Executive Summary: Key Legal and Evidentiary Issues

• Scope and application of The King’s Bench Rules on vexatious litigant orders and the leave requirement for commencing new proceedings.
• Proper legal test for granting leave to a declared vexatious litigant, with emphasis on the Yascheshen v Allergan Inc. framework and Rule 7-9(2).
• Adequacy of Mr. Sheppard’s affidavit as a functional “proposed pleading” and whether it disclosed any recognizable cause of action against Clews.
• Limits on a chambers judge’s discretion and the applicable appellate standards of review for questions of law versus mixed fact and law.
• Alleged error in treating the absence of a draft statement of claim as a procedural bar, and whether the judge nonetheless examined the substance of the claim.
• Argument that the chambers judge improperly weighed conflicting affidavit evidence, and the Court of Appeal’s conclusion that she confined herself to the sufficiency of the proposed pleading.

Background and deteriorating business relationship

Stan Sheppard, through his company 6517633 Canada Ltd. (7633), had a long-standing business relationship with Dan Davis and his company, Clews Storage Management KEHO Ltd. (Clews), between 2007 and 2017. Under this arrangement, 7633 marketed and sold cattle oilers under a franchise agreement with Clews. When that relationship ended, 7633 and Clews became direct competitors in the cattle oiler market, and their dealings became increasingly acrimonious, ultimately spawning litigation between them.

The vexatious litigant order and its effect

As the disputes escalated, Clews obtained a vexatious litigant order (the VL Order) against Mr. Sheppard and 7633 under Rule 11-28(1) of what are now The King’s Bench Rules. The VL Order designated both Mr. Sheppard and 7633 as vexatious litigants and prohibited them from instituting any proceedings against Clews or Mr. Davis in the Court of King’s Bench without first obtaining leave from a judge of that court. This order effectively created a “gatekeeping” requirement: before starting any new action against Clews or Mr. Davis, 7633 had to convince a judge that the proposed proceeding was not an abuse of process and had reasonable grounds.

The proposed new proceeding and factual incidents relied upon

In May 2024, 7633 sought leave to commence a new proceeding against Clews. Because of the VL Order, 7633 supported its leave application with an affidavit from Mr. Sheppard, which the courts treated as the functional equivalent of a proposed pleading. In that affidavit, Mr. Sheppard explained that 7633 promotes its cattle oiler business by attending trade shows, renting booth space, and collecting contact information from potential customers. He then described three incidents that, in his view, justified a new action against Clews. First, in the fall of 2021, a Clews director attended 7633’s booth at a trade show in Red Deer, Alberta, despite Mr. Sheppard’s objections. Second, in October 2022, Mr. Sheppard saw individuals he knew to be Clews directors at a Saskatchewan farm property where 7633 kept materials for constructing cattle oilers, and he suspected they damaged a grain auger. Third, in February 2024, a Clews salesman came to 7633’s booth at a Lethbridge, Alberta trade show and remained there until Mr. Sheppard directed him to leave.

Nature of the relief sought by 7633

From these incidents, Mr. Sheppard asserted a “genuine concern” that Clews, through its directors, officers, or salespeople, would keep attending 7633’s trade show booths and attempt to gain a competitive edge by collecting the names and contact information of 7633’s prospective customers. On that basis, 7633 sought leave to commence an action to restrain Clews and its personnel “from entering upon the real property of the company and any and all rented trade show booths in the Province of Saskatchewan.” The relief sought was therefore essentially injunctive, aimed at stopping future physical presence by Clews’ representatives at 7633’s property and display spaces, rather than damages for past loss.

The governing legal test for vexatious litigant leave

There is no specific statutory or rule-based list of requirements in The King’s Bench Rules for a vexatious litigant seeking leave. The court emphasized that this type of decision requires balancing the applicant’s access-to-justice rights against the harms flowing from vexatious litigation, mindful that “access to justice” has two sides: it must also protect other parties and the court process from abusive, costly, and repetitive proceedings. To structure the discretion, the Court of Appeal adopted and applied the test articulated in Yascheshen v Allergan Inc. Under that approach, when a vexatious litigant seeks leave to commence a proceeding, they must show that: (a) the proposed proceeding is not an abuse of process, as generally captured by Rule 7-9(2)(b) or (e); and (b) there are reasonable grounds for the proposed proceeding, as generally reflected in Rule 7-9(2)(a). This test aligns with statutory provisions in other jurisdictions, such as the Federal Courts Act, Ontario’s Courts of Justice Act, and Alberta’s Judicature Act, and has been consistently applied in Saskatchewan King’s Bench jurisprudence. The Court of Appeal noted that some cases, like Gichuru v Purewal, suggest judges may consider additional contextual factors—such as the history behind the vexatious order, any pattern of unpaid costs awards, and whether the proposed claim is uneconomical to litigate—but concluded that, for this case, it was unnecessary to refine the Yascheshen test because the chambers judge’s analysis focused squarely on the proposed pleadings themselves.

