Earth Drilling Co. Ltd. v Keystone Drilling Corp., 2022 ABKB 744

Court of King’s Bench of Alberta Citation: Earth Drilling Co. Ltd. v Keystone Drilling Corp., 2022 ABKB 744 Date: 20221109 Docket: 2203 11165 Registry: Edmonton Between: Earth Drilling Co. Ltd. Plaintiff - and - Keystone Drilling Corp., Wollman Mechanical Corp., Expatriate Consulting Ltd. Stefan Murphy, and Randy Wollman Defendants _______________________________________________________ Reasons for Judgment of the Honourable Justice M. J. Lema _______________________________________________________ A.

Introduction [ 1 ] A drilling company seeks an injunction, based on asserted breaches of confidential-information and fiduciary duties, against two individuals formerly associated with it and now pursuing their own drilling operation. [ 2 ] No injunction is warranted here.

B. No strong prima facie case or serious issue to be tried [3] The plaintiff is Earth Drilling Co Ltd. (EDC).

The defendants are Randy Wollman and Stefan Murphy, their personalcorporations, and their drilling company, Keystone Drilling Corp (KDC). [4] The parties disagree about whether the first-branch test for an injunction is “a serious issue to be tried” (per EDC) or “astrong prima facie case” (per the defendants). [5] I find that EDC has not shown a strong prima facie case or a serious issue to be tried. [6] As explained below, the evidence shows that the information claimed as proprietary or otherwise confidential by EDC wasgenerated by a separate (and non-predecessor) company playing no role here, was created or co-created by or shared with externalparties, lacked the necessary “quality of confidence”, or some combination. [7] The net result is that EDC lacks the necessary informational foundation for its various asserted claims against thedefendants. [8] On the fiduciary aspect, the defendants did not have that status at EDC. [9] The defendants were, or became, independent contractors to EDC. [10] My analysis follows.

Beck/Tervita not actually a predecessor to EDC [11] EDC asserts ownership of various technological know-how, namely, information relating to the combination of a certaindrilling rig and drilling head, including various enhancements to that combination. [12] It purports to include information amassed on those subjects by what it calls “predecessor corporation(s).” [13] Beck Drilling and Environmental Services Ltd was federally incorporated on July 12, 1990, and extra-provincially registeredin Alberta on July 24, 1990.

On March 14, 2012, Beck became Tervita Drilling and Coring Services Ltd. (I will refer to this company as“B/T”.) [14] EDC was incorporated in 1977 (in Saskatchewan), but it was not until August 13, 2012, that certain Wegleitner familymembers purchased EDC from its former owner and amalgamated it with another Saskatchewan corporation (101213120 SaskatchewanLtd) (the combined entity continuing under the EDC name), and not until March 21, 2013, that EDC was extra-provincially registered tooperate in Alberta. [15] B/T continued its operations for a few years after EDC was acquired. [16] The principal of B/T was Gary Wegleitner, the father of EDC’s current principal, John Paul Wegleitner (Wegleitner). [17] The critical point here is that B/T is not a predecessor of EDC i.e., was not amalgamated with, merged into, continued as orotherwise folded into EDC. [18] In other words, EDC did not, by any means of corporate combining, come to inherit whatever technical information andassociated rights B/T had amassed. [19] EDC cited Suncor Inc v Canada Wire & Cable Ltd, (AB KB), [1993] 3 WWR 630 (ABQB) (Forsyth J.)on this aspect.

I find that the corporate metamorphoses examined in that case, with the essential carry-through of directors, shareholdersand employees, are distinguishable from, and offer no guidance on, the characterization of EDC as some kind of successor to B/T here,where no such overlaps or at least not to the same degree. In any case, that case focused on successor-corporation liabilities and thepossibility that a certain U.S. approach to that issue might apply. EDC did not show whether that approach was adopted, in that case orelsewhere, or why it would necessarily apply to information rights.

No evidence that EDC acquired B/T’s rights to proprietary information (if any) [20] The evidence did not show that EDC acquired that information and associated rights e.g., by way of an assignment of B/T’srights in and relating to that information, as was seen in Composite Technologies Inc v Shawcor Ltd, 2017 ABCA 160 at paras 102-119,especially para 116: Taking into account the stipulated

definitions of the capitalized terms in paragraph 3, the text of the whole document, the purposeaccounting for the technology transfer agreement and the business environment in which it would operate, we unhesitatingly concludethat Composite Technologies transferred to Proflex Pipe any interest it had in the issued and pending patents described inschedule A, any interest it may have in future patents relating to flexible composite pipe technology and any other proprietaryinformation not protected by the issued or pending patents disclosed in

schedule A that would allow Proflex Pipe to manufactureflexible composite pipe. This is a comprehensive sale on the part of Composite Technologies. [para 68] [footnotes omitted] [21] Instead, the technological know-how amassed by B/T migrated to EDC simply through “family connection” i.e., by way ofWegleitner, who worked at one point at B/T. And by way of the defendants who worked at B/T before doing the same at EDC:

• Mr. Wollman was employed by B/T from 2007 to 2009 as a supervisor. From 2009 to 2015, Mr. Wollman provided his services to B/T as an independent contractor. In 2015, Mr. Wollman started providing his services to EDC as an independent contractor; and • from 2004 to 2012, Mr. Murphy was employed at B/T as a water hauler, helper, and driller. In 2015, Mr. Murphy was hired by EDC as a helper and moved to more responsible positions. In 2020, Mr. Murphy started providing his services to EDC as an independent contractor.

Information claimed as proprietary by EDC amassed by B/T [ 22 ] The central thrust of EDC’s information claim – that it amassed certain drilling know-how – is effectively undercut by its own evidence, which was that all, or virtually all, of that know-how was amassed by B/T, as it worked through various drilling problems and came to pair a particular rig with a particular drill head, plus make various enhancements to that combination. [ 23 ] This is reflected in how EDC describes the information i.e., as having been amassed “by ED and/or any predecessor companies .” (As explained, B/T is not actually a predecessor, in the sense of having been folded into EDC one way or another.) Here is one batch of examples (Wegleitner affidavit sworn July 19, 2022, paras 8-10): In 2007, Earth Drilling and/or its predecessor corporation(s) , purchased the first four of the Earth Drilling Sonic Rigs.

The winter of 2007 and into 2008 consisted of many months of Earth Drilling, and/or its predecessor corporation(s) , undertaking much “trial and error” work in the Fort McMurray area to equip the Earth Drilling Sonic Rigs for the Canadian winter. This “trial and error” work cost millions of dollars.

During the period 2007-2010 (inclusive), Earth Drilling, and/or its predecessor corporation(s) , spent many more millions of dollars in equipping the Earth Drilling Sonic Rigs with newer and better designed Sonic drill heads that could be used in Alberta and could withstand the severe working conditions associated with the Canadian winter. [ 24 ] EDC did not assert that any of the technological know-how in question derived from any of EDC’s activities before it entered the Weigleitner family orbit in August 2012. [ 25 ] Accordingly, the above references to “trial and error” work and other information-generating activities in 2007, 2007-2008, and 2007-2010 were necessarily to work and activities of B/T i.e., had nothing to do with EDC. [ 26 ] At other points, EDC refers to time periods after or at least including those when EDC was in the Weigleitner family orbit.

For example: Since 2010, Earth Drilling, and/or its predecessor corporation(s) , have invested millions of dollars more in enhancing the Earth Drilling Sonic Rigs for use in the Oil Sands, in particular.

