Law Times

PAGE 2 NEWS sumers will force companies to strengthen their due diligence procedures or risk significant fines, say lawyers. "We have called it a regula- Federal legislation aimed at protecting consumers W Companies must strengthen due diligence procedures BY ROBERT TODD Law Times ide-ranging federal legislation aimed at protecting con- tory sea change," says Penny Bonner, partner and leader of Ogilvy Renault LLP's recall and crisis-management practice. "It is taking a range of products that have never been subject to government regulation and sub- jecting them to what could be a very, very comprehensive moni- toring, reporting, regulatory re- quirement scheme." The new legislation, which was introduced earlier this month, consists of amendments to the Food and Drugs Act and the creation of the Canada Con- sumer Product Safety Act. It includes a ban on the man- ufacture, importation, advertise- ment, or sale of consumer goods that threaten health and safety; forces suppliers to report "seri- ous product-related incidents"; and allows the federal govern- ment to order recalls of unsafe products, said the government. It also would require continuous monitoring of drugs, and health- care institutions would have to report adverse reactions. The legislation would in- crease the maximum fine for unsafe consumer products to $5 million, from $1 million, for each offence, while the penalty for the manufacture or distribu- tion of unsafe drugs would go up to $5 million, from $5,000. "As our aim is to prevent harm in the first place, this legislation will allow Health Canada to play a more active role in informing industry about new legal obligations and help develop stringent manufacturing standards for consumer products," said Health Minister Tony Clem- ent in a speech on April 8. "Most Canadian manufac- turers, importers, and retailers are conscientious corporate citizens," he said. "Our legis- lation is aimed at the handful that willfully put consumers in harm's way." To enforce the new laws, Clement said the government will hire more enforcement officials focused on keeping unsafe products out of the Ca- nadian market, and will ramp up surveillance of products al- ready on the market. While acknowledging the 'One thing that concerns us is the breadth of the application of the legislation,' says Penny Bonner. 'It applies not only to manufacturers and importers of consumer products, but it also applies to those who test, sell, and advertise.' new legislation would create much-needed protections for consumers — for example, the government previously had no authority to order recalls or safe- ty-testing on many products — Bonner says she has a number of misgivings about the legislation. "One thing that concerns us is the breadth of the appli- cation of the legislation," she says. "It applies not only to manufacturers and importers of consumer products, but it also applies to those who test, sell, and advertise." She notes that the defini- DD LT RXQTA-11 OP ad 4/11/08 10:09 AM Page 1 tion of "sell" includes "a transfer without consideration." Bonner says the legislation could apply, for example, to someone who gives a used baby stroller to a neighbour. "They would be liable to all the penalties and all the remedies in the legislation if that stroller constituted a danger to human health or safety," she says. The legislation also fails to make concessions for consumer products that are inherently dan- gerous, such as knives, says Bon- ner. Anyone who sells a product that could be a danger to human health or safety is subject to the legislation, vendor and purchaser know that product constitutes an inherent danger," she says. "even though the Bonner also says the legisla- tion lacks due process or pro- cedural safeguards. "Inspectors can go in and inspect commercial premises without having any reason- able grounds for believing there's a contravention of the legislation," she says. "They can seize anything. They can order a stop-sale right on the spot. They can order a recall if they have reasonable grounds to believe there is a danger to human health and safety. "If that recall is not con- ducted the way they wanted it to be conducted, they can issue a violation order and assess an administrative monetary penalty." Such orders, says Bonner, can only be reviewed by oth- er inspectors, and only the minister can review violation orders. "So the rights granted to people affected by the en- forcement actions are very re- stricted," she says. Lang Michener LLP inter- national trade lawyer Cyndee Todgham Cherniak says a due diligence defence within the legislation will protect those who take proper steps. "One shouldn't get into trouble because they reduce their risk of doing something wrong and end up in a situation where they're selling harmful goods," she says. "By taking on a mentality of safety and con- sumer protection, one protects themselves." nizations that show a strong ef- fort to weed out harmful goods also could resist prosecution un- der the proposed legislation. "It's going to be unlikely that some individual on the street is going to be prosecuted. The leg- islation is broadly drafted and it could capture a lot of people within the larger net, but if you look at other forms of statutes . . . they're really looking at the bigger offenders." She says individuals or orga- APRIL 21, 2008 / LAW TIMES Bonner notes that much of the legislation is left for regula- tion, which means some of her concerns could be "narrowed or mitigated." And while the legislation is far from perfect, Bonner says, it's an attempt by the government to show its commitment to consumer safety, and opposition parties and the media would be hard pressed to oppose it. "It's very hard to argue against legislation that could prevent injury to children," she says. "But I think there are some unintended consequences and I think the [drafters] of the legislation didn't understand how all-embracing this legisla- tion was going to be." Bonner says she sympathizes with retailers who will be subject to the new legislation. "Are they going to be put in a position where they have to test the safety of all the prod- ucts they're selling? Because they certainly will have the lia- bility when this legislation goes through," she says. LT Marketplace EMPLOYMENT WANTED With over 20,000 Office Products finding what you want is easy. Dye & Durham BASICS catalogue features 400+ Environmentally Preferred Products Great 'green' office products that are good for the environment. The EPP logo means the product is recyclable, reusable or reduces waste material. Look for a selection in our catalogue and online under the 'Green Products' heading. C U PREFERRED SUPPLIER EPP E yourONE source supplier for dyedurhambasics.ca • 1-888-393-3874 • Fax: 1-800-263-2772 OFFICE & FURNITURE PRODUCTS Office & Furniture Products • Corporate Promotional Products Printing & Graphic Services • Law Office Essentials Corporate Supplies • Search & Registration Services www.lawtimesnews.com SERVICES - Available law clerk. Proficient in estates, real estate, liti- gation, ADR, corporate/commercial and labour and employment. Part/full time. Messages (416) 621-2485. COUNSELING Dr. Valentin Shulman: Helping legal professionals to overcome depression and stress since 1989. Individual sessions, telephone coaching. Call (416) 766-6185. To advertise call 905-841-6481 a D Y I n E 9 p N d & 9 C n D R m a 1 H a A n M S a 8 W e ' r e y C i o a

• Cover