COURT FILE NO.: CV-19-00628860-0000
DATE: 2023-05-19
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: 10379875 CANADA INC. et al. v. TIW INDUSTRIES LTD. et al.
BEFORE: ASSOCIATE JUSTICE D. MICHAEL BROWN
HEARD: 2023-01-16 (in person)
COUNSEL: Richard Butler, rbutler@willmsshier.com, for the plaintiffs
Vincent DeMarco, vincent.demarco@wehlitigation.com, for the defendants, Akzo Nobel Coatings Ltd. / Akzo Nobel Peintures Ltee, Akzo Nobel Wood Coatings Ltd. / Akzo Nobel Peintures Bois Ltee, Akzo Nobel Salt Ltd. / Sel Akzo Nobel Ltee, Nouryon Chemicals Ltd., Nouryon Pulp and Performance Canada Inc. / Nouryon Pâte et Performance Canada Inc., Nouryon Chemicals LLC, PPG Architectural Coatings Canada, Inc. / PPG Rêvetements Architecturaux Canada, Inc., PPG Canada Inc. and PPG Industries, Inc. (the “Akzo Affiliates”)
E N D O R S E M E N T
[1] This is a motion by the plaintiffs for validation of service of the Fresh as Amended Statement of Claim and the motion record for this motion on the defendant, Akzo Nobel N.V., a company in the Netherlands, for leave to issue a Further Fresh as Amended Statement of Claim and for an extension of time to serve the Further Fresh as Amended Statement of Claim on Akzo Nobel N.V. Akzo Nobel N.V. did not respond to the motion and did not appear at the hearing. The motion is opposed by certain other defendants to the action which are affiliates of Akzo Nobel N.V. (the Akzo Affiliates, as defined below). The remaining defendants have not opposed. For the reasons that follow, the motion for leave to amend and for an extension of time is granted and the motion as it relates to validation of service is dismissed.
Background
[2] The plaintiff’s claims in the action are for damages relating to alleged environmental contamination. The plaintiffs purchased the surface and subsurface parcels of land at 65 Heward Avenue in Toronto in 2018, which they allege is contaminated as a result of the conduct of the previous owners of the property. The named defendants (20 in total) include the owners of the property from 1934 through 1985, as well as various entities that the plaintiffs allege are responsible at law for the liabilities of certain previous owners.
[3] The plaintiffs allege that Canadian Industries Limited (“CIL”), a textile and chemical manufacturer, owned 65 Heward from September 23, 1942 until November 17, 1975. The Plaintiffs claim that CIL's operations at 65 Heward caused and/or contributed to the substantial contamination that remains beneath the surface at 65 Heward. The plaintiffs allege that through a series of amalgamations and/or corporate acquisitions, certain named defendants, their predecessors and/or parent companies hold CIL’s environmental liabilities for 65 Heward. The defendants that the plaintiffs allege hold CIL’s environmental liabilities include Akzo Nobel N.V. and 9 other defendants that are subsidiaries or affiliates of Akzo Nobel N.V. (the “Akzo Affiliates”). According to the Fresh as Amended Statement of Claim, the Akzo Affiliates are domiciled in various locations in Canada and the United States.
[4] The plaintiffs’ original Statement of Claim was issued in October 2019 but was amended before it was served. The Fresh as Amended Statement of Claim was issued on September 4, 2020, and was served on all defendants, except Akzo Nobel N.V., between September 12, 2020 and October 5, 2020. Akzo Nobel N.V. was the only defendant outside of North America and as the Netherlands is a contracting state under the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters, it would have to be served through its Central Authority. Plaintiffs’ counsel were advised by their process server in September 2020 that service in the Netherlands under the Hague Convention would require translation of the pleading into Dutch and would normally take a minimum of 6 months but could take longer as a result of the COVID-19 pandemic.
[5] In December 2020, counsel for the plaintiff had a discussion with counsel who had been retained by the Akzo Affilliates regarding service on Akzo Nobel N.V. Counsel for the Akzo Affiliates confirmed that he did not act for Akzo Nobel N.V. He also advised that if Akzo Nobel N.V. was served it likely bring a motion to challenge jurisdiction of this court. He said he could likely get instructions to accept service of the claim on behalf of Akzo Noble N.V. if the plaintiffs would agree that accepting such service would not constitute an attornment to jurisdiction.
