Yves Doucet and Peter Dauphinee (appellants) v. Spielo Manufacturing Incorporated and Jon Manship (respondents)

(102-09-CA; 2011 NBCA 44)

Indexed As: Doucet et al. v. Spielo Manufacturing Inc. et al.

New Brunswick Court of AppealDeschênes, Robertson and Green, JJ.A.

May 12, 2011.

Summary:The plaintiffs were employees and minority shareholders of the corporate defendant.

They sued the defendants alleging, inter alia, wrongful dismissal, oppression, unjust enrichment, failure to negotiate in good faith, negligent misrepresentation and breach of fiduciary duty. The defendants counterclaimed for the return of severance benefits paid to the plaintiff Doucet, alleging "after-acquired cause" for his termination. The matter proceeded to trial. After the close of the defendants' case, the plaintiffs sought to recall the plaintiff Doucet to give rebuttal evidence.

The New Brunswick Court of Queen's Bench, Trial Division, in a decision reported at 340 N.B.R.(2d) 198; 871 A.P.R. 198, dismissed the motion. The trial continued.

The New Brunswick Court of Queen's Bench, Trial Division, in a decision reported at 352 N.B.R.(2d) 1; 907 A.P.R. 1, dismissed the action and allowed the counterclaim. The parties sought the determination of costs. The defendants sought party and party costs up to the time of an offer to settle (made 10 days before trial) and solicitor-client costs thereafter.

The New Brunswick Court of Queen's Bench, Trial Division, in a decision reported at 355 N.B.R.(2d) 316; 917 A.P.R. 316, declined to award solicitor-client costs. However, the plaintiffs made the action more complex and prolix than it needed to be. The court determined the amount involved to be $14.8M. Using Tariff "A", Scale 5, the court awarded the defendants costs of $838,490.62 against the plaintiffs respecting the action and $17,825 against the plaintiff Doucet respecting the counterclaim. The plaintiffs appealed the above three decisions.

The New Brunswick Court of Appeal allowed the appeal in part. The appeal on the main action was dismissed. The appeal on the counterclaim was allowed and a new trial was ordered before a different judge. The costs order on the counterclaim was set aside. The costs order made at trial on the main action was varied from $838,490.62 to $745,325, plus reasonable disbursements. As the defendants were largely successful on the appeal, they were awarded costs fixed at $7,500.

Editor's Note: There are several other prior cases involving these parties.

Company Law - Topic 7013Fundamental changes and shareholders' rights - Rights of minority or dissenting shareholders - Oppression - What constitutes - Doucet and Dauphinee were employees

and minority shareholders of Spielo - They signed a share subscription agreement that provided that if they ceased to be an employee, for any reason, Spielo would immediately repurchase their shares at the then net book value - Spielo terminated them and repurchased their shares at net book value - Spielo was later sold at a substantially higher price per share than that paid to Doucet and Dauphinee - They sued Spielo and its president alleging, inter alia, wrongful dismissal and oppression - They argued, inter alia, that the defendants' termination of their employment based on false allegations of poor financial performance, and while negotiating to sell Spielo and gathering in shares from minority shareholders at a low price, was oppressive - The trial judge rejected oppression claim - The New Brunswick Court of Appeal stated that the court did not accept the trial judge's bald proposition that the oppression remedy was not available if the impugned conduct was sanctioned under the express terms of a contract (the employment and share purchase agreements) - That pronouncement left no room for the understanding that neither party to a contract was entitled to engage in opportunistic or vindictive behaviour - See paragraph 10.

Company Law - Topic 7013Fundamental changes and shareholders' rights - Rights of minority or dissenting shareholders - Oppression - What constitutes - Doucet and Dauphinee were employees and minority shareholders of Spielo - They signed a share subscription agreement that provided that if they ceased to be an employee, for any reason, Spielo would immediately repurchase their shares at the then net book value - Spielo terminated them and repurchased their shares at net book value - Spielo was later sold at a substantially higher price per share than that paid to Doucet and Dauphinee - They sued Spielo and its president alleging, inter alia, wrongful dismissal and oppression - They argued, inter alia, that the defendants' termination of their employment based on false allegations of poor financial performance, and while negotiating to sell Spielo and gathering in shares from minority shareholders at a low price, was oppressive - The trial judge rejected the oppression claim - The New Brunswick Court of Appeal disagreed with the basis that the trial judge rejected the claim - However, the trial judge's findings laid to rest any finding of oppression - The trial judge found that the dismissals were not carried out in order to deprive the plaintiffs of their substantial and realizable capital gain - At the time of dismissals, there were no pending negotiations for the sale of Spielo - The dismissals were also found to be motivated by proper business considerations - The trial judge's findings were not "infected" with palpable and overriding error - See paragraphs 11 and 40 to 63.

Company Law - Topic 9781Actions against corporations and directors - Action for oppressive conduct - When available - [See both Company Law - Topic 7013].

Company Law - Topic 9785Actions against corporations and directors - Action for oppressive conduct - Oppression, prejudice or disregard of interests - [See both Company Law - Topic 7013].

Contracts - Topic 1106

Formation of contract - General principles - Duty to negotiate in good faith - The New Brunswick Court of Appeal stated that the law did not recognize the existence of a pre-contractual duty to bargain in good faith - If the law were to do so, the duty would arise under tort principles and the calculation of damages would be based on principles that differed from contract law - The court stated that it did not want to leave the impression that the law would or should remain impervious to cases where the defendant failed to disclose pertinent and material information and where the defendant entered into negotiations with no intention of entering into a contract because of an ulterior motive - With respect to the latter situation, the court was not confident that a defendant who had knowingly caused the plaintiff to waste time and money in pursuing negotiations the defendant knew would never lead to a concluded contract should be immune from the obligation to pay compensation - The law should not embrace the business morals of the opportunist - The intentional infliction of economic harm required redress in the form of compensation tied to the innocent party's reliance interests - But it was to tort law that the aggrieved party should turn - See paragraphs 30 to 37.

Contracts - Topic 1106Formation of contract - General principles - Duty to negotiate in good faith - The New Brunswick Court of Appeal stated that "If one steps back for a moment from the concept of oppression under s. 241(1) of the Canada Business Corporations Act and turns to the principles of contract law that attempt to regulate unacceptable commercial behaviour, the goal of the legislation becomes evident. It seeks to bypass the largely ineffective solutions offered by the common law for placing restrictions or limits on the ability of a contractual party to pursue their self-interests without regard to the legitimate expectations of the other. The initial response of the common law was to address the problem through principles of contractual interpretation and to examine the exercise of contractual power in terms of isolating the intention of the parties. The next development in the law was the modern doctrine of good faith performance, which focuses on the expectations of the parties. The attractiveness of the oppression remedy is that the analysis circumvents the issues typically raised in regard to the interpretation of contract and the good faith performance doctrine, which remains in a state of legal gestation under Canadian law. Yet we know that both the oppression remedy and the good faith doctrine focus on the reasonable expectations of the parties, a concept classically articulated in the principles of contract interpretation as the exercise of identifying the intention of the parties." - See paragraph 48.