In 2017, Earth Drilling was awarded a President’s Award in recognition of the development of the Earth Drilling Sonic Rigs by Earth Drilling and the enhancements made to the drill heads, and others, on the Earth Drilling Sonic Rigs, which enhancements are confidential and proprietary to Earth Drilling and afford to Earth Drilling a competitive advantage (collectively, the “Enhancements”). [ 27 ] But, by definition, with EDC not a presence on the stage here until August 2012 (at the earliest) and, more likely, until March 21, 2013 (when it was extra-provincially registered in operate in Alberta), investments “since 2010” may mean investments made in 2010, 2011, 2012 and early 2013 i.e., before EDC was on the scene i.e., may have been made exclusively by B/T. [ 28 ] Even the reference to a 2017 award is ambiguous, with EDC not specifying precisely what enhancements were recognized or, more importantly, when they were developed.

With EDC referring to the “Earth Drilling Sonic Rigs” as such even when referring to the years 2010-2013, it is not clear that the recognized improvements were made by EDC or even (at minimum) at the time it was on the stage (i.e., after 2012 or more likely spring 2013). [ 29 ] The same intention to straddle the pre-EDC and EDC-in-action timelines is seen in EDC’s responses to certain undertakings given in cross-examination of Wegleitner. For instance: Earth Drilling and/or its predecessor corporation(

s) had unsuccessfully attempted to utilize the Diedrich sonic drilling head with Gus Pech sonic drilling rigs. … It cost Earth Drilling and/or its predecessor corporation(

s) millions of dollars to repair and replace the Diedrich sonic drilling heads …. As discussed in greater detail in Undertaking Response #5, Earth Drilling and/or its predecessor corporation(s) , then sought to replace the Diedrich sonic drilling heads, equipped to the Gus Pech sonic drilling rigs, with Roussy sonic drilling heads. Since this type of combination rig had never before been utilized for mining in the Alberta Oil Sands, Mr. [JP] Weigleitner, Mr. Wollman and Mr. Murphy spent significant time and resources in adapting the Gus Pech sonic drilling rigs to work effectively with the Roussy sonic drilling heads. Earth Drilling and/or its predecessor corporation(

s) spent millions of dollars adapting the Gus Pech sonic drilling rigs to work with the Roussy sonic drilling head. [ 30 ] EDC distilled its proprietary-information claim to the evidence described in paras 13, 34 and 35 of its brief, plus response #5 to Wegleitner’s undertakings, the latter reviewed above. [ 31 ] The cited evidence adds nothing material to that claim. [ 32 ] Here is paragraph 13 of EDC’s brief: Mr. Wollman and Mr. Murphy were hired by the Wegleitner family in 2006 and 2004, respectively. [FN 9] Mr. Wollman and Mr.

Murphy have, in one capacity or another, worked for the Wegleitner family for the vast majority of their working careers. They were relied upon and entrusted by the Wegleitner family. [FN 10] As such, when Mr. Wollman and Mr. Murphy transitioned into their roles at

Earth Drilling from Tervita in or around 2015, they had access to Earth Drilling’s trade secrets and confidential information, which includes, among other things, the details pertaining to the Earth Drilling Sonic Rigs. Specifically, the methods and systems developed to successfully combine and operate the Gus Pech sonic drilling rig with the Roussy sonic drill head, and all the enhancements and modifications made to the Earth Drilling Sonic Rigs (“the Enhancements”). [FN 11] Additionally, Mr. Wollman and Mr.

Murphy received specialized training with respect to the Enhancements, maintenance and repair of the Earth Drilling Sonic Rigs and were provided access to key stakeholders. [FN 12] [emphasis added] [ 33 ] Footnote #11 links to “Wegleitner transcript at page 21, lines 1-3 and undertaking #5.” I have already examined undertaking response #5 above. Here is the identified extract from that transcript: … We have made numerous enhancements and air modifications, hydraulic modifications, lots of stuff. [ 34 ] Footnote 12 is to the same transcript (page 29 at lines 5-11 and 18-21): And so, let’s break that down a bit.

What tools are you claiming that Earth Drilling had that was proprietary to Earth Drilling? Just the know-how, the knowledge, the workings, the dealings, the access to clients, the visit to Gus Pech. Everything we did to enhance or change the equipment. … And was there something specifically that Earth Drilling did that they told Mr. Wollman was confidential and was not to be disclosed?

No, he was entrusted. [ 35 ] Nothing in paragraph 13 or in these footnoted materials adds anything material to what EDC presented in its undertaking response #5, which I have already found failed to prove actual enhancements or modifications by EDC itself. [ 36 ] Here is paragraph 34: Mr. Wegleitner and Mr. Roussy met in or around the winter of 2009 at the NGWA Water Well Show in Las Vegas. Mr. Wegleitner developed a relationship with Mr.

Roussy and was in the process of attempting to find a better alternative to the current Diedrich sonic drill heads, that were being utilized by Earth Drilling’s predecessor corporation at that time. The Diedrich sonic drilling heads were an unmitigated disaster when combined with a Gus Pech sonic drilling rig.

The combination of the Diedrich sonic drilling head and the Gus Pech sonic drilling rig was a “grenade” [sic] that would just blow up again and again. [footnotes omitted] [emphasis added] [ 37 ] As with much of the evidence already reviewed, EDC again anchors its proprietary-information claim in long-ago information amassed by B/T. [ 38 ] Finally, here is paragraph 35: By 2022, only three people at Earth Drilling had the technical know-how to combine the Gus Pech sonic drill rig and the Roussy sonic drill head [:] Mr. Murphy, Mr. Wollman and Mr.

Wegleitner following years of trial and error in consultation with SDC employees and its owner Mr. Roussy (see below for further details). Mr. Murphy and Mr. Wollman were key in the modification, maintenance, repair, and operation of the Earth Drilling Sonic Rigs. Further, under the direction of Mr. Wegleitner, Mr.

Wollman was the primary person tasked with making the many modifications and enhancements to the Earth Drilling Sonic Rigs. [footnotes omitted] [emphasis added] [ 39 ] The “details below” comment links to paragraph 36: SDC employees also helped in troubleshooting issues with the Roussy sonic drill head. SDC employees that helped are Bill Fitzgerald (operations manager), Randy and Steve. In particular, SDC’s Randy was very helpful in assisting with rebuilding and modifying the Roussy sonic drill heads, but the other SDC employees generally were helpful in assisting with rebuilding the Roussy sonic drill heads.

Contact with the SDC remains current by at least Mr. Murphy. [ 40 ] Nothing in paras 35 or 36 adds anything material to the state of affairs reflected in undertaking response #5. If anything, these paragraphs show that outsiders to EDC – namely, the identified SDC employees, at minimum – were privy to at least some of the information generated by the work to pair the identified rig with the identified head i.e., this was not exclusively “EDC information”, as discussed further below.

Wollman and Murphy gleaned information while providing services to B/T [ 41 ] The evidence is clear that both Wollman and Murphy provided services to B/T i.e., before providing them to EDC. Per the Wegleitner affidavit referred to above: Mr. Wollman was hired by a predecessor corporation of Earth Drilling by my father in 2005. As an employee of the predecessor corporation to Earth Drilling , Mr. Wollman’s education as a heavy-duty mechanic was paid for completely by the predecessor corporation to Earth Drilling . From 2005-2012 (inclusive), Mr.

Wollman was the lead heavy-duty mechanic for the predecessor corporation to Earth Drilling . Beginning in 2007, as the lead heavy-duty mechanic, Mr. Wollman was sent for drilling training to the Diedrich Drilling Inc hub in

Chicago, Illinois. Also, he was trained in-house by Jon Short, drilling and completion consultant, from Tennessee. During these times, he learned the specifics of the Earth Drilling Sonic Rigs and the Enhancements developed by Earth Drilling.

The expenses for such training was covered entirely by Earth Drilling and/or its predecessor corporation(s) . [Wegleitner affidavit sworn July 19, 2022, paras 13-16] [ 42 ] Again, in the above passages, it is not apparent what portion, if any, of Wollman’s technical know-how acquired during the described work and training came from work for Earth Drilling itself, versus B/T (which is the only apparent “predecessor” referred to by Wegleitner) i.e., after 2012 or more likely spring 2013, when EDC came on stage here. [ 43 ] Same for Murphy, whose role Wegleitner described as follows: Mr.

