Saskatoon & Region Home Builders' Association Inc. v. Children's Wish Foundation of Canada, (2014) 440 Sask.R. 300 (QB)

• Judge: Rothery, J.
• Court: Court of Queen's Bench of Saskatchewan (Canada)
• Case Date: March 27, 2014
• Jurisdiction: Saskatchewan
• Citations: (2014), 440 Sask.R. 300 (QB);2014 SKQB 89

Saskatoon Home Builders v. Children's Wish (2014), 440 Sask.R. 300 (QB)

MLB headnote and full text

Temp. Cite: [2014] Sask.R. TBEd. AP.039

Saskatoon & Region Home Builders' Association Inc. (plaintiff) v. The Children's Wish Foundation of Canada (defendant)

(2013 Q.B. No. 307; 2014 SKQB 89)

Indexed As: Saskatoon & Region Home Builders' Association Inc. v. Children's Wish Foundation of Canada

Saskatchewan Court of Queen's Bench

Judicial Centre of Saskatoon

Rothery, J.

March 27, 2014.

Summary:

The Children's Wish Foundation (CWF) partnered with the Saskatoon & Region Home Builders' Association to conduct and operate a home lottery. The parties entered into a service provider agreement for the 2012 lottery. In 2013, the Association sued CWF for $168,464.76, alleging that CWF owed this sum for reimbursement of expenses and a consulting fee. CWF counterclaimed, alleging that the Association was withholding certain information and records that it was required to turn over to CWF pursuant to the terms of the agreement. CWF sought an order directing the Association to immediately deliver the documents and restitution in the sum of $92,350.60. The Association applied to amend its statement of claim by adding allegations that CWF breached both the terms of the agreement and the rules of the Saskatchewan Liquor and Gaming Authority (SLGA) which required the proceeds of the lottery to remain in the province of Saskatchewan for the benefit of Saskatchewan residents. CWF applied (1) to have the amendments struck on the basis that they were frivolous and vexatious, or in the alternative, summary judgment dismissing the additional claims; (2) summary judgment dismissing the Association's original claim; and (3) summary judgment granting its counterclaim.

The Saskatchewan Court of Queen's Bench dismissed the application to strike the amendments but granted summary judgment dismissing the additional claims. The court ordered the Association to immediately deliver the withheld documents, and ordered CWF to pay the Association an additional $37,314. CWF was awarded costs on a solicitor and client basis to be assessed by the court.

Contracts - Topic 7416

Interpretation - General principles - Most commercially reasonable interpretation - The Children's Wish Foundation (CWF) entered into a service provider agreement (SPA) with the Saskatoon & Region Home Builders' Association to conduct a home lottery - The "Consulting Services" set out in the budget that was approved by the Saskatchewan Liquor and Gaming Authority (SLGA) included operational expenses of $639,467 and the Association's fee of $218,207 for a total of $857,674 - The budget for gross revenue was $2,902,000, and the budget for the cost of prizes was $1,000,000 - Thus, the budgeted total costs of expenses was 29.6% of gross revenues - At the end of the lottery, total gross revenue was only $2,426,698 and prizes totalled $1,296,365 - CWF had already paid the Association $820,360 - The Association sent CWF two further invoices totalling $168,464.76 - When CWF refused to pay the additional amount, the Association sued CWF - CWF counterclaimed, alleging that it was not required to reimburse the Association any more than 30% of the actual gross revenues ($728,009.40) - Because it had paid the Association $820,360, CWF sought restitution of $92,350.60 - CWF applied for summary judgment dismissing the Association's claim and granting its counterclaim - The Saskatchewan Court of Queen's Bench dismissed the application - CWF's interpretation of the SPA would produce an absurd result - The only interpretation that was logical within the SPA in its entirety was that the parties had agreed that the Association would not be reimbursed for expenses in excess of 30% of the budgeted gross revenue, not 30% of the actual gross revenue - This interpretation was also consistent withe the SLGA rules - The Association could claim the sum of $857,674 from CWF, meaning that the Association was entitled to a further $37,314 - See paragraphs 43 to 64.

Practice - Topic 2231

Pleadings - Striking out pleadings - Grounds - False, frivolous, vexatious or scandalous - In 2012, the Children's Wish Foundation (CWF) entered into a service provider agreement (SPA) with the Saskatoon & Region Home Builders' Association to conduct a home lottery - In March 2013, the Association sued CWF under the SPA for the reimbursement of expenses - In September 2013, the Association applied to amend its statement of claim and filed a supporting affidavit sworn by the Association's president - The president swore that (a) funds raised by CWF for the benefit of local children were being sent to CWF's offices in Ontario; (b) although each child's wish cost about $10,000 and the Association had raised about $700,000, only six wishes had been granted over the past year; and (c) the Association was concerned that CWF's expenditures were used for administrative costs and executive salaries - The same day that the application was filed, a newspaper reporter obtained photocopies of the court file and proceeded to write an article entitled "Lawsuit questions home lottery revenues" - The article was published on the final weekend of sales for CWF's 2013 home lottery - The Association subsequently filed a second amended claim that alleged CWF had breached the terms of the SPA and the rules of the Saskatchewan Liquor and Gaming Authority which required the proceeds of the lottery to remain in Saskatchewan for the benefit of Saskatchewan residents - CWF applied to strike the amendments on the grounds that they were frivolous and vexatious given the timing of the first amendments - Alternatively, CWF applied for summary judgment dismissing the amended claim - The Saskatchewan Court of Queen's Bench dismissed the application to strike the amendments - CWF's suspicions as to the real reason for the first amendments were understandable, particularly where an affidavit did not need to be filed with an application to amend pleadings - However, the evidence fell short of concluding that the amendment was "instituted for an ulterior motive other than to enforce a true legal claim" - The court allowed the application for summary judgment - There was no genuine issue requiring a trial - The evidence submitted by the Association was nothing more than assertions with no factual underpinning - See paragraphs 4 to 25 and 65 to 73.

Practice - Topic 5702

Judgments and orders - Summary judgments - Jurisdiction or when available or when appropriate - The Children's Wish Foundation (CWF) entered into a service provider agreement (SPA) with the Saskatoon & Region Home Builders' Association to conduct a home lottery - In 2013, the Association sued CWF under the SPA for the reimbursement of expenses and a consulting fee - CWF counterclaimed, seeking an order directing the Association to immediately deliver to CWF certain documents (revenue and ticket sales reconciliation, ticket purchaser database, etc.) - The Association filed a defence to the counterclaim, alleging that CWF breached the terms of the SPA and the rules of the Saskatchewan Liquor and Gaming Authority (SLGA) that required the proceeds of the lottery to remain in the province for the benefit of Saskatchewan residents - The Association sought an order dismissing the counterclaim - CWF applied for summary judgment granting its counterclaim - The Saskatchewan Court of Queen's Bench granted the application and ordered the Association to immediately deliver the withheld information and records - The terms of the SPA set out the documents that the Association was to provide to CWF no later than December 31, 2012 - The SPA also stated that the records relating to the lottery were the sole and exclusive property of CWF - CWF was the licensee of the licence granted by the SLGA and was required to retain all records pertaining to the conduct and management of its lottery for three years from the final draw - There was no genuine issue requiring a trial - The Association refused to provide the documentation as a litigation tactic - This was not a defence to the counterclaim - See paragraphs 38 to 42.

Practice - Topic 5702

Judgments and orders - Summary judgments - Jurisdiction or when available or when appropriate - [See Practice - Topic 2231 ].

Practice - Topic 5706

Judgments and orders - Summary judgments - Counterclaim or set-off - [See Contracts - Topic 7416 ].

