Canada: Product Liability E-Communiqué - September 2015

In This Issue

  1. Goodbye ... Newman! Ontario Court of Appeal Overturns Itself, Clarifying Vicarious Liability for Vehicle Owners
  2. Para-Normal Defence Medicals: Court of Appeal Affirms Broader Scope of Defence Medicals
  3. The Supreme Court of Canada Has The Final Word
  4. Regulating Risk: Keeping You Up-To-Date on Product Regulation

Goodbye ... Newman! Ontario Court of Appeal Overturns Itself, Clarifying Vicarious Liability for Vehicle Owners

By Christopher Horkins

In Fernandes v. Araujo the Ontario Court of Appeal overturned one of its own previous decisions, clarifying a half-century old area of confusion in the law on vicarious liability for vehicle owners. The Court's ruling is a helpful development for automotive manufacturers defending product liability cases.

Background to the Case

The plaintiff was injured while riding as a passenger in an All Terrain Vehicle. The ATV owner gave permission for the driver and plaintiff to take the ATV out for a spin but asserted that he did not give permission to leave the farm property where they were visiting. After driving the ATV off the property, the ATV was involved in a rollover accident resulting in the plaintiff's injury.

The ATV owner's insurer denied coverage on the basis that the owner had not consented to the ATV being driven off the property. The insurer brought a motion for summary judgment seeking to dismiss the claim against the owner. The Court dismissed the insurer's motion and the insurer appealed.

Confusion in the Law: When is an Owner Vicarious Liable?

Ontario's Highway Traffic Act provides that a vehicle owner will be vicariously liable for the negligent operation of their vehicle unless the driver possessed the vehicle without the owner's consent. This, however, has been interpreted in different ways by the Court of Appeal.

In Fernandes, the Court of Appeal was tasked with reconciling two conflicting lines of authority from its own cases:

  1. Finlayson v. GMAC Leaseco Ltd., a 2007 case holding that the owner of a vehicle will be vicariously liable if the owner consented to the driver's possession, regardless of whether the driver operated the vehicle in a way prohibited by the owner; and
  2. Newman and Newman v. Terdik, a 1953 case in which the vehicle owner was not found vicariously liable where the owner only gave permission to drive the vehicle on private property and the accident occurred on the highway.

In examining the two competing cases, the court found that Finlayson was more consistent with the policy objectives of the vicarious liability provisions of the Highway Traffic Act – namely, to protect the public by insisting that vehicle owners exercise caution in permitting others to operate their vehicles. Although generally hesitant to break with its own past decisions, the Court of Appeal found that Newman was "wrongly decided" and should therefore be overruled.

Key Take-Away Principle

After Fernandes, the law in Ontario is clear: where an owner consents to another's possession of their vehicle, the owner will be vicariously liable for that person's negligence in operating the vehicle, even if the driver breaches a condition imposed by the owner on the use of the vehicle. This case is good news for vehicle manufactures named as co-defendants in product liability actions, as it removes a potential avenue for a co-defendant vehicle owner to escape liability and shift the full burden of damages onto the manufacturer.

Para-Normal Defence Medicals: Court of Appeal Affirms Broader Scope of Defence Medicals

By Jeremy Martin

When the physical and mental condition of the plaintiff is central to a case, to what extent can a defendant compel that plaintiff to submit to testing to determine the extent of her injuries? That question was recently answered by Ontario's Court of Appeal in Ziebenhaus v. Behlieda.

History of the Law in Ontario

Historically in Ontario, a defendant could move for the plaintiff to attend an examination by a physician, dentist, psychologist or psychiatrist, or to undergo "further physical or mental examinations." The courts in Ontario have long been equivocating about whether or not they have the power, either under the Courts of Justice Act or their inherent jurisdiction, to compel plaintiffs to undergo testing by other, para-medical professionals at the request of the defendant.

The case law on this point had diverged into two competing lines of thought. The more conservative approach held that examinations by other medical professionals could be ordered only if those evaluations were a "diagnostic aid" for the few medical professionals specified in the Act, thus bringing the testing under the Act's authority. The more liberal approach held that there ought to be a "level playing field" as between the plaintiffs and the defendants. If the plaintiff was able to adduce evidence about her damages by being examined by para-medical professionals, the more liberal courts ruled that the defendant should have the opportunity to produce similar evidence, by virtue of the inherent jurisdiction of the Court to ensure a fair trial.

