Rule 17 Service Outside Ontario & An Analysis of Kaplan v. Heber

How do you go about serving extrajudicial documents on parties outside of Ontario?  Are courts strict in their enforcing the rules governing service? Let’s start the conversation by saying that service of legal documents on parties outside Ontario is a laborious, arduous and involved task¹.

Rule 17 of the RULES OF CIVIL PROCEDURE – R.R.O. 1990, Reg. 194 sets out a roadmap dealing with how legal documents have to be served on a party who is not located within Ontario.  In some instances, service outside of Ontario requires leave of the court.  As well, the manner of service differs depending on whether the Country, in which the party is situated, is a signatory to the Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters signed at The Hague on November 15, 1965² [ The “Convention”].   The process to determine how to proceed with service might give rise to a temptation to figure a way around the rules governing such service.  I recommend avoidance of that temptation because judges strictly enforce Rule 17.

For the most part, the general principle followed by the courts is that the rules are liberally construed to secure the just, most expeditious and least expensive determination of every proceeding on its merits.³ Generally, if there is a failure to comply with the rules it is viewed as an irregularity and does not render a proceeding a nullity.⁴ So, for example, Judges do not freak out if defences are delivered in 30 days after service of a statement of claim as opposed to 20 days as called for by the rules.  Lawyers who move to note pleadings closed after 20 days without first calling the lawyer on the other side to first check if the defendant plans to file a defence are criticized for sharp practice⁵. However, Rule 17 is different.  When we are dealing with parties located in Ontario, the Rules and case law make it clear that the goal of formal service is to give the adverse party notice so a proper response will be provided in a timely fashion.  Accordingly, the defendant in Ontario cannot hide behind the plaintiff’s minimal non compliance with the rules of service and expect drastic court sanctions⁶. Notwithstanding the plaintiff’s failure to comply with the rules of service when a defendant located in Ontario serves a defence or a respondent serves an appearance they are deemed to be served. Arguably, one could argue that the same principles should apply to service on defendants or respondents who are situated outside of Ontario⁷.  As logical as that may sound, that’s just not the way Ontario courts have seen it.  As set out in Kaplan v. Heber⁸[“Kaplan”], Courts reject that premise and strictly apply compliance with the service framework contained in the Convention.

There were a number of issues in this case, but for the purposes of this blog, let’s focus on the question of how to deal with the non service of the defendants residing in Israel.

The court noted that Israel is a signatory to the Convention which provides “that service of an originating process on a person who resides in another signatory country must be made through that country’s Central Authority unless another method of service is approved by the country.”  Now, in Ontario an originating process must be served personally (Rule 16.02) or by an alternative to personal service (Rule 16.03).  Rule 16.03(4) says “Service of a document may be made by sending a copy of the document together with an acknowledgment of receipt card (Form 16A) by mail to the last known address of the person to be served, but service by mail under this subrule is only effective as of the date the sender receives the card.”

Rule 17.05(3) provides that the originating process to be served outside Ontario in a contracting state shall be service (a) the central authority in the contracting state or (b) in a matter that is permitted by the Convention and that would be permitted by these rules if the document were being served in Ontario.

In paragraphs 21- 23 of Kaplan, Faita J. reviewed the basic law plaintiffs must consider when dealing with service of someone located outside of Ontario and concluded “In short, a plaintiff cannot circumvent the Convention even if the defendant has actual notice of service.”   Here are some excerpts:

Article 10 of the Convention states,

Provided the State of destination does not object, the present Convention shall not interfere with –

1. 1. the freedom to send judicial documents, by postal channels, directly to persons abroad,
   2. the freedom of judicial officers, officials or other competent persons of the State of origin to effect service of judicial documents directly through the judicial officers, officials or other competent persons of the State of destination,
   3. the freedom of any person interested in a judicial proceeding to effect service of judicial documents directly through the judicial officers, officials or other competent persons of the State of destination.

In reviewing the Israeli law (HCCH|Declaration/reservation/notification) the court noted, “The State of Israel has declared that it does not object to the use of Article 10(a) provided that such method of service is not used to serve the State of Israel.”  The Court concluded, in paragraph 30 “In my view, the better view is that Article 10(a) authorizes the service of an originating process abroad as do Articles 10(b) and (c).”

The bottom line of this case is that pursuant to Rule 17, the fact situation in this case permitted service outside of Ontario without leave of the court.  Given that Israel was a signatory to the Convention service of the originating process could have been effected either through the central authority in Israel or in a manner permitted by the Convention and Ontario’s Rules.  Israel permits service by mail as does Ontario.  But to effect service by mail under Ontario’s Rules the defendant who receives the document had to sign an acknowledgment of receipt card and send it back.  If the defendant being served declined to sign the acknowledgement of receipt card then service was not effected.  Unlike someone served in Ontario, the fact that the defendant knew about the claim is irrelevant.  Please refer to paragraphs 19-24 of the Salguiero⁹case to understand how the courts view this issue:

[19]     ……. Although a foreign defendant may be served with an Ontario statement of claim without leave under the circumstances set out in Rule 17.02, where the state in which the foreign defendant resides is a signatory to the Convention, Rule 17.05 (3) applies.  The Ontario Court of Appeal has conclusively determined that Rule 17.05 (3) is a complete code and where that rule applies, the court may not deem service to be effective under Rule 16.  Khan Resources Inc. v. Atomredmetzolo JSC¹⁰is binding authority on this point.

