Roumann Consulting, Inc. v. Aviva Insurance Company of Canada et al., 2020 ONSC 3387

2020 ONSC 3387

COURT FILE NO.: 22/19

DATE: 2020/06/01

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: ROUMANN CONSULTING, INC., Plaintiff

AND:

AVIVA INSURANCE COMPANY OF CANADA, TEMPLE INSURANCE COMPANY, EVEREST INSURANCE COMPANY OF CANADA, ARCH INSURANCE CANADA LTD., XL REINSURANCE AMERICA INC., and LLOYD’S UNDERWRITERS, Defendants[^1]

BEFORE: Justice I.F. Leach

COUNSEL: Stuart R. Mackay, for the plaintiff

Shannon M. Gaudet and Julia Boddy, for the defendants

HEARD: November 20, 2019

ENDORSEMENT

Introduction

[1] Before me is a motion, brought by the plaintiff corporation in this proceeding, seeking declarations that the defendant insurers are required:

a. to defend a counterclaim made against the plaintiff in an ongoing civil action in the state of Wisconsin; and

b. to indemnify the plaintiff for legal costs incurred and/or damages recovered against it in that proceeding.

[2] The procedural vehicle formally employed by the plaintiff to have the court decide such issues is Rule 20 of the Rules of Civil Procedure, dealing with motions for summary judgment.

[3] Although the plaintiff’s notice of motion refers to Rule 20, and portions of the test for granting relief to a plaintiff pursuant to Rule 20.04(2)(a), (i.e., that there is “no genuine issue requiring a trial” raised by the defence that has been served and filed by the defendants), that notice of motion does not expressly use the words “summary judgment”.

[4] It nevertheless essentially requests only summary judgment in part, pursuant to Rule 20.01(1), insofar as the notice of motion also seeks, in addition to costs of the motion, an order that the balance of relief sought in the underlying amended statement of claim, (e.g., damages for bad faith, as well as punitive and exemplary damages), be set for trial after the Wisconsin litigation has been “heard and decided”.

[5] For their part, the defendant insurers have not brought a formal motion of their own.

[6] They nevertheless have filed material responding to the plaintiff’s motion; material that not only opposes granting of the relief sought by the plaintiff, but essentially asks the court to grant summary judgment in favour of the defendants. In particular, the defendants asked, in their responding motion material, for the plaintiff’s motion and action to be dismissed, with costs payable to the defendants.[^2]

Background

[7] The material filed by the parties incorporates a good deal of evidentiary material, including:

a. affidavits;

b. documents outlining the nature of the contractual relationship between parties to the Wisconsin litigation;

c. pleadings, other court filings, and a first instance summary judgment decision from the Wisconsin litigation; and

d. substantial correspondence exchanged between the parties, (through their respective lawyers), relating to the plaintiff’s request for provision of a defence and coverage from the defendants, in relation to the claims advanced against the plaintiff in the Wisconsin litigation, and the defendants’ denials in that regard.

[8] For reasons outlined and addressed in more detail below, in my view much of that evidence is neither relevant nor admissible when it comes to formal determination of whether the relief sought by the parties should be granted or denied.[^3]

[9] The following initial summary and chronology of events accordingly is provided only as a general review of the information filed by the parties, and the wider context in which I am being asked to address the particular issues raised by the plaintiff’s motion. In that regard:

a. The plaintiff in this litigation, Roumann Consulting Inc., (or “RCI”), is a company duly incorporated pursuant to the laws of Ontario. It is based in the town of Belle River, Ontario, and provides sales, estimating and project management services in relation to construction contracts.

b. On or about March 26, 2015, RCI entered into an “Independent Contractor Agreement” with another company, T.V. John & Son Inc., (or “TVJ”), duly incorporated pursuant to the laws of Wisconsin. The full text of the agreement can be found at Tab 2A of the plaintiff’s motion record. However, it included provisions indicating:

i. that the agreement was to be governed by the internal laws of the state of Wisconsin; i.e., without regard to any conflict of law principles;

ii. that TVJ was being retained to perform certain sales, estimating and management services for RCI;

iii. that RCI was to provide its services “in a manner consistent with the standards of care, diligence and skill ordinarily exercised by professionals in similar fields and circumstances”, “in accordance with sound professional practices”, “in a good and workmanlike manner”, and in compliance with all applicable federal, state and local laws;

iv. that, in addition to reimbursement for certain incurred expenses, RCI would be compensated for its services by the payment of specified fees, including an indicated hourly rate as well as a commission of 30 percent of the defined net profit realized by TVJ in relation to projects solicited by RCI and accepted by TVJ during the term of the agreement;

v. that the agreement would continue indefinitely, subject to either party’s ability to terminate the agreement, for any reason, on giving not less than 30 days written notice in advance of termination;

vi. that the parties nevertheless were to remain bound by provisions of the agreement relating “to periods, activities or obligations upon or subsequent to the termination” of the agreement, including:

1. an obligation on both parties to cooperate with each other to complete any ongoing projects upon mutually agreeable terms;

2. an obligation on RCI to “immediately deliver”, to TVJ, “any and all property, documents, records and materials” previously belonging to TVJ or sourced from within TVJ, “including, without limitation, all Confidential Company Information”; and

3. provisions governing the further compensation, if any, to be paid by TVJ to RCI, including provisions whereby:

a. if RCI terminated the agreement, TVJ would continue to provide the aforesaid compensation for a period of two years following the effective date of termination, with respect to projects obtained and/or solicited by RCI and accepted by TVJ during the term of the agreement;

b. if TVJ terminated the agreement for any reason other than “willful misconduct”, (as defined by the agreement), TVJ would provide the aforesaid compensation in relation to all construction projects accepted by TVJ in relation to certain specified customers, for the entire duration of such projects, regardless of whether or not the projects were obtained and/or solicited by RCI during the term of the agreement or within the two year period following the effective termination date of the agreement; and

c. if TVJ terminated the agreement for “willful misconduct”, (defined by the agreement as meaning “any act committed with an intentional, willful or wanton disregard of [TVJ’s] interests, as is found in deliberate proven violations or disregard of standards of behaviour which [TVJ] has a right to expect of [its] contractors, vendors or employees, or in carelessness or negligence of such a gross degree or recurrence as to manifest culpability, wrongful intent, or evil design of equal severity to such disregard”), TVJ would not be required to make any further payments to RCI.

c. During the course of its business dealings with TVJ, RCI obtained successive policies of insurance, providing it with certain defined “Errors and Omissions Insurance” coverage. Such insurance policies included one numbered SRD489368, issued on May 12, 2017, which underlies the parties’ present dispute.[^4] I will return to further consideration of that policy’s specific provisions during the course of my analysis below. For now, however, I simply note the following:

i. The plaintiff was the named insured.

ii. Through their duly authorized common insurance manager, (Encon Group Inc. or “Encon”), the six defendants to this proceeding bound themselves, severally and not jointly, to provide a specified percentage of any loss covered under the policy’s wording.

d. On or about August 21, 2017, TVJ sent a letter via email and courier to RCI, providing notice that TVJ was terminating the aforesaid Independent Contractor Agreement, effective September 20, 2017. The full text of the letter can be found at Tab 2B of the plaintiff’s motion record. However, for present purposes, I note the following:

i. TVJ’s letter directed RCI to “cease work immediately”, and refrain from further use of any names or logos that might lead others to believe that RCI was still an agent of TVJ or its parent company. RCI also was directed to return, as soon as possible, any Confidential Information belonging to TVJ.

ii. TVJ’s letter made no reference to any termination of the Independent Contractor Agreement for “willful misconduct” on the part of RCI sufficient to relieve TVJ of any obligation to pay any further specified compensation to RCI. The letter instead indicated that TVJ would be paying RCI commissions for the duration of projects “accepted” by TVJ through to September 20, 2019; i.e., for a two-year period following the effective termination date. RCI also was asked to submit an invoice for any hourly work and expenses incurred prior to receipt of the termination notice, which would be “paid promptly”.

iii. TVJ’s letter nevertheless also indicated that it intended to withhold all future payments to RCI until RCI and its accountant accurately completed and returned a specified tax form; something TVJ said it had “repeatedly requested” since February of 2017.

e. On August 22, 2017, RCI’s counsel apparently sent a letter on its behalf to TVJ, responding to TVJ’s termination letter sent the day before. The letter itself was not filed in evidence by the plaintiff or the defendants, in relation to the motion before me. However, as noted below, the letter is mentioned in TVJ’s later pleading in the Wisconsin litigation, wherein the letter from RCI’s counsel is said to have outlined “certain proposals and interpretations of the Independent Contractor Agreement”.

f. On August 31, 2017, TVJ apparently sent a letter to RCI’s counsel, responding to the aforesaid letter of August 22, 2017. The full text of the letter can be found at the last two pages of Tab 2D of the plaintiff’s motion record, where it appears as “Exhibit C” to TVJ’s later counterclaim pleading in the Wisconsin litigation. Amongst other things, TVJ’s letter communicated the following:

i. TVJ’s overall position that operations, cost reporting and communications would continue to be conducted and/or provided in a manner consistent with past practices and the parties’ agreement, apart from TVJ intending to seek assistance from RCI and Mr Rousse only when necessary, in its sole discretion;

ii. TVJ’s assertion that the parties’ agreement allowed it to maintain certain reserves and pay RCI its portion of such reserves only when projects were completed and final payments were received from clients;

iii. TVJ’s assertion that no commission payments were past due, and that further commission reports and corresponding commission payments would be provided on the 30^th day of each month;

iv. TVJ’s assertion that the parties had agreed to define and apply an “overhead charge” of $7,000 per project, which nevertheless had not been charged to all the projects, resulting in the commissions owed to RCI having been “overstated/overpaid by approximately $28,000”;

v. TVJ’s expression of confidence that it would be able to profitably complete current and future projects without RCI involvement, but would in its sole discretion contact Mr Rousse for assistance, (and pay Mr Rousse the agreed hourly rate for his assistance over an allotted number of hours), if and when TVJ determined such assistance was required;

vi. TVJ’s explanation of why it felt it had carried certain financial risks in relation to a specified client;

vii. repetition of TVJ’s position that no future payments would be made to RCI until TVJ received the requested U.S. Internal Revenue Service form completed by Mr Rousse, who was said to have been aware of TVJ’s request in that regard from February of 2017 onward; and

viii. an explanation that TVJ and its affiliated entities wished to minimize contact with RCI as Mr Rousse had “a history of communicating belligerently with Symbiont, [apparently TVJ’s parent corporation], TVJ, its subcontractors, and even its clients”, with such “behaviour and communications [having] risen to the level of ‘willful misconduct’”, as “evidenced in numerous emails from Mr Rousse”.

g. RCI thereafter took the position that TVJ had violated the Independent Contractor Agreement in numerous ways; e.g., by refusing to pay outstanding invoices, by failing to make required continued payments, and by directing RCI to cease work immediately on all TVJ projects. In the view of RCI, there were also indications that the profits being reported by TVJ were false. On October 13, 2017, RCI accordingly commenced a formal claim against TVJ in the United States District Court, Eastern District of Wisconsin. A copy of RCI’s “Complaint”, (i.e., a pleading somewhat akin to a statement of claim under Ontario’s Rules of Civil Procedure), including copies of the aforesaid Independent Contractor Agreement and TVJ termination letter dated August 21, 2017, (attached to the Complaint as exhibits), can be found in its entirety at Tab 2C of the plaintiff’s motion record. However, alleging various specified breaches of contract, and various specified breaches of a duty of good faith and fair dealing, RCI asked the court to grant relief that included, in addition to claims for legal costs and interest:

i. an accounting of the books and records of TVJ, to determine the precise extent of TVJ’s breaches of contract and breaches of a duty of good faith and fair dealing, as well as the precise amount of resulting damages sustained by RCI, which were thought to be in the range of “hundreds of thousands of dollars”; and

ii. a judgment against TVJ “in an amount to be determined at trial”, but including “compensatory, incidental and consequential damages”.

h. On or about January 17, 2018, RCI apparently amended its initial Complaint by the filing of another pleading called a “First Amended Complaint”. The full text of the pleading, (albeit without the indicated exhibits apparently attached to the original), can be found at Tab 1B of the Responding Motion Record filed by the defendants. However, amongst other things:

i. the pleading was expanded to include a personal claim by Ronald Rousse, an additional plaintiff, (who is also RCI’s principal and Chief Executive Officer), based on an Employment Agreement said to have been made between Mr Rousse and RCI on February 16, 2012;

ii. the pleading also added a further defendant, namely The Kroger Co., (“Kroger”), a company incorporated and based in Ohio, and the owner of numerous construction projects in respect of which RCI alleged entitlement to a share of net profits realized;

iii. the causes of action were expanded to include claims of unjust enrichment; and

iv. the relief being sought from the court was expanded to include a request for the imposition of constructive trusts upon TVJ and Kroger in relation to specified funds.

i. On or about February 6, 2018, TVJ responded by filing, in the Wisconsin litigation, a pleading somewhat akin to a statement of defence under Ontario’s Rules of Civil Procedure; i.e., TVJ’s “Answer and Affirmative Defences to First Amended Complaint”. The entire pleading can be found at Tab 1C of the Responding Motion Record filed by the defendants. However, amongst other aspects of the pleading:

i. TVJ denied RCI’s allegations;

ii. TVJ indicated that, when it terminated its Independent Contractor Agreement with RCI, it “was undertaking an investigation into whether termination would be for cause due to [RCI’s] Willful Misconduct, as defined in the contract”;

iii. TVJ alleged that RCI had engaged in such “Willful Misconduct”;

iv. TVJ alleged that RCI also had materially breached its contractual obligation to return all of TVJ’s “Confidential Information”; and

v. TVJ accordingly requested judgment in its favour, dismissal of the claims against it, and a judicial declaration that TVJ was not obliged to make any post-termination payments to RCI under the Independent Contractor Agreement.

j. On or about February 7, 2018, TVJ filed a further pleading in the Wisconsin litigation, formally advancing a counterclaim against RCI.[^5] The full text of that pleading, i.e., TVJ’s “Counterclaims Against Rouman (sic) Consulting Inc.”, can be found at Tab 2D of the plaintiff’s motion record. The nature of the claims formally advanced and not advanced by TVJ in that pleading are of central importance to the issues raised by the plaintiff’s motion, and I accordingly will have more to say about the form and content of that pleading during the course of my analysis. For now, however, I note the following:

i. The body of the pleading contains allegations, under various headings, that include the following:

1. that TVJ was asserting counterclaims “to pursue redress for damage caused by [RCI’s] behaviour” and “to protect [TVJ] from [RCI’s] continued attempts to access [TVJ’s] project and financial information beyond that which [RCI] already has impermissibly retained”;

2. that Mr Rousse and RCI “engaged in aggressive, unprofessional conduct resulting in damaged customer relationships, project inefficiencies, and lost business opportunities”, and that TVJ terminated its Independent Contractor Agreement with RCI “as a result of [that] behaviour”;

3. that RCI, instead of adhering to its obligation to return TVJ’s confidential information and other property, instead contacted TVJ’s customers, “threatened those customers with legal action”, and “made over-reaching demands for accounting information”, all of which was said to constitute a “material breach” of the Independent Contractor Agreement, entitling TVJ “to suspend performance under the contract”:

4. that factual particulars of RCI’s behaviour included:

a. RCI, through its owner and chief operating officer Mr Rousse, having engaged in “increasingly belligerent, disrespectful and incendiary contacts with [TVJ’s] customers, leading to customer complaints and loss of business”, with one of those customers issuing a Trespass Notice to Mr Rousse, revoking and withdrawing his ability to enter any of that customer’s buildings or parking lots;

b. RCI having sought to “conscript” TVJ into “improper conduct” by requesting that TVJ “aver to the United States Department of Homeland Security that [TVJ] did not have a written contract with [RCI], notwithstanding the fact that [RCI] did in fact have an Independent Contractor Agreement” with RCI, and that Mr Rousse previously had a written employment agreement with [TVJ]”;

c. RCI having “refused, without explanation, to return any of [TVJ’s] Confidential Information and other property”, notwithstanding RCI’s contract obligations and TVJ requests for immediate return of its property, electronic files (including project files) and other “Confidential Information”, (as defined in the Independent Contractor Agreement), which was said to have “independent economic value, developed at great expense”;

d. RCI having demanded excessive production of project accounting information and financial records from TVJ and/or its parent company, at TVJ’s expense, notwithstanding lack of entitlement in that regard; and

e. RCI having embarked on contacting TVJ customers, “threatening those customers with legal action without basis”;

5. that the Wisconsin court had jurisdiction over TVJ’s counterclaims, and was a proper venue in that regard, because the counterclaims arose from RCI’s activities in and directed towards Wisconsin, TVJ had suffered injuries in Wisconsin, and a “substantial part of the events giving rise to the claims and counterclaims in [the] action occurred in [that] judicial district”;

6. that RCI’s “material breach” of the Independent Contractor Agreement excused TVJ from further performance of its obligations under that agreement; and

7. that RCI engaged in behaviour and communications that “rose to the level” of “Willful Misconduct”, under the Independent Contractor Agreement, such that RCI accordingly was not entitled to any payments following termination of that agreement.

ii. In the course of its counterclaim pleading, TVJ refers, with varying degrees of specificity, to other documents. A number of those references employ somewhat vague and generic descriptions of documents or possible documents; e.g., with TVJ referring to “materials”, “documents”, “financial records”, “records”, “Confidential Information” as defined by the Independent Contractor Agreement, and “demands” communicated by RCI, by or through RCI’s counsel, and/or by TVJ. However, TVJ’s pleading also refers with more particularity to identified or apparently identifiable documents, (not all of which have been filed in evidence before me), including the following:

1. its Independent Contractor Agreement with RCI, which TVJ attached to the pleading as “Exhibit A”, and expressly “incorporated by reference” into its pleading;

2. the “Trespass Notice” mentioned above;

3. the written employment agreement between TVJ and Mr Rousse, mentioned above;

4. the termination letter, (also described as a “notice”), which TVJ sent to RCI on August 21, 2017, attached to its pleading as “Exhibit B”, and expressly “incorporated by reference” into its pleading;

5. correspondence sent to TVJ by RCI’s counsel on August 22, 2017, mentioned above, apparently “outlining certain proposals and interpretations of the Independent Contractor Agreement”; and

6. the responding correspondence sent by TVJ to RCI’s counsel on August 31, 2017, (noted and described above), which TVJ attached to its pleading (albeit without the letter’s “confidential enclosures”) as “Exhibit C”, and expressly “incorporated … by reference” into its pleading.

iii. TVJ’s counterclaim pleading culminates in a formal prayer for relief indicating that TVJ was requesting the following relief from the United States District Court for the Eastern District of Wisconsin:

A. Judgment in [TVJ’s] favour on all claims plead (sic) against it;

B. Declaratory Judgment finding that [RCI] materially breached the Independent Contractor Agreement;

C. Declaratory Judgment finding that [RCI] engaged in willful misconduct under the Independent Contractor Agreement; and

D. Any other and further relief that the Court deems appropriate and just.

k. On or about February 21, 2018, RCI responded by filing, in the Wisconsin litigation, a pleading somewhat akin to a defence to counterclaim under Ontario’s Rules of Civil Procedure; i.e., RCI’s “Answer and Affirmative Defences to [TVJ’s] Counterclaims”. The entire pleading can be found at Tab 1D of the Responding Motion Record filed by the defendants. However, amongst other aspects of the pleading:

i. RCI made certain admissions concerning description of the parties, the Independent Contractor Agreement entered into by the parties, jurisdiction of the Wisconsin court over RCI in relation to the dispute, and Wisconsin being a proper venue for adjudication of the parties’ dispute;

ii. RCI denied TVJ’s substantive allegations and claims, as well as TVJ’s characterization/description of the parties’ agreement and correspondence exchanged between the parties, noting that the documents themselves were the “best evidence” of their content;

iii. RCI’s “further” answers included certain additional factual allegations, including the following:

1. that the relationship with the customer issuing the relevant Trespass Notice was soured by the belligerent behaviour of Timothy Nelson, (TVJ’s Chief Executive Officer), which led to an employee of the customer “challenging him to a fistfight”;

2. that RCI had no TVJ property, documents or confidential information;

3. that the only TVJ property RCI ever had was a computer that was returned to TVJ before receipt of TVJ’s termination letter/notice;

4. that RCI never had access to TVJ’s computer system; and

5. that the “confidential information” demanded by TVJ did not exist; and

iv. RCI’s pleading concluded with a number of “affirmative defences”, including assertions:

1. that RCI had supplied information proving that it had returned the only TVJ property in its possession prior to receipt of TVJ’s termination letter/notice and had no other information, and TVJ had “verified the accuracy” of RCI’s statements in that regard;

2. that TVJ already had committed itself to a position that its termination of the Independent Contractor Agreement with RCI was without cause, and it was “too late” for TVJ to alter its position in that regard; and

3. that, to the extent TVJ was asserting that RCI had engaged in actions damaging a customer relationship, that relationship had been severely impaired by the actions of Mr Nelson.

l. At some point in or before July of 2018, RCI made a request, pursuant to its aforesaid Errors and Omissions Insurance policy with the defendant, for certain assistance and/or coverage in relation to the counterclaim TVJ had made against RCI in the Wisconsin litigation; a request that led to further communications and this litigation. In that regard:

i. Neither the motion material filed by the plaintiff, nor the responding motion material filed by the defendants, indicates with precision when or how that request initially was made. However, the affidavit sworn by Mr Rousse on May 3, 2019, and filed by the plaintiff in support of its motion, indicates:

1. that Encon “was first made aware of the claim sometime in May, 2018”;

2. that Mr Rousse received an email from a claims analyst with Encon on July 16, 2018, confirming receipt of a “Loss Notice” supplied by the plaintiff’s insurance broker and requesting “additional information regarding the claim”; and

3. that further telephone and email communications between Mr Rousse and the claims analyst led to Encon also being provided with, (amongst other things), a copy of TVJ’s counterclaim pleading in the Wisconsin litigation.

ii. On July 27, 2018, Ontario counsel retained by the plaintiff wrote to Encon. In that letter, (the full text of which can be found at Tab 2F of the plaintiff’s motion record), the plaintiff’s Ontario counsel:

1. responded to Encon’s requests for further information;

2. advised Encon that the plaintiff had retained specified litigation counsel in Wisconsin to defend the counterclaim made against it by TVJ in the Wisconsin litigation;

3. advanced various arguments in support of the plaintiff’s view that it was entitled to coverage pursuant to its insurance policy with the defendants; and

4. provided additional notice that the plaintiff would be “submitting a claim … pursuant to its rights” under the insurance policy.

iii. On August 1, 2018, a senior claims leader and vice-president with Encon sent a responding letter to the plaintiff’s Ontario counsel. The letter, (the full text of which can be found at Tab 2G of the plaintiff’s motion record), indicated that there was no insurance coverage available to the plaintiff in the circumstances, and set out various arguments in support of that position.

iv. Into the fall of 2018, further communications were exchanged between the plaintiff’s Ontario counsel and Encon’s claims department, with the former supplying additional information and advancing further arguments in support of the plaintiff’s claim for insurance coverage and the latter continuing to deny that the circumstances gave rise to any defence or coverage obligations pursuant to the relevant policy.[^6]

m. On January 4, 2019, the plaintiff issued its original statement of claim herein. The full text of that original pleading can be found at Tab 2I of the plaintiff’s motion record.[^7] In addition to interest and costs, the plaintiff formally requested the following relief in this action:

i. a declaration that the defendants are required to defend the counterclaim brought against the plaintiff by TVJ in the Wisconsin litigation;

ii. a declaration that the defendants are required to indemnify the plaintiff for any damages recovered by TVJ in that counterclaim;

iii. damages for bad faith on the part of the defendants, for denying the plaintiff a defence to TVJ’s counterclaim and indemnity; and

iv. punitive and exemplary damages.

n. On January 15, 2019, the defendants delivered a notice of intent to defend, found at Tab 2J of the plaintiff’s motion record.

o. On February 13, 2019, the defendants served a Demand for Particulars, requesting particulars of the specific acts or course of conduct relied upon by the plaintiff in support of its allegations that the defendants exhibited bad faith and/or acted in a high-handed and indifferent manner. The plaintiff’s corresponding Response to Demand for Particulars was delivered on February 27, 2019. Both documents can be found at Tab 2K of the plaintiff’s motion record.

p. On March 13, 2019, the defendants delivered their statement of defence, which can be found at Tab 2L of the plaintiff’s motion record.

q. The plaintiff filed its motion record herein on or about May 23, 2019, in turn leading to the filing of the defendants’ responding motion record on July 2, 2019, and cross-examination of Mr Rousse on the initial affidavit he filed in support of the plaintiff’s motion; i.e., the affidavit he swore on or about May 3, 2019.[^8]

r. In the meantime, there have continued to be developments in the Wisconsin litigation, some of which were presented as part of the evidentiary material filed by the parties, and some of which essentially were agreed upon by the parties and presented accordingly during the course of written and oral argument. In that regard:

i. RCI and TVJ apparently each sought a measure of summary judgment relief in the Wisconsin litigation. In particular, it seems that RCI moved for summary judgment dismissing TVJ’s counterclaim in its entirety, (without moving for summary judgment on its own claims against TVJ), and that TVJ brought a cross-motion for a summary judgment declaring that RCI’s failure to return certain documents constituted a material breach of the Independent Contractor Agreement, thereby relieving TVJ from any obligation to make further commission payments to RCI. TVJ apparently refrained from seeking summary judgment declaring that it was relieved of its obligation to make further payments to RCI on the basis RCI had engaged in “willful misconduct”, taking the position that there were issues of fact as to whether RCI’s conduct rose to the level of “willful misconduct”.[^9]

ii. On May 8, 2019, one of RCI’s lawyers swore an affidavit, filed in the Wisconsin litigation for unspecified reasons, presenting the Wisconsin court with certain evidence, (e.g., various “deposition” transcripts, disclosed documents and lawyer correspondence), apparently relating to and/or generated by the dispute between RCI and TVJ.[^10] That material included:

1. a document entitled “Defendant [TVJ’s] Initial Disclosures Pursuant to Rule 26(a)(1)”, signed by TVJ’s Wisconsin counsel on January 12, 2018, indicating, inter alia, that TVJ had “not yet asserted an affirmative claim against [RCI] for which it seeks damages”, although TVJ did intend to seek its legal costs, and reserved the right to “supplement its response”;[^11] and

2. a letter dated May 9, 2018, sent by TVJ’s Wisconsin counsel to RCI’s Wisconsin counsel, indicating and confirming, inter alia, that TVJ’s “counterclaims (currently) do not seek damages, only declaratory relief”.[^12]

iii. On or about August 1, 2019, a “Decision and Order” was issued by District Judge Adelman in the Wisconsin litigation, addressing the summary judgment relief sought by RCI and TVJ. The full text of that decision can be found at Tab A of the “Supplementary Affidavit” brief filed by the plaintiff in relation to the motion before me; i.e., a brief containing a further affidavit sworn by Mr Rousse on or about September 5, 2019. However, for present purposes, I note the following:

1. In the opening paragraph of the decision, TVJ’s counterclaim is characterized and described as one “seeking a declaration that it owes no further payments to the plaintiffs”; i.e., to RCI and Mr Rousse.

2. Similarly, in the course of the presented chronology, the relief sought by TVJ via its counterclaim is described, (on page five of the decision), in the following manner: “TVJ filed a counterclaim against [RCI] seeking a declaration that TVJ has no obligation to make further payments under the independent contractor agreement”.

3. There is a further indication, (at pages five and six of the decision), that TVJ’s counterclaim alleged “two grounds for such a declaration”; i.e., that RCI engaged in “willful misconduct” prior to the termination, and that RCI failed to return certain documents to TVJ at the time of the termination.

4. It was found that TVJ did not terminate its agreement with RCI for “willful misconduct”, and that TVJ had waived its right to do so. Several reasons for that finding were provided, including the following:

a. The agreement between the parties did not provide for automatic termination if and when RCI engaged in any such willful misconduct, but simply granted TVJ an option to terminate the agreement on that basis in such circumstances. In fact, TVJ had never exercised that option.

b. TVJ’s termination letter made no reference to “willful misconduct”, or the corresponding provisions of the Independent Contractor Agreement that would relieve TVJ of any obligation to make further payments to RCI. To the contrary, the letter indicated and acknowledged that RCI was entitled to further commission payments during the two- year period following the effective date of termination, effectively indicating that it was terminating the agreement “for any reason other than Willful Misconduct”.

c. In further correspondence sent by TVJ to RCI’s lawyer shortly after the termination letter, TVJ had referred to wilful misconduct by Mr Rousse, (and therefore by RCI), but only as a reason for preferring to communicate through RCI’s lawyer instead of direct communication with Mr Rousse. The same correspondence reiterated TVJ’s intention to make further payments to RCI; a position inconsistent with TVJ relying on termination of the agreement for willful misconduct by RCI.

d. The RCI behaviour pled and relied upon by TVJ in support of its “willful misconduct” arguments, (i.e., emails sent by Mr Rousse in June and July of 2016 disparaging a customer and causing that customer to complain to TVJ and issue a Trespass Notice, and a request by RCI in January of 2017 for TVJ to sign a letter to the American Department of Homeland Security that was said to be misleading), predated TVJ’s termination letter in August of 2017. TVJ accordingly was aware of the material facts relating to the supposed “willful misconduct” of RCI at the time of the termination letter, but chose not to mention or rely upon them.

e. Following the termination letter, (e.g., in September of 2017), TVJ made payments to RCI, inconsistent with TVJ having terminated the agreement on the basis of “willful misconduct” by RCI.

f. The first time TVJ indicated a right to terminate the agreement for “Willful Misconduct” was the date of its counterclaim.

5. It was found that RCI had not committed, by any failure to return property immediately after the agreement’s termination, any “material breach” of the agreement sufficient to excuse TVJ from further performance under the agreement. Several reasons for that finding were provided as well, including the following:

a. Even if certain electronic documents disclosed in RCI’s productions qualified as “property, documents and materials” previously belonging to TVJ or sources from within TVJ, failure by RCI to return them immediately would not constitute a “material” breach of the parties’ agreement. The essential object of the agreement from TVJ’s perspective was to obtain RCI’s services and profit from its relationship with certain clients, and the essential object of the termination provision was to grant the parties an option of terminating their relationship. Recovery of TVJ’s property upon termination was a “peripheral” matter and obligation.

b. There was no evidence to support any suggestion that TVJ had suffered any specific harm, let alone non-compensable harm, from RCI’s failure to return TVJ’s property immediately. In particular, there was no evidence that RCI used the documents to compete against RCI, or even to explain how such documents might have helped RCI in that regard.

c. There was no evidence to suggest that RCI had retained documents in bad faith or engaged in sharp dealing.

6. The District Court judge accordingly made an order granting the summary judgment relief sought by RCI, dismissing TVJ’s counterclaims. At the same time, an order was made dismissing TVJ’s request for partial summary judgment; i.e., TVJ’s request for a declaration that it was relieved of any obligation to make further payments to RCI, based on RCI’s supposed “material breach” of the agreement in failing to return TVJ property immediately.

iv. During the course of the hearing before me on November 20, 2019, I was advised by counsel that TVJ has appealed the aforesaid decision of the District Judge, in relation to the summary judgment motions. In the circumstances:

1. It is not yet clear whether RCI will still be facing a counterclaim by TVJ in the Wisconsin litigation.

2. The questions of whether and to what extent the plaintiff may still require a defence in that regard, or require indemnity in relation to that counterclaim should it continue and result in TVJ being granted its requested relief, accordingly are not yet moot.

3. Moreover, even if TVJ’s appeal of the summary judgment ruling in the Wisconsin litigation fails and the dismissal of TVJ’s counterclaim remains in place, RCI has incurred what it says are substantial costs attributable to defence of that counterclaim;[^13] costs which it will still seek to recover from the defendants in this Ontario litigation, along with damages said to flow from the defendants’ alleged breach of their insurance obligations. The question of whether the defendants owed RCI a defence, in relation to TVJ’s counterclaim in the Wisconsin litigation, accordingly needs to be answered in any event.

[10] Again, I have provided that extended background and chronology of events as a general review of the information filed by the parties, and to outline the wider context in which I am being asked to address the particular issues raised by the plaintiff’s motion.

[11] As noted above, however, in my view much of that evidence is neither relevant nor admissible when it comes to formal determination of whether the relief sought by the parties should be granted or denied.

[12] To explain why that is so, I turn next to an outline and discussion of general principles applicable to such insurance coverage disputes, and the procedures used to determine them.

General principles

DISPUTES REGARDING AN INSURER’S DUTY TO DEFEND AND/OR INDEMNIFY

[13] The law regarding determinations of whether an insurance company has a duty to defend a policyholder who is a defendant in an underlying lawsuit, and/or provide indemnity in relation to successfully litigated claims against such a policyholder, is settled and clear.

[14] General principles in that regard include the following:

a. Questions about an insurer’s duty to provide indemnification for any damages an insured may be ordered to pay in underlying litigation are decided at the conclusion of that litigation; i.e., once the court dealing with the underlying litigation has determined what the “actual facts” are, and what claims against the insured have been substantiated. After trial, it may turn out that there is no liability on the insured, such that no duty of the insurer to provide indemnity is triggered.[^14]

b. However, an insurer’s duty to defend is broader than its duty to indemnify, and may arise even when the duty to indemnify does not. In particular, it is not necessary to prove that the obligation to indemnify will in fact arise in order to trigger the duty to defend. The mere possibility that a pleaded claim falling within the coverage provided by an insurer may succeed will suffice to trigger the duty to defend. Where the relevant pleading against the insured asserts claims which would be payable under the agreement to indemnify in the insurance contract, the insurer has a duty to defend. However, where it is clear from the pleading against the insured that a suit falls outside policy coverage, the duty to defend does not arise. The duty to defend should be confined to claims which arguably fall within the coverage provided by the policy.[^15]

c. Proceedings to determine whether an insurer has a duty to defend a policyholder who is a defendant in an underlying lawsuit therefore invariably are decided by reading the claim or claims asserted against the policyholder in the relevant pleading in the underlying action, (including documents referred to within that pleading), with the coverage provided by the insurance policy. If one or more of the claims asserted against the policyholder in the underlying action fall within the coverage provided, the insurer has a duty to defend the action on behalf of the insured.[^16]

d. Where the pleading advancing claims against a policyholder is not framed with sufficient precision to determine whether the claims asserted are covered by an insurance policy, an insurer’s duty to defend will be triggered where, on a reasonable reading of the pleading, a claim within the provided coverage can be inferred. Such an approach is congruent with the broader tenets underlying the construction of insurance contracts, namely the contra proferentum rule, and the principle that coverage provisions should be construed broadly while exclusion clauses should receive a narrow interpretation. Any doubt as to whether the pleading against the policyholder brings the incident within the coverage provided by the policy ought to be resolved in favour of the insured.[^17]

e. However, in determining whether there is a possibility that claims pleaded against the policyholder fall within provided liability coverage, courts must not engage in a fanciful reading of the pleading merely for the purpose of requiring the insurer to defend. It is only where there is a genuine ambiguity or doubt about whether the pleaded claims fall within the provided coverage that the duty to defend must be resolved in favour of the policyholder.[^18]

f. Moreover, the bare assertions advanced in a pleaded claim against the policyholder are not necessarily determinative. If that were the case, parties to an insurance contract would always be at the mercy of a third-party pleader. What really matters is the true nature of the claim pleaded against the policyholder. Courts accordingly have been encouraged to look behind the literal terms of the pleading against the policyholder to ascertain the “substance” and “true nature” of the claims being asserted, and whether the claimant’s factual allegations considered in their entirety could possibly support the claimant’s legal allegations.[^19]

g. Because determinations of whether or not an insurer has a duty to defend focus on whether claims pleaded against a policyholder may fall within provided coverage, and not on whether the pleaded claims are meritorious, courts making such determinations assume the verity of pleaded factual allegations, and generally are not permitted to go beyond pleaded allegations to consider extrinsic or “premature” evidence; i.e., evidence which, if considered, would require findings to be made before trial of the underlying litigation that might affect or compromise that underlying litigation.[^20]

h. In particular, beyond looking at the relevant pleading against the policyholder and the relevant insurance policy, courts making determinations of whether an insurer has a duty to defend may only consider documents “explicitly referred to” within the pleading, when that is necessary to help the court understand and determine the true nature and substance of the pleading. Referring to such documents does not require factual findings to be made that might impact the underlying litigation; it simply illuminates the true nature and substance of the pleading.[^21]

i. It must also be remembered that questions of whether an insurer has a duty to defend a policyholder in underlying litigation arise as a preliminary matter, and proceedings to determine whether or not an insurer has such an obligation are intended to be decided expeditiously. To that end, such a proceeding should not be delayed by expanding the parameters of evidence to be considered, (e.g., by reference to affidavits and additional exhibits, cross-examination on affidavits and resulting transcripts), thereby encouraging determination of the “duty to defend” issue to become a “trial within a trial”.[^22]

SUMMARY JUDGMENT – RULE 20

[15] As noted above, the procedural vehicle chosen by the plaintiff in this case, to have the court decide whether the defendants have a duty to defend the plaintiff in relation to the relevant counterclaim in the Wisconsin action and/or provide indemnity in that regard, essentially was a motion for partial summary judgment brought pursuant to Rule 20 of the Rules of Civil Procedure. In that regard:

a. Pursuant to Rule 20.01(1), a plaintiff may, after the defendant has delivered a statement of defence or served a notice of motion, move with supporting affidavit material or other evidence for summary judgment on all or part of the claim in a statement of claim.

b. Numerous additional “sub-rules” outline the manner in which the court must approach such a motion for summary judgment, and the powers the court has in that regard. They include the following:

i. Pursuant to Rule 20.02(1), an affidavit for use on a motion for summary judgment may be made on information and belief, if the source of the information and the fact of the belief are specified in the affidavit, as required by subrule 39.01(4). However, on the hearing of the motion, the court may, if appropriate, draw an adverse inference from the failure of a party to provide the evidence of any person having personal knowledge of contested facts.

ii. Pursuant to Rule 20.02(2), a defendant responding to a plaintiff’s motion for summary judgment may not rest solely on the allegations or denials in his or her pleadings, but “must set out, in affidavit material or other evidence, specific facts showing that there is a genuine issue requiring a trial”. This has been supplemented by repeated judicial admonitions emphasizing, in various ways, that a respondent to a such a motion is not permitted “to sit back and rely on the possibility that more favourable facts may develop at trial”, and is instead required to “lead trump or risk losing” and “put its best foot forward”, as “the court is entitled to assume that the record contains all the evidence the parties would present at trial”.[^23]

iii. Pursuant to Rule 20.04(2), the court is obliged to grant summary judgment if it satisfied “that there is no genuine issue requiring a trial with respect to a claim”.

iv. In making that determination, the court is to consider the evidence submitted by the parties, and pursuant to Rule 20.04(2.1), may weigh the evidence, evaluate the credibility of a deponent, and draw any reasonable inference from the evidence, “unless it is in the interest of justice for such powers to be exercise only at trial”. In the exercise of those powers, the court also has the ability, pursuant to Rule 20.04(2.2), to order presentation of oral evidence by one or more of the parties; i.e., to direct a “mini-trial”.

v. Where the only genuine issue is the amount of the plaintiff’s entitlement, the court has the ability, pursuant to Rule 20.04(3), to order a trial of that issue, or grant judgment with a reference to determine the amount. Similarly, pursuant to Rule 20.04(4), where the court is satisfied that the only genuine issue is a question of law, the court may determine the question and grant judgment accordingly.

vi. Where summary judgment is refused or granted only in part, the court nevertheless has additional powers, pursuant to Rules 20.05(1) and (2), to specify what material facts are not in dispute, define the issues to be tried, order that the action proceed to trial expeditiously, and make numerous further orders and directions that may be just in the circumstances.

[16] In Hyrniak v. Mauldin, supra, the Supreme Court of Canada encouraged the use of Ontario’s summary judgment rule to resolve cases in an expeditious manner provided that can achieve a fair and just adjudication.

[17] Speaking for the court, the comments of Justice Karakatsanis in that regard included the following, (at paragraphs 1, 2 and 27 of the Hyrniak decision):

Ensuring access to justice is the greatest challenge to the rule of law in Canada today. Trials have become increasingly expensive and protracted. Most Canadians cannot afford to sue when they are wronged or defend themselves when they are sued, and cannot afford to go to trial. …

Increasingly, there is recognition that a culture shift is required in order to create an environment promoting timely and affordable access to the civil justice system. This shift entails simplifying pre-trial procedures and moving the emphasis away from the conventional trial in favour of proportional procedures tailored to the needs of the particular case. The balance between procedure and access struck by our justice system must come to reflect the modern reality and recognize that new models of adjudication can be fair and just. …

There is growing support for alternative adjudication of disputes and a developing consensus that the traditional balance struck by extensive pre-trial processes and the conventional trial no longer reflects the modern reality and needs to be re-adjusted. A proper balance must recognize that a process can be fair and just, without the expense and delay of a trial, and that alternative models of adjudication are no less legitimate than the conventional trial.

[18] Consistent with that general approach and philosophy, Justice Karakatsanis indicated, at paragraph 22 of Bruno Appliance and Furniture, Inc. v. Hyrniak, 2014 SCC 7, [2014] 1 S.C.R. 87, (a companion action to Hyrniak v. Mauldin, supra), that summary judgment would be appropriate where a matter “can be resolved in a fair and just manner”, which will be the case when the process:

i. allows the judge to make the necessary findings of fact;

ii. allows the judge to apply the law to the facts; and

iii. is a proportionate, more expeditious and less expensive means to achieve a just result.

[19] Justice Karakatsanis went on to say, in the same paragraph, that if there appeared to be a genuine issue requiring a trial, based only on the record before a judge hearing a summary judgment motion, that judge must then ask if the need for a trial can be avoided by using the new powers provided under Rules 20.04(2.1) and (2.2) of the Rules of Civil Procedure. If so, those powers may then be used at the judge’s discretion, “provided that their use is not against the interest of justice”.

[20] The general law relating to summary judgment motions, brought pursuant to Rule 20 of the Rules of Civil Procedure, therefore is now clear and settled.

[21] Numerous decisions in the wake of Hryniak v. Mauldin, supra, also have confirmed that the court does not require a cross-motion for summary judgment when it can decide the issue that was the subject matter of another party’s motion for summary judgment.[^24] Reliance on such authorities no doubt may explain the decision of the responding defendants in this instance to ask that I dismiss the plaintiff’s motion and the plaintiff’s action, without having brought a formal cross-motion of their own.

DETERMINATIONS REGARDING AN INSURER’S DUTY TO DEFEND AND RULE 20

[22] In my view, even a cursory examination of the law relating to determination of an insurer’s duty to defend and the law relating to motions for summary judgment makes it clear that there are fundamental and arguably irreconcilable tensions between the two. For example:

a. the provisions of Rule 20.01(1) and Rule 20.01(3) restricting the availability of Rule 20 to the period after a defendant has delivered a statement of defence inhibits use of summary judgment motions as a readily available means of quickly addressing and resolving “duty to defend” issues as a preliminary matter;

b. Rule 20’s emphasis on moving and responding parties supplying the court with affidavit evidence, (preferably from those having personal knowledge of “contested facts”), runs counter to appellate authority restricting the ability of courts determining “duty to defend” issues to the relevant pleading, documents expressly referred to in that pleading, and the relevant policy of insurance;

c. Rule 20’s provisions permitting a court to weigh evidence, evaluate credibility and draw reasonable inferences from evidence, or to conduct a “mini-trial”, run counter to appellate directions that courts determining “duty to defend” issues are to proceed on the basis that pleaded factual allegations are true; and

d. the authorities requiring parties bringing or responding to a summary judgment to “lead trump or risk losing” are not consistent with appellate authorities effectively dictating that parties are not permitted to lead certain figurative cards in their litigation deck, (e.g., evidence pertaining to what might be “actual” or “true” facts as opposed to pleaded ones, or the likely outcome of underlying litigation), in a proceeding to determine “duty to defend” issues.

[23] Indeed, our Court of Appeal has emphasized expressly “that Rule 20 does not lend itself to deciding duty to defend issues”, for reasons that include the following:

a. the delay involved in bringing a motion for summary judgment, (which can be resorted to only after a defendant has delivered a statement of defence), necessarily defeats the objective of deciding duty to defend issues expeditiously as a preliminary issue;

b. further delay is possible if genuine issues arise which cannot properly be resolved by a motion judge on a Rule 20 motion;

c. a motion for summary judgment risks transforming a “duty to defend” application into a “duty to indemnify” application; e.g., by introducing extrinsic evidence pertaining to what the actual or “true facts” might turn out to be, in turn raising the spectre of a motion judge improperly considering and applying such evidence by essentially making findings of fact relative to the underlying claim or claims; and

d. more generally, the summary judgment procedure, by inviting if not requiring the filing of affidavit evidence, cross-examinations on affidavits and resulting transcripts, along with substantial casebooks and legislation, risks a “duty to defend” application being turned into “a trial within a trial”.[^25]

[24] Our Court of Appeal also has noted that the process generally and properly adopted in this province to decide a duty to defend issue is an application under Rule 14.05(3)(d) or (h) of the Rules of Civil Procedure; i.e., summary procedures whereby the court, applying the required restrictions on matters to be considered in determining “duty to defend” issues, may hear and determine applications for:

a. the determination of rights that depend on the interpretation of a contract or other instrument; or

b. in respect of any matter where it is unlikely that there will be any material facts in dispute requiring a trial.[^26]

[25] In my view, one of the most remarkable aspects of the proceeding before me is that the plaintiff expressly relied “front and centre” upon our Court of Appeal’s outline of “duty to defend” principles in Halifax Insurance Co. of Canada v. Innopex Ltd., supra, while apparently ignoring the Court of Appeal’s clear and reasoned admonition, within the same decision, that a Rule 20 motion for summary judgment is not the appropriate procedural vehicle for approaching and determining such “duty to defend” disputes.[^27]

[26] Through necessity or an abundance of caution, the defendants then responded by similarly using the procedures applicable to a Rule 20 summary judgment motion; e.g., filing responding affidavit evidence introducing documents going beyond the relevant counterclaim and insurance policy, cross-examining on the plaintiff’s affidavit material, and filing a transcript of that cross-examination. In fairness, however, it should be noted that the defendants did so while formally maintaining their primary contention that the court should not be considering such evidence, (or similarly extrinsic evidence tendered by the plaintiff), in determining whether the defendants had/have a duty to defend the counterclaim advanced against the plaintiff in the Wisconsin litigation.

[27] In any event, in approaching and resolving the “duty to defend” issues raised in this case, I do not think the parties’ selection and/or use an inappropriate Rule 20 summary judgment process for determining such issues compels or permits me to consider, in contravention of the appellate authorities and directions noted above, extrinsic or premature evidence going beyond:

a. the relevant counterclaim, found at Tab 2D of the plaintiff’s motion record;

b. documents expressly referred to in that counterclaim; and

c. the relevant policy of insurance issued by the defendants to the plaintiff, found at Tab 1A of the defendants’ responding motion record.

[28] To the contrary, in accordance with the appellate authorities noted above, I intend to consider only those more limited materials in determining whether the defendants had/have a duty to defend the counterclaim brought against the plaintiff in the Wisconsin litigation.

[29] In this case, there arguably might be some uncertainty as to what documents are “expressly referred to” in the relevant counterclaim. In that regard:

a. In my view, such documents certainly include the three documents which the pleading expressly mentions, incorporates by reference and attaches as lettered “exhibits”, namely:

i. the Independent Contractor Agreement between TVJ and RCI attached to the pleading as “Exhibit A”;

ii. the “Notice of Termination” letter sent by TVJ to RCI on August 21, 2017, attached to the pleading as “Exhibit B”; and

iii. the further correspondence sent by TVJ to RCI on August 31, 2017, attached to the pleading as “Exhibit C”.

b. While the counterclaim makes passing and broad references to other documents or possible documents, such as “contacts” allegedly made by Mr Rousse with TVJ customers, “customer complaints”, “communications”, “requests” and “all prior correspondence”, without providing specifications of author, recipient, date and/or manner of transmission, in my view such references are too vague to qualify as the sort of documents “expressly referred to” in a pleading that were contemplated by the appellate authorities addressing such “duty to defend” considerations.

c. Moreover, while the counterclaim refers to certain documents in a more specific and identifiable fashion, (e.g., a “Trespass Notice to Ron Rousse”, a “written employment agreement” between TVJ and Mr Rousse, and “correspondence outlining certain proposals and interpretations” sent by RCI’s counsel to TVJ on August 22, 2017, “one day after” TVJ transmitted its “termination notice” on August 21, 2017), I think it needs to be remembered that a court making “duty to defend” determinations has regard to documents referred to the pleading advancing claims against a policyholder only where that is “necessary” to illuminate the true nature and substance of the pleading. In this case, I do not think reference to documents such as a Trespass Notice, the written employment agreement between Mr Rousse and TVJ, or correspondence sent by RCI’s lawyers to TVJ communicating their interpretation of the Independent Contractor Agreement or other proposals to resolve the dispute between TVJ and RCI, is necessary or helpful to determining the true nature or substance of TVJ’s pleaded counterclaim.

d. Finally, while it perhaps goes without saying, I obviously have not ability to consider, in making requested “duty to defend” determinations, documents referred to in the counterclaim which neither party attempted to place in evidence.

[30] To address and resolve the “duty to defend” issues raised in this case, I therefore notionally have limited my consideration to the counterclaim pleading, the three documents attached to it as exhibits, and the relevant policy of insurance issued by the defendants to the plaintiff.

[31] To the extent the Rule 20 procedural vehicle chosen and employed by the parties requires me to apply the test specified in Rule 20.04(2)(a) in relation to the “duty to defend” issues raised by the plaintiff’s motion, (i.e., granting partial summary judgment declaring that the defendants had/have or did/do not have a “duty to defend” the counterclaim in the Wisconsin litigation only if I am satisfied that there is “no genuine issue requiring a trial in that regard), I think that threshold for granting such relief is inherently met having regard to the supervening mandated approach that must be taken in addressing and resolving such issues. In particular:

a. a trial to resolve factual issues relating to the “duty to defend” obviously is not required when I must proceed on the basis that facts pleaded in the counterclaim are true for the purpose of the mandated “duty to defend” analysis;

b. a trial to resolve the legal issue of whether or not the defendants had/have a duty to defend is not required when the authorities require the issue to be addressed and resolved as a preliminary issue, with a duty to defend being found if there is a possibility of the pleaded claim falling within the coverage provided; and.

c. in my view, the “duty to defend” issues raised by the parties “can be resolved in a fair and just manner”, since the law in this area effectively does not require me to make any findings of fact, (as the facts alleged in TVJ’s counterclaim in the Wisconsin litigation must be taken as true for the purpose of my analysis), I am in a position to apply the law to the facts I must assume to be true, and resolving the “duty to defend” issues via this motion is a proportionate, more expeditious and less expensive means to achieve a just result than having those issues proceed to determination at trial.

[32] To the extent determination of the “duty to defend” issues in this case should be approached as if the parties had employed the more usual and appropriate procedure of a Rule 14.05(3)(d) or (h) application, or a motion brought pursuant to Rule 21.01(1)(a) requesting a determination of law, (based on the restricted evidence capable of being considered in relation to “duty to defend” determinations I grant leave to admit), all of the limited documents to be considered on such an application or motion are before me, along with the relevant arguments of the parties in that regard.[^28]

[33] In short, I am satisfied that I am in a position to determine the “duty to defend” issues raised by the plaintiff’s motion via either approach.

ADMISSIBILITY OF CERTAIN AFFIDAVIT EVIDENCE

[34] For the reasons noted above, I effectively have found that the affidavit evidence tendered and relied upon by the parties, (except insofar as it introduces the counterclaim in the Wisconsin litigation being faced by the plaintiff, the three documents attached as exhibits to that pleading, and the relevant policy of insurance), is irrelevant and inadmissible in relation to determination of whether the defendants had/have a duty to defend the relevant counterclaim.

[35] However, for the sake of completeness, (insofar as general principles and admissibility of evidence in relation to the plaintiff’s motion are concerned), I note that the defendants have raised additional objections about portions of the affidavit material delivered and relied upon by the plaintiff.

[36] In particular, the defendants submit that portions of the affidavit and supplementary affidavit sworn by Mr Rousse on May 3, 2019, and on September 5, 2019, respectively, contain information that is not only irrelevant but argumentative and/or undermined by the refusal of Mr Rousse to provide supporting information properly requested by defence counsel during a Rule 39.02 cross-examination of Mr Rousse on September 5, 2019.

[37] Rule 4.06(2) the Rules of Civil Procedure provides that “an affidavit shall be confined to the statement of facts within the personal knowledge of the deponent or to other evidence that that deponent could give if testifying as a witness in court”. Rule 39.01(4) augments the scope of permissible affidavit evidence by providing that an affidavit for use in a motion “may contain statements of the deponent’s information and belief if the source of the information and the fact of belief are specified in the affidavit.”

[38] Clearly, neither rule permits an affiant to stray beyond the bounds of presenting facts, (known directly or indirectly through information and belief), to embark on legal argument. A witness would not be permitted to do that in the witness box, and counsel should not attempt to have an affiant do that in an affidavit.

[39] Our courts nevertheless have been called upon again and again to emphasize that affidavits should present evidence and not contain legal argument, and that legal argument belongs in a factum or brief and not an affidavit. Legal argument and opinions from an affiant not duly qualified as an expert accordingly are improper and superfluous, and portions of an affidavit containing such argument and opinions therefore should be struck out and/or not considered.[^29]

[40] I agree with the defendants that many paragraphs of the affidavits sworn by Mr Rousse improperly stray beyond presentation of facts and into legal argument.

[41] For example, paragraph 22 of Mr Rousse’s initial affidavit asserts the contentious proposition and legal conclusion he wants the court to accept, (i.e., “The Defendants have, at the very least, a duty to defend Roumann under the Policy”), before setting forth numerous considerations, in paragraphs 23-32, offered in support of that proposition and suggested conclusion.

[42] In doing so, Mr Rousse refers to certain paragraphs of the pleaded counterclaim, certain provisions of the relevant underlying insurance policy, and the suggested absence of reference to certain matters in each document, but he refers to such “facts”, (already in evidence), in a manner intertwined with disputed characterizations and inferences the court is being asked to accept. In my view, this is clearly argument, as demonstrated in comments such as the following:

a. “The allegations made within the counterclaim, at the very least, have a negligent component to them”;

b. “The alleged conduct … does not fall within the exclusions of Part III of the Policy”;

c. “The allegations of Willful Misconduct took place within the context of Roumann’s services towards T.V. John”;

d. “The reality is that the counterclaim is effectively compensatory in nature”;

e. “The offsetting claim is effectively a claim for compensatory damages equal to or greater than the amount owed under the agreement”;

f. “Even if the official notice given in July, 2018, is used as the date that Encon was first aware of the claims, they still would not have been prejudiced by the time of the notice”;

g. “The allegations made in the counterclaim fall squarely within the Policy, and at the very least , there is [a] possibility that a claim within the Policy will succeed within the pleadings as set out above”;

h. “The true nature of the allegations made within the counterclaim fall within the Policy coverage”;

i. “The true nature of the allegations may contain negligent conduct within the context of Roumann’s services towards T.V. John”; and

j. “This alleged behaviour of T.V. John should not be automatically considered ‘deliberate, dishonest, criminal or fraudulent’ as suggested by [the defendants], but could just as easily be considered negligent”.

[43] The supplementary affidavit sworn by Mr Rousse contains further argumentative content. For example, beyond setting forth Mr Rousse’s personal interpretation of District Judge Adelman’s decision and its possible significance to this litigation, (i.e., as opposed to letting the document speak for itself), Mr Rousse includes the following assertion: “I believe that the legal fees incurred by Roumann defending the T.V. John Counterclaim are properly covered by the errors and omissions insurance policy that is the subject of these proceedings, and should be paid by the Defendants”.

[44] Assertions by an affiant, such as the examples noted in the previous two paragraphs, are not facts. They are opinions, arguments and suggested inferences and legal conclusions. While capable of being properly included in the plaintiff’s factum and oral submissions made by plaintiff counsel, (as they were), they properly have no place in an affidavit.

[45] I accordingly would not have considered such assertions in any event, even if the affidavits sworn by Mr Rousse otherwise could have been considered in determining whether or not the defendants had/have a duty to defend the counterclaim the plaintiff is facing in the Wisconsin litigation.[^30]

[46] As for the content of paragraph 32 of the initial affidavit sworn by Mr Rousse, emphasizing that the plaintiff considers it “vitally important” for the court to accept its position, (i.e., that the defendants had/have an obligation to provide the plaintiff with a defence to the counterclaim that should be enforced by the court), because the plaintiff having to fund its own defence is putting a “massive strain” on its financial resources, in my view the relevant paragraph is not only argumentative but irrelevant for reasons beyond the court’s obligation to determine the existence of a duty to defend based only on the underlying pleading, documents referred to in that pleading, and the relevant insurance policy.

[47] In particular, the merits of the substantive dispute between the parties do not turn in the slightest on the financial position of the plaintiff. If consideration of the relevant claim, documents expressly referred to in that claim and the relevant insurance policy support a conclusion that the defendants had/have a duty to defend the counterclaim in the Wisconsin litigation, it would not matter in the slightest if the plaintiff had ample resources to fund the defence without financial assistance from the defendants. Conversely, if consideration of the relevant claim, documents expressly referred to in the claim and the relevant policy make it clear that the defendants had/have no duty to defend the counterclaim, it matters not, for the purposes of this litigation, that the plaintiff otherwise lacks the financial resources to fund that defence.

[48] While I think the refusal of Mr Rousse to supply information supporting the assertion of such financial strain may have provided a further reason for not considering his evidence in that regard, in my view the evidence was irrelevant and inadmissible in any event.

Analysis

[49] With all of the above general principles, procedural dynamics and evidentiary restrictions in mind, I turn to analysis of the particular substantive “duty to defend” issues raised by the defendant’s motion, and whether or not it would be appropriate to grant the relief requested by the plaintiff or the relief requested by the defendants.

WITHDRAWN AND/OR DEFERRED ISSUES

[50] In doing so, I nevertheless start by noting that certain arguments and positions raised in the material filed by the parties, in relation to the plaintiff’s motion, effectively were “taken off the table” during the course of the hearing before me.

[51] In other words, the parties essentially agreed that, notwithstanding indications to the contrary in the material each side had filed, I was not being called upon to address or decide certain issues for the time being.

[52] For example, the material filed by each side suggested that I was being asked to decide whether or not the plaintiff’s motion and action should be dismissed on the basis, (suggested by the defendants), that the plaintiff had provided with defendants with late notice of the counterclaim the plaintiff was facing in the Wisconsin litigation. In that regard:

a. Part V of the relevant policy of insurance, setting forth various “Conditions” of provided coverage, includes paragraph 9 thereof, which reads in part as follows: “Notice of Claim: This is a claims-made and reported policy. The INSURED shall, as soon as practicable after being made award of a CLAIM for which coverage would be afforded by this policy, provide written notice with the full particulars thereof to the INSURANCE MANAGER, ENCON Group Inc., at the address indicated in the Declarations. … Any late notice or absence of notice is cause for forfeiture of the rights of the INSURED, if the INSURERS sustain injury therefrom.”

b. In paragraphs 19 and 20 of their statement of defence, the defendants allege that the plaintiff breached that “Notice of Claim” condition, insofar as RCI must have been aware of the counterclaim before February 21, 2018, (i.e., the date on which RCI delivered a formal Answer to the counterclaim in the Wisconsin litigation), but waited a further five months before making its initial report of the counterclaim to Encon on July 16, 2018. The defendants further allege that they suffered prejudice as a result of that late notice.

c. In its motion material, plaintiff counsel anticipated and attempted to address such arguments pre-emptively; e.g., by arguing that any late notice would constitute “imperfect” compliance rather than non-compliance, that there was no prejudice to the defendant insurers having regard to the “off-coverage” position they adopted in any event, and that the court should grant relief from forfeiture to the extent necessary.[^31] Plaintiff counsel also included, in the plaintiff’s Book of Authorities, decisions offered in support of such arguments.

d. In its responding motion material, defence counsel once again emphasized that the plaintiff received notice of the counterclaim it was facing in the Wisconsin litigation when it was served with that counterclaim, but failed to put Encon on notice until five months later, all of which was said to constitute “late notice” and a violation of paragraph/section 9 of the relevant insurance policy.[^32]

[53] However, I was advised during the course of oral submissions that counsel had agreed that I was not being asked to address or decided such “late notice” issues after all, and counsel accordingly refrained from making any submissions in that regard.

[54] The plaintiff’s notice of motion also included, as part of sub-paragraph (b) of the prayer for relief, a request for a declaration that the defendants “are required to indemnify the plaintiff for … damages recovered by T.V. John in the [Wisconsin] counterclaim”. However:

a. In his factum, book of authorities and submissions, plaintiff counsel highlighted authority emphasizing that, while questions about an insurer’s duty to defend are determined as a preliminary matter, questions about its duty to provide indemnification for any damages recovered in the underlying litigation are decided at the conclusion of that litigation.[^33]

b. In her written and oral submissions, counsel for the defendants argued, inter alia, that no duty to defend was triggered by the counterclaim advanced in the Wisconsin litigation, as consideration of the relevant counterclaim pleading and relevant insurance policy alone made it sufficiently clear that the counterclaim presented no claim capable of falling within the coverage extended by the policy. She too nevertheless emphasized, as a preliminary point in the course of her oral submissions, that if the defendants had a confirmed duty to defend, (which might carry an obligation to reimburse the insured for expenses incurred in defending itself), questions of whether or not the defendants also had any obligation to provide indemnity for any damages awarded in relation to the counterclaim were to be decided at the end of the Wisconsin litigation.

c. Having regard to the interim appellate proceedings in the Wisconsin litigation, it was not yet known if the counterclaim, dismissed at first instance, might survive. In other words, litigation of the relevant counterclaim in the underlying litigation was not yet concluded.

[55] In the result, although I was asked to make a determination about the mere possibility of coverage under the policy, in relation to the pleaded counterclaim, the parties essentially agreed that I was not being asked to make any final determination of the defendants’ obligation to provide indemnification in relation to any damages awarded by the counterclaim, despite the formal wording of the plaintiff’s notice of motion.

