does not arise when government officials exercised their duties, nor a compensation scheme, which usually provides for alternative compensation arrangements for persons injured by government action. The court disagreed, stating that neither was indicative of the existence of the duty of care, given that such a duty is inconsistent with the intention of the Act.

Regulators and private law duties

The court went on to note that if the general policy of the law is to immunize regulators acting as regulators to protect the public interest, it would be counterintuitive if the kind of activity that would bring the regulator into contact with the regulated entity gave rise to a proximity where it otherwise would not exist. Even if sufficient proximity existed between the parties in this case, residual policy considerations should foreclose the existence of the duty. Specifically, the court found that the existence of a duty of care to protect the economic interests of a supplier of food would give rise to the regulator being exposed to indeterminate liability: claims could be made by a multitude of other persons for whom harm is foreseeable, including retailers, wholesalers, food processors, etc. This possibility was sufficient to bar the finding of such a duty of care.

Ramifications

With the recent introduction of extensive federal consumer protection legislation through the CCPSA, government has again entered the fray of regulating private conduct to ensure public safety. While the CCPSA’s impact remains to be seen, particularly as it relates to the extent of enforcement, parties regulated by this legislation must bear in mind that recourses against government entities in respect to their use of the legislation may well be limited if the analysis followed by the court in this case is applied to the CCPSA.

Industry concern lies with the very broad inspection, enforcement and remediation (including recall) powers granted under the CCPSA to the federal regulator, and that the unchecked or unqualified exercise of these powers could lead to significant loss or harm to regulated industries. This concern becomes even more apparent when avenues of redress—which foster accountability in regulator conduct—are foreclosed.

That being said, there continues to be ongoing litigation examining the circumstances in which government owes private law duties, and as such it seems likely that a similar analysis will be undertaken by the courts regarding obligations under the CCPSA.