Federal government passes proposed changes to product liability legislation

7 juillet 2014

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As previously reported, the 2014 federal budget implementation act, Bill C-31 (the Economic Action Plan 2014 Act, No. 1) included a number of components that concern product liability legislation. Bill C-31 received Royal Assent on June 19, 2014.

The provisions concerning product liability include amendments to the Hazardous Products Act (Bill C-31, Part 6, Division 3), the Motor Vehicle Safety Act, Railway Safety Act, the Transportation of Dangerous Goods Act, 1992 and the Safe Food for Canadians Act (Bill C-31, Part 6, Division 15).

Amendments to each of these statutes include the following.

Hazardous Products Act

The changes to the Hazardous Products Act add definitions for “suppliers” and “hazardous products”, expand the categories of substances that may be subject to the Act, and empower the Minister of Health to order testing on products that may be dangerous and to make other orders required to remedy or prevent non-compliance with the Act. The amendments also replace the current product labelling and safety data sheet elements of Canada’s Workplace Hazardous Materials Information System (WHMIS) with the UN’s Globally Harmonized System of Classification and Labelling of Chemicals (GHS). Finally, the changes increase the penalties for non-compliance with the Act.

In the course of Senate committee hearings, the Minister of Finance indicated that the proposed changes are intended to align the Canadian labelling requirements for hazardous chemicals with international standards (and specifically US standards) so as to lower costs for manufacturers.

Wider Scope

The amendments add a definition for “supplier”, meaning a person who, in the course of business, sells or imports a hazardous product. A “hazardous product” is now defined as any product, mixture, material or substance that is classified in accordance with the Act’s regulations in a category or subcategory of a hazard class listed in Schedule 2 of the Act. The amendments also bring five “sectors” of products into the scope of the Act for the first time under section 12, namely:

New Powers of Testing and Seizure for Analysis

The changes to section 20 of the Act now permit the Minister of Health to order importers or sellers of products, mixtures, materials or substances to provide information or conduct testing within a specified time period if there are reasonable grounds to believe the item is or may be a danger to the health or safety of any individual who may handle or be exposed to it in a work place. The amendments also convey broad powers of inspection to inspectors, including the power to seize samples for analysis. The Minister is also granted the power to order any supplier to take any measure necessary to remedy or prevent non-compliance with the Act (the Act also provides that a person who is subject to such an order can ask for it to be reviewed by an officer designated under the Act).

The amendments also impose a six-year record-keeping requirement under section 14 of the Act on suppliers, for labels, safety data sheets, and purchase and sale information (except where the Minister decides that this is unnecessary or impractical).

Increased Penalties

The maximum penalties for contraventions of the Act or its regulations have been increased under section 28 of the Act, from $100,000 and 6 months’ imprisonment on summary conviction to $500,000 and 18 months’ imprisonment for repeated offences; and from $1,000,000 and two years’ imprisonment to $5,000,000 and two years’ imprisonment for indictable offences. A due diligence defence is available except for knowing or reckless conduct (which could give rise to a fine of $1,000,000 and two years’ imprisonment for repeated summary offences, or a fine in the discretion of the court and five years’ imprisonment for indictable offences). Officers, directors, agents or mandataries of corporations who breach the Act may be held liable regardless of whether proceedings are brought against their corporations.

Motor Vehicle Safety Act

A number of changes have been made to the Motor Vehicle Safety Act (MVSA). Section 10 of the MVSA has been amended to require companies to report a non-compliance with a prescribed motor vehicle safety standard (i.e., a technical non-compliance) in the same manner that safety defects are currently being reported (with the caveat that no further reporting to the owners of the vehicle will necessarily be required where the Minister of Transportation decides that the non-compliance is inconsequential to safety). Section 10 has also been amended to empower the Minister to order that public notice of a defect be given in appropriate circumstances. A failure to comply with such an order would be an offence.

Section 11 of the MVSA has been amended to omit the government’s obligation to provide interested persons with an opportunity to make representations to the Minister with respect to proposed regulations, and to make regulations incorporating foreign standards effective immediately, i.e., eliminating a previous six-month grace period.

Under section 17 of the MVSA, financial penalties for offences have been doubled.

Changes to section 20 of the MVSA introduce a broad power for the Minister to collect information related to vehicles or equipment that the Minister considers to be in the public interest.

Railway Safety Act and Transportation of Dangerous Goods Act, 1992

The changes to the Railway Safety Act (RSA) and Transportation of Dangerous Goods Act, 1992 (TDGA) repeal the statutory notice period for new regulations under each enactment.  Previously, section 50 of the RSA required publication of proposed new regulations 90 days before their effective date, during which time interested persons had to be given a reasonable opportunity to make representations to the Minister of Transport. Section 30(1) of the TDGA required that all regulations and ministerial orders made pursuant to the Act be published in the Canada Gazette and that a “reasonable opportunity” be given for representations to be made to the Minister. These provisions dealing with the right to make representations are repealed, although proposed regulations will continue to be published in the Canada Gazette prior to enactment.

Safe Food for Canadians Act

The Safe Food for Canadians Act received Royal Assent in 2012, but has not yet come into force. Among other things, the amendments to the Act now authorize the Governor in Council to make regulations regarding trade in fresh fruits and vegetables, including regulations that the Department of Finance has indicated will enable the government to require all fresh produce dealers trading internationally or inter-provincially to be a member of a single, third-party dispute resolution body, such as the Dispute Resolution Corporation (DRC). The DRC is a non-profit organization that deals with a range of disputes including condition, contract, and payment issues arising in member-to-member transactions. The DRC would replace the Canadian Food Inspection Agency’s Board of Arbitration in these circumstances; according to the Department of Finance, this would help reduce instances of slow, partial and non-payment, as well as fraudulent activity within the industry.

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