Arrow Corporation Inc. v. LCL Navigation Ltd., 2004 FC 1502

Date: 20041026

Docket: T-1916-03

Citation: 2004 FC 1502

                           ACTION IN REM AGAINST THE VESSEL "SEA TIGER"

BETWEEN:

                                                  ARROW CORPORATION INC.,

                           WHIZDOM INTERNATIONAL FREIGHT SERVICES INC.

                                            and CIA MOLINERA EL GLOBO S.A.

                                                                                                                                            Plaintiffs

                                                                           and

                                                        LCL NAVIGATION LTD.,

CROWLEY AMERICAN TRANSPORT LINE INC.,

ULF RITSCHER GMBH & CO. REEDEREI KG,

THE SHIP "SEA TIGER",

HER OWNERS AND ALL OTHERS INTERESTED IN THE "SEA TIGER"

              Defendants

                                                        REASONS FOR ORDER

HARGRAVE P.

[1]                 By this motion the Plaintiffs seek an order for an extension of time within which to serve LCL Navigation Ltd. ("LCL") of Toronto, with the Statement of Claim.

BACKGROUND

[2]                 By way of background the Plaintiffs, a seller, a freight forwarder and a purchaser of a flour milling machine respectively, contracted with LCL, by way of a non-negotiable ocean waybill, for carriage of a flour milling machine from Winnipeg to Chile. The container and the flour mill were damaged. To preserve time while negotiating the Plaintiffs sued LCL, together with Crowley American Transport Line Inc. which had issued the actual ocean bill of lading and Ulf Ritscher GmbH & Co. Reederei KG, the owner of the carrying ship Sea Tiger.

[3]                 The present action was commenced in a timely manner, near the end of the limitation period, on 16 October 2003. LCL, with whom the Plaintiffs had apparently been negotiating, received the Statement of Claim the day it was issued. The following day, 17 October 2003, LCL wrote to counsel for the Plaintiffs acknowledging receipt of the Statement of Claim, referred to a clean out-turn report from Chile and alluded to limitations of three days and of nine months. At least in part of this LCL was mistaken, for the Chilean port receipt did apparently show damage to the container and the Chilean despatch bill stated the case containing the mill was withdrawn from the port premises in bad condition. Thus on 3 December 2003 counsel for the Plaintiffs wrote, in a timely manner, to LCL, asking if they had instructions to accept service. No such advice was relayed to counsel for the Plaintiffs and therefore counsel had the Statement of Claim served on LCL on 23 December 2003, at that point eight days stale dated. Solicitors for LCL were unable to obtain instructions to consent to an extension of time for service, that position being taken 28 January 2004.

[4]                 Plaintiffs' counsel had intended to bring the extension motion on Monday, 8 March 2004 in Vancouver. However the motion did not materialize until 14 September 2004 when it was served and filed.

CONSIDERATION

[5]                 At one time the test for an extension of time within which to serve an originating document was that there be a sufficient reason, which the Court of Appeal pointed out in May & Baker Canada Ltd. v. The "Oak", [1979] 1 F.C. 401 (F.C.A.) at 404, was a near-impossible test in the case of accessible defendant who had not misled the plaintiff. However the 1998 Rules changed all that: the test now involves looking at and balancing the circumstances in each instance and considering whether there is a continuing intent to pursue the claim, whether there is an arguable case and whether there would be prejudice to the proposed defendant should the extension be granted: see Gross v. Minister of National Revenue (1998), 155 F.T.R. 91 at 95 (F.C.T.D.).

[6]                 Mr Justice MacKay, in Registered Public Accountants Association of Alberta v. Society of Professional Accountants of Canada (2000), 5 C.P.R. (4^th) 527 at 534 (F.C.T.D.) noted the grounds to support an application for an extension of time were well-established and went on to refer to Gross (supra), Alcorn v. Canada (Commissioner of Corrections) (1998), 149 F.T.R. 314 (F.C.T.D.) and Aircraft Technical Publishers v. ATP Aero Training Products Inc. (1998), 82 C.P.R. (3d) 352 (F.C.T.D.) for the added caution that a court must consider whether an extension of time is essential to ensure justice being done between the parties:

[7]                 The position of LCL is that the material of the Plaintiffs does not demonstrate a continuing intent to pursue the action as against LCL. Here the gap in the continuing intention is either from 12 February 2004, when Plaintiffs' counsel advised of the intention to bring the motion to extend time for service, or possibly 8 March 2004, the first date that Plaintiffs' counsel advised that he was able to bring the motion, to 14 September 2004 when the present motion for an extension was served and filed, some six or seven months.

