CE Design Ltd. Appellant (Defendant) v. Saskatchewan Mutual Insurance Company, 2021 SKCA 14

Court of Appeal for Saskatchewan Docket: CACV3414 and CACV3421 Citation: CE Design Ltd. v Saskatchewan Mutual Insurance Company , 2021 SKCA 14 Date: 2021-01-22 Between: CE Design Ltd. Appellant (Defendant) And Saskatchewan Mutual Insurance Company Respondent (Plaintiff) And Homegrown Advertising Inc., Monty Loree and Lisa Loree Non-Parties (Defendants) Before: Jackson, Schwann and Tholl JJ.A. Disposition: Appeals dismissed Written reasons by: The Honourable Madam Justice Schwann In concurrence: The Honourable Madam Justice Jackson The Honourable Mr.

Justice Tholl On appeal from: QB 171 of 2008, Saskatoon Appeal heard: October 8, 2020 Counsel: Samuel Edmondson for the Appellant Sean Sinclair and James Steele for the Respondent No one appearing on behalf of the non-parties Schwann J.A. I. Introduction [ 1 ] This appeal raises numerous questions about multiplicity of proceedings, abuse of process, finality of determinations, territorial competence, and the appropriateness of using the

summary judgment procedure in the face of a complex, multi-jurisdictional action. It involves most directly two unreported Court of Queen’s Bench Chambers decisions relating to the obligation of a Saskatchewan insurance company to satisfy a class action judgment granted in the State of Illinois and whether the Illinois proceedings should prevail: CE Design Ltd. v Saskatchewan Mutual Insurance Company (5 April 2019) Saskatoon, QB 171 of 2008 (Sask) [ Stay Decision ], and Saskatchewan Mutual Insurance Company v Homegrown Advertising Inc. (5 April 2019) Saskatoon, QB 171 of 2008 (Sask) [

Summary Judgment ]. Both of these decisions have been appealed. [ 2 ] In these decisions, a Queen’s Bench judge declined to strike proceedings that had been commenced in this province by the Saskatchewan Mutual Insurance Company [SMI] and went on to grant

summary judgment in its favour. The effective result of the two decisions is that it will be difficult for CE Design Ltd. [CE Design] to enforce the Illinois judgment against SMI in this jurisdiction. [ 3 ] For the reasons that follow, I find no error in either decision. The appeals must, therefore, be dismissed. II. Background A. Historical backdrop to the CE Design claim [ 4 ] Homegrown Advertising Inc. [Homegrown] is a Saskatchewan company with Monty Loree and Lisa Loree as its principal directors.

Homegrown was insured in Saskatchewan by SMI under a commercial general liability insurance contract that covered expected and intended damages; but, as explained more fully below, the insurance contract was interpreted to exclude “damage resulting from advertising faxes …” (

Summary Judgment at para 13). [ 5 ] In 2004, Homegrown was engaged by the Franklin Edison Corporation to provide advertising services in the state of Illinois. In the course of fulfilling its contractual obligations to that company, Homegrown sent unsolicited faxes to various recipients in that state. CE Design was one such recipient. Unsolicited fax advertisement is prohibited by the Telephone Consumer Protection Act of 1991 , 47 USC § 227 (as it then read in 2006).

This statute provides for a right of action for violations and statutory damages of $500 per violation. [ 6 ] A class action was commenced in Illinois by CE Design acting as the representative plaintiff against Homegrown and Monty and Lisa Loree [Defendants or insureds]. The claim was grounded in common law conversion and violations of various statutes, including the Telephone Consumer Protection Act of 1991 . The essence of the action concerned the transmission of the unsolicited faxes from Homegrown.

Illinois courts took jurisdiction over the class action because Homegrown had transacted business in that state and had allegedly violated the law in that state. After the action was commenced, Homegrown provided notice of the class claim to its insurer, SMI; however, by reply letter of June 23, 2006, SMI denied coverage.

[ 7 ] In due course, the Defendants negotiated a $5 million settlement with CE Design on behalf of the class [settlement agreement]. Pursuant to the terms of that agreement, Homegrown and its principals, Monty Loree and Lisa Loree, were relieved from having to satisfy the judgment. Instead, the agreement expressly provided that the judgment could only be satisfied from the insurance policy issued by SMI, and not by attaching or otherwise acquiring any of the Defendants’ other assets.

The settlement agreement also provided for an assignment of the SMI policy to the class as represented by CE Design and its attorneys “of all of its claims against, and rights to payments from, Saskatchewan Mutual Insurance Company under the insurance policies issued to Defendants …” (settlement agreement at para 5). [ 8 ] SMI was not advised of nor did it participate in the settlement discussions that led to the settlement agreement.

SMI was not asked for nor did it provide its consent to the assignment of the Homegrown policy to CE Design. [ 9 ] Certification of the class action was granted and the settlement agreement was approved on a preliminary basis by an Illinois court on November 28, 2006, with final approval granted by the Illinois Circuit Court of the 19th Judicial Circuit on February 15, 2007. Pursuant to this process, the following judgment was entered (final approval of settlement agreement and judgment): D.

The Court enters judgment against Defendants Homegrown Advertising, Inc., Monty Loree and Lisa Loree in favour of the Class in the total amount of $5,000,000.00 (the “Judgment”), said Judgment to be satisfied only from the proceeds of the insurance polices which Defendants assigned to the Plaintiff Class … . E.

The Court hereby approves Defendants’ assignment to the Class of all of Defendants’ claims, rights to payment, and rights of action against every insurer, including Saskatchewan Mutual Insurance Company … . [ 10 ] CE Design took a series of actions in the Illinois courts to enforce its judgment against SMI. To that end, in an order issued on May 3, 2007, by the Circuit Court of the 19th Judicial Circuit Lake County, Illinois, in response to a motion by CE Design for turnover of insurance proceeds, a default judgment was entered against SMI. It provides as follows: 1.

Citation Defendant, Saskatchewan Mutual Insurance Company, is ordered to pay Plaintiffs/Judgment Creditors the principal amount of $5,000,000.00, plus $94,931.50 for 77 days of post-judgment interest accrued since February 15, 2007, plus costs in the amount of $100.00, for a total judgment of U.S. $5,095,031.50 . (Emphasis in original) [ 11 ] This enforcement action was the first time SMI had been specifically named as a party in the class proceedings. B.

Initial Saskatchewan proceedings [ 12 ] Armed with the Illinois judgment against SMI, CE Design applied to register it in Saskatchewan under The Enforcement of Foreign Judgments Act , SS 2005, c E-9.121 . The application came before Mills J. of the Court of Queen’s Bench in 2008. He dismissed CE Design’s application, finding SMI “did not receive notice of the commencement of proceedings in sufficient time to present a defence” ( CE Design Ltd. v Saskatchewan Mutual Insurance Company , 2008 SKQB 12 at para 18 , 315 Sask R 91 [ Mills Decision ]).

No appeal was taken from that decision. [ 13 ] Following the Mills Decision , in 2008 SMI commenced its own action against Homegrown and CE Design in the Court of Queen’s Bench for Saskatchewan for a declaration that (

a) it had no duty to defend Homegrown in the class action; (

b) it had no duty to indemnify the class defendants with respect to the subject matter of the class action; and (

c) it bore no liability to CE Design. In response to the initiation of SMI’s action, CE Design applied for an order that the Court of Queen’s Bench had no jurisdiction over the proceedings, no jurisdiction over the subject matter of the SMI claim and for an order dismissing SMI’s claim. [ 14 ] CE Design’s application came before Currie J. in Chambers.

Examining the application through the lens of The Court Jurisdiction and Proceedings Transfer Act , SS 1997, c C-41.1 . [ CJPTA ], Currie J. found that “a real and substantial connection exists between Saskatchewan and an insurance contract that was made in Saskatchewan between two Saskatchewan corporations … because the action concerns contractual obligations, and the contract was made in Saskatchewan …” ( Saskatchewan Mutual Insurance Company v Homegrown Advertising Inc. , 2009 SKQB 358 , 342 Sask R 104 at para 13 [ Currie Decision ]).

On these bases, he held Saskatchewan courts had territorial competence. [ 15 ] Justice Currie next considered whether, notwithstanding a finding of territorial competence, the Court of Queen’s Bench should decline to exercise jurisdiction on the footing that a court of another state is the more appropriate forum. Applying the legislative framework, Currie J. concluded as follows: (

a) the “comparative convenience and expense favoured Saskatchewan” (at para 20); (

b) the “law to be applied favours Saskatchewan as the more appropriate forum” (at para 30); and (

c) the “prospect of additional steps in enforcement favours Saskatchewan …” (at para 36). [ 16 ] For those reasons, Currie J. held that “the fair and efficient working of the Canadian legal system is served by this court exercising its territorial competence with respect to this action” (at para 37). [ 17 ] The nub of the Currie Decision is found at paragraph 38 :

[38] Saskatchewan is the more appropriate forum in which to try this action. Primary among the reasons for this conclusion is the fact that this action involves the

interpretation of a contract made in Saskatchewan between Saskatchewan parties, and that the

interpretation will be conducted under Saskatchewan law. [ 18 ] CE Design’s application was accordingly dismissed with costs. Importantly though, CE Design did not appeal the Currie Decision . C. Intervening proceedings in Illinois [ 19 ] Meanwhile, also in 2008, CE Design filed a motion to discover SMI’s assets in Illinois. SMI responded with an application to dismiss CE Design’s motion on the basis that it was not subject to personal jurisdiction in the Illinois courts and that Canada, not Illinois, was the appropriate forum to resolve the dispute.

SMI met with initial success in having the Illinois judgment vacated. That victory was short-lived as it was subsequently overturned on appeal, albeit SMI was granted leave to file further petitions to open up the default judgment. [ 20 ] In 2013, SMI brought five successive applications in the Illinois courts to set aside the default judgment. The essence of applications of that sort – known as a “section 2-1401 petition” – is to inform the court of facts that do not appear on the record that, if known, would have prevented the judgment from having been entered.

The parties accept that to be entitled to relief under a

section 2- 1401 petition, an applicant must prove the following: (

a) the existence of a meritorious defence, (

b) due diligence in presenting this defence in the original action, and (

c) due diligence in filing the

section 2-1401 motion. [ 21 ] SMI brought several

section 2-1401 petitions on jurisdictional grounds. None met with success. [ 22 ] By way of an amended

section 2-1401 petition brought on November 27, 2013 [Fifth Petition], SMI once again applied to open up the Illinois judgment, this time advancing 23 insurance coverage defences. The parties filed cross-motions for judgment on the pleadings to address the merits of SMI’s petition.

The record reveals that both parties made oral argument and filed extensive briefs of law. [ 23 ] The Fifth Petition was heard by Judge Mullen who, in a one-page, hand-written ruling, delivered on May 12, 2015, denied SMI’s motion on conflict of law and jurisdictional grounds ( CE Design Ltd. v Homegrown Advertising, Inc. (12 May 2015) Lake County, 735 ILCS 5/2-1401 (IL 19th JC) [ Mullen Decision ]). She stated as follows: [T]he court having reviewed the materials submitted by the parties and heard the argument of counsel it is hereby ORDERED: 1.

SMI’s motion is DENIED because SMI had the burden to prove that there is an outcome-determinative conflict of law between Illinois and Saskatchewan and failed to do so. A question of international law is not subject to judicial notice … . These decisions establish that international law is a question the must be pled and proved, requiring expert testimony. SMI did not do so. Therefore, Illinois law governs. [ 24 ] Based on her ruling, Judge Mullen went on to grant CE Design relief with respect to all of SMI’s coverage defences (described as defences (

a) through (u)), except for two defences that challenged the reasonableness of the underlying settlement and CE Design’s ability to recover in excess of the policy limits (described as defences (

v) and (w)). Those two matters were remitted for a subsequent hearing. [ 25 ] SMI’s last

section 2-1401 petition – dealing with defences (

v) and (w) – came before Judge Ortiz of the Circuit Court of the 19th Judicial Circuit. CE Design filed an answer to SMI’s petition and aggressively disputed those defences. SMI responded with a cross- motion for

summary judgment. On July 17, 2018, the parties consented to an order wherein they agreed to resolve their dispute by way of

summary judgment. As Judge Ortiz commented in a subsequent ruling, “This agreed order limits the scope of the Court’s inquiry to determining as a matter of law whether or not SMI’s remaining defences are meritorious” ( CE Design Ltd. v Homegrown Advertising, Inc. (25 January 2019) Lake County, ILCS 04-L-1048 (IL 19th JC) at 5 [ Ortiz Decision ]). [ 26 ] In a 37-page ruling made on January 25, 2019, Judge Ortiz found the two remaining defences unmeritorious. Having reached that conclusion, Judge Ortiz granted CE Design’s motion for

summary disposition and denied SMI’s application. [ 27 ] SMI appealed both the Mullen Decision and the Ortiz Decision to the Illinois appellate court. As of the date of the appeal hearing in this matter, no decision has been rendered in Illinois. D. The Saskatchewan applications [ 28 ] In the midst of the Illinois proceedings, SMI applied in this province in 2015 for a

summary judgment against Homegrown, Monty Loree, Lisa Loree and CE Design. CE Design responded with an application of its own in 2016 for an order striking SMI’s statement of claim or staying the action. For reasons not explained by either party on appeal, neither application was heard by the Court of Queen’s Bench until 2019. [ 29 ] The Chambers judge, who eventually heard the matters, rendered separate, unreported decisions: the Stay Decision and the

Summary Judgment . 1. The Stay Decision [ 30 ] CE Design’s application to strike or stay SMI’s proceedings was grounded in a three-part argument. First, CE Design argued the SMI Saskatchewan action should be struck for being frivolous or vexatious, or that SMI should be estopped from proceeding because issues raised in its action were res judicata and a collateral attack on the findings of the Illinois courts.

CE Design also advanced an abuse of process argument along substantially the same lines, which was summarized by the Chambers judge in this manner: “Counsel for CE [Design] also argued that there has been significant action in this matter, particularly in the State of Illinois, since the decision of Currie J.

of this court on September 15, 2009 (2009 SKQB 358, 342 Sask R 104) to warrant the court’s review” (Stay Decision at para 14). [31] Second, CE Design argued that SMI’s Saskatchewan claim amounted to a “multiplicity of proceedings” within the meaning ofs. 37 of The Queen’s Bench Act, 1998, c Q-1.01. [32] Third, CE Design asked the Court to revisit the Currie Decision and for the following order to issue: 3. In addition, or in the alternative, pursuant to

Section 10 of The Court Jurisdiction and Proceedings Transfer Act, SS 1997, c C-41.1, anOrder that this Honourable Court decline to exercise its territorial competence in the within action on the grounds that a Court of anotherState is a more appropriate forum in which to adjudicate the proceedings. [33] This argument also centred on the proposition that if SMI’s claim were to be heard in Saskatchewan, it would open the door forpotentially conflicting decisions between a Saskatchewan decision on the merits of the statement of claim and the Illinois decisions inresponse to its

section 2-1401 petitions. Since Judges Mullen and Ortiz had already determined the same issues, CE Design argued,adjudication of the SMI lawsuit could result in potentially inconsistent results. Finally, CE Design emphasized that since significantproceedings had already taken place in Illinois subsequent to the Currie Decision, there was a sufficient basis to warrant a review of thatdecision. [34] SMI vigorously opposed the application.

In its view, legitimate insurance coverage defences were raised in the Saskatchewanproceedings and those defences deserved to be determined by a Saskatchewan court because they relate to a Saskatchewan insurancepolicy and Saskatchewan parties. SMI took issue with CE Design’s underlying theory that an Illinois court had already determined thecoverage defences on their merits.

On the strength of an expert witness, who opined on the U.S. legal proceedings conducted to date, SMImaintained its Saskatchewan action did not offend the principles of res judicata or issue estoppel because no Illinois decision hadadjudicated the coverage defences on their merits. Rather, SMI argued, the Illinois decisions rendered thus far were merely procedural innature. [35] The Chambers judge referred appropriately to s. 37 of The Queen’s Bench Act, 1998, and s. 10 of CJPTA. He then examinedthe jurisprudence in relation to the meaning of an adjudication on the merits.

The Chambers judge cited numerous authorities in support ofthe broad proposition that dismissal of a claim for a technical objection or infirmity collateral to the substance of the matter is not adecision on the merits. [36] The Chambers judge drew particular attention to the fact that CE Design had not appealed the Currie Decision in thisjurisdiction, and then stated, “the words of Currie J. are as true and relevant today as they were in 2009 when the decision was rendered”(Stay Decision at para 26).

Finally, the Chambers judge concluded the Illinois judgment had been rendered on procedural grounds and that“[t]here was no hearing of the evidence and a determination of the substantive issues on the defences of SMI” (at para 27). For all of thosereasons, CE Design’s application to strike or stay the SMI claim was dismissed with costs. 2. The

Summary Judgment [37] As noted, SMI also applied for

summary judgment. The same Chambers judge who heard the stay application also heard anddetermined the

summary judgment application. He began by asking himself if

summary judgment was the appropriate procedure toresolve SMI’s action.

Citing the leading authorities on the question of whether there was a genuine issue requiring trial – PrimewestMortgage Investment Corporation v Antonenko, 2018 SKQB 259, and Tchozewski v Lamontagne, 2014 SKQB 71, [2014] 7 WWR 397 –he concluded this was “an appropriate action to be dealt with summarily” (Summary Judgment at para 1). [38] The Chambers judge next turned to the substantive issue of whether the nature of the claim was covered by the insurancepolicy. [39] The Chambers judge began by exploring the concepts of deliberate, wilful and culpable acts in an insurance context and theCanadian case law that has interpreted them, particularly Co-operative Fire & Casualty Company v Saindon, (SCC),[1976] 1 SCR 735 at 746–747 and 748–749 [Saindon].

The Chambers judge then focussed on Buchanan v GAN Canada Insurance(2000), (ON CA), 134 OAC 189 (CA) [GAN], quoting with approval the following passage from that decision: “theexclusion clause applies where the insured committed a deliberate act which was the dominant cause of the plaintiff’s injuries whereinjury was foreseeable” (at para 14). [40] The Chambers judge next discussed an unreported insurance decision from Ontario that had been brought to his attention,concluding it was virtually identical to the case at hand: ING Insurance Company of Canada v Health Craft Products Inc. (30 June 302009) Ontario, 05-CV-31068 (Sup Ct J) [ING].

CE Design was one of the parties in the ING class action. Like the within matter, that wasa case where the insurer “was never asked nor refused to defend its insured” and where the class action involved damages for “faxtransmissions which allegedly violate American laws” (at 1). On those facts, the Ontario court held as follows: I find the insured, Health Craft, failed in its duty to cooperate and advise the Applicant [ING Insurance Company of Canada].

Morespecifically, Health Craft failed to obtain the Applicant’s consent to settlement, and any purported assignment of rights under the policy inquestion is therefore, ineffective as against ING and its successors. [41] Following his review of GAN and ING, among other authorities, the Chambers judge provided several reasons for whysummary judgment should be granted in favour of SMI. [42] First, he found the pleadings in the Illinois action fell outside of the policy coverage because of the stated exclusions for“expected or intended damage”.

In relation to those clauses, he held “[t]he insured intended to send the faxes which were unsolicited. Thefact that the result was not what was expected by the defendants, Homegrown Advertising Inc., Monty Loree and Lisa Loree is irrelevant”(Summary Judgment at para 13). He went on to find as follows: “The faxes were deliberately sent by the defendants which they were inthe business of doing and were remunerated for this service. The damage was not caused by an accident but by the specific acts done bythe defendants for remuneration” (at para 20).

The Chambers judge drew support for this conclusion from the ING decision.

[ 43 ] Second, the Chambers judge examined a clause in the settlement agreement wherein the class had agreed not to pursue recovery on the judgment against the Defendants, but were to look for recovery from the SMI policy of insurance instead. Because the insureds were not liable, the Chambers judge’s reasoning led him to conclude that, absent liability on those parties, it followed there was “no obligation on SMI to pay or defend the action” (at para 14). [ 44 ] Third, the Chambers judge considered whether the Defendants had waived their rights under the policy. He found they had by (

a) failing to notify SMI as soon as practicable, (

b) failing to send SMI copies of demand notices and legal summonses, and (

c) failing to comply with the terms of the policy prohibiting voluntary assumption of liability without SMI’s consent. Having found the Defendants to have failed in all three respects, the Chambers judge concluded that SMI had no duty to defend or indemnify. [ 45 ] Finally, the Chambers judge reasoned that since the insureds had not defended the action, they were deemed to have admitted the allegations in SMI’s claim including the allegation that “SMI had no duty to defend” (at para 18). [ 46 ]

Summary judgment was granted in SMI’s favour. III. Jurisdiction and Standard of Review [ 47 ] Leave to appeal both the Stay Decision and the

Summary Judgment was granted by Leurer J.A. on September 9, 2019: CE Design v Saskatchewan Mutual Insurance Company (9 September 2019) Regina, CACV3414 and CACV3421 (Sask CA). The whole of the two decisions are being appealed. [ 48 ] CE Design appeals from the two decisions on a wide range of legal issues and constructs such as the authority to reconsider a judgment, abuse of process, multiplicity of proceedings, territorial competence,

summary judgment, etc. In very broad terms, an alleged error in the identification of the law on which a decision is founded, including the

interpretation of that law, is subject to the correctness standard of review: Housen v Nikolaisen , 2002 SCC 33 , [2002] 2 SCR 235. Absent an extricable question of law, questions of mixed fact and law attract a palpable and overriding error standard of review.

Similarly, questions of fact attract the same deferential standard of appellate review. [ 49 ] As it pertains to abuse of process, this Court recently concluded that decisions of that nature are discretionary and must be reviewed with the standard of review applicable to such decisions: Canadian Pacific Railway v Kelly Panteluk Construction Ltd ., 2020 SKCA 123 [ Canadian Pacific ], and Strom v Saskatchewan Registered Nurses’ Association , 2020 SKCA 112 at para 60 , [2020] 12 WWR 396.

In that vein, this Court emphasized, in Onion Lake Cree Nation v Stick , 2018 SKCA 20 , [2018] 5 WWR 111 [ Stick ], that the particulars of a case must be considered: [51] The doctrine of abuse of process is also a flexible one. There is no set test or rules for determining what amounts to an abuse of process. Rather, the doctrine engages a court’s inherent power to prevent the misuse of its judicial proceedings.

As Arbour J. stated in Toronto (City) v CUPE, Local 79 , 2003 SCC 63 , [2003] 3 SCR 77, the doctrine of abuse of process focusses on the integrity of the adjudicative process: [43] … In all of its applications, the primary focus of the doctrine of abuse of process is the integrity of the adjudicative functions of courts.

Whether it serves to disentitle the Crown from proceeding because of undue delays … or whether it prevents a civil party from using the courts for an improper purpose … the focus is less on the interest of parties and more on the integrity of judicial decision making as a branch of the administration of justice. [ 50 ] The standard of review applicable to discretionary decisions is deferential.

An appeal court may intervene only where a lower court erred in principle, disregarded or misapprehended a material fact, failed to act judicially, “or the result is so plainly wrong as to amount to an injustice and invite intervention on that basis”: Rimmer v Adshead , 2002 SKCA 12 at para 58 , [2002] 4 WWR 119 [ Rimmer ]. Also see Kot v Kot , 2021 SKCA 4 at para 15 . [ 51 ] CE Design challenges the Chambers judge’s finding that the Mullen Decision and the Ortiz Decision were not decisions on the merits by pointing to the evidence of its expert witness. The Chambers judge declined to accept that evidence.

Appellate courts must take a deferential stance to a trial judge’s decision concerning choice of expert: see Frondall v Frondall , 2020 SKCA 135 at para 21 [ Frondall ]; Labrecque v Labrecque , 2014 SKCA 59 at para 29 , 43 RFL (7th) 71; and Stelter v Stelter , 2012 SKCA 117 at para 31 , 405 Sask R 63. The assessment of the probative value of an expert opinion is also subject to deference: Hess v Thomas Estate , 2019 SKCA 26 at para 31 , 433 DLR (4th) 60 [ Hess ]. [ 52 ] In terms of

summary judgment, a decision as to whether there is a genuine issue requiring trial on a

summary judgment application is a question of mixed fact and law. Where there is no extricable error in principle, the decision to proceed by

summary judgment should not be overturned absent palpable and overriding error: see Deren v SaskPower , 2017 SKCA 104 at para 41 , and Blue Hills Excavating Inc. v Canadian Western Bank Leasing Inc. , 2019 SKCA 22 at para 36 , 67 CBR (6th) 202. [ 53 ] The

Summary Judgment was largely concerned with the

interpretation of a standard form insurance contract. In the circumstances of this case, that ground of appeal attracts the correctness standard of review: Ledcor Construction v Northbridge Indemnity Insurance Company , 2016 SCC 37 at para 4 , [2016] 2 SCR 23 [ Ledcor ]. See also Royal & Sun Alliance Insurance Company of Canada v Community Electric Ltd. , 2020 SKCA 17 at para 31 , [2020] 5 WWR 381 [ Royal & Sun ]. IV. Analysis A. The Stay Decision 1. The Illinois proceedings were procedural in nature

[ 54 ] With the benefit of expert evidence, the Chambers judge concluded the Mullen Decision and the Ortiz Decision were merely procedural in nature. His reasoning on this point is captured at paragraph 27 of the Stay Decision : “There was no hearing of the evidence and a determination of the substantive issues on the defences of SMI”. [ 55 ] CE Design took no issue in the court below with the proposition that a decision that is not adjudicated on the merits does not attract arguments about res judicata or collateral attack.

However, CE Design argues in this Court, as it did in the Court of Queen’s Bench, that the Mullen and Ortiz Decisions were judgments on the merits in relation to SMI’s coverage defences, that SMI has had a full and fair opportunity to litigate those defences in Illinois, and that the Chambers judge either misapprehended the evidence or failed to consider relevant evidence in reaching his conclusion. In support of its position, CE Design focuses on the type of application brought in the Fifth Petition.

In its factum, it argues as follows: “SMI must be taken to have admitted to the sufficiency of its pleadings to establish that there is no genuine issue of fact and that it was at law entitled to judgment”. Of a secondary nature, CE Design argues SMI’s failure to call evidence in Illinois to prove that the law of Saskatchewan applied to evaluate its defences is fatal to its position. [ 56 ] Assessment of this argument begins with the two Illinois decisions. As mentioned, SMI applied to open up the default judgment that had been registered against it. That was the narrow issue before the Illinois courts.

In accordance with Illinois law, and as noted above, a party seeking to vacate a judgment under a

section 2-1401 petition must establish (

a) the existence of a meritorious defence, (

b) due diligence in presenting the defence in the original action, and (

c) due diligence in filing the petition. A meritorious defence for these purposes must at least raise a serious question about the propriety of the default judgment. [ 57 ] As mentioned, the Fifth Petition first came before Judge Mullen on coverage defences (

a) to (w). In her one-page, hand-written decision, Judge Mullen denied SMI’s motion to open up the default judgment, stating “SMI had the burden to prove that there is an outcome-determinative conflict of law between Illinois and Saskatchewan and failed to do so”. She went on to grant judgment for CE Design with respect to all defences except for the reasonableness of the settlement (

v) and whether CE Design could recover in excess of the policy limits (w). Those matters were set over to a subsequent hearing that eventually came before Judge Ortiz. [ 58 ] Judge Ortiz granted CE Design’s motion for

summary disposition on defences (v) (reasonableness of the settlement) and (w) (exceeding policy limits), concluding those defences were not meritorious.

Importantly, though, Judge Ortiz did not address SMI’s arguments that the default judgment should be voided due to CE Designs’ failure to follow Illinois law by providing SMI with notice and an opportunity to defend itself against the default judgment. [ 59 ] With that broad context before the Chambers judge, each party retained an expert in Illinois civil procedure to provide an objective, non-partisan opinion about whether SMI had a full and fair opportunity to litigate the merits of its coverage defences in Illinois – and, in particular, whether SMI had a full and fair opportunity to allege and adjudicate each of the defences and issues raised in paragraphs 20 to 22 of its Saskatchewan statement of claim. [ 60 ] Peter Trobe provided an expert opinion for CE Design.

In an affidavit sworn on February 5, 2019, Mr. Trobe proffered the following opinion: (

a) under Illinois practice and procedure, judgment on the pleadings is proper where the pleadings disclose “no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law”; (b) “[a] decision to grant either a motion for judgment on the pleadings or a motion for

summary judgment is a decision on the merits, as a matter of law”; and (c) “SMI had a full and fair opportunity to adjudicate the merits of its coverage defences in the Illinois action” and “SMI has had a full and fair opportunity to allege and adjudicate each of the defences and issues raised in paragraphs 20 to 22 of its statement of claim in the Saskatchewan action”. [ 61 ] In his affidavit sworn on December 15, 2017, Robert O’Donnell provided the following opinion evidence for SMI in response to Mr. Trobe’s opinion: (

a) While Judge Mullen’s order disposed of SMI’s coverage defences, the defences “were not fully heard and determined on the merits” of each defence. Each defence was disposed of by Judge Mullen for technical reasons: Illinois choice of law analysis and Illinois estoppel. (

b) Accordingly, “SMI’s coverage defences were not fully heard and determined on the merits, but rather, were disposed of for various procedural reasons”. (

c) The procedure CE Design followed on its motion for turnover (which resulted in default judgment against SMI), and the processes it failed to follow in relation to that motion, “denied SMI a full and fair opportunity to have its coverage defences determined on the merits”. (

d) And, a decision to grant a motion for judgment on the pleadings or on a motion for

summary judgment, in this case , was not a decision on the merits: 55. In my opinion, while these orders did operate as “final” decisions under Illinois law for purposes of collateral estoppel and res judicata , it does not appear Judge Mullen ever reviewed and decided the issue of whether, as a matter of law, Homegrown’s insurance policy with SMI required SMI to defend Homegrown in the underlying litigation. [ 62 ] As can be seen, the experts were at odds as to whether a decision to grant a motion for judgment on the pleadings or on

summary judgment is a decision on the merits. In his reply affidavit, Mr. Trobe reiterated his earlier position: a court’s decision to grant judgment on the pleadings (the Mullen Decision ) or to grant

summary judgment (the Ortiz Decision ) is an indication, in either case, that the court had evaluated the merits of the claims and concluded they could not be sustained as a matter of law; or, in other words, the claims had no merit.

[63] As noted above, Mr. O’Donnell disagreed with Mr. Trobe’s opinion. According to Mr. O’Donnell, a trial court cannotdetermine the merits of the underlying cause of action in the context of a

section 2-1401 petition. In a February 28, 2019, reply affidavit toMr. Trobe’s reply affidavit, Mr. O’Donnell opined the following: [42] By focussing on the word “merit” in those two different constructs, Mr. Trobe misses the mark. Judge Mullen’s dismissal of SMI’stwenty-one coverage defences based on procedural constructs of Illinois law does not equate to her having substantively reviewed themerits of each defense, and determined each defense “had no merit”. [64] With the benefit of this evidentiary backdrop, I return to the matter at hand. As can be seen from their affidavits, Mr. Trobe andMr.

O’Donnell offered diametrically different points of view on the merits issue. After reviewing the Canadian law in relation to whatconstitutes an adjudication on the merits, the Chambers judge concluded by stating that “[t]he judgment in Illinois was rendered only onprocedural issues. There was no hearing of the evidence and a determination of the substantive issued on the defences of SMI” (StayDecision at para 27). In my respectful view, that decision was open to him based on the opinion evidence of Mr. O’Donnell.

It isrecognized that “at common law the issue of what is foreign law … is a question of fact to be determined by a judge” (Hunt v T&N plc, (SCC), [1993] 4 SCR 289 at 308). Also see Boehringer Ingelheim (Canada) Ltd. v Englund, 2007 SKCA 62 at para 24,284 DLR (4th) 94 [Boehringer], and s. 4(2) of The Evidence Act, SS 2006, c E-11.2. [65] As I see it, CE Design’s argument really amounts to a disagreement with the Chambers judge’s preference for Mr. O’Donnell’sopinion evidence over that of Mr. Trobe’s. Its argument – that the Chambers judge either misapprehended or failed to consider relevantevidence, i.e., Mr.

Trobe’s evidence – is really a request for this Court to find error with the selection of Mr. O’Donnell’s evidence, and arequest to reassess the evidence afresh and substitute our opinion. Respectfully, that argument bumps up against the standard of reviewwith respect to both the selection of expert and the weight assigned to that expert evidence.

This Court stated the following in Frondall: [20] The admissibility of an expert’s evidence is a question of law “reviewable for correctness insofar as the proper articulation andapplication of the legal test is concerned” (R v Dominic, 2016 ABCA 114 at para 17, 335 CCC (3d) 178). Absent an error in principle,deference is owed to trial judges in relation to their decision to admit or reject expert evidence: Hess v Thomas Estate, 2019 SKCA 26 atpara 30, 433 DLR (4th) 60, and R v Chung, 2018 SKCA 70 at para 16.

In R v D.D., 2000 SCC 43, [2000] 2 SCR 275, the Supreme Courtexpressed the principle in this way: “Where the record clearly does not support a finding of admissibility on the basis of the Mohancriteria, the Court of Appeal may rule that the evidence should not have been admitted” (at para 13).

As it pertains to a trial judge’sdecision to admit or reject evidence, absent an error in principle, appellate deference is owed to the decision of the trial judge. … [52] … As this Court noted in Clemens v McGruther, 2019 SKCA 46 at para 34 [Clemens], the privileged position of the trier of fact andthe deferential standard of review do not leave much room for appellate intervention on the broad question of weight.

Simply put, “It isnot the function of an appellate court to reconsider the expert evidence and come to a different conclusion” (Clemens at para 34): also seeKolibab v Tenneco Canada Inc., (SK CA), [2000] 1 WWR 590 (Sask CA). [66] While the Chambers judge failed to mention Mr. Trobe or refer to his evidence in his decision, or, for that matter, to explainwhy he preferred Mr. O’Donnell’s opinion over Mr. Trobe’s, CE Design did not suggest that the Stay Decision must be set aside becauseof insufficient reasons. The fact remains that the Chambers judge accepted Mr.

O’Donnell’s well-reasoned opinion as the basis for hisfinding. Simply because there was another point of view on the matter is not a basis to overturn that finding. [67] Finally, even if I examined this ground of appeal on a substantive level, I conclude CE Design’s argument cannot withstandscrutiny. Judge Mullen’s decision was an adjudication on SMI’s application to open up the default judgment. She clearly ruled againstSMI on jurisdictional grounds and thus – by any reasonable measure – it could not be said that her decision was a determination on themerits of the SMI defences.

It is true Judge Ortiz rejected SMI’s defences (

v) and (w); however, three things must be kept in mind inrelation to that decision. First, these defences are not raised in SMI’s statement of claim. Second, the issues arising from defences (

v) and(

w) only arose in the context of a

section 2-1401 petition based on a presumption that the default judgment was valid, a point Judge Ortizdid not address. Third, his decision pertains to a default judgment against a third party (SMI) arising from enforcement proceedings for therecovery of assets and does not concern the underlying insurance coverage issues. For all of those reasons, I find this ground of appeal hasno merit. 2.

Territorial competence [68] CE Design next argues that even if Saskatchewan has jurisdiction simpliciter to hear and determine SMI’s action, the Chambersjudge should have declined to exercise his discretion in favour of Saskatchewan in light of the subsequent proceedings that have takenplace in Illinois. In its factum, CE Design frames its argument in this way: “in view of the advanced litigation in Illinois, on the very samefacts and issues, it is appropriate that courts of Saskatchewan decline to exercise their territorial competence”.

As I understand its position,CE Design submits the Chambers judge erred in two respects: first, that he failed to consider whether the judicial proceedings in Illinoisfollowing the Currie Decision constituted an exceptional circumstance that ought to have been taken into account and, second, that hemisunderstood or misinterpreted the evidence as evident from his conclusion that “the words of Currie J. are as true and relevant today asthey were in 2009 when the decision was rendered” (Stay Decision at para 26). [69] The appropriate starting point in this analysis is once again with the standard of review.

CE Design concedes, correctly in myview, that a decision under the CJPTA is discretionary in nature and, as such, attracts appellate deference. Therefore, to succeed with itsargument, CE Design must persuade this Court that the Chambers judge either erred in principle, failed to consider or misapprehendedmaterial evidence or that the result was so plainly wrong as to amount to an injustice. [70] Respectfully, I see no such error. The Chambers judge did not overlook this argument or fail to consider the evidence said tosupport it.

The Chambers judge identified CE Design’s argument in paragraphs 10 and 11 of the Stay Decision. He acknowledged thatthere had been significant action “particularly in the state of Illinois” since the Currie Decision (at para 14), and he understood that CEDesign had asked for that decision to be reviewed in light of those proceedings. Finally, the Chambers judge placed this argument in anappropriate context. He paid particular attention to the reasoning process and analysis underlying the Currie Decision, referring to

paragraphs 20 to 22 and 32 to 36, in particular. Paragraph 22 of the Currie Decision is important and merits repeating here: [22] In contrast, little reason suggests itself for applying Illinois law to the

interpretation of the contract. No one suggests that the parties tothe contract contemplated that it would be interpreted according to Illinois law. The connections to Illinois are Homegrown’s conduct afterthe contract had been made, the obtaining of a judgment based on that conduct in Illinois, and the assignment by Homegrown of itsinterest under the contract to an Illinois corporation, CE Design. Those connections relate to the backdrop against which this action will bedetermined, though. Determination of the issues themselves relates to interpreting the insurance contract.

The contract was made inSaskatchewan, not in Illinois.

The parties to the contract are Saskatchewan persons, not Illinois persons. (Emphasis added) [71] Although the Chambers judge stated that he found the words of Currie J. continued to be relevant, I interpret that statement tobe a simplified recognition that he found Currie J.’s reasoning and analysis remained sound in spite of the subsequent proceedings inIllinois. [72] Viewed in this context, and in light of the standard of review, I see no basis for appellate intervention. [73] In any event, CE Design’s argument operates from the assumption that it was open to the Chambers judge to revisit the CurrieDecision, absent an appeal from that decision.

At the time of the oral hearing of this appeal, the parties were asked to provide furthersupplemental submissions on whether a different judge in Chambers can determine an application pursuant to CJPTA to decline to exerciseterritorial competence where that question has already been determined in the action. [74] I begin by noting that no Saskatchewan decision has thus far determined whether it is possible to revisit a jurisdictionaldecision once territorial competence has been established under the CJPTA or, for that matter, what standard of proof applies to anapplication of this nature: see, for example, SSAB Alabama Inc. v Canadian National Railway Company, 2020 SKCA 74 at para 14 (leaveto appeal to SCC requested, 39362).

While I find it unnecessary to resolve this specific issue in order to respond to this ground of appeal, Inonetheless offer a couple of observations. [75] There have been surprisingly few decisions that have grappled with this issue in the context of territorial competence: notably,Conor Pacific Group Inc. v Canada (Attorney General), 2012 BCCA 222, 350 DLR (4th) 104 [Conor Pacific]; Purple Echo ProductionsInc. v KCTS Television, 2008 BCCA 85, 52 CPC (6th) 15 [Purple Echo]; and Newfoundland and Labrador (Attorney General) vRothmans Inc., 2013 NLTD(G) 180, (NLSC) [NL Rothmans]. [76] Conor Pacific provides a rare instance of a court reconsidering its previous decision on jurisdiction.

In that case, the lower courtfound there was no real or substantial connection to British Columbia and therefore refused to assume jurisdiction. The lower court’sdecision was sustained on appeal. After the Court of Appeal rendered its decision, the appellant persuaded that Court to revisit thejurisdictional issue because neither level of court had considered the import of the respondent being a federally incorporated companywith a registered office in British Columbia. This was taken as being relevant to s. 3 and s. 7 of the Court Jurisdiction and ProceedingsTransfer Act, SBC 2003, c 28 [B.C.

Jurisdiction Act] (which is B.C.’s equivalent to Saskatchewan’s CJPTA). The Court of Appeal agreedto revisit its earlier decision but did so noting it was an exceptional case “in which it is in the interests of justice that this Court reconsiderthe jurisdictional argument …” (Conor Pacific at para 14). [77] Several other British Columbia decisions suggest it is possible for a court to revisit its decision on territorial competence.

Onesuch example is Purple Echo, where the British Columbia Court of Appeal focussed on the finality of decisions made under the B.C.Jurisdiction Act in the context of the wording in Rule 14(6)(

a) of the Supreme Court Civil Rules, BC Reg 221/90 (now Rule 21-8(1) of theSupreme Court Civil Rules, BC Reg 168/2009). That rule came into force in the same year as the B.C. Jurisdiction Act. The Court ofAppeal held that a decision concerning jurisdiction made by a Chambers judge does not necessarily end the question of territorialcompetence.

Referring to the lower court’s adoption of a more demanding standard of proof on that issue, it found the Chambers judge haderred in requiring “Purple Echo to establish territorial competence on a balance of probabilities …” (at para 42). [78] Subsequent British Columbia decisions have confirmed the Purple Echo understanding of the Supreme Court Civil Rules: see,for example, Dollinger v Starke, 2020 BCSC 1574 at para 26. Therefore, it appears that the B.C.

Jurisdiction Act, read in conjunction withthe Supreme Court Civil Rules, requires only an arguable case for the assumption of jurisdiction simpliciter, potentially leaving the issueof jurisdiction (if contested) open to challenge at a subsequent point in the action. [79] See also Ontario (Attorney General) v Rothmans Inc., 2013 ONCA 353 at para 54, 363 DLR (4th) 506. [80] The Purple Echo approach, however, was rejected in NL Rothmans.

In the context of an extended discussion of Supreme Courtof Canada jurisprudence on this issue, including Club Resorts Ltd. v Van Breda, 2012 SCC 17, [2012] 1 SCR 572 [Van Breda], OrsbornC.J. concluded by stating as follows (NL Rothmans): [48] This confirms the view that a proceeding leading to a decision that jurisdiction can be assumed is substantively and qualitativelydifferent from a proceeding involving the actual litigation of the case in question.

The jurisdiction proceeding draws on the allegations inthe pleadings and considers matters – such as the situs of a tort – that are of relevance only to the issue of the territorial competence of theCourt. Once the issue of territorial competence of the Court is decided, it is spent; it is not open to be re-litigated and reconsidered as thematter proceeds. Any assessment of the merits of the claim has no place in the determination of territorial competence. (Emphasis added) [81] As I said above, it is unnecessary to resolve this issue for purposes of this appeal.

However, and without deciding the matter, Iam somewhat attracted to the principled approach taken in NL Rothmans. To hold otherwise could lead to endless and costly litigation.Furthermore, in the context of the matter at hand, I note that the CJPTA does not address the possibility of reconsideration or provide forsome form of variation application. Furthermore, Rule 3-14 of The Queen’s Bench Rules (which addresses jurisdictional challenges) doesnot speak to the standard of proof where an application of this nature is brought.

Finally, I find it noteworthy that CE Design did not putjurisdiction in issue in its statement of defence. These reasons lend support to the Chambers judge’s decision.

3. Multiplicity of proceedings [ 82 ] CE Design argues the Chambers judge erred in not striking SMI’s action in its entirety or alternatively staying it pending a final determination of the Illinois action based on s. 29 and s. 37 of The Queen’s Bench Act, 1998 . [ 83 ] CE Design is correct in saying that the Court of Queen’s Bench has authority pursuant to s. 29 to grant a remedy to avoid multiplicity of proceedings, which may be granted either absolutely or on any terms considered appropriate.

As well, pursuant to s. 37, judges of that court are empowered to enter a stay of proceedings where they consider it appropriate to do so: see, for example, Canadian Pacific at para 48 . That said, neither of those provisions provide guidance on how judicial discretion should be exercised. [ 84 ] Before turning to the jurisprudence, I wish to make three preliminary points. [ 85 ] First, CE Design does not take issue with the Chambers judge’s approach to and

interpretation of s. 29 and s. 37, nor does it suggest that he ignored or misapprehended the evidence. As I understand its argument, CE Design takes issue with how the Chambers judge exercised his discretion and asks this Court to revisit its application and decide the matter afresh.

As I have explained above, this is not the role of an appellate court. [ 86 ] Second, by arguing in its factum that the Chambers judge should have imposed a stay, “pending a final determination in the Illinois action that some or all of the 23 alleged defences are meritorious ” (emphasis added), CE Design appears to advance a position that seems inconsistent with its underlying thesis: i.e., that the merits have already been examined in Illinois and that a final determination in relation to them has been achieved in Illinois. [ 87 ] Third, this argument must be assessed in light of the Currie Decision , where Currie J. determined that Saskatchewan was the most appropriate forum to resolve the coverage defences.

Justice Currie was well aware of the ongoing proceedings in Illinois. In fact, he anticipated the possibility of Illinois courts proceeding “in spite of his decision”, but said that possibility had little, if any, bearing on his ruling because “the other factors already discussed weigh in favour of Saskatchewan as the more appropriate forum, and any apparent multiplicity would not serve to reverse that conclusion” (at para 32). [ 88 ] Those points aside, I now turn to the merits of CE Design’s argument.

It is beyond question that superior courts exercise the inherent jurisdiction to control their own proceedings and that this jurisdiction includes the power to prevent abuse of the adjudicative process. The abuse of process doctrine is flexible and not governed by any set of rigid rules or criteria.

Abuse of process is to be assessed in the specific circumstances of each case: “There can be no exhaustive list of factors a judge should consider when determining whether to grant a stay of proceedings as the relevant factors will, of necessity, be determined by the context in which the request for a stay arises” ( Stick at para 49 ). [ 89 ] The case law also recognizes that the commencement of two actions by the same plaintiff against the same defendant involving the same dispute in the same jurisdiction is, on its face, an abuse of process: see Boehringer at paras 33–34 . [ 90 ] That, of course, was not the situation that was before the Chambers judge.

Instead, he had to grapple with different actions commenced by different plaintiffs in different jurisdictions. Commenting on the different jurisdiction aspect of that equation, Richards J.A. (as he then was) observed as follows in Boehringer : “Abuse of process is ultimately aimed at preventing the misuse of the courts.

Forum non conveniens is grounded in judicial comité and concerned with ensuring that cases are litigated in an appropriate forum” and that the “status of a Saskatchewan proceeding which has an extra-jurisdictional counterpart will normally be resolved through the application of The Court Jurisdiction and Proceedings Transfer Act ” (at para 37).

In spite of the different purposes underpinning the doctrines of abuse of process and forum non conveniens , this Court ultimately held in Boehringer that even though a situation may present as a forum non conveniens issue, it does not “preclude the doctrine of abuse of process from being engaged in an appropriate case” (at para 37).

All of that said, as this Court recently pointed out in Canadian Pacific , a multiplicity of proceedings in different jurisdictions is not an “absolute bar to the commencement and prosecution of multiple actions” (at para 54). [ 91 ] The next point to be made in connection with this issue is that the decision to grant a stay of proceedings is discretionary in nature. It is determined by an examination of the context in which the matter arises and is not governed by a rigid set of principles or an exhaustive list of factors.

Addressing the doctrine of abuse of process in a situation involving the commencement of two lawsuits, this Court concluded as follows in Stick : [54] As this Court stated in Boehringer Ingelheim , it is an abuse of process to commence two lawsuits between the same parties that effectively deal with the same subject matter. The commencement of such actions in two or more jurisdictions may also constitute an abuse of process ( Boehringer Ingelheim at para 36 ).

This is so because the doctrine of abuse of process covers a wide variety of circumstances including those where the requirements of issue estoppel and res judicata may not apply, and where the doctrine of forum non conveniens may apply.

The ultimate question for the court must always be whether the circumstances giving rise to the actions bring the administration of justice into disrepute or result in unacceptable unfairness to one of the parties. [ 92 ] Those principles governed how the Chambers judge resolved the issue of whether it was appropriate to stay the Saskatchewan action because of a multiplicity of proceedings. While the Chambers judge did not have the benefit of this Court’s recent decision in Canadian Pacific , I find that his decision is consistent with the principles expressed therein.

As Canadian Pacific made clear, where a court is faced with multiple proceedings in different jurisdictions, the question of whether the Saskatchewan proceeding should be stayed is measured against “the criteria indicative of abuse” assessed through the following framework: [59] Based on the foregoing jurisprudence, the initial task of the court in each case of an allegation of multiplicity is to determine whether the multiple actions relate to the same dispute or matter and the extent of that relationship.

The ultimate task is to determine, given any multiplicity, whether on the whole the process of the court has not been invoked properly, honestly and in good faith, or whether the court’s function has been misused as a means of vexation or oppression in the process of litigation. In short, an allegation of multiplicitous litigation must be measured against the criteria indicative of abuse. [ 93 ] In pursuing its action in Saskatchewan, I see no evidence that SMI failed to act in good faith or was in any way dishonest. SMI

simply sought a ruling on its Saskatchewan action that had been commenced long before the default judgment proceedings took place in Illinois. Furthermore, it did so on the strength of the Currie Decision which, as I said, was not appealed. [ 94 ] Neither can it be said, as alleged by CE Design, that the Chambers judge improperly exercised his discretion by blindly following the Currie Decision , as evinced by the statement that Currie J.’s comments were “as true and relevant today as they were in 2009” ( Stay Decision at para 26).

As I explained above, this argument misinterprets what the Chambers judge actually held. As I read his decision, in addition to finding the reasoning and analysis of the Currie Decision sound, the Chambers judge simply alluded to the fact that CE Design would face the same hurdles experienced in connection with the Mills Decision if the contract were to be interpreted in Illinois but then CE Design attempted to register that judgment in Saskatchewan.

Placed in the appropriate context, I see nothing untoward with what the Chambers judge said. [ 95 ] Neither do I see any error with how the Chambers judge dealt with this issue on a more substantive level. As discussed above, and contrary to CE Design’s position, he did not ignore the evidence about the Illinois proceedings; in fact, he expressly commented on those proceedings in the context of this argument (see Stay Decision at para 14).

Granted, that argument was vetted primarily through the lens of the doctrine of res judicata , but the fact remains that he was alert to CE Design’s position and the evidence said to support it. [ 96 ] Although the Chambers judge did not expressly address the nuances between a situation involving multiple proceedings in this jurisdiction in comparison to one where there are proceedings in Saskatchewan and another jurisdiction, he appropriately referenced the portions of the Currie Decision (at para 22 ) that focussed on the in-kind differences between the Saskatchewan proceedings and those in Illinois, namely, as follows: (

a) the issue at the centre of the SMI Saskatchewan claim was the

interpretation of the insurance policy, which was made in Saskatchewan by Saskatchewan parties; (

b) there was no compelling reason to apply Illinois law to this interpretive exercise; (

c) no one suggested the policy should be interpreted pursuant to Illinois law; (

d) the connection to Illinois relates to Homegrown’s conduct after the contract was made and not beforehand; and (

e) the impugned judgment in that state was taken out on the basis of that conduct and the subsequent assignment of the insurance proceeds to CE Design. Viewed with those considerations in mind, the issues – while related – were sufficiently distinct.

