Harris Scientific Products Ltd. v. Araujo, 2005 ABQB 603

• Judge: Veit, J.
• Court: Court of Queen's Bench of Alberta (Canada)
• Case Date: August 05, 2005
• Citations: 2005 ABQB 603;(2005), 382 A.R. 332 (QB)

Harris Scientific Products v. Araujo (2005), 382 A.R. 332 (QB)

MLB headnote and full text

Temp. Cite: [2005] A.R. TBEd. SE.028

Harris Scientific Products Ltd. (plaintiff) v. David Araujo, Petroleum Research and Production Canada Ltd., Petroleum Research and Production Canada Ltd., operating under the trade name PRP Canada and PRP Canada, Petroleum Research and Production Canada Ltd., operating under the trade name Hanson Research, 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 603)

Indexed As: Harris Scientific Products Ltd. v. Araujo

Alberta Court of Queen's Bench

Judicial District of Edmonton

Veit, J.

August 5, 2005.

Summary:

Harris Scientific Products, owned by Spenceley, fired its employee, Araujo. Harris claimed that the dismissal was for cause arguing that Araujo, a key employee, breached his fiduciary duty by setting up employment with a competitor while still employed with Harris and soliciting customers of Harris. Harris sued Araujo, alleging that it suffered business losses because of Araujo's activities. Araujo, claimed that he was wrongfully dismissed and sued Harris for damages in lieu of notice. Araujo also claimed that he suffered damages as a result of an Anton Piller order obtained and executed by Harris.

The Alberta Court of Queen's Bench 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. The court awarded punitive damages and costs as a sanction for abuse of the Anton Piller order.

Damage Awards - Topic 550

Torts - Injury to land and buildings - Trespass (incl. obtention and execution of Anton Piller Order) - Harris Scientific Products, which was owned by Spenceley, fired an employee, Araujo - Harris obtained an Anton Piller order and had the order executed at Araujo's residence - Araujo claimed that he suffered damages as a result of the order - The Alberta Court of Queen's Bench allowed Araujo's claim - The court held that the Spenceley's affidavit, upon which the Anton Piller application was based, contained crucial errors and misrepresentations - There were also a number of defects in the manner in which the order was executed - The court awarded $35,000 damages for trespass (including an award for the mental distress brought on by the obtention and execution of the order) - The court also awarded punitive damages of $10,000 each against Harris and Spenceley - Further, Harris was ordered to indemnify Araujo for his costs of the proceedings as a sanction for gross abuse of the Anton Piller process - See paragraphs 97 to 154.

Damage Awards - Topic 2021

Exemplary or punitive damages - Trespass to buildings (incl. obtention and execution of Anton Piller Order) - [See Damage Awards - Topic 550 ].

Damages - Topic 1300

Exemplary or punitive damages - Trespass (incl. obtention and execution of Anton Piller Order) - [See second Damages - Topic 4212 ].

Damages - Topic 4212

Torts affecting land and buildings - Normal measure - Trespass (incl. obtention and execution of Anton Piller Order) - The Alberta Court of Queen's Bench discussed what damages should be awarded in trespass where a claimant suffered damages arising from a defective issuance and execution of an Anton Piller order - The court stated that "damages for trespass resulting from a defective Anton Piller order should not be so low as to condone the wrongdoing; the use of state powers to breach an individual's privacy must be jealously guarded. Even where the target of the order has suffered no, or little, in the way of pecuniary damage, the level of damages awarded can be more than nominal and can reflect mental distress. In Alberta, trespass damages are at large; trespass is therefore a sufficient basis to award such damages. In Canadian jurisdictions where trespass damages are not at large, recourse to the undertaking in damages may be required in order to achieve adequate compensation." - See paragraph 105.

Damages - Topic 4212

Torts affecting land and buildings - Normal measure - Trespass (incl. obtention and execution of Anton Piller Order) - The Alberta Court of Queen's Bench discussed what damages should be awarded in trespass where a claimant suffered damages arising from a defective issuance and execution of an Anton Piller order - The court stated that it rejected a mere rebuke coupled with a punitive award of costs in favour of the more assertive approach of the English courts - The court stated that "trespass and aggravated or exemplary damages are the two most obvious heads of damages called into action wherever the target's rights have been breached due to the wrongful obtention or execution of an Anton Piller order. Where, as in this case, there has been seizure of items outside the scope of the order ... or more people executing the order than the order allowed ... damages can be awarded in trespass" - The court noted that in Alberta damages for trespass, apart from a proved loss, were at large - See paragraphs 113 to 118.

Equity - Topic 3606

Fiduciary or confidential relationships - General principles - What constitutes a fiduciary relationship - [See Master and Servant - Topic 343 ].

