T-4794-77
Mona Lisa Incorporated (Plaintiff)
v.
The Ship Carola Reith and her Owners, Parten-
reederei M.S. Carola Reith, Intercast S.A., Cast
North America Limited, Cast Europe, N.V., Rich-
mond Shipping Limited and Cast Shipping Lim
ited (Defendants)
Trial Division, Dubé J.—Montreal, March 5;
Ottawa, March 16, 1979.
Practice — Service — Application to set aside service
because no personal or proper service effected pursuant to law
— Service effected for all defendants by delivering and leaving
copy with receptionist of defendant Cast North America Lim
ited — Whether or not proper service was effected on all or
any of defendants — Federal Court Rules 304, 309(2), 310(1),
1002(5) — Quebec Code of Civil Procedure, art. 130.
These are two similar motions, one by the defendant ship
Carola Reith and her owners and the other by the remaining
defendants, to file a conditional appearance and to set aside
service of plaintiff's statement of claim on the ground that "no
personal or proper service was made as required by law". The
affidavit of service attached to the statement of claim stated
that service was effected "by delivering to and leaving the said
certified copy with ... the receptionist of the Cast North
America Ltd." The issue to be determined, therefore, is wheth
er or not proper service was effected on all or any of the
defendants.
Held, the service effected on Cast North America Limited is
valid, but the service effected on all the other defendants must
be set aside. Rule 1002 applies to the action in rem against the
Carola Reith. Obviously the ship is not a person or a corpora
tion to which Rule 309 dealing with personal service, or Rule
310 with reference to substitutional service, would apply. The
applicable Rule 1002(5) is mandatory. The service of the
statement of claim as against the ship is contrary to the Rules
and ought to be set aside. Although the affidavit does not
describe the receptionist of Cast North America Limited as
being "the person apparently in charge, at the time of the
service", it can be sensibly inferred that she could appear to the
process server to be a person with authority to deal with such
matters. In view of the liberal interpretation given Quebec's
service procedure rules and in light of Rule 2(2), the Court
would be very reluctant "to end prematurely the normal
advancement" of this case on the sole ground that the affidavit
of service did not specify that the receptionist appeared to the
process server to be "the person ... in charge". For the
remaining defendants substitutional service under Rule 310(2)
may be effected only when the prospective defendants in the
ordinary course of business enter into transactions in Canada,
regularly make use of the services of the persons served, and
actually made use of that person served for the purposes of the
transaction in question. The Court cannot presume the exist
ence of all these elements without the benefit of an affidavit.
APPLICATION.
COUNSEL:
Laurent Fortier for plaintiff.
Gerald P. Barry for defendants the Ship
Carola Reith and her Owners, Partenreederei
M.S. Carola Reith.
Robert Cypihot for defendants Intercast S.A.,
Cast North America Limited, Cast Europe,
N.V., Richmond Shipping Limited and Cast
Shipping Limited.
SOLICITORS:
Stikeman, Elliott, Tamaki, Mercier & Robb,
Montreal, for plaintiff.
McMaster Meighen, Montreal, for defendants
the Ship Carola Reith and her Owners, Par-
tenreederei M.S. Carola Reith.
Brisset, Bishop, Davidson & Davis, Montreal,
for defendants Intercast S.A., Cast North
America Limited, Cast Europe, N.V., Rich-
mond Shipping Limited and Cast Shipping
Limited.
The following are the reasons for order ren
dered in English by
DuBÉ. J.: These are two similar motions, one by
the defendant ship Carola Reith and her owners
and the other by the remaining defendants, to file
a conditional appearance and to set aside service of
plaintiff's statement of claim. The following rea
sons apply to both motions.
In its statement of claim in rem and in perso-
nam plaintiff says that it was the owner of a
certain shipment of Plasticware which was
received by the defendants on board the vessel
Carola Reith at the port of Antwerp, Belgium, on
or about the 7th day of March 1976, under clean
board bill of lading, to be delivered at the Port of
Montreal, Canada. Plaintiff further alleges that
the said cargo was discharged in short and
damaged condition and that it suffered damage in
the amount of $3,423.75.
In their motions defendants seek an order to set
aside service of the statement of claim on the
ground that "no personal or proper service was
made as required by law".
In his affidavit of service attached to the state
ment of claim Reynold Lewke says that he did on
the 5th day of September 1978 serve the above
named defendants "by delivering to and leaving
the said certified copy with Miss Ginette Leduc,
the receptionist of the Cast North America Ltd."
It must be determined, therefore, whether
proper service was effected on all or any of the
defendants.
Firstly, as to the service upon the ship Carola
Reith. It being an action in rem the applicable
Rule is 1002(5)(a) which reads:
Rule 1002. .. .
