Secure Resources Inc v Wilson, 2021 ABQB 744

Court of Queen’s Bench of Alberta Citation: Secure Resources Inc v Wilson, 2021 ABQB 744 Date: 20210917 Docket: 2103 08890 Registry: Edmonton Between: Secure Resources Inc. Plaintiff - and - Lennard Wilson, Aski Enterprises Inc., John Doe, Jane Doe and ABC Corporation Defendants _______________________________________________________ Endorsement of the Honourable Mr. Justice M. J. Lema _______________________________________________________ A. Introduction [ 1 ] The target of an Anton Piller order and interim injunction (granted by me in an employment-restrictive-covenant context) applies to set aside both orders on various grounds, including material non-disclosure.

[ 2 ] The initial applicant resists, asserting full disclosure, and seeking continuation of both orders. [ 3 ] I find material non-disclosure here and that both orders should be set aside. B.

Analysis [ 4 ] My core finding is that Secure Resources Inc. did not make full disclosure of all material matters in the ex parte application before me. [ 5 ] As I see it, given the current Alberta law on the effect of wrongful dismissals (constructive or otherwise) on non-competition covenants (namely, that such dismissals effectively unplug such covenants, per Globex Foreign Exchange Corporation v Kelcher , 2011 ABCA 240 and ServiceMaster of Canada Ltd v Meyer , 2019 ABCA 130 ), a linchpin issue on the initial application was whether Mr.

Wilson had or had not been constructively dismissed. [ 6 ] I recognize that it was not my function, at the initial application, to make a ruling on that point. But it was imperative for Secure to lay out the material evidence on that issue as part of its "strong prima-facie case" positions on the Anton Piller and injunction applications . [ 7 ] The basic picture painted by Secure's initial brief was that Mr.

Wilson had resigned: Wilson was an employee of Secure until he resigned with no notice on May 28, 2021 [para 3] As a result of ... increasing [performance] concerns, Secure issued Wilson with a performance development letter on May 27, 2021.

On receiving this letter, he resigned and was "furious." [para 8] [see also para 21 of Sazwan affidavit] In response to this [asserted-by-Wilson] defence [of constructive dismissal via wage rollback], [Secure] submits that it is clear on the facts that Wilson chose to resign form his position. [para 53] [ 8 ] I recognize that Secure pointed out, in its initial materials, that Mr. Wilson would or might argue that he was constructively dismissed. Here is how Mr.

Sazwan described that particular dimension: As a result of the [per para 7 described] increasing [performance] concerns, Secure issued Wilson with a performance development letter on May 27, 2021.

On receiving this letter, he resigned and was "furious." [para 8 of Sazwan affidavit]; On June 2, 2021, Secure became aware that Wilson may have been contacting customers and instructed its counsel to issue a cease-and- desist letter [para 12]; Wilson's response to [that] letter was that he "disagree[s]" with the allegation of a breach and then alleges without detail that Secure failed to pay him wages without warning, which amounted to "constructive termination." [para 13]; The defences discussed below are based on Wilson's email response to the cease-and-desist [letter] and speculation [para 50]; Wilson states that there are wages owing to him that amount to constructive termination.

He has not specified what specifically he is referring to, although Secure speculates it may be the temporary thirty (30%) per cent rollback on salaries [para 51]; A recent decision of this Court has found that a rollback that is not accepted can amount to constructive dismissal [ Kosteckyj v Paramount Resources Ltd , 2021 ABQB 225 at para 41 ...] [para 52]; In response to this defence, [Secure] submits that it is clear on the facts that Wilson chose to resign from the position [para 53] [emphasis added] [ 9 ] In contrast, here is Mr.

Wilson's evidence on the constructive-dismissal front: On or about May 20, 2021 [a Secure official] emailed me demanding that I sign a "transfer agreement" ... that effectively eliminated my position with Secure and transferred my employment and Employment Agreement to [a new Secure entity]. ... [She] told me that I had to sign the Transfer Agreement by May 28, 2021, which was also the day I was scheduled to receive my regular paycheque.

However, I declined to do so. [para 22 of Wilson affidavit] In paragraph 7 of the Sazwan Affidavit, Sazwan says that "all salary employees received a temporary 30% salary reduction." ... As I understand it, there were only three salaried employees at Secure, and was the only one ... to receive a 30% salary reduction. This was reduction was imposed upon me on or about April 30, 2021. [para 23] In or about the same time frame, Secure continued to withhold payment of my tonnage bonus, which was an integral component of my compensation as set out in ... the Employment Agreement.