Murphy was hired by a predecessor corporation of Earth Drilling by me personally in 2007 as a water hauler. Beginning in 2007, Mr. Murphy began training as a driller, working for a predecessor corporation to Earth Drilling , to specifically work with the Earth Drilling Sonic Rigs during this time period and thereafter. During the course of his employment with Earth Drilling, Mr. Murphy was trained in the use of the Earth Drilling Sonic Rigs, particular he was sent on occasion for training to the manufacturer of the Earth Drilling Sonic Rigs located in Vancouver, [BC]. In 2015, Mr.

Murphy joined Earth Drilling as a driller working with the Earth Driller Sonic Rigs. [Wegleitner affidavit sworn July 19, 2022, paras 21-23] [ 44 ] Again, even with the use of “Earth Drilling” to refer to pre-2012 or pre-2013 activities and events, it is clear that Mr. Murphy did work for and was in the orbit of B/T, at least through to 2015. [ 45 ] This overall straddling of the pre-EDC and EDC eras is also seen in the following further excerpts from Wegleitner’s July 19, 2022, affidavit: From 2007 to March 2022 (inclusive) , Mr. Wollman continued to be the lead heavy-duty mechanic for Earth Drilling.

During this period of time , Mr. Wollman was made privy to, made aware of, and had access to all of the tools, parts, Enhancements and other proprietary information developed confidentially by Earth Drilling that pertains to the Earth Drilling Sonic Rigs. During the course of his employment with Earth Drilling , Mr. Wollman was aware of the confidential and secret nature of the innovations, the Enhancements, and development of the Earth Drilling Sonic Rigs. Also, during the course of his employment with Earth Drilling , Mr.

Wollman was instructed not to divulge this information and to maintain its confidentiality. … From 2007 to March 2022 (inclusive) , Mr.

Murphy, as a water hauler, driller, and heavy-duty mechanic for Earth Drilling, was privy to, made aware of, had access to all of the tools, parts, Enhancements, and other proprietary information of Earth Drilling that pertains to the Earth Drilling Sonic Rigs. [paras 18, 19 and 26] [ 46 ] These paragraphs fold together pre-EDC-on-stage periods (2007 up to 2012 or 2013) with post-2012 or -2013 periods, without specifying what technological know-how (if any) was acquired by each of Wollman and Murphy in the latter period. [ 47 ] Given no such specification, conceivably each acquired all of their know-how about these rigs and their modifications in the pre-EDC period and carried that pre-existing know-how into their post-2012 or -2013 work for or with EDC. [ 48 ] In other words, as with the excepts above, EDC did not show that it was the source of Wollman’s or Murphy’s know-how or that EDC possessed particular know-how that others did not have (with B/T potentially having all of the same, and perhaps even greater, know-how about these various drilling matters than EDC).

EDC not showing its own enhancements or modifications [ 49 ] The same lack of detail of EDC’s own contributions to the collective technical know-how is seen again in these undertaking responses: As shown in the Equipment Transactions Statements attached to Undertaking Response #5, the lower costs associated in maintaining, repairing, and continuously enhancing the Gus Pech sonic drilling rigs with the Roussy sonic drill head is in excess of a million dollars for the time period of 2020 to present.

Mr. [JP] Weigleitner advises that the initial cost of adapting and enhancing the Gus Pech sonic drilling rigs to work with the Roussy sonic drilling rig was significantly higher. It required a lengthy process of trial and error before Earth Drilling and/or its predecessor corporation(

s) could get this combination rig working. The cost of adapting and enhancing the Gus Pech sonic drilling rigs to work with the Roussy sonic drill head includes the time expended to install and modify specific parts (see Updated Responses to Undertaking #5), purchasing and modifying these parts, obtaining specialized training for Mr. Wollman and Mr.

Murphy (see Updated Responses to Undertakings #5, #7 and #13), and the cost of the continued trial and error process in getting the combination of the Gus Pech sonic drilling rig and the Roussy sonic drill head to work properly (this includes time the rigs were down for repair and maintenance, the costs of the repair and maintenance, and the costs of different and/or replacement parts). [ 50 ] The references to the “trial and error process” obviously refers to periods before EDC came on stage i.e., the period when B/T was working through that process, with the assistance (in part) of Wollman and Murphy. [ 51 ] More problematically (for EDC), its attempts to show continuing enhancements and modifications, as reflected (per it) in the noted Equipment Transactions Statements, fall flat.

[ 52 ] The statements (one for each of six rigs) reflected the following: • the summarized expenses are all after August 2020 i.e., are clearly from the “EDC era” i.e., do not stem from any pre-EDC activities; • however, the vast majority of the expenses are labelled (under “Class Name”) “repair and maintenance”; • no expenses were labelled “enhancements”, “modifications” or anything similar i.e., to differentiate them from “repair and maintenance”; • in any case, the summaries do not provide any, or at least enough, information to classify any particular expense as relating to “enhancement”, “modification” or anything akin; • the only other expense categories shown are “small tools / supplies” and “subcontractors”; • the former does not necessarily reflect “enhancement” or “modification” expenses; • the latter category reflects payments to Wollman and Murphy (i.e., to the corporations through which they provided their services to EDC) but also to a half dozen or so other contractors; • the expense summaries do not provide any, or at least enough, information to classify any of those (subcontractor) expenses as relating to enhancements, modifications, or anything akin; and • in any case, if ED’s argument was that any such expenses necessarily involved such work, it did not show that Wollman and Murphy were the exclusive providers of such work or that only they were privy to any information connected with such work i.e., as distinct from the other subcontractors. [ 53 ] The lack of detail continues here: … Earth Drilling made numerous modifications and enhancements to the Gus Pech sonic drilling rigs equipped with the Roussy drill heads, specification air modifications, hydraulic modifications, and others.

The invoices relating to these modifications and enhancements have been incurred incrementally since the Gus Pech sonic drilling rigs were acquired by Earth Drilling in or around 2015.

This significant capital expenditure by Earth Drilling is summarized in the attached Equipment Transactions Statements, which demonstrates the ongoing cost of enhancing, modifying, repairing, and maintaining the Gus Pech sonic drilling rigs …. [ 54 ] Again, the statements in question do not detail the asserted enhancements or modifications, and neither do they necessarily show any such kinds of expense i.e., as distinct from “repair and maintenance”, “small tools / supplies”, and “subcontractors.” [ 55 ] Even when asked to particularize “specific enhancements” made by EDC, Wegleitner’s undertaking response was anchored, at least in part, and possibly entirely, in the work of the “predecessor corporation(s)”: Mr.

Weigleitner advises that Earth Drilling added and incorporated the following specific enhancements into the Gus Pech sonic drilling rig and/or the Roussy sonic drilling head: 1. compressors were added …; 2. an auto shut off was added …; 3. diverters were added …; 4. heaters were added …; and 5. the Gus Pech sonic drilling rig was outfilled with a candycane with a hydraulic set-up ….

These are just some of the examples of the successful enhancements to the Gus Pech sonic drilling rigs in combination with the Roussy sonic drilling heads which were developed over many years of trial and error by Earth Drilling and/or its predecessor corporation(s) , under the direction of [Wegleitner]. When specific issues arose, Earth Drilling and/or its predecessor corporation(

s) would rely upon Mr. Wollman, Mr. Murphy, Mr. Roussy, and the teams at Gus Pech or [Sonic Drilling Corporation] to assist in developing solutions to those issues. … [ 56 ] EDC’s expanded response to undertaking #5 itself (consisting or, or including, approximately 210 pages of material) features no obvious or necessary proprietary information or, alternatively, no exclusive possession of such information by EDC.