Practice - Topic 7457

Costs - Solicitor and client costs - Entitlement to - Where claim or defence irrelevant, scandalous or without merit - In 2012, the Children's Wish Foundation (CWF) entered into an agreement with the Saskatoon & Region Home Builders' Association to conduct a home lottery - In March 2013, the Association sued CWF for the reimbursement of $168,464.76 in additional expenses - In September 2013, the Association applied to amend its statement of claim and filed a supporting affidavit sworn by the Association's president - The president swore that (a) funds raised by CWF for the benefit of local children were being sent to CWF's offices in Ontario; (b) although each child's wish cost about $10,000 and the Association had raised about $700,000, only six wishes had been granted over the past year; and (c) the Association was concerned that CWF's expenditures were used for administrative costs and executive salaries - The same day that the application was filed, a newspaper reporter obtained photocopies of the court file and proceeded to write an article entitled "Lawsuit questions home lottery revenues" - The article was published on the final weekend of sales for CWF's 2013 home lottery - The Association subsequently filed a second amended claim that alleged CWF had breached the agreement and the rules of the Saskatchewan Liquor and Gaming Authority which required the proceeds of the lottery to remain in Saskatchewan for the benefit of Saskatchewan residents - CWF was granted summary judgment dismissing the Association's amended claim and the Association was awarded $37,314 for its additional expenses - The Saskatchewan Court of Queen's Bench held that CWF was entitled to costs on a solicitor and client basis from and after September 2013 - The Association harmed CWF's reputation by making unfounded accusations about CWF's use of lottery proceeds - The amendments and supporting affidavit found their way to the media and the allegations were widely reported - CWF could do nothing but defend itself against the allegations at considerable legal cost - See paragraphs 74 to 78.

Practice - Topic 7462.1

Costs - Solicitor and client costs - Entitlement to solicitor and client costs - Unproven allegations of dishonest or improper conduct - [See Practice - Topic 7457 ].

Cases Noticed:

International Minerals & Chemical Corp. (Canada) Ltd. et al. v. Commonwealth Insurance Co. et al. (1990), 85 Sask.R. 304 (Q.B.), refd to. [para. 5].

Sagon v. Royal Bank of Canada et al. (1992), 105 Sask.R. 133; 32 W.A.C. 133 (C.A.), refd to. [para. 6].

Potash Corp. of Saskatchewan Inc. v. Mosaic Potash Esterhazy Limited Partnership (2010), 373 Sask.R. 1; 2010 SKQB 18, refd to. [para. 22].

Kichula v. Farm Credit Corp. (1991), 95 Sask.R. 245 (Q.B.), refd to. [para. 24].

Tamarak Energy Inc. v. Ipsco Inc. et al. (1999), 185 Sask.R. 161; 1999 SKQB 125, refd to. [para. 24].

Hryniak v. Mauldin (2014), 453 N.R. 51; 314 O.A.C. 1; 2014 SCC 7, appld. [para. 26].

Pervez et al. v. Caskey et al. (2013), 431 Sask.R. 201; 2013 SKQB 377, refd to. [para. 28].

Combined Air Mechanical Services Inc. et al. v. Flesch et al. (2011), 286 O.A.C. 3; 2011 ONCA 764, refd to. [para. 32].

Tchozewski v. Lamontagne (2014), 440 Sask.R. 34; 2014 SKQB 71, refd to. [para. 33].

Siemens et al. v. Bawolin et al. (2002), 219 Sask.R. 282; 272 W.A.C. 282; 2002 SKCA 84, refd to. [para. 75].

University of Saskatchewan v. Fireman's Fund Insurance Co. of Canada et al. (1996), 140 Sask.R. 289 (Q.B.), revd. (1997), 158 Sask.R. 223; 153 W.A.C. 223 (C.A.), leave to appeal refused (1998), 227 N.R. 287 (S.C.C.), refd to. [para. 76].

Counsel:

C.J. Onishenko, for the plaintiff;

D. Hodson, Q.C., and C.R. Lepage, for the defendant.

These applications were heard before Rothery, J., of the Saskatchewan Court of Queen's Bench, Judicial Centre of Saskatoon, who delivered the following fiat on March 27, 2014.