Evidence - Topic 510Presentation of evidence - Rebuttal evidence - General principles - The plaintiffs were employees and minority shareholders of the corporate defendant (Spielo) - They sued the defendants alleging, inter alia, wrongful dismissal and oppression - The defendants counterclaimed for the return of severance benefits paid to the plaintiff Doucet, alleging "after-acquired cause" for his termination - After the close of the defendants' case, the plaintiffs sought to recall the plaintiff Doucet to give rebuttal evidence - The rebuttal evidence concerned the evidence of Vienneau, called by the defendants, who testified that Doucet had requested and received a "kickback or payback" in consideration for a company getting a certain contract involving Spielo - The defendants' counsel first raised

the issue during Doucet's cross-examination - The trial judge refused the rebuttal evidence - A plaintiff could not "split" his or her case - The defendants complied with Browne v. Dunn and gave ample background to Doucet as to what Vienneau's testimony would be - The New Brunswick Court of Appeal held that the trial judge erred, inter alia, in refusing to allow Doucet to offer reply evidence - The trial judge erred in persisting with the mistaken notion that this was a proper case for the application of the rule in Browne v. Dunn - A defendant was not able to establish a counterclaim through the application of that rule - Doucet had the right to hear from Vienneau and others who testified on behalf of the defendants before offering viva voce and documentary evidence in response to the kickback allegation which represented a new and unexpected ground of dismissal for cause which arose out of the defendants' case - Rule 54.07(d) of the Rules of Court authorized the trial judge to permit the plaintiff employee to offer reply evidence to address this new matter - See paragraphs 104 to 113.

Evidence - Topic 512 Presentation of evidence - Rebuttal evidence - To contradict witnesses - [See Evidence - Topic 510].

Master and Servant - Topic 7525Dismissal or discipline of employees - Grounds - General - Grounds learned after dismissal - The New Brunswick Court of Appeal stated that "While the concept of 'after acquired cause' for dismissal provided employers with a valid defence to an action for wrongful dismissal, the defence is circumscribed by s. 30(2) of the Employment Standards Act ... This provision overrides the common law by requiring employers to provide employees with written reasons if the dismissal is for cause." - See paragraph 13 - The court discussed the legal framework for an employer's defence of after acquired cause for dismissal - See paragraphs 74 to 86 - The court stated that "In summary, the plea of after discovered cause for dismissal has two key elements: (1) the employer must not have known of the misconduct at the time of the dismissal; and (2) the misconduct, had it been known, would have warranted summary dismissal. If the employer was aware of the misconduct and the notice of dismissal failed to specify that the misconduct was the reason for the dismissal, s. 30(2) of the Employment Standards Act would preclude the employer from subsequently raising the matter." - See paragraph 87.

Master and Servant - Topic 7525Dismissal or discipline of employees - Grounds - General - Grounds learned after dismissal - The New Brunswick Court of Appeal stated that "At this point, it is best to summarize how s. 30(2) of the Employment Standards Act differs from the common law when it comes to the concept of after discovered cause for dismissal. At common law, it makes no difference whether the employer knew of the earlier misconduct. If, however, the employer knew of the earlier misconduct, the employee has the right and obligation to establish employer condonation. By contrast, under s. 30(2), if the employer knew of the earlier misconduct and does not specify this fact as a ground of dismissal, that is the end of the matter. The employer may not amend its reasons by adding a new cause for dismissal. Accordingly, the employee does not have to go the further step of establishing employer condonation. On the other hand if the employer complies with s. 30(2) and

gives written reasons for the dismissal, the employee can raise the defence of condonation ..." - See paragraph 88.

Master and Servant - Topic 7525Dismissal or discipline of employees - Grounds - General - Grounds learned after dismissal - The New Brunswick Court of Appeal stated that "... there is a substantive difference between cause for dismissal based on discrete acts of misconduct, hidden from the employer, or incapable of discovery in the normal course of the employment relationship, and acts which relate to matters of job performance and which, with due diligence, would have been known to anyone who took the time to observe what was happening in the workplace. In my view, the difference is in keeping with the objectives underscoring the Employment Standards Act. Hence, I am not one who subscribes to the view that evidence of incompetence, supposedly unknown at the time of dismissal, may be relied on to establish just cause for dismissal. If an employer has failed to supervise an employee in an effort to assess the employee's continuing level of competence in performing assigned tasks, that is the employer's problem. The omission should be deemed to negate any plea of after discovered cause for dismissal. In short, the easy cases are those in which the employer did not know of the pre-dismissal conduct. The difficult cases are those where it is alleged than the employer ought to have known of the alleged misconduct." - See paragraph 89.

Master and Servant - Topic 7525Dismissal or discipline of employees - Grounds - General - Grounds learned after dismissal - The New Brunswick Court of Appeal stated that "I subscribe to the general view that the policy rationale underscoring the concept of after discovered cause is to ensure that an employee is not permitted to rebut allegations of wrongdoing merely because efforts to conceal the misconduct during the employee's tenure were successful, or because the nature of the transgressions were beyond the normal reach of those who are entitled to assume every employee is fulfilling their employment obligations based on loyalty and honesty. In this way, the plea of after discovered cause prevents an employee from benefiting from his or own misconduct. However, the plea should be rejected in cases where a review of the employee's file or work reveals deficiencies that would have warranted negative comment or remedial action by the employer before invoking the ultimate sanction: dismissal for cause. As stated at the outset, the law should not encourage employers to assume the role of employment archaeologists, looking through the remnants of an employee's work history, in an effort to unearth grounds for dismissal" - See paragraph 90.

Master and Servant - Topic 7525Dismissal or discipline of employees - Grounds - General - Grounds learned after dismissal - Doucet was employed by the corporate defendant (Spielo) - He headed a division of Spielo before he was terminated after 10 years of service - He was given 12 months' notice - Doucet sued for wrongful dismissal - Spielo counterclaimed, alleging that just cause for the termination was discovered after the termination which entitled them to recover the notice paid to him - They alleged that Doucet demanded and received a secret commission or kick-back from a company that Spielo did business with - They

also alleged that Doucet was actively involved with the management of a company (Dovico) operated by his sister while he was still employed by Spielo and used other employees of Spielo to assist Dovico without any permission or compensation for such services - Spielo's president had some knowledge of Doucet's involvement with Dovico but not the full extent - The trial judge held that the defendants had sufficient grounds to dismiss Doucet for subsequently acquired cause - The New Brunswick Court of Appeal ordered a new trial - The trial judge appeared to treat Dovico as a competing business and failed to consider whether Doucet's conduct warranted immediate dismissal - There was also errors committed respecting the alleged kick-back evidence - See paragraphs 14, 15 and 92 to 113.

Master and Servant - Topic 7553Dismissal or discipline of employees - Grounds - Misconduct or misconduct of business - [See fifth Master and Servant - Topic 7525].

Master and Servant - Topic 7571Dismissal or discipline of employees - Grounds - Remuneration from third party - [See fifth Master and Servant - Topic 7525].

Master and Servant - Topic 7582.1Dismissal or discipline of employees - Grounds - Personal use of employer's property - [See fifth Master and Servant - Topic 7525].

Master and Servant - Topic 8000Dismissal without cause - Notice of dismissal - What constitutes reasonable notice - Doucet was employed by the corporate defendant (Spielo) - He headed a division of Spielo before he was terminated after 10 years of service - He was 45 years old - He was an electrical engineer - He was given 12 months' notice - Doucet had provided assistance to another company, Dovico, during his tenure at Spielo and became employed at Dovico as soon as his notice period expired - Doucet sued for wrongful dismissal, arguing that he should have received 24 months' notice - The trial judge held that there was cause for Doucet's dismissal - In any event, the 12 months' notice provided was reasonable - Doucet could have gone to work for Dovico shortly after he was terminated but chose to wait out the notice period - Doucet appealed, arguing, inter alia, that Spielo was obliged to porvide 18 to 20 months' notice - The New Brunswick Court of Appeal rejected the argument - He failed to identify a reversible or palpable and overriding error or to establish that the notice period was so inordinately low as to warrant intervention - See paragraphs 72 and 73.

Master and Servant - Topic 8000Dismissal without cause - Notice of dismissal - What constitutes reasonable notice - Dauphinee was employed by the corporate defendant (Spielo) as an information technology lawyer - He had extensive training in the intellectual property field - He was terminated after seven years of service - He was 48 years old - He was given six months' notice - He sued for wrongful dismissal, arguing that he should have received 24 months' notice - The trial judge held that the appropriate notice period should have been nine

months - However, Dauphinee failed to mitigate his damages - He did not apply to any law firms and did not take any of the usual types of job search initiatives - The failure to mitigate negated any claim to an additional notice period over the six months provided - Dauphinee appealed, arguing, inter alia, that Spielo was obliged to provide 18 to 20 months' notice - The New Brunswick Court of Appeal rejected the argument - He failed to identify a reversible or palpable and overriding error or to establish that the notice period was so inordinately low as to warrant intervention - See paragraphs 72 and 73.

Master and Servant - Topic 8409Employment and labour standards - Layoff or dismissal - Written reason for - [See first and second Master and Servant - Topic 7525].

Practice - Topic 6931Costs - General principles - Discretion of court - The New Brunswick Court of Appeal stated that "One must also recognize the residual or overriding discretion of trial judges to adjust a costs award even though the award departs from the strict application of the Tariff. This residual discretion can be traced to Rule 59.01(2)(a) which states that nothing in the Rule shall be construed so as to interfere with the authority of the court to fix costs of a proceeding with or without reference to the Tariff... In summary, not only does the trial judge retain the discretion to adopt the appropriate Scale and percentage rate to be applied to the excess amount, he or she retains the discretion to make an award that deviates from the strict application of the Tariff in order to respond to the exigencies of the case." - See paragraph 33.

Practice - Topic 6936Costs - General principles - Evidence - The New Brunswick Court of Appeal discussed the relevance of affidavit evidence regarding legal fees in determining party and party costs - The court stated that it seemed axiomatic that in large scale commercial litigation, the successful party was going to provide affidavit evidence respecting the actual legal costs incurred in pursuing or defending an action - The court stated that "In my view, in cases involving large scale litigation, the successful party has no option but to provide the trial judge with evidence of the cost of pursing or defending the lawsuit (hourly rate(s) and time spent). It is an established principle of law that a costs award cannot be a source of profit to the successful litigant ... The evidence may also be regarded as a reality check for those judges who view themselves as being too far removed from the daily practice of civil litigation in this Province. The evidence also confirms that a costs award in New Brunswick represents only partial indemnification. Access to justice remains the overarching principle... In cases where the Tariff is applied, it may still be necessary to offer affidavit evidence of legal fees incurred if only to eliminate the possibility of the successful party profiting from the costs award. In large scale commercial litigation with quantifiable claims, the need will be obvious. The same holds true in regard to large scale litigation where the Tariff is inapplicable. Correlatively, lump sums awards crafted in darkness are no longer permissible." - See paragraphs 156 to 160.

Practice - Topic 7003Costs - Party and party costs - General principles and definitions - Amount involved - The

New Brunswick Court of Appeal stated that "A costs award predicated on an 'amount involved' under a Tariff system is inherently problematic. There is no immediate or obvious relationship between the amount claimed and the costs incurred in either pursuing or defending the lawsuit. This case adds another layer of difficulty because it involves multiple and overlapping claims embracing a dollar amount that the drafters of the 1982 Tariff could not reasonably have envisaged. Of course, the cost of legal services has increased dramatically over the last three decades, thereby rendering the assumptions, on which the Tariff was first predicated, dated. The Tariff remains relevant today because of the residual discretion which Rule 59 of the Rules of Court vests in trial judges to make needed adjustments. Standing by itself, the Tariff continues to serve as a guidepost for those concerned about the financial ramifications of being declared an unsuccessful litigant, and as a protection against lump sum awards which are the product of 'scratchpad justice'." - See paragraph 16.

Practice - Topic 7003Costs - Party and party costs - General principles and definitions - Amount involved - The New Brunswick Court of Appeal stated that "This case retraces the analytical framework laid down in Rule 59 for determining the 'amount involved' and to explain the approach the drafters of the 1982 Tariff had anticipated would be followed when moving away from the 'basic' scale (Scale 3). But it is not so much the scale which is of critical significance to a costs award as it is the percentage rate to be applied to the amount exceeding the first $100,000. Obviously, the difference between 1% and 5% is immense when the amount involved stretches into the millions. The jurisprudence cited to the Court forces us to reflect on the purposes underscoring a costs award, the difference between partial and substantial indemnification, and how our Tariff is able to provide the successful party with meaningful compensation without undermining the primary goal of ensuring 'access to justice'. Affidavit evidence of actual legal fees (billed hours or time spent and hourly rate) in cases involving large scale litigation is unavoidable." - See paragraph 17.

Practice - Topic 7003Costs - Party and party costs - General principles and definitions - Amount involved - The New Brunswick Court of Appeal stated that "... at times the task of fixing the 'amount involved' may be difficult and, at times, it may seem contrived. But I also believe it is far better for trial judges to adhere to the Tariff than to make lump sum awards of costs based on unarticulated criteria, that is to say, awards that are the product of scratchpad justice: a 'guesstimation' of what might be fair and reasonable compensation to the successful litigant. A lump sum award cannot be the product of an unprincipled exercise of discretion." - See paragraph 129.

Practice - Topic 7004Costs - Party and party costs - General principles and definitions - Scale of costs - Fixing of - [See Practice - Topic 6931 and first and second Practice - Topic 7003].

Practice - Topic 7006Costs - Party and party costs - General principles and definitions - Purpose of party and

party costs - The New Brunswick Court of Appeal stated that it was hornbook law that, absent special circumstances, the purpose of a costs award in a "loser pay" system was to provide the successful party with partial indemnification with respect to the lawyer's fees incurred in either pursuing or defending an action or proceeding - A costs award should properly compensate the successful party and awards of costs should not deter plaintiffs from pursuing meritorious claims - When it came to an award of party-and-party costs, the jurisprudence spoke generally of partial and substantial indemnification - The jurisprudence did not support the proposition that a costs award in New Brunswick was or was originally intended to provide the successful party with substantial indemnification - See paragraphs 117 to 119.