See, for example: • April 4, 2018, email from Gus Pech Manufacturing’s engineering department: “JP [i.e., Wegleitner], attached are a couple of photos of the new open style sonic wrenches we came up with. …” Later in the same email: “Just thought this would be another selling point to your client on the safety side of things.” From the latter comment, it appears that EDC would or at least might be passing along or sharing the proposed new idea with an outside party; • same-date email from same person at Gus Pech Mfg: “[Wegleitner], attached are some very basic drawings of the dual head design we discussed. …” The attached design documents state “This document contains technical information proprietary to Gus Pech Mfg Co, Inc.” The disclosure to others or use of the technical information in any way, without the prior written consent of Gus Pech Mfg Co, Inc is hereby prohibited.

All rights reserved ”;

• another April 4, 2018, email (Wegleitner to Gus Pech engineer): “… We have a presentation to our client [presumably about this dual-head design] on Monday morning”, which seems to confirm that EDC was planning to share that new design idea with an outside party; • April 6, 2018, email from Gus Pech engineer to Wegleitner: “Attached is a rough mockup drawing of the layout.

I am also attaching our brochure for the two models we are trying to marry ”, showing that Gus Pech was planning to incorporate that idea into its offerings to the wider drilling-rig market. (And the attached design documents feature the same “proprietary to Gus Pech” message: • June 8, 2018, email from Gus Pech engineer to Wegleitner: “… attached is what I came up with quick.

Let me know if you want the tracks taken out of the model; I just made something up to put in as tracks ”, with attached design documents featuring the same Gus Pech proprietary message; • August 8, 2018, email from Wegleitner to Gus Pech engineer: “I have included a few pictures of a few of the upgrades around the hydraulic tank area. … Let us know if there is anything we can do to help out.” Again, the idea in question is being worked on by EDC and Gus Pech jointly or at least shared by EDC with Gus Pech; • August 13, 2018, email from Wegleitner to Gus Pech personnel about a “Rose-Wall tank”, apparently being manufactured or assembled by Rose-Wall Mfg, Inc of Greenfield, Indiana: “… let’s plan to have [the tank] delivered to Gus Pech upon completion.

We will start working on a truck.” Again, this enhancement or modification appears to be a joint project of EDC and Gus Pech; • August 20, 2018, email from Murphy to Wegleitner and someone at engineering@guspech.com attaching a batch of photographs under the subject line “R-43 modifications.” Again, whatever, the email reflects the involvement of the Gus Pech company in this work; • and so on.

None of the remaining material reflects any developed-by-or-otherwise-proprietary-to-EDC information. [ 57 ] EDC’s own descriptions of subsets of that material reflect external-to-EDC parties playing a role in developing the asserted enhancements or modifications or otherwise having a window into them: See attached a series of email from Mr. Wegleitner, Mr. Murphy, Mr.

Wollman, the Gus Pech team, the Suncor team, and/or the SDC team , detailing some of the conversations that occurred in attempting to resolve some of the ongoing issues with the Gus Pech sonic drilling rigs and/or the Roussy sonic drilling heads, or the integration of the one with the other. See attached the pictures Mr. Murphy took of Rig R43 and emailed to Mr. Wollman and the engineering team at Gus Pech on August 20, 2018. These pictures show the enhancements and/or modifications referred to above as well as additional enhancements.

These pictures were provided to Gus Pech’s team when [EDC] contracted with them to manufacture the newer Gus Pech sonic drilling rigs in order to allow them to be useable with the Roussy sonic drilling heads . [emphasis added] Others in possession of or otherwise aware of asserted proprietary information [ 58 ] As noted above and as reflected further in Wegleitner’s response to undertaking #5, a further obstacle to EDC’s proprietary- information claims is the involvement of outside parties, primarily the Gus Pech company, in the development of the asserted enhancements and modifications: … The most recent Gus Pech sonic drilling rigs purchased by Earth Drilling either had these modifications and/or enhancements incorporated by Gus Pech directly during the manufacturing process or were subsequently installed by Mr.

Murphy or Mr.

Wollman once they were received by Earth Drilling. [part of response to undertaking #5] [ 59 ] No evidence shows that, with these asserted modifications and enhancements shared with Gus Pech, that company was somehow barred, by agreement or otherwise, from incorporating those changes or updates into other rigs manufactured by them i.e., for other purchasers of Gus Pech rigs. [ 60 ] The same goes for the personnel of Sonic Drilling Corporation identified in EDC’s brief at paras 28 and 36, who (per the associated evidence provided by Wegleitner) also created, co-created, or shared in the identified insights and greater understanding of the pairing and operation of the particular rig and drilling head in question here. [ 61 ] And apparently also personnel at Papley Drilling Ltd., who (per the description in para 33 of EDC’s brief) necessarily also had some understanding of that particular pairing and its operation: The initial Gus Pech sonic drilling rigs equipped with the Roussy sonic drill heads, including the Enhancements made by Earth Drilling and/or its predecessor corporation(s), were acquired by Earth Drilling from Papley Drilling Ltd who had previously acquired them from Tervita on or about 2013. [ 62 ] No evidence shows anything that would bar, or would have barred, the Gus Pech organization, SDC or (for that matter) Papley Drilling from incorporating all technical know-how about the pairing of a Gus Pech rig with a Roussy drilling head into products designed and built by them for other customers, drilling-rig-operation strategies prepared for other customers, or otherwise.

EDC not showing “quality of confidence” about the technical know-how here [ 63 ] EDC invoked the test for confidential or proprietary information outlined in Manson Insulation Products Ltd v Crossroads C & I Distributors , 2019 ABQB 684 (Thomas J.) at para 378 : As previously observed, the 2008 DA makes it plain that certain New Manson-related information that came into the possession of New

Crossroads was potentially confidential. However, one aspect of establishing information is confidential for the purposes of this tortclaim is to evaluate to what degree the purportedly confidential information is accessible or may be investigated.

Mason J in PharandSki Corp v Alberta (1991), (AB KB), 116 AR 326, 80 Alta LR (2d) 216 (Alta QB) identified a non-exclusive list ofsix factors that help evaluate whether information has “a quality of confidence about it”: 1. the extent to which the information is known outside the owner’s business; 2. the extent to which it is known by employees and others involved in the owner’s business; 3. the extent of measures taken by the owner to guard the secrecy of the information; 4. the value of the information to the owner and his competitors; 5. the amount of money or effort expended by the owner in developing the information; and 6. the ease or difficulty with which the information could be properly acquired or duplicated by others. [64] It also cited Jetco Heavy Duty Lighting v Fonteyne, 2018 ABQB 345, where Mah J. adopted a similar list from GasTOPSLtd v Forsyth, (paras 124-125) affd. 2012 ONCA 134), which added the following factors: Whether the holder and taker of the secret treat the information as secret.

In employment-related cases, the courts also consider whether: (

a) the employer possesses a trade secret; (

b) the employee knew it was a secret; (

c) the employee acquired knowledge [of] it during his/her employment; (

d) the employee has, after termination of his/her employment, used of this knowledge improperly. [para 146 of Jetco]. [65] As discussed, the fundamental flaw here (for EDC) is the pre-existence the technical know-how in question, which wasdeveloped by B/T, with the assistance of Wollman and Murphy i.e., this is not information created or unearthed by EDC itself. [66] Beyond that, as noted, various suppliers, service providers and one upstream owner also have contributed to the developmentof that know-how or at least obtained windows into it i.e., the asserted information is not the exclusive property or asset of EDC. [67] EDC tried but failed to show that various expenses incurred by it since 2020 reflected “enhancement” or “modification” work,with the underlying evidence not backing up its assertion. [68] In the case of Wollman, EDC did not ask him to enter any particular “confidentiality of information” or “protection ofproprietary information” agreements, nor any non-competition agreement. [69] While EDC and Murphy did enter into a confidentiality-of-information agreement, the surrounding circumstances here (asexplained) undercut the asserted confidentiality of the information in question. [70] Millions of dollars may have been spent in sorting out how precisely to pair the identified rig with the identified drill head andalso to make enhancements to the operation of that pairing.

