Franssen v. Thule Towing Systems LLC, 2012 ABQB 657

Court of Queen ’ s Bench of Alberta Citation: Franssen v. Thule Towing Systems LLC, 2012 ABQB 657 Date: 20121025 Docket: 1001 18895 Registry: Calgary Between: Mark Franssen and Deanna Franssen Plaintiffs - and - Thule Towing Systems LLC, Hyundai Motor America, Valley Hyundai LLC, Valley Hyundai LLC operating as Longs Peak Hyundai, Longs Peak Hyundai and John Doe Defendants Editorial Notice: On behalf of the Government of Alberta personal data identifiers have been removed from this unofficial electronic version of the judgment. _______________________________________________________ Memorandum of Decision of K.R.

Laycock, Master in Chambers _______________________________________________________

[ 1 ] The plaintiffs filed a statement of claim on December 29, 2010. [ 2 ] On December 6, 2011 Master Breitkreuz granted an order allowing the plaintiffs until March 6, 2012 to serve the statement of claim and gave the plaintiffs leave to serve, ex-juris, a copy of the Statement of Claim and Notice to Defendants upon the defendants at their corporate offices located in the United States of America. The application was supported by an affidavit sworn by Jennifer J. Locke. [ 3 ] The affidavit of Jennifer J Locke states: 1.

I am a student-at-law at the firm Chatwin LLP, who are counsel for the plaintiffs named in the above noted action, and as such have a personal knowledge of the matters herein deposed to, except where stated to be based on information and belief, in which case I verily believe it to be true. 2. This action arises out of a fire loss which occurred at [...] Rearview Circle SE, Calgary, Alberta (“the Premises”) on February 27, 2009. The fire emanated from the 2008 Hyundai Veracruz owned by the plaintiff, Mark Franssen.

The Hyundai caught fire while parked in the garage of the Premises, and resulted in extensive damage to the Premises and the Plaintiffs’ Personal property. It is alleged that the fire resulted from a faulty converter module, or, in the alternative, from the installation of the converter module. I do verily believe these facts to be true. 3. The Hyundai was manufactured by Hyundai Motor America and was bought in Colorado from Valley Hyundai LLP operating as Longs Peak Hyundai. The defendants referred to in the within paragraph will be hereafter referred to as the “Hyundai defendants”. 4.

The Converter Module and associated wiring installed was manufactured and distributed by Thule Towing Systems LLC and/or Hyundai Motor America. Thule Systems LLC manufactures and distributes product in North America. Attached hereto and marked as “Exhibit A” is a page from the website of Thule Towing Systems LLC which states its involvement in production and sales in North America. 5. I believe that the Hyundai Defendants manufacture and distribute automobiles with the knowledge that they will be disseminated North America wide. 6. The Statement of Claim in the within action was filed on December 22, 2010. 7.

I am informed and do verily believe there is a real and substantial connection between Alberta and the facts on which this claim is based under The Alberta Rules of Court s. 11.25 (3) for the following reason(s):

a) The claim relates to a tort committed in Alberta;

b) The foreign Defendants all manufactured and distribute products which they knew would be sold or disseminated throughout North America, including Alberta. 8. I make this affidavit in support of serving a commencement document outside of Canada, and in support of an Affidavit to extend the time for service of the Statement of Claim. [ 4 ] Hyundai Motor America applies to strike paragraphs 2-5 and 7 of the affidavit of Jennifer J. Locke, for an order setting aside the order granted by Master Breitkreuz and for a declaration that no further steps can be taken against any of the defendants in this action as a statement of claim was served upon them when it had expired.

[5] On July 3, 2012, the legal department for Hyundai Motor America received a copy of the statement of claim and court order.On December 27, 2011, the registered agent for the Valley Hyundai defendants received a copy of the statement of claim and courtorder. There is no evidence of service upon Thule Towing Systems LLC. [6] The defendant relies upon rule 13.18 with respect to the application to strike out the bulk of the Locke affidavit. The rulestates:

(1) An affidavit may be sworn (

a) on the basis of personal knowledge, or (

b) on the basis of information known to the person swearing the affidavit and that person’s belief.