[20]     As described in Khan, the Convention serves two purposes.  One purpose is to ensure that foreign defendants are put on notice of claims, but the other is to provide a uniform procedure in all contracting states.  For that reason, it is insufficient to simply bring the matter to the attention of a defendant or to demonstrate that the defendant is actually aware of the claim.  The defendant must be served in the foreign state in the manner permitted by the Convention.  As a practical matter as well, it is highly unlikely that a foreign state that is signatory to the Convention will enforce a judgment if the claim was not served in the manner required by the law of that state.

[21]     The Convention not only requires service through the Central Authority, but also requires the document to be translated into the official language of the foreign jurisdiction.  The Court of Appeal specifically approved of the decision by this court in Campeau v. Campeau,¹¹in which the court held that service on an English speaking litigant in Austria that had not been effected pursuant to the Convention was not valid.  In Khan, the court also applied decisions in Ontario and other provinces which had reached the same conclusion.

[22]     The Court of Appeal did leave open the possibility that there might be circumstances in which a party had exhausted all of the remedies open to it under the Convention and had been unable to effect service.  This was the case in Zhiang v. Jiang in which Master Glustein (as he then was) made an order dispensing with service in a situation where China had refused to effect service.  In Khan, the Court of Appeal specifically declined to rule on whether or not Zhiang was correctly decided and thus left open the possibility that such an argument can be advanced under particular circumstances.  That is not the case here. The plaintiff has made no effort to comply with the Convention.  There is no evidence that the Central Authority would refuse to effect service or is acting in bad faith.

[23]     I have no doubt that a foreign defendant could choose to waive compliance with the Convention, could serve a defence and could voluntarily attorn to the jurisdiction. This is not what happened here.  The evidence is clear that the insurer for the defendant simply assumed that service had been effected on all of the defendants and served a defence in the face of a threat to note all of the defendants in default.  The error was almost immediately detected and an amended defence was served which relies upon the absence of service and also rejects the jurisdiction of the Ontario courts on other grounds.

[24]     Since service was not effected in accordance with the Convention, the defendant has not waived the requirement and it is not open to the court to deem service effective under Rule 16.01 (2) or 16.08,…..

Conclusions and Takeaways

The case law is clear.  The courts do not look kindly on plaintiffs who fail to comply with Rule 17. Strict compliance is expected and failure to do so, at best, leads to delays in prosecuting the claim.  If limitation periods are missed it could be worse.

So, for those lawyers who have respondents/defendants located outside Ontario and have to deal with Rule 17 I have these suggestions:

First step – Remember Rule 17.04 – Originating process to disclose facts and reference rule relied on for argument that leave is not required.

Take the time to read Rule 17.04 which provides that an originating process served outside Ontario without leave shall disclose the facts and specifically refer to the provision of Rule 17.02 relied on in support of such service.  In other words, if the originating process does not require leave reference the subrule in 17.02 and the facts relied upon to come under that provision.  For example, “This application is in respect of the administration of the estate of the deceased John Smith and the Applicant relies upon Rule 17 .02(b) of the Rules of Civil Procedure for service outside of Ontario without leave.“

See Rules 17.02 and 03.

These rules list the types of causes of action that require leave and those that do not require leave to serve someone outside Ontario. Ensure which category your facts fall into and follow the path for service set out by the rules.

Manner of Service Outside Ontario

Review Rule 17.05. It is not enough to hire a lawyer or agent in the jurisdiction in question to effect service. First you have to determine if the country in question is a signatory to the Convention.  If not, the manner provided for in these Rules for service in Ontario or the manner provided for by the law of the local jurisdiction will suffice.  If the country in question is a contracting state, then service should be done through the central authority or in a manner that is permitted by the Convention that would be permitted by Ontario’s Rules.  Now – how do you find out if a country is a signatory?  How do you find out how to contract the central authority in each country?

Find out if the country in question is a signatory to the Convention and points of contact.

Does the country in question require that service be effected through its central authority alternative to personal service? Don’t presume what is permitted in Israel will work in China. To start you off in your research the link from the Alberta Court of Appeal (https://albertacourts.ca/kb/areas-of-law/civil/service-outside-canada)¹² is included. Here are a number of very useful excerpts from that site:

1. An up-to-date list of the Contracting States at: https://www.hcch.net/en/instruments/conventions/status-table/?cid=17
2. Table of Contracting States to the Hague Service Convention: https://albertacourts.ca/docs/default-source/qb/table-of-contracting-states-to-the-hague-service-convention.pdf
3. Instruction Booklet for Service Outside of Canada (Hague Service Convention): https://albertacourts.ca/docs/default-source/qb/instructions-service-outside-of-canada-(hsc).pdf
4. A list of all the Central Authorities and their addresses and other contact information

The bottom line

If the plaintiff’s counsel spends the time researching how to approach service at the beginning of the file, it can save a lot of time and steer clear of avoidable costly delays downstream.  In the worst case scenario, if the plaintiff’s lawyer missteps such that service within the limitation period is not properly done it may give rise to a negligence claim.