But the evidence shows that, if such sums were spent, they were incurred byB/T i.e., upstream of any involvement by EDC.

No patents or anything akin registered by EDC [71] EDC acknowledged that none of its asserted proprietary information was protected by patents or anything akin. [72] On this aspect, I adopt the following arguments by the defendants (their brief, paras 32-34): … the information provided in [Wegleitner’s] amended Undertaking #5 clearly shows parts being added that are commercially available.To the extent that drawings have been provided as part of his amended undertaking response, these drawings state “This documentcontains technical information proprietary to Gus Pech Mfg.” [emphasis in original] Notably, there is no evidence before this Court thatthe Defendants are using any of the “modifications” that are described in [Wegleitner’s] Amended Undertakings, as none of thisinformation was put to them in questioning.

In paragraph 37 of its Brief, [EDC] refers to the work it did to the well control diverter system for which it received an award. [EDC] didnot take any steps to protect the development of the well control diverter system and its modifications to the well control diverter systemare not related to the sonic drill heads.

Further [Wegleitner] confirmed that he has no information about whether any of the Defendantsare using this well control diverter system on the Keystone Sonic Rig. [EDC] did not apply for [or] obtain any patents or other intellectual property protections for the alleged modifications to the [EDC] SonicRigs. When asked what steps [EDC] took to protect the alleged modifications, [Wegleitner] testified that “nothing” was done to protectthis information.

Other than the diverter system, [EDC] did not design anything and any equipment or modifications that it added to therigs were parts that could be purchased from a hydraulic component vendor or an industrial supplier. [73] Simply put EDC’s evidence did not actually show specialized or unique know-how even in the domain of these “parts-based

enhancements” i.e., that it used a particular

part in a novel or unique way or that it had combined parts in any such fashion. [74] And, as noted, the evidence did not show that the defendants are using any of the asserted enhancements or modifications onthe rig they purchased. Neither Wollman nor Murphy was a fiduciary [75] EDC argued that Wollman and Murphy were fiduciaries to it, emphasizing the following: … both Mr. Wollman and Mr. Murphy owed, and still owe, [EDC] a fiduciary duty. The evidence demonstrates that both Mr. Wollmanand Mr. Murphy had the authority and ability to unilaterally affect the practical interests of [EDC]. Mr. Wollman and Mr.

Murphy were entrusted by [EDC] to develop the required skill, proficiency, knowledge and needed contactsrelating to [EDC’s] Sonic Rigs and the Enhancements, so as to be the resident experts at [EDC] to ensure the continued operation of,development of, and perfection of [EDC’s] Sonic Rigs and the Enhancements. This is apparent as the evidence demonstrates, among other things, that both Mr. Wollman and Mr.

Murphy: a. received significant specialized training at the expense of [EDC] from consultants and experts from across North America; b. were entrusted to develop significant relationships with the employees and personnel at [SDC], which was integral to thedevelopment of, perfection of, and continued operation of the [EDC] Sonic Rigs and the Enhancements; and c. were entrusted to develop such a specialized expertise and knowledge of confidential information relating to the combination of aGus Pech Sonic drilling rig and a Roussy sonic drill head that no other company in Alberta operates such rigs with such a combination.

The fact that Mr. Wollman and Mr. Murphy were imbued with such specialized training, knowledge, and trust relating to the[EDC] Sonic Rigs and the Enhancements left [EDC] vulnerable to the whims of both Mr. Wollman and Mr. Murphy in decidingnot to exercise their duties in good faith and in the best interests of [EDC] as trusted personnel of [EDC] over their many years ofservice to [EDC]. Mr. Wegleitner himself admitted that without Mr. Wollman and Mr.

Murphy performing their duties in relation to [EDC’s] Sonic Rigswould be detrimental to [EDC] [presumably intended to read “ … admitted that [them] not performing their duties … would bedetrimental …”], as Mr. Wollman and Mr. Murphy were “go-to guys” in the sense that they were chosen to be “in-houseexperts” relating to the [EDC] Sonic Rigs and the Enhancements. Given the fact that both Mr. Wollman and Mr. Murphy owed a fiduciary duty to [EDC], the very fact that both Mr.

Wollman and Mr.Murphy are operating Keystone and the Keystone Rig is an appropriation and use of [EDC’s] proprietary and confidential information,constituting a breach of such fiduciary duty. [emphasis added] [76] EDC relies here on Wollman’s and Murphy’s collective importance to EDC. But not in the sense that they had the authority,power, or discretion to make decisions materially affecting EDC’s interests. Or otherwise, to direct or manage EDC’s overall strategy oroperations.

Instead, EDC’s points to the “on the ground” need for their continued presence, with their specialized knowledge, as thetrigger for fiduciary duties. [77] In other words, effectively, “these individuals have critical knowledge and skills which are indispensable to our organization.” [78] EDC effectively argues that Wollman’s and Murphy’s fiduciary duty was to continue working for EDC -- i.e., to keep theirexperience close at hand for EDC’s benefit – and that their core breach of that duty was to stop providing services to EDC. [79] An employee’s or contractor’s importance on the ground to the employer or other party to the contracting relationship is not afactor, on its own, in the fiduciary equation: Jetco Heavy Duty Lighting v Fonteyne, 2018 ABQB 345 (Mah J.): It is also important not to conflate a valuable employee with a fiduciary employee.

Given the onerous obligations held by afiduciary, it is necessary to actually find that the employee is a “key employee” as opposed to merely being a good or valuable employee.This caution was delivered by the Court in Flag Works Inc v Sign Craft Digital

(1978) Inc, 2007 ABQB 434 , 2007ABQB 434,a decision of Justice S. L. Martin as she was then, at para 51: That Ms. Holt was an exceptionally good employee and even essential to the efficient operation of Ms. Flock's business does nothowever, make her into top or senior management. These were positions held by Ms. Flock and Ms. Hurley. Her responsibilitieswould have some impact on the practical and legal status of the company but any vulnerability which existed was attributable to herdiligence, not her discretion to affect Flag Work's relevant financial or legal interests. That Flag Works needed Ms.

Holt or reliedupon her to be the backbone of one of their profit center[s] does not make her into a "key employee" for the purpose of affixingfiduciary duties. [para 51] While it is clear from the above survey of case law that any decision regarding the existence of a fiduciary duty is contextual and highlyfact dependent, nonetheless the common thread is the reposing, by the employer, of sufficient discretion and power to makebusiness decisions such that the employer’s legal or practical interests are vulnerable to the exercise of that power or discretion.The value or competence of the employee does not, by itself, provide the required degree of vulnerability. [paras 59 and 65][emphasis added] [80] See also Valley First Financial Services Ltd v Trach, 2003 BCSC 223 (Cole J.) (affd 2004 BCCA 312 at paras 60-63): … Trach’s work was important to the plaintiff, but that alone is insufficient to establish a fiduciary relationship.

After considering and

weighing all the evidence, I am not satisfied that there is a fiduciary relationship with the plaintiff. [para 91 of BCSC decision] [ 81 ] And KRG Insurance Brokers v Shafron & Other , 2005 BCSC 1611 (Parrett J.): … I have no doubt that Mr. Shafron was important to the plaintiff’s business and that he was for the entire nine-year period he remained employed under Mr. Meier, the difficulty here is that this importance is not sufficient to establish a fiduciary relationship.

I am not satisfied that there was a fiduciary relationship between the defendant Shafron and the plaintiff. [paras 95 and 97] [fiduciary finding reversed by BCCA ( 2007 BCCA 79 ) but upheld by the Supreme Court of Canada ( 2009 SCC 6 at para 13 )] [ 82 ] And the “not a fiduciary” reasoning of the British Columbia Court of Appeal in Consbec Inc v Walker , 2016 BCCA 114 (paras 40-42 ). [ 83 ] As for whether independent contractors (discussed further below) can owe fiduciary duties to their contracting parties, the defendants argued (and I accept): … While [EDC] references two Ontario decisions in its Brief, this Honourable Court has made the following statement with respect to fiduciary duties owed by independent contractors: “The starting point assumption is that the contractor will pursue its own self interest, not that of the principal.