[8]                 Counsel for the Plaintiffs seeks to explain the delay by pointing out that while his practice is in Vancouver, he operates out of an office in Kelowna on Mondays and thus could not be in Vancouver for the regular Monday motions at the Federal Court: as a result he finally decided to bring the application for the time extension as a motion in writing. This is a weak explanation given in written reply argument. I give the explanation little weight.

[9]                 In coming to a decision I must also look at the overall circumstances, with a view to doing justice between the parties. What concerns me is that LCL received and acknowledged receipt of the Statement of Claim immediately after it was issued by the Court. This is an interesting area to explore, even though I recognised that the motion is to extend time for service, not to deem that service has already been taken place, or to dispense with service, or to validate service as set out in Federal Court Rule 147. However this exploration does go to doing justice between he parties.

[10]            Service does go beyond examination of whether the Defendant could be expected to receive word of the claim: it goes to jurisdiction, which is a matter sufficiency of service: see for example Canada v. Spelrem (2001), 211 F.T.R. 274 (F.C.T.D.) at 275 and 276. Spelrem was a situation in which there was no service on the defendant, but rather service on Mr Spelrem's wife, with no basis for assuming that Mr and Mrs Spelrem resided together, a matter of sufficiency of service. Mr Justice Pelletier held that there was no proof of valid service. However the other end of the scale are cases such as Ralux N.V./S.A. v. Spencer Mason, The Times, 18 May 1989 (C.A.) in which Lord Justice O'Connor concluded his judgement by saying:

This dicta was quoted with approval by the Court of Appeal (Civil Division) in Hastie & Jenkerson v. McMahon, [1990] 1 WLR 1575 at 1580, Lord Justice Woolf, as he then was, acknowledged there could be circumstances in which a certain degree of ceremony was required, but where there had been service of a legible copy of a document by facsimile he could "... see no reason why there should be any need for ceremony. What is required is that a legible copy of the document should be in the possession of the party to be served." (page 1579).

[11]            Here I would observe that Federal Court Rule 147, validating service, is quite broad, the test being whether or not the material to be served came to the notice of the person to be served. In the present instance the Statement of Claim certainly came to the notice of LCL, who acknowledged receipt and then commented upon the claim.

[12]            Of interest at this point is Hvozdanski Estate v. Gasland Oil Ltd. (1999), 258 A.R. 358 (Alta. Q.B.), a decision of Master Funduk. There the statement of claim was delivered to the defendant by some third party. At issue was whether there ought to be a deemed good and sufficient service. Master Funduk pointed out that the court was still master of procedure, with the rules were "... the servants of the Court, not the other way around.". He went on to say:

This pragmatic passage was quoted with approval by Madam Justice Acton, on appeal to the Alberta Court of Queen's Bench, (2000) 263 A.R. 399.

[13]            While this digression does not, on the present motion, bear on deeming service to have taken place, it is relevant in considering doing justice between parties. Here I return to Registered Public Accountants (supra) at 534 where Mr Justice MacKay emphasized that a general principle is whether an extension of time is essential to ensure justice between the parties and to the case which underlies that concept, Grewal v. Canada (MEI) [1985] 2 F.C. 263 (F.C.A.). There, at page 271 Chief Justice Thurlow said:

In Grewal it concerned the Chief Justice that the lack of a continuing intention during the appeal period to pursue the matter and that militated strongly against any explanation for the delay and against the case for an extension. Indeed, in Grewal, the intention to proceed, thus necessitating an application for a time extension, was arrived at only long after time had expired (page 278).

[14]            In the present instance the explanation for the delay is weak. The demonstration of a continuing intent is also weak. There is certainly an arguable case of good merit and clearly no prejudice to LCL. However the important factor is that to ignore the facts that LCL acknowledged receipt of the Statement of Claim a day after it was issued and then took exception both to an initial short delay in service and subsequently to a delay in seeking an extension of time for service, would be a clear injustice.

[15]            The Plaintiffs may have 14 days within which to serve LCL Navigation Ltd.

[16]            Costs shall be in the cause.

(Sgd.) "John A. Hargrave"

                                                                                          Prothonotary

Vancouver, British Columbia

26 October 2004

                                                             FEDERAL COURT

                           NAMES OF COUNSEL AND SOLICITORS OF RECORD

MOTION DEALT WITH IN WRITING WITHOUT THE APPEARANCE OF PARTIES

DOCKET:                                         T-1916-03

STYLE OF CAUSE:                       Arrow Corporation Inc. et al. v. LCL Navigation Ltd. et al.

REASONS FOR ORDER BY:     Hargrave P.

DATED:                                           26 October 2004

WRITTEN REPRESENTATIONS BY:                            

SOLICITORS OF RECORD: