Geophysical Service Inc v. Sable Mary Seismic Inc & Matthew Kimball, 2003 NSSC 073

IN THE SUPREME COURT OF NOVA SCOTIA Citation: Geophysical Service Inc v. Sable Mary Seismic Inc & Matthew Kimball, 2003 NSSC 073 Date: 20030401 Docket: S.H. 190408 Registry: Kentville Between: Geophysical Service Incorporated Plaintiff v. Sable Mary Seismic Incorporated and Matthew Kimball Defendants Judge: The Honourable Justice Donald M. Hall Heard: In Kentville, N.S., on February 25 and 28, 2003. Counsel: Richard Southcott, Esq., and Colin Piercey, Esq., counsel for the plaintiff. Nash Brogan Esq., and Derrick Kimball, Esq., counsel for the defendants.

By the Court: [ 1 ] The defendants have applied to set aside an Anton Piller order granted ex parte December 4, 2002, while the plaintiff has applied to confirm the order and to vary it to the extent of authorizing its access to the copies of the documents seized under the order. [ 2 ] The issues to be decided are whether the Anton Piller order ought to be set aside or confirmed as requested by the plaintiff. [ 3 ] The plaintiff is engaged in the business of the acquisition, processing and management of marine and land based seismic data, including the operation of seismic vessels off Atlantic Canada.

The plaintiff corporation is based in Calgary, Alberta. Its principal executive officer, director and shareholder is David "Davey" Einarsson. [ 4 ] The defendant, Sable Mary Seismic Incorporated (Sable Mary) has its head office and main place of business in Windsor, Nova Scotia. It is engaged in the business of providing crews for vessels engaged in seismic explorations off the coast of Atlantic Canada. It also provides management and consulting services for such operations. [ 5 ] The defendant Matthew Kimball is the principal officer, director and shareholder of Sable Mary and the directing mind of that company.

Mr. Kimball was employed by the plaintiff through Sable Mary as a management consultant in its Atlantic Canada operations. [ 6 ] Messrs Einarsson and Kimball had known each other for many years and had had a very friendly business and personal relationship. In June of 1997 Mr. Kimball was interested in obtaining a vessel for gathering seismic data but was unable to arrange the necessary financing. He discussed this interest with Mr.

Einarsson in September, 1997 which resulted in an agreement whereby Sable Mary would provide the crew for a vessel or vessels in a joint venture seismic gathering operation between the plaintiff and Reiber Shipping, a Norwegian company. As well, Sable Mary would provide the services of Mr.

Kimball as a management consultant with respect to the operations. [ 7 ] No formal written contract was entered into between the plaintiff and Sable Mary but they apparently operated under a number of oral agreements and undertakings as well as a number of "letter agreements" that were executed from time to time. [ 8 ] It is the basis of Sable Mary's remuneration that is at the root of the conflict between the parties. It is common ground, however, that Sable Mary was to provide the crew for the vessel and was to be reimbursed for personnel or crew costs plus a certain percentage or percentages.

Also, the management fees for Mr. Kimball's services were fixed by agreement between Messrs. Einarsson and Kimball. The plaintiff says that the crew costs consisted of the payroll costs which in turn included the statutory benefits to which the employer was obliged to contribute, such as Canada Pension Plan, employment insurance and workers compensation. Sable Mary says that the remuneration was calculated in accordance with an oral agreement between Messrs.

Einarsson and Kimball that there would be a five percent "value added" factor added to the actual wage paid, at least in some circumstances, and then to this was to be added a further thirty percent markup. As well, there was to be a five percent "administration fee" added to the figure calculated as noted and referred to in the "letter agreements". [ 9 ] Sable Mary supplied a crew and Mr.

Kimball's services as agreed beginning in 1998 and ending in March, 2002, when the plaintiff decided to provide the crew itself. [ 10 ] During the period that Sable Mary provided the crew it billed the plaintiff twice monthly as agreed. The invoices provided only the names of the crew members and a lump sum figure. Although the invoice amounts ranged up to $228,000.00 per period no detailed information or back-up documentation or invoices were provided or requested. All invoices went to the plaintiff's Calgary office where they were reviewed by its accountant, Ms. Merle Carr, who presented them to Mr.

Einarsson for his approval for payment. He approved for payment all invoices as submitted. [ 11 ] After the plaintiff began providing its own crew it discovered that its payroll costs were substantially less than what it had been paying to Sable Mary. Wayne Lam, the plaintiff's Chief Financial Officer, asked Mr. Kimball for an explanation of the difference

with respect to these costs. Mr. Kimball replied by email to Mr. Lam's inquiry stating that "all work sheets for people invoices are gone." He further stated that he was "not prepared to dig into this stuff and try to reproduce any of the past or any of the invoices." His e-mail concluded, "What does Davey say about this?" [ 12 ] When in Halifax on October 8, 2002, Mr. Einarsson met with Mr. Kimball and asked him about the difference in the crew costs. Each has a different version of what took place at this meeting. Mr. Einarsson says that Mr.

Kimball became very emotional, shouting profanities and refused to provide any explanation. Mr. Kimball says that Mr. Einarsson was very defensive and apologetic for raising the issue but acknowledged that he was upset and angry at being accused of over-billing the plaintiff. In any event, following the meeting Mr.

Kimball submitted his "resignation" effective October 31, 2002, which was accepted by the plaintiff. [ 13 ] Subsequently the plaintiff had a forensic audit performed by KPMG Forensic, an accounting firm specializing in forensic audits, which showed an apparent discrepancy in the payroll costs of between $600,000,00 to $1,000,000.00 for a one year period of the time that Sable Mary was providing crewing services. [ 14 ] The plaintiff then commenced an action to recover the alleged over payment and simultaneously applied for the Anton Piller order that is the subject of this application.

The order was applied for ex parte and heard in camera and granted by MacDonald, A.C.J. It included the following terms: 6. The persons authorized to enforce this Order shall be the Plaintiff's counsel and their agents, including private investigators and the employees or contractors of KPMG Forensic Inc. mandated by the Plaintiff's solicitors, totaling not more than four in number at any given time in respect of any individual building located at the Premises as hereinafter defined, plus such law enforcement officers as may be required (the "Authorized Persons"). 7.

The Defendants and any adult persons at the following premises: (a) . . . 8 Park Drive, Windsor, Nova Scotia, . . .; (b) . . . 29 Park Drive, Windsor, Nova Scotia, . . .; (c) . . . apartment number 1, 320 Albert Street, Windsor, Nova Scotia . . .; (d) . . . 34 Cribbons Point Road, Antigonish County, Nova Scotia . . .; (collectively the "Premises") shall permit the Authorized Persons to enter and search the Premises on any business day or days at any time between 7:00 a.m. and 9:00 p.m., or such extension of that time as the Authorized Persons, acting reasonably, believe necessary to complete any search, copying or imaging, for the purpose of searching for and removing any items and records that any of the Authorized Persons believe on reasonable grounds represent or contain business records of the Defendants or either of them related to the period between January 1, 1998 and October 31, 2002, including, without limitation, books, documents, accounting ledgers, information stored electronically or in computer memory, copies or images of same, disks, tapes, CD Roms and, if in the opinion of the Authorized persons, acting reasonably, it is not practicable to otherwise obtain the evidence thereon, computer or computer related equipment containing any of the foregoing, as well as any other items and records that represent or contain business records of companies or businesses known as Abbott Contracting Limited, Abbott Self Storage, Windsor Sales and Rentals Limited and R & A Rentals Windsor 2000 that any of the Authorized Persons believe on reasonable grounds may be mingled with the business records of the Defendants (collectively the "Relevant Evidence"). . . . 14.

All Relevant Evidence seized or delivered under this Order shall be retained in the custody of KPMG Forensic Inc., its employees and contractors (together "KPMG Forensic"). KPMG Forensic shall, as quickly as is reasonably practicable, copy the Relevant evidence

and return the Relevant Evidence to the Defendants. Subject to further Order of the Court, KPMG shall retain in its custody and possession all copies of the Relevant Evidence and shall not review or analyze such copies or provide the Plaintiff or its solicitors, investigators or agents with access to such copies without the consent of the Defendants. 15.

Bailiffs and sheriffs, the Royal Canadian Mounted Police, and all other law enforcement officers and other provincial and municipal police officers in those locations where this Order is sought to be enforced may, as may be required by the persons enforcing this Order, assist those persons in carrying out the terms of this Order and, if requested by such persons, shall forthwith accompany such persons for the purpose of keeping the peace at any entry, search and seizure conducted pursuant to this Order. [ 15 ] On December 4, 2002, the order was executed with a crew of seven including counsel, who searched the premises at Windsor and seized numerous documents and items including computer hard drives.

As provided in the order all seized material was taken to KPMG's office and copied. As indicated in the order KPMG was ordered to simply retain the copies and not turn them or any information concerning them over to the plaintiff or any other person and to return the original to the defendants as soon as practicable. This was done. [ 16 ] The defendants filed this application to set aside the order on February 12, 2003. [ 17 ] The plaintiff's position is that it has established the three essential conditions for the granting of an Anton Piller order.

It says that Sable Mary deliberately over billed the plaintiff for its services knowing that it was contrary to the agreement of the parties. In these circumstances it amounted to fraud involving a great deal of money. It contends that the evidence presented supports this position and as a result the plaintiffs have established an extremely strong prima facie case in respect to its claim against the defendants. It further maintains that the explanations of Mr.

Kimball as to how Sable Mary arrived at its billing figures are a fabrication designed in hindsight to explain the discrepancy and ought to be rejected by the Court as not being truthful. [ 18 ] The plaintiff says that it will suffer actual or potential serious damage if the order is set aside in that it would be unable to prove its case without these records, which would result in great loss to it. [ 19 ] As to the third requirement, the plaintiff maintains that there is a real likelihood that the evidence will be destroyed if returned to the defendants. [ 20 ] Finally, the plaintiff says that the search and seizure were carried out in a proper manner and in accordance with the ex parte order. [ 21 ] The defendants take the position that the plaintiff has not established an extremely strong prima facie case as required, nor even a strong prima facie case.

They say that although the plaintiff's evidence may have been sufficient to justify the granting of the ex parte order, in view of the explanations and evidence of Mr. Kimball and other witnesses presented by the defendants, it can not now be said that an extremely strong prima facie case continues to exist. The defendants maintain that their position as to the billing is plausible and ought to be accepted by the court and that there was no over billing and certainly no fraud on the part of the defendants.

They say that the issue between the parties is a disagreement or misunderstanding respecting the terms of the agreement as to the basis of Sable Mary's compensation for its services. [ 22 ] The defendants further contend that there is no risk of further damage to the plaintiff. Whatever damage it might be ultimately found that the plaintiff is entitled to be compensated for has already occurred.

They maintain that the plaintiff will not experience any ongoing or continuing damage if the order is set aside as would occur in the case of intellectual property. [ 23 ] Furthermore, the defendants insist that the plaintiff has not established that there is any likelihood of the evidence in question being destroyed. [ 24 ] Finally, they say that the search and seizure were carried out in an unlawful manner and contrary to the terms of the order. In

particular they refer to an occasion when more than four persons were present when the search and seizure operation was being carried out, which was contrary to the terms of the order. Accordingly, they say that on this ground alone the order ought to be set aside. [ 25 ] The Anton Piller order has its genesis in a decision of the English Court of Appeal bearing the same name, i.e., Anton Piller K.J. v. Manufacturing Process Ltd. et al [1976] 1 Ch. 55 .

In that decision the Court granted an order ex parte requiring the defendants to give permission to the plaintiff and its solicitors to enter the defendants' premises so as to inspect and seize evidence relevant to the plaintiff's claim against the defendants. The Court directed, however, that the order must be carried out with due circumspection. As Lord Denning, M.R., said at pages 60 - 61: Nevertheless, in the enforcement of this order, the plaintiffs must act with due circumspection. On the service of it, the plaintiffs should be attended by their solicitor, who is an officer of the court.

They should give the defendants an opportunity of considering it and of consulting their own solicitor. If the defendants wish to apply to discharge the order as having been improperly obtained, they must be allowed to do so. If the defendants refuse permission to enter or to inspect, the plaintiffs must not force their way in. They must accept the refusal, and bring it to the notice of the court afterwards, if need be on an application to commit. You might think that with all these safeguards against abuse, it would be of little use to make such an order.