The Chambers judge merely adopted that line of reasoning. [ 97 ] Based on the foregoing, particularly the deferential standard of review for discretionary decisions, I fail to see how allowing SMI’s claim to proceed would bring the administration of justice in Saskatchewan into disrepute or result in unacceptable unfairness to CE Design, let alone reveal or involve any error on the part of the Chambers judge. 4.

Abuse of process, res judicata , collateral attack [ 98 ] In light of the ongoing appeals in Illinois from the Mullen Decision and the Ortiz Decision , CE Design wisely declined to pursue any argument about res judicata , issue estoppel and collateral attack. That said, the abuse of process doctrine remains a live issue on appeal.

While the Chambers judge touched on abuse of process, CE Design argues he failed to address this issue in a meaningful way, which, as the argument goes, amounts to an error in principle that opens the door for this Court to address this issue afresh. [ 99 ] Much of the analysis on this issue is addressed in the context of CE Design’s multiplicity of proceedings argument and will not be repeated. That said, a few brief observations are in order. [ 100 ] The premise of this argument is that the Mullen Decision and the Ortiz Decision are decisions on the merits of all 23 SMI coverage defences.

CE Design submits the material facts underlying the SMI action were the same material facts underlying the Illinois action, involve the same parties and the same policy of insurance. While the jurisprudence does not expressly preclude re-litigation of the same issue, CE Design contends that no factors speak in favour of re-litigation in the circumstances at hand other than a possible fairness argument.

Even so, it says SMI experienced no unfairness in the Illinois litigation that affected or could have affected the result. [ 101 ] While the Chambers judge failed to grapple with the abuse of process doctrine head on, this ground of appeal cannot succeed for several reasons. First, as concluded above, the Currie Decision determined that the merits of SMI’s claim should be resolved in Saskatchewan. Nothing that subsequently occurred in Illinois changes that ruling.

Second, as discussed above, the Chambers judge found the Illinois courts had not substantively adjudicated the SMI defences on their merits; and, therefore, SMI’s Saskatchewan action did not constitute re-litigation of the facts and the law. For this reason alone, the principles of judicial economy and avoidance of unnecessary expense, within the meaning of Toronto v CUPE Local 79 , 2003 SCC 63 at para 52 , [2003] 3 SCR 77, are not engaged. Finally, context is important. The Currie Decision forms a large part of that context. Justice Currie concluded that Saskatchewan had territorial competence.

CE Design knew this to be the case but proceeded in Illinois anyway. Furthermore, and most importantly, the judicial proceedings at issue in Illinois arise from a default judgment taken out in that state without service of process on SMI, “in sufficient time to present a defence” ( Mills Decision at para 18 ). These were appropriate considerations for the Chambers judge to take into account and they had a bearing on whether the Saskatchewan action amounted to an abuse of process. As I read the Stay Decision , those considerations were front of mind for the Chambers judge. I see no error. B.

Summary judgment was appropriate [ 102 ] To proceed by way of

summary judgment, an applicant must persuade the court that “there is no genuine issue of material fact requiring a trial” ( Peter Ballantyne Cree Nation v Canada , 2016 SKCA 124 at para 28 , [2017] 1 WWR 685). CE Design argues the Chambers judge erred in concluding the matter could be resolved by

summary judgment. It points to the affidavit of James Borcia, sworn

May 11, 2017, in which he deposed to the need for further details and information from Monty Loree that might be relevant to thecoverage defences and possibly reveal additional defences grounded in fraud and collusion. It argues the Chambers judge made a palpableand overriding error of fact by failing to consider this uncontroverted evidence and that further evidence was required to flesh out thosedefences. [103] There is no merit to this argument. Mr. Borcia is SMI’s U.S. counsel in the Illinois proceedings. He swore an affidavit for SMI inresponse to CE Design’s strike application in Saskatchewan, not on the

summary judgment application. Mr. Borcia had simply opined thatwith the benefit of further investigation, including an examination of Monty Loree under oath, further coverage defences would come tolight. There is no indication that his affidavit was filed by SMI in support of its

summary judgment application. In any event, the test forsummary judgment is not whether all of the available evidence has been uncovered but whether a Chambers judge can make the necessaryfindings of fact and apply the law to the facts: see Hryniak v Mauldin, 2014 SCC 7 at paras 28 and 49, [2014] 1 SCR 87. Furthermore,while it was up to SMI to put its best foot forward on the

summary judgment application, it chose to apply for

summary judgment despitethe possibility of some other favourable evidence coming forward in the future. It was entitled to take that risk. [104] Since the issue before the Chambers judge involved the

interpretation of a contract of insurance, there was an obviousevidentiary foundation to enable him to fairly and justly adjudicate the limits of policy coverage. Where there is no error in principle, adecision to proceed by way of

summary judgment should not be overturned absent palpable and overriding error. I see no such error. C.

Summary judgment: No duty on SMI to defend the insureds [105] The central issue on the

summary judgment application was whether SMI had a duty to defend and indemnify the Defendantsunder the insurance policy. As framed by the Illinois pleadings, this question reduces to whether the act of sending faxes fell within theprovisions of the insurance policy and, if so, whether the claim was excluded by the terms of the policy. 1. Preliminary mootness argument [106] SMI raises what it calls a mootness argument at the start. It argues the issue of a duty to defend is moot because (

a) theunderlying Illinois action is already reduced to judgment, (

b) the Defendants had not defended the Saskatchewan action, and (

c) theDefendants never brought an action against SMI to recover their defence costs. In other words, SMI argues that since the named insuredswere noted for default of defence in Saskatchewan, CE Design cannot now raise a defence on the merits.

More importantly, as SMI goeson to argue, having been noted for default of defence, the named insureds are taken to have admitted the allegations as pled, including theallegation that SMI had no duty to defend. [107] To refresh on this point, SMI brought an action against Homegrown Advertising Inc., Monty Loree, Lisa Loree and CE Design inwhich it denied any obligation to defend or indemnify the “Class Action Defendants”. Only CE Design filed a defence to the action.

Therecord shows that Homegrown, Monty Loree, and Lisa Loree were noted for default of defence, accordingly, it stands to reason that thosedefendants are taken to have admitted the allegations of fact in the statement of claim. SMI’s argument loses attraction, however, becauseCE Design did file a statement of defence in the Saskatchewan action in which it denies each and every allegation in the statement of claimand put SMI to the strict proof thereof.

For this reason, SMI’s preliminary mootness argument cannot succeed. [108] With that, I turn to the pivotal question of whether SMI had a duty to defend and indemnify under the insurance policy. 2. Principles of

interpretation [109] As noted by the Supreme Court in Ledcor, the

interpretation of a policy of insurance involves a two step process: “The primaryinterpretive principle is that where the language of the insurance policy is unambiguous, effect should be given to that clear language,reading the contract as a whole” (citations omitted, at para 49). If ambiguity remains, the general rules of contract construction must beemployed to resolve the ambiguity: [50] … These rules include that the

interpretation should be consistent with the reasonable expectations of the parties, as long as thatinterpretation is supported by the language of the policy; it should not give rise to results that are unrealistic or that the parties would nothave contemplated in the commercial atmosphere in which the insurance policy was contracted, and it should be consistent with theinterpretations of similar insurance policies. See Progressive Homes, [2010 SCC 33] at para. 23, citing Scalera, [2000 SCC 24 ,[2000] 1 SCR 551] at para. 71; Gibbens, [2009 SCC 59] at paras. 26–27; and Consolidated-Bathurst Export Ltd. v.

Mutual Boiler andMachinery Insurance Co., (SCC), [1980] 1 S.C.R. 888, at pp. 900–902. [110] In the search for intention, the following principles apply (Barbara Billingsley, General Principles of Canadian Insurance Law,3d ed (Toronto: LexisNexis, 2020) at 140–141 [Canadian Insurance Law]): In this search for intention, the following fundamental and inter-related principles apply: • undefined contract terms should be given their “plain, ordinary and popular” meaning, “as they would be understood by theaverage person applying for insurance, and not as they might be perceived by persons versed in the niceties of insurance law”; • clearly worded terms should be given full effect in the context of the contract read as a whole; • an undefined word with two meanings should be assigned a meaning which “is more reasonable in promoting the intentionof the parties”; and • the objective of the contract should not be negated by a technical definition or by an

interpretation “which will result ineither a windfall to the insurer or an unanticipated recovery to the insured”. See also Sabean v Portage LaPrairie Mutual Insurance Company, 2017 SCC 7, [2017] 1 SCR 121; Progressive Homes Ltd. v Lombard

General Insurance Company of Canada, 2010 SCC 33, [2010] 2 SCR 245 [Progressive Homes]; and Brissette Estate v Westbury LifeInsurance Company, (SCC), [1992] 3 SCR 87. [111] The narrow issue at play here is whether SMI had a duty to defend. Whether that duty arose is determined by the wording of theinsurance policy.

