Harris Scientific Products Ltd. v. Araujo, 2005 ABQB 850

• Judge: Veit, J.
• Court: Court of Queen's Bench of Alberta (Canada)
• Case Date: September 08, 2005
• Citations: 2005 ABQB 850;(2005), 382 A.R. 377 (QB)

Harris Scientific Products v. Araujo (2005), 382 A.R. 377 (QB)

MLB headnote and full text

Temp. Cite: [2005] A.R. TBEd. NO.118

Harris Scientific Products Ltd. (plaintiff) v. David Araujo, and Petroleum Research and Production Canada Ltd., and Petroleum Research and Production Canada Ltd., operating under the trade name PRP Canada and PRP Canada, and Petroleum Research and Production Canada Ltd., operating under the trade name Hanson Research, and Hanson Research and Hanson Research Ltd., and Petroleum Research and Production Ltd. (defendants)

David Araujo (plaintiff by counterclaim) v. Harris Scientific Products Ltd., John Wheelwright and Thomas Spenceley (defendants by counterclaim)

(0003 04105; 2005 ABQB 850)

Indexed As: Harris Scientific Products Ltd. v. Araujo

Alberta Court of Queen's Bench

Judicial District of Edmonton

Veit, J.

November 14, 2005.

Summary:

Harris Scientific Products, owned by Spenceley, fired its employee, Araujo. Harris sued Araujo for damages for breach of fiduciary duty. Araujo, claimed that he was wrongfully dismissed and that he suffered damages as a result of an Anton Piller order obtained and executed by Harris.

The Alberta Court of Queen's Bench, in a decision reported 382 A.R. 332, dismissed Harris' claim for damages for breach of fiduciary duty and Araujo's claim for damages for wrongful dismissal. The court, however, allowed Araujo's claim respecting the Anton Piller order, holding that Harris improperly obtained and improperly executed the order. In addition to punitive damages, the court held that Araujo was entitled to an indemnity of costs for these proceedings from Harris ($162,000) because of the gross abuse of the Anton Piller process. Subsequently Araujo sought an order stating that Spenceley (the owner of Harris) be held jointly liable for all, or part, of those costs.

The Alberta Court of Queen's Bench allowed the application in part.

Company Law - Topic 321

Nature of corporations - Lifting the corporate veil - Conditions - The Alberta Court of Queen's Bench stated that absent fraudulent conduct, abuse of process or gross misconduct in the instigation or conduct of litigation, courts should not impose costs awards on principals of corporations - See paragraphs 20 to 24.

Company Law - Topic 321

Nature of corporations - Lifting the corporate veil - Conditions - [See Practice - Topic 7459 ].

Practice - Topic 7459

Costs - Solicitor and client costs - Entitlement - Illegal seizure of property (incl. wrongful obtention and execution of Anton Piller Order) - Spenceley's company, Harris Scientific Products sued a former employee, Araujo - Araujo claimed that he suffered damages because of an Anton Piller order obtained and executed by Harris - The trial judge allowed Araujo's claim and awarded punitive damages against Harris and Spenceley - Harris was ordered to indemnify Araujo for his costs of the proceedings ($162,000) as a sanction for gross abuse of the Anton Piller process - Subsequently, Araujo sought to make Spenceley jointly liable for costs - The Alberta Court of Queen's Bench held Spenceley jointly liable for a quarter of the costs - The court held that it was not functus on this issue - Harris was a real company and was not a "man of straw" put forward by Spenceley to conduct this litigation - Harris was an existing, operating company that bore its own liability for its own actions, but Spenceley was a personal defendant in Araujo's counterclaim - However Spenceley's misconduct was relatively minor in relation to Harris' misconduct - See paragraphs 1 to 35.

Practice - Topic 7765

Costs - Special orders - Costs against nonparty (incl. company principals and parties added by counterclaim) - [See first Company Law - Topic 321 and Practice - Topic 7459 ].

Cases Noticed:

Television Real Estate Ltd. v. Rogers Cable T.V. Ltd., 1997 CarswellOnt 1580 (C.A.), refd to. [para. 20].

Shoal Harbour Marine Service Ltd. (1956), 20 W.W.R.(N.S.) 448 (B.C.S.C.), refd to. [para. 8].

Anchorage Management Services Ltd. v. 465404 B.C. Inc. et al. (1999), 132 B.C.A.C. 72; 215 W.A.C. 72; 1999 BCCA 771, refd to. [para. 22].

Kerr & Richard Sports Inc. v. Fulton et al. (1992), 133 A.R. 382; 10 C.P.C.(3d) 382 (Q.B.), refd to. [para. 23].

Counsel:

Edward R. Feehan (Duncan & Craig LLP), for Harris Scientific Products Ltd.;

Robert M. Curtis, Q.C. (McCuaig Desrochers), for David Araujo.

This matter was heard on September 8, 2005, before Veit, J., of the Alberta Court of Queen's Bench, who delivered the following memorandum on November 14, 2005.