(2) If an affidavit is sworn on the basis of information and belief, the source of the information must be disclosed in the affidavit.

(3) If an affidavit is used in support of an application that may dispose of all or part of a claim, the affidavit must be sworn on the basisof personal knowledge of the person swearing the affidavit. Affidavit Paragraph 2 [7] The defendant argues that Ms. Locke did not have personal knowledge of any of the facts she deposed. She must have beenrelying on information and belief from an unidentified source. The defendant refers to only a few of the huge array of cases that deal withthe sufficiency of affidavits and the need to have either personal knowledge or disclose the source of information: Patel v.

Friesen, 2002ABQB 112; Mikisew Cree First Nation v. Canada 2002 ABCA 110 at para. 12; Murray v. Tarrabain, 2005 CarswellAlta 2134 at para.24. [8] The plaintiffs argue that paragraph 2 merely states what is alleged in the statement of claim and Ms. Locke is not swearingto facts upon which she has personal knowledge. [9] A mere reference to the pleading is not enough: Rieckmann Estate v. Rieckmann, (AB KB), 1991CarswellAlta 693, 121 A.R. 141 at para.10. [10] Unless Ms.

Locke was standing at the residence at the time of the fire on February 27, 2009, she could not have had personalknowledge of the facts deposed to in paragraph 2 of her affidavit. Without an expert report or other report, she would not have known thatthe fire resulted from a faulty converter module or from the faulty installation of the converter module. To merely repeat the unfoundedallegations contained in the statement of claim provides no facts to support an application for service ex juris. The whole paragraph istherefore struck out.

Repeating allegations found in the statement of claim does not provide any factual evidence to the court. Affidavit Paragraph 3 [11] The plaintiffs argue that this statement is not based on information and belief and also that the defendant failed to examine onthe affidavit to determine whether the deponent had first-hand knowledge of these facts. While it may be possible for the deponent, byphysical examination of the vehicle to determine that it was manufactured in the United States, I doubt that the deponent left her office

and went out and examined the fire ravaged motor vehicle two years after the fire occurred. I further doubt that she had first-handknowledge of the fact that the vehicle was purchased in Colorado from Valley Hyundai. Unless she was present at the time of the sale,someone, who was not identified, has provided her with this information. If she viewed the original sales documents, those documentsshould have been attached as an exhibit. Since there is no source of information or belief in the information, paragraph 3 is struck out.

Affidavit Paragraph 4 [12] The plaintiffs argue that the statements in paragraph 4 are not based on information and belief. They argue that, in part, thefacts are based on a page from the website of Thule Towing Systems LLC. The exhibit attaching a short six line blurb merely describesthe company as a manufacturer of load carrier systems for motor vehicles with production and sales locations in North and SouthAmerica, Europe, Africa and Asia. The exhibit may support the information contained in the second and third sentences of paragraph, butit is not the source of information for the first sentence.

It is not believable that the deponent has the personal knowledge of theinformation contained in the first sentence. The first sentence of paragraph 4 is struck out because there is no source of the informationand no statement that the deponent beliefs the information. Affidavit Paragraph 5 [13] This sentence starts out by declaring that the deponent believes the facts but there is no source of the information. Because thedeponent failed to disclose the source of the information paragraph 5 is struck out.

