Court File and Parties

COURT FILE NO.: CV-21-665329 MOTION HEARD: 20220331 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Sigma Convector Enclosure Corp., Plaintiff AND: Fluid Hose & Coupling Inc., Joe Pasternak also known as Joseph Pasternak, Barbara Pasternak and Taizhou Chuangju Valve Co., Ltd. also known as 台州 创巨阀门有限公司, Defendants

BEFORE: Associate Justice Jolley

COUNSEL: Robert Harason, counsel for the moving party plaintiff

HEARD: 31 March 2022

Reasons for Decision

[1] The plaintiff brings this motion without notice to the foreign defendant Taizhou Chuangju Valve Co. Ltd. (“Taizhou”) for an order for substituted service and validation of service of the statement of claim on it. It also seeks an order extending the time for service of the claim. The domestic defendants do not oppose the motion.

[2] The plaintiff brought the motion on an urgent basis. The rationale for doing so was to be able to note Taizhou in default before a motion by the defendants is heard which may result in the claim being amended. The plaintiff wishes to avoid having to serve Taizhou with the amended claim by having it noted in default.

[3] I brought to counsel’s attention Rule 26.04(3) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 which requires that amended pleadings must be served on all parties, including those that have been noted in default. In this motion, the plaintiff seeks only to deal with the original statement of claim. In the event the statement of claim requires amendment after the defendants’ motion, the plaintiff will need to seek separate relief concerning service of that amended pleading, as contemplated in rule 26.04(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194.

[4] As Taizhou is resident in China the plaintiff acknowledges that it must effect service in accordance with the Hague Convention of 15 November 1965 on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters (the "Hague Convention"). The Hague Convention requires service through the Chinese service authority following a number of detailed steps.

[5] Parties are not permitted to seek orders validating service or for substituted service until service has been attempted under the Hague Convention (see Tiwari v Tiwari 2018 ONSC 6697, citing Wang v. Lin 2016 ONSC 3967 and Khan Resources Inc. v Atomredmetzoloto JSC 2013 ONCA 189).

[6] I am satisfied that the plaintiff followed all the required steps under the Hague Convention. The plaintiff commenced the required process on 13 July 2021. On 21 July 2021, the Chinese service authority acknowledged that the necessary steps had been completed and advised that it was sending the file for service. The plaintiff advised the Chinese service authority that service needed to be effected by 19 December 2021 and requested a report by 19 August 2021.

[7] On 1 November 2021 the Chinese service authority attempted service, unsuccessfully.

[8] The plaintiff was not advised of this until 4 March 2022, despite sending a follow up request for a response on 9 December 2021. The Certificate, dated 21 February 2021, stated that “the document has not been served, by reason of the following facts – the legal representative of the company was not at the company and could not be contacted, the staff refused to sign the documents (Nov.1, 2021)”. What is clear is that the plaintiff’s documents contained Taizhou’s correct legal name and address.

[9] While the plaintiff did not succeed in serving Taizhou through the Hague Convention process, it did complete the process and obtained the Certificate. As service could not be effected, the plaintiff may now move for service in another manner.

[10] The plaintiff seeks both validated service and substituted service.

[11] Plaintiff’s counsel argued that it would be appropriate to validate service on 1 November 2021 on the basis either that the statement of claim came to the attention of Taizhou or would have had it not been evading service. I do not agree. The statement of claim was not left with anyone, whether signed for or not. There is no indication that staff even saw it. What we know is they were asked to accept service and did not. I also do not conclude that Taizhou was evading service. This was the only attempt made. There is no evidence that the legal representative was not simply away that day or even hour. I do not accept that he was required have left someone in charge to accept legal documents if he was not going to be present or that, failing to do so, he would be found to be deliberately evading service.

[12] However, I am satisfied that subservice by mail is appropriate. The plaintiff has the correct address for Taizhou and it is likely that the statement of claim will come to its attention if mailed there. Further, service by mail will avoid the need for the legal representative to be present to receive the statement of claim.

[13] I am also satisfied that an order extending the time for service is appropriate. The plaintiff took steps to effect service as soon as the claim was issued. The attempted service did take place within that six month window, albeit unsuccessfully. By following the steps in the Hague Convention, I am satisfied that the plaintiff acted reasonably and am further satisfied that no prejudice would result to Taizhou should be extension be granted. Taizhou may still serve a statement of defence, should it wish.

[14] Lastly the plaintiff seeks costs of this motion. Rule 57.03(3) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 provides that on a motion made without notice, there shall be no costs to any party unless the court orders otherwise. The plaintiff argues that costs are appropriate on a partial, if not substantial indemnity basis, given the lack of cooperation of Taizhou. I am not prepared to award costs. There is no evidence that Taizhou deliberatively evaded service or knew the claim was coming and instructed its staff not to accept it. It happened that the Chinese service authority attended on a date when the legal representative was not there and staff there would not accept service. There is no evidence that the Chinese service authority attempted to reach the legal representative and he refused or that they re-attended and he refused them entry.

[15] In conclusion, (a) the time for service of the statement of claim is extended to 7 January 2023; (b) the plaintiff may substitutionally serve Taizhou at its business address, set out in the attached order, by regular mail. Service shall be effected 15 days after mailing; (c) the request for validation of service is dismissed; and (d) there is no order as to costs.

[16] Order to go in terms of the draft order attached, which I have signed.

[17] This endorsement is to be served on Taizhou, along with the statement of claim.

Associate Justice Jolley Date: 31 March 2022