But it can be effective in this way: It serves to tell the defendants that, on the evidence put before it, the court is of opinion that they ought to permit inspection -- nay, it orders them to permit -- and that they refuse at their peril. It puts them in peril not only of proceedings for contempt, but also of adverse inferences being drawn against them; so much so that their own solicitor may often advise them to comply. We are told that in two at least of the cases such an order has been effective.

We are prepared, therefore, to sanction its continuance, but only in an extreme case where there is grave danger of property being smuggled away or of vital evidence being destroyed. [ 26 ] The Court recognized that granting such orders was a significant departure from the English tradition that an individual's premises were not subject to search and seizure for civil purposes and that such orders should be granted only in exceptional circumstances. [ 27 ] Ormrod, L.J., at page 62 succinctly stated the conditions that must be met in order to obtain such an order.

He said: There are three essential preconditions for the making of such an order, in my judgment. First, there must be an extremely strong prima facie case. Secondly, the damage, potential or actual, must be very serious for the applicant.

Thirdly, there must be clear evidence that the defendants have in their possession incriminating documents or things, and that there is a real possibility that they may destroy such material before any application inter partes can be made. [ 28 ] Not long after this decision of the English Court of Appeal the procedure was introduced into Canada and accepted by Canadian courts. [ 29 ] One such case is Nintendo of America Inc. v. Colnex Video Games Inc. et al (1982) 46 N.R. 311 . That case was concerned with copyright infringement.

At page 313, Heald, J., observed that ". . . an order of this nature should be made only in the most exceptional circumstances . . . ." [ 30 ] Heald, J., stated the Court's rationale for granting the Anton Piller order in that case at page 320, where he said, after referring to Lord Ormrod's three preconditions for the making of such an order: In my opinion, the plaintiff has met all three of these conditions. With respect to the first test, I said earlier that in my view the plaintiff had made out an extremely strong prima facie case.

I say this because in the material there are admissions by the manufacturing defendants that plaintiff's gameboards have been copied and installed in cabinets enabling them to be operated. Some of the defendants' distributors have acknowledged importing infringing copies of plaintiff's games for purposes of sale or hire and have further acknowledged selling, leasing and distributing those same infringing copies. Secondly, I believe that the plaintiff has established that the resultant damage, potential or actual will be very serious for it.

The plaintiff's business in Canada is the manufacture and sale of audio- video games to legitimate distributors. The material before us shows that the market is being flooded with less expensive infringing games which, if allowed to continue, will quite possibly jeopardize the plaintiff's entire operation in this country. Thirdly, there is, in my

view, clear evidence that the defendants have in their possession infringing copies of plaintiff's video games which they have offered to sell to plaintiff's investigators. I am also satisfied that it has been shown that there is a real possibility that the infringing gameboards will be removed or disposed of since, as mentioned earlier, they can be removed from the cabinets and disposed of in a matter of minutes.

Accordingly, there is, in my view, a real possibility of destruction of the infringing material before any application inter partes could be made. [ 31 ] Heald, J., noted, however, that the English Court of Appeal seemed to have applied a less onerous test in the subsequent case of Yousif v. Salama [1980] 3 All E.R. 405 , where Lord Brightman referred to "prima facie evidence that essential documents are at risk." It is to be noted, however, that in the foregoing quotation Lord Brightman was obviously referring to the third precondition.

It appears to me that he indeed may be suggesting that the test for establishing the third precondition or element is on a lower scale than for establishing the first precondition, that is, that the applicant has a strong or an extremely strong prima facie case on the merits to support his claim. Lord Denning also sat on this appeal. As pointed out by Mr. Southcott, Farley, J., of the Ontario Superior Court of Justice, in Ontario Realty Corporation v. P.

Gabriele & Sons Ltd. (2000) 2000 CanLII 22697 (ON SC) , 50 O.R.(3d) 539, adopted the test of "a strong prima facie case" as opposed to "an extremely strong prima facie case". He cited in support of this position a decision of the Supreme Court of Canada in Aetna Financial Services Ltd. v. Feigelman 1985 CanLII 55 (SCC) , [1985] 1 S.C.R. 2. That case, however, was concerned with a Mareva injunction rather than an Anton Piller order, the Mareva injunction being much less intrusive than an Anton Piller order. [ 32 ] In Sulfur Experts Inc. v.

