Greenbuilt Group of Companies Ltd. v. RMD Engineering Inc., 2013 ABQB 297

Court of Queen ’ s Bench of Alberta Citation: Greenbuilt Group of Companies Ltd. v. RMD Engineering Inc., 2013 ABQB 297 Date: 20130515 Docket: 1203 09810 Registry: Edmonton Between: Greenbuilt Group of Companies Ltd. Plaintiff (Respondent) - and - RMD Engineering Inc. Defendant (Applicant) _______________________________________________________ Memorandum of Decision of the Honourable Mr. Justice Thomas W. Wakeling _______________________________________________________ I. Introduction [ 1 ] RMD Engineering Inc. ( “ RMD Engineering ” ) is a Saskatchewan manufacturer.

In October 2009 it agreed to manufacture an automated styrofoam panel drilling machine for the Greenbuilt Group of Companies Ltd. ( “ Greenbuilt ” ). The machine RMD Engineering built did not meet Greenbuilt ’ s expectations. In 2012 Greenbuilt commenced this action against RMD Engineering for the purchase price of the machine and damages for lost revenue. The claim is for approximately $950,000. [ 2 ] Greenbuilt served its statement of claim on RMD Engineering in Saskatchewan.

[ 3 ] RMD Engineering seeks two orders. The first is an order setting aside service of the statement of claim on the grounds that “ there is no real and substantial connection between Alberta and .... [Greenbuilt ’ s] claim that ... RMD Engineering breached their agreement ” . The second is an order seeking a stay of the action because “ Alberta is forum non conveniens . ” [ 4 ] Greenbuilt recently filed an amended statement of claim asserting that the agreement was made in Alberta. II.

Questions Presented [ 5 ] Does Greenbuilt ’ s statement of claim disclose facts which demonstrate that a “ real and substantial connection exists between Alberta and the facts on which [the] . . . claim in the action is based ” and “ specifically [refer] . . . to the grounds for service of the documents outside Alberta and in Canada ” , as required by rule 11.25(1) of the Alberta Rules of Court , Alta. Reg. 124/2010 (sometimes the “ Alberta Rules of Court ” , the “ new Alberta Rules of Court ” or the “ new rules ” )? [ 6 ] If not, what is the consequence of this deficiency?

Can it be corrected? [ 7 ] Does the Court of Queen ’ s Bench of Alberta have the jurisdiction to hear Greenbuilt ’ s claim? [ 8 ] If the Court has jurisdiction to hear Greenbuilt ’ s claim, should it decline to do so because the Court of Queen ’ s Bench for Saskatchewan is clearly a more convenient forum to try this action? III. Brief Answers [ 9 ] Greenbuilt ’ s statement of claim does not comply with rule 11.25(1) of the Alberta Rules of Court .

It does not demonstrate that a “ real and substantial connection exists between Alberta and the facts on which [the] ... claim in the action is based. ” Nor does it “ specifically [refer] . . . to the grounds for service of the documents outside Alberta and in Canada ” catalogued in rule 11.25(3). [ 10 ] These deficiencies are not fatal. Greenbuilt may amend its statement of claim to address these oversights. As pleadings have not closed, Greenbuilt does not require the Court ’ s prior permission to amend its statement of claim. Alberta Rules of Court , r. 3.26(1).

Greenbuilt would still be able to serve its amended statement of claim before the one year time limit in rule 3.26(1) of the Alberta Rules of Court expires. [ 11 ] This Court has jurisdiction to hear this claim if it is amended to include some of the facts which were disclosed in the affidavits filed in this application so as to establish that a “ real and substantial connection exists between Alberta and the facts on which [the] ... claim in the action is based ” .The new version must also make specific reference to the types of claim set out in rule 11.25(3) which it alleges its action presents. [ 12 ] There is no basis to conclude that Saskatchewan is clearly a better forum for the resolution of this lawsuit than Alberta.

This action could be tried in either jurisdiction without great inconvenience to anyone. The plaintiff carries on business in Alberta. Its fact witnesses reside in Alberta. So does its counsel. These three facts are not determinative because the defendant carries on business in Saskatchewan and its witnesses and counsel reside in Saskatchewan. Alberta is the better place to try this action because it is more likely than not that the law of Alberta is the proper law of the contract.

IV. Applicable Parts of the Alberta Rules of Court [ 13 ] The applicable parts of the Alberta Rules of Court are set out below: 11.25(1) A commencement document may be served outside Alberta and in Canada only if (

a) a real and substantial connection exists between Alberta and the facts on which a claim in the action is based, and (

b) the commencement document discloses the facts in support and specifically refers to the grounds for service of the document outside Alberta and in Canada.

(2) A commencement document may be served outside Canada only if (

a) a real and substantial connection exists between Alberta and the facts on which a claim in an action is based and the commencement document is accompanied with a document or affidavit that sets out the grounds for service of the document outside Canada, (

b) the Court, on application supported by an affidavit satisfactory to the Court, permits service outside Canada, and (

c) the person served with the commencement document is also served with a copy of the order permitting service outside Canada.

(3) Without limiting the circumstances in which a real and substantial connection may exist between Alberta and the facts on which a claim in an action is based, in the following circumstances a real and substantial connection is presumed to exist: . . . (

b) the claim relates to a contract or alleged contract made, performed or breached in Alberta; (

c) the claim is governed by the law of Alberta; . . . 11.31(1) A defendant may apply to the Court to set aside (

a) service of a commencement document, . . . only before the defendant files a statement of defence or a demand for notice.

(2) An application under this rule is not an acknowledgment by the defendant that the Court has jurisdiction with respect to a claim, counterclaim or third party claim in respect of which the application is filed. [ 14 ] The comparable provisions in the court rules in force before November 1, 2010 follow: 27 A defendant before delivering a defence may apply to the Court to set aside the service of the statement of claim upon him . . . on the ground of irregularity or otherwise, and the application shall not be deemed to be a submission to the jurisdiction of the Court. . . . 30 Service outside of Alberta of any document by which any proceeding is commenced . . . may be allowed by the Court whenever: . . . (

f) the proceeding to . . . recover damages . . . in respect of the breach of a contract, being (in any case) a contract (

i) made within Alberta, or . . . (iii) which is by its terms, or by implication governed by Alberta law . . . 31 Every application for leave to serve any document, or to give notice thereof, out of Alberta shall be supported by affidavit or other evidence, (

a) stating that in the belief of the deponent the applicant has reasonable cause of action, [sic] (

b) showing in what place or country the person to be served is, or normally may be found, and (

c) giving the grounds upon which the application is made and every order allowing such service shall limit the time within which the proceedings may be answered or opposed, and in limiting the time regard shall be had to the place where service is to be effected. Alberta Rules of Court , Alta. Reg. 390/68 ( “ old Alberta Rules of Court ” or “ old rules ” ). V. Statement of Facts

[ 15 ] On June 28, 2012 Greenbuilt filed its statement of claim against RMD Engineering. The important paragraphs of this commencement document are set out below: 1. The Plaintiff is a corporation incorporated pursuant to the laws of the Province of Alberta, that carries on, inter alia , the operation of a manufacturing plant which produces styrofoam panels for sale to building companies and for use in construction projects. 2. The Defendant is a company incorporated pursuant to the laws of the Province of Saskatchewan that specializes in machine design. 3.

On or about the end of October 2009, the Plaintiff agreed to purchase an automated Styrofoam [sic] panel hole drilling machine (hereinafter “ Hole Punch Machine ” ) from the Defendant for the sum of $72,000 plus GST for a total of $75,600.00 ( “ the Agreement ” ) that was to be installed in the Plaintiff ’ s plant that was located near Acheson, Alberta ... . . . . 6. The Defendant breached the condition . . . in that the Hole Punch Machine was not reasonably fit for the intended purpose ... . . . . 8.

The Defendant throughout 2010 and 2011 did attempt to correct the problems with the Hole Punch Machine and has admitted and acknowledged that it was not able to repair the Hole Punch Machine so that the Hole Punch Machine operated correctly. 9. As a result of the Defendant ’ s breach of the agreement [sic], the Plaintiff has incurred damage and loss as follows: (

a) the sum of $75,600.00 regarding the purchase price; (

b) Costs relating to the delay of the production of the panel system for lost revenues in the sum of $110,000.00 per month for 8 months for total losses in the sum of $880,000.00 ... . [ 16 ] No part of Greenbuilt ’ s statement of claim referred to the grounds in rule 11.25(3) of the Alberta Rules of Court which justify service of the claim on RMD Engineering in Saskatchewan. [ 17 ] Greenbuilt served its statement of claim on RMD Engineering in Saskatoon on September 5, 2012. [ 18 ] The same day Greenbuilt served its statement of claim, RMD Engineering filed an application seeking an order setting aside service of the claim in Saskatchewan.

It invoked rule 11.31(1) of the new Alberta Rules of Court , the provision which allows a defendant to bring a set aside application without attorning to the jurisdiction of the Court of Queen ’ s Bench. [ 19 ] The defendant also argued in its application that “ [t]here is no real and substantial connection between this Action and Alberta attracting [the] jurisdiction of this Court ” and that “ Alberta is not the most convenient forum for this Action in all the circumstances ” .

[ 20 ] On September 11, 2012 RMD Engineering filed an affidavit of its president, Jim Boire. Mr. Boire swore that RMD Engineering ’ s Saskatoon office emailed a quotation for the automated styrofoam machine to Greenbuilt on October 26, 2009. His affidavit also disclosed that the plaintiff faxed to the defendant a purchase order for the machine from its Acheson facility on October 28, 2009. Other important passages are reproduced below: 3. On or about October 20, 2009, Ben Baader . . . [of Greenbuilt] travelled to . . . [RMD Engineering ’ s] head office in Saskatoon, Saskatchewan.

On this visit, he expressed an intention to enter into an agreement for the purchase of an automated hole drilling machine, which would be manufactured by RMD [Engineering] according to Greenbuilt ’ s instructions. Both parties signed a confidentiality agreement at that time ... . . . . 10. At no time during the negotiation of the Agreement, did I or any agent of RMD [Engineering] travel to Alberta to discuss the hole making machine. 11.

Neither party expressed any intention as to which law would apply to the Agreement, nor which jurisdiction would be the appropriate forum for any disputes that may arise under it. . . . 13. No agent of RMD [Engineering], including myself, travelled to Alberta on RMD ’ s behalf in relation to the automated hole drilling machine until the prototype was delivered by me to Greenbuilt on or about March 29, 2010. [ 21 ] The confidentiality agreement referred to in Mr.

Boire ’ s affidavit states that RMD Engineering “ is about to become an [sic] Contractor with Greenbuilt ” , that “ Greenbuilt would not have agreed to employ ... RMD Engineering unless ... RMD Engineering had first agreed to enter into this Agreement ” and acknowledges that it would “ be governed and construed in accordance with the laws of the Province of Alberta ” and that the parties “ attorn[ed] . . . to the jurisdiction of the Courts of the Province of Alberta ” . [ 22 ] On October 25, 2012 Greenbuilt filed an affidavit of Ben Baader. Mr. Baader, an officer of Greenbuilt, deposed that Mr.

Boire was in Edmonton on October 26, 2009 when Greenbuilt received RMD Engineering ’ s quotation for the automated styrofoam machine. He provided more particulars in the following paragraph of his affidavit: 14. . . . The order for this equipment was placed from Edmonton after Mr.

Boire came to Edmonton and inspected our plant and told us how a production working prototype was to be built and designed for our plant and it was in Edmonton while he was here that we structured our deal and the contract for the purchase of this piece of equipment. [ 23 ] On February 28, 2013 RMD Engineering filed a second affidavit of Mr. Boire. He asserted that the confidentiality agreement “ was specifically restricted to information and was not an overarching agreement that would apply to the manufacture of the machine in question ” . Mr. Boire also took issue with several assertions Mr.

Baader made in his affidavit. But he did acknowledge that he met with Greenbuilt representatives in Alberta on October 26, 2009. [ 24 ] RMD Engineering filed an amended application on February 28, 2013. This amended application did not alter the essential points RMD Engineering made in its September 5, 2012 application. [ 25 ] On March 4, 2013 Greenbuilt filed an amended statement of claim. The new version stated clearly that the agreement to purchase the automated drilling machine was made in Alberta. There is no evidence that Greenbuilt has served its amended statement of claim on RMD Engineering.

[26] Neither party invoked rule 6.20(1) of the Alberta Rules of Court and cross-examined the deponent of affidavits filed by theother side. VI. Analysis [27] The new service ex juris rules jettisoned past practice. They eliminate the need to secure prior judicial permission to serve acommencement document extraterritorially within Canada. Now there is one principal inquiry - does the court have jurisdiction to hearthe plaintiff’s claim. There is no merit-based test.

A court does not have to ask if the party who has effected extraterritorial service has agood arguable case. [28] In order to understand the effect of the service ex juris rules in force after November 1, 2010, the date the new rules cameinto force, it is necessary to have a solid understanding of the territorial nature of the Court of Queen’s Bench of Alberta’s jurisdiction,the historical development of service ex juris in England, an experience which shaped Alberta’s rules of court, and the features of thenew service ex juris rules which distinguish them from the old service ex juris rules. A.

A State’s Law Is Without Force Beyond Its Territorial Boundary [29] Under international and common law state jurisdiction is territorial. Morguard Investments Ltd. v. De Savoye, (SCC), [1990] 3 S.C.R. 1077, 1095 (“one of the basic tenets of international law [is] that sovereign states have exclusive jurisdictionin their own territory”); Singh v. Rajah of Faridkote, [1894] A.C. 671, 683 (P.C.) (Punjab) (“[a]ll jurisdiction is properly territorial”); TheQueen v.

Jamieson, [1896] 2 Q.B. 425, 430 (“an Act will not be construed as applying to foreigners in respect of acts done by them outside of the dominions of the sovereign power enacting”) & 18

(2) Halsbury’s Laws of England 550-51 (4th ed. reissue 2000) (a “statehas jurisdiction to prescribe rules of conduct . . . within its territory”). A state’s law is without force beyond its territorial limits.Morguard Investments Ltd. v. De Savoye, [1990] 3 S.C.R. 1077, 1095 (“a state’s law has no binding effect outside its jurisdiction”); ProSwing Inc. v. Elta Golf Inc., 2006 SCC 52 , [2006] 2 S.C.R. 612, 640 (“law normally applies solely in the jurisdiction where it isenacted”); New Zealand v.

Ortiz, [1984] 1 A.C. 1, 21 (H.L.) (“By international law every sovereign state has no sovereignty beyond itsfrontiers”) & Pennoyer v. Neff, 95 U.S. 714, 722 (1878) (“no State can exercise direct jurisdiction and authority over persons or propertywithout its territory”). B. The Common Law Recognized Territorial Limitations on the Jurisdiction of a Court [30] At common law a court has power over a person who falls within two distinct groups. The first group consists of personsserved with a court’s process within the territory in which the court administers justice.

The Siskina, [1979] A.C. 240, 254 (H.L. 1977)(“The general rule is that the jurisdiction of the English court over persons is territorial. It is restricted to those upon whom its processcan be served within the territorial limits of England and Wales”); Trustees of United Services Fund v. Richardson Greenshields ofCanada Ltd., (BC SC), 23 B.C.L.R. 1, 7 (C.A. 1988) (the court has no jurisdiction over a nonresident foreigner);Maharanee of Baroda v. Wildenstein, [1972] 2 Q.B. 283, 291-92 (C.A.) (fleeting presence is enough to ground jurisdiction); DeManneville v.

De Manneville, 32 E.R. 762, (Ch. 1827) (an alien was subject to the jurisdiction of the domestic court while in England) &Carrick v. Hancock, 12 Times L.R. 59, 60 (Q.B. 1895) (“a transient served within the jurisdiction of the court is subject to its jurisdictionand, as a correlative, is entitled to invoke its protection while present in the jurisdiction”). [31] The second group consists of persons who voluntarily submit to the jurisdiction of the court.

A person may manifest anintention to submit by agreeing to do so in a contract or participating in the court process. [32] The explanation for the territorial limitation on a court’s jurisdiction is simple. A domestic court dispenses justice to thosewho owe allegiance to the state. Those within state borders populate the set of persons from whom allegiance is due. The Siskina, [1979]A.C. 210, 236 (C.A. 1977) (“At common law the court . . . administered justice for those who owed . . . [the sovereign] allegiance. Hiswrit ran within the realm, not outside it.

Foreigners within the realm owned [sic] him allegiance whilst there”); John Russell & Co. v.Cayzer, Irvine and Co., [1916] 2 A.C. 298, 302 (H.L.) (“The root principle of English law about jurisdiction is that the Judges stand inthe place of the sovereign in whose name they administer justice, and that therefore whoever is served with the King’s writ, and can becompelled consequently to submit to the decree made, is a person over whom the Court has jurisdiction.”) & F.

Piggott, Service Out ofthe Jurisdiction xxvii (1892) (The common law maxim that the King’s writ does not run beyond the sea “expresses the constitutional

principle that the Sovereign’s authority, and therefore the jurisdiction of the Sovereign’s Courts, is territorial”). [33] A court has no jurisdiction to issue to a person over whom it has no power an order directing him or her to take an action orrefrain from taking an action. Rio Tinto Zinc Corp. v. Westinghouse Electric Corp., [1978] A.C. 547, 631 (H.L.) (exercising “jurisdictionover foreigners in respect of acts done outside the jurisdiction ... [of the Untied States] ... is not in accordance with international law”);Singh v.

Rajah of Faridkote, [1894] A.C. 670, 684 (P.C.) (Punjab) (under international law a judgment issued without jurisdiction over aperson is “an absolute nullity”); British National Spinners Ltd. v. Imperial Chemicals Ltd., [1953] 1 Ch. 19, 26 (C.A. 1952) (“[t]he writof the United States does not run in this country”); Hewitson and Milner v. Fabre, 21 Q.B.D. 6, 9 (1888) (service on a foreigner abroad“is no service at all . . . [and is] wholly void”); Drummond v. Drummond, L.R. 2 Ch. 32, 43 (1866) (the Queen’s writ was not “availablebeyond the jurisdiction”); Attorney General v.

Prossor, [1938] 2 K.B. 531, 537 & 541 (C.A.) (at common law a subpoena could not beserved outside the jurisdiction); Petro-Canada Products Inc. v. Dresser-Rand Canada Inc., 2004 ABCA 144 , 348 A.R. 81, 88(C.A. 2004) (“an Alberta court cannot compel the attendance of the non-resident individuals”); Trustees of United Services Fund v.Richardson Greenshields of Canada Ltd., (BC SC), 23 B.C.L.R. 1, 7 (C.A. 1988) (British Columbia has no jurisdictionover a foreigner) & Vantel Broadcasting Co. v. Canada Labour Relations Board, (BC CA), 35 D.L.R. (2d) 620, 631(B.C. Sup.

Ct. 1962) (“Provincial Courts have no common-law authority to send their writs beyond their territorial boundaries”). C. The English Response to the Problem of the Absent Defendant [34] Long ago in England, a person who left the jurisdiction of a court to avoid obligations might be the subject of state processesthe application of which pressured the absent defendant to return. Outlawry was an effective concept: “In the local courts threat ofoutlawry was for centuries the usual means of compelling a reluctant defendant to appear before the court”. A.

Kiralfy, Potter’s Historical Introduction to English Law 315 (4th ed. 1958). An outlaw lost the protection of the law and suffered forfeiture of property. 3 W. Holdsworth, A History of English Law 303-04 (5th ed. 1942). Or the sovereign may have exercised prerogative rights andcommanded a subject to return to the territory. F. Piggott, Service Out of the Jurisdiction xlii-xliii (1892). [35] These measures may have been adequate in communities where most commercial activity took place between residents of alocal area.

But they were not well suited to the changes in business patterns introduced by the industrial revolution. [36] In the eighteenth and nineteenth centuries commercial activity in the United Kingdom changed dramatically. A largerproportion of business transactions involved actors outside the United Kingdom. With the emergence of international commerce, themerchants needed a sophisticated legal system to resolve disputes which had foreign dimensions.

The principle that a domestic court hadpower only over those served within the territory of the court or who submitted to the jurisdiction of the court limited the capacity of thecourt to provide this essential service.

Recognizing this dilemma, some states, including England, introduced legislation that expandedthe jurisdiction of their courts. [37] The mischief of the missing defendant was sufficiently serious to cause Parliament to pass acts in 1832 and 1838 intended toameliorate the “great inconvenience and delays of Justice aris[ing] ... from the defect of jurisdiction in Courts of Equity to effectuate theservice of their process in such parts of the United Kingdom of Great Britain and Ireland as are not within the jurisdiction of the saidrespective Courts”.

An Act to effectuate the service of process issuing from the Courts of Chancery and Exchequer in England andIreland respectively, 2 & 3 Will. IV, c. 33 & 4 & 5 Will. IV, c. 82. These enactments allowed the English Court of Chancery andExchequer to authorize the service within the United Kingdom of court documents relating to claims “concerning lands, or tenements, orhereditaments, situate or being within ... England or Wales” and “any money vested in any government or other public stock, or publicshares in public companies or concerns, or concerning the dividends or produce thereof”. 2 & 3 Will.

IV, c. 33, s. 1 & 4 & 5 Will. IV, c.82, s. 1. [38] The judge made General Orders of the Court of Chancery issued on May 8, 1845 introduced new service ex juris rules whichbestowed on the court the power to allow service ex juris “in any suit”. An applicant need only apply and provide “such evidence as shallsatisfy the Court in what place or country the defendant is or may probably be found”. These rules governed the service of Chanceryprocesses until 1875. Justice Pearson, in Société Générale de Paris v. Dreyfus Brothers, 29 Ch.

D. 239, 243 (1885) observed that the1845 instrument “was as wide an order as could possibly be framed, giving the Court absolute power in any case whatever to orderservice of the writ out of the jurisdiction”. See also Drummond v. Drummond, L.R. 2 Ch. 32, 40 (C.A. 1866) (the service ex juris ruleswere “framed ... in the most general terms and ... apply to ‘a Defendant in any suit out of the jurisdiction of the Courts’ ”). [39] Before 1832 a litigant in Chancery could serve a commencement document out of the jurisdiction, but a defendant was free to

ignore it. Drummond v. Drummond , L.R. 2 Ch. 32, 43 (C.A. 1866) ( “ That subpoenas could be and were served out of the jurisdiction of the Court, and that if the party served appeared ... the service was effectual, and the suit could proceed against the party, but that if the party served did not appear upon the subpoena, the service could not be made effectual, and the suit could not be proceeded in against the party served ” ).

This was obviously an unsatisfactory state. [ 40 ] Twenty years after Parliament allowed the Courts of Chancery and Exchequer to serve their processes beyond their territorial limits, Parliament gave the same power to the common law courts. The Common Law Procedure Act, 1852 , 15 & 16 Vict., c. 76, ss. 18 & 19 allowed a plaintiff in the Court of Common Law to serve a British subject or a foreigner outside the United Kingdom with a writ of summons alleging that “ there is a cause of action which arose within the jurisdiction, or in respect of a breach of a contract made within the jurisdiction ” .

A leading English scholar of the period summarized the effect of this important legislation: “ [T]he jurisdiction of the [Common Law] Courts was enlarged, and the maxim that the Queen ’ s writ did not run beyond the sea was modified to this extent: the Courts had power to order it to run throughout the Empire, and as against British subjects throughout the world. ” F. Piggott, Service Out of the Jurisdiction xlv (1892). [ 41 ] A uniform rule for the Courts of Chancery and the Common Law was introduced in 1875.

Supreme Court of Judicature Act, 1875 , 38 & 39 Vict. 1, c. 77, 1 st sch. [ 42 ] This new code exhibited several noteworthy features. First, Order 11 Rule 4 declared that “ [n]o writ of summons may be served out of the jurisdiction ... without the leave of the Court or Judge ” . Second, Order X1 Rule 1 bestowed a discretion on the court: “ Service out of the jurisdiction ... may be allowed by the Court ... ” .

Third, Order XI Rule 1 limited service ex juris to several types of actions, including actions relating to contracts “ made or entered into within the jurisdiction, and whenever there has been a breach within the jurisdiction of any contract wherever made ” . Fourth, Order XI Rule 3 stipulated that “ [e]very application for an order for leave ... shall be supported by evidence, by affidavit or otherwise, showing ... the grounds [listed in rule 1] upon which the application is made ” . [ 43 ] Substantial changes to Order XI were made in The Rules of Court, 1883.

The types of actions for which extraterritorial service was permissible were redrafted. Perhaps most noteworthy was the introduction in Rule 4 of a merit based element. This was new. A person had to state a belief that the plaintiff had a “ good cause of action ” .

Rule 4 reads as follows: Every application for leave to serve such writ ... on a defendant out of the jurisdiction shall be supported by affidavit or other evidence, stating that in the belief of the deponent the plaintiff has a good cause of action ... and the grounds upon which the application is made; and no such leave shall be granted unless it shall be made sufficiently to appear to the Court or Judge that the case is a proper one for service out of the jurisdiction under this order. D.

English Service Ex Juris Jurisprudence [ 44 ] A review of several English cases will highlight some of the concerns which troubled the courts when they heard service ex juris applications. [ 45 ] The Court of Appeal, in Great Australian Gold Mining Co. v. Martin , 5 Ch. D. 1 (1877), reviewed Order XI Rule 3 of The Rules of Court, 1875 for the first time. Rule 3 directed an applicant seeking leave to serve a defendant outside the jurisdiction to present evidence of “ the grounds upon which the application is made ” .

This requirement was introduced because [w]hen Order XI. of the Judicature Act came into operation, it was necessary to provide for the new and additional circumstance that there was no longer a bill before the writ was issued, and therefore it was necessary that something should be provided which would correspond ... with the statement of facts which the Court had under the old practice before it. 5 Ch D. 1 , 13 (C.A. 1877). See also 5 Ch. D. 1 , 10 (C.A. 1877) (under the previous practice “ the whole of the case was stated on the bill, which the Court might look at ” ).

In other words, an affidavit was needed to record the facts which used to appear in the bill. Had the bill continued to exist there would have been no need for an affidavit. [ 46 ] On January 10, 1876 the Great Australian Gold Mining Co. was given leave to issue a writ of summons against Sir James

Martin, the Chief Justice of Sydney, and serve it on him in New South Wales. The endorsement on the writ recorded in most abstract terms the relief the plaintiffs sought and the wrongdoing of the defendants. Several months later, on May 3, 1876, the plaintiffs filed a statement of claim which states “ at considerable length ” the particulars of the fraudulent conduct attributed to the Chief Justice of Sydney. The information in this statement of claim would not have been before the court which originally granted leave to serve the writ ex juris . 5 Ch. D 1 , 16 (C.A. 1877).