Affidavit Paragraph 7 [14] The deponent swears that the facts contained in the paragraph are based on information but she does not disclose the source ofthe information. The defendant also objects to the paragraph being argument, legal opinion or conclusion which is highly improper toinclude in an affidavit. See Renfrew Insurance Ltd. v. Donald, 2012 ABQB 228 at para. 14; Alberta Treasury Branches v. Leahy(1999), 1999 ABQB 185 , 234 A.R. 201 at para. 84. [15] In addition, the allegation in paragraph 7(

b) is not supported by any facts and is merely an unsupported conclusion. For all ofthese reasons paragraph 7 is struck out. Extend Time for Service [16] The issue is whether there is sufficient evidence left in the affidavit to support the plaintiffs’ application to extend time forservice pursuant to rule 3.26. The rule states:

(1) A statement of claim must be served on the defendant within one year after the date the statement of claim is filed unless the Court,on application filed before the one-year time limit expires, grants an extension of time for service.

(2) The extension of time for service under this rule must not exceed 3 months.

(3) Rule 13.5 does not apply to this rule or to an extension of time ordered under this rule. [17] The evidentiary requirements for an application to extend time for service under the former rule 11(6) were considered by the

Alberta Court of Appeal in Oberg v. Foothills Provincial General Hospital (1999), 1999 ABCA 76 , 232 A.R. 263. The rulestated: Every application under subrule (2) shall be supported by an affidavit stating that one or more defendants have not been served andsetting forth the reasons for the lack of service. [18] The Court of Appeal stated at paragraph 14: In my view, Rule 11(6) merely requires that an applicant provide enough information from which it can be inferred that the applicationfor renewal is not simply a delay tactic. An inference that the extension is more than a stalling tactic is sufficient. Keeping in mind thatthe Rule is for the benefit of plaintiffs, that

interpretation provides an appropriate balance between fairness, efficiency and expediency. [19] The Court contrasted the rule in existence prior to the 1992 amendment and concluded that both rules serve the same purpose.The court stated in paragraph 10 and 16: 10. .... The Rule is designed to provide an extended period for service of a statement of claim where needed. At the same time, it seeks toeliminate the potential for protracted and unnecessary litigation delays created by extensions. Thus, there is a need to balance the ease ofmeeting a plaintiff’s needs with the prevention of undue delay. 16 In

summary, the affidavit discloses the following: first, there was a change of solicitors; second, the defendants had not been served;and third, the plaintiffs required an extension of time. These facts support an inference that the extension was required to allow the newsolicitors time to serve, and that the application was not for delay only. There is no need to serve earlier than the one-year limitation,so the reasons need not address why it was not served earlier. This is unlike the old Rule where the application can be servedoutside the initial one-year period.

In that case there was a need to establish a “sufficient reason”for not serving within the year. [20] Prior to 1992 the rule required “sufficient reasons” in order to obtain a renewal and prejudice was always a factor to consider.After the 1992 amendment that rule merely required “reasons”.

At paragraph 12 the Court of Appeal concluded that the prior higherstandard as to the reasons for renewal was not essential. [21] The defendant argues that, while rule 3.26 does not state that an affidavit is required in support of an application for extension,there must be some evidence for the court to exercise a judicial discretion in considering the application. It is argued that the sameevidentiary burden must be met under the current rule as was required under the former rule. [22] This issue has been addressed by Master Breitkreuz in Gangl v. Burns [2010] A.J. 1501, 2010 ABQB 822.

The defendantapplied to set aside an order the Master granted permitting the plaintiff to serve substitutionally and to extend time for service. Theaffidavit in support of the ex-parte order referred to attempts at service made between June 7, 2010 and June 24, 2010. When theapplication was made on July 7, 2010 the Master was advised that the statement of claim expired the next day. [23] The Master noted in the decision that the thrust of the defendant’s argument was that there was nothing in the affidavit tosupport an inference that an extension for time was required.

The Master agreed with plaintiff’s argument that there was no requirementthat the affidavit must specifically refer to a request for an extension of time. [24] The Master, after referred to the highlighted part of para. 16 in the Oberg decision noted above, stated: 13 It is apparent from this that the court is not entitled to know the reason the statement of claim hasn’t been served.

All the court needsto know is that the statement of claim hasn’t been served, (which must be fairly obvious in an application to extend the time for service)and an order is requested to serve within the three additional months required.