Although it is called a "bonus" in [that agreement], it is in fact a commission. Secure did not pay my full tonnage bonus due in season 3 (2019-20) or any portion of my tonnage bonus for season 4 (2020-21). These payments are due and owing as per

section 2.4 of the Employment Agreement [which states (in part): "The Tonnage bonus will be approved by the [Chief Commercial Officer] and paid within 15 days of the receivables for each tonnage tier having been paid in full] . [para 24] The 3 0% reduction in my salary and the withholding of my bonuses were not expressed as being temporary in nature, and I did not consent to them . [para 25] On May 26, 2021, I had a meeting with Sazwan in his office and Romas on the phone to discuss various topics including the

withholding of my bonuses and my 30% salary reduction, which by then had been reflected in two consecutive pay periods. In response, I was told that they would look into paying me some of my outstanding bonuses together with my regular pay on May 28, 2021 . [para 26] The next day, however, I was provided with [a] Warning Letter [Ex C to Sazwan affidavit].

The allegations in this letter to the effect that I was not meeting expectations and was required to improve my performance are completely false. ... [para 27] On May 28, 2021, I discovered that neither my regular pay nor any portion of my outstanding bonuses had been deposited into my bank account. Accordingly, I attended at the Plant and advised Secure's [payroll person] that I was treating Secure's failure to pay my full wages as constructive dismissal .

I then provided her with [various company items], a letter [asserting] the constructive dismissal, a document outlining the monies owed to me , and three expense reports.

Attached as Exhibit "G" ... are copies of the documents I provided to [her] at that time, together with emails I subsequently exchanged with her regarding this event. [para 29] After my departure on May 28, 2021, Romas sent me a text message indicating that she would have my bonus and backup prepared on my final pay to be issued in a timely manner. ... [para 30] Although Secure subsequently provided me with my May 28, 2021 paycheque and reimbursement of the 30% pay cut it had earlier imposed, it has continued to refuse or fail to pay any portion of my bonuses , vacation pay, expenses or statutory severance. ... [para 31] [emphasis added] [ 10 ] I am not in a position to resolve the conflicts over whether, for example, the 30% wage cut was temporary or affected all employees.

But Secure did not argue or offer any evidence that Wilson agreed to the rollback. [ 11 ] As well, I am not in a position to determine whether he had effectively acquiesced to the long delays in paying his tonnage bonuses. [ 12 ] Same for determining precisely what happened on the "transfer to new entity" front. [ 13 ] But given the case law cited by Wilson at para 77 of his brief (i.e. cases where 20% wage cuts, commission-payment failures, salary-payment failures, and "demands to sign a new [employment] agreement with a new company" were recognized as constructive dismissals), Secure was obliged, as part of its duty of full disclosure, to provide a full and fair account of the material events. [ 14 ] Secure failed to discharge that duty in its initial materials and submissions, in particular by: • not even mentioning the long-outstanding bonuses (which are in the neighbourhood of $60,000); • same for the "transfer to new entity" aspect; • omitting any mention of the May 26th meeting, where Wilson had outlined his unpaid-salary and outstanding-bonuses concerns and where Secure had said it would "look into" paying "some" of his outstanding bonuses and his regular pay on May 28th. (That omission puts a vastly different cast on the "step up performance" letter on May 27th, which makes no reference to outstanding pay or bonuses.

Any conciliatory attitude on Secure's part on the 26th looks to have completely evaporated by the 27th); • attempting to characterize Wilson's salary-related concerns as somehow vague and unspecific ("alleges without detail" and "without [specifying] what specifically he is referring to", and "Secure speculates it may be the ... 30 per cent rollback on salaries").