Sir James Martin moved to have the writ and service ex juris order discharged. Near the end of 1876, Sir James filed an affidavit sworn August 4, 1876 stating that he had nothing to do with the promotion of the company, and he never had any shares, or debentures, or other interest in it; that he had signed the prospectus after it had been sent to England without his knowledge, and of which he did not approve, and that when he heard of them he had at once repudiated all connection with the company, and that he had never received any benefit from his trusteeship. 5 Ch.

Div. 1, 3 (1877). [ 47 ] Vice-Chancellor Malin of the Chancery Division of the High Court of Justice dismissed Sir James ’ motion. He stated that “ if a case is stated which, if proved, the Court sees will entitle the Plaintiff to the decree, that is a case in which a Defendant, against whom the relief is sought, being a British subject, resident abroad, should be served out of the jurisdiction ” . 5 Ch. D. 1 , 6 (1876). The Vice- Chancellor also concluded that the plaintiffs ’ claim was of a nature listed in rule 1 for which service ex juris was allowed. 5 Ch. D. 1 , 8 (1876).

He declined to exercise his discretion in Sir James ’ favor expressing the opinion that the Sydney Chief Justice “ should now have the opportunity ... of completely vindicating himself from the charges made against him; and he will do much better by answering the case in this Court than by driving the parties to see him in a Court in the country in which he resides, and of which he is the head ” . 5 Ch. D. 1 , 9 (1876). [ 48 ] The Court of Appeal held that a deponent must swear that he believes the facts alleged in the claim are true and that these facts constitute an action of the kind described in rule 1.

Justice Bramwell ’ s opinion is captured in the following passage: “ [T]here ought to be an affidavit showing the grounds on which the application is made, namely, showing that there is a case within rule 1 which arose in England within the jurisdiction of this Court. ” 5 Ch. D. 1 , 17 (C.A. 1877). This is not a requirement that the applicant meet a merit- based standard. [ 49 ] The plaintiffs were given leave to file a fresh affidavit which contained the features the Court of Appeal described as essential.

Upon doing so, the Court of Appeal dismissed the appeal. [ 50 ] Additional changes to service ex juris procedure were made in 1883. [ 51 ] Rule 4, as it appeared in The Rules of Court, 1883 , directed an applicant for extra territorial service to file an affidavit disclosing that the deponent believes the plaintiff has a “ good cause of action ” and “ the grounds upon which the application is made ” .

A court could not grant permission to serve a writ ex juris “ unless it shall be made sufficiently to appear to the Court or Judge that the case is a proper one for service out of the jurisdiction under this order ” . [ 52 ] The House of Lords and the English Court of Appeal considered these amendments on numerous occasions. [ 53 ] Lord Davey ’ s judgment in Chemische Fabrik Vormals Sandoz v. Badische Anilin und Soda Fabriks , 90 L.T. 733 (H.L. 1904) merits special attention, on account of its cogency.

He reinforced the need to appreciate that the “ court is not, on an application for leave to serve out of the jurisdiction, or on a motion made to discharge an order for such service, called upon to try the action or express a premature opinion on its merits ” . 90 L.T. 733, 735 (H.L. 1904). See also Soci é t é G é n é rale de Paris v. Dreyfus Brothers , 37 Ch. D. 215 , 225 (C.A. 1887).

Bearing this fundamental premise in mind, he opined that “ the application should be supported by an affidavit stating facts which, if proved, would be a sufficient foundation for the alleged cause of action ” . 90 L.T. 733, 735 (H.L. 1904). This opinion is the same as that Vice-Chancellor Malin and Justice Bramwell expressed in Great Australian Gold Mining Co. v. Martin , 5 Ch. D. 1 , 6 & 17 (Ch. 1876 & C.A. 1877).

Lord Davey also believed that “ where there is a substantial legal question arising on the facts disclosed by the affidavits ... the court should, as a rule, allow the service of the writ ” . 90 L.T. 733, 735 (H.L. 1904). A “ substantial legal question ” did not include a meritless one. 90 L.T. 733, 735 (H.L. 1904). He also noted that the applicant could discharge the burden to show “ that the case is a proper one for service out of the jurisdiction under this order ” by identifying which feature of rule 1 was engaged.

Rule 1 listed the types of actions which could justify service ex juris . 90 L.T. 733, 735 (H.L. 1904). Finally, he made it clear that a court, on a set aside application, could rely on affidavits filed in support of and in opposition to the application for leave to serve outside the state.

90 L.T. 733, 735 (H.L. 1904). [54] The English courts were not oblivious to the practical consequences visited upon defendants who resided outside the UnitedKingdom. This must have influenced their attitude towards service ex juris. An expanded jurisdiction would have extended the circle ofpersons whose interests may be affected by a judgment and the process of the court. This is so without regard to whether the courtultimately imposed any burden on a jurisdiction-resisting defendant. Mere participation had its burdens.

Great inconvenience would havebeen the lot of any defendant served with a court process outside its geographic borders. Chemische Fabrik Vormals Sandoz v. BadischeAnilin und Soda Fabriks, 90 L.T. 733, 734 & 735 (H.L. 1904) ; Société Générale de Paris v. Dreyfus Bros., 29 Ch. D. 239, 243 (Ch.1885) & Great Australian Gold Mining Co. v. Martin, L.R. 5 Ch. D. 1, 10-11 (C.A. 1877).

A person hauled before a court, to which noduty of any kind was owed on account of presence or voluntary agreement, would have had to secure legal advice in a community whoselegal system and skilled professionals were probably unknown to the defendant. E.

The Constitution of Canada Imposes Limits on the Jurisdiction of a Provincial Superior Court [55] Now that important English historical material has been recorded, it is necessary to track the significant developments inCanada which have shaped Alberta’s service ex juris laws. [56] Distinctive Canadian constitutional values - Canada-is-one-nation - caused the Supreme Court of Canada in a series ofimportant judgments released after 1989 to modify the law governing both the recognition of judgments issued by provincial superiorcourts and non-Canadian courts and the conditions which must exist before a provincial superior court may constitutionally exercise itsjurisdiction.

Morguard Investments Ltd. v. De Savoye, (SCC), [1990] 3 S.C.R. 1077, 1103 (the “approach of permittingsuit where there is a real and substantial connection with the action provides a reasonable balance between the rights of the parties”);Hunt v. T & N plc, (SCC), [1993] 4 S.C.R. 289, 325 (Morguard was careful to indicate . . . that a court must havereasonable grounds for assuming jurisdiction”); Tolofsen v.

Jensen, (SCC), [1994] 3 S.C.R. 1022, 1049 (“In Canada acourt may exercise jurisdiction only if it has a ‘real and substantial connection’ (a term not yet fully defined) with the subject matter ofthe legislation”); Spar Aerospace Ltd. v. American Mobile Satellite Corp., 2002 SCC 78 , [2002] 4 S.C.R. 205, 230 (“Morguardand Hunt establish that it is a constitutional imperative that Canadian courts can assume jurisdiction only where a ‘real and substantialconnection’ exists”); Beals v.

Saldanha, 2003 SCC 72 , [2003] 3 S.C.R. 416, 435 (“A substantial connection with the subjectmatter of the action will satisfy the real and substantive connection even in the absence of a connection with the defendant in the action”)& Club Resorts Ltd. v.

Van Breda, 2012 SCC 17 , [2012] 1 S.C.R. 572, 594 (“in Canadian constitutional law; the real andsubstantial connection test has given expression to the constitutionally imposed territorial limits that underlie the requirement oflegitimacy in the exercise of the state’s power of adjudication”). [57] The direct consequence of the modifying enforcement of judgment rules was a new understanding of the jurisdiction ofprovincial superior courts. [58] Justice La Forest, the architect of the new constitutional order, created a regime which permitted “suit where there is a realand substantial connection with the action” and enforced the judgment of a provincial superior court of a jurisdiction which had a realand substantial connection with the action.

Morguard Investments Ltd. v. De Savoye, (SCC), [1990] 3 S.C.R. 1077,1108. [59] Recognizing and enforcing a judgment issued by a provincial superior court whose process was served outside its boundariesbecause there was a real and substantial connection between the subject matter of the action or the parties and the province was arevolutionary development. There had never been any value attributed to the nexus between the subject matter of the action and thejurisdiction of a court.

Application of the traditional common law rules based on service of the defendant within the jurisdiction couldbring disputes with no connection whatsoever to the jurisdiction before the court. See Maharanee of Baroda v. Wildenstein, [1972] 2Q.B. 283, 294 (C.A.) (service on a French art dealer while in England to watch the Ascot horserace provided a proper basis for Englishcourt to hear a case about the authenticity of a painting purchased by an Indian princess in Paris); Colt Industries v.

Sarlie, [1966] 1 AllE.R. 673 (Q.B. 1965) (the English court enforced a New York judgment relating to an action that had no links to England because thedefendant was served in England) & Penn v.

