ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: 12-CV-453236CP
DATE: June 25, 2012
BETWEEN:
Brent Gray
Plaintiff
- and -
SNC-Lavalin Group Inc., Pierre Duhaime, Gilles Laramée, Jacques Lamarre, Ian A. Bourne, David Goldman, Patricia A. Hammick, Pierre H. Lessard, Edythe A. Marcoux, Lorna R. Marsden, Claude Mongeau, Gwyn Morgan, Michael D. Parker, Hugh D. Segal, Eric Siegel, Lawrence N. Stevenson, Jean-Paul Vettier, Michael Novak, Riadh Ben Aïssa, Stéphane Roy, Charles Azar, and André Béland
Defendants
Proceeding under the Class Proceedings Act, 1992
COUNSEL:
• A. Dimitri Lascaris, Peter Jervis, Joel Rochon, Sakie Tambakos for the Plaintiff
HEARING DATE: In writing
PERELL, J.
REASONS FOR DECISION
A. INTRODUCTION AND OVERVIEW
[ 1 ] This is a motion for substituted service on the Defendants Stéphane Roy and Riadh Ben Aïssa in a proposed class action under the Class Proceedings Act, 1992 , S.O. 1992, c. C.6.
[ 2 ] The motion with respect to Mr. Roy is straightforward, and for the reasons that follow, I conclude that there shall be an order for substituted service on Mr. Roy.
[ 3 ] The motion with respect to Mr. Aïssa is much more complicated and seemingly raises the issues of whether the rule from Khan Resources Inc. v. Atomredmetzoloto JSC , 2012 ONSC 1522 , reversing 2011 ONSC 4793 (Master) is correct or whether in the circumstances of this case, the rule from Khan Resources admits of exceptions or is distinguishable.
[ 4 ] Khan Resources holds that when documents must be served in accordance with Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters, 15 November, 1965, Can TS 1989 No. 2 (entered into force 10 February 1969, accession by Canada 26 September 1988 (the “ Hague Convention ” ), an Ontario court cannot order substituted service under the Rules of Civil Procedure .
[ 5 ] For the reasons that follow, I conclude that the rule from Khan Resources. simply does not apply to the circumstances of this case. Thus, there is nothing to preclude treating the motion with respect to Mr. Aïssa as a straightforward motion for substituted service.
[ 6 ] Thus, for the reasons that follow, I conclude that there shall be an order for substituted service on both Mr. Roy and Mr. Aïssa .
B. FACTUAL BACKGROUND
[ 7 ] By action commenced in Toronto on May 9, 2012, the Plaintiff, Brent Gray, sues SNC-Lavalin Group Inc., (“SNC-Lavalin”), Pierre Duhaime, Gilles Laramée, Jacques Lamarre, Ian A. Bourne, David Goldman, Patricia A. Hammick, Pierre H. Lessard, Edythe A. Marcoux, Lorna R. Marsden, Claude Mongeau, Gwyn Morgan, Michael D. Parker, Hugh D. Segal, Eric Siegel, Lawrence N. Stevenson, Jean-Paul Vettier, Michael Novak, Riadh Ben Aïssa, Stéphane Roy, Charles Azar, and André Béland.
[ 8 ] Mr. Gray’s lawyer of record in Rochon Genova LLP.
[ 9 ] By action commenced in Brampton, also on May 9, 2012, the Trustees of the Drywall Acoustic Lathing and Insulation Local 675 Pension Fund (“Drywall Fund”) commenced a similar action under Court File No. CV-12-2014-00 styled The Trustees of the Drywall Acoustic Lathing and Insulation Local 675 Pension Fund v SNC-Lavalin Group Inc.
[ 10 ] Drywall Funds’ lawyer of record is Siskinds LLP.
[ 11 ] There is also a parallel class action in the Québec Superior Court. On March 1, 2012, an action was commenced by the filing of a petition. Siskinds Desmeules, Avocats (“Desmeules”), a Québec City law firm affiliated with Siskinds, are counsel for the petitioners in the Québec Proceeding.