To establish a fiduciary relationship with an independent contractor, the Plaintiff must show that there is a mutual understanding that in carrying out his functions, the subcontractor gives up personal interest and dedicates himself to the general contractor . It is clear that Wollman and Murphy were not in fiduciary positions. They had no access to pricing or client lists, could not make decisions on behalf of [EDC], and were not in supervisory or managerial roles . They had no ability to make decisions on behalf of [EDC] or the power to affect its legal or practical interests .

To classify two of its mechanics, working as independent contractors … as fiduciaries would be opening the floodgates [as] to who could be classified as such. While Wollman and Murphy were skilled tradesmen with the ability to troubleshoot and repair equipment, this does not transform them into fiduciaries.

As stated in Questor [complete], “[J]ust because an employee is good, valuable, trusted, or even essential to the efficient operation of a business, does not transform them into a fiduciary.” [Defendants’ brief, paras 131-133] [footnotes omitted] [emphasis added] Wollman and Murphy were independent contractors, not employees, at the end of their connection with EDC (at minimum) [ 84 ] EDC argued that “[a]lthough Mr.

Wollman tendered his services to [EDC] as an independent contractor, this was not truly an independent contractor relationship (see below for further details.” Those details are outlined in para 24 of EDC’s brief: Mr. Wollman was always treated as an employee by Earth Drilling [FN 35] and acted as any other employee would [FN 36]. [He] was supplied with parts and equipment to perform his work for [EDC] [FN 37]. The fact that Mr.

Wollman became an “independent contractor” did not affect how [EDC] dealt with him (having formerly been an employee of an [EDC] predecessor corporation) [FN 38]. [ 85 ] Wollman was employed by Beck between 2007 and 2009, when he began providing his services to it as an independent contractor. (As already found, Beck was not actually a legal predecessor to EDC.) But that historical status has no bearing on whether Wollman was an employee of EDC. [ 86 ] Footnote 35 links to Mr. Wegleitner’ testimony that Mr.

Wollman was “treated as an employee”, with no elaboration. [ 87 ] Footnote 36 links to his testimony that “[Mr. Wollman] showed up to work every day as did everybody else … he worked every day. He worked every day. … Unless he was in Fort McMurray or specified that he required time off, he showed up to work every morning as did everybody else.” Such reporting for duty is neutral on the employee-versus-IC aspect. [ 88 ] Footnote 37 links to Mr.

Wollman’s testimony in cross-examination that EDC supplied “brake cleaner, … Nitrile gloves, paper towel, oil diapers, earplugs, safety glasses, hard hats, and coveralls” and “parts for their equipment.” This evidence does not outweigh Wollman’s and Murphy’s evidence of supplying their own trucks and major tools (see below). [ 89 ] Footnote 38 links to Wegleitner’s testimony on another subject (paying for or contributing to Murphy’s technical education) i.e., does not bear on the “Wollman as IC” point. [ 90 ] The evidence is clear that Wollman provided his services to EDC exclusively through a corporation (Wollman Mechanical Corp.), with him billing EDC through that company and EDC paying that company (i.e. no evidence of T4 slips being issued by EDC to Wollman or source deductions being deducted from payments to either him or his company), that Wollman provided his own major tools (with EDC providing only minor supplies), and that Wollman worked for other contracting parties during the period he supplied services to EDC. [ 91 ] In any case, Wegleitner acknowledged in cross-examination that Wollman was an independent contractor vis-à-vis EDC: transcript (pp 26 (lines 11-20), 28 (lines 10-23), and 31 (lines 5-14)). [ 92 ] It is also clear that Murphy shifted to independent-contractor status (from employee) in March 2020, even if the parties disagree about the circumstances of that shift (Wegleitner transcript at p 44 (lines 205 and 25—27) and p 45 (lines 1-6); Murphy’s affidavit at paras 17 and 18). [ 93 ] He too provided his services via a corporation (Expatriate Consulting Ltd) after that point, billing EDC, and being paid, via

that company (with again no evidence of T4 slips or source deductions), provided his own truck and major tools, and worked for other contracting parties during the period he provided services to EDC through his company. [ 94 ] Despite EDC’s perception of both as employees, the evidence shows that Wollman was an independent contractor vis-à-vis EDC throughout and that Murphy was March 2020 onwards.

In any case, no evidence Wollman or Murphy using or planning to use any of the asserted enhancements or modifications [ 95 ] No evidence showed that the rig purchased by Wollman’s company features any of the asserted-by-EDC enhancements or modifications or that they are planning to add any of them.

Or that EDC asked for an opportunity to inspect or otherwise obtain a window into the configuration of the Keystone rig. [ 96 ] On this aspect, see the uncontradicted evidence of Wollman and Murphy on the repair-and-maintenance-focused changes made by them to the Keystone rig (Wollman’s affidavit at paras 40 and 41; Murphy’s affidavit at paras 30 and 31). [ 97 ] And see also Orpheus Medica v Deep Biologics Inc , 2020 ONSC 4974 (Papageorgiou J.) at paras 87-92 (no evidence injunction targets using any asserted-to-be-confidential information).

No (or no operative) non-competition, non-solicitation, confidential-information, or similar agreements here [ 98 ] Wollman did not enter any non-competition, non-solicitation, confidential-or-proprietary-information-focused or similar agreements with EDC. [ 99 ] Murphy was party to employment and confidential-information agreements with EDC, but the former largely ceased to apply when he shifted to independent-contractor status.

The latter and any information-use elements of the employment agreement did not apply to emanating-from-B/T-era information or to shared-with-external-parties information, and EDC did not show that any other information here was confidential in character.

First branch of injunction test not satisfied [ 100 ] EDC has not satisfied the first branch of the injunction test, whether the standard is “strong prima facie case” or “serious issue to be tried.” [ 101 ] To summarize on this aspect: • B/T created a body of technical knowledge; • Wollman and Murphy shared in that knowledge as part of providing services to B/T; • EDC did not acquire B/T’s rights in respect of that knowledge via predecessor-corporation inheritance (e.g., if B/T had merged into or amalgamated with EDC); • no evidence shows that EDC acquired B/T’s technical knowledge by way of information-transfer agreement or anything akin i.e., vesting EDC with B/T’s rights in respect of such information; • B/T is not a plaintiff here; • asked to detail its own enhancements or modifications, EDC invariably referred to the technical knowledge dating back to the pre- EDC phase; • in any case, EDC’s own asserted “enhancement” or “modification” expenses are not actually shown to have that character; • in any case, any EDC-era enhancements or modifications were created or co-created or shared with outside parties such as the Gus Pech and Roussy companies, with no evidence that those outsiders were constrained in any way from using that information in their business endeavors beyond business with EDC; • EDC did not pursue patent or other intellectual-property protection for any of its asserted enhancements or modifications; • neither Wollman nor Murphy was a fiduciary to EDC; • at the close of their involvement with EDC (at minimum), both were independent contractors, not employees; • no evidence showed that Wollman and Murphy are using any of the asserted enhancements or modifications on the Keystone drilling rig or even planning to; and • Wollman entered into no non-competition or similar agreements, Murphy’s employment agreement fell away when he became an independent contractor and, in any case, none of its use-of-information-focused provisions or those of the separate confidentiality-of- information document applied to the information here.

C. No irreparable harm [ 102 ] In any case, refusing EDC the requested injunction will not cause it irreparable harm or raise a material risk of such harm. [ 103 ] Here are its irreparable-harm arguments: The evidence is clear that [EDC], in developing and operating the [EDC] Sonic Rigs, has created a “first-mover” advantage, or at least according to Wegleitner, a competitive advantage in the oil sands industry in Alberta and a reputation as an innovator.