Lord Baltimore, 27 E.R. 1132 (Ch. 1750) (the defendant, served in England, was directed toabide by a Chancery order governing land in America). [60] After completely rewriting the related rules governing recognition within Canada of a provincial superior court judgment andthe jurisdiction of a provincial superior court in an all-Canadian fact pattern, the Supreme Court of Canada did the same for the rulesgoverning recognition and enforcement of non-Canadian judgments. Justice Major explained why in Beals v. Saldanha, 2003 SCC 72, [2003] 3 S.C.R. 416, 437-38:

International comity and the prevalence of international cross-border transactions and movement call for a modernization of privateinternational law. The principles set out in Morguard, and further discussed in Hunt . . . can and should be extended beyond therecognition of interprovincial judgments, even though their application may give rise to different considerations internationally. Subjectto the legislatures adopting a different approach by statute, the "real and substantial connection" test should apply to the law with respectto the enforcement and recognition of foreign judgments. [61] Beals v.

Saldanha, 2003 SCC 72 , [2003] 3 S.C.R. 416 was not the product of constitutional values. If it was, JusticeMajor could not have approved provincial legislation less receptive to the enforcement of foreign judgments, a concession clearly made. F.

A Court Must Carefully Scrutinize Any Claim That It Has Power Over a Person Not Served Within the Jurisdiction orWho Has Not Voluntarily Submitted to the Jurisdiction [62] That the Court of Queen’s Bench of Alberta’s jurisdiction has constitutional limits compels it to carefully scrutinize any claimthat it has jurisdiction over a person not served within Alberta or who has not agreed to submit to its jurisdiction. Unconstitutional foraysmust be avoided. See Dreco Energy Services Ltd. v.

Wenzel Downhole Tools Ltd., 2008 ABCA 395 , 440 A.R. 351, 353 (C.A.2008) (“A court should not sanction service outside the jurisdiction without careful consideration.”); Vitkovice Horni A Hutni Tezirstvo v.Korner, [1951] A.C. 869, 877 (H.L.) (judges must appreciate that extraterritorial service “invade[s] ... the sovereignty of a foreignState”); Almin Rasheed Shipping Corp. v.

Kuwait Insurance Co., [1984] 1 A.C. 50, 65 (H.L. 1983) (“[c]omity . . . dictates that judicialdiscretion to grant leave . . . should be exercised with circumspection in cases where there exists an alternative forum”); Société Généralede Paris v. Dreyfus Bros., 29 Ch. D. 239, 243 (Ch. 1885) (“this Court ought to be exceedingly careful before it allows a writ to be served out of the jurisdiction”); Singh v. Howden Petroleum Ltd., 100 D.L.R. 4th 121, 132 (Ont. C.A. 1979) (“great care” must be exercised”) &George Munro Ltd. v.

American Cyanamid and Chemical Corp., [1944] 1 K.B. 432, 444 (C.A.) (“an application under the rule shouldnever be granted without full knowledge and careful consideration of all the relevant circumstances”). A court must also recognize that“the governors [of foreign states] . . . resent the service on their subjects without their leave of the process of the Courts of othernations”. Hewitson and Miller v. Fabre, 21 Q.B.D. 6, 8 (1888). [63] The Alberta Court of Appeal, in Hansraj v.

Ao, 2004 ABCA 223 , 354 A.R. 91, 105 (2004), recorded theimplications of an expansive jurisdictional claim on the part of a superior court: This is a serious topic, because it extends the arm of the Alberta courts outside Alberta, to other provinces which have their ownLegislature and courts. It is more serious now than ever, because the grounds for recognition of judgments from other provinces arebroader than they used to be.

At one time, a judgment founded upon service ex juris was not enforceable outside Alberta; that is nolonger so. [64] Today a Canadian superior court need not concern itself unduly with the hardship a prospective litigant based in Canada butoutside the jurisdiction may experience. The inconvenience attributable to the fact that legal practices used to operate within borderscoincident with the boundaries of the single province in which they were located is no longer as large as it used to be.

The presence ofinternational and national law firms in Canada reduces the likelihood that litigants will be forced to retain counsel with whom they arecompletely unfamiliar. Black v. Law Society of Alberta, (SCC), [1989] 1 S.C.R. 591 (the Supreme Court of Canadagave the green light to the growth of national law firms). In addition, by the end of the year Canadian lawyers should be able to practicelaw anywhere in Canada. The leaders of law societies are optimistic that all provincial and territorial governing bodies will ratify the2013 national mobility agreement.

The Lawyers Weekly, vol. 32, no. 44, at 2 (2013). [65] But basic constitutional principles demand that the Court focus on correct delineation of the borders of its jurisdiction toreduce the risk that it might wrongly exercise its judicial powers. This is an important constitutional issue. G. The Role of Service Ex Juris [66] There is one important feature regarding extraterritorial service which must be borne in mind.

[67] In Canada service ex juris rules do not engage constitutional values. They are nothing more than a means of giving notice of aproceeding to a person who might be interested in knowing about it. Muscutt v. Courcelles, (ON CA), 160 O.A.C. 1,17 (C.A. 2002). See also Drummond v. Drummond, L.R. 2 Ch. 32, 37 (C.A. 1866) & Whitmore v. Ryan, 67 E.R. 792, 794 (Ch. 1846).Notice allows a defendant to assess whether its best interests are served by participation in a foreign suit. Under some circumstances aforeign judgment may present a future liability. E.g., Beals v.

Saldanha, 2003 SCC 72 , [2003] 3 S.C.R. 416 (a Florida lawsuitfor $8,000 which an Ontario couple chose to ignore ultimately led to an obligation enforceable in Canada to pay approximately$800,000). [68] Unless the service ex juris rule adopts the constitutional test for a court exercising jurisdiction, valid service is not a reliable litmus test for demonstrating jurisdiction. Marren v.

Echo Bay Mines Ltd., 2003 BCCA 298 , 226 D.L.R. 4th 622, 626-27(B.C.C.A. 2003) (The plaintiff had good service but the court had no jurisdiction). [69] Proper service on an extra-provincial defendant and the jurisdiction of the court whose process is served out of province aretwo different concepts. Valid service on a foreign defendant does not necessarily clothe a domestic court with jurisdiction. Club ResortsLtd. v.

Van Breda, 2012 SCC 17 , [2012] 1 S.C.R. 572, 599 (rule 17.02 of Ontario’s Rules of Civil Procedure “is purelyprocedural in nature and does not by itself establish jurisdiction in a case”); Muscutt v. Courcelles, (ON CA), 160O.A.C. 1, 17 (C.A. 2002) (Ontario’s service ex juris rule “is procedural in nature and does not by itself confer jurisdiction”); Marren v.Echo Bay Mines Ltd., 226 D.L.R. 622, 626-27 (B.C.C.A. 2003) (the chambers judge erred “when he equated extra-provincial serviceunder the Supreme Court Rules with real and substantial connection”); Royal & Sun Alliance Insurance Co. of Canada v.

Wainoco Oil &Gas Co., 2004 ABQB 643 , 364 A.R. 151, 157 (Q.B. 2004) (“when this Court does not have jurisdiction to hear an action as ofright . . . the Court cannot take jurisdiction of the action, regardless of any satisfaction of the Rules”) & Sobey’s Land Holdings Ltd. v. Harvey & Co., 25 C.P.C. 6th 263, 273 (Nfld. Sup. Ct. Tr. Div. 2006) (“The service [ex juris] provisions . . . are procedural and do notconfer jurisdiction”). [70] An example will clarify my point. Suppose that a rule allowed a party to serve a commencement document outside Alberta onpayment of a $500 service ex juris fee.

The fact that a party could produce a receipt confirming payment of the $500 fee would not allowa court to assert jurisdiction. There still had to be a real and substantial connection between Alberta and the action before the Court ofQueen’s Bench of Alberta could hear an action. [71] The converse is also true. Invalid service does not mean that a forum has no jurisdiction. This scenario is most likely toappear if a service ex juris test incorporates a merit based standard.

Suppose that a plaintiff could not serve outside the jurisdiction unlessthe plaintiff filed an opinion of an independent barrister that the plaintiff had a very strong case. There is no reason to conclude that acourt has jurisdiction to hear only cases the plaintiff is most likely to win. Jurisdiction is not a function of the strength of a litigant’s case.See Société Générale de Paris v. Dreyfus Brothers, 29 Ch. D. 239, 244 (Ch. 1885) (“you cannot go into the merits of the case ... all youhave to do is ascertain properly whether or not the jurisdiction for the trial of the action is here or elsewhere”). H.

The Essential Components of Valid Service Ex Juris Under Rule 11.25 of the New Alberta Rules of Court [72] An understanding of the fundamental principles about the constitutional limits of the Court of Queen’s Bench of Alberta’sjurisdiction and the limited role, in theory, which service ex juris plays, ensures that the necessary framework is in place to analyze andassess the role the new Alberta Rules of Court play in post November 1, 2010 litigation.

This background work is necessary to evaluatethe defendant’s claim that the plaintiff has failed to comply with rule 11.25(1) of the new rules and to determine whether any deficienciescan be corrected. 1. A Comparison of Service Ex Juris Under the Old and New Rules [73] As of November 1, 2010, the effective date of the new Alberta Rules of Court, the components of a valid ex juris servicechanged dramatically. [74] Rule 11.25 of the new rules is the source of norms now in force. Rules 30 and 31 of the old rules recorded the standard bywhich the legitimacy of service ex juris was measured before November 1, 2010.