[6] From February 2021 through to March 2022, the plaintiffs engaged in a process aimed at narrowing the number of defendants to the action. Plaintiffs’ counsel wrote to counsel for each of the defendants and invited them to provide information and records demonstrating that their clients had no history of ownership or control over the property at 65 Heward Avenue. There followed a series of without prejudice correspondence and discussions between the plaintiffs and a number of defendants. The plaintiffs’ objective in these discussions was to obtain information and records that would give comfort to the plaintiffs to release certain defendants from the action without the necessity of pleadings and discovery from those defendants.
[7] The plaintiffs’ evidence is that they paused their efforts to serve Akzo Nobel N.V. while engaged in their attempts to narrow the parties to the action, including possibly releasing Akzo Nobel N.V. from the action. In an effort to clarify the role of Akzo Nobel N.V., on March 2, 2022, the plaintiffs served a Request to Admit on the Akzo Affiliates which included a number of requested admissions relating to Akzo Nobel N.V.’s relationship to the other defendants and its connection to the property at 65 Heward Avenue. The Akzo Affiliates refused all requested admissions, taking the position that the Request to Admit was “premature and unhelpful”.
[8] The plaintiffs’ efforts to narrow the parties to the action were successful. In June 2022, the plaintiffs reached agreements with five of the defendants to discontinue the action against them on a without costs basis. Most of the amendments to the Fresh as Amended Statement of Claim for which leave is sought on this motion relate to the removal of these five defendants.
Service on Akzo Nobel N.V.
[9] The plaintiffs’ evidence is that they decided to proceed with service on Akzo Nobel N.V. upon receiving the response of the Akzo Affiliates’ response to the request to admit. On October 19, 2022 plaintiffs’ counsel couriered copies of the motion record for this motion, the Fresh as Amended Statement of Claim dated September 20, 2020 and the proposed Further Fresh as Amended Statement of Claim to the Central Authority in the Netherlands responsible for coordinating international service of documents under the Hague Convention. On December 8, 2022 the Central Authority confirmed by email that the documents had been “issued”[^1].
[10] The Certificate of service from the Dutch Central Authority had not been received by the time the affidavits for this motion were sworn. Instead, the Certificate and related documents from the Central Authority were uploaded to Case Lines by the plaintiffs shortly before the hearing. They are not attached to an affidavit. The Certificate appears to indicate that the pleadings and the motion record were served by the Central Authority on Akzo Nobel N.V. on November 9, 2022.
[11] Further, on December 2, 2022, the plaintiffs served the motion record for this motion, the Fresh as Amended Statement of Claim dated September 20, 2020 and the proposed Further Fresh as Amended Statement of Claim on Akzo Nobel N.V. directly by email, courier and Canada Post priority mail.
Validation of Service
[12] The plaintiffs seek validation of service on Akzo Nobel N.V. of both the motion record and the Fresh as Amended Statement of Claim. Rule 16.08 provides that the court may make an order validating service where a document has “been served in a manner other than one authorized by the Rules.” In the case of the motion record, an order validating service is neither necessary nor appropriate as the motion record has been served in a manner that is authorized by these Rules.
[13] According to the affidavit of service filed, the motion record on this motion was served on Akzo Nobel N.V. in the Netherlands by email, courier and mail on December 2, 2022. Rule 17.05(3)(b) provides:
17.05(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 the Convention and that would be permitted by these rules if the document were being served in Ontario.
[14] As the Akzo Affiliates acknowledge in their factum, the Netherlands is a non-objecting state with respect to Article 10(b) of the Hague Convention, which states:
“Provided the State of destination does not object, the present Convention shall not interfere with … the freedom to send judicial documents, by postal channels, directly to persons abroad”.
[15] The combined effect of Rule 17.05(3)(b) and Article 10(b) is that Ontario court documents may be served in the Netherlands by mail provided that service by mail would be permitted if the documents were served in Ontario. A motion record may be served by mail in Ontario pursuant to Rule 16.01(4)(i). Accordingly, the plaintiffs’ motion record was properly served by mail on Akzo Nobel N.V. on December 2, 2023, with such service effective on December 9, 2022 per Rule 16.06(2).
[16] I pause here to note the significance of the service of the motion record on Akzo Nobel N.V. Although properly served with the Motion Record and Notice of Motion, Akzo Noble N.V. has not responded to the motion in any way and did not attend the hearing. Although the motion was opposed by Akzo Affiliates, counsel for the Akzo Affiliates made it clear in both their written materials and oral submissions that they did not act for Akzo Nobel N.V. Counsel submitted that Akzo Nobel N.V intends to challenge the jurisdiction of this court. It has not responded to or appeared on this motion out of a concern that doing so might be an attornment to such jurisdiction.
