Dreco Energy Services Ltd. et al. v. Wenzel et al., (2004) 365 A.R. 135 (QB)

• Judge: Greckol, J.
• Court: Court of Queen's Bench of Alberta (Canada)
• Case Date: November 09, 2004
• Citations: (2004), 365 A.R. 135 (QB);2004 ABQB 842

Dreco Energy Services v. Wenzel (2004), 365 A.R. 135 (QB)

MLB headnote and full text

Temp. Cite: [2004] A.R. TBEd. DE.047

Dreco Energy Services Ltd. and Vector Oil Tool Ltd. (plaintiffs) v. Kenneth Hugo Wenzel, Kenneth H. Wenzel Oilfield Consulting Inc. and KW Downhole Tools Inc. (defendants)

(0203 12910; 2004 ABQB 842)

Indexed As: Dreco Energy Services Ltd. et al. v. Wenzel et al.

Alberta Court of Queen's Bench

Judicial District of Edmonton

Greckol, J.

November 19, 2004.

Summary:

Wenzel, the inventor of downhole oilfield equipment, sold his business, Vector, to Dreco. Wenzel remained an employee. The deal included restrictive covenants and an employment contract between Wenzel and Vector which allegedly bound Wenzel to restrictive covenants, confidentiality agreements and fiduciary duties. Dreco and Vector were subsequently sold to National. In 2002, Wenzel left to form and operate his own company. Vector and Dreco sued Wenzel and the other defendants asking for injunctive relief and damages for breach of the share purchase agreement and the employment contract. The plaintiffs applied for an interim injunction to prevent the defendants from carrying on business in the downhole tools industry in contravention of the restrictive covenants.

The Alberta Court of Queen's Bench, per Hembroff, J., in a decision reported [2003] A.R. Uned. 83, dismissed the application. The plaintiffs appealed.

The Alberta Court of Appeal, in a decision reported 346 A.R. 356; 320 W.A.C. 356 allowed the appeal. The court issued an interlocutory injunction and directed that it remain in place until final disposition of the lawsuit, or until a contrary order by a judge of the Court of Queen's Bench. The court also remitted the matter to a different judge of the Court of Queen's Bench to fix the terms of the interlocutory injunction. The defendants now applied for an order: (1) carving out certain items from the ambit of the injunction because the plaintiffs had not met the onus of showing irreparable harm or a prima facie case with respect to those items; (2) vacating the injunction on February 21, 2005; and (3) severing the issue of liability from that of quantum.

The Alberta Court of Queen's Bench, per Greckol, J., dismissed the application.

Injunctions - Topic 1862

Interlocutory or interim injunctions - Revocation of interim injunction - Benefits of action received before trial - A complicated lawsuit boiled down to a question of whether the defendant Wenzel, the inventor of downhole oilfield equipment, breached the sale contract of his business and his employment contract with the plaintiff purchaser, both of which contained restrictive non-competition clauses, when, in 2002, he left the purchaser and its successors, and continued to invent and market downhole oilfield equipment - The restrictive covenants lasted up to five years - In 2004, the purchaser obtained, on appeal, an interlocutory injunction against Wenzel - The injunction was to remain in place until final disposition of the lawsuit, or until a contrary order by a judge of the Court of Queen's Bench - Wenzel sought an order vacating the injunction on February 21, 2005, arguing that an injunction that would last for the entire duration of the restrictive covenants would accord the purchaser the fruits of the litigation before the matter could get to trial - The Alberta Court of Queen's Bench dismissed the application - See paragraphs 55 to 64.

Practice - Topic 5204

Trials - General - Severance of issues or parties - General - A complicated lawsuit boiled down to a question of whether the defendant Wenzel, the inventor of downhole oilfield equipment, breached the sale contract of his business and his employment contract with the plaintiff purchaser, both of which contained restrictive non-competition clauses, when he left the purchaser and its successors, and continued to invent and market downhole oilfield equipment - Wenzel sought severance of liability and quantum - The Alberta Court of Queen's Bench refused - The court could not find that severance would end the suit given: (1) the high likelihood of appeal; (2) returning to court for a determination of remedy; (3) possible loss of valuable evidence with the effluxion of time - While the issues were "complex and difficult" and some time and cost would be saved by running a liability trial first and the parties would get to court sooner, those advantages were outweighed by the disadvantages associated with the certainty of returning to trial at some stage for a remedy hearing - See paragraphs 66 to 83.

Cases Noticed:

Collins (J.G.) Insurance Agencies Ltd. v. Elsley Estate, [1978] 2 S.C.R. 916; 20 N.R. 1, refd to. [para. 59].

Doerner, Doerner and Doerner v. Bliss & Laughlin Industries Inc. et al. and Northfield Metal Products Ltd., [1980] 2 S.C.R. 865; 34 N.R. 168, refd to. [para. 59].

Dale and Co. v. Land (1987), 84 A.R. 52; 56 Alta. L.R.(2d) 107 (C.A.), refd to. [para. 59].

Esso Resources Canada Ltd. et al. v. Stearns Catalytic Ltd. et al. (1991), 114 A.R. 27; 77 D.L.R.(4th) 557 (C.A.), consd. [para. 68].

Oil Sands Hotel (1975) Ltd. v. Gaming and Liquor Commission (Alta.) et al. (2002), 331 A.R. 201 (Q.B.), refd to. [para. 69].

Tanguay et al. v. Vincent, [1999] A.R. Uned. 510; 75 Alta. L.R.(3d) 90; 1999 ABQB 814, consd. [para. 72].

Canadian Cancer Society v. Bank of Montreal (1966), 57 W.W.R.(N.S.) 182 (Alta. C.A.), refd to. [para. 72].

Emma Silver Mining Co. v. Grant (1879), 11 Ch. D. 918, refd to. [para. 72].

Karlsen Shipping Co. v. Sefel J. & Associates Ltd. (1978), 9 A.R. 341; 88 D.L.R.(3d) 297 (C.A.), refd to. [para. 72].

Keg River Metis Settlement v. R., [1978] A.U.D. 720 (C.A.), refd to. [para. 75].

Lim v. Home Insurance Co. (1995), 168 A.R. 308 (Q.B.), refd to. [para. 79].

Counsel:

Terry J. Williams and Kevin Feehan (Fraser Milner Casgrain LLP), for the plaintiffs;

Bradley J. Willis (Willis Bokenfohr Thorsrud), for the defendants.

Greckol, J., of the Alberta Court of Queen's Bench, Judicial District of Edmonton, heard this application on November 9, 2004, and delivered the following reasons for judgment on November 19, 2004.