[75] There are several distinguishing features which make the two versions very different. [76] First, the new rules allow a party to serve a commencement document outside Alberta and within Canada without priorjudicial permission. Generally speaking, this is the practice in Canada. Amchem Products Inc. v. Workers’ Compensation Board, (SCC), [1993] 1 S.C.R. 897, 921 (“In most provinces in Canada, leave to serve ex juris is no longer required except in specialcircumstances”); Supreme Court Rules, B.C.

Reg. 168 /2009, Rule 4-5 & Court Jurisdiction and Proceedings Transfer Act, B.C. 2003, c.28, s. 10; Saskatchewan Rules of Court, r. 28; Court of Queen’s Bench Rules, Man. Reg. 553/88, rule 17.02; Rules of Civil Procedure,R.R.O. 1990, Reg. 194, rule 17.02 ; Rules of Court, N.B. Reg. 82-73, rule 19; Nova Scotia Civil Procedure Rules, rule 31.09(1); PrinceEdward Island Rules of Civil Procedure, rule 17.02; Rules of the Supreme Court, 1986, SNL 1986, c. 42, Sch.D., rule 6.07.

Rule 30 ofthe old Alberta Rules of Court insisted that a party have a court order granting permission for service ex juris before effecting serviceoutside Alberta. Leister v. Whitstone, 2000 ABQB 668 , 96 Alta. L.R. 3d 372, 376 (Master 2000) (“an application should bemade and an order granted for service ex juris before service is effected”). [77] Deleting the need for prior judicial approval obviously meant that a court no longer had discretion as to whether to approveextraterritorial service. This was clearly one of the features of the old rules. Dreco Energy Services Ltd. v.

Wenzel Downhole Tools Ltd.,2008 ABCA 395 , 440 A.R. 351, 354 (C.A. 2008). It was also a key part of the English rules of court interpreted by the Houseof Lords and the English Court of Appeal in opinions cited with approval by Alberta courts. Vitkovice Horni A Hutni Tezirstvo v. Korner,[1951] A.C. 869 (H.L.) & Chemische Fabrik Vormals Sandoz v. Badische Anilin und Soda Fabriks, 90 L.T. 733 (H.L. 1904) . [78] At the outset, the new rules relieved a party of the burden of securing judicial approval of service outside Canada in mostcases. But this grace period for service outside Canada was short lived.

Effective July 12, 2012, with the filing of Alberta Rules of CourtAmendment Regulation, Alta. Reg. 122/2012, s. 9, a party seeking to serve a person outside Canada once again needed prior judicialpermission. [79] Drafters of the new rules probably expected that many defendants served out of the jurisdiction would not challenge thevalidity of extra-territorial service. If so, they may have concluded that burdening a plaintiff with an obligation to prepare and the courtswith a duty to review service ex juris material was no longer warranted.

Proponents may have held the opinion that these measures mayreduce litigant costs and the demands on court time, consequences deemed meritorious by the foundational rules. Rule 1.2(1) of the newrules declares that “[t]he purpose of these rules is to provide a means by which claims can be fairly and justly resolved in or by courtprocesses in a timely and cost effective manner”. [80] The second change is a corollary of the first.

Under the new rules a party who wishes to serve a commencement documentoutside Alberta must assert in the commencement document or a document accompanying a commencement document, in the case ofservice outside Canada, facts, which, on the assumption they are true, would allow a court to conclude that there is “a real andsubstantial connection between Alberta and the facts on which a claim in the action is based”. The commencement document must alsoreveal, according to rule 11.25(1)(

b) and (2)(a), the grounds for service outside Alberta. This is a reference to rule 11.25(3) which liststhe “circumstances a real and substantial connection is presumed to exist”. No such obligation arose under rules 30 and 31 of the oldrules. A prudent pleader working under the new rules will set out in detail the facts connecting the claim to Alberta and the criterion orcriteria in rule 11.25 (3) upon which the applicant relies.

A skilled drafter will appreciate the important role this part of a commencementdocument plays and have carefully reviewed the service ex juris, conflicts and constitutional case law to reduce the risk a person servedout of the jurisdiction will challenge the validity of the service or the power of the court to adjudicate the action. Patel v. Friesen, 2002 ABQB 112 , 1 Alta. L.R. 4th 310, 315 (Master 2002) (“Too many of the [service ex juris] applications are rejected forinadequate materials.

Those responsible for drafting affidavits in support of the application have not read . . . [the leading texts] nor . . .any of the numerous judgments that deal with the requirements of Rules 30 and 31") & Bell Bros. Transport Ltd. v. Cummins DieselPower Ltd., (AB CA), 35 D.L.R. (2d) 775, 777 (Alta. Sup. Ct. App.

Div. 1962) (on account of a “laxity in observingthe requirements of the [service ex juris] rule . . . [a] restatement of what is required to be set out in an affidavit on an application for anorder for service ex juris is not inappropriate”). [81] The third difference between the old and new rules is of especial importance. Rule 11.25(1) of the new rules relieves theparty who serves a commencement document outside Alberta but within Canada of the need to pass a merit based test.

This wasundoubtedly the norm in the Courts of Chancery and Exchequer until 1875 and arguably in all English courts until 1883, as noted above.The merit based criterion which played an important role under the old rules vanished without a trace in the new rules. There are at leasttwo good reasons for this. First, a court whose jurisdiction is defined by territorial and constitutional boundaries is entitled to adjudicatesuspect actions. Great Australian Gold Mining Co. v. Martin, 5 Ch. D. 1, 6 (Ch. 1876) (“I assume that, when this comes for a hearing,the claim will be dismissed with costs”).

This is not an argument that a legislature does not have the authority to abridge the plenaryjurisdiction of its courts. It does. Court rules might stipulate that service ex juris is only available if the defendant resides in the UnitedStates or is a corporation traded on the New York Stock Exchange. Second, the inconvenience associated with litigating in a foreignjurisdiction is nowhere near as substantial today as it was in 1883 when a merit based feature was first introduced into the English

service ex juris rules. [82] One must also remember that a plaintiff who pursues a meritless claim cannot escape the screening mechanism Alberta’ssummary judgment rule represents just because a claim was served outside Alberta. Alberta Rules of Court, r. 7.3.

Summary judgmentremoves meritless claims from an overburdened litigation system. Apsley v. Boeing Co., 2010 U.S. Dist. Lexis 65837, p. 23 (D. Kan.)(“Summary judgment ... is an important procedure ‘designed to secure the just, speedy and inexpensive determination of every action’ ”).In Canada v. Lameman, 2008 SCC 14 , [2008] 1 S.C.R. 372, 378 the Supreme Court of Canada declared that [t]he

summary judgment rule ... prevents claims or defences that have no chance of success from proceeding to trial. Tryingunmeritorious claims imposes a heavy price in terms of time and cost on the parties to the litigation and on the justice system. It isessential to the proper operation of the justice system and beneficial to the parties that claims that have no chance of success be weededout at an early stage. See also Another Look Ventures Inc. v. 642157 Alberta Ltd., 2012 ABCA 253, ¶ 8 (summary judgement may be granted if “it is plainand obvious that the action cannot succeed”); Enokhok Development Corp v.

Alberta Treasury Branches, 2011 ABCA 322 , 68 Alta. L.R. 5th 126, 131 (C.A. 2011) (“summary judgment should only be granted if the matter is factually and legally beyond doubt”); Poliquin v. Devon Canada Corp., 2009 ABCA 216 , 454 A.R. 61, 82 (C.A. 2009) (summary judgment may be granted if theproper disposition of the action is “plain and obvious”); Murphy Oil Co. v. Predator Corp., 2006 ABCA 69 , 384 A.R. 251, 257(C.A. 2006) (“it must be ‘plain and obvious’ that the action cannot succeed”); Stoddard v.

Montague, 2006 ABCA 109 , 412A.R. 88, 91 (C.A. 2006) (summary judgment may be granted if the respondent’s position is “hopeless” and proper disposition of theaction is “beyond doubt”); Prefontaine v. Veale, 2003 ABCA 367 , 339 A.R. 340, 344 (C.A. 2003) (summary judgment may begranted if the respondent has “no reasonable prospect of success”); Pioneer Exploration Inc. Estate v. Euro-Am Pacific Enterprises Ltd.,2003 ABCA 298 , 339 A.R. 165, 168 (C.A. 2003) (summary judgment may be granted if the proper disposition of the action is“beyond doubt”); Mellon v.

Gore Mutual Insurance Co., 1995 ABCA 340 , 174 A.R. 200, 201 (C.A. 1995) (summary judgmentmay be granted if it is “manifestly clear or beyond doubt that there is not a triable issue”); Zebrowski v. Jehovah’s Witnesses, 1988ABCA 256 , 87 A.R. 229, 232 (C.A. 1988) (“summary judgment is available to a defendant where the material clearlydemonstrated that the action is bound to fail”); German v. Major, 1985 ABCA 176 , 62 A.R. 2, 9 (C.A. 1985) (summaryjudgment may be granted if the proper disposition of an action is “plain and obvious”) & Greene v. Field Atkinson Perraton, 1999ABQB 239, ¶ 1 (Master) (purpose of the

summary judgment rule is to “reject promptly and inexpensively, claims and defences that arebound to fail at trial”). [83] Rule 31 of the old Alberta Rules of Court introduced a merit based test which had a subjective and objective dimension. Theparty who sought permission for service ex juris had to file an affidavit “stating that in the belief of the deponent the applicant has areasonable cause of action”.