[17] This motion is therefore unopposed by Akzo Noble N.V. and I have treated it as such in my determination of the motion. Akzo Noble N.V. has made a tactical decision not to recognize the jurisdiction of this court and has elected not to oppose this motion. It must accept the consequences of that decision. Akzo Nobel N.V. cannot have it both ways by opposing the motion by proxy through its North American subsidiaries and affiliates. Accordingly, to the extent the Akzo Affiliates have opposed this motion on the basis of alleged prejudice to Akzo Nobel N.V., I have given those submissions little weight.
[18] The plaintiffs also seek validation of service of the Fresh as Amended Statement of Claim on Akzo Nobel N.V. The plaintiffs’ evidence is that this pleading was served on Akzo Nobel N.V. by the Central Authority in the Netherlands on November 9, 2022. However, certain of the documents demonstrating such service were not attached to any affidavit and are not properly in evidence. Accordingly, I am not able to determine on the record before me whether the means of service was compliant with Hague Convention and Rule 17.05(3)(a). Even if I were able to make such a determination, I would not make an order validating the means of service. If I had determined that the means service on November 9, 2022 was compliant with the Hague Convention and Rule 17.05(3), then no validation order would be necessary.
[19] Even if I had determined that the means of service did not comply with the Hague Convention, an order validating such means of service would still not be appropriate. The Hague Convention is an international treaty that has been incorporated into Ontario law under Rule 17.05 and has been determined by the Court of Appeal to be a complete code for service in contracting states. Courts in Ontario do not have discretion to validate service in a contracting state by means that are non-compliant with the Hague Convention: Khan Resources Inc. v. Atomredmetzoloto JSC, 2013 ONCA 189 at paras 25-53.
[20] Notwithstanding whether the means of service of the Fresh as Amended Statement of Claim was compliant with the Hague Convention, the plaintiffs still have an issue with respect to the timing of such service. The delivery of the pleading by the Central Authority occurred on November 9, 2023, just over 2 years after the deadline for service pursuant to the Rules after taking into account the 6-month pandemic extension granted by the Emergency Management and Civil Protection Act. In this respect, the plaintiffs’ request for validation of service of the Fresh as Amended Statement of Claim amounts to a request for a 2-year extension of time for service. I will therefore deal with this aspect of the validation request together with requested extension to serve the proposed Further Fresh as Amended Statement of Claim, below.
Amendment of Claim
[21] The plaintiffs seek leave to amend the Fresh as Amended Statement of Claim to incorporate the amendments reflected in the proposed Further Fresh as Amended Statement of Claim that is attached as Schedule “A” to the Plaintiff’s Notice of Motion. Rule 26.02 provides that a party may amend its pleading without leave before the close of pleadings if the amendment does not include or necessitate the addition, deletion or substitution of a party to the action. The pleadings in this action are not yet closed as the Akzo Affiliates have not yet served Statements of Defence. However, the amendments proposed by the plaintiffs to the Fresh as Amended Statement of Claim include the deletion of the five defendants against whom the plaintiffs have agreed to discontinue the action, so leave is required.
[22] Pursuant to Rule 26.01, on a motion at any stage in the action, the court shall grant leave to amend a pleading “unless prejudice would result that could not be compensated for by costs or an adjournment.”
[23] The amendments proposed by the plaintiffs are largely unopposed. The Akzo Affiliates oppose only the proposed amendments to two paragraphs of the Fresh as Amended Statement of Claim, which they say constitute the withdrawal of an admission by the plaintiffs. They rely on Rule 51.05:
Withdrawal of Admission
51.05 An admission made in response to a request to admit, a deemed admission under rule 51.03 or an admission in a pleading may be withdrawn on consent or with leave of the court.
[24] The Akzo Affiliates object to the amendments to paragraph 5 and 68 of the Fresh as Amended Statement of Claim as reflected in the following redline comparison prepared by counsel:
On May 7, 2018, the Plaintiff, 10379875 Canada Inc. (“103 Inc.”), entered into an Agreement of Purchase and Sale to purchase the subsurface parcel of the Property. 103 Inc.
will closeclosed the transaction andcompletecompleted the purchase of the subsurface parcelwhenon or about November 6, 2020, once 103 Inc.iswas satisfied with the environmental condition of the Property.68.103 Inc.will closeclosed the transaction on or about November 6, 2020 for the sub-surface parcel of the Propertywhenonce the Plaintiffsarewere satisfied with the environmental condition at the Property.