O'Connell (2000) 2000 ABQB 875 (CanLII) , 279 A.R. 246, Romaine, J., of the Alberta Court of Queen's Bench, referred to the applicant's submission that " . . . since it was unable to obtain immediate access, it has suffered irreparable harm in that evidence that would have been helpful or necessary to its case may have been lost to it." The learned judge did not respond directly to this proposition but he did say in stating his reasons for setting aside an Anton Piller order at paragraph 47: The next question is whether Sulphur Experts has established that it will suffer irreparable harm before trial if the injunction is not granted.

The type of harm that must be established is harm for which no fair or reasonable redress would be available after trial. The standard of proof required under this test is high; there must be a high degree of probability that harm will in fact occur . . . . [ 33 ] Nathanson, J., of this Court, adopted a similar position in granting a Mareva injunction in Merck & Co., et al v. Scotia Marine Products

(1983) Inc. et al (1986) 1986 CanLII 7044 (NS SC) , 73 N.S.R.(2d) 374. He said in paragraph 12 at page 376: The injunction being claimed has a quia timet aspect. Some of the acts feared have not yet appeared and may never appear. One use of injunctions is the prevention of prospective injury, and the mere futurity of unlawful acts is not an impediment to the grant of an injunction. However, the courts, in exercising their discretion, want to know whether there is a high degree of probability that the feared harm will occur.

The degree of probability will be weighed with all other relevant circumstances: see Spry, The Principles of Equitable Remedies (3rd Ed. 1984), p. 360ff. and Sharpe, Injunctions and Specific Performance (1983), p. 30ff. [ 34 ] With respect to the third precondition, Heald, J., in Nintendo, supra , was prepared to grant an Anton Piller order on the basis that ". . . there is considerable prima facie evidence that documents, machines and equipment essential to the plaintiff's case are at risk so that the court is justified in allowing the plaintiff to take such steps as are necessary to preserve them." He went on to quote the words of Lord Denning in Yousif, supra, at page 406: . . .

But in this case there is evidence (if it is accepted) which shows the defendant to be untrustworthy. The plaintiff has a legitimate fear that the documents will be destroyed . . . . There is a genuine fear that, if the plaintiff waits till after the application is heard, the defendant may destroy the documents before the date of the hearing. That is the sort of danger which the Anton Piller Order is designed to prevent . . . . it seems to me that the granting of the order can in no way harm the defendants. It is an aid to justice as far as the plaintiff is concerned.

Instead of having to speculate or try and get evidence from elsewhere, it should all be available in the files. It can do no harm to the defendant at all. If he is honest, he will produce the documents in any case. If he is dishonest, that is all the more reason why the order should be made . . . . [ 35 ] Addy, J., of the Federal Court of Canada, Trial Division, in another patent infringement case Chin-Can Communication Corp. et al v.

Chinese Video Centre Ltd. et al (1983) 70 C.P.R.(2d) 184 , in responding to the suggestion of counsel that a statement to the effect that the witness believed that the evidence would be destroyed should be sufficient to satisfy the third precondition, said at pages 187 - 188:

I do not accept this proposition. It is a far cry from complying with the rule of establishing an "exceptional case" or of satisfying the court that there must, in accordance with the words of Lord Denning in the Anton Piller case, be "a grave danger that vital evidence will be destroyed or that papers will be burned or lost or hidden or taken beyond the jurisdiction". On the contrary, if the argument of counsel for the applicant were accepted, it would only be in exceptional circumstances that an "Anton Piller" order would not be granted in copyright infringement cases.

With regard to the probability of destruction, whether there must be "an extremely strong prima facie case" or whether the "on the balance test" suffices, there would be an obligation in either case to adduce some convincing, concrete, factual evidence and not a mere statement of opinion or belief by a witness, to justify a finding on the issue of real or grave danger that the evidence will be destroyed or removed. [ 36 ] As to the consequences of improper execution of an Anton Piller order, Reid, J., of the Federal Court of Canada, Trial Division, said in Fila Canada Inc v.

Doe et al (1996) 1996 CanLII 4060 (FC) , 114 F.T.R. 155, at paragraph 16 , page 159: A solicitor, as an officer of the court, owes duties to the court as well as to his or her client. Solicitors attend and supervise the execution of these orders to ensure that their boundaries are not exceeded and to be in a position to give the court an accurate and complete description of what occurred. They have legal expertise and are expected to be able to explain to those enforcing the order and to those against whom it is being executed what is and what is not allowed thereunder.