The innovation and proficiency of the [EDC] Sonic Rigs have been recognized by the oil sands industry and the evidence demonstrates that [EDC] is the only company in Alberta, besides now Keystone, that operates a Gus Pech sonic drilling rig combined with a Roussy sonic drill head.

Should the Interim Injunction not be granted, such that the Keystone Parties are [not] enjoined from operating the Keystone Rig in the oil sands space pending the outcome of this Action, [EDC] will lose its recognized first-mover/competitive advantage in the oil sands space, as it relates to the operation of a Gus Pech sonic drilling rig combined with a Roussy sonic drill head and will lose its reputation as an innovator. [ 104 ] In his affidavit sworn July 19, 2022, Wegleitner stated (in part) that “[the referred-to-earlier] enhancements … afford to [EDC] a competitive advantage.” “First mover advantage” case law [ 105 ] Here are some cases discussing the “first mover advantage” concept. [ 106 ] In Questor Technology Inc v Stagg , 2020 ABQB 3 , D.B.

Nixon J. declined to characterize the plaintiff as a “first mover”: Questor argues that they would have had the first mover advantage in the market for low-pressure burners with “Natural Air Draft” technology , but for the Emission LP Burner Technology. Questor relies on Mr. Sutherland’s assertions to prove this point. In contrast, the Defendants assert that Questor’s allegation of losing the first mover advantage is untenable in light of the competitive nature of the waste gas incineration industry. The Defendants have provided uncontested evidence that the market is competitive .

They assert that the waste gas combustor is a product offered by many companies . They offer evidence from affiant Brent Willey, who states that many other competitors have targeted the low-pressure end of the combustor market since Questor entered the market in 1999. These other competitors include Total Combustions Inc, Delta Incinerators, Tornado Combustion Technologies, John Zink Hamworthy Combustion, and Black Gold Rush Industries. The arguments advanced by the Defendants are supported by the cross-examination of Mr. Sutherland. In particular, during cross- examination, Mr.

Sutherland agreed that the market for both high and low-pressure incinerators was very competitive by the end of 2017. In

summary, the Defendants argue that neither Questor nor Emission’s products can be described as “first to market”. On the basis of the evidence provided, I find that Questor has not demonstrated , on the balance of probabilities, with clear and not speculative evidence, that they have lost, or will lose, a first mover advantage . [paras 103-107] [emphasis added] [ 107 ] In Tornado ACS Canada v Living Water , 2010 ONSC 3001 , Belobaba J. found “first-mover” status for the plaintiff: Will the plaintiffs suffer irreparable harm if the interlocutory injunction is not granted? Here again, in my view, the answer is yes.

The Tornado cleaning machine is an exciting and unique technology . Apparently, it is one of a kind . However, there is no guarantee that this will remain so. It is obviously important to the plaintiffs to take full advantage of their “first mover” position in the market and begin marketing and selling the product immediately. If the plaintiffs are required to wait a year or two until the contractual dispute is resolved at trial, another competing technology may well be on the market and their “first mover” advantage will be lost .

Also, if the interlocutory injunction is refused there is a very real possibility that the defendants’ earnest but under-funded efforts at promotion and distribution would dilute the brand and cause more damage than gain. The loss of a “first mover” advantage in the sales and distribution of what appears to be a unique and highly desirable industrial cleaning system is not easily calculable. And even if an appropriate damage award could be calculated, the evidence seems clear that there is little to no chance that the defendants would be financially able to pay it.

All of this persuades me that the harm to the plaintiffs would indeed be irreparable if they were unable to preserve the contractual status quo until trial. [ 108 ] In Polar Wireless Corporation v Roberts , 2012 ONSC 6482 , Stevenson J. examined a claim of “first mover advantage”, implicitly finding such advantage against a backdrop of an “emerging business”: Polar submits that Polar is a "first mover" in the industry and that market share is not quantifiable as there is no market share to argue about at this point .

The situation is one of opportunities ; about developing the three pillars and not allowing Go To to detrimentally affect those opportunities. … I agree with Polar, that it will suffer irreparable harm if the injunction is not granted. The potential loss of market share to Polar may be

significant but will certainly be difficult to quantify at this time given both Polar and Go To are attempting to obtain market share in this emerging line of business . … the issue of damages cannot be easily determined as this is an emerging business and I accept that it would be difficult to determine damages on the basis of sale histories (as there are few) and sales projections. … It is clear that without an injunction , Polar will suffer irreparable harm to these relationships and opportunities it has worked hard to foster over the past few years. [paras 64, 66 and 68] [emphasis added] [ 109 ] I find that EDC has not shown that it has “first-mover” status or, in any case, any resulting advantage: • EDC referred many times in its evidence to being the first driller in Alberta (or perhaps Canada) to pair a Gus Pech drilling rig with a Roussy drilling head; • as described by Wegleitner, this gave it a “competitive advantage”; • however, EDC did not provide any context within which to gauge the asserted advantage.

For instance, it did not describe or explain: o with any material detail, the drilling field(

s) in which it operates; o whether it has any competitors in any of those fields; o the total drilling activities in those fields over the years in question; o EDC’s share of the drilling activity in any given field over the years in question; o how its particular rig-and-head combination actually gives it a competitive advantage in any of those fields i.e., over any competitors offering drilling services in any given field or subfield; o how (if at all) its customers perceive it as providing superior drilling services and, if so, the extent to which that perception is built on that particular combination; or o overall, map out how using that combination gave it “first mover” status i.e., what new kinds of drilling activities or what superior drilling results it was able to pursue or perceive, compared to other drilling companies. [ 110 ] EDC did not show that its drilling activities represented an “emerging market” i.e., a new kind of drilling or, in any case, what particular differential performance it was able to achieve, compared to competitors. [ 111 ] It did not show that it had developed a unique product or, in any case, what differential performance it was able to achieve, compared to competitors. [ 112 ] EDC did not provide concrete or detailed evidence of any harm caused to it by Keystone’s business activities or of any material basis for forecasting such harm. [ 113 ] In what EDC’s counsel characterized as a re-direct examination (following the cross-examination of Wegleitner) and what the defendants’ counsel characterized as improper (new-subject-matter) questioning, EDC’s counsel asked Wegleitner: Q: … in answer to a question by [defendants’ counsel] you instructed Mr.

Miller [of EDC] not to utilize the services of either [Wollman or Murphy] from [the time they acquired their own drilling rig]? A: That is correct. Q: And how did that impact [EDC]? [objection by defendants’ counsel and discussions between counsel on that issue] A: With [us] no longer having Wollman or Murphy? Q: Correct. A: Huge. They were our two go-to guys, they were key to the business.

We are still in the process of trying to rebuild from their exit. [ 114 ] Assuming for the sake of discussion this was a proper question on re-direct, the answer is too vague (lacking concrete details) to make any difference here. [ 115 ] In any case, as the question recognized, it was EDC’s decision to step away from using Wollman’s and Murphy’s services (even recognizing Wegleitner’s apparent dismay that Wollman had purchased his own rig). [ 116 ] The other objected-to questions in re-direct (or possible re-direct), bearing on how Wollman learned what to do for EDC after becoming an independent contractor, the circumstances of Murphy becoming an independent contractor, and how EDC came to know that Wollman had bought a drilling rig, are irrelevant to the issues here. [ 117 ] Accordingly, I do not need to explore the proper scope of questions on redirect examination. [ 118 ] As noted by the defendants, EDC continues to operate all six of its Gus Pech sonic rigs i.e., it did not show that the Defendants’ pursuit of drilling work with its rig had diminished any of EDC’s work in the sonic-drilling realm.