[ 12 ] The actions are proposed class actions against SNC-Lavalin and certain of its current and former officers and directors. SNC-Lavalin is a publicly traded company and its shares trade on the Toronto Stock Exchange. It is alleged that disclosure documents issued by SNC-Lavelin contained misrepresentations. The actions arose out of an investigation by the Audit Committee of SNC -Lavelin ’s Board of Directors into allegedly improper contracts under which US$56 million were paid to unknown agents. The report of the Audit Committee allegedly implicates Ben Aïssa and Roy Stéphane Roy as having participated in the wrongful conduct.
[ 13 ] Significantly, the plaintiffs in the Gray Action and in the Drywall Fund Action intend to seek leave to assert the right of action for secondary market misrepresentation provided by Part XXIII.1 of the Ontario Securities Act , RSO 1990, c S.5 . This is significant because leave of the court is required to bring a secondary market misrepresentation claim, and in Sharma v Timminco Ltd . 2012 ONCA 107 , the Court of Appeal held that the running of the three-year limitation period under section 138.14 of the Act was not suspended by s. 28 of the Class Proceedings Act, 1992. Thus, the limitation period continues to run until the court grants leave. In turn, this means that there is a deadline for a court decision for the leave motion .
[ 14 ] Siskinds, Rochon Genova , and their respective clients have agreed to prosecute th eir claims in a consolidated action in Toronto . T he plan is to discontinue the Gray Action as against certain defendants and then to consolidate the Drywall Fund Action with the Gray Action in Toronto .
[ 15 ] The first disclosure document in respect of which the plaintiffs in the Drywall Action Fund allege a misrepresentation was released by SNC-Lavelin on November 6, 2009. Thus, the limitation period for this claim will expire in respect of that disclosure document on November 6, 2012. Thus, the motion for leave under Part XXIII.1 of the Securities Act needs to be heard and actually decided by November 6, 2012.
[ 16 ] Upon the commencement of the actions, Siskinds and Rochon Genova each issued a press release across Canada Newswire indicating, among other things, that Mr. Aïssa and Mr. Roy had been named as defendants in the Drywall Action.
[ 17 ] The Québec Petition has been served on all of the defendants named in the Petition, except Messrs. Aïssa and Roy. The Drywall Fund Statement of Claim has been served on all of the defendants except Messrs. Aïssa and Mr. Roy. The Gray Statement of Claim has been served on all of the defendants except Messrs Aïssa and Roy and also Messrs. Azar, Béland, Lamarre and Vettier, against whom the plan is to discontinue the action.
[ 18 ] Messrs. Aïssa and Roy have not retained counsel for the Québec petition, the Drywall Fund Action, or the Gray Action.
[ 19 ] For the Québec petition, attempts were made, without success, to serve the Petition personally on Messrs. Aïssa and Roy. On March 23, 2012, a bailiff attempted to serve Messrs. Roy and Aïssa at SNC-Lavelin’s headquarters at 455 René-Lévesque Blvd. West, Montreal, Québec.
[ 20 ] Siskinds carried out searches of public documents and databases to ascertain Mr. Roy’s residential address. Those searches indicated that he l ives in “Ile Perrot” in Québec. Siskinds identified two possible addresses and sent process servers, but the a ttempts at service were unsuccessful.
[ 21 ] Mr. Aïssa is a Canadian citizen who normally resides in Canada, in Montreal, Québec. An attempt was made to serve him at an address in Montreal. However, he is currently incarcerated in Switzerland, where he was arrested in connection with allegations of corruption, fraud and money laundering.
[ 22 ] In Québec, on May 18, 2012, Desmeules obtained Orders from the Superior Court for substituted service on Messrs. Aïssa and Roy, and on May 26, 2012, pursuant to the order notices were published in The Gazette (in English), Le Soleil (in French) and Le Journal de Montréal (in French) for substituted service of the Petition on Mr. Aïssa, and in Le Soleil (in French) and Le Journal de Montréal (in French) for substituted service of the Petition on Mr. Roy. Accordingly, Mr. Aïssa and Mr. Roy have now been served with the Petition in the Québec Proceeding.
[ 23 ] In the Gray action, Rochon Genova have been in contact with Mr. Roy’s criminal and civil lawyers. Mr. Roy has retained Québec lawyers Isabel Schurman and Michèle Meleras with respect to potential criminal law matters, and James Duggan with respect to certain civil matters in connection with Roy’s former employment with SNC. A copy of the Gray Statement of Claim has been provided to Ms. Schurman, Ms. Meleras, and Mr. Duggan. They, however, do not have instructions to accept service.