This had been interpreted to impose an obligation to present facts which viewed objectively justify thedeponent’s belief that the applicant has a reasonable cause of action. [84] The objective component presents this question - has the plaintiff presented a good arguable case? Composers Authors andPublishers Association of Canada v. International Good Music Inc., (SCC), [1963] S.C.R. 136, 143 (in the context ofrules substantially the same as the old rules, the Court insisted that the applicant present a “good arguable case”); Dreco Energy ServicesLtd. v.

Wenzel Downhole Tools Ltd., 2008 ABCA 395 , 440 A.R. 351, 354 (C.A. 2008) (“The order will not go unless theApplicant has a ‘good arguable case’”); Nova, an Alberta Corp. v. Grove Estate, 1982 ABCA 279 , [1982] A.J. No. 1011, ​ 10(C.A.) (the court applied the “good arguable case” standard); United States Satellite Broadcasting Co. v. WIC Premium Television Ltd.,2000 ABCA 233, ​ 6 (the court utilized “a reasonable or good arguable case” test) & Vitkovice Horni A Hutni Tezirstvo v. Korner, [1951]A.C. 869, 879-80 (H.L.) (“is a case a proper one to be heard in our courts.

The description ‘good arguable case’ has been suggested and Ido not quarrel with it”). See also Chemische Fabrik Vormals Sandoz v. Badische Anilin und Soda Fabriks, 90 L.T. 733, 735 (H.L. 1904)(“the application should be supported by an affidavit stating facts which, if proved, would be a sufficient foundation for the alleged causeof action”); Société Générale de Paris v. Dreyfus Bros., 37 Ch.

D. 215, 222-23 (C.A. 1887) (“The fact that such an affidavit is to bemade shows that the Court ought to consider whether there is a probable cause of action in respect of which the writ is sought to beissued and notice to be served abroad”); Bell Bros. Transport Ltd. v. Cummins Diesel Power Ltd., (AB CA), 35 D.L.R.(2d) 775, 777 (Alta. Sup. Ct. App. Div. 1962) (cited Chemische Fabrik with approval); Alberta Cement Corp. v. Bakewell, 2000 ABQB2002, ¶ 17 (“a good cause of action is established by setting forth a factual situation which, if proven, would give the party a remedy inlaw’); Henderson v.

Johnson & Johnson, 43 A.R. 119, 124 (Master 1982) (“A cause of action is established by a set of facts which, ifproven, would give the plaintiff a remedy in law”) & Orr v. Brown, (BC CA), [1932] 3 D.L.R. 364, 369 (B.C.C.A.)(“facts . . . deposed to on the application, if proved, reasonably disclose a cause of action”). [85] There is no longer a merit based component to service ex juris law, at least with regard to service within Canada. And this isa positive reform. It simplifies the law.

[86] Asking whether the plaintiff has pleaded facts which if proven constitute a cause of action with a real and substantialconnection to Alberta provides a precise test that is relatively easy to apply, does not impose an impossible burden on the applicant at anearly stage of the litigation process and relieves the court of the burden of determining whether the plaintiff has a good arguable case.Nova, an Alberta Corp. v.

Grove and Guelph Engineering Co., 1982 ABCA 279 , 39 A.R. 409, 414-15 (C.A. 1982) (“The needfor service ex juris arises, of necessity, before pleading is complete and before there has been production of documents or oralexaminations”) & Chemische Fabrik Vormals Sandoz v.

Badische Anilin und Soda Fabriks, 90 L.T. 733, 735 (H.L. 1904) (“the court isnot, on an application for leave to serve out of the jurisdiction or on a motion made to discharge an order for such service called upon totry the action . . . and where there are conflicting statements as to material facts, any such opinion must necessarily be based oninsufficient materials”). [87] Proponents of the new rules must have concluded that the focus at this stage of the litigation continuum should be on thejurisdictional issue. Société Générale de Paris v. Dreyfus Brothers, 29 Ch.

D. 239, 244 (Ch. 1885) (“you cannot go into the merits of thecase ... all you have to do is ascertain properly whether or not the jurisdiction for the trial of the action is here or elsewhere”). Theyprobably appreciated that a court’s constitutional jurisdiction and the strength of a litigant’s case are two fundamentally different issues.They would have realized that

summary judgment is available to screen out frivolous actions. As well, they may have held the view thatit is exceedingly difficult to evaluate the strength of the plaintiff’s case at the start of process. They were probably also aware of theEnglish historical precedents which did not utilize a merits based component and the general trend in Canada to remove barriers toextraterritorial service. [88] Had they held these opinions, they may have been at odds with the opinion Chief Justice Wittmann expressed in Scott &Associates Engineering Ltd. v.

Ghost Pine Windfarm, LP, 2011 ABQB 630 , 520 A.R. 190, 200 (Q.B. 2011): For this court to do away with the good arguable case criterion and have no standard whatsoever . . . would in my view require that underthe [new rules] . . . there should be express or implied a provision that a "good arguable case" is not required to be made out to supportvalid service outside of Canada pursuant to Rule 11.25(2). It is common ground that there is no express exclusion of the requirement inthe [new rules] ... . Nor is anything to be implied from the [new rules] . . . which would do away with this requirement.

Logic and common sense dictate some standard of proof in addition to mere allegations in a statement of claim in order to support serviceof an originating document outside of the jurisdiction. Were it otherwise, this Court could take jurisdiction over any person or entityoutside the jurisdiction solely on the basis of unproven allegations in an originating document. That has never been the law and wouldgive rise to a potential for much mischief should it become so. [89] This is not a debate which affects the outcome of this case. Chief Justice Wittmann dealt with service outside Canada.

Thiscase considers service within Canada. [90] With respect, for the reasons set out above, I do not share Chief Justice Wittmann’s fear that divorcing jurisdictional andmerit issues will have untoward effects. [91] Fourth, the new rules, unlike the old ones, expressly incorporate the real and substantial connection concept to whichMorguard Investments Ltd. v. De Savoye, (SCC), [1990] 3 S.C.R. 1077 and Hunt v. T & C plc, (SCC),[1993] 4 S.C.R. 289, 324 accorded constitutional status, into the service ex juris norm.

As a result, a determination under the new rulesthat a party has passed the service ex juris test means that the Court has the constitutional jurisdiction to hear the case. A finding underthe old rules that a party met the service ex juris test was not a guarantee that the Court had the jurisdiction to hear the claim. Roth v. Interlock Services Inc., 2004 BCCA 407 , 33 B.C.L.R. 4th 60, 65 (C.A. 2004) (compliance with service ex juris rules “is not the end of the inquiry”) & Marren v.

Echo Bay Mines Ltd., 2003 BCCA 298 , 226 D.L.R. 4th 622, 626-27 (B.C.C.A. 2003) (“thechambers judge erred when he equated extra-provincial service under the Supreme Court Rules with the real and substantialconnections”. [92] Of interest is the fact that the type of claims which are presumed to pass constitutional master in rule 11.25(3) of the newrules are not the same as those which are listed in Rule 30 of the old rules and justified a service ex juris order.

[93] While these four differences are noteworthy and directly affect the process, there is one important feature the two regimesshare. A person served outside Alberta, whether under the old or new rules, could and may challenge both the propriety of service andthe right of the Court to hear the action. Rule 11.31 of the new Alberta Rules of Court forces and Rule 27 of the old Alberta Rules ofCourt forced the party who served the other outside Alberta to defend its right to do so if questioned. In 1979 the Ontario Court ofAppeal in Singh v.

Howden Petroleum Ltd., 24 O.R. 769, 779 recognized the importance of this contest shortly after Ontario had changedits court rules: It is my view that the intended effect of the 1975 amendments was to remove, as unnecessary, one of the two steps in the ultimatedecision as to whether service out of the jurisdiction should be allowed. The initial application to the Master for leave to serve out ofOntario was dispensed with.

The Rules Committee, in my view, recognized that the real argument on whether service out of Ontarioshould be allowed took place when both parties were represented, on the application by the defendant to set aside service of the writ. 2. The Changes Introduced by the New Service Ex Juris Rules Were Significant [94] The new service ex juris rules jettisoned past practice. There is no longer the need to secure prior judicial permission to servea commencement document extraterritorially within Canada.

By deleting the merit based component for service outside of Alberta butwithin Canada, the new rules shine a bright light on one important issue - does the court have jurisdiction to hear the plaintiff’s claim? [95] These are significant changes. 3.