SPECIFIC “DUTY TO DEFEND” ISSUES

[56] Of course, the overarching “duty to defend” issue raised by the plaintiff’s motion is whether or not the defendants had/have such a duty, in relation to the counterclaim advanced in the Wisconsin litigation.

[57] However, in their written material and oral submissions, the parties essentially focused on three specific incidental issues in that regard. In particular:

a. The defendants assert and the plaintiff denies that the counterclaim in the Wisconsin litigation is not a claim in respect of which the relevant policy can possibly provide coverage because it advances no claim for “compensatory damages”.

b. The defendants assert and the plaintiff denies that the counterclaim in the Wisconsin litigation is not a “claim” in respect of which the relevant policy can possibly provide coverage because the claims as pleaded do not result from “an error, omission or negligent act in the rendering of insured services” by the plaintiff and others falling within the policy’s definition of “Insured”, including Mr Rousse.

c. The defendants assert and the plaintiff denies that the counterclaim in the Wisconsin litigation is not a claim in respect of which the relevant policy can possibly provide coverage because the claims as pleaded inevitably will be excluded as “claims resulting from deliberate, dishonest, criminal or fraudulent acts committed by the insured”.

[58] I will address those issues in turn, after outlining certain provisions of the relevant policy of insurance.

PROVISIONS OF THE RELEVANT INSURANCE POLICY

[59] As noted above, the parties now agree that the relevant policy of insurance is Policy Number SRD489368, which can be found in its entirety at Tab 1A of the defendants’ responding motion record.

[60] The entire policy is 14 pages long, and is made up of the following components:

a. two “face” or “declarations” pages tailoring the policy to the specific parties involved;

b. seven pages of standard policy provisions, including agreed “Definitions” in Part I, “Insuring Agreements” in Part II, “Exclusions” in Part III, and “Conditions” in Part IV; and

c. five additional pages, each containing a separate “Endorsement” modifying certain provisions and coverage of the policy that might otherwise apply.

[61] I have reviewed the policy in its entirety, and nothing herein should suggest otherwise.

[62] For present purposes, however, I think it sufficient to note the following:

a. As noted above, the named insured under the policy is the plaintiff to this proceeding, (i.e., “Roumann Consulting Inc.”.), and the named insurers are the same as those identified as defendants in the now amended statement of claim. Again, the defendant insurers bound themselves severally but not jointly to provide the insured with a specified percentage of any loss covered under the policy’s wording.

b. The policy identifies itself as a “claims made and reported” policy; i.e., indicating that the coverage extended by the policy would be provided to claims made and reported during the specified policy period running from May 23, 2017, to May 23, 2018.

c. In Part II, paragraph 1 of the policy, (under the subheading “General Agreements”), the general insuring obligation of the defendants is described in terms reading, in part, as follows: “In consideration of the premium indicated in the Declarations, and in reliance upon the attachments to and the statements made in the application form, and subject to the terms, conditions and limitations contained in this policy, the INSURERS agree to pay, on behalf of the INSURED, all sums which the INSURED shall become legally obligated to pay as DAMAGES because of a CLAIM, first made and reported to the INSURANCE MANAGER during the policy period, resulting from an error, omission or negligent act in the rendering of INSURED SERVICES by the INSURED … during the policy period”.

d. Each of the capitalized terms in that “General Agreement” description of the coverage extended to the insured is assigned a “special meaning” by the “Definitions” found in Part I of the policy. In particular:

i. Pursuant to paragraph 9 of those “Definitions”, the term “INSURERS” is defined, in part, as meaning “The insurance companies whose names appear in the Declarations”.

ii. Pursuant to paragraph 7 of those “Definitions”, the term “INSURED” is defined, in part, as meaning: “The Named INSURED mentioned in the Declarations, as well as persons described hereafter, but solely for CLAIMS resulting from an error, omission or negligent act in the rendering of INSURED SERVICES, while acting within the scope of their duties for the Named INSURED: (a) any present or former partner, director, officer or employee of the Named INSURED; (b) any independent contractor retained by the Named INSURED; [and] (c) employees of others on loan to and while working for and under the guidance of the Named Insured.”

iii. Pursuant to paragraph 3 of those Definitions, the term “DAMAGES” is defined as “Compensatory DAMAGES, including all pre-judgment and post-judgment interest”.

iv. Pursuant to paragraph 2 of those Definitions, the term “CLAIM” is defined as “Any written or oral allegations received by the INSURED resulting from an error, omission or negligent act in the rendering of INSURED SERVICES”.

v. Pursuant to paragraph 6 of those Definitions, the term “INSURANCE MANAGER” is defined in part as “The insurance administrator under this policy”, with the “DECLARATIONS” providing confirmation that the “INSURANCE MANAGER” was Encon Group Inc.

vi. Pursuant to paragraph 8 of those Definitions, the term “INSURED SERVICES” is defined as “Those services as defined in Endorsement No. 1”. The first of the five single page endorsements attached to and forming part of the policy is labeled “Endorsement No. 1”, and confirms an agreement whereby paragraph 8 of the Definitions in Part I of the policy is amended to define “INSURED SERVICES” as follows: “Those services rendered by the INSURED, while acting within the scope of the INSURED’S duties as a consultant and customary to that practice.”

e. In Part II, sub-paragraph 2(a) of the policy, (under the subheading “Defence and Other Payments”), the general duty to defend of the insurers is described in terms reading, in part, (together with the general preamble to Part II, paragraph 2), as follows: “With respect to the insurance afforded by the General Agreements of Part II of this policy, the INSURERS further agree … that they shall have the right and duty to defend the INSURED in any suit first brought against the INSURED before a court of civil jurisdiction in Canada or the United States of America.”

f. Part III of the policy, dealing with “Exclusions”, begins with a short preamble indicating that the coverage afforded under the policy does not apply to circumstances covered by an enumerated list of exclusions. In that regard, exclusion number 6 deals with “Deliberate, Dishonest or Fraudulent Acts”, and together with the general preamble to Part III, reads as follows: “The coverage afforded under this policy does not apply to … CLAIMS resulting from deliberate, dishonest, criminal or fraudulent acts committed by the INSURED, unless it was done in order to protect persons or property, but this exclusion does not apply to any INSURED who is neither the author of nor an accomplice to the act.”

[63] Again, the entire policy of insurance has many more provisions. However, I think it fair to say that the provisions outlined above contain the policy wording at the heart of the current dispute between the parties, reflected in the specific issues upon which the parties have focused.

COUNTERCLAIM ADVANCING NO CLAIM FOR COMPENSATORY DAMAGES

[64] As noted above, the first central issue between the parties centres on whether or not the relevant counterclaim in the Wisconsin litigation is a “CLAIM” in respect of which the insurance policy may possibly provide coverage; a dispute which is focused in turn on whether the counterclaim advances a claim for “compensatory damages”.

[65] If TVJ’s counterclaim in the Wisconsin litigation does not advance a claim for “compensatory damages”, in my view a fair and sensible reading of the interacting provisions of the relevant policy of insurance leads inexorably to a conclusion that the defendant insurers had and have no obligation to defend that counterclaim. In particular:

a. pursuant to Part II, sub-paragraph 2(a) of the policy, the defendant insurers only have a duty to defend the plaintiff in any suit “with respect to the insurance afforded by the General Agreements of Part II”;

b. pursuant to Part II, sub-paragraph 1 of the policy, the coverage extended by the policy is limited to the defendants’ obligation to pay, “on behalf of the INSURED, all sums which the INSURED shall become legally obligated to pay as DAMAGES”;

c. pursuant to Part I, paragraph 3 of the policy, “DAMAGES” must be “Compensatory Damages”;

d. if the counterclaim by TVJ in the Wisconsin litigation includes no request for an award of “compensatory damages”:

i. the counterclaim cannot possibly result in the plaintiff becoming legally obligated to pay “damages” as defined by the policy;

ii. the counterclaim therefore cannot possibly result in any outcome in respect of which the defendant insurers have agreed to pay sums on behalf of the plaintiff;

iii. the counterclaim accordingly does not raise any possibility of the defendant insurers having to provide coverage pursuant to “the insurance afforded by the General Agreements of Part II of this policy”; and

iv. the defendant insurers accordingly had/have no duty to defend TVJ’s counterclaim in the Wisconsin litigation.

[66] Plaintiff counsel did not suggest otherwise.

[67] In particular, there appeared to be no dispute that, pursuant to the provisions of the relevant policy of insurance, the defendant insurers had/have a duty to defend TVJ’s counterclaim against RCI if and only if the counterclaim seeks compensatory damages.

[68] There nevertheless is a fundamental dispute as to whether TVJ’s claim seeks compensatory damages. The defendant insurers say that it does not. The plaintiff says that it does.

[69] I independently agree with the defendant insurers that it does not.

[70] In Corporation of the City of Peterborough v. General Accident Assurance Company, [1998] O.J. No. 1506 (C.A.), our Court of Appeal had occasion to consider the meaning of “compensatory damages” in the context of interpreting an errors and omissions policy of insurance. In particular:

a. The insurer in that case had issued a policy of insurance requiring it to pay, on behalf of the insured city, any “compensatory damages” the insured became obligated to pay by reason of liability imposed upon the insured by a court of civil law because of a wrongful act on the part of the insured.

b. A city solicitor erred by authorizing the release of a cheque to a general contractor retained by the city, despite three subcontractors having given the city written notice of their claims for liens. As a result of the mistake, the subcontractors brought civil claims against the city, which its insurer refused to defend. After being found liable in those civil claims, the city also was obliged to pay the lien claims of the subcontractors; payment in respect of which the city’s insurer refused indemnification.

c. The insurer based its refusal to defend and refusal to provide indemnification, in part, on its view that claims by subcontractors to have the city pay their lien claims did not constitute claims for “compensatory damages”, and accordingly were not claims in respect of which any coverage was provided by the relevant policy of insurance.

d. Our Court of Appeal found that the monetary sums the insured city became obligated to pay were compensatory in nature. In particular, they were sums providing the subcontractors with the sums they otherwise would have been paid by the general contractor, but were not paid owing to the negligence of the city’s solicitor.[^34]

e. As for whether the claims of the subcontractors were claims for “compensatory damages”, (i.e., whether the sums the insured city was obliged to pay as a result of those claims constituted an obligation to pay “compensatory damages”), our Court of Appeal noted that the policy under consideration was an errors and omissions policy, intended generally to protect the city from “the financial consequences” of a wrongful act for which the city was responsible. The term “compensatory damages” had to be interpreted in that light, with the term “damages”, in an insurance policy context, meaning “sums payable by way of compensation, whether at law, or under statute”.[^35]

f. The obligation imposed on the insured city, as a result of the subcontractor claims, was an obligation to pay “compensatory damages”; i.e., an obligation to pay monetary sums to the subcontractors that were compensatory in nature.[^36]

g. Having found that the subcontractor claims had made the insured city liable to pay “compensatory damages”, (bringing the situation within the coverage provided by the insurance policy subject to the possible application of exclusion clauses), and that none of the exclusion clauses relied upon by the insurer applied in the circumstances, the Court of Appeal dismissed the insurer’s appeal; i.e., upholding the decision of the judge at first instance, finding that the insurer had a duty to defend the subcontractor claims against the city as well as a duty to indemnify the city for its resulting monetary obligations to the subcontractors.

[71] I see no basis for taking a different approach to the interpretation of what was contemplated by the term “compensatory damages” in this case. In particular:

a. The relevant policy of insurance in this case is expressly identified at the outset of its first Declarations page as a policy providing “Errors and Omissions Insurance”.

b. The wording of the coverage extended by the “General Agreements” of the “Insuring Agreements”, together with the definition of “Insured” in Part I of the policy and the modified definition of “Insured Services” in “Endorsement No. 1”, makes it clear that the relevant policy was intended generally to protect the plaintiff from the financial consequences “resulting from an error, omission or negligent act” in the plaintiff’s rendering of services with the scope of its duties as a consultant, and customary to that practice.

c. The term “compensatory damages” accordingly has to be interpreted in that light, with the term “damages”, in this insurance policy context, meaning “sums payable by way of compensation, whether at law, or under statute”.

[72] In my view, an examination of TVJ’s counterclaim in the Wisconsin litigation makes it clear that TVJ asserts no claim for “sums payable by way of compensation, whether at law, or under statute”. In that regard:

a. It is true that the first paragraph of the “Introduction” to the counterclaim includes an indication that TVJ would be asserting its counterclaims against RCI “to pursue redress for damage caused by Roumann’s conduct and to protect T.V. John from Roumann’s continued attempts to access T.V. John’s proprietary project and financial information beyond that which Roumann has already impermissibly retained”.[^37]

b. Moreover, the pleaded comments TVJ offered in support of its assertion that the Wisconsin court had jurisdiction to entertain the counterclaim include an indication that “T.V. John’s injuries were suffered in Wisconsin”.[^38]

c. I also note that the allegations pleaded by TVJ as “Factual Background” include an assertion that it sustained “loss of business” as a result of RCI, through its owner and chief operating officer Mr Rousse, engaging in “belligerent, disrespectful and incendiary contacts with T.V. John’s customers”.[^39]

d. However, in my view, a review of the counterclaim in its entirety makes it quite clear that the pleading contains absolutely no formal claim for compensatory damages; i.e., no request that the Wisconsin court grant relief making RCI “legally obligated to pay” TVJ sums as financial compensation for any damage or loss TVJ may have sustained as a result of RCI’s actions.

e. Without limiting the generality of the foregoing, when one looks to the formal prayer for relief found in the final substantive paragraph of TVJ’s counterclaim, (i.e., where the proverbial “rubber meets the road” in terms of what TVJ is and is not asking the Wisconsin court to do in terms of granting formal relief and legally enforceable orders vis-à-vis RCI), it clearly contains no request whatsoever for any order compelling RCI to pay TVJ monetary sums of any kind for any reason. As noted above, the only relief TVJ “respectfully requests” from the Wisconsin court, in relation to its counterclaim, is the following:

i. “Judgment in T.V. John & Son, Inc.’s favour on all claims plead against it”;

ii. “Declaratory Judgment finding that Roumann Consulting Inc. materially breached the Independent Contractor Agreement”;

iii. “Declaratory Judgment finding that Roumann Consulting Inc. engaged in willful misconduct under the Independent Contractor Agreement”; and

iv. “Any other and further relief that the Court deems appropriate and just”.

f. The first type of relief formally requested by TVJ is entirely “defensive” rather than “offensive”. It essentially asks the Wisconsin court to dismiss the claims RCI has brought “against” TVJ in the Wisconsin proceeding. It does not ask the Wisconsin court to grant judgment in TVJ’s favour in relation to any claims brought “by” TVJ against RCI, let alone any claims by TVJ for damages.

g. The second type of relief formally requested by TVJ also appears to be “defensive” rather than “offensive”, insofar as paragraph 4 of the counterclaim effectively includes an indication that the requested declaration of “material breach” of the Independent Contractor Agreement by RCI is being sought by TVJ in support of TVJ’s position that it was/is entitled “to suspend performance under the contract”; i.e., bringing an end to TVJ’s further obligations to RCI that otherwise may have existed following termination of the agreement. A court declaration of RCI having “materially breached” the Independent Contractor agreement arguably might simultaneously lay the basis for a claim that RCI also should pay TVJ damages to address the material breach. However, for present purposes, the important point is that the formal request for relief actually made by TVJ in its counterclaim stops short of asking the Wisconsin court to make an order legally obliging RCI to pay any such damages.

h. Read together with the provisions of the Independent Contractor Agreement, (incorporated into TVJ’s counterclaim by reference), I think the third type of relief formally requested by TVJ is also “defensive” rather than “offensive”. In particular, a formal declaration by the Wisconsin court that RCI “engaged in willful misconduct under the Independent Contractor Agreement” clearly would trigger the provisions of paragraph 4.1(e) of that agreement, thereby relieving TVJ of any obligation to make any further payments it otherwise was required to make under Article VI of the agreement. In any event, the additional declaration requested also stops short of asking the Wisconsin court to make any order obliging RCI to pay any damages in relation to such “willful misconduct”.

i. As for the generic fourth and final type of relief requested by TVJ in the counterclaim’s prayer for relief, (i.e., “Any other and further relief that the Court deems appropriate and just”), it is similar to the various residual “catch all” requests for relief routinely included in the prayers for relief found in almost every notice of motion, notice of application, statement of claim, counterclaim, crossclaim and third party claim filed by litigants in this province. In my view, while such generic requests for additional unspecified relief may serve a limited purpose, (e.g., in terms of preserving some measure of flexibility allowing courts and parties to avoid Draconian enforcement of strict rules of pleading), they realistically cannot be used to expand the scope of pleaded claims having a “mere possibility” of falling within provided insurance coverage for the purpose of “duty to defend” determinations. In particular, the potential scope of a request for “any other and further relief that the Court deems just and appropriate”, or similar requests, is so indeterminate and wide-ranging that one could never rule out, in advance, the possibility of it eventually including a form of relief not specifically pleaded that nevertheless arguably falls within the scope of coverage provided by an insurance policy. Literal application of the principles governing “duty to defend” determinations effectively would result in insurers always being required to defend claims against policyholders, so long as the pleaded claim against the policyholder included a generic request for “any other and further relief that the Court deems just and appropriate”, or a similar generic and non-specific request for relief. As a matter of practice and policy, that simply cannot be the law.