Standard of review on appeal

Because the appeal challenged the refusal to grant leave under a vexatious litigant order, the Court of Appeal characterized the underlying decision as an exercise of judicial discretion. The applicable standard of review depended on the nature of the alleged error: correctness for questions of law, and palpable and overriding error for questions of fact or mixed fact and law. The Court reaffirmed that appellate intervention is only warranted if the chambers judge misapplied the legal criteria, misapprehended or ignored material evidence, or otherwise made a palpable and overriding error, and that an appellate court cannot replace a discretionary decision merely because it would have exercised that discretion differently.

Arguments advanced by 7633 on appeal

On appeal, 7633 did not dispute the correctness of the Yascheshen v Allergan Inc. test itself. Instead, it argued that the chambers judge misapplied the test in two main ways. First, 7633 claimed the judge improperly imposed a non-existent procedural requirement by effectively insisting on a draft statement of claim or draft originating document, rather than treating Mr. Sheppard’s affidavit as sufficient to delineate a potential cause of action. According to 7633, this undue focus on form caused the judge to overlook the substance of the factual allegations, which it said did disclose a reasonable cause of action. Second, 7633 asserted that the judge wrongly weighed conflicting affidavit evidence when determining if a reasonable cause of action had been shown, something that is impermissible at the “pleadings sufficiency” stage, whether under Rule 7-9(2)(a) or in the analogous vexatious-litigant leave context.

The Court’s treatment of the draft pleading issue

The Court of Appeal accepted that Rule 11-28 does not expressly require a vexatious litigant to file a draft statement of claim or originating application when seeking leave. It acknowledged that, although there is no strict rule demanding a draft pleading, filing one will often be highly advisable because the Yascheshen test requires the court to assess the proposed proceeding through the lens of Rule 7-9(2), which in turn focuses on “the pleading or other document.” Given the presumption that a vexatious litigant’s approach to litigation is problematic and the gatekeeping role of leave applications, it may be difficult for a judge to assess the merits of a proposed proceeding without a clear pleading. However, the Court of Appeal rejected the assertion that the chambers judge had treated the absence of a draft statement of claim as an automatic bar. It read the decision as showing that the judge did examine the substance of Mr. Sheppard’s affidavit, summarized the underlying incidents and requested relief, and then concluded that, even taken as a proposed pleading, the affidavit did not set out sufficient material facts to identify a viable cause of action. References in the decision to the usefulness of filing a proposed pleading were viewed as practical, not as the creation of a rigid procedural prerequisite.

Assessment of whether a reasonable cause of action was disclosed

The Court of Appeal then assessed whether the chambers judge had correctly concluded that 7633 failed to demonstrate reasonable grounds for the proposed proceeding. It emphasized that, when deciding if a pleading discloses a reasonable claim under Rule 7-9(2)(a), courts may not weigh evidence; they must focus on the pleading and any particulars, asking whether it is “plain and obvious” the claim cannot succeed, assuming the pleaded facts to be true. The same logic applies when evaluating whether a vexatious litigant’s proposed claim has reasonable grounds. In this case, no draft statement of claim was filed, so the judge treated the affidavit as if it were the proposed pleading. The Court confirmed that the judge correctly stated and applied the governing test: she looked to see whether the facts alleged, taken at their highest for 7633, identified the legal elements of any recognizable cause of action that could support the requested injunctive relief. It agreed with her conclusion that they did not. Although Mr. Sheppard’s affidavit described Clews’ representatives attending trade show booths and a farm property, and expressed concern about possible misuse of customer information or property damage, the affidavit did not clearly articulate any established tort or statutory cause of action, nor did it connect the feared future conduct to a legally cognizable wrong in a way that met the threshold for a non-frivolous claim.

Rejection of the argument about weighing evidence

On the second main ground, the Court of Appeal rejected 7633’s contention that the chambers judge impermissibly weighed conflicting affidavit evidence. The reasons at first instance made no reference to Clews’ responding affidavit or any evaluation of credibility. Instead, the judge explicitly anchored her reasoning in the framework for striking pleadings under Rule 7-9(2)(a), focusing on whether sufficient facts were pleaded to establish the legal elements of a cause of action. The Court of Appeal observed that the decision contained no indication that the judge had gone beyond the four corners of the applicant’s materials or considered contradictory evidence. It held that she confined herself to asking whether Mr. Sheppard’s affidavit, treated as a proposed pleading, disclosed a cause of action with a reasonable prospect of success. Consequently, the appellate court found no error of law and no palpable and overriding error in her approach.

Outcome of the appeal and monetary consequences

Having found that the chambers judge applied the correct legal test and did not improperly weigh evidence, the Court of Appeal concluded there was no basis to disturb her refusal of leave. The appeal brought by 6517633 Canada Ltd. was therefore dismissed, and the original decision denying leave to commence the new action against Clews remained in force. Clews Storage Management KEHO Ltd., as the respondent, was the successful party on the appeal. The Court of Appeal awarded Clews its costs of the appeal on a fixed basis, setting the amount at $3,500. No damages or other monetary awards were granted in this decision beyond that fixed costs order, and there is no indication of any additional quantified costs or damages being awarded elsewhere in relation to this appeal.