14 This is not a case were I had to draw an inference that there was no delay. Oberg says so. If no reasons are required then noinference is required. [25] The plaintiff argues that the effect of this decision is that the mere appearance of counsel in court asking for an extension issufficient for the court to infer that service has not been affected. Therefore, it is argued that upon such an appearance, an order to extendtime for service should be granted. [26] Master Smart also considered this issue in Wardell v. Peebles, 2012 ABQB 303.

The defendants applied to set aside theMaster’s order, granted ex parte, to extend time for service of the statement of claim. The affidavit in support of the application gaveevidence of the attempts by a process server to serve the statement of claim.

The Master recognized that under rule 3.26 there was noexpress requirement for an affidavit in support of the application. [27] After reviewing Gangl and Oberg and considering the comments contained in the Alberta Law Reform Institute, The RulesProject, with respect to the prior rule 11, the Master concluded at paragraph 10: I see nothing in the new Rule that suggests the reasoning in Oberg ought not to continue to apply. The threshold remains low.

DespiteMaster Breitkreuz’s conclusion in Gangl, in my view providing an explanation for not serving although not mandatory would bedesirable when asking the court to exercise its discretion. In this case the affidavit in support is poorly drafted, lacking particularity andprovides slim evidence to support the application for an extension of time.

The threshold may be low but the cavalier approach oftentaken is dangerous when considering the consequences of failing to effect service in time. [28] The Master concluded that the evidence indicated, firstly, that attempts at service had been made in relation to one defendantand information had been obtained regarding the whereabouts of the other defendant, and secondly, that service could be affected withintime if an extension was granted.

He concluded the delay was not inappropriate and the defendants in their motion did not allegeprejudice. [29] Master Smart accepted the argument that an order to extend time for service should not be granted in a perfunctory waybecause the court order requires an exercise of discretion. The court’s discretion can only be exercised with evidence.

Evidence in aninterlocuatory application can only be presented in the form of an affidavit. [30] I disagree with the plaintiff’s argument that an order to extend time for service can be made without any affidavit evidence.Firstly, some rules specifically require an affidavit in an application: see for example rules 11.25(2) (service ex juris) and 11.28(2)(substitutional service). Many rules do not specifically provided for affidavit evidence when making an application to the court. Forexample, an application to amend pleadings pursuant to rule 3.62(1)(b)(

I) requires the court’s permission. The rule does not state that anaffidavit is necessary, however the case law makes it clear that evidence is required unless the amendment is trivial, obvious or clerical:Wong (Guardian and Trustee of) v. Al-Hassan 2003 ABCA 366; Hodge v. Carey Industrial Services Ltd (1997) (AB KB), 202 A.R. 154; Firemaster Oilfield v. Safety Boss (AB KB), 37 Alta. L.R. (3d) 317.

A few of the otherrules that do not mention affidavits include: rules 2.15 and 2.16(3) (appointing a litigation representative), 3.5 (transfer an action), 4.22(security for costs), 4.31 (dismiss for delay where prejudice), 4.33 (dismiss for long delay), 5.11 (order to produce a record), 5.12 (failureto file affidavit of records). All of these applications would also require affidavit evidence. In Lock v. Tussman 2001 ABQB 83, MasterFunduk quote the Court of Appeal in Crown Life Assurance Co. v. A.E. LePage (Ontario), C.A. 8803-0459 A.C.

October 3, 1989, “noevidence-no order”. [31] Secondly, the rule requires an application to the court, so the plaintiff does not get an extension as of right. Should the RulesCommittee have wanted plaintiffs to have 15 months to serve the statement of claim, the rule would be different. Should the RulesCommittee have wanted the matter to be perfunctory, a clerk could have been designated to grant an extension. [32] Thirdly, any application to the court requires the exercise of judicial discretion.

