Don’t forget to serve, even if the insurer already knows about the lawsuit

A claimant in a product liability case must still go through the formal process of serving notice in China of intent to sue a Chinese manufacturer, even if the defendant manufacturer was aware of the claim since 2019, had a copy of the claim, had insurance, retained counsel, and filed a defence, mistakenly thinking service had already been done.

However, since the defendant’s insurer and counsel were well aware of the claim, Ontario’s Superior Court said it was reasonable to grant a 24-month extension for the claimant to complete the formal notice requirements required by China (an 18-month process).

“Service on GD Midea [the defendant Chinese manufacturer] cannot be deemed or validated simply because GD Midea is aware of the claim,” the Ontario Superior Court ruled Monday. “Service must be effected in China through the Central Authority pursuant to the Convention.

“The fact that GD Midea and its insurer are aware of the claim is relevant to an order extending the time for service, however, and it is reasonable to provide an extension of 24 months for that purpose.”

In Salguiero et. Al. v Instant Brands Inc. et al., Nancy Salguiero purchased an “Instant Pot” pressure cooker online through Amazon.com in November 2016 and allegedly suffered severe burns because of a product malfunction.  She sued Amazon, Instant Brands and GD Midea, which is alleged to be the manufacturer.

There were no issues serving notice of intent to sue on Amazon or Instant Brands, a Canadian company located in Ottawa. But counsel for the plaintiffs did not serve notice on GD Midea in China.

“Counsel for the plaintiff was aware that both Canada and China are signatories to the Convention and had made inquiries about effecting service pursuant to Rule 17.05 (3),” as the Ontario Superior Court noted. “Counsel had reviewed various cost estimates for translation of the documents and service through the Central Authority but had not taken any steps to initiate that process when on Mar. 21, 2019, he was contacted by counsel retained by the insurer for GD Midea and advised that the matter was being investigated.”

The Convention requires litigants residing in China to be served through the “Central Authority.” It also requires these documents to be translated into Mandarin Chinese. Unlike some signatories to the convention, such as Canada or the United States, China does not permit service of its citizens by mail, electronic delivery or private process server.

Meanwhile, “it is not disputed that at some point in time a copy of the statement of claim had come into the possession of Allianz Global Risks U.S. Insurance Company, which is GD Midea’s insurer,” the court noted. “It is not disputed that Allianz retained McCague Borlack LLP in order to defend GD Midea.

“It is not disputed that McCague Borlack served [an] original statement of defence in the mistaken belief that service had been effected and the plaintiff was threatening to note GD Midea in default. Obviously, GD Midea could not have been noted in default because the plaintiff would have been unable to furnish an affidavit of service to the court.”

Because it had not been served, GD Midea argued the case should be thrown out. But the court found that because GD Midea had been aware of the details of the case for some time, its insurer had been involved, and a defence filed with the court, it could not claim prejudice if the plaintiff was given an extension to go through the proper procedure of serving notice.

“The defendant [GD Midea] argues that it would be improper and unjust to [extend the deadline for service] because the plaintiff has made no effort to comply with the Convention to date and the limitation period would have expired almost three years ago,” the court observed.

“I do not accept that it would be unjust to make the requested order. The plaintiff originally had reason to believe that the defendant was prepared to defend the proceeding without insisting on formal service.  He believed this because the insurer was involved and a statement of defence was eventually served.”

Feature photo courtesy of istock.com/syahrir maulana