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act is too onerous. "Safety is always a pri- ority of our members," says Ventin. "You have to understand that they are already doing these things. They have their own incident-reporting systems in place, and if a product needs to be recalled, they will do it." McNaughton agrees responsible orga- nizations will always have taken those factors into account. "It doesn't mean there were never any recalls before and now there will be tons of them. It's not that extreme. It codifies what people have been doing." She believes many companies will do more than what's required. "No matter how high the standard in legislation like this, it's not the end of the story. Liability will also be determined by the laws of negligence. There is a much greater con- cern these days about class actions." She says companies also do recalls for quality reasons. Compliance may prove more prob- lematic for companies with cross-border dealings. Caroline Zayid, a litigation part- ner at McCarthy Tétrault LLP in Toronto, is particularly concerned about one detail of the reporting regime. "Where a seller or manufacturer learns of a situa- tion that resulted in, or could reasonably have been expected to result in, death or a serious adverse effect on someone's health, it must report it within two days. It's a very short time frame," she warns. "For example, if a distribution company in Japan, or any other country you want to pick, learns of such a situation, it is now technically within the knowledge of the company. A responsible manu- facturer would investigate it, and it may take some time to assess whether it sits within the definitions, but the clock is ticking. The obligation in Canada may have crystallized even before they realize they have a health and safety issue. It will be very difficult to comply." A non-compliant company can be punished by the new system of fines and penalties, called the administrative mon- etary penalty, which can be issued where a notice of violation of an order has been issued. Ultimately, if not paid as required, the monetary penalty can be registered with the Federal Court as a debt and enforced as if it were a judgment obtained from the Federal Court. Companies may also be forced to report incidents that turn out to be false alarms. There will be an opportunity to correct this via the requirement to lodge a more comprehensive written report within 10 days of learning of the incident, but the damage may already be done. The Canadian government can disclose the initial report to the public and foreign governments if it feels it is necessary, so the information may already be in the hands of many other governments. The U.S. legislation also calls for the creation of an online, searchable public database. It will list such reports and may affect com- panies that are selling in the Canadian marketplace. "It's been put in the legisla- tion for a purpose, and it makes sense in some circumstances," says Zayid, "but complying will require a lot of resources, organization, and planning." IH More coverage at . AIRD & BERLIS INHOUSE FEBRUARY 2011 • rd&Berlis_IH_Feb_11.indd 1 33 1/4/11 2:34:15 PM t i n y .c c/IH_r e c a l l s