CITATION: Xela Enterprises Ltd. v. Castillo, 2015 ONSC 866
DIVISIONAL COURT FILE NO.: 177/14 DATE: 20150205
ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT
CORBETT, PERELL AND GILMORE JJ.
BETWEEN:
XELA ENTERPRISES LTD. GABINVEST S.A., LISA S.A., JUAN ARTURO GUTIÉRREZ, JUAN GUILLERMO GUTIÉRREZ and 696096 ALBERTA INC.
Plaintiffs
(Responding Parties)
– and –
MARGARITA CASTILLO, ROBERTO RICARDO CASTILLO, JUAN LUIS BOSCH GUTIÉRREZ, DIONISIO GUTIÉRREZ MAYORGA, JUAN JOSE GUTIÉRREZ MAYORGA, FELIPE ANTONIO BOSCH GUTIÉRREZ, ROBERTO BARILLAS CASTILLO, ISABEL GUTIÉRREZ DE BOSCH, LA BRANA, S.A., MULTI-INVERSIONES, S.A., VILLAMOREY, S.A. and AVICOLA VILLALOBOS S.A.
Defendants
(Moving Parties)
Joseph Groia and Martin G. Mendelzon, for the Plaintiffs
Katherine Kay and Ellen M. Snow, for the Appellants
HEARD at Toronto: February 5, 2015
D. L. CORBETT J. (ORALLY)
[1] The appellants appeal the order of Thorburn J. dated January 20, 2014, to grant the respondent’s motion for validated or substituted service of the Fresh as Amended Statement of Claim on the respondents.
[2] The facts of the case are fully summarized in the motion Judge’s reasons in the court below and we do not repeat them.
[3] The respondents amended the Statement of Claim of February 28, 2013 and made numerous attempts to serve it on the Gutiérrez Guatemalan defendants in Guatemala, including serving the fresh claim on their counsel in Toronto, Stikeman Elliott LLP. The service attempts in Guatemala were undertaken by notaries but did not comply with Guatemalan law. Guatemala is a civilian jurisdiction wherein service is viewed as a jurisdictional act within the domain of the judiciary or other state officials. Direct service by a party violates the Guatemalan constitution and the Guatemalan courts must be involved in the appointment of notaries to effect service within the jurisdiction. This is distinguishable from Ontario and other common law jurisdictions where service is a procedural step that can be done by the parties.
[4] Following attempted service in Guatemala, the respondents brought a motion before Thorburn J. for an order validating service of the fresh claim on the Gutiérrez Guatemalan defendants or alternatively, an order for substituted service. The Gutiérrez Guatemalan defendants argued that due to Canada’s international law obligations and the nature of service under Guatemalan law, service must be done in accordance with Guatemalan law in order to be found valid by an Ontario Court.
[5] Justice Thorburn recognized that Guatemala is not a contracting state under the Convention on the Service Abroad of Judicial and Extra-judicial Documents in Civil or Commercial Matters, otherwise known as the Hague Convention. If it was, Rule 17.05(3) would apply. However, in respect to non-contracting states, Rule 17.05(2) allows the plaintiffs to choose to serve the defendants “in the manner provided for in the Rules of Service in Ontario or in the manner provided by the law of Guatemala.”
[6] The issues on this appeal centre on Thorburn J.’s interpretation of Rule 17.05(2) and her exercise of discretion, pursuant to Rule 16.08. The parties agree that the applicable standard of review for questions of law is correctness and that the judicial exercise of discretion is owed deference. (See Housen v. Nikolaisen, [2002] S.C.C. 33 at para. 8).
I. The Issues
Did Justice Thorburn Properly Interpret and Apply Rule 17.05(2)?
[7] The wording of Rule 17.05(2) is unambiguous. Where a jurisdiction is not a signatory to the Hague Convention, a litigant seeking to effect service on a foreign party has a choice to serve the party either in accordance with the Ontario Rules or the foreign rules.
[8] While the appellants are correct that Ontario Rules of Civil Procedure ought to be interpreted in a manner which conforms to Canada’s international obligations. Justice Thorburn’s interpretation of that Rule did not offend that principle. We agree with Thorburn J.’s interpretative analysis of 17.05 and we adopt it.
II. Did Justice Thorburn’s Ruling Offend the Principles of Comity?
[9] The appellant’s arguments are based on the argument that Thorburn J.’s interpretation of the service rules offends the international principle of comity. As in R. v. Hape, [2007] S.C.C. 26 at para. 50, comity is based on a desire for states to act in reciprocity to one another. However, this principle does not override the express intent of Ontario’s service laws. Rule 17.05(2) is “conflicting legislation” within the meaning of para. 46 of R. v. Hape.
III. Did Justice Thorburn Properly Exercise Her Discretion in Validating Service of the Fresh Claim?
[10] In her reasons, Thorburn J. found that the fresh claim had come to the attention of the respondents. This does not offend “international law obligations” as submitted by the appellant. On the contrary, Thorburn J. reviewed the relevant rules and principles and made a determination that she was entitled to make based on the record before her. As Guatemala is not a signatory to the Hague Convention, service in accordance with the Ontario Rules does not undermine any Canadian International Law obligation.
[11] The appeal is dismissed.
[12] The parties should write forthright to Himel J. to request appointment of a case management judge for this case, which seems likely to be hotly contested. The parties should bring this endorsement to Himel J.’s attention.
[13] I have endorsed the back of the Appeal Book, “For reasons given orally by D.L. Corbett J. for the Court, the appeal is dismissed. Costs to the respondents from the appellants fixed at $15,000 inclusive for the appeal and motion for leave to appeal.”
___________________________ D. L. CORBETT J.
PERELL J.
GILMORE J.
Date of Reasons for Judgment: February 5, 2015
Date of Release: February 19, 2015
CITATION: Xela Enterprises Ltd. v. Castillo, 2015 ONSC 866
DIVISIONAL COURT FILE NO.: 177/14 DATE: 20150205
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
CORBETT, PERELL AND GILMORE JJ.
BETWEEN:
XELA ENTERPRISES LTD. GABINVEST S.A., LISA S.A., JUAN ARTURO GUTIÉRREZ, JUAN GUILLERMO GUTIÉRREZ and 696096 ALBERTA INC.
Plaintiffs
(Responding Parties)
– and –
MARGARITA CASTILLO, ROBERTO RICARDO CASTILLO, JUAN LUIS BOSCH GUTIÉRREZ, DIONISIO GUTIÉRREZ MAYORGA, JUAN JOSE GUTIÉRREZ MAYORGA, FELIPE ANTONIO BOSCH GUTIÉRREZ, ROBERTO BARILLAS CASTILLO, ISABEL GUTIÉRREZ DE BOSCH, LA BRANA, S.A., MULTI-INVERSIONES, S.A., VILLAMOREY, S.A. and AVICOLA VILLALOBOS S.A.
Defendants
(Moving Parties)
ORAL REASONS FOR JUDGMENT
D. L. CORBETT J.
Date of Reasons for Judgment: February 5, 2015
Date of Release: February 19, 2015