(5) In an action in rem, the statement of claim or declara
tion shall be served
(a) upon a ship, or upon cargo, freight or other property, if
the cargo or other property is on board a ship, by attaching a
certified copy of the statement of claim or declaration to the
main mast or the single mast, or to some other conspicuous
part of the ship, and leaving the same attached thereto;
Obviously the ship is not a person or a corpora
tion to which Rule 309 dealing with personal
service, or Rule 310 with reference to substitution-
al service, would apply. The applicable Rule
1002(5) is mandatory. In The "Mesis" v. Louis
Wolfe & Sons (Vancouver) Ltd.', the Chief Justice
of this Court had this to say at page 435:
Whatever the correct view of the nature of a Canadian Admi
ralty action in rem is, in my view, Rule 307 does not authorize
the Rule 1002 type of service out of the jurisdiction. In my
view, not only is Rule 307 applicable only to service on a legal
person but, having regard to the mandatory requirements of
Rule 1002(5), Rule 1001 does not make Rule 307 applicable to
the service of a statement of claim in an action in rem.
' [1977] 1 F.C. 429.
It is very clear, therefore, that the service of the
statement of claim as against the ship is contrary
to the Rules and ought to be set aside.
Secondly, does service on a receptionist consti
tute personal service upon a corporation? Under
Rule 304 originating documents must be served
personally, unless substitutional service is ordered
under Rule 310(1). Rule 309(2) prescribes the
ways in which personal service upon a corporation
may be effected.
Rule 309. .. .
(2) Personal service of a document upon a corporation is
effected by leaving a certified copy of the document
(a) in the case of a municipal corporation, with the warden,
reeve, mayor or clerk,
(b) in any case other than a municipal corporation,
(i) with the president, manager, or other head officer, the
treasurer, the secretary, the assistant treasurer, the assist
ant secretary, any vice-president, or any person employed
by the corporation in a legal capacity, or
(ii) with the person apparently in charge, at the time of
the service, of the head office or of the branch or agency in
Canada where the service is effected, or
(c) in the case of any corporation, with any person discharg
ing duties for the particular corporation comparable to those
of an officer falling within subparagraph (a) or (b) (i),
or by such other method as may be provided by statute for the
particular case or as is provided for service of a document on a
corporation for the purposes of a superior court in the province
,where the service is being effected.
Miss Leduc is not a person described in Rule
309(2)(b)(i): she is a receptionist. The affidavit
aforementioned does not describe her as a person
"apparently in charge", or a "person discharging
duties ... comparable to those of an officer",
although she may conceivably have appeared to be
"in charge" to the process server.
However, Rule 309(2) does further provide that
personal service upon a corporation may be effect
ed "by such other method as may be provided by
statute for the particular case or as is provided ...
for the purposes of a superior court in the province
where the service is being effected". Article 130 of
the Code of Civil Procedure . of the Province of
Quebec prescribes somewhat the same type of
service as Rule 309 of the Federal Court of
Canada. The article reads:
130. Service upon a corporation as defined in the Civil Code
is made at its head; office, at its business office in the province,
or at the office of its agent in the district where the cause of
action has arisen, speaking to any officer or to a person in
charge of the said office.
If the corporation has no business office in the Province of
Québec and no agent having his office in the district where the
cause of action has arisen, service may be made upon one of the
officers of the corporation or upon any person mentioned as
such in the last annual report submitted to the Minister of
Consumer Affairs, Cooperatives and Financial Institutions
under the Companies Information Act.
Counsel for plaintiff, however, relies on the new
article 2 of the Code which provides that the
provisions of the Code must be interpreted in such
a way as to "facilitate rather than to delay or to
end prematurely the normal advancement of
cases". He then refers the Court to several Quebec
decisions 2 to the effect that, where the defendants
have not been prejudiced by irregular service, then
the irregularity is cured by the appearance of the
defendants in Court. He alleges that whereas
defendants have not suffered any prejudice
because of the irregularity of service, the plaintiff
would suffer irreparable damage if service were to
be set aside: the action is based on a bill of lading
and would be prescribed under the Hague Rules
limiting such actions to a period of one year.
The Federal Court Rules include an interpreta
tion Rule to the same effect. Rule 2(2) provides
that "These Rules are intended to render effective
the substantive law and to ensure that it is carried
out; and they are to be so interpreted and applied
as to facilitate rather than to delay or to end
prematurely the normal advancement of cases".
There is however, as counsel for the defendants
points out, Federal Court jurisprudence to the
effect that an attempted service of process not in
accordance with the Rules of Court may result in
such service being set aside.
2 Dame Gauthier v. Lacroix [1951] B.R. 473. United Motors
Limited v. Marine Transport Co. S.A. [1968] C.S. 306.
Lamarre v. La Municipalité de St-Paul de l'fle aux Noix
[1969] R.P. 310.
In MCA Canada Ltd. v. Robert Simpson
Productions 3 , Heald J. held that the plaintiff had
not shown that service on a corporation controller
was within the Court Rule governing service on
corporations. He said this at page 448:
The affidavit of service by Donald Lewis Marston, student-
at-law, is to the effect that service was on Mr. Douglas
Longstaff "who is in the capacity of comptroller with said
corporate defendant". There is no evidence before me on which
I could possibly conclude that said Douglas Longstaff is one of
the persons covered by Rule 309(2)(b)(i).