This gives some assurance that the boundaries of the order will not be exceeded. Counsel understand that a misstep or mischaracterization of a situation can lead not only to the particular execution of the order being invalid but also to the vacating of the Anton Piller Order itself. [ 37 ] Counsel agree that on an application to set aside an Anton Piller order the proceeding is heard de novo with the plaintiff having the burden of proving that the order should remain in place. [ 38 ] It is acknowledged by the defendants that on the ex parte application the plaintiff met this burden.

However, by the very nature of an ex parte application the Court hears only the evidence of one of the parties. On this application the court has had the benefit of also seeing and hearing the evidence on the other side. [ 39 ] It appears that the fundamental issue between the parties turns on the question of what were the terms of remuneration of Sable Mary in the contract between it and the plaintiff. The plaintiff says that it was a straight forward cost plus arrangement, i.e., the payroll costs for the crew plus five percent. It suggests that the "letter agreements" clearly establish this position.

The defendants say, not so, that the written memoranda set out only part of the agreement, that there were other percentages to be added to the crew costs in accordance with an oral agreement struck by Mr. Einarsson and Mr. Kimball. [ 40 ] This leads to the question, for the purposes of this application, whether the plaintiff has established an extremely strong prima facie case in support of its position. In my opinion that is the test that it must meet.

Despite certain judicial pronouncements to the contrary mentioned above, I am not satisfied that Canadian jurisprudence sanctions any departure from the stringent preconditions enunciated by Lord Ormrod in the Anton Piller case, supra , in particular with reference to the first precondition. [ 41 ] At first blush, the proposition put forth by the defendants may not seem credible or reasonable while the plaintiff's position appears to be soundly based.

On a closer examination of the circumstances, however, the defendants' position does not appear to be so implausible. [ 42 ] First, the initial "letter agreement" dated December 5, 1997, makes no reference to the defendants' remuneration being on a cost plus basis. Instead it provides for a monthly fee and a "success sharing plan for Sable Mary Seismic based on profits". Mr. Kimball testified that the disputed percentage markups were agreed to by Mr. Einarsson. He said that the thirty percent markup was to cover crew "benefits" as well as additional compensation for his services.

He also stated that there was no profit or "success" sharing with him.

[ 43 ] Second, the "letter Agreement" of October 16, 1998, does not use the term "payroll costs" but states that Sable Mary will "continue to pay for the personnel supplied by Sable Mary Seismic at cost plus 5%". Cost of the personnel is not defined, thus it conceivably could include other items in addition to the "payroll costs" as suggested by Mr. Kimball.

It is understood that "payroll costs" included only salary paid to the employee plus mandatory contributions to benefits paid by the employer such as Canada Pension Plan contributions, employment insurance premiums and Workers' Compensation premiums. [ 44 ] Third, it does appear from all the evidence that the written "agreements" did not include all of the agreements and arrangements made by Messrs. Einarsson and Kimball. [ 45 ] Fourth, the bimonthly invoices for supplying crew amounted to large sums of money, ranging up to $228,000.00 per bi- monthly billing period. Mr.

Einarsson approved all of these invoices without requiring any supporting documentation or details of how the invoiced amount was arrived at. It apparently had been agreed that Sable Mary would simply submit an invoice setting out the names of the crew members and a lump sum plus GST. It was not required that the hours or days worked by each crew member, or his or her rate of pay, and the amount actually paid to each be set out in the invoice. Also, there is no reference to a five percent markup. Mr. Einarsson simply approved the invoices for payment and they were paid.

I find it astounding that such large sums would be approved for payment without full details and supporting documentation being provided. In my view this fact provides some credence for the proposition put forth by Mr. Kimball. [ 46 ] In the end, it seems to me that the case will turn on issues of credibility and determination and

interpretation of the terms of the contract between the parties. These are issues for the trial judge to decide. [ 47 ] Considering all of the evidence it seems to me that the defendants have provided a plausible proposition in support of their position as to the basis of compensation.