Master and Servant - Topic 343

Fiduciary duty - When owed - Harris Scientific Products fired its office manager, Araujo, who did work that supported the company's sales effort - Harris claimed that the dismissal was for cause because Araujo, being a key employee, breached his fiduciary duty by setting up employment with a competitor while still employed with Harris and soliciting customers of Harris - The Alberta Court of Queen's Bench dismissed the fiduciary duty claim, holding that Araujo was not a key employee - The court held that although he was historically and overall, a valued employee, at the time of his dismissal he did not have the power to put Harris at legal or practical risk - The court stated that the fact that Araujo was neither an officer or director was clearly not determinative of whether he should be characterized as a key employee, nor was the fact that he has received employer funded training - Because he was not a key employee and not burdened with fiduciary obligations, he was entitled to receive and consider offers of employment from Harris' competitors (i.e., this was not actionable disloyalty) - In any event, even if there was a fiduciary relationship, Harris failed to prove that it suffered damages - See paragraphs 59 to 79.

Master and Servant - Topic 1982

Remuneration - Vacation pay - Entitlement to - Harris Scientific Products fired its office manager, Araujo, who did work that supported the company's sales effort - Araujo claimed damages for wrongful dismissal and claimed entitlement to vacation pay - His claim for vacation pay had been rejected by the Employment Standards Office of Alberta Human Resources and Employment - The Alberta Court of Queen's Bench dismissed his claim, holding that the cumulative effect of a number of incidents justified Harris terminating Araujo for insubordination - The incidents included a disrespectful retort, a refusal to complete a task, throwing a company jacket on the floor in the presence of Harris customers, etc. - The court also rejected his claim for vacation pay, but noted that the finding of the Employment Standards Office was not binding on the court - See paragraphs 80 to 96.

Master and Servant - Topic 4207

Duties of servant - Fiduciary duty - [See Master and Servant - Topic 343 ].

Master and Servant - Topic 7554

Dismissal or discipline of employees - Grounds - Wilful disobedience or insubordination - [See Master and Servant - Topic 1982 ].

Practice - Topic 3378.9

Interim proceedings - Preservation of property - Anton Piller Order - General - The Alberta Court of Queen's Bench stated that "Alberta courts might usefully consider the adoption of English practice standards for Anton Piller orders as found in Practice Direction Part 25 ..." - The court noted that similar standards were adopted in Australia - The court stated that "Both practice standards include useful mention of the judicial discretion to dispense with the services of an independent Supervising Solicitor. However, the obvious benefit of an independent solicitor in conducting Anton Piller searches, especially in cases such as this one where the applicant gained unrestricted access to solicitor-client privileged material cannot be overemphasized ... One other factor which the English practice rules emphasize is the possibility of requiring the actual funding of the undertaking in damages and of insuring the chattels that are seized ... A scan of English case law indicates that, since the adoption of the most recent rules of practice relating to Anton Piller procedures, there have been relatively few contested proceedings; the rules therefore appear to have at least partially achieved the objective of protecting against abuses of Anton Piller orders" - See paragraphs 107 to 112.

Practice - Topic 3379.4

Interim proceedings - Preservation of property - Anton Piller Order - Costs - [See Damage Awards - Topic 550 and both Practice - Topic 3379.5 ].

Practice - Topic 3379.5

Interim proceedings - Preservation of property - Anton Piller Order - Effect of undertaking as to damages and costs - The Alberta Court of Queen's Bench discussed what use could be made of an undertaking in damages provided for in an Anton Piller order - The court stated that "the measure of damages to be applied to an undertaking given for an Anton Piller order is the same as for breach of contract. One of the important components of that measure of damages is foreseeability. It is foreseeable that if an Anton Piller order is improperly obtained, a trespass results. Even where an order was properly obtained, it is foreseeable that it could be improperly executed" - The court also discussed the relationship between costs and an undertaking in damages in this context - See paragraphs 140 to 154.

Practice - Topic 3379.5

Interim proceedings - Preservation of property - Anton Piller Order - Effect of undertaking as to damages and costs - The Alberta Court of Queen's Bench stated that the effect of rule 468 of the Alberta Rules of Court was that a litigant who gave an undertaking in damages to an Alberta court in order to obtain an Anton Piller order was deemed to undertake to pay any costs awarded to the target in setting aside the order and recovering on the undertaking as to damages - See paragraphs 152 and 153.

Practice - Topic 3379.6

Interim proceedings - Preservation of property - Anton Piller Order - Damages for wrongful obtention or execution of order - [See Damage Awards - Topic 550 and both Damages - Topic 4212 ].