As the court stated in Oberg, it is a lowthreshold but nonetheless facts must be presented for the court to exercise its discretion. [33] It is not sufficient for counsel to merely advise the court that service has not been effected in order to obtain an extension. It is

also not sufficient for the deponent of the affidavit to merely state that they are applying for an order to extend time for service. The underlying purpose of the requirement to obtain leave of the court to extend time for service remains, as described by the Court of Appeal in Oberg in paragraph 10 (supra), “a need to balance the ease of meeting a plaintiff’s needs with the prevention of undue delay”. I agree with Master Smart that the test remains the same as stated in Oberg .

I disagree with Master Breitkruez’s conclusion in Gangl that it is enough to know that service has not been effected. [ 34 ] Returning to the affidavit of Jennifer J. Locke, there is little factual material left. Paragraph 1 merely identifies the deponent of the affidavit. What is left of paragraph 4 tells us that the defendant Thule Towing Systems LLC manufactures and distributes products in North America. Paragraph 6 notes that the statement of claim was filed December 22, 2010.

Paragraph 8 states that the affidavit is in support of serving commencement documents outside of Canada and to extend time for service. [ 35 ] Other than disclosing when the statement of claim was filed and asking for an order to extend time for service, there are no material facts contained in the affidavit to support the application to extend time for service. There is no evidence upon which the court can rely in granting an extension of time for service.

Therefore, the provision in the order of the Master, granted December 6, 2011, to extend time for service of the statement of claim is struck out. [ 36 ] Therefore the statement of claim was served upon the Hyundai defendants after the time for service had expired. Rule 3.28 provides that “no further proceeding may be taken in an action against a defendant who was not served in time”. Therefore the Hyundai defendants are entitled to a declaration that the plaintiff may take no further steps against them.

Proportionality and Prejudice [ 37 ] The plaintiffs argue that their order should be saved based on comments made by the court in Tarrabain v. Murray [2006] A.J. No. 834, 2006 ABQB 514 . In that case the motor vehicle injury action was commenced Alberta and the statement of claim was served in California. In the first Tarrabain application, Justice Murray set aside an order for service ex juris granted by a Master for deficiencies in two affidavits. The plaintiff then filed a further affidavit and applied for an order nunc pro tunc declaring service to be good and sufficient.

The statement of claim had been served within one year of its issuance. [ 38 ] Justice Veit stated that the case illustrates the problem where a technical failure to comply with the rule would deprive the litigant of substandard rights. Since there was clear evidence before the court that the tort had been committed within Alberta and that the action was one which the Alberta court’s should assume jurisdiction, the plaintiff should not lose his cause of action which was a punishment out of all proportion to the error.

She also noted that there is no evidence of prejudice suffered by the defendant. [ 39 ] The proportionality and prejudice argument was advanced by the plaintiffs. In Tarrabain there was, eventually, sufficient evidence to satisfy the test for granting an order for service ex-juris. On this application the affidavit is insufficient and no application has been filed by the plaintiffs requesting an order to extend time for service nunc pro tunc .

With no application and no evidence, issues of proportionality and prejudice can not be considered. [ 40 ] Furthermore rule 3.26(1) requires the application for extension be made before the year has expired. Counsel could provide no cases where the court has considered or granted an extension order nunc pro tunc . Service Ex-Juris [ 41 ] Since the plaintiffs can take no further steps against the Hyundai defendants it is unnecessary to consider all of the arguments and case authorities with respect to the application to set aside the order for service ex-juris.

Further evidence [ 42 ] The plaintiffs’ argument that they can remedy any error or deficiency in the affidavit by filing a further affidavit to support

their application will be left for another day when they actually file a further affidavit. Costs [ 43 ] The applicants have been successful and will be entitled to their taxable costs of this application. Heard on the 16 th day of October, 2012. Dated at the City of Calgary, Alberta this 25 th day of October, 2012. K.R. Laycock M.C.C.Q.B.A. Appearances: Codie L. Chisholm Bennett Jones LLP for the Defendant Hyundai Motor America Kathleen Kenny Chatwin LLP for the Plaintiffs