Legal Analysis

Defective products can have drastic implications and consequences, from bruises and scrapes to permanent physical disabilities and impairments and can arise from everyday items such as vehicles, tools, appliances, drugs or medicines, and children’s toys. Product liability rests on the notion that consumers of a product have the reasonable expectation that the product will be safe.

Product liability law involves a combination of areas of law including contract, tort, legislation, and insurance, and claims can stem from several avenues such as Consumer Protection Acts, Sale of Goods Acts, manufacturers’ warranties, and negligence theories.

Consumer Protection Acts

A number of provinces have consumer protection legislation that provide conditions and warranties for specific types of goods, although Nova Scotia’s is the most useful of the Atlantic Provinces. Generally, a Consumer Protection Act applies whenever a consumer sale is made by a seller in the ordinary course of business. A consumer sale is a sale where goods are purchased for the buyer’s personal consumption or use. R.S.N.S. 1989, c.92 s 26(1). A seller is any person who is in the business of selling goods or services to buyers. R.S.N.S. 1989, c.92 s 2(n). Nova Scotia’s Consumer Protection Act expressly sets out implied conditions or warranties that apply to consumer sales, including, that the goods are of merchantable quality and that the goods will correspond to their description, RSNS 1989, c.92 s. 26(3).

Sales of Goods Act

Each common law province enacted its own sale of goods legislation that outline implied warranties. Typically, these include that the goods will be reasonably fit for the general purposes that such goods serve and that the goods will be of merchantable quality. These acts govern the interactions of buyers, sellers, and others. Each province’s Sale of Goods legislation can be found below:

Nova Scotia
Sales of Goods Act, R.S.N.S. 1989 c. 408, s.17

New Brunswick
Sales of Goods Act, R.S.N.B. 2016, c 110 s 20

Prince Edward Island
Sales of Goods Act, R.S.P.E.I. 1988 c S-1, s 16

Newfoundland and Labrador
Sales of Goods Act, R.S.N.L. 1990 c S-6, s 16

In order to establish a claim under a Sale of Goods Act, there must be a direct contractual relationship, i.e. between consumer and seller. Because there are certain requirements that need to occur for these warranties to be implied, and because it is possible for the seller to contract out of them, a claimant should seek experienced legal counsel to ascertain their legal alternatives.

Elements of a Negligence Product Liability Claim

If a claimant has suffered personal injury or damage to other property as a result of a defective product, she may proceed under ordinary negligence theories. To succeed on such claim, an injured party must establish, on a balance of the probabilities, that: (1) the defendant owed a legal duty of care to him; (2) the defendant’s actions failed to meet a reasonable standard of care; (3) the defendant’s actions were both the factual and proximate cause of the injuries; and (4) the injured party suffered damages as a result. Organigram Holdings Inc. v Downton, 2020 NSCA 38 (CanLII).

The legal causation inquiry asks the question “but for” a defect in the product’s design, manufacture, or warning, would the injury or damage not have occurred. If not, the question is whether the defect “materially contributed” to the injury or cause of injury. Athey v Leonati, (1996) SCJ No. 102. The proximate causation inquiry asks the question whether the defendant reasonably foresaw the risk harm or injury.

Types of Claims

Manufacturers have several duties of care in relation to product liability, namely:

1. to see that there are no defects in manufacture that are likely to give rise to injury in the ordinary course of use;
2. to warn consumers of dangers inherent in the use of the product of which the manufacturer has knowledge or ought to have knowledge;
3. to avoid safety risks in designing the product to make sure the product is reasonably safe for its intended purpose;
4. to compensate consumers for the cost of repairing a dangerous product that presents a real and substantial danger to the public. Price v Smith & Wesson Corp., 2021 ONSC 1114 (CanLII).

Negligent design, development and testing

A design defect is an error in the design of the product, and the question is oftentimes whether a different design ought to have been used by the manufacturer. A design defect is notably distinct from a manufacturing error. Downton v Organigram Holdings Inc., 2019 NSSC 4 (CanLII), in that it results in a whole line of products being defective.

In these cases, an injured party must identify the design defect, establish that the defect created a substantial likelihood of harm, and show that there is an alternative design that is safer and economically feasible to manufacture. The injured party must also establish that a safer alternative would have resulted but for the defendant’s negligence. Id.

Whether a manufacturer breaches its duty is determined by a risk-utility analysis that measures whether the utility of the chosen design outweighs the foreseeable risks associated with the chosen design. Price v Smith & Wesson Corp., 2021 ONSC 1114 (CanLII).

Negligent manufacturing

Negligent manufacturing is a distinct form of negligence and a claim arises when something goes wrong in the manufacturing process itself, or in the handling of the product, which produces a sub-standard product. In this case, the defect relates only to the item at issue. An injured party must point to and identify a defect in the manufacturing process and the product itself.