[ 119 ] EDC offered no material rebuttal to the Defendants’ argument that, “[if EDC] has suffered any harm or faces any potential harm [i.e., from Keystone’s drilling activities], its loss can be quantified and compensated by an award of damages, once [the Court] has all the evidence before it.” [ 120 ] As for the impact of the “irreparable harm admitted” provision in Murphy’s confidentiality agreement, I adopt and accept the clause-not-determinative arguments outlined in paras 143 and 144 of the defendants’ brief. [ 121 ] All to say: EDC has not shown any “first-mover advantage” here or, in any case, that it would suffer irreparable harm or that there is a material risk of such harm if the requested injunction were not granted.

D.

Balance of convenience favours the defendants [ 122 ] Here are EDC’s arguments on balance of convenience: [EDC] submits that the balance of convenience in granting the interim/interlocutory injunction weighs in its favour for the following reasons if the injunction is not granted. … [EDC] will suffer irreparable harm [i.e., if the injunction is refused] whereas if the injunction is granted any loss or damage that may result to the Keystone Parties can be remedied with an award of damages; if, at the end of the day, [this Court] finds against [EDC] once this action is decided on its merits. … [EDC] has provided an undertaking as to damages ….

Additionally, [EDC] submits that due to the limited scope of the interim/interlocutory injunction being sought, the Keystone Parties will not be prohibited from earning a livelihood (see the wording of the Amended Application and Order found in [EDC’s] book of materials). Lastly, [EDC] submits that there is no public interest weighing in favour of not granting the interim/interlocutory injunction; it is strictly the interest(

s) of [EDC] and the Keystone Parties that are being determined. [ 123 ] As noted, EDC has not shown actual or any material risk of irreparable harm here. [ 124 ] In any case, the balance of convenience does not turn on the presence of that factor (even if shown) or on whether the opposite (injunction-target) party could be made whole with damages.

Instead, it attempts to measure the relative harms to the applicant (if the injunction is denied and it turns out that it should have been granted) and to the respondent (if the injunction is granted and it should not have been). [ 125 ] I find that the greater harm here would be imposing an injunction later found to be unwarranted, versus the opposite scenario: • EDC did not refute the Defendants’ portrait of EDC as a “large, successful company with numerous types of rigs operating throughout western Canada [and] [employing] upwards of 200 employees and [operating] over 20 drilling rigs”; • on the other hand, Wollman, and Murphy, through Keystone, operate one rig, apparently by themselves; • the evidence showed that EDC passed on an opportunity to purchase the rig later purchased by Wollman’s company: Wegleitner transcript (pp 38 (lines 3-21), 40 (lines 23-27), and 41 (1-7); • given Wollman’s and Murphy’s collective drilling experience was apparently amassed predominantly or at least to a considerable extent in the Alberta oil sands region, barring them from pursuing opportunities in that region would be unduly onerous i.e., in forcing them to pursue business in unfamiliar regions and with no, or little, or at least lesser, sense of the potential clients or customers; and • I accept the uncontradicted evidence of both Wollman and Murphy as to the inevitable or at least likely harmful consequences to their business and, by extension, their overall livelihoods if the injunction is granted (the former’s affidavit at para 77, the latter’s at para 53). [ 126 ] In ServiceMaster of Canada Limited v.

Meyer , 2019 ABCA 130 , the majority judgment (at para 181) upheld Ross J. on a similar balance-of-convenience conclusion: It is clear that the effect of the injunction could significantly interfere with Meyers’ ability to earn a livelihood, and thereby provide support to his family. Meyer has no other source of income since ServiceMaster Edmonton ceased providing any compensation to him on learning of the establishment of Damage Inc. If the injunction were granted, then Meyer’s options would be limited. Meanwhile, refusing the injunction application would not significantly affect the Applicants .

The main litigation would continue and, if they were ultimately successful at trial, any harm to them could be compensated through a damages award. In this context, it may be noted that Damage Inc. is apparently a successful concern so that funds would be available to pay those damages. In sum, the balance of convenience favours Meyer. [para 77 of Ross J.,’s’ judgment] [reproduced in para 97 of Wakeling JA’s reasons] [emphasis added] E.

Conclusion [ 127 ] With no strong prima facie case or even serious issue to be tried, no irreparable harm, and the balance of convenience favouring the defendants, no injunction is warranted here. [ 128 ] The gist of this application – EDC’s fundamental misread of what constitutes confidential or proprietary information -- is reflected in the following excerpt from the cross-examination of Mr. Wollman:

Q: And so, do I understand, sir, that a combination of the Gus Pech sonic rig and the Roussy sonic drill head was something that you were familiar with as a result of your providing services to Tervita and Earth Drilling ? A: Yeah, I mean where I learned about Gus Pech sonic rig and the Ray Roussy head when Gus Pech came to the Tervita shop in 2012 and I was told by the managers to go help Gregg Collins and two of his helpers to go retrofit the Gus Pech sonic rig. So that is where I became familiar . Q: That was the starting point. A: Yeah.

Q: But continuing thereafter, sir, as we have discussed earlier today you became more accustomed and more familiar with the Gus Pech sonic rig and the Roussy sonic drill head by your being retained through [your corporation] to work on that equipment for Tervita and for Earth Drilling, correct? A: No, I am going to rephrase that for you. When I went to go work for Earth Drilling in 2015, I already knew the Gus Pech rig and the Ray Roussy head very well. I did not learn more at Earth Drilling about the Gus Pech rig and the Roussy head. My knowledge was already retained.

Q: Well, you got that knowledge through the time that you were at Tervita? A: That is correct. Not at Earth Drilling . Q: But it is fair to say, sir, that during your time at Earth Drilling you developed more familiarity because you were working on that equipment for Earth Drilling? A: Yeah, but what did I become more familiar about ? You have to be more explicit about that. Q: Well, it just makes common sense, sir, that the more you work on something, the better you know it? A: Really? Yeah, well, I worked on them obviously, servicing, preventative maintenance.

You know, trying to keep that rig going when that rig goes out in the field so that rig has zero downtime. That was my job and my role, to keep that rig efficient. Q: Right. A: Proper service intervals. There is a whole list I can mention what you need to do, just like servicing a tractor or a combine. Q: I don’t dispute your point, sir. In fact, I agree with it. And my point is this, is that the more you work on something the more familiar you are with that, correct? A: I agree with you on that, yeah.

I don’t tend to disagree. [ 129 ] Wollman and Murphy bringing their pre-EDC knowledge and experience to bear to assist EDC does not make that knowledge or experience confidential or proprietary to EDC. [ 130 ] And (as explained above) the evidence did not show any of their gained-at-EDC knowledge and experience was itself confidential or proprietary, instead representing the application of their pre-existing knowledge and experience to everyday problems of repairing and maintenance. [ 131 ] As the BCCA concluded in Consbec Inc v Walker (cited above): In effect, the trial judge found that all Peter took with him when he left Consbec were the general skills and knowledge he had acquired while working for that company.

That is something he was entitled to do: Valley First Financial Services Ltd v Trach [also cited above]. [para 47] [ 132 ] See also KOS Oilfield Transportation Ltd v Mitchell , 2010 ABCA 270 at paras 32 and 33 . [ 133 ] Wollman and Murphy arrived at EDC with deep knowledge and experience, and their expansion of that knowledge and experience at EDC did not come from exposure to any confidential or proprietary information. [ 134 ] They are entitled to bring that knowledge and experience to their Keystone enterprise. [ 135 ] EDC’s amended (with narrower relief sought) injunction application is dismissed, with costs to the defendants.

F. Costs. [ 136 ] The defendants may make submissions on the scale and other details of costs via letter (2.5-page maximum) sent to my assistant by November 25. The plaintiff may respond via letter (same page limit) sent by December 9. Heard via WebEx on the 28 th day of October, 2022.

Dated at Edmonton, Alberta this 9 th day of November, 2022. M. J. Lema J.C.K.B.A. Appearances: Richard J. Cotter & Kurtis P. Letwin Dentons Canada LLP for the Plaintiff Shannon L. Kelley & Nicole Cooper Parlee McLaws LLP for the Defendants