This in the face of Wilson's crystal-clear accounting of the outstanding salary amounts (part of Ex G of his affidavit, being material provided by him to Secure later on May 28th) and also Secure's apparent ability to "look into" paying him his regular salary i.e. apparently without needing any more information him on the 26th; • offering no evidence to anchor its description of the salary rollback as "temporary", let alone its implicit assertion that Wilson (and any other "rolled-back" employees) should have understood it as such; • not explaining what reassurance Wilson should have drawn from Secure's "we'll look into it" response to his as-of-May-26th salary and bonus concerns; and • not offering any explanation for the long delays in paying Wilson's bonuses. [ 15 ] Effectively, Secure tried to portray a clear resignation, with any (minor) uncertainty arising from some kind of misunderstanding about a temporary salary rollback. [ 16 ] Whereas, on Wilson's uncontradicted evidence, he was effectively "way out on a ledge", having experienced a major salary cut (for two pay periods), ongoing delays in paying material bonuses, a demand to shift his services to a new entity (even if he ultimately declined to do so), with Secure telling him that it would "look into" some of his concerns and (possibly) partially square up with him by May 28th, and immediately laying down new performance demands (whether or not warranted) with no mention of his salary or bonus concerns, followed (on the 28th) by him not receiving, by the usual auto-deposit times, any additional amounts, let alone his regular pay. [ 17 ] As it turns out, Secure's evidence (from its payroll person) is that Secure had banking problems on the 28th that prevented any payroll or other amounts being paid to any of its employees, and it appears that, later that day, Wilson received both his regular pay and a top-up payment (reversing the earlier rollbacks). [ 18 ] But he laid down his constructive-dismissal position before learning of those payments, those payments did not reflect full pay-out of amounts owing to him (e.g. leaving the bonuses unpaid in full), and, in any case, if Secure's actions leading up to the payments amounted to constructive dismissal (again, on which I am not making any finding) those payments did not necessarily erase the impact of the earlier non- or short payments or eclipse whatever constructive-dismissal position Wilson had acquired as a result of them.

[ 19 ] In para 13 of its reply brief, Secure stated: On the issue of constructive dismissal, the Court was advised at the initial application that Wilson had received a wage rollback and that such a rollback can, in some circumstances, be considered constructive dismissal. Wilson's evidence does not change the fact that he elected to resign despite being repaid the wage rollback, and this was done following the Warning Letter. [ 20 ] Whether Wilson "elected to resign" is an open question (as noted), but this framing gets the sequencing wrong.

However his decision to step away from Secure should be labeled, it occurred, on his uncontradicted evidence, before he was aware of receiving the repayment, and, in any case (as noted), receiving a catch-up payment does not necessarily erase the impact of the shortfall in the first place (whatever it might have been). [ 21 ] Moreover, the "Warning Letter" cannot be regarded as some kind of "just case" termination beating Wilson to the punch: it ended with an explicit recognition that the employment relationship would continue, even if only contingently i.e. on improved performance (if such was actually required): "A meaningful shift in your work product [etc] ... must occur in order for your employment to continue." (excerpt from May 27th letter, which (again) made no reference to the salary and bonus concerns discussed the day before). [ 22 ] All in all, given the centrality of "constructive dismissal or not", Secure presented a materially incomplete picture of the key events bearing on that issue. [ 23 ] If I had received the reflecting-the-above-incremental-details fuller picture from Secure at the initial application, I would have found that Secure had not met the "strong prima facie" requirement for either order, instead considerable uncertainty over whether Wilson had resigned versus having been constructively dismissed and, by extension, given the governing ABCA precedents ( ServiceMaster and Globex ), over whether the restrictive covenants were still in place.

C.

Conclusion [ 24 ] Given the critical importance of full and fair disclosure on such ( ex parte ) applications, and applying the guidance of Celanese Canada Inc v Murray Demolition Corp , 2006 SCC 36 (para 30 ) and Secure 2013 Group Inc v Tiger Calcium Services Inc , 2017 ABCA 316 (paras 44-47 , 61 and 177), as explained further by Wilson at paras 41-48 of his brief, I am setting aside the Anton Piller and injunction orders for material disclosure shortfalls. [ 25 ] In any case, I would also have set aside both orders for the "excessive speculation" reasons outlined by Wilson at paras 35-36 and 49-51 of his brief. [ 26 ] Given the core focus of Secure's initial application (i.e. the two orders) and of the comeback application (i.e. whether those orders should stand or fall), I am not prepared to expand the reach of the latter application to address Wilson's bid for

summary dismissal of Secure's claims against him or to grant him partial (or any)

summary judgment of his counterclaim against Secure. Here I accept Secure's argument that it has (or may have) additional evidence bearing on, and additional submissions to make about, those applications. [ 27 ] Wilson is entitled to costs of the comeback application. I invite the parties' submissions about the scale of those costs (if they cannot agree by September 24th), via letter (3-page maximum) to my assistant (Stacy Adams) by 4:30 pm on October 1, 2021. [ 28 ] I thank the parties for their helpful written and oral submissions. Heard on the 30 th day of August, 2021. Dated at Edmonton, Alberta this 17 th day of September, 2021. M. J. Lema J.C.Q.B.A. Appearances:

Eugene J. Bodnar and Neil Tichkowsky Scot Venturo Rudakoff LLP for the Defendants Lennard Wilson and Aski Enterprises Inc. Anthony R. Purgas and James McTague Reynolds Mirth Richards & Farmer LLP for the Plaintiff