[73] In my view, TVJ’s counterclaim accordingly advances no claim for compensatory damages within the meaning of the relevant policy of insurance.

[74] In this case, plaintiff counsel repeatedly attempted to characterize TVJ’s counterclaim in the Wisconsin litigation as a claim for “set-off”, thereby bringing it within the concept of a claim for “compensatory damages”.

[75] In that regard, I certainly agree that the term “damages” may have a different meaning depending on the context in which it appears,[^40] and that a counterclaim raising a set-off defence may involve and/or constitute a claim for compensatory damages. Indeed, that was the conclusion in Myers v. Simcoe & Erie General Insurance Co., 1994 CanLII 7266 (ON SC), [1994] O.J. No. 1032 (S.C.J.), (1994), reversed in part (2004), 1994 CanLII 423 (ON CA), 115 D.L.R. (4^th) 607 (Ont.C.A.). In particular:

a. The case involved plaintiff architects who sued former clients for unpaid fees and disbursements.

b. The defendant clients brought a counterclaim against the plaintiff architects seeking payment of monetary damages for alleged professional negligence, in respect of which the defendant clients also claimed entitlement to a defence of equitable set-off in relation to the plaintiff’s claim for fees and disbursements.

c. The plaintiff architects had a policy of liability insurance, whereby their insurer had committed to “pay all sums [the architects were] required to pay as damages” as a result of a breach in the rendering or failure to render professional services.

d. The insurer refused to defend the counterclaim, arguing that a claim for setoff was not a claim covered by the policy. The architects moved for a declaration that the insurer was bound to defend the counterclaim.

e. The judge at first instance held that the insurer was bound to defend the counterclaim, noting that, although a claim of set-off was commonly referred to as a defence, it nevertheless also involved a claim for damages, and therefore was covered by the policy.

f. Our Court of Appeal agreed, noting the following at paragraph 5 of its decision: “Although a set-off is commonly referred to as a defence, it nevertheless involves a claim by the defendant who asserts set-off. At trial, the trial judge in this case would be required to determine whether the allegations of professional negligence on the part of the respondents had been proven and then to assess the damages resulting from such negligence. Those damages, when assessed would, in our view, represent damages which the respondents would be required to pay or assume in the form of diminution of their claim for fees and disbursements.”

[76] In my view, however, the counterclaim advanced by TVJ in the Wisconsin does not advance a defence or claim of set-off on any reasonable reading of the pleading, despite RCI’s repeated attempts to characterize TVJ’s counterclaim in that manner.

[77] Indeed, I think accepting such a characterization would require the court to engage in “a fanciful reading of the pleading merely for the purpose of requiring the insurer to defend”; i.e., the practice condemned by the Supreme Court of Canada in its Monenco decision, when quoting the relevant passage from Hilliker’s insurance text with approval.[^41]

[78] As reflected in the Court of Appeal’s remarks in Myers v. Simcoe & Erie General Insurance Co., supra, a defence of “set-off” involves a situation where the defendant claims the existence of an obligation owed by the plaintiff to the defendant, which the defendant asks the court to accept, quantify and set-off against any substantiated obligation owed by the defendant to the plaintiff.

[79] Application of “legal set-off” requires the two obligations to be liquidated and mutual. Application of “equitable set-off” does not require the two obligations to be mutual or liquidated, but they must be so clearly connected or closely “bound up” with each other, (e.g., arising from the same transaction or relationship), that it would be manifestly unjust to allow the plaintiff to enforce payment of the defendant’s obligation without taking into consideration the possible obligation of the plaintiff to pay a claimed sum to the defendant.[^42]

[80] However, as I read TVJ’s counterclaim in the Wisconsin litigation, there is no request for the court to find the existence of any obligation owed by RCI to TVJ that should be set-off against any obligation TVJ might owe to RCI pursuant to RCI’s claim. The relief formally sought in the pleaded counterclaim instead goes no further than seeking relief simply confirming, in various ways, that TVJ owes no obligation to RCI.

[81] Without limiting the generality of the foregoing, I note again that TVJ’s pleaded counterclaim does not ask the court to award, assess and set-off, (against any damages TVJ may have to pay to RCI as a result of TVJ’s claim), any liquidated or unliquidated damages allegedly owed to TVJ by RCI.

[82] RCI nevertheless seeks to have such a request read into TVJ’s counterclaim, along with an inexplicable and commercially non-sensical inference that TVJ also intended to “cap” its counterclaim for monetary damages from RCI at the precise amount of whatever damages TVJ might owe to RCI pursuant to RCI’s claim.

[83] I see no basis for forcing such a strained interpretation on TVJ’s pleaded counterclaim.

[84] Again, in my view it is not a reasonable reading of the pleaded counterclaim, but a “fanciful” one which therefore must be rejected. The true nature and substance of TVJ’s counterclaim does not advance a claim for compensatory damages in the sense required.

[85] As the pleaded counterclaim in the Wisconsin litigation asserts no claim for sums which RCI may become legally obligated to pay as compensatory damages, it presents no claim in respect of which the defendant insurers possibly committed to providing RCI with indemnity, pursuant to the relevant insuring agreement. The defendant insurers accordingly had/have no duty to defend TVJ’s counterclaim in the Wisconsin litigation.

[86] While those reasons are sufficient to decide the plaintiff’s motion, I will address the additional “duty to defend” issues raised by the parties, (albeit formally in obiter and more briefly), in case my general views in that regard are required elsewhere.

COUNTERCLAIM ADVANCING NO CLAIM RESULTING FROM AN ERROR, OMISSION OR NEGLIGENT ACT IN THE RENDERING OF INSURED SERVICES

[87] As noted above, the second central issue between the parties focused on whether or not TVJ’s counterclaim in the Wisconsin litigation is a claim “resulting from an error, omission or negligent act in the rendering of insured services” by the plaintiff and others falling within the policy’s definition of “Insured”, including Mr Rousse.

[88] In that regard, the argument advanced by the defendant insurers essentially proceeds along the following lines:

a. pursuant to Part II, sub-paragraph 2(a) of the policy, the defendant insurers only have a duty to defend the plaintiff in any suit “with respect to the insurance afforded by the General Agreements of Part II”;

b. pursuant to Part II, sub-paragraph 1 of the policy, the coverage extended by the policy is limited to the defendants’ obligation to pay, “on behalf of the INSURED, all sums which the INSURED shall become legally obligated to pay as DAMAGES because of a CLAIM”;

c. as emphasized in the definition found in paragraph 3 of Part I of the policy, a “claim” falling within the provided coverage must involve “written or oral allegations received by the INSURED resulting from an error, omission or negligent act in the rendering of INSURED SERVICES”;

d. as similarly emphasized in the definition found in paragraph 7 of Part I of the policy, an “INSURED” includes the Named Insured mentioned in the Declarations, as well as other persons identified by description within the definition of the term, “solely for CLAIMS resulting from an error, omission or negligent act in the rendering of INSURED SERVICES”;

e. as noted above, the definition of “INSURED SERVICES in paragraph 8 of Part I of the policy is modified by “Endorsement No. 1” of the policy to mean “Those services rendered by the INSURED, while acting within the scope of the INSURED’s duties as a consultant and customary to that practice”;

f. TVJ’s counterclaim in the Wisconsin litigation includes and is based on allegations:

i. that RCI “requested that T.V. John aver to the United States Department of Homeland Security that T.V. John did not have a written contract with Roumann, notwithstanding the fact that Roumann did in fact have an Independent Contractor Agreement”;[^43]

ii. that RCI, after the Independent Contractor Agreement was terminated, “refused, without explanation, to return any of T.V. John’s Confidential Information and other property”;[^44] and

iii. that RCI “began contacting T.V. John customers, threatening those customers with legal action without basis”, after the Independent Contractor Agreement had been terminated.[^45]

g. such allegations do not result from “an error, omission or negligent act” on the part of RCI and/or those working for RCI, but from intentional acts on the part of RCI and/or those working for RCI;

h. such acts also are unrelated to RCI’s duties as a consultant in the construction industry, and are not customary to that practice;

i. the allegations in TVJ’s counterclaim accordingly do not constitute a “claim” within the meaning of the policy; and

j. the defendant insurers accordingly had/have no duty to defend TVJ’s counterclaim in the Wisconsin litigation.

[89] Even if the particular counterclaim allegations of RCI conduct identified and relied upon by the defendant insurers are properly characterized as intentional acts, (and therefore not “errors, omissions or negligent acts”), and as acts falling outside the services rendered by RCI while acting within the scope of its duties as a consultant and customary to that practice”, in my view they clearly are not the only allegations of RCI conduct in TVJ’s crossclaim upon which the counterclaim is said to be based. For example:

a. Paragraph 2 of TVJ’s counterclaim includes allegations that RCI, even before TVJ’s termination of the Independent Contractor Agreement, “engaged in aggressive, unprofessional conduct resulting in damaged customer relationships, project inefficiencies, and lost business opportunities”.[^46]

b. In my view, it is not clear that any and all acts underlying that alleged conduct by RCI, expressly “realleged and incorporated by reference” in support of TVJ’s counterclaim for declaratory relief,[^47] necessarily would be characterized as intentional, (rather than acts involving errors, omissions or negligence), or necessarily viewed as acts unrelated to RCI’s duties as a consultant in the construction industry, or customary to that practice.

c. That in turn means there is at least a possibility that TVJ’s counterclaim is based in part on allegations resulting from errors, omissions or negligent acts in the rendering of “insured services” by RCI, satisfying the relevant insurance policy’s definition of a “claim”.

d. Of course, at the conclusion of the underlying litigation, the Wisconsin court might find, having regard to the evidence presented at trial, that TVJ has a meritorious counterclaim nevertheless based on acts by RCI that were intentional and/or unrelated to services rendered by RCI while acting within the scope of its duties as a consultant and customary to that practice. However, at this stage of the litigation, if there is a “mere possibility” of the policy’s definition of a “claim” being satisfied on a reasonable reading of the pleaded counterclaim, the existence of a “duty to defend” the counterclaim cannot be denied on this second basis suggested by the defendant insurers.

[90] I accordingly would not have dismissed the plaintiff’s motion, or granted partial summary judgment dismissing the plaintiff’s claim for a “duty to defend” declaration, on this second suggested basis.

COUNTERCLAIM EXCLUDED AS A CLAIM RESULTING FROM DELIBERATE, DISHONEST, CRIMINAL OR FRAUDULENT ACTS COMMITTED BY THE INSURED

[91] As noted above, the third central issue between the parties focused on the defendant insurers’ contention that TVJ’s counterclaim in the Wisconsin litigation is not a claim in respect of which the relevant policy of insurance can possibly provide coverage because the claims pleaded therein inevitably will be excluded as “claims resulting from deliberate, dishonest, criminal or fraudulent acts committed by the insured”.

[92] In that regard, the defendant insurers rely upon:

a. Paragraph 6 of Part III of the relevant insurance policy, indicating that the coverage afforded under the policy does not apply to claims “resulting from deliberate, dishonest, criminal or fraudulent acts committed by the INSURED, unless it was done in order to protect persons or property”, although the same paragraph also indicates that the exclusion “does not apply to any INSURED who is neither the author of nor an accomplice to the act”;

b. the definition of “deliberate” provided by Black’s Law Dictionary (11^th ed. 2019), namely: “intentional, premeditated, fully considered”, or “unimpulsive, slow in deciding”; and

c. the definition of “dishonest” provided by Black’s Law Dictionary, supra, which includes: “demonstrating a lack of integrity or probity; untrustworthy, and therefore tending to cheat people”; “fraudulent; resulting from a lack of candor, fairness and straightforwardness”; and “not involving straightforward dealing; discreditable; underhanded; fraudulent”.

[93] The defendants argue that TVJ’s counterclaim alleges conduct on the part of RCI that is inherently “dishonest” within the above dictionary definition and therefore within the meaning of “dishonest” reasonably contemplated by the relevant exclusion clause of the insurance policy; e.g., insofar as TVJ alleges that RCI asked TVJ to “aver, to the United States Department of Homeland Security, that T.V. John did not have a written contract with Roumann, notwithstanding the fact that Roumann did in fact have an Independent Contractor Agreement” with TVJ.

[94] For reasons similar to those outlined in relation to the previous issue, (i.e., wherein the defendants argued that TVJ alleged conduct on the part of RCI that did not result from an “error, omissions or negligent act” but intentional acts), the defendant insurers also argue that much of the conduct alleged by TVJ in its counterclaim, (e.g., asking TVJ to lie to the United States government, refusing to return TVJ’s confidential information and property, and threatening customers with legal action), should be characterized as “deliberate” within the above dictionary definition, and therefore within the meaning of “deliberate” reasonably contemplated by the relevant exclusion clause of the insurance policy.

[95] In my view, the argument of the defendant insurers in relation to this third issue fails for reasons similar to those noted above in relation to the second issue. In particular, it is based on a flawed premise that TVJ’s counterclaim is based solely on the specific allegations, identified and relied upon by the defendant insurers, of arguably “dishonest” or “deliberate” conduct on the part of RCI. It ignores the possibility that, if TVJ’s pleaded counterclaim is litigated to a conclusion, the Wisconsin court might find, having regard to the evidence, that the counterclaim should succeed based on other allegations of RCI conduct, pleaded in the counterclaim, that may not be characterized as “dishonest” or “deliberate”.