[ 24 ] The plaintiffs in the Drywall Fund Action are attempting to serve Mr. Aïssa in Switzerland in accordance with the formal requirements under Hague Convention .
[ 25 ] Service under the Hague Convention may take some time. The Drywall Fund Statement of Claim is being translated into German for the purposes of service under the Hague Convention. Once translation is complete, it is likely to take three to four months to complete the service process, with no guarantee of success , and there is the possibility that Mr. Aïssa may be released and leave Switzerland before the Hague Convention service process is complete . It is also possible that other criminal charges may be laid in Canada, and Mr. Aïssa c ould be extradited to Canada or another jurisdiction before the Hague Convention process is complete .
[ 26 ] As an alternative to the Hague Convention process, Siskinds and Rochon Genova have contacted Michael Edelson, an Ottawa lawyer who has been retained as counsel for Mr. Aïssa with respect to potential criminal law matters. Mr. Edelson is able to communicate with Mr. Aïssa through a Swiss lawyer. Mr. Edelson has advised Siskinds and Rochon that he does not have authority to accept service.
[ 27 ] In the above circumstances, Mr. Gray seeks an Order for substituted service on Mr. Roy of the pleadings in both actions and any motion materials by delivering a copy of the court documents to Mr. Duggan. Mr. Gray believes that there is a strong likelihood that substituted service will cause the documents to come to the attention of Roy.
[ 28 ] In the above circumstances, Mr. Gray seeks an Order for substituted service on Mr. Aïssa of the pleadings in both actions and any motion materials by delivering a copy of the court documents to Mr. Edelson. Mr. Gray believes that there is a strong likelihood that substituted service will cause the documents to come to the attention of Mr. Aïssa.
[ 29 ] My Gray submits that Messrs. Aïssa and Roy are necessary parties for the plaintiffs’ leave motion and that Messrs. Aïssa and Roy may have material information. Mr Gray submits that he would be prejudiced if the hearing of his motion for leave was delayed waiting for the completion of service in in accordance with the Hague Convention and if it was delayed waiting to locate Mr. Roy and serve him personally because if the deadline passes then some of his secondary market misrepresentation claims may be extinguished.
C. DISCUSSION
[ 30 ] The Court is authorized to make an order for substituted service pursuant to Rule 16.04 of the Rules of Civil Procedure , R . R . O . 1990, Reg . 194 , which provides that:
(1) Where it appears to the court that it is impractical for any reason to effect prompt service of an originating process or any other document required to be served personally or by an alternative to personal service under these rules, the court may make an order for substituted service or, where necessary in the interest of justice, may dispense with service.
(2) In an order for substituted service, the court shall specify when service in accordance with the order is effective. ... .
[ 31 ] The test for substituted service was summarized as follows by Master Dash in Chambers v Muslim (2007), 87 OR (3d) 784 (Master) at para 13 :
What is the test for substituted service under rule 16.04 ? The plaintiff must satisfy the court, on proper evidence, that the proposed method of substituted service will have “some likelihood” or a “reasonable possibility” of bringing the action to the attention of the defendant, otherwise “the exercise of obtaining an order for substituted service is a charade.” One must select the mode of service “that is most likely to bring the document in question to the attention of the defendant”. This could include publication in a newspaper in the defendant’s locality. However, “substituted service is not available if the whereabouts of the defendant are unknown”. If “the defendant will not learn of the action through substituted service” it may be “more appropriate to ask for an order dispensing with service altogether”. Furthermore, before substituted service is ordered the plaintiff must show that “all reasonable steps have been taken to locate the party and to personally serve him or her. What is reasonable will depend on the nature of the case, the relief claimed, the amount involved and all of the surrounding circumstances.” Substituted service is not intended to spare the inconvenience or expense or difficulty of personal service if personal service can be effected.
[ 32 ] The term “prompt service” in r ule 16.04(1) is not fixed but rather will depend on the facts of any given case. As Justice Quinn stated in Laframboise v Woodward (2002), 59 OR (3d) 338(S.C.J.) at para 8 :
… I prefer the Shorter Oxford definition to which I have referred: “unable to be carried out or done”. Of course, “unable” must be read in conjunction with “prompt”. Where time is not of the essence, prompt service as contemplated by rule 16.04(1) may take on a different meaning than when compared to a case where there is some urgency.