Typically, a high standard of care is imposed on manufacturers in cases of manufacturing defects and courts may draw inferences from circumstantial evidence—the proof of a defect, along with proof that the defect resulted in the injury to the consumer, permits the trial judge to draw an inference of negligence. Price v Smith & Wesson Corp., 2021 ONSC 1114 (CanLII). In Johansson v General Motors of Canada Ltd., 2012 NSCA 120, the court noted that if the plaintiff’s evidence “permits an inference of negligence attributable to the defendant . . . the jury, after any evidence from the defendant, would decide whether or not that inference should be drawn.”

Negligent distribution, marketing and sale (duty to warn)

Canadian courts have repeatedly recognized “negligent marketing” or distribution as merely a synonym for breach of the duty to warn. Bow Valley Husky (Bermuda) Ltd. v Saint John Shipbuilding Ltd., 1195 CanLII 9867 (NLCA), 1997 CanLII 307 (SCC) (1997) 3 SCR 1210.  A critical element of this claim is that the product’s propensity to injury outweighed the value of its use.

When manufacturers place products into commerce, they create a relationship of reliance with consumers, who have far less knowledge concerning the inherent dangers in the use of the products and are thus at risk if the product is not safe. The duty to warn seeks to correct this knowledge imbalance by alerting consumers to dangers and allowing them to make informed decisions. This includes a duty to warn consumers of inherent dangers to which it has knowledge or ought to have knowledge of. This is a continuing duty, and manufacturers must alert to dangers known at the time of sale and those thereafter discovered.

Once a duty to warn is recognized, the warning must be adequate and should be communicated clearly and understandably to inform the user of the nature of the risk and the extent of the danger. It should be correspond to the gravity of the potential hazard and “reasonableness” will depend on all the facts and circumstances relevant to the product. Bow Valley Husky (Bermuda) Ltd. v Saint John Shipbuilding Ltd., 1195 CanLII 9867 (NLCA), 1997 CanLII 307 (SCC) (1997) 3 SCR 1210.

Examples of negligent conduct in this category include if a company’s marketing materials or warranties it made are inaccurate, or if the company made representations as to the safety and fitness of the product when it knew or ought to have known that the representations were false.

Liable Parties

Potentially, a claimant can bring a cause of action against any party within the supply chain, for examples, seller, manufacturer, or distributor. However, the largest amount of liability is always on the seller, who is in a contractual relationship with the consumer and subject to implied warranties and other legal duties. Louisburg Home Construction Ltd. v Eddy Group Ltd., 2013 NSSM 32 (CanLII).

In general, manufacturers carry limited legal responsibility for defects, and the product must have created danger or caused injury or death.  A manufacturer has a duty to take reasonable care in the manufacture of its product, including all its component parts, and failure to take such reasonable care can result in liability to the ultimate user or consumer, provided that: (1) the product causing the injury has the same defect as it had when it left the manufacturer; and (2) the manufacturer should have contemplated that the product would be consumed or used in the same condition as it was when it left him. A manufacturer also has a duty to ensure, through inspection or otherwise, that the component parts supplied by sub manufacturers can be safely used in the product. Johansson v General Motors of Canada Ltd., 2012 NSCA 120 (CanLII).

A distributor can be liable for failing to meet its duty to use reasonable care in several ways, including where, (1) it puts into circulation a product in a dangerous condition where the defect could and ought to have been discovered by reasonable diligence on the distributor’s part. Phillips v Ford Motor Co. of Canada Ltd., (1970) OJ No. 1484; (2) it makes negligent misrepresentations, recommendations, or instructions without properly testing or inspecting the product; (3) it fails to warn of safety risks; and (4) it sells the product to a purchaser in whose hands the product may be dangerous. Good-wear Treaders Ltd. v D&B Holdings Ltd., 1979 NSJ No. 532.

Res Ipsa Loquiter and Strict Liability

Unlike jurisdictions in the United States, Canadian courts have not adopted “strict liability” in product liability cases. Under the principle of strict liability, a manufacturer will be found liable for any injuries caused by defective products, regardless of whether the manufacturer exercised reasonable care. The doctrine of Res Ipsa Loquiter is similarly not embraced by Canadian Courts, which treat the doctrine as expired. Res Ipsa Loquiter is the principle that the mere occurrence of an accident implies negligence. Johansson v General Motors of Canada Ltd., 2011 NSSC 352 (CanLII). Where these principles apply, a defendant’s liability would be inferred from the fact that their product was defective.

Thus, a  Canadian plaintiff must still establish a prima facie case of negligence. Although an injured party may face hurdles in proving a breach of the standard of care, courts still hold manufacturers to very high levels of accountability and will make strong inferences in favor of an injured party.