Canada: The Theory Of Regulatory Negligence Is Further Eroded By Recent Decision

In a series of recent preliminary motions heard in a class proceeding, the Ontario Superior Court of Justice confirmed that alleging regulatory negligence as a cause of action will be very difficult. The Court also confirmed that the plaintiff must have a direct relationship with the defendant manufacturer in order to maintain a claim against the manufacturer.

Kevan Drady commenced a putative class action in Ontario against Health Canada. Drady claimed that Health Canada had been negligent in the conduct of its regulatory duties and that as a consequence he had suffered damage arising from the implantation of silicone block or sheeting into his jaw. The implant, which Drady received in 1981, was removed in 1999. Since he could not identify who had manufactured the implant, Drady claimed "for the several liability of the Crown for the wrongs committed by its servants."

Health Canada defended the action and commenced third-party proceedings against six potential manufacturers of the silicone block that may have been supplied to Drady in 1981 "for contribution and indemnity" with respect to Drady’s claim.

Prior to scheduling a certification hearing, the court agreed to hear four preliminary motions.

In the first motion, Health Canada successfully moved to strike out the Statement of Claim on the basis that it owed no private-law duty of care to Drady. Justice Cullity held that the provisions of the Food and Drugs Act, S.C. 1952-53, c. 38 (the FDA), and the Medical Device Regulations of September 2, 1976 propounded thereunder (the MDR), are not "aimed at, or geared to, the protection of private interests of specific individuals" but rather that "any duty imposed (implicitly) in the FDA is to regulate in the interests of the public."¹ In so finding Justice Cullity endorsed the reasoning of Winkler J., as he then was, in Attis v. Her Majesty the Queen in the Right of Canada [2007], in which he refused to certify a regulatory negligence claim relating to breast implants on the basis, inter alia, that no private-law duty of care was owed to Attis.

The plaintiff sought to assert that a private-law duty of care could arise from the manner in which Health Canada discharged its public duty in the circumstances of a particular case. However, Drady could not identify the particular product with which he was implanted. Justice Cullity held that "a causal connection between the plaintiff, the device and its vendor is an essential link in the creation of a relationship of proximity between the plaintiff and the Crown."² Drady asserted that he was unable to identify the implant because of the Crown’s failure to require all implants to be properly labeled. Justice Cullity rejected this argument as he held that "at most, this failure would amount to a breach of a duty owed to the public. In my opinion, an essential requirement for establishing proximity cannot be grounded in a breach of duty owed only to the public".³ Consequently, Justice Cullity found that no reasonable cause of action for negligence, breach of fiduciary duty or a violation of section 7 of the Charter could be made out and struck the claim in its entirety.

In a second set of motions, Health Canada and the third-party manufacturers were successful in arguing that Drady's failure to identify the manufacturer of his silicone block or sheeting was fatal to his claim. Justice Cullity agreed that the case was not distinguishable from Attis v. Canada (2003), 29 C.P.C. (5^th) 242, in which Justice Winkler (as he then was) held that allegations of regulatory negligence had to be made with respect to a particular device and manufacturer. Attis was a putative breast-implant class action in which the representative plaintiffs had identified their implants as having been manufactured by Dow Corning. Consequently, in Attis, Health Canada was not allowed to third-party any manufacturer other than Dow. In the Drady case, Justice Cullity expressly followed Attis and held that there could be no reasonable cause of action against Health Canada in regulatory negligence for failure to regulate a product where the plaintiff has not established any factual connection with a specific product. The potential application of the market-share theory (which postulates that when a plaintiff cannot identify the particular manufacturer of a product, all potential manufacturers of an identical product could be held liable in proportion to their market share at the time) was raised during oral argument, but Justice Cullity did not apply it or address it in his reasons. In the result, Justice Cullity struck the claim in its entirety on this independent basis as well.

A third motion was heard to strike out the third-party claims on the basis that Drady had limited the claim against Health Canada to its several liability only and that, consequently, Health Canada’s claims for contribution and indemnity against the third-party manufacturers was not sustainable. Justice Cullity accepted the proposition that if the claim had been clearly drafted so as to so limit the plaintiff’s claim then the motion would be tenable. However, he ultimately found that Drady’s Amended Statement of Claim was not sufficiently clear in limiting Drady's claim against Health Canada to just its several liability.

As to the fourth motion, the judge indicated, in obiter, that he would have allowed the plaintiff's motion to stay the third-party proceedings until after certification if the other motions had not made it moot. In this regard he would not have issued a permanent stay or required any action for contribution to be tried separately as requested by the plaintiff.

The Drady case therefore confirms the proposition from Attis v. Canada that government regulators do not give rise to a private-law duty of care owed to individual citizens. Furthermore, Drady reiterates that any such claim must be asserted by a representative plaintiff who is the recipient of a specific, identifiable product. Finally, Drady supports the proposition that a plaintiff can, in a properly drafted claim, limit its claim against a defendant to the several liability of that defendant, in order to avoid the proceeding becoming bogged down with third-party proceedings for contribution and indemnity.