[ 33 ] T he requirement to take all reasonable steps to effect service personally is contextual. Justice Quinn stated in Laframboise v Woodward , supra at para. 10 . that “[w]hat is reasonable will depend on the nature of the case, the relief claimed, the amount involved and all of the surrounding circumstances. ”
[ 34 ] I am satisfied that the criteria for substitutional service have been satisfied with respect to Mr. Roy and that the requested order should issue.
[ 35 ] But for the possible complication that Mr. Aïssa is in a detainee in a Hague Convention state, I am also satisfied that the criteria for substitutional service have been satisfied with respect to Mr. Aïssa.
[ 36 ] For Ontario proceedings, rule 17.05 imports the Hague Convention into the rules for the service of documents outside Ontario. Rule 17.05 states:
MANNER OF SERVICE OUTSIDE ONTARIO
Definitions
17.05 (1) In this rule,
"contracting state" means a contracting state under the Convention; ("État contractant")
"Convention" means the Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters signed at The Hague on November 15, 1965. ("Convention").
General Manner of Service
(2) An originating process or other document to be served outside Ontario in a jurisdiction that is not a contracting state may be served in the manner provided by these rules for service in Ontario, or in the manner provided by the law of the jurisdiction where service is made, if service made in that manner could reasonably be expected to come to the notice of the person to be served.
Manner of Service in Convention States
(3) An originating process or other document to be served outside Ontario in a contracting state shall be served,
(a) through the central authority in the contracting state; or
(b) in a manner that is permitted by Article 10 of the Convention and that would be permitted by these rules if the document were being served in Ontario.
Proof of Service
(4) Service may be proved,
(a) in the manner provided by these rules for proof of service in Ontario;
(b) in the manner provided by the law of the jurisdiction where service is made; or
(c) in accordance with the Convention, if service is made in a contracting state (Forms 17A to 17C).
[ 37 ] Where service is made outside Ontario in a signatory state of the Hague Convention , the service will not be effective unless it is compliant with the requirements of the Convention: Pharm Canada Inc. v. 1449828 Ontario Ltd. (c.o.b. TrinityWorldwide Services Inc.) , 2011 ONSC 4808 ; Campeau v. Campeau , [2004] O.J. No. 4788 (S.C.J.) ; Dofasco Inc. v. Ucar Carbon Canada Inc. , [1998] O.J. No. 3450 (Gen. Div.) ; Samina North America v. H3 Environmental II LLC , [2004] O.J. No. 6229 (S.C.J.).
[ 38 ] Khan Resources Inc. v. Atomredmetzoloto , supra is authority that an order for substituted service cannot be made when the person to be served resides in a jurisdiction that is a signatory to the Hague Convention . S ervice in a country that is a signatory to the Hague Convention must be done exclusively in accordance with the Hague Convention . In Khan Resources , Justice O’Marra reversed the decision of Master Graham, who had validated service under rule 16.08, notwithstanding the non-compliance with the Hague Convention . Rule 16.08 states:
16.08 Where a document has been served in a manner other than one authorized by these rules or an order, the court may make an order validating the service where the court is satisfied that,
(a) the document came to the notice of the person to be served; or
(b) the document was served in such a manner that it would have come to the notice of the person to be served, except for the person’s own attempts to evade service.
[ 39 ] In Khan Resources, Master Graham followed the decision of Master Glustein in Zhang v. Jiang (2006), 82 O.R. (3d) 306 (Master) . (For the reasons that follow, the Zhang case should be treated as overturned.)
[ 40 ] I n Khan Resources , pursuant to the Hague Convention , the plaintiffs , who were advancing a $300 million claim, sought to serve two Russian corporations that were subsidiaries of the Russian State Atomic Energy Corporation, a Russian state-owned corporation; however, the Russian central authority refused to effect service. The Russian Government exercised its right under Article 13 of the Hague Convention , which protects the sovereignty or security of the signatory to refuse to effect service. Article 13 states:
Where a request for service complies with the terms of the present Convention, the State addressed may refuse to comply therewith only if it deems that compliance would infringe its sovereignty or security.
It may not refuse to comply solely on the ground that, under its internal law, it claims exclusive jurisdiction over the subject-matter of the action or that its internal law would not permit the action upon which the application is based.