[25] The Akzo Affilliates describe the alleged withdrawal of the admission in an affidavit sworn by their lawyer:
These amendments propose to withdraw an admission that the Plaintiffs did not have to and/or would not close the purchase of the subsurface parcel of 65 Heward Avenue, Toronto (the subject property of the dispute, the “Property”) unless and/or until they were satisfied with the environmental condition of the property, and thus could have walked away from the purchase without suffering the damages alleged in the action. The amendments proposed would remove this admission.
[26] The plaintiffs submit that these amendments do not constitute a withdrawal of any admission. I agree. The Fresh as Amended Statement of Claim uses temporal as opposed to conditional language. The pleading states that the transaction will close “when” the plaintiffs are satisfied with the environmental condition at the property, not “if” or “only if” the plaintiffs are satisfied. The proposed amendments similarly use temporal language – the transaction closed “once” the plaintiffs were so satisfied. The original and proposed amended statements convey the same meaning but viewed from different points in time. The pleading has merely been updated to reflect the fact that the transaction has closed since the Fresh as Amended Statement of Claim was issued and that, as anticipated, it closed once the plaintiffs were satisfied with the environmental condition of the property. I find that these proposed amendments do not amount to the withdrawal of an admission by the plaintiffs.
[27] As there is no withdrawal of an admission and there is no evidence before me of any other prejudice that would result from the amendments proposed by the plaintiffs, the plaintiffs’ motion for leave to amend the Fresh as Amended Statement of Claim is granted in accordance with the mandatory requirements of Rule 26.01.
Extension of Time for Service
[28] The leading case on a motion to extend the time for service of a statement of claim is the decision of the Court of Appeal in Chiarelli v Wiens, 2000 CanLII 3904 (ON CA). The court must consider whether an extension would advance the just resolution of the dispute without prejudice or unfairness to either party. The moving party on a motion for an extension must also provide a reasonable explanation for the delay.
[29] In most cases, as in the present motion, the key issue is the existence of prejudice to the defendant in respect of whom the extension of time for service is sought. The prejudice that will defeat an extension of time for service must be caused by the delay (Chiarelli, para 16).
[30] In this case, the defendant to be served (Akzo Nobel N.V.) has not opposed the motion nor asserted any prejudice resulting from the delay. While the requested extension is opposed by the Akzo Affiliates, based largely on broad assertions of prejudice to Akzo Nobel N.V., they have filed no evidence of such prejudice. As the Court of Appeal held in Chiarelli:
Although the onus remains on the plaintiffs to show that the defendant will not be prejudiced by an extension, in the face of such a general allegation, the plaintiffs cannot be expected to speculate on what witnesses or records might be relevant to the defence and then attempt to show that these witnesses and records are still available or that their unavailability will not cause prejudice. It seems to me that if the defence is seriously claiming that it will be prejudiced by an extension it has at least an evidentiary obligation to provide some details. The defence did not do that in this case.
[31] Notably, no evidence has been filed by the respondents as to when Akzo Nobel N.V. first became aware of the plaintiffs’ claim. The defendants’ awareness of the claim is an important factor on a motion for an extension of time for service: see Salguiero et al. v. Instant Brands Inc. et al., 2022 ONSC 4345. If, for example, the defendant was already aware of the claim against it within the time for service under the Rules, that would weigh against a finding of a prejudice resulting from the delay in service.
[32] The plaintiffs’ evidence is that they assume that Akzo Nobel N.V. is aware of the Fresh as Amended Statement of Claim given that it was served on nine of its subsidiaries and affiliates in September and October of 2020 and those subsidiaries and affiliates have collectively retained one law firm to represent all of them. Absent any evidence to the contrary, this is a reasonable assumption in my view.
