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
keep detailed information on the source and purchasers of
report on incidents, product defects and labeling errors that
resulted or could have resulted in death or serious adverse health
recalls for human health or safety reasons in other
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
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
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.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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The recent decision of the Ontario Court of Appeal in BMW Financial Services Canada, a Division of BMW Canada Inc. v. McLean provides some useful insight into the relationship between automobile dealers and the financing arms of the manufacturers for whom those dealers are franchisees.
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