Nor does Rule 309(2)(b)(ii) assist the plaintiffs. This Rule is
an alternative to Rule 309(2)(b)(i) and permits service on:
... the person apparently in charge, at the time of the
service, of the head office or of the branch or agency in
Canada where the service is effected, ...
There is nothing in Mr. Donald Marston's affidavit of service
or anywhere else in the evidence before me from which I could
sensibly infer or assume that said Douglas Longstaff was "the
person apparently in charge at the time of the service".
There are no words in Reynold Lewke's affida
vit which would describe Miss Leduc as being "the
person apparently in charge, at the time of the
service", but one could sensibly infer that the lady
could appear to the process server, as well as to
any casual visitor, to be a person with authority to
deal with such matters. Bearing in mind the liberal
interpretation given the service procedure rules in
the Province of Quebec, as already referred to, and
in the light of our own Rule 2(2), I would be very
reluctant "to end prematurely the normal advance
ment" of this case on the sole ground that the
affidavit of service did not specify that Miss Leduc
appeared to the process server to be "the person
...in charge".
Thirdly, may such service on defendant Cast
North America Limited be considered proper ser
vice on the other defendants, all non-resident
corporations?
The normal procedure with reference to those
non-residents would have been to apply for service
3 [1971] F.C. 445.
ex juris under Rule 307. Plaintiff, however,
attempted to effect substitutional service under
Rule 310(2) which reads:
Rule 310. .. .
(2) Where a person resident outside Canada who, in the
ordinary course of his business, enters into contracts in Canada
or enters into business transactions in Canada (as, for example,
when a carrier receives goods in Canada for transport to some
place outside Canada) and, in that connection, regularly makes
use of the services of a person or persons resident in Canada, is
sued in respect of any cause of action arising out of such a
contract or transaction, personal service of the statement of
claim or declaration or other document in the action upon any
such person whose services the defendant actually made use of
in connection with the contract or transaction in question shall
be deemed to be personal service on the defendant as though an
order had been duly made for substitutional service in that
manner in the particular case.
There is nothing in the affidavit of service to the
effect that Cast North America Limited is a
person whose services the other defendants make
use of on a regular basis and is a person whose
services the defendants actually made use of in
connection with the transaction in question. There
is nothing in the statement of claim which would
indicate the relationship between the several
defendants. Paragraph 2 of the statement of claim
does recite that the defendants are "common carri
ers by water for hire, were the owners, operators,
managers and charterers of the vessel Carola
Reith and, carriers of the said shipment", but
nothing more. No affidavit having been filed at the
hearing of the motion by any of the parties, the
Court is limited to those two documents: the state
ment of claim and the affidavit of service.
Paragraph 3 of the statement of claim does refer
to bill of lading number G 010 and counsel for
plaintiff attempted in his written argument to file
the bill of lading in order to show the respective
roles played by the several defendants. But the
Rules of the Federal Court do not permit such
filing of evidence at that stage, or at any previous
stage during the hearing of a motion, without a
proper affidavit.
Rule 310(3) provides that where service is
effected under 310(2) there shall be attached to
the endorsement "a separate ... notice to that
effect setting out the provisions of paragraph (2)
in full". Plaintiff did set out on the back of his
statement of claim the full paragraph (2) in
accordance with the Rule.
In my view, however, that is not sufficient where
nothing appears either in the affidavit of service,
or in the statement of claim itself, to the effect
that the person served does enter into business
transactions in the ordinary course of business
with the defendants and that the defendants actu
ally made use of that person's service in connection
with the transaction in question. Moreover, the
Rule is limited to contracts entered into in
Canada, or business transactions in Canada,
whereas paragraph 3 of the statement of claim
refers to a bill of lading dated at Dusseldorf in
Germany and a shipment received on board at
Antwerp, Belgium. That paragraph does refer to a
delivery at Montreal, Canada, but it cannot be
inferred from the mere reading of the statement of
claim that the person served actually provided
services in that connection.
Counsel for the defendants rightly points out
that the question of whether valid service has been
effected upon these non-resident defendants is not
merely one of procedure, but goes to the very
question of jurisdiction of the Court over the par
ties. In principle, the jurisdiction of this Court
extends only to those persons within the territorial
jurisdiction of Canada. Only by strict compliance
with statutory or other provisions having the force
of law (e.g. Rules of Court) may jurisdiction be
acquired over non-residents. The Quebec Code
method of service made to apply under Rule 309
does not apply under Rule 310 providing substitu-
tional service in regard to persons residing outside
Canada.
In my view, the requirements of Rule 310(2)
must be strictly adhered to. Substitutional service
may only be effected under these provisions when
the prospective defendants in the ordinary course
of business enter into transactions in Canada,
regularly make use of the services of the persons
served, and actually made use of the services of
that person served for the purposes of the transac
tion in question. The existence of all these ele
ments cannot be presumed by the Court without
the benefit of an affidavit. It necessarily follows
that service upon the non-resident defendants must
be set aside.
ORDER
It is hereby ordered that the service effected on
Cast North America Limited is valid and that the
service effected on all the other defendants be set
aside. Costs of the two motions to the defendants.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.