[33] Based on the record before me, I find that there is no prejudice to Akzo Nobel N.V. resulting from the 2-year delay in service of the Fresh as Amended Statement of Claim nor will Akzo Nobel N.V. suffer prejudice from the delay resulting from the requested extension of time to serve the Further Fresh as Amended Statement of Claim. I find the following factors support a finding of no prejudice:
a) This action is still at a very early stage and pleadings have not closed. As of the hearing of this motion, the Akzo Affiliates had not yet delivered Statements of Defence.
b) Counsel for the Akzo Affiliates has given evidence that, if this motion is granted, he now has instructions to accept service of the Further Fresh as Amended Statement of Claim on behalf of Azko Nobel N.V. subject to the plaintiffs’ agreement that such acceptance is not an attornment to the jurisdiction. This suggests that Akzo Nobel N.V., once served, would share the same counsel as the Akzo Affiliates and would not have to bring new counsel up to speed.
c) Akzo Nobel N.V. has been aware of the claim against it since at least December 9, 2022 when it was served with the motion record, and has likely been aware since October 2020 when nine of its subsidiaries and affiliates across North America were served with the Fresh as Amended Statement of Claim that named Akzo Nobel N.V as a defendant.
d) The plaintiffs’ claims against Akso Nobel N.V. relate to environmental contamination that occurred more than 40 years ago. When viewed in that context, the delay caused by the extension of time for service is not significant. It is highly unlikely that evidence of 40-year old events that was still available in 2020 would no longer be available in December 2022 or today.
e) The respondents on this motion have filed no evidence of any prejudice to Akso Nobel N.V. resulting from the delay in service.
[34] I also find that the plaintiffs have provided a reasonable explanation for the delay. It was reasonable for the plaintiffs to hold off serving Akzo Nobel N.V. under the Hague Convention while they engaged in discussions with the Akzo Affiliates and other defendants with the objective of releasing those defendants who had no liability for the property, including potentially Akso Nobel N.V. Throughout this period, the plaintiffs were actively pursuing this litigation. The plaintiffs’ claims have never been paused or abandoned. As discussed above, the plaintiffs’ assumption that Akso Noble N.V. was aware of the claims during this time was also reasonable.
[35] In summary, I find that the requested extension of time for service of the Fresh as Amended Statement of Claim and the Further Fresh as Amended Statement of Claim would advance the just resolution of the dispute without prejudice or unfairness to either party. I would therefore grant the plaintiffs’ motion as it relates to an extension of time for service.
[36] In the Notice of Motion, the plaintiffs seek an extension of time of seven months based on advice they received in September 2020 that service in the Netherlands under the Hague Convention would take at least six months. However, the plaintiffs’ experience in serving under the Hague convention in the Fall of 2022 suggests that the process can be completed in under two months. In light of this more recent evidence, in my view an extension of four months is sufficient.
Disposition
[37] The plaintiffs’ request for leave to amend the Fresh as Amended Statement of Claim in form of the Further Fresh as Amended Statement of Claim attached as Schedule “A” to the Notice of Motion is granted.
[38] The plaintiffs’ request for an extension of time to serve the Fresh as Amended Statement of Claim and the Further Fresh as Amended Statement of Claim on the defendant Akzo Nobel N.V. is granted. The deadline to effect service of these pleadings is extended until 120 days from the date of this endorsement. The extension of time as it relates to service of the Fresh as Amended Statement of Claim is granted nunc pro tunc, such that it applies to any past service of the pleading that was otherwise compliant with the Hague Convention and Rule 17.05(3).
[39] The request for validation of service of the motion record and the Fresh as Amended Statement of Claim is denied.
Costs
[40] The plaintiffs were largely successful on the motion. While the motion as it relates to validation of service was dismissed, the end the result for the plaintiffs is roughly equivalent to validation given my finding that the motion record was properly served under the Rules and the Hague Convention and my ruling that the extension of time for service of the Fresh as Amended Statement of Claim be granted nunc pro tunc. Given their success, the plaintiffs should have their costs on the motion.
[41] In their costs submissions filed, the plaintiffs seek partial indemnity costs if successful in the amount of $12,526.70. In their costs submissions, the Azko Affiliates seek partial indemnity costs if successful in the amount of $15,000. The Azko Affiliates also submit that if the plaintiffs are successful, a costs award of between $12,000 and $15,000 would be reasonable. Based on these costs submissions, the amount requested by the plaintiffs is within the reasonable expectations of the parties. The Azko Affiliates shall pay to the plaintiffs their costs of the motion, fixed in the amount of $12,526.70 (inclusive of HST) and payable within 30 days.
D. Michael Brown, Associate Judge
DATE: 2023-05-19
[^1]: Based on the documents that followed from the Central Authority, it appears that the documents were served, not issued. This may have been a translation error.