Practice - Topic 7006Costs - Party and party costs - General principles and definitions - Purpose of party and party costs - The New Brunswick Court of Appeal stated that "One has to ask whether our 1982 Tariff bears any relationship to the realities of litigation costs today. To the extent the 1982 Tariff sets out party-and-party costs payable in actions involving $1,000 to $100,000, based on one of five scales, the Tariff is arguably reflective of a legal era long past and, therefore, is unresponsive to a party's plea for fair and meaningful reimbursement for costs in successfully pursuing or defending an action. The Tariff's other obvious short-fall is the lack of a logical relationship between the amount being claimed and the amount reasonably needed to pursue or defend a law suit... Despite obvious shortcomings, the Tariff possesses an advantage that simply does not exist if the trial judge elects to make a lump sum costs award. The Tariff promotes certainty and predictability in the law by providing lawyers and clients with the ability to anticipate or calculate the potential magnitude of a costs award ... it forces the parties to evaluate the merits of each claim and to estimate fairly the amount of damages likely to be recovered ...The other advantage of our Tariff system is that it is not really as rigid as one thinks. The discretion built into Rule 59, for the benefit of trial judges to craft an award that responds to present day realities and the facts of the case, cannot be overlooked... The essential feature of New Brunswick's Tariff, despite its outdated scales, is that it continues to ensure that access to justice remains the fundamental objective." - See paragraphs 119 to 121.

Practice - Topic 7006Costs - Party and party costs - General principles and definitions - Purpose of party and party costs - [See first and second Practice - Topic 7003].

Practice - Topic 7103Costs - Party and party costs - Special orders - Conduct by party or counsel (incl. breach of court rules) - The plaintiffs were employees and minority shareholders of the corporate defendant - They sued the defendants alleging, inter alia, wrongful dismissal, oppression, unjust enrichment, failure to negotiate in good faith, negligent misrepresentation and breach of fiduciary duty - The action involved extensive court time - The action was dismissed - The trial judge found that the plaintiffs made this action more complex and prolix than it needed to be - The court determined the amount involved to be $14.8M - Using Tariff "A", Scale 5, given the complexity of the matters raised, the court awarded

the defendants party and party costs of $745,325 respecting the action - The New Brunswick Court of Appeal held that trial judge's decision to fix the "amount involved" at $14.8M was justifiable - The court agreed with his decision to award costs based on Scale 5 and to apply 5% to the excess amount - There were valid reasons for moving from Scale 3 to Scale 5 and applying the maximum percentage - Two of the plaintiffs' claims were "erected on legal foundations of straw" - See paragraphs 18 and 161 to 188.

Practice - Topic 7109Costs - Party and party costs - Special orders - Discretion to exceed scale of costs - [See Practice - Topic 6931 and second Practice - Topic 7006].

Practice - Topic 7111.2Costs - Party and party costs - Special orders - Increase in scale of costs - Effect of settlement offers - The plaintiffs were employees and minority shareholders of the corporate defendant - They sued the defendants alleging, inter alia, wrongful dismissal, oppression, unjust enrichment, failure to negotiate in good faith, negligent misrepresentation and breach of fiduciary duty - The action involved extensive court time - The defendants offered to settle the action for $1M 10 days before the trial - The offer was not accepted - The action was dismissed - The trial judge awarded the defendants $745,325 for party and party costs and augmented the costs award by $93,165.62 because the plaintiffs' rejection of the settlement offer or because the case was unnecessarily complex - The New Brunswick Court of Appeal deducted the augmented amount ($93,165.62), stating, inter alia, that, despite first appearances, the offer was not "substantial" given the size of the monetary claims - It would not have even covered the plaintiffs' legal fees to date - See paragraphs 19 and 189 to 191.

Practice - Topic 7115Costs - Party and party costs - Special orders - Increase in scale of costs - Difficulty and complexity of proceedings - [See Practice - Topic 7103].

Practice - Topic 7247.1Costs - Party and party costs - Offers to settle - Costs to successful defendant - [See Practice - Topic 7111.2].

Contrats - Cote 1106Formation du contrat - Principes généraux - Obligation de négocier de bonne foi - [Voir Contracts - Topic 1106].

Droit des compagnies - Cote 7013Modifications de structure et droits des actionnaires - Droits des actionnaires minoritaires ou dissidents - Oppression - Éléments constitutifs - [Voir Company Law - Topic 7013].

Droit des compagnies - Cote 9781Actions contre les corporations et les dirigeants - Demande en cas d'abus - Conditions d'ouverture - [Voir Company Law - Topic 9781].

Droit des compagnies - Cote 9785Actions contre les corporations et les administrateurs - Demande en cas d'abus - Oppression - Préjudice ou mépris des intérêts - [Voir Company Law - Topic 9785].

Employeurs et employés - Cote 7525Congédiement d'employés ou recours disciplinaire - Motifs - Généralités - Motifs appris après le congédiement - [Voir Master and Servant - Topic 7525].

Employeurs et employés - Cote 7553Congédiement d'employés ou recours disciplinaire - Motifs - Mauvaise conduite ou mauvaise conduite des affaires - [Voir Master and Servant - Topic 7553].

Employeurs et employés - Cote 7571Congédiement d'employés ou recours disciplinaire - Motifs - Rémunération fournie par un tiers - [Voir Master and Servant - Topic 7571].

Employeurs et employés - Cote 7582.1Congédiement d'employés ou recours disciplinaire - Motifs - Utilisation des biens de l'employeur à des fins personnelles - [Voir Master and Servant - Topic 7582.1].

Employeurs et employés - Cote 8000Congédiement non motivé - Avis de congédiement - Préavis raisonnable - Éléments constitutifs - [Voir Master and Servant - Topic 8000].

Employeurs et employés - Cote 8409Normes d'emploi - Mise à pied ou licenciement - Motifs écrits - [Voir Master and Servant - Topic 8409].

Preuve - Cote 510Présentation de la preuve - Preuve en réfutation - Principes généraux - [Voir Evidence - Topic 510].

Preuve - Cote 512Présentation de la preuve - Preuve en réfutation - Pour contredire les témoins - [Voir Evidence - Topic 512].

Procédure - Cote 6931Dépens - Principes généraux - Pouvoir discrétionnaire du tribunal - [Voir Practice - Topic 6931].

Procédure - Cote 6936Dépens - Principes généraux - Preuve - [Voir Practice - Topic 6936].

Procédure - Cote 7003Dépens - Dépens entre parties - Principes généraux et définitions - Montant clé - [Voir Practice - Topic 7003].

Procédure - Cote 7004Dépens - Dépens entre parties - Principes généraux et définitions - Échelle des dépens - Fixation - [Voir Practice - Topic 7004].

Procédure - Cote 7006Dépens - Dépens entre parties - Principes généraux et définitions - But des dépens entre parties - [Voir Practice - Topic 7006].

Procédure - Cote 7103Dépens - Dépens entre parties - Ordonnances spéciales - Conduite d'une partie ou de l'avocat (y compris l'inobservation des règles de procédure) - [Voir Practice - Topic 7103].

Procédure - Cote 7109Dépens - Dépens entre parties - Ordonnances spéciales - Discrétion permettant de dépasser l'échelle des dépens - [Voir Practice - Topic 7109].

Procédure - Cote 7111.2Dépens - Dépens entre parties - Ordonnances spéciales - Majoration dans l'échelle des dépens - Effet d'offres de règlement - [Voir Practice - Topic 7111.2].

Procédure - Cote 7115Dépens - Dépens entre parties - Ordonnances spéciales - Majoration dans l'échelle des dépens - Difficulté et complexité de l'instance - [Voir Practice - Topic 7115].

Procédure - Cote 7247.1Dépens - Dépens entre parties - Offres de règlement - Dépens au défendeur ayant eu gain de cause - [Voir Practice - Topic 7247.1].

Cases Noticed:McKinley v. BC Tel et al. (2001), 271 N.R. 16; 153 B.C.A.C. 161; 251 W.A.C. 161; 2001

SCC 38, refd to. [para. 14].Browne v. Dunn (1894), 6 R. 67 (H.L.), refd to. [para. 15].Queen (D.J.) v. Cognos Inc., [1993] 1 S.C.R. 87; 147 N.R. 169; 60 O.A.C. 1, refd to.

[para. 28].BG Checo International Ltd. v. British Columbia Hydro and Power Authority, [1993] 1

S.C.R. 12; 147 N.R. 81; 20 B.C.A.C. 241; 35 W.A.C. 241, refd to. [para. 28].Martel Building Ltd. v. Canada, [2000] 2 S.C.R. 860; 262 N.R. 285; 2000 SCC 60, refd

to. [para. 31].978011 Ontario Ltd. v. Cornell Engineering Co. (2001), 144 O.A.C. 262 (C.A.), refd to.

[para. 32].International Corona Resources Ltd. v. LAC Minerals Ltd., [1989] 2 S.C.R. 574; 101

N.R. 239; 36 O.A.C. 57, refd to. [para. 33].Crawford et al. v. Agricultural Development Board (N.B.) et al. (1997), 192 N.B.R.(2d)

68; 489 A.P.R. 68 (C.A.), refd to. [para. 34].

Castle Bridge Real Estate v. Midwinter (G.) & Associates et al. - see 055774 N.B. Ltd. v. Midwinter (G.) & Associates et al.

055774 N.B. Ltd. v. Midwinter (G.) & Associates et al. (2002), 253 N.B.R.(2d) 126; 660 A.P.R. 126; 2002 NBQB 312 (T.D.), refd to. [para. 34].

S-Marque Inc. v. Homburg Industries Ltd. (1999), 176 N.S.R.(2d) 218; 538 A.P.R. 218 (C.A.), refd to. [para. 34].

Gateway Realty Ltd. v. Arton Holdings Ltd. and LaHave Developments Ltd. (1991), 106 N.S.R.(2d) 180; 288 A.P.R. 180 (T.D.), affd. (1992), 112 N.S.R.(2d) 180; 307 A.P.R. 180 (C.A.), refd to. [para. 34].

Shunjing Trading Inc. v. E.B. Engineered Panels and Controls Inc. et al. (2011), 370 N.B.R.(2d) 1; 956 A.P.R. 1; 2011 NBCA 29, refd to. [para. 35].

Westcom TV Group Ltd. v. Canwest Global Broadcasting Inc., [1996] B.C.T.C. Uned. B02 (S.C.), refd to. [para. 35].

Cineplex Corp. v. Viking Rideau Corp., [1985] O.J. No. 304 (H.C.), refd to. [para. 35].Cannon v. Lange et al. (1998), 203 N.B.R.(2d) 121; 518 A.P.R. 121 (C.A.), refd to. [para.

39].BCE Inc. v. 1976 Debentureholders - see Aegon Capital Management Inc. et al. v. BCE

Inc. et al.Aegon Capital Management Inc. et al. v . BCE Inc. et al., [2008] 3 S.C.R. 560; 383 N.R.

119; 2008 SCC 69, refd to. [para. 41].Naneff v. Con-Crete Holdings Ltd. et al., [1993] O.J. No. 1756 (Gen. Div.), varied (1994),

73 O.A.C. 334 (Div. Ct.), refd to. [para. 45].Deluce Holdings Inc. v. Air Canada, [1992] O.J. No. 2382 (Gen. Div.), refd to. [para. 46].Brock v. Matthews Group Ltd., [1988] O.J. No. 370 (H.C.), revd. in part (1991), 43

O.A.C. 369 (C.A.), refd to. [para. 47].Mesa Operating Limited Partnership v. Amoco Canada Resources Ltd. (1994), 149 A.R.

187; 63 W.A.C. 187 (C.A.), refd to. [para. 51].Shelanu Inc. v. Print Three Franchising Corp. (2003), 172 O.A.C. 78 (C.A.), refd to.

[para. 52].Dashney et al. v. McKinlay et al. (1996), 6 O.T.C. 53 (Gen. Div.), refd to. [para. 58].Covered Bridge Golf and Country Club v. Schurman - see Schurman v. Covered Bridge

Recreation Inc.Schurman v. Covered Bridge Recreation Inc. (2009), 340 N.B.R.(2d) 168; 871 A.P.R.

168; 2009 NBCA 1, refd to. [para. 67].Gillies v. Goldman Sachs Canada Inc. et al. (2001), 160 B.C.A.C. 149; 261 W.A.C. 149;

2001 BCCA 683, refd to. [para. 71].Bramble et al. v. Medis Health and Pharmaceutical Services Inc. (1999), 214 N.B.R.(2d)

111; 547 A.P.R. 111 (C.A.), refd to. [para. 72].Link v. Venture Steel Inc. et al., [2008] O.T.C. Uned. O67 (Sup. Ct.), revd. in part (2010),

259 O.A.C. 199; 2010 ONCA 144, refd to. [para. 72].Murphy v. Clarica Life Insurance Co. (2003), 266 N.B.R.(2d) 100; 698 A.P.R. 100; 2003

NBQB 381 (T.D.), refd to. [para. 72].Johnson v. James Western Star Ltd., [2001] B.C.T.C. 1008; 2001 BCSC 1008, affd.

(2003), 180 B.C.A.C. 61; 297 W.A.C. 61; 2003 BCCA 151, refd to. [para. 72].Lake Ontario Portland Cement Co. v. Groner, [1961] S.C.R. 553, refd to. [para. 74].McIntyre v. Hockin, [1889] O.J. No. 36 (C.A.), refd to. [para. 75].

Backman v. Maritime Paper Products Ltd. (2009), 349 N.B.R.(2d) 171; 899 A.P.R. 171; 2009 NBCA 62, refd to. [para. 75].

Carr v. Fama Holdings Ltd., [1989] B.C.J. No. 1888 (C.A.), refd to. [para. 76].Leonard (Cyril) & Co. v. Simo Securities Trust Ltd. et al., [1971] 3 All E.R. 1313 (C.A.),

refd to. [para. 77].Cormier v. Royal Canadian Legion, Saint John Branch No. 14 (1994), 154 N.B.R.(2d)

335; 395 A.P.R. 335 (T.D.), refd to. [para. 79].Jagoe v. Recount Investments Ltd., [1997] N.B.R.(2d) (Supp.) No. 50 (T.D.), refd to.