The Principled Approach to the Service Ex Juris and Jurisdiction Questions [96] There are a number of straightforward and uncomplicated steps which this Court must complete to properly assess achallenge to the validity of the extraterritorial service of its process within Canada. [97] At the outset, the Court must refer to the commencement document and any material filed in support of and in opposition to arule 11.31(1) set-aside application to collect the factual assertions which must be evaluated to determine whether “a real and substantialconnection exists between Alberta and the facts on which a claim in the action is based”, the test recorded in rule 11.25(1)(

a) of the newrules. Dreco Energy Services Ltd. v. Wenzel Downhole Tools Ltd., 2008 ABCA 395 , 440 A.R. 351, (C.A. 2009)(the courtreviewed the pleadings, affidavits filed in support of and in opposition to a set-aside motion and cross-examination on affidavits) &Horni A Hutni Tezirstvo v. Kosner, [1951] A.C. 869, 884 (H.L.) (“There is voluminous affidavit evidence on both sides”). A defendantmust take care not to supply any factual assertions which may assist the plaintiff. This is not an uncommon error. Chemische FabrikVormals Sandoz v.

Badische Anilin und Soda Fabriks, 90 L.T. 733, 735 (H.L. 1904)(the affidavits filed by the party moving to set asideservice outside the United Kingdom filled in the gaps in the plaintiff’s original supporting affidavit). [98] Next, the Court must ask three questions. [99] First, are there factual assertions within the pool of factual assertions collected by the first step which demonstrate that “a realand substantial connection exists between Alberta and the facts on which a claim in the action is based”? This standard appears in rule11.25(1)(a).

It is important to recall that the focus is on factual assertions or allegations. This is not the stage of the litigation continuumwhere findings of fact are made. That is the role of the trial court, a task discharged with full exposure to the work product of the fulllitigation continuum. Vitkovice Horni A Hutni Tezirstvo v. Kosner, [1951] A.C. 869, 879 (H.L.)(it is not “the duty of the court ... to trythe action upon the preliminary application”) & Chemische Fabrik Vormals Sandoz v.

Badische Anilin und Soda Fabriks, 90 L.T. 733,735 (H.L. 1904)(“the court is not on an application for leave to serve out of the jurisdiction ... called upon to try the action”). [100] If the factual assertions in the pool collected by the first step meet this standard, the Court has the jurisdiction to hear anaction which contains these factual assertions. It must be then determined whether the commencement document incorporates enough ofthe factual assertions which caused the Court to answer the preceding question positively.

This is the thrust of the second question. [101] Second, do the factual assertions in the commencement document, a subset of the factual assertions collected at the first step,

disclose the “ facts in support [of the real and substantial connection] ” , the standard incorporated in rule 11.25(1)(

b) of the new rules? If not, the court cannot conclude that it has the jurisdiction to hear the action as currently framed. And because the standard for establishing jurisdiction and the lawfulness of extraterritorial service are the same, it follows that a negative determination on the jurisdiction query compels a negative determination on the validity of service ex juris . [ 102 ] In this case, the plaintiff ’ s statement of claim is most likely to be adjudged compliant with rule 11.25(1) (

b) if it provides a detailed account of its manufacturing facility in Acheson; the nature of the interaction between the representatives of the plaintiff and the defendant, including details of information exchanged, the location of meetings, any agreements which the two parties made; the delivery of the machine to the Acheson facility; the installation of the machine at the Acheson facility; the problems associated with the machine post installation, remedial efforts undertaken by the defendant at the Acheson facility; the performance deficiencies about which the plaintiff complains; and the nature of the damages the plaintiff asserts it has suffered. [ 103 ] Third, does the commencement document “ specifically ... [refer] to the grounds for service of the document outside Alberta and in Canada [set out in rule 11.25(3) ] ” , a requirement found in rule 11.25 (1) (b).

A careful pleader will have expressly asserted that the plaintiff makes a claim listed in rule 11.25(3) . An omission of this critical assertion deprives the commencement document of a feature necessary to a finding that extraterritorial service is lawful. [ 104 ] One will note that no inquiry is pursued to determine whether the asserted facts disclose a “ good arguable case ” . This is because a merit based question does not arise under rule 11.25(1) . [ 105 ] It is now necessary to answer these questions. I.

The Court of Queen ’ s Bench of Alberta Has Jurisdiction To Hear Greenbuilt ’ s Action [ 106 ] A review of Greenbuilt ’ s statement of claim, the two affidavits of Mr. Boire sworn on September 5, 2012 and February 27, 2013 and the affidavit of Mr. Baader sworn on October 24, 2012 shows that Greenbuilt or RMD Engineering has made the following uncontested allegations: 1. Greenbuilt is an Alberta corporation with a manufacturing facility near Acheson, Alberta. 2. On October 20, 2009 Greenbuilt and RMD Engineering signed a contractor confidentiality agreement.

This agreement was signed in contemplation of RMD Engineering undertaking a project for Greenbuilt. One of its terms stated that “ [t]his Agreement shall be governed by and construed in accordance with the laws of the Province of Alberta and the parties hereto hereby attorn and submit to the jurisdiction of the Court of the Province of Alberta ” . 3. No other agreement, whether written or oral, stipulated the law of the contract. 4. On October 26, 2009 RMD Engineering emailed from its Saskatoon office to Greenbuilt ’ s Alberta facility a quotation for the automated styrofoam drilling machine.

This quotation contained an offer to manufacture an automated styrofoam panel hole drilling machine for $65,000 within ten to twelve weeks. 5. On October 26, 2009 Mr. Boire, RMD Engineering ’ s president, was with Greenbuilt ’ s Mr. Baader in Alberta. 6. On October 28, 2009 Greenbuilt faxed from its Alberta facility to RMD Engineering ’ s Saskatoon office a purchase order for the automated styrofoam drilling machine. This purchase order accepted RMD Engineering ’ s offer to sell Greenbuilt an automated styrofoam drilling machine.

7. RMD Engineering manufactured the automated styrofoam drilling machine in Saskatoon. 8. RMD Engineering transported the machine to Greenbuilt’s Acheson facility. 9. The automated styrofoam machine once installed in Greenbuilt’s Acheson facility was unable to complete the tasks whichGreenbuilt needed it to do. 10. In 2010 and 2011 RMD Engineering representatives attended at Greenbuilt’s Acheson facility for the purpose of making themachine work. 11. The reason why the machine does not work is contested. 12.

Greenbuilt paid RMD Engineering the agreed upon price for the machine. [107] I am satisfied that Greenbuilt is making a claim against RMD Engineering that relates to a contract performed and breached inAlberta. Greenbuilt used the machine in its Acheson facility. The plaintiff did not know the machine the defendant built was not able toperform as required until the machine was installed in the plaintiff’s Acheson facility and put to work. [108] The uncontested facts suggest that the contract was made in Saskatchewan.

There was probably no binding contract untilRMD Engineering received Greenbuilt’s fax in its Saskatoon office on October 28, 2009. Professor McCamus, in The Law of Contracts77-80 (2005), opines that a binding contract exists when the offeror receives the offeree’s communication of acceptance. See BrinkibonLtd v. Stahag Stahl Und Stahlwarenhandelsgesellschaft mbH, [1983] 2 A.C. 34 (H.L.) (the contract was made in Austria because theofferor was there when it received the offeree’s fax sent from London accepting the offer); Eastern Power Ltd. v.

Azienda CommunaleEnergia and Ambiente, (ON CA), 178 D.L.R. (4th) 409 (Ont. C.A. 1999) (the contract was formed in Italy, thelocation of the offeror whose offer the offeree accepted by fax sent from Ontario); Re Viscount Supply Co., (ON SC),40 D.L.R. (2d) 501, 506 (Ont. Sup. Ct. 1963) (the contract was made in Toronto, the location of the offeror when he received acceptanceof his offer over the telephone from the offeree calling from Montreal); Re Modern Fashions, 8 D.L.R. (3d) 590, 991 (Man.

Q.B. 1969)(the purchase of goods contract was made in place where the offeror was when telephonic acceptance given by offeree seller) & Sennettv. Tape Estate, (SK KB), 45 Sask. R. 314 (QB 1986) (the contract was made in Saskatchewan because the offeror wasthere when in the course of a telephone conversation with the offeree the offeree accepted the offer). See also Restatement of Contracts(Second), s. 64 (communications through instantaneous technology governed by same principles in force if the offeror and offeree aretogether). [109] I am also satisfied that this claim is probably governed by Alberta law.

This is the case even though there is no expressstatement in the manufacturing contract that Alberta law is the proper law of the contract. [110] Two reasons lead to this conclusion. First, the entire fact pattern provides reliable evidence, objectively assessed, that theparties intended Alberta law to apply. Second, Alberta law has the closest and most significant connection with the transaction. [111] In the absence of an express statement identifying the proper law of the contract, a court must examine all the facts todetermine if there is reliable evidence of their intention.

Should this line of inquiry not produce a satisfactory answer, the court mustascertain which “system of law ... has the closest and most real connection” with the fact pattern. 2 J. Walker, Canadian Conflict of Laws 31-5 (6th ed. looseleaf release 31 December 2012). [112] The existence of the confidentiality agreement is reliable evidence that on an objective evaluation the parties intended tomake the law of Alberta the proper law of the contract. The two contracts were entered into at the same time and were substantiallylinked. It is more likely than not that Greenbuilt would not have retained RMD Engineering t

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