Practice - Topic 7459

Costs - Solicitor and client costs - Entitlement - Illegal seizure of property (incl. wrongful obtention and execution of Anton Piller Order) - Harris Scientific Products, which was owned by Spenceley, fired an employee, Araujo - Harris obtained an Anton Piller order and had the order executed at Araujo's residence - Araujo claimed that he suffered damages as a result of the order - The Alberta Court of Queen's Bench allowed Araujo's claim and awarded damages, including punitive damages, against Harris and Spenceley - Harris was ordered to indemnify Araujo for his costs of the proceedings as a sanction for gross abuse of the Anton Piller process - The court stated that Araujo should not be out one dime for the time, trouble and expense required to redress the situation - See paragraphs 97 to 154.

Cases Noticed:

International Corona Resources Ltd. v. LAC Minerals Ltd., [1989] 2 S.C.R. 574; 101 N.R. 239; 36 O.A.C. 57, refd to. [para. 60].

Ridgewood Electric Ltd. (1990) v. Robbie, 2005 CarswellOnt 614, refd to. [para. 106].

Netsmart Inc. v. Poelzer et al. (2002), 324 A.R. 260; 2002 ABQB 800, refd to. [para. 106].

Richel v. Stevenson et al. (1998), 235 A.R. 49; 1998 ABQB 1039, refd to. [para. 107].

Indian Manufacturing Ltd. et al. v. Lo et al. (1995), 101 F.T.R. 208 (T.D.), refd to. [para. 107].

Columbia Pictures Industries Inc. v. Robinson (1987), 3 I.P.J. 317, refd to. [para. 113].

Hudson's Bay Co. v. White (1997), 7 C.P.C.(4th) 109 (Ont. Gen. Div.), refd to. [para. 114].

Fletcher Sutcliffe Wild Ltd. v. Burch, [1982] F.S.R. 64 (Ch.), refd to. [para. 114].

Royal Bank of Canada v. Got (W.) & Associates Electric Ltd. et al. (1997), 196 A.R. 241; 141 W.A.C. 241 (C.A.), refd to. [para. 115].

Digital Equipment Corp. v. Darkcrest Ltd., [1984] Ch. 512, refd to. [para. 116].

Bank of Nova Scotia v. Dunphy Leasing Enterprises Ltd. (1991), 120 A.R. 241; 8 W.A.C. 241 (C.A.), refd to. [para. 118].

Geophysical Service Inc. v. Sable Mary Seismic Inc. and Kimball (2003), 213 N.S.R.(2d) 303; 667 A.P.R. 303; 2003 NSSC 73, refd to. [para. 120].

Murano et al. v. Bank of Montreal et al. (1995), 20 B.L.R.(2d) 61 (Ont. Gen. Div.), refd to. [para. 124].

Whiten v. Pilot Insurance Co. et al., [2002] 1 S.C.R. 595; 283 N.R. 1; 156 O.A.C. 201; 2002 SCC 18, refd to. [para. 130].

Sylvan Lake Golf & Tennis Club Ltd. v. Performance Industries Ltd. and O'Connor (No. 2), [2002] 1 S.C.R. 678; 283 N.R. 233; 299 A.R. 201; 266 W.A.C. 201; 2002 SCC 19, refd to. [para. 130].

Village Gate Resorts Ltd. v. Moore et al. (1999), 130 B.C.A.C. 267; 211 W.A.C. 267; 37 C.P.C.(4th) 5 (C.A.), refd to. [para. 145].

Hadley v. Baxendale (1854), 156 E.R. 145 (Ex. Ct.), refd to. [para. 145].

Kempling v. Hearthstone Manor Corp. (1996), 184 A.R. 321; 122 W.A.C. 321 (C.A.), refd to. [para. 146].

Burgess v. Burgess, [1996] E.W.J. No. 4156 (C.A.), refd to. [para. 148].

Pulse Microsystems Ltd. v. SafeSoft Systems Inc. (1996), 110 Man.R.(2d) 163; 118 W.A.C. 163; 134 D.L.R.(4th) 701 (C.A.), refd to. [para. 149].

Girocredit Bank Aktiengesellschaft der Sparkassen v. Bader (1999), 28 C.P.C.(4th) 264 (B.C.S.C.), refd to. [para. 151].

James v. Stonehocker, 2002 CarswellOnt 2728 (Sup. Ct.), refd to. [para. 151].

Statutes Noticed:

Rules of Court (Alta.), rule 468 [para. 152].

Authors and Works Noticed:

Australia, Practice Notes, http://www.fedcourt.gov.au/how/practice_notes_cj10.htm, generally [para. 107].

England, Practice Direction, Part 25, http://www.dca.gov.uk/civil/procrules_fin/menus/ rules.htm, generally [para. 107].

Counsel:

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

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

This matter was heard on April 11 to 20, 2005, before Veit, J., of the Alberta Court of Queen's Bench, Judicial District of Edmonton, who delivered the following memorandum of decision on August 5, 2005.