[para. 79].Snodgrass v. Brunswick Chrysler Plymouth Ltd. et al. (1989), 98 N.B.R.(2d) 1; 248

A.P.R. 1 (T.D.), affd. (1989), 103 N.B.R.(2d) 91; 259 A.P.R. 91 (C.A.), refd to. [para. 79].

Hamilton v. International Brotherhood of Boilermakers, Iron Shipbuilders, Blacksmiths, Forgers and Helpers, Local Lodge No. 73 et al., [1998] N.B.R.(2d) Uned. 72 (T.D.), refd to. [para. 79].

Lefebvre v. HOJ Industries Ltd.; Machtinger v. HOJ Industries Ltd., [1992] 1 S.C.R. 986; 136 N.R. 40; 53 O.A.C. 200, refd to. [para. 82].

Aerocide Dispensers Ltd. v. United Steelworkers of America, [1965] O.L.A.A. No. 1, refd to. [para. 84].

Lindsay v. Peace Hills Trust (2008), 336 N.B.R.(2d) 299; 862 A.P.R. 299; 2008 NBQB 303 (T.D.), refd to. [para. 85].

Aasgaard v. Harlequin Enterprises Ltd., [1993] O.J. No. 1484 (Gen. Div.), refd to. [para. 86].

Ennis v. Canadian Imperial Bank of Commerce, [1986] B.C.J. No. 1742 (S.C.), refd to. [para. 91].

Knowlan v. Trailmobile Parts & Services Canada Ltd., [2006] B.C.T.C. Uned. 167; 2006 BCSC 337, refd to. [para. 91].

Bursey v. Acadia Motors Ltd. (1979), 28 N.B.R.(2d) 361; 63 A.P.R. 361 (T.D.), varied (1980), 35 N.B.R.(2d) 587; 88 A.P.R. 587 (C.A.), refd to. [para. 99].

Tozer v. Hutchinson (1869), 12 N.B.R. 540 (C.A.), refd to. [para. 99].Atkins v. Windsor Star, [1994] O.J. No. 623 (Gen. Div.), refd to. [para. 99].Hall v. Boise Alljoist Ltd. (2006), 306 N.B.R.(2d) 396; 793 A.P.R. 396 (C.A.), refd to.

[para. 100].Henry v. Foxco Ltd. - see Henry v. Fox Ford.Henry v. Fox Ford (2004), 269 N.B.R.(2d) 63; 707 A.P.R. 63 (C.A.), refd to. [para. 100].McEwan v. Irving Pulp and Paper Ltd. (1995), 161 N.B.R.(2d) 328; 414 A.P.R. 328

(T.D.), refd to. [para. 101].Thorn v. RGO Office Products Ltd. (1993), 147 A.R. 284 (Q.B.), refd to. [para. 101].Allocki Laight & Westwood Ltd. v. Patten, Bernard and Dynamic Displays Ltd., [1966]

O.J. No. 1067 (C.A.), refd to. [para. 105].Mersey Paper Co. v. Queens (County), [1959] N.S.J. No. 9 (S.C.), refd to. [para. 105].R. v. Lyttle (M.G.), [2004] 1 S.C.R. 193; 316 N.R. 52; 184 O.A.C. 1; 2004 SCC 5, refd

to. [para. 106].Doiron v. Haché (2005), 290 N.B.R.(2d) 79; 755 A.P.R. 79; 2005 NBCA 75, refd to.

[para. 114].Becker et al. v. Cleland Estate et al. (1981), 35 N.B.R.(2d) 542; 88 A.P.R. 542 (C.A.),

refd to. [para. 115].Boyle v. Atherton, Atherton Estate and Eureka Holdings (1983), 51 N.B.R.(2d) 151; 134

A.P.R. 151 (C.A.), refd to. [para. 115].Daigle and Workers' Compensation Board (N.B.) v. Cape Breton Crane Rentals Ltd.,

Canadian Indemnity Co. and Frechette (1987), 91 N.B.R.(2d) 189; 232 A.P.R. 189 (C.A.), refd to. [para. 115].

Proenca v. Squires Home Improvements & Total Renovations Ltd. et al. (2001), 252 N.B.R.(2d) 274; 658 A.P.R. 274; 2001 NBCA 45, refd to. [para. 115].

Comeau v. Saint John Regional Hospital et al. (2001), 244 N.B.R.(2d) 201; 634 A.P.R. 201; 2001 NBCA 113, refd to. [para. 115].

Moffett (Stephen) Ltd. v. New Brunswick (Minister of Transportation) (2008), 326 N.B.R.(2d) 242; 838 A.P.R. 242; 2008 NBCA 9, refd to. [para. 115].

C.J.G. v. L.T.G. (2011), 369 N.B.R.(2d) 202; 952 A.P.R. 202; 2011 NBCA 12, refd to. [para. 115].

Young v. Young et al., [1993] 4 S.C.R. 3; 160 N.R. 1; 34 B.C.A.C. 161; 56 W.A.C. 161, refd to. [para. 117].

1465778 Ontario Inc. et al. v. 1122077 Ontario Ltd. et al. (2006), 216 O.A.C. 339 (C.A.), refd to. [para. 117].

Davies v. Clarington (Municipality) et al. (2009), 254 O.A.C. 356; 2009 ONCA 722, refd to. [para. 117].

Catalyst Paper Corp. v. Companhia de Navegação Norsul (2009), 264 B.C.A.C. 288; 445 W.A.C. 288; 2009 BCCA 16, refd to. [para. 117].

Williamson v. Williams et al. (1998), 223 N.S.R.(2d) 78; 705 A.P.R. 78 (C.A.), refd to. [para. 118].

Domenicantonio v. Finnigan - see Stamper v. Finnagan, Via Rail Canada Inc., Canadian National Railway Co. and New Brunswick.

Stamper v. Finnagan, Via Rail Canada Inc., Canadian National Railway Co. and New Brunswick (1988), 84 N.B.R.(2d) 362; 214 A.P.R. 362 (T.D.), refd to. [para. 126].

Adams et al. v. Borrel et al. (2008), 336 N.B.R.(2d) 223; 862 A.P.R. 223; 2008 NBCA 62, refd to. [para. 127].

Liquid Carbonic Inc. v. Marché de Poisson du Quai Ltée, McGraw Fresh & Frozen Fish Ltd., Thorne Riddell Inc. and National Bank of Canada (1985), 61 N.B.R.(2d) 395; 158 A.P.R. 395 (C.A.), refd to. [para. 130].

Fowler v. Crawford and Barton (1991), 114 N.B.R.(2d) 181; 289 A.P.R. 181 (T.D.), refd to. [para. 132].

Guimond Estate et al. v. Fiberglas Canada Inc. et al. (1999), 207 N.B.R.(2d) 355; 529 A.P.R. 355 (T.D.), affd. (1999), 221 N.B.R.(2d) 118; 567 A.P.R. 118 (C.A.), refd to. [para. 132].