A trilogy of Supreme Court decisions have adopted the so-called Pleadings Rule to help resolve that question: Nichols vAmerican Home Assurance Co., (SCC), [1990] 1 SCR 801; Non-Marine Underwriters, Lloyds of London v Scalera,2000 SCC 24, [2000] 1 SCR 551 [Scalera]; and Moneco Ltd. v Commonwealth Insurance Company, 2001 SCC 49, [2001] 2 SCR 699.The principles established in that line of cases were subsequently summarized by the Supreme Court in Progressive Homes in this manner: (a) “[i]t is irrelevant whether the allegations in the pleadings can be proven in evidence” (at para 19); (

b) there is no duty to defend where it is clear the claim either does not come “within the scope of coverage” (at para 20) or “it isexcluded by an exclusion clause” (at para 19); and (

c) in examining a claim, the parties “are not bound by labels … What is determinative is the true nature or substance of theclaim” (citations omitted, at para 20). See also Royal & Sun; Saskatchewan Government Insurance v Patricia Hotel

(1973) Ltd., 2011 SKCA 70, 334 DLR (4th) 740; andWestridge Construction Ltd. v Zurich Insurance Company, 2005 SKCA 81, [2006] 4 WWR 437. 3. The pleadings and the SMI insurance policy [112] Application of the Pleadings Rule necessarily begins with an eye to the Illinois pleadings. The plaintiff, CE Design, brought aclass action claim on behalf of itself and all other persons similarly situated against the Franklin Edison Corporation, Homegrown, MontyLoree and Lisa Loree arising from the following: 3. Unsolicited faxes damage … . Recipients lose the use of their fax machine, paper, and ink toner.

Unsolicited faxes also cause therecipients to waste valuable time they would have spent on something else. Unsolicited faxes prevent fax machines from receivingauthorized faxes, prevent their use for authorized outgoing faxes, cause undue wear and tear on the recipient fax machines, and requireadditional labour to attempt to discern the source and purpose of the unsolicited message. [113] The allegations central to the class claim are these: 11. In late 2004, Defendants transmitted by telephone facsimile machine an unsolicited advertisement to Plaintiffs facsimile machine.

Acopy of that fax is attached hereto and marked as exhibit A. 12. Defendants did not have Plaintiff’s prior express invitation or permission to send advertisements to Plaintiff’s fax machine. 13.

On information and belief, Defendants have sent thousands of similar unsolicited facsimile advertisements throughout the UnitedStates. [114] As mentioned above, the class action claim is grounded in a statutory cause of action under the Telephone Consumer ProtectionAct of 1991, common law conversion and a breach of the Illinois Consumer Fraud and Deceptive Practices Act, 815 ILCS 505. [115] From the plain wording of the SMI policy, it is clear SMI agreed to provide commercial general liability insurance toHomegrown for bodily injury and property damage. The relevant portions of the insurance policy are these:

SECTION 1-COVERAGESCoverage A. Bodily Injury and Property Damage Liability This insurance applies only when an Each Occurrence Limit is stated in the Declarations. 1. Insuring Agreement a. We will pay those sums that the insured becomes legally obligated to pay as compensatory damages because of “bodily injury” or“property damage” to which this insurance applies. No other obligation or liability to pay sums or perform acts or services is coveredunless explicitly provided for under SUPPLEMENTARY PAYMENTS-COVERAGES A, B AND D.

This insurance applies only to“bodily injury” and “property damage” which occurs during the policy. The “bodily injury” or “property damage” must be caused by an“occurrence”. The “occurrence” must take place in the “coverage territory”. We will have the right and duty to defend any “action[”]seeking those compensatory damages but; 1) The amount we will pay for compensatory damages is limited as described in

SECTION III-LIMITS OF INSURANCE; 2) We may investigate and settle any claim or “action” at our discretion and 3) Our right and duty to defend end when we have used up the applicable limit of insurance in the payment of judgments or settlementsunder Coverage A, B or D or medical expenses under Coverage C. b. Compensatory damages because of “bodily injury” include compensatory damages claimed by any person or organization for care, lossof service or death resulting at anytime from the “bodily injury”. c. “property damage” that is loss of use of tangible property that is not physically injured shall be deemed to occur at the time of the“occurrence” that caused it. 2 Exclusions.

This insurance does not apply to: a. “Bodily injury” or “property damage” expected or intended from the standpoint of the insured. This exclusion does not apply to “bodily injury” resulting from the use of reasonable force to protect persons or property. [ 116 ] The following words are defined in that policy: (

a) bodily injury “means bodily injury, sickness or disease sustained by a person, including death resulting from any of these at any time”; (

b) occurrence “means an accident, including continuous or repeated exposure to substantially the same general harmful conditions”; and (

c) property damage “means (

a) Physical injury to tangible property, including all resulting loss of use of that property; or (

b) Loss of use of tangible property that is not physically insured”. 4. The claims fell outside of the scope of coverage [ 117 ] The Chambers judge found CE Design’s claim fell outside of the policy coverage. However, in reaching this conclusion, he did not refer to the terms of the insurance policy or analyze the applicable law. His conclusion was brief: “The insured intended to send the faxes which were unsolicited. The fact that the result was not what was expected by the defendants, Homegrown Advertising Inc., Monty Loree and Lisa Loree is irrelevant” (

Summary Judgment at para 13). In reaching his conclusion, the Chambers judge appears to have placed reliance on the principle of law espoused in Saindon . [ 118 ] CE Design argues the Chambers judge misunderstood or misapplied the law in Saindon and thereby erred in law. Broadly speaking, Saindon holds that loss is intentionally caused where an insured takes action with the purpose of causing some degree of loss or harm even though the extent of the loss or harm actually sustained was itself not foreseen.

CE Design submits the Saindon principle is limited to situations where a plaintiff intends a wrongful act that happens to result in more serious consequences than those initially intended. That sort of scenario, CE Design argues, is distinguishable from the one at hand where the intended act was not wrongful nor capable of resulting in any foreseeable harm, yet damage inadvertently ensued. Second, CE Design argues the Chambers judge failed to make a finding of fact as to whether the Defendants’ action was intentional.

On the whole of it, CE Design says the Chambers judge misapprehended the evidence and reached a conclusion that could not be reasonably supported by the evidence. [ 119 ] CE Design also argues that, although the Defendants intended to send faxes to various recipients, they incorrectly thought some of the recipients had invited or consented to the receipt of those missives.

CE Design argues that it was unforeseen that the recipients had not provided their consent and the resulting damage was an accident, thus falling within the scope of coverage. [ 120 ] The necessary starting point of course is the insurance policy. Pursuant to its terms, SMI is required to indemnify Homegrown for compensatory damages for bodily injury or property damage to which the insurance policy applies. (There is no suggestion the actions described in the claim caused bodily injury.) As set out above, property damage is defined as “(

a) Physical injury to tangible property including all resulting loss of use of that property; or (

b) Loss of use of tangible property that is not physically insured”. The loss complained of here is the loss of paper, toner, and time along with loss of the use of the fax machines. That there was property damage appears to have been accepted by the parties. Paragraph 3 of the claim (set out above) alleges the Defendants sent unsolicited faxes to the recipients that caused loss of use of their fax machines, paper, ink, toner and time.

Based on the pleadings, I am satisfied the first requirement for coverage is met. [ 121 ] The second requirement necessary to establish coverage under this policy is the need for the pleadings to contain an allegation that the property damage was caused by an occurrence in the coverage area. As seen above, occurrence is defined to mean “accident, including continuous or repeated exposure to substantially the same general harmful conditions”. The issue in this matter turns on the word accident , which is not defined in the insurance policy.

On this point, the Chambers judge simply concluded by saying, “The faxes were deliberately sent by the defendants which they were in the business of doing and were being remunerated for this service. The damage was not caused by an accident but by the specific acts done by the defendants for remuneration ” (emphasis added,

Summary Judgment at para 20). [ 122 ] The issue before the Chambers judge centred around whether the actions amounted to an accident within the meaning of the insurance policy. In this regard, CE Design draws a distinction between those recipients who wanted to receive the faxes and those who did not. CE Design argues the Defendants intended to send faxes to recipients who they mistakenly thought had consented to receiving the faxes. It goes on to argue that it was unforeseen the recipients had not consented and thus the damage was an accident falling within the realm of coverage. CE Design argues that because the Defendants ha

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