be held responsible for a careless act when no malice is intended. This last case shows that the concept of “product liability” applies not only within the realm of products but also when it comes to services.
Let’s first take a look at the Finney v. Barreau du Quebec decision rendered in 2004, in which the Supreme Court awarded an aggrieved client of a member of the Barreau (bar) $25,000, plus solicitor and client costs, for “moral damages” because her lawyer failed to prosecute diligently and had a history of serious professional misconduct. What makes this case unique is that it proves lawyers aren’t above the law when their work is sub-standard. This was the first time that a professional regulatory body was found liable for failing to protect the public. As the Court noted, “The delegation of [regulatory] powers by the State imposes obligations on the governing bodies of the profession, which are then responsible for ensuring the competence and honesty of their members in their dealings with the public.”
The Court ruled the Barreau could not escape liability by pleading good faith in the performance of its duties: “It would be contrary to the fundamental objective of protecting the public if this immunity were interpreted as requiring evidence of malice or intent to harm to rebut the presumption of good faith. Gross or serious carelessness is incompatible with good faith.”
This judgment was a shot across the bow of all self-regulated professions and should help ensure they act in a timely manner to discipline members who don’t provide what they promise, whether they are doctors, lawyers, or accountants.
In Donoghue v. Stevenson, [1932] A.C. 562 (H.L.), the court had to determine if the manufacturer of a bottle of ginger beer owed a duty to a consumer who suffered injury as a result of finding a decomposed snail in the bottle after consuming part of the bottle’s contents. Lord Atkin, in finding liability against the manufacturer, established the principle of negligence. His reasons have been followed and adopted in all the common-law countries:
The rule that you are to love your neighbour becomes in law, you must not injure your neighbour; and the lawyer’s question, who is my neighbour? receives a restricted reply. You must take reasonable care to avoid acts or omissions which you can reasonably foresee would be likely to injure your neighbour. Who, then, is my neighbour?
The answer seems to be persons who are so closely and directly affected by my act that I ought reasonably to have them in contemplation as being so affected when I am directing my mind to the acts or omissions which are called in question.
More than three decades ago, the Supreme Court of Canada clearly affirmed, in General Motors Products of Canada Ltd. v. Kravitz, [1979] 1 S.C.R. 790, that automakers and their dealers are jointly liable for the replacement or repair of a vehicle if independent testimony shows that it is afflicted with factory-related defects which compromise its safety or performance.
The existence of secret warranty extensions or technical service bulletins also help prove that a product’s deficiencies are the manufacturer’s responsibility. For example, in Lowe v. Fairview Chrysler in 1989, technical service bulletins were instrumental in showing that Chrysler had a history of automatic transmission failures similar to what we see in Ford and GM vehicles today. In addition to replacing or repairing the product, the seller and manufacturer can also be held responsible for any damages arising from the defect (see the CASE SUMMARY referring to Wharton, Chapter 5). This means that loss of wages, supplementary transportation costs, and damages for personal inconvenience can be awarded.
When a warranty claim is rejected on the pretext that the customer “altered”, failed to carry out preventive maintenance on, or damaged the product, manufacturers must prove to the court that there’s a link between their allegation and the failure (see Julien v. General Motors of Canada Ltd. [1991], 116 N.B.R. [2d] 80).
Misrepresentation
Misrepresentation or false advertising is illegal under federal and provincial laws and carries both civil and criminal penalties. Under the Competition Act, federal authorities regularly get multi-million dollar settlements from businesses that stretch the truth — or simply lie — to their customers. And, it doesn’t take much to start the ball rolling: a simple on-line denunciation (at www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/frm-eng/GH%C3%89T-7TDNA5) will suffice to start an investigation that could cost a company millions.
As can be seen in the federal court ruling against Bell Canada, Ottawa’s position is similar to Quebec’s: if qualifying information is necessary to prevent a representation from being false or misleading when read on its own, then that information should be presented clearly and conspicuously. “Fine print” won’t do.
CASE SUMMARY
Bell Canada found this out the hard way on June 28, 2011, when it consented to pay a $10 million settlement (the first time that the maximum penalty for misleading advertising has ever been imposed) and change its advertising after the Canadian Competition Bureau said the ads were contrary to the Competition Act’s civil prohibition against making representations that are false or misleading.
Bell made false, misleading representations for over five years about the prices at which certain of its services were available (including home phones, Internet, satellite television, and wireless services). Bell’s representations gave the “general impression” that the advertised monthly price for the services was sufficient, when in fact Bell used a variety of “fine-print disclaimers” to “hide” additional mandatory fees which made the actual price paid by consumers higher than the advertised price (in one instance 15 percent higher than advertised). According to the Competition Act’s misleading advertising provisions, the “general impression” conveyed by the advertisement to the average consumer, as well as its literal meaning, were considered in determining that the representations made were false or misleading. The settlement between Bell and the Bureau is set out in a “consent agreement” found at www.ct-tc.gc.ca.
As with most businesses caught scamming the public, Bell maintained it did no wrong. Nevertheless, the company paid the $10 million fine and agreed to drop all non-compliant advertising within sixty days. In particular, Bell agreed not to use small print or other ancillary disclosures that contradict the general impression of its price representations. Bell also agreed to pay the Competition Bureau $100,000 to cover the costs of [the Bureau’s] investigation.
Abuse of Trust
Abuse of trust is a polite way of saying to someone in authority “you lied.” Such a breach need not be intentional or malicious, but can be due to negligence, as was likely the case with Texaco and the Alberta Motor Association, below.
CASE SUMMARY
We are the Men from Texaco
We wear the Texaco Star
We like to think at Texaco
We’ve got everything for your car
We’ve got wipers for your windshield
Plugs ’n’ belts ’n’ tires, too
Lubricants and batteries and polishes for you
All the things to keep your engine up to par
We’ve got everything for your car
That’s why you can trust you car to the man who wears the Star
for the finest products that can take care of you car
At every Texaco station, clean across the nation
You can trust your car to the man who wears