Simms v. Simms (1996), 182 N.B.R.(2d) 362; 463 A.P.R. 362 (C.A.), refd to. [para. 139].Rademaker v. Rademaker (2002), 251 N.B.R.(2d) 177; 654 A.P.R. 177; 2002 NBCA 47,

refd to. [para. 140].NB Power v. Westinghouse - see New Brunswick Power Corp. v. Westinghouse Canada

Inc. New Brunswick Power Corp. v. Westinghouse Canada Inc. (2010), 359 N.B.R.(2d) 170;

929 A.P.R. 170; 2010 NBQB 78 (T.D.), refd to. [para. 141].New Brunswick Power Corp. v. Westinghouse Canada Inc. (2006), 309 N.B.R.(2d) 299;

799 A.P.R. 209; 2006 NBQB 370 (T.D.), affd. (2008), 337 N.B.R.(2d) 138; 864 A.P.R. 138; 2008 NBCA 70, refd to. [para. 142].

Tercon Contractors Ltd. v. British Columbia (Minister of Transportation and Highways), [2010] 1 S.C.R. 69; 397 N.R. 331; 281 B.C.A.C. 245; 475 W.A.C. 245; 2010 SCC 4, refd to. [para. 142].

J.D. Irving Ltd. et al. v. Mojan ltée et al. (1983), 52 N.B.R.(2d) 361; 137 A.P.R. 361 (T.D.), refd to. [para. 145].

Debly Construction Ltd. v. New Brunswick (Minister of the Environment) (2009), 344 N.B.R.(2d) 275; 884 A.P.R. 275; 2009 NBQB 105 (T.D.), refd to. [para. 146].

Landymore et al. v. Hardy et al. (1992), 112 N.S.R.(2d) 410; 307 A.P.R. 410 (S.C.), refd to. [para. 148].

Morash v. Burke et al. (2007), 252 N.S.R.(2d) 335; 804 A.P.R. 335; 2007 NSSC 68, refd to. [para. 149].

Campbell v. Jones et al. (2001), 197 N.S.R.(2d) 212; 616 A.P.R. 212; 2001 NSSC 139, revd. (2002), 209 N.S.R.(2d) 81; 656 A.P.R. 81; 2002 NSCA 128, refd to. [para. 150].

Bevis et al. v. CTV Inc. et al. (2004), 228 N.S.R.(2d) 34; 723 A.P.R. 34; 2004 NSSC 209, refd to. [para. 150].

Khoury v. Khoury (1994), 149 N.B.R.(2d) 1; 381 A.P.R. 1 (Q.B. Fam. Div.), refd to. [para. 151].

Beaverbrook Foundation v. Beaverbrook Art Gallery (2007), 325 N.B.R.(2d) 72; 836 A.P.R. 72 (Arb.), refd to. [para. 153].

Smith v. Michelin North America (Canada) Inc. (2008), 271 N.S.R.(2d) 274; 867 A.P.R. 274; 2008 NSCA 107, refd to. [para. 158].

S & A Strasser Ltd. v. Richmond Hill (Town) et al. (1990), 45 O.A.C. 394 (C.A.), refd to. [para. 161].

Scapillati v. Potvin (A.) Construction Ltd. (1999), 122 O.A.C. 327 (C.A.), refd to. [para. 161].

St. Elizabeth Home Society v. Hamilton (City) (2010), 266 O.A.C. 136; 2010 ONCA 280, refd to. [para. 161].

Statutes Noticed:Employment Standards Act, S.N.B. 1982, c. E-7.2, sect. 30(1) [para. 80]; sect. 30(2)

[paras. 13, 82].Rules of Court (N.B.), rule 59 [para. 124 to 134].

Authors and Works Noticed:Ball, Stacey Reginald, Canadian Employment Law (2010 Looseleaf), vol. 2, p. 21-39

[para. 84].Barnacle, Peter, and Wood, Roderick, Employment Law in Canada (4th Ed. 2005) (2010

Looseleaf), para. 17.136 [para. 84].Boyle, Christine, and Percy, David R., Contracts: Cases and Commentaries (7th Ed.

2004), p. 713 [para. 52].Echlin, Randall Scott, and Certosimo, Matthew L.O., Just Cause: The Law of Summary

Dismissal in Canada (2010 Looseleaf), pp. 8-2 [para. 86]; 8-9 [para. 76].Halsbury's Laws of England (2nd Ed. 1940), vol. 22, p. 155 [para. 74].

Levitt, Howard Alan, The Law of Dismissal in Canada (3rd Ed. 2003) (2010 Looseleaf), p. 6-11 [para. 86].

McCamus, John D., The Law of Contracts (2005), pp. 137 et seq. [para. 34]; 151 et seq. [para. 35]; 784 to 805 [para. 54].

O'Byrne, Shannon Kathleen, The Implied Term of Good Faith and Fair Dealing: Recent Developments (2007), 86 Can. Bar Rev. 193, generally [para. 52].

Orkin, Mark M., The Law of Costs (2nd Ed. 1987) (2010 Looseleaf), vol. 1, pp. 2-1 et seq. [para. 117]; 2-37 [para. 159]; 2-177, 2-178, 2-179 [para. 164].

Swan, Angela, Canadian Contract Law (2nd Ed. 2009), p. 287 et seq. [para. 34].Waddams, Stephen M., The Law of Contracts (5th Ed. 2005), p. 31 et seq. [para. 34].

Counsel:George W. MacDonald, Q.C., Richard J. Scott, Q.C., and Crystal Gamble, for the

appellants;J. Gordon Petrie, Q.C., Catherine A. Lahey and Clarence L. Bennett, for the respondents.

This appeal was heard on September 16, 2010, by Deschênes, Robertson and Green, JJ.A., of the New Brunswick Court of Appeal. The following judgment of the court was delivered by Robertson, J.A., on May 12, 2011.

Appeal allowed in part.

Editor: Rodney A. Jordan

Company Law - Topic 9781Actions against corporations and directors - Action for oppressive conduct - When available - Doucet and Dauphinee were employees and minority shareholders of Spielo - They signed a share subscription agreement that provided that if they ceased to be an employee, for any reason, Spielo would immediately repurchase their shares at the then net book value - Spielo terminated them and repurchased their shares at net book value - Spielo was later sold at a substantially higher price per share than that paid to Doucet and Dauphinee - They sued Spielo and its president alleging, inter alia, wrongful dismissal and oppression - They argued, inter alia, that the defendants' termination of their employment based on false allegations of poor financial performance, and while negotiating to sell Spielo and gathering in shares from minority shareholders at a low price, was oppressive - The trial judge rejected oppression claim - The New Brunswick Court of Appeal stated that the court did not accept the trial judge's bald proposition that the oppression remedy was not available if the impugned conduct was sanctioned under the express terms of a contract (the employment and share purchase agreements) - That pronouncement left no room for the understanding that neither party to a contract was entitled to engage in opportunistic or vindictive behaviour - See paragraph 10.