[96] In addition to the examples I already have noted in that regard, there is, at the very least, TVJ’s significant allegation and request for relief based on allegations that RCI “engaged in willful misconduct under the Independent Contractor Agreement”. As emphasized by plaintiff counsel:

a. the allegation clearly refers to and engages the definition of “Willful Misconduct” agreed upon by TVJ and RCI in paragraph 4.2(d) of the Independent Contractor Agreement;

b. as noted above, that definition provides that “Willful Misconduct” means “any act committed with an intentional, willful or wanton disregard of the [TVJ’s] interests as is found in deliberate proven violations or disregard of standards of behaviour which [TVJ] has a right to expect of his or her contractors, vendors or employees, or in carelessness or negligence of such a gross degree or recurrence as to manifest culpability, wrongful intent, or evil design or equal severity to such disregard”, [emphasis added];

c. that definition of “Willful Misconduct” accordingly has two disjunctive branches, one of which admittedly may be satisfied by “intentional” or “deliberate” conduct, but the other of which may be satisfied by acts of “carelessness” or “negligence” which may be blameworthy but not necessarily “deliberate, dishonest, criminal or fraudulent”; and

d. TVJ’s counterclaim allegation that RCI “engaged in willful misconduct under the Independent Contractor Agreement” accordingly gives rise, at the very least, to a “mere possibility” of the Wisconsin court finding, having regard to the evidence if the counterclaim is litigated to a conclusion, that TVJ’s counterclaim should succeed based on “willful misconduct” not falling within the exclusion clause set forth in Paragraph 6 of Part III of the relevant insurance policy.

[97] Moreover, as plaintiff counsel also emphasized, the relevant exclusion clause also contains an exception; i.e., making it inapplicable to conduct by the insured “done in order to protect persons or property”. In that regard:

a. Defence counsel argued that RCI had the onus or burden of proving that such an exception would apply on the facts of this case and failed to do so.

b. However, for the reasons outlined above, I think defence counsel’s suggestion of such an onus or burden is misplaced in the context of “duty to defend” determinations. To establish such a duty at this stage of the proceedings, as far as the relevant exclusion clause is concerned:

i. RCI is not obliged to prove that the exception to the exclusion clause would apply on the actual facts of the case, which is something RCI would not be permitted to do in any event, insofar as doing so would require the leading of extrinsic or premature evidence the court is not permitted to hear at this stage of the proceedings; and

ii. RCI need only succeed in persuading the court that, having regard only to TVJ’s counterclaim, the documents expressly referred to in that counterclaim and the relevant policy of insurance, there is at least a “mere possibility” that the relevant exclusion clause may not operate to entirely exclude application of the insurance policy insofar as TVJ’s counterclaim is concerned.

c. In this instance, plaintiff counsel noted that RCI might argue successfully, if TVJ’s counterclaim is litigated to a conclusion, that some of the conduct alleged and relied upon by TVJ in support of the counterclaim, (e.g., RCI threatening customers with legal action), even if substantiated, was done in order to protect the property of TVJ.

d. In my view, it is simply not clear, at this stage of the proceedings, and having regard to the limited material I am permitted to consider, that the exclusion clause relied upon by the defendant insurers would make the relevant policy of insurance entirely inapplicable to TVJ’s counterclaim.

[98] For such reasons, I accordingly would not have dismissed the plaintiff’s motion, or granted partial summary judgment dismissing the plaintiff’s claim for a “duty to defend” declaration, on this third suggested basis.

Conclusion

[99] For the reasons outlined above, in my view the defendants had/have no duty to defend the counterclaim advanced against the plaintiff in the Wisconsin litigation.[^48]

[100] As the defendants had/have no duty to defend that counterclaim, they also had/have no duty to indemnify the plaintiff for legal costs already incurred by the plaintiff in defending that counterclaim.

[101] To the extent relief must be granted within the framework and rubric of the Rule 20 summary judgment procedure employed by the parties:

a. the plaintiff’s motion for a declaration that the defendants are required to defend the plaintiff pursuant to policy SRD489368 in the counterclaim filed by TVJ in the Eastern District of Wisconsin is dismissed;

b. the plaintiff’s motion for a declaration that the defendants are required to indemnify the plaintiff for legal costs already incurred by the plaintiff in defending the aforementioned counterclaim is also dismissed; and

c. partial summary judgment instead shall issue dismissing the plaintiff’s claim, in sub-paragraph 1(a) of the prayer for relief in the plaintiff’s statement of claim, seeking “a declaration that the Defendants are required to defend the counterclaim brought against [the plaintiff] by T.V. John & Son, Inc. … in case number 2.17-CV-01407-LA in the United States District Court for the Eastern District of Wisconsin”.

[102] In that regard, it nevertheless should be noted that I grant such relief without prejudice to the plaintiff’s ability to request a declaration of the defendants’ duty to defend that counterclaim if and when that pleading is formally amended in the Wisconsin litigation. In other words, the partial summary judgment I have granted relates only to the pleaded counterclaim in its current form.

[103] In her oral submissions, counsel for the defendants specifically and expressly acknowledged that such a qualification on the granted relief would be appropriate, and I think she was right to make that concession. In particular:

a. In making a “duty to defend” determination such as the one required in this instance, a court obviously is obliged to address and resolve the issue based on the existing state of the pleading targeting the policyholder in the underlying litigation. Basing such determinations on the possibility of future amendments to that pleading, which may or may not be requested, and which may or may not be permitted if requested, would involve impermissible speculation.

b. In this case, for the reasons outlined above, I have found that the defendants had/have no “duty to defend” the existing counterclaim in the Wisconsin litigation.

c. However, that Wisconsin litigation is ongoing. Moreover, as the defendants highlighted in their responding material, and as noted above, TVJ has filed a document in that litigation, entitled “Defendant T.V. John & Son, Inc.’s Initial Disclosures Pursuant to Rule 26(a)(1)”, (found at Tab 1E of the defendants’ responding motion record), indicating in Part III thereof that “T.V. John has not yet asserted an affirmative claim against Plaintiff [RCI] for which it seeks damages”.[^49] [Emphasis added.] The document accordingly suggests that, at some point in the future, the plaintiff may be facing an amended counterclaim in the Wisconsin litigation, substantively different from the existing one.

d. The plaintiff should not be precluded, by a judgment stating without qualification that the defendants have no duty to defend TVJ’s counterclaim in the Wisconsin litigation, from raising new “duty to defend” issues if the counterclaim is amended in ways that may bring the amended counterclaim within the scope of insurance coverage provided by the defendants.

[104] Because my conclusion that the defendants have no duty to defend the existing counterclaim in the Wisconsin litigation is premised on a finding that there is no possibility of that existing counterclaim falling within the coverage extended by the relevant insurance policy, I normally would be inclined to grant judgment dismissing the plaintiff’s claim herein in its entirety. However, I am reluctant to do so in this case for two reasons:

i. As noted above, plaintiff counsel and defence counsel both approached the hearing before me on the basis that formal determination of whether the defendants had any obligation to indemnify the plaintiff, in relation to the counterclaim in the Wisconsin litigation, should await the conclusion of that underlying litigation. I accordingly received no further submissions in that regard.

ii. Because I was presented with collateral evidence indicating that there was a possibility of TVJ amending its counterclaim in the future, (e.g., to assert a claim for monetary damages), that raises the spectre of the plaintiff possibly wanting to raise new and modified “duty to defend” and “duty to indemnify” claims against the defendants in the future, if and when the counterclaim in the Wisconsin litigation is amended. In the circumstances, a judgment formally dismissing the plaintiff’s current claim for a declaration that the defendants are required to indemnify the plaintiff for any damages recovered by TVJ pursuant to its counterclaim in the Wisconsin litigation would be problematic, unless it was expressly made subject to the same qualifications outlined above, in relation to my partial judgment that the defendants had/have no duty to defend the existing counterclaim. Moreover, if this action commenced by the plaintiff is formally dismissed in its entirety, the existing Ontario framework for litigation between the parties, in relation to the Wisconsin litigation and the relevant insurance policy issued by the defendants, would disappear. All concerned would be required to litigate any further dispute completely ab initio, in the wake of the relevant counterclaim being amended.

[105] However, it also would be problematic to leave the plaintiff’s action formally outstanding on the court’s docket.

[106] In the circumstances, I think the more appropriate course of action is to make an order, (in addition to the above orders dismissing the relief requested by the plaintiff’s motion and granting partial judgment dismissing the plaintiff’s claim for a “duty to defend” declaration), formally imposing a stay in relation to the balance of the plaintiff’s action; i.e., the portion of the plaintiff’s action in respect of which partial summary judgment has not been granted.[^50] If and when a time comes when lifting of the stay may be necessary and appropriate, the parties or any of them may seek that further relief from the court.

[107] For now, a further order imposing such a stay shall go accordingly.

Costs

[108] Because my decision was reserved, the parties were unable to make any submissions regarding costs, having regard to the substantive outcome of the plaintiff’s motion.

[109] It is always preferable for parties to discuss and agree on cost resolutions acceptable to all concerned.

[110] However, subject to further directions of the court, (made for the reasons and in the circumstances noted below), if the parties are unable to reach an agreement on entitlement and/or quantum in relation to outstanding cost issues:

a. The defendants may serve and file written cost submissions, not to exceed five pages in length, (not including any bill of costs, settlement offers, authorities or other necessary attachments), within two weeks of the release of this decision;

b. The plaintiff then may serve and file responding written cost submissions, also not to exceed five pages in length, (not including any necessary attachments similar to those described in the previous sub-paragraph), within two weeks of the time specified for delivery of written cost submissions by the defendants; and

c. The defendants then may serve and file, within one week of receiving any responding cost submissions from the plaintiff, reply cost submissions not exceeding two pages in length.

[111] If no written cost submissions are received within four weeks of the release of this decision, there shall be no costs awarded in relation to the plaintiff’s motion or the stayed action.

[112] In setting the above timetable for the delivery of written cost submissions, I am very mindful of the reality that this decision is being released at a time when Ontario and many other jurisdictions are engaged in extraordinary efforts to address a global pandemic, and to slow the spread of a novel coronavirus and resulting COVID-19 disease. In that regard:

a. Such efforts have required a drastic reduction in the operations of the Superior Court of Justice for Ontario. Those operations initially were restricted to defined “urgent matters” by way of a direction issued on March 17, 2020, and are being expanded on an incremental basis over time, to the extent circumstances and available resources are allowing that to happen.

b. Most courthouses in the province nevertheless remain closed or subject to restricted access, with corresponding restrictions on the normal ability of parties to file material with the court.

c. Extraordinary arrangements have been made to have the judiciary and court staff, including judicial secretaries, work primarily from home, where they are receiving and relaying communications and filings electronically.

[113] Moreover, in the current environment, where citizens are being advised to stay home and numerous business operations are closed either voluntarily or by government direction to promote health and safety, it would be surprising if law office operations were not compromised as well, in turn limiting the ability of counsel to prepare and deliver written cost submissions.

[114] Having said all that, for the time being at least, I continue to receive written cost submissions from counsel in relation to other matters during the current COVID-19 crisis. It may be that the parties and counsel involved in this matter have a similar ability to keep matters moving forward as normally as possible, despite the current restrictions and challenges.

[115] In the circumstances, the above timetable for the delivery of written cost submissions shall be subject to modification, (such as extension of the indicated deadlines), in response to written/email requests from counsel indicating, with brief reasons, why such a modification may be required. Leave permitting such direct communications to the court is hereby granted, (for the purpose of Rule 1.09 of the Rules of Civil Procedure), provided such communications are also copied to all counsel.

Justice I.F. Leach

Date: June 1, 2020

[^1]: When this matter came before me on November 20, 2019, I was asked to address two motions, one of which resulted in amendment of the style of cause to the form indicated and employed herein. In particular:

a. In addition to the plaintiff’s motion for summary judgment, addressed by this endorsement, I was presented with another motion brought by the plaintiff, (and not opposed by the extant defendants or a proposed additional defendant), requesting an order “granting leave to all parties to amend the pleadings to include Lloyd’s Underwriters as a defendant and to remove Encon Group Inc. as a defendant”.

b. The style of cause employed in all the summary judgment motion material filed by the plaintiff and responding material filed by the defendants reflected that used in the plaintiff’s original statement of claim, and read as follows: “ROUMANN CONSULTING, INC. v. ECON GROUP INC., AVIVA INSURANCE COMPANY OF CANADA, TEMPLE INSURANCE COMPANY, EVEREST INSURANCE COMPANY OF CANADA, ARCH INSURANCE CANADA LTD., and XL REINSURANCE AMERICA INC..”

c. However, the relevant underlying policy of insurance included provisions indicating and confirming that, while ENCON Group Ltd. was a designated “insurance manager” duly authorized to issue policies and receive notices on behalf of the various subscribing insurers, (each of which was binding itself severally but not jointly to provide its indicated percentage layer of coverage to the plaintiff), it was agreed that ENCON Group Ltd. itself was “not a party” to the resulting contract of insurance. The “declarations” page forming part of the relevant underlying policy also indicated and confirmed that, in addition to the subscribing insurers already identified in the plaintiff’s original statement of claim, certain additional underwriters, capable of being designated and named as “Lloyd’s Underwriters”, were also subscribing insurers.

d. The relief sought by the plaintiff’s unopposed motion for leave to amend the pleadings was addressed and granted before argument of the plaintiff’s motion for summary judgment motion, so that my decision in relation to the latter would bind all concerned. Although the plaintiff’s original summary judgment motion material sought declarations vis-à-vis Encon Group Inc., I accordingly have proceeded, (as counsel did, during the course of submissions), as if such relief was sought vis-à-vis the insurers who subscribed to the relevant underlying policy, (i.e., the current defendants to the action), on a nunc pro tunc basis.

[^2]: See the “Factum of the Responding Defendants”, at paragraph 61.

[^3]: Nothing that follows in this endorsement should be read as any intended indication or suggestion to the contrary, and I will be clarifying and confirming, later in these reasons, the more limited evidence I consider relevant and admissible in relation to making my determinations.

[^4]: For the sake of clarity, it should be noted and emphasized that this was not the policy of insurance initially filed and relied upon by the plaintiff, in support of its motion. However, by the time of the hearing before me, the parties effectively had agreed that policy number SRD489368 was the one relevant to their dispute. By way of explanation:

a. The policy of insurance initially relied upon by the plaintiff was policy number SRD511785, found at Tab 2F of the plaintiff’s motion record. As indicated in that policy, (including its “Declarations” page), it was a “claims made and reported policy” whereby five specified subscribing insurers, (Aviva Insurance Company of Canada, Temple Insurance Company, Everest Insurance Company of Canada, Arch Insurance Canada Ltd. and XL Reinsurance America Inc.), provided such coverage to RCI in relation to the policy period “from 23 May 2018 to 23 May 2019”. The policy, issued on July 12, 2018, also indicated that it was “replacing” policy number SRD489368.

b. In their responding motion material, the defendants essentially highlighted that the plaintiff’s claim for insurance coverage, in relation to the counterclaim commenced against RCI by TVJ in Wisconsin on February 7, 2018, actually was governed by policy number SRD489368, found at Tab 1A of the Responding motion record filed by the defendants. As indicated in that policy, (including its “Declarations” page), it was a “claims made and reported policy” whereby the five insurers noted above, along with “Certain Underwriters at Lloyd’s Under Agreement No. B0509FINPUI700043”, provided such coverage to RCI in relation to the policy period “from 23 May 2017 to 23 May 2018”.

c. The substantive provisions of the two insurance policies are essentially the same, apart from the indicated policy periods, and the provisions relating to the Lloyd’s Underwriters present in policy number SRD489368, deleted from replacement policy number SRD511785. However, as noted and agreed in the plaintiff’s motion for an order granting leave to all parties to amend their pleadings, (described and addressed in the first footnote to this endorsement), policy number SRD489368 was the one in effect when TVJ commenced its counterclaim against RCI. As noted below, it also was the policy in place when the plaintiff reported that counterclaim to the defendants.

d. For the above reasons, and as the parties now seem to agree, the relevant policy of insurance appears to be policy number SRD489368 and I have proceeded on that basis. However, as the substantive provisions of the two policies are essentially the same, the issues raised by the plaintiff’s motion almost certainly would be determined in the same manner, regardless of which policy applied.

[^5]: It seems that the procedural laws of Wisconsin, (unlike Rule 27.02 of Ontario’s Rules of Civil Procedure), do not require a defendant’s counterclaim to be asserted in the same pleading as that party’s statement of defence; i.e., its pleading setting forth its “answer” and “affirmative defences” to the formal claims made against it.