Last year, the Divisional Court sought to resolve this controversy in the decision of Ziebenhaus v. Behlieda. That Court adopted the more liberal line of thinking, finding that it would be deprived of useful information if evidence from these professionals could only be provided by one side and not the other. In its decision, the Divisional Court noted that the Court of Appeal had not yet weighed in to resolve the controversy. It has now done so.

The Ontario Court of Appeal's Decision

In a very brief decision endorsing the Divisional Court's reasons, the Ontario Court of Appeal confirmed that the defendant ought to have the right to meet the plaintiff's case with its own evidence. The Court ruled that requiring the defendant to show that para-medical examinations are necessary "diagnostic aids" for a "medical practitioner" to come to a diagnosis was an unnecessary fiction, and contrary to public policy.

Key Take-Away Principle

While defendants are now more free to seek para-medical examinations of plaintiffs in personal injury cases, we expect that courts will continue to assess motions for defence medicals on a case-by-case basis. A judge may be reluctant to order extensive testing on a vulnerable plaintiff – especially where that evidence is not necessary to challenge similar evidence from the plaintiff's own experts. Notwithstanding that caveat, and pending any possible further appeal, a lingering unfairness to defendants in the Rules of Civil Procedure appears to have been rectified.

The Supreme Court of Canada Has The Final Word

By Stefanie Holland

On September 17, 2015, the Supreme Court of Canada denied leave to appeal the decision of the Ontario Court of Appeal, in Tajedin Getahun v. Blake Moore.

Earlier this year, the Court of Appeal had addressed the extent to which communications between counsel and experts is permitted, specifically under the 2010 amendments to the Ontario Rules of Civil Procedure. In overturning the trial judge's decision, the Appellate Court found that the trial judge erred in holding that it was unacceptable for counsel to review and discuss the draft expert reports. The Court of Appeal took a more practical approach in finding that it was not inappropriate for counsel to review draft expert reports and that consultations regarding draft reports should not be automatically disclosed.

It is fair to say that both the Court of Appeal and Supreme Court have restored logic and practicality to the use of experts in Ontario. Now that leave to appeal has been denied, this would appear to be the final word on the degree of communications that is permitted between counsel and experts and confirms the law in respect of an issue which has been the subject of conflicting authorities.

Find a full copy of the Supreme Court's decision here.

If you missed our earlier article on the Court of Appeal's decision on Moore v Getahun, it can be accessed here.

Regulating Risk: Keeping You Up-To-Date on Product Regulation

By Emily Larose

A look at what's new with the Medical Devices Regulations and Canada Consumer Product Safety Act.

E-Labelling of Specified Medical Devices

The Therapeutics Product Directorate has issued a new interpretation of the Medical Devices Regulations with respect to electronic labelling of certain medical devices.

The affected devices, the directions for use that are required pursuant to the labelling requirements in the Regulations may be provided to users via an internet download or an electronic data storage device (e.g., disk, USB drive, etc.). Paper copies of the label information must be available and provided to users, upon request, without additional cost.

Manufacturers relying on such electronic labels must ensure that they are identical to any paper label submitted with the device licence application.

Please note that this interpretation applies only to devices that are not sold to the general public.

Health Canada's full Notice and a sample Letter of Attestation can be found here.

Cosmetic Contact Lenses to Be Held To Medical Device Safety Standards

New regulations have been announced, which will make non-corrective contact lenses subject to the Medical Devices Regulations as of July 16, 2016.

Cosmetic contact lenses have been regulated as consumer products, but the amendments to the Regulations will be regulated as Class II medical devices. However, because cosmetic contact lenses do not have any therapeutic function, they will not be subject to the effectiveness requirements that apply to other types of medical devices.

Read the Regulations and Regulatory Impact Statement here.

New Draft Cribs, Cradles and Bassinets Regulations

Health Canada has issued proposed regulations under the Canada Consumer Product Safety Act that would repeal and replace the existing Cribs, Cradles and Bassinets Regulations with a stated purpose of strengthening product standards and better aligning Canadian requirements with those in the US.

These include:

  • A prohibition on drop side cribs
  • Including performance requirements for accessories such as sleep or change table accessories that attach to cribs, cradles or bassinets
  • Changing performance requirements for a stability, crib slat strength, etc.
  • Prohibiting the use of occupant restraints on cribs, cradles, bassinets and sleep accessories

Read the proposed Regulation and Regulatory Impact Statement here.

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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Peter Henein
Emily Larose
Carly Cohen
Christopher Horkins
Stephanie Voudouris
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