Ontario Court of Appeal Affirms Need to Establish Actual Harm in Negligence Claims

On March 27, 2024, the Ontario Court of Appeal (Court) affirmed in Palmer v. Teva Canada Ltd. (Palmer) that Canadian law does not provide remedies for an increased risk of harm. This ruling is in line with other recent landmark product liability decisions and makes clear that actual harm, not just risk thereof, is required for recovery in tort.

Background

In Palmer, the Ontario Superior Court of Justice dismissed a motion to certify a proposed class action related to alleged contamination in valsartan, a prescription drug for treating high blood pressure. 

The plaintiffs alleged, among other things, that the defendants breached their duty of care to the plaintiffs by failing to ensure that the valsartan they produced was free of the contaminants “NDMA” and “NDEA,” which they said were carcinogenic. As a result, the plaintiffs claimed damages for an increased risk of harm and psychological harm arising from the recall notice, as well as costs for medical monitoring, medical services and discarded drugs.

The motion judge held that the plaintiffs’ action failed to make out a claim or establish some basis in fact that NDMA or NDEA causes cancer, and therefore, their action was for pure economic losses for an alleged increased risk of being diagnosed with cancer after ingesting NDMA or NDEA. The motion judge denied certification and made clear that the law provides remedies for actual injuries, not future or speculative ones. (See our July 2023 Blakes Bulletin: Divisional Court Affirms That Exposure to Increased Risk of Harm Is Not Actionable).

Key Findings

Actual Harm

The overriding hurdle facing the appellants was that no present damage had materialized. On appeal, the appellants argued that their claim pleaded two types of “actual” harm: (1) genotoxic injury (i.e., cellular or molecular changes to their body caused by ingesting NDMA and NDEA); and (2) psychological injury. 

The Court rejected the plaintiffs’ assertion that genotoxic injury constituted present actual harm, holding that a physical change with no perceptible effect upon one’s health is not compensable in negligence. This claim, therefore, had the same flaw as the claim for increased risk of cancer — there was no materialized damage.

With respect to the psychological injury claim, the Court accepted that there could be a cause of action for present psychological harm occasioned by the risk of future physical harm (i.e., a cancer diagnosis). However, it stated that the plaintiffs’ claim was not viable because the psychological injuries alleged did not rise above ordinary annoyances and were not “serious and prolonged.” Further, the Court found that the injury was not foreseeable in a person of “ordinary fortitude.”

Notably, the Court observed that the recall notices stated that the increased risk of developing cancer was between 0.0086% and 0.0011% in the context of a 50% existing lifetime risk of developing cancer. As such, the Court concluded that the recall would not ordinarily cause any psychological injury at a level compensable in tort. To the contrary, the Court found that the notices seem intended to assuage concern.

The Court also observed that, in any event, psychological damage claims are often inherently individualized and, as such, do not satisfy the commonality requirement for class certification. 

Pure Economic Loss

The Court also upheld the motion judge’s decision not to certify the plaintiffs’ negligence claim for pure economic loss (including damages for medical services and monitoring). Pure economic loss is recoverable only when the product presents an imminent real and substantial danger and only for the costs of averting such danger. 

Here, the Court found that the plaintiffs had not pleaded that valsartan was imminently dangerous or that discarding the product would not be feasible and sufficient to avert any danger. Recovery for economic loss does not extend to other losses such as replacement value or refund for the contaminated product. There can also be no recovery of medical expenses or medical monitoring without a viable claim in negligence for physical or psychological damages. 

Consumer Protection Legislation and the Competition Act

Finally, the Court rejected the plaintiffs’ claim that the defendants breached the Consumer Protection Act by making false, misleading, deceptive, or unconscionable representations about valsartan. The essence of the plaintiffs’ case was a negligence claim for a contaminated product, not a deceptive misrepresentation. There was no allegation or material facts to support an allegation that valsartan was unfit for its intended purpose or that the allegedly contaminated valsartan was a useless or ineffective drug for the purpose of treating hypertension. 

The Court also dismissed the plaintiffs’ misleading advertising claim under section 52 of the Competition Act (Act) on the basis that none of the pleaded misrepresentations were capable of sustaining a cause of action under the Act. The Court made clear that the purpose of section 52 is to target deceptive marketing practices, not create liability for defective products.

Key Takeaways

This decision highlights the importance of requiring actual harm in product liability cases. It confirms that Canadian law does not provide remedies for theoretical or speculative risks because actual harm (compensable damage) must be alleged. The decision also confirms that a claim for psychological injury arising from notice of an increased risk will be struck if it fails to meet the basic threshold of injury needed to garner recovery and the ordinary fortitude test.

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