Executive Summary: Key Legal and Evidentiary Issues

• The defendant failed to pay for telecommunications products under a long-standing international distribution agreement.

• Despite acknowledgments of debt and proposed repayment plans, the defendant made only minimal partial payments.

• Service of legal documents was complex, requiring compliance with the Hague Service Convention and multiple Letters Rogatory.

• The defendant was properly noted in default after failing to respond despite confirmed service.

• The court accepted affidavit evidence from a corporate officer to support the breach and outstanding balance.

• Default judgment, including security interests and substantial costs, was awarded in favor of the plaintiff.

Facts and procedural background

Mitel Networks Corporation and its U.S. affiliate, Mitel Networks, Inc., entered into a distribution agreement with Division Integral de Telefonia S.A. de C.V. (Divitel), a Mexican company, in 2005 for the sale and distribution of Mitel telecommunications products in Mexico. The parties later amended the agreement and added a Service Solutions Addendum. Under the agreement, Divitel was required to pay for shipments within 60 days, with overdue accounts attracting 24% annual interest. The agreement also granted Mitel a security interest in unpaid products and related proceeds.

Between 2013 and 2014, Mitel shipped products and invoiced Divitel for over $1.2 million USD. Divitel made a few small payments but left a significant balance unpaid. Several communications followed in which Divitel’s representative acknowledged the debt and promised repayment through various plans, none of which were fulfilled. The final payment made by Divitel was $15,000 USD in March 2017, leaving an outstanding balance of $1,174,966.98 USD.

Efforts to effect international service

The litigation faced a long procedural history because Divitel is located in Mexico, requiring service of the Statement of Claim under the Hague Service Convention. Mitel retained a Mexican law firm, obtained multiple Letters Rogatory, and made numerous attempts to serve the defendant at various locations. Eventually, a Mexican court allowed service through newspaper publication. Notices were published in November 2022, and the defendant had until January 12, 2023, to collect the claim documents.

Mitel received a certificate of service confirming that service was valid under the Hague Convention. Divitel did not respond, and the Ontario Superior Court noted the defendant in default on November 27, 2023.

Default judgment and outcome

After initially rejecting affidavit evidence from Mitel’s counsel, the court accepted a subsequent affidavit from Mitel’s corporate secretary outlining the breach, payment history, and outstanding amounts. Based on this evidence and Divitel’s failure to respond, the court granted default judgment.

The judgment included the unpaid principal amount of $1,174,966.98 USD, declarations of security interest in Mitel’s products and proceeds in Divitel’s possession, and interest calculated at the contractual rate. Additionally, Mitel was awarded $118,677.80 in costs and disbursements due to the extensive efforts required to achieve service in Mexico and litigate the matter.

The case illustrates the challenges of enforcing international commercial contracts and securing justice through procedural compliance with cross-border legal conventions.