[^6]: Not all of that correspondence was included in the motion material I was asked to consider. However, the plaintiff did file one such letter, sent by its Ontario counsel on October 12, 2018. The full text of the letter can be found at Tab 2H of the plaintiff’s motion record.

[^7]: As noted above, the pleading was formally amended on November 20, 2019, (immediately prior to argument of the plaintiff’s motion), to alter the identified defendants; i.e., by removing Encon Group Ltd. and adding Lloyd’s Underwriters in that regard. However, the substantive portions of the pleading remain unchanged.

[^8]: A transcript of that cross-examination, conducted on September 5, 2019, also formed part of the evidentiary material I was asked to consider in relation to the motion.

[^9]: I was not presented with motion material, filed in the Wisconsin litigation, confirming the precise nature of the summary judgment relief sought and not sought by RCI and TVJ in that litigation. My description of the relief sought by the parties is taken from the “Decision and Order” issued by District Judge Adelman in the Wisconsin litigation on or about August 1, 2019, discussed in further detail below.

[^10]: A copy of the relevant affidavit, albeit with only two of its originally attached exhibits, (“Exhibit M” and “Exhibit N” thereto), can be found at Tab 1E of the Responding Motion Record filed by the defendants.

[^11]: The document was “Exhibit M” to the aforesaid affidavit sworn by RCI’s counsel in the Wisconsin litigation, and can be found in its entirety at Tab 1E of the Responding Motion Record filed by the defendants.

[^12]: The document was “Exhibit N” to the aforesaid affidavit sworn by RCI’s counsel in the Wisconsin litigation, and also can be found in its entirety at Tab 1E of the Responding Motion Record filed by the defendants.

[^13]: In his supplementary affidavit sworn on September 5, 2019, Mr Rousse indicates that the total legal fees and disbursements incurred as of August 13, 2019, in relation to RCI’s Wisconsin lawyers, came to $498,808.66 (USD). However, it is not clear to me, on my reading of the supplementary affidavit, whether those legal fees and disbursements relate solely to defence of TVJ’s counterclaim; i.e., bearing in mind that RCI is also pursuing a claim against TVJ in the same litigation.

[^14]: See Monenco Ltd. v. Commonwealth Insurance Co., 2001 SCC 49, [2001] 2 S.C.R. 699, at paragraphs 28 and 37; Halifax Insurance Co. of Canada v. Innopex Ltd., 2004 CanLII 33465 (ON CA), [2004] O.J. No. 4178 (C.A.), at paragraph 38; and Cadillac Fairview Corp. v. Oakridge Landscape Contractors, [2010] O.J. No. 3480 (S.C.J.), at sub-paragraph 2(c).

[^15]: See Nichols v. American Home Assurance Co., 1990 CanLII 144 (SCC), [1990] 1 S.C.R. 801, at pp.810 and 812.; Monenco Ltd. v. Commonwealth Insurance Co., supra, at paragraphs 29-30; Cadillac Fairview Corp. v. Oakridge Landscape Contractors, supra, at sub-paragraphs 2(a), 2(b) and 2(e); Progressive Homes Ltd. v. Lombard General Insurance Co., 2010 SCC 33, at paragraph 19; and Versa Fittings v. Berkley Insurance Co., 2015 ONSC 1756 (S.C.J.), at paragraph 11.

[^16]: See Monenco Ltd. v. Commonwealth Insurance Co., supra, at paragraphs 28, 30, 36, 38 and 40; Halifax Insurance Co. of Canada v. Innopex Ltd., supra, at paragraph 1; Cadillac Fairview Corp. v. Oakridge Landscape Contractors, supra, at paragraph 2(d); and Versa Fittings v. Berkley Insurance Co., supra, at paragraph 10.

[^17]: See Monenco Ltd. v. Commonwealth Insurance Co., supra, at paragraph 31. In the course of her submissions, defence counsel relied on passages from the Supreme Court of Canada’s decision in Ledcor Construction Limited v. Northbridge Indemnity, 2016 SCC 37, [2016] 2 S.C.R. 23, at paragraph 52, speaking to onus; e.g., indicating that an insured has the onus of first establishing that a damage or loss claimed falls within the initial grant of coverage, that the onus then shifts to the insurer to establish that one of the exclusions to the coverage applies, with the onus then shifting back to the an insured to prove that an exception to the exclusion applies. However, in my view, it is important not to take those particular comments regarding onus out of context. In that case, the Supreme Court of Canada was dealing with “duty to indemnify” issues in relation to a policy of insurance providing “all risk” coverage to an owner and general contractor for any physical damage incurred during the course of certain construction projects. It was not dealing with “duty to defend” issues in relation to a policy of insurance providing coverage for third party liability. Passages from the Ledcor case essentially indicating whether the insured or insured have the onus of proving the existence or non-existence of coverage at certain stages, (i.e., on the usual civil standard of a balance of probabilities), do not sit well with passages from other authorities, including the Supreme Court of Canada’s decision in the Monenco case, that any doubt about the existence of coverage in the course of “duty to defend” analysis should be resolved in favour of the insured. In my view, it would be a mistake to unthinkingly apply analysis from the “duty to indemnify” context to “duty to defend” issues. For the reasons appellate courts repeatedly have emphasized, the two duties and contexts are fundamentally different. Not surprisingly, courts dealing with “duty to defend” issues accordingly have extended the “mere possibility of coverage” approach, emphasized in authorities such as the Monenco decision, to exclusion clauses as well; i.e., holding that, in situations where there is at least a “mere possibility” that an exclusion clause will not apply, the exclusion clause will not operate to eradicate the duty to defend. For example, see Versa Fittings v. Berkley Insurance Co., supra, at paragraph 52.

[^18]: See Monenco Ltd. v. Commonwealth Insurance Co., supra, at paragraph 32.

[^19]: See Monenco Ltd. v. Commonwealth Insurance Co., supra, at paragraphs 34-36; Halifax Insurance Co. of Canada v. Innopex Ltd., supra, at paragraph 41; Cadillac Fairview Corp. v. Oakridge Landscape Contractors, supra, at sub-paragraph 2(f); and Versa Fittings v. Berkley Insurance Co., supra, at paragraph 12.

[^20]: See Monenco Ltd. v. Commonwealth Insurance Co., supra, at paragraphs 28 and 34-37; and Halifax Insurance Co. of Canada v. Innoplex Ltd., supra, at paragraph 32-33 and 37. As noted by our Court of Appeal in the latter decision, that is not to say that evidence is never permissible on a duty to defend application. In particular, expert evidence sometimes may be helpful to the court in the interpretation of insurance coverage and, on occasion, in interpreting technical language in the underlying claim. Generally, however, evidence going to the truth of pleaded allegations is not receivable.

[^21]: See Monenco Ltd. v. Commonwealth Insurance Co., supra, at paragraphs 36 and 38-40; and Halifax Insurance Co. of Canada v. Innoplex Ltd., supra, at paragraph 36. As emphasized by our Court of Appeal in the latter decision, at paragraph 36, the procedure advocated in the authorities to determine “duty to defend” issues is similar to that followed in relation to motions brought pursuant to Rule 21.01(1)(b) to strike out a pleading on the ground it discloses no reasonable cause of action or defence. No evidence is admissible on such a substantive adequacy motion, but the court is entitled to consider documents referred to and relied upon in the pleading, as such documents are not “evidence” precluded by Rule 21.01(2)(b).

[^22]: See Monenco Ltd. v. Commonwealth Insurance Co., supra, at paragraph 37; Halifax Insurance Co. of Canada v. Innoplex Ltd., supra, at paragraphs 1-2; and Cadillac Fairview Corp. v. Oakridge Landscape Contractors, supra, at sub-paragraph 2(c) and paragraphs 5-6.

[^23]: See, for example: Pizza Pizza Ltd v. Gillespie (1990), 1990 CanLII 4023 (ON SC), 75 O.R. (2d) 225 (Gen.Div.); 1061590 Ontario Ltd. v. Ontario Jockey Club (1995), 1995 CanLII 1686 (ON CA), 21 O.R. (3d) 547 (C.A.); Transamerica Life Insurance Co. of Canada v. Canada Life Assurance Co. (1996), 1996 CanLII 7979 (ON SC), 28 O.R. (3d) 423 (Gen.Div.); and Toronto-Dominion Bank v. Hylton, 2012 ONCA 614, [2012] O.J. No. 4309 (C.A.).

[^24]: See, for example: King Lofts Toronto I Ltd. v. Emmons, [2014] O.J. No. 133 (C.A.); Kassburg v. Sun Life Assurance Company of Canada, 2014 ONCA 922; Landrie v. Congregation of the Most Holy Redeemer, 2014 ONSC 4008; Zhu v. Matadar, [2015] O.J. No. 78 (S.C.J.), Nemeth v. Yasin, 2015 ONSC 558, [2015] O.J. No. 347 (S.C.J.); and Cross Bridges Inc. v. Z-Teca Foods Inc., 2015 ONSC 2632, [2015] O.J. No. 2022 (S.C.J.). The jurisdiction to grant summary judgment in the absence of a formal cross-motion for such relief similarly was recognized, (although not exercised), in cases such as Farmers Oil & Gas Inc. v. Ontario (Ministry of Natural Resources), [2015] O.J. No. 127 (S.C.J.), and Brown v. Baum, 2015 ONSC 849.

[^25]: See Halifax Insurance Co. of Canada v. Innopex Ltd., supra, at paragraphs 1, 2, 28, 30, 32-33, and 37-39.

[^26]: Ibid., at paragraph 37.

[^27]: Similarly, while relying upon this court’s decision in Cadillac Fairview Corp. v. Oakridge Landscape Construction, supra, for another summary of principles applicable to “duty to defend” determinations, the plaintiff apparently paid little heed to Justice Ramsay’s reiteration, at paragraph 5 of the decision, of the Court of Appeal’s emphasis that a motion for summary judgment does not lend itself to the determination of whether there is a duty to defend. In that regard, Justice Ramsay made the further observation that, whether under the former version of Rule 20, or Rule 20 in its recently amended form, a motion for summary judgment “permits to some extent an assessment of the evidence”, which is “besides the point” in making “duty to defend” determinations.

[^28]: In Zhou v. Town of Markham, 2014 ONSC 435, this court was presented with a similar problematic situation in which the parties had employed the inappropriate procedural vehicle of a Rule 20 summary judgment motion to bring “duty to defend” issues before the court for determination. At paragraph 14 of the decision, Justice Brown found that the decision to bring a motion under Rule 20 was not fatal to the motion or the relief sought, as she had the power and ability, (taking into account the provisions of Rule 1.04), to treat the motion as if it were an application brought pursuant to Rule 14.05(d) or a motion brought pursuant to Rule 21.01(1)(a). For an example of the latter procedural mechanism being used successfully to resolve such “duty to defend” issues, (i.e., as an alternative to bringing a Rule 14.05 application), see Kinkade v. 947014 Ontario Inc., 2014 ONSC 1599.

[^29]: Cases in which such principles have had to be emphasized unfortunately are somewhat legion. For only a few examples, see: Ontario Federation of Hunters & Anglers v. Ontario (Ministry of Natural Resources), [2001] O.J. No. 750 (Div.Ct.), at paragraphs 4-21; Chopik v. Mitsubishi Paper Mills Ltd., [2002] O.J. No. 2780 (S.C.), at paragraphs 25-26; Singer v. Schering-Plough Canada Inc., 2010 ONSC 42, [2010] O.J. No. 113 (S.C.J.), at paragraphs 27-53; Said v. University of Ottawa, 2013 ONSC 7186, [2013] O.J. No. 6119 (S.C.J.), at paragraph 7; Professional Institute of the Public Service of Canada v. Unifor, 2015 ONSC 3748 (Div.Ct.), at paragraph 9; and Ismail v. Fleming, 2018 ONSC 6780, at paragraphs 16-24.

[^30]: Having said that, there are aspects of the impugned paragraphs which might fairly be characterized as statements of fact, (e.g., the professed intention and/or purpose of Mr Rousse in relation to certain actions and behavior), normally capable of being included in an affidavit. I accordingly would have considered those narrower assertions, had such affidavit evidence not been irrelevant to the “duty to defend” determination in any event.

[^31]: See, for example, paragraphs 28-32 an 43-45 of the factum filed by the plaintiff.

[^32]: See, for example, paragraph 20 of the factum filed by the defendants.

[^33]: See paragraph 26(c) of the factum filed by the plaintiff. See also Halifax Insurance Co. of Canada v. Innopex Ltd., supra, at paragraph 38, and Cadillac Fairview Corp. v. Oakridge Landscape Contractors, supra, at paragraph 2(c).

[^34]: Corporation of the City of Peterborough v. General Accident Assurance Company, supra, at paragraph 21.

[^35]: Ibid., at paragraph 23, wherein the Court of Appeal cited, with approval, a passage from Gordon Hilliker, Liability Insurance Law in Canada, 2d ed. (1996), at p.130, noting that courts, when interpreting policies of liability insurance, have interpreted the term “damages” in accordance with its “plain, ordinary and popular” meaning.

[^36]: Ibid., at paragraph 24. By implication, the civil claims brought against the insured city by the subcontractors were claims for compensatory damages.

[^37]: See TVJ’s counterclaim, (found at Tab 2D of the plaintiff’s motion record), at paragraph 1.

[^38]: Ibid., at paragraph 8.

[^39]: Ibid., at paragraph 13.

[^40]: See Ukrainian (Fort William) Credit Union Ltd. v. Nesbitt Burns Ltd., 1997 CanLII 1411 (ON CA), [1997] O.J. No. 4282 (C.A.), at paragraph 41, in which the Court of Appeal quotes the same passage from Hilliker’s insurance text discussing the meaning of “damages” applied by courts when interpreting policies of liability insurance.

[^41]: Again, see Monenco Ltd. v. Commonwealth Insurance Co., supra, at paragraph 32.

[^42]: See Hattori Overseas (Hong Kong) Ltd. v. Phillip Cox Agency Inc. (1985), 2 C.P.C. (2d) 257 (Ont.Div.Ct.); Telford v. Holt, 1987 CanLII 18 (SCC), [1987] 2 S.C.R. 193; H.D. Madden & Associates Inc. v. Brendan Wood, Tutsch & Partners Inc. (1989), 33 C.P.C. (2d) 263 (Ont.Dist.Ct.); Agway Metals Inc. v. Dufferin Roofing Ltd. (1991), 46 C.P.C. (2d) 133 (Ont.Gen.Div.); and Strellson AG v. Strellmax Ltd., 2018 ONSC 1808.

[^43]: See TVJ’s counterclaim, (found at Tab 2D of the plaintiff’s motion record), at paragraph 15.

[^44]: Ibid., at paragraph 20.

[^45]: Ibid., at paragraph 27.

[^46]: Similar allegations are made, or echoed, in paragraph 13 of TVJ’s counterclaim.

[^47]: See paragraph 35 of TVJ’s counterclaim, found at Tab 2D of the plaintiff’s motion record.

[^48]: Again, that conclusion is dictated by the first specific issue raised by the parties, and the reality that TVJ’s counterclaim in the Wisconsin litigation does not assert any claim for compensatory damages.

[^49]: To be clear, the document forms part of the evidence which I did not consider for the purpose of making the requested “duty to defend” determinations in this case; i.e., to determine whether the defendants had/have a duty to defend the existing counterclaim in the Wisconsin litigation. I mention the document now only for a different purpose; i.e., as an indication why future amendment of the existing counterclaim is perhaps more than a mere possibility.

[^50]: Although neither party requested such a stay, the court has the ability, pursuant to section 106 of the Courts of Justice Act, c.C.43, to impose a stay on its own initiative.