The Central Authority shall, in case of refusal, promptly inform the applicant and state the reasons for the refusal.
[ 41 ] Master Graham held that the Hague Convention does not oust the jurisdiction of the court to order substituted service. Justice O’Marra disagreed, and he held that an order to substitute, dispense with , or validate service is not available where service is required to be effected in a contracting state under the Hague Convention .
[ 42 ] Justice O’Marra held that the Hague Convention applied and that rule 17.05 (3) had to be interpreted in a way that upheld Canada’s international obligations. He held that when the Hague Convention applies, the contracting states must comply with its provisions and that the contracting states are not free to apply their domestic laws to circumvent the provisions of the Convention. The domestic law with respect to service of court documents is ousted, and the receiving state determines the regime for service. Justice O’Marra stated at paragraphs 77-78 of his judgment:
In light of these principles, I must presume that Rule 17.05(3) conforms to Canada's international obligations under the Service Convention. This means that Rule 17.05(3) prescribes the only methods of service available when service is to be performed in a contracting state. A party seeking to perform service cannot resort to Rules 16.04 or 16.08 to substitute, dispense with, or validate service. This conclusion is required by the exclusive character of the Service Convention.
I also find that this presumption is not rebutted by "an unequivocal legislative intent to default" on this international obligation. The arguments made by the respondents do not rise to the threshold of "unequivocal legislative intent", particularly in light of the appellants' arguments to the contrary. As LeBel J. made clear in Hape , "In deciding between possible interpretations, a construction that would place Canada in breach of its international obligations should be avoided." As such, I reject the respondents' interpretation and adopt the one advanced by the appellants.
In summary, Rules 16.04 and 16.08 have no application when service must be performed abroad in a contracting state pursuant to Rule 17.05(3). Master Graham erred in law by validating service under Rule 16.08. Accordingly, the appeal is allowed.
[ 43 ] In my opinion the Khan Resources case simply does not apply to the circumstances of the case at bar where service need not be performed in a contracting state pursuant to rule 17.05 (3). The difference is that in the case at bar, unlike the Russian companies, Mr. Aïssa is not a foreigner. His situation is not much different than Mr. Roy, who is a Canadian citizen normally subject to the jurisdiction of the courts of his own country and who may be avoiding service or who is not co-operating in acknowledging that he knows about the proceedings in Ontario and Québec.
[ 44 ] Thus, the order for substituted service for Mr. Aïssa is actually grounded under the general manner of service (rule 17.05 (2)) and not the rule for the manner of service in a Convention state (rule 17.05(3).)
[ 45 ] I wish to be clear that I do not doubt the correctness of Justice O’Marra’s decision in Khan Resources, and I am not refusing to follow the case. I am also not distinguishing or qualifying the case. Rather, in my opinion, the rule from Khan Resources simply does not apply to the circumstances of the case at bar. Put somewhat differently, service of the court documents outside Ontario should be based on Mr. Aïssa normal residency in Québec.
[ 46 ] In the case at bar, service in accordance with the Hague Convention is a redundancy that should proceed out of an abundance of caution. If the authorities in Switzerland exercise their limited right to refuse to serve the documents, the court in Ontario will respect that decision. That respect, however, does not mean that the domestic law of the Ontario Court has been ousted. Service on Mr. Aïssa is based on his normal connection to Canada and independent of his abnormal connection to Switzerland.
D. CONCLUSION
[ 47 ] For the above reasons, this motion is granted.
Perell, J.
Released: June 25, 2012
COURT FILE NO.: 12-CV-453236CP
DATE: June 25, 2012
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Brent Gray
Plaintiff
‑ and ‑
SNC-Lavalin Group Inc., Pierre Duhaime, Gilles Laramée, Jacques Lamarre, Ian A. Bourne, David Goldman, Patricia A. Hammick, Pierre H. Lessard, Edythe A. Marcoux, Lorna R. Marsden, Claude Mongeau, Gwyn Morgan, Michael D. Parker, Hugh D. Segal, Eric Siegel, Lawrence N. Stevenson, Jean-Paul Vettier, Michael Novak, Riadh Ben Aïssa, Stéphane Roy, Charles Azar, and André Béland
Defendants
REASONS FOR DECISION
Perell, J.
Released: June 25, 2012.