Service of Process

• Author: International Law Group

Formations, Inc. (plaintiff) has been selling glue to its customers made by the American companies TACC International Corporation, ITW TACC, a Division of Illinois Tool Works Inc., and Illinois Tool Works Inc.(proposed defendants) in Alberta, Canada. The Canadian customers brought seven lawsuits against the defendants alleging that the glue was defective. The defendants settled six of the lawsuits without contribution from the plaintiff.

The plaintiff's statement of claim alleged breach of contract, negligence and negligent misrepresentation arising from the manufacture and sale of the glue; it asked for damages for the following losses; profits; business opportunity; goodwill; and reputation and for reimbursement for costs associated with the investigation and defense of the customers' lawsuits. The plaintiff also applied for service of process ex juris before the judge who was serving as case manager of the customers' lawsuits.

A plaintiff's officer averred in his supporting affidavit (but without quantifying them) that the plaintiff had suffered losses and damages and had incurred costs and expenses. During cross- examination on his affidavit, the officer admitted that many of the unpaid customer accounts included materials in addition to the glue. He also conceded that plaintiff had not sued the customers to recover the outstanding accounts. Although the defendants' insurer had defended the customers' lawsuits, the affidavit claimed that the plaintiff had to spend additional sums.

The officer accepted that the future loss claim might be conjectural but alleged that the plaintiff was aware that it had been losing business for three years. According to the affiant, some of plaintiff's lost business came from other customers who thought that the plaintiff was inadequately supporting those customers who had bought the flawed glue.

The parties agreed before the chambers judge that the test was whether the plaintiff had set forth a good arguable case. The chambers judge decided that plaintiff had fallen short of meeting that test.

On appeal, however, the plaintiff urged that the chambers judge failed to apply the principle that the standard of proof in a proceeding for service ex juris has a very low threshold. The Alberta...