Accordingly, I cannot say that I am satisfied that the plaintiff has established an extremely strong prima facie case. [ 48 ] With respect to the second precondition, whether the plaintiff has established that the damage it will experience will be very serious if the order does not remain in place, as defendants’ counsel has pointed out, the damages, if any, have already occurred. It is noted that in a number of the cases cited by counsel, in particular the copyright infringement cases, the applicants were concerned with ongoing or future losses.

In this case, the plaintiff says that without the seized evidence it will be unable to prove its case, thereby suffering a substantial loss. On the other hand, however, it maintains that this is a straight forward cost plus contract. It seems to me that the law is well established that in cost plus contracts the contractor is legally bound to maintain and produce accurate records. Failure to do so will result in facts being presumed against the contractor. Here the plaintiff has details of what it paid the crew and has been able to calculate the differential between these payments and what it paid Sable Mary .

Mr. Kimball has explained how certain percentages were added to the basic payroll costs to arrive at the invoiced figures. In these circumstances it appears that any overpayment is calculable.

As well, the plaintiff may obtain access to the defendants’ documents and other records through procedures under the Civil Procedure Rules such as discovery of documents and notices to produce. [ 49 ] I am not satisfied that the plaintiff has established that it will suffer substantial loss if the instant order is set aside. [ 50 ] As to the third precondition, whether the defendants have in their possession documents or things pertinent to the case and that there is a real possibility that they may destroy them if the order is set aside, I am satisfied that the defendants have such documents and things in their possession which have been copied by KPMG.

I am also satisfied, however, that the plaintiff has failed to establish, on a prima facie basis, that there is a real possibility that they may be destroyed if the order is set aside. The plaintiff says that the defendants have committed fraud and therefore are not trustworthy. As I see it, however, no fraud has been proved, even on a prima facie basis, at this juncture. Mr. Kimball has no criminal record and as far as the court knows he is regarded as a reputable business man firmly established in his community.

Furthermore, if he had had any inclination to destroy potential evidence I am certain that such would have been dispelled by the fact that it is now known that such evidence exists. I am convinced that in these circumstances he would not run the risk of being condemned to criminal and other sanctions by destroying evidence. [ 51 ] Finally, turning to the question of whether the order was properly executed, I have concluded that the plaintiff’s search crew erred in two respects.

The order granted by MacDonald, A.C.J., authorized the presence on the premises of not more than four persons at any time to search for and copy business records of the defendants and their related enterprises. The plaintiff acknowledges that certain items including RRSPs and personal banking records were seized, as well as Mr. and Mrs. Kimball's son's personal computer hard drive. I accept the evidence of two of Sable Mary's employees that on one occasion there were six members of the plaintiff’s seven member

search crew present at the Albert Street office of the defendants. These acts were in breach of the terms of the order. [ 52 ] The plaintiff's witnesses testified that at no time were there more than four persons present in any individual building at any given time. Although I have no doubt that it was not the intention of the leaders of the search crew that more than four persons should be present, I am persuaded by the testimony of Messrs. Richard Wayne MacDonald and Darren Stephen Greenough, the defendants' employees at the Albert Street location, that in fact it did occur.

On cross-examination both testified in a straight forward manner. Each was in a good position to observe what was going on. Each mentally noted the number of persons present at the time and where they were located. Both Mr. MacDonald and Mr. Greenough struck me as credible and reliable witnesses. [ 53 ] With respect to the appropriate remedy for these breaches, it does not seem to me that they were so egregious as to demand the setting aside of the order. It appears that, to some extent at least, they may have occurred inadvertently and without malice.

I am of the view, however, that some sanction ought to be imposed. An Anton Piller order is an extremely invasive procedure where a defendant has no opportunity to oppose it until after the event. It can be a very distressing event, especially in the circumstances such as occurred here, where Mr. Kimball's personal residences and members of his family were subjected to the process. I have concluded that the appropriate remedy is to make a monetary award in the amount of $1,000.00 with respect to the breaches of the order.

As to any other damages the defendants may seek to recover, that will be left for the trial judge. [ 54 ] In conclusion I will order that the Anton Piller order be set aside, that all copies of material copied by KPMG be returned to the defendants’ solicitor and that KPMG be enjoined from providing to the plaintiff any information obtained by it from their examination and copying of the material in question. [ 55 ] I will hear counsel further with respect to costs if they wish.