April 8, 2015
In Mitchison v. Zerona International Inc., 2014 ONSC 4738 the plaintiff brought an action in Ontario for damages against the defendant with respect to a franchise business purchased from the defendants. The plaintiffs alleged the defendants violated the Arthur Wishart Act (Franchise Disclosure) 2000, S.O. 2000, C. 3. The statement of claim originally named Zerona Canada, carrying on business as Zerona International, as a defendant. Zerona Canada defended the action and pleaded that the impugned agreement was actually between the plaintiffs and Zerona International Inc. and another individual who was a director of Zerona International Inc. The plaintiff amended the statement of claim to add Zerona International Inc. as a defendant and corrected other misnomers in the title of proceedings.
Both Zerona International Inc. and one of the named individual directors of Zerona International Inc. resides in the Barbados. The plaintiff travelled to the Barbados and served Zerona International Inc. and one of the directors personally. The defendants were subsequently noted in default and thereafter brought a motion for determination that service of the amended statement of claim was invalid, as it did not comply with the requirements of the Hague Convention on the Service Abroad of Judicial and Extra Judicial Documents in Civil or Commercial Matters, 15 November 1965, Can. T.S. 1989 No. 2 (“the Hague Convention”) and as such was not served in accordance with 17.05(3)(b) of the Rules of Civil Procedure. The defendants brought the motion without attorning to the jurisdiction of Ontario.
Master Glustein cited Article 10(c) of the Hague Convention which permits “any person interested in a judicial proceeding to effect service of the claim directly through the judicial officers, officials or other competent persons of the stated destination.” Master Glustein determined that Article 10(c) precluded the “person interested in a judicial proceeding (i.e. the plaintiff) from effecting service himself. Accordingly, it is a requirement of the Hague Convention that service be affected through an intermediary rather than a litigant.
As a result, Master Glustein granted the defendant’s motion, declared that the purported service of the claim was invalid, and set aside the noting in default of the Barbados defendants. This technical approach taken by Master Glustein led to a harsh result. The defendants were not denying that they received the claim or that they had timely notice of it. Nonetheless, Master Glustein was bound by the provisions of the Hague Convention and determined that service was invalid. This result would seem to be at odds with Rule 2.01 of the Ontario Rules of Civil Procedure which determines that a failure to strictly comply with the rules is an irregularity and does not render a proceeding or step in a proceeding a nullity. Nonetheless, it is important to realize that when engaging in cross-border litigation, it is imperative knowledgeable and experienced counsel be retained to handle such matters. Had the plaintiff in Mitchison v. Zerona International Inc. consulted appropriate counsel before serving the statement of claim personally, the cost, expense and delay associated with the motion could have been avoided.
Jeff Van Bakel practices in cross-border litigation, professional negligence defence and commercial litigation. He regularly blogs about cross-border litigation involving enforcing foreign judgments and letters rogatory here.