Company Law - Topic 9781Actions against corporations and directors - Action for oppressive conduct - When available - Doucet and Dauphinee were employees and minority shareholders of Spielo -

They signed a share subscription agreement that provided that if they ceased to be an employee, for any reason, Spielo would immediately repurchase their shares at the then net book value - Spielo terminated them and repurchased their shares at net book value - Spielo was later sold at a substantially higher price per share than that paid to Doucet and Dauphinee - They sued Spielo and its president alleging, inter alia, wrongful dismissal and oppression - They argued, inter alia, that the defendants' termination of their employment based on false allegations of poor financial performance, and while negotiating to sell Spielo and gathering in shares from minority shareholders at a low price, was oppressive - The trial judge rejected the oppression claim - The New Brunswick Court of Appeal disagreed with the basis that the trial judge rejected the claim - However, the trial judge's findings laid to rest any finding of oppression - The trial judge found that the dismissals were not carried out in order to deprive the plaintiffs of their substantial and realizable capital gain - At the time of dismissals, there were no pending negotiations for the sale of Spielo - The dismissals were also found to be motivated by proper business considerations - The trial judge's findings were not "infected" with palpable and overriding error - See paragraphs 11 and 40 to 63.

Company Law - Topic 9785Actions against corporations and directors - Action for oppressive conduct - Oppression, prejudice or disregard of interests - Doucet and Dauphinee were employees and minority shareholders of Spielo - They signed a share subscription agreement that provided that if they ceased to be an employee, for any reason, Spielo would immediately repurchase their shares at the then net book value - Spielo terminated them and repurchased their shares at net book value - Spielo was later sold at a substantially higher price per share than that paid to Doucet and Dauphinee - They sued Spielo and its president alleging, inter alia, wrongful dismissal and oppression - They argued, inter alia, that the defendants' termination of their employment based on false allegations of poor financial performance, and while negotiating to sell Spielo and gathering in shares from minority shareholders at a low price, was oppressive - The trial judge rejected oppression claim - The New Brunswick Court of Appeal stated that the court did not accept the trial judge's bald proposition that the oppression remedy was not available if the impugned conduct was sanctioned under the express terms of a contract (the employment and share purchase agreements) - That pronouncement left no room for the understanding that neither party to a contract was entitled to engage in opportunistic or vindictive behaviour - See paragraph 10.

Company Law - Topic 9785Actions against corporations and directors - Action for oppressive conduct - Oppression, prejudice or disregard of interests - Doucet and Dauphinee were employees and minority shareholders of Spielo - They signed a share subscription agreement that provided that if they ceased to be an employee, for any reason, Spielo would immediately repurchase their shares at the then net book value - Spielo terminated them and repurchased their shares at net book value - Spielo was later sold at a substantially higher price per share than that paid to Doucet and Dauphinee - They sued Spielo and its president alleging, inter alia, wrongful dismissal and oppression - They argued, inter alia, that the defendants' termination of their employment based on false allegations of poor financial

performance, and while negotiating to sell Spielo and gathering in shares from minority shareholders at a low price, was oppressive - The trial judge rejected the oppression claim - The New Brunswick Court of Appeal disagreed with the basis that the trial judge rejected the claim - However, the trial judge's findings laid to rest any finding of oppression - The trial judge found that the dismissals were not carried out in order to deprive the plaintiffs of their substantial and realizable capital gain - At the time of dismissals, there were no pending negotiations for the sale of Spielo - The dismissals were also found to be motivated by proper business considerations - The trial judge's findings were not "infected" with palpable and overriding error - See paragraphs 11 and 40 to 63.

Evidence - Topic 512 Presentation of evidence - Rebuttal evidence - To contradict witnesses - The plaintiffs were employees and minority shareholders of the corporate defendant (Spielo) - They sued the defendants alleging, inter alia, wrongful dismissal and oppression - The defendants counterclaimed for the return of severance benefits paid to the plaintiff Doucet, alleging "after-acquired cause" for his termination - After the close of the defendants' case, the plaintiffs sought to recall the plaintiff Doucet to give rebuttal evidence - The rebuttal evidence concerned the evidence of Vienneau, called by the defendants, who testified that Doucet had requested and received a "kickback or payback" in consideration for a company getting a certain contract involving Spielo - The defendants' counsel first raised the issue during Doucet's cross-examination - The trial judge refused the rebuttal evidence - A plaintiff could not "split" his or her case - The defendants complied with Browne v. Dunn and gave ample background to Doucet as to what Vienneau's testimony would be - The New Brunswick Court of Appeal held that the trial judge erred, inter alia, in refusing to allow Doucet to offer reply evidence - The trial judge erred in persisting with the mistaken notion that this was a proper case for the application of the rule in Browne v. Dunn - A defendant was not able to establish a counterclaim through the application of that rule - Doucet had the right to hear from Vienneau and others who testified on behalf of the defendants before offering viva voce and documentary evidence in response to the kickback allegation which represented a new and unexpected ground of dismissal for cause which arose out of the defendants' case - Rule 54.07(d) of the Rules of Court authorized the trial judge to permit the plaintiff employee to offer reply evidence to address this new matter - See paragraphs 104 to 113.

Master and Servant - Topic 7553Dismissal or discipline of employees - Grounds - Misconduct or misconduct of business - Doucet was employed by the corporate defendant (Spielo) - He headed a division of Spielo before he was terminated after 10 years of service - He was given 12 months' notice - Doucet sued for wrongful dismissal - Spielo counterclaimed, alleging that just cause for the termination was discovered after the termination which entitled them to recover the notice paid to him - They alleged that Doucet demanded and received a secret commission or kick-back from a company that Spielo did business with - They also alleged that Doucet was actively involved with the management of a company (Dovico) operated by his sister while he was still employed by Spielo and used other employees of Spielo to assist Dovico without any permission or compensation for such services -

Spielo's president had some knowledge of Doucet's involvement with Dovico but not the full extent - The trial judge held that the defendants had sufficient grounds to dismiss Doucet for subsequently acquired cause - The New Brunswick Court of Appeal ordered a new trial - The trial judge appeared to treat Dovico as a competing business and failed to consider whether Doucet's conduct warranted immediate dismissal - There was also errors committed respecting the alleged kick-back evidence - See paragraphs 14, 15 and 92 to 113.

Master and Servant - Topic 7571Dismissal or discipline of employees - Grounds - Remuneration from third party - Doucet was employed by the corporate defendant (Spielo) - He headed a division of Spielo before he was terminated after 10 years of service - He was given 12 months' notice - Doucet sued for wrongful dismissal - Spielo counterclaimed, alleging that just cause for the termination was discovered after the termination which entitled them to recover the notice paid to him - They alleged that Doucet demanded and received a secret commission or kick-back from a company that Spielo did business with - They also alleged that Doucet was actively involved with the management of a company (Dovico) operated by his sister while he was still employed by Spielo and used other employees of Spielo to assist Dovico without any permission or compensation for such services - Spielo's president had some knowledge of Doucet's involvement with Dovico but not the full extent - The trial judge held that the defendants had sufficient grounds to dismiss Doucet for subsequently acquired cause - The New Brunswick Court of Appeal ordered a new trial - The trial judge appeared to treat Dovico as a competing business and failed to consider whether Doucet's conduct warranted immediate dismissal - There was also errors committed respecting the alleged kick-back evidence - See paragraphs 14, 15 and 92 to 113.

Master and Servant - Topic 7582.1Dismissal or discipline of employees - Grounds - Personal use of employer's property - Doucet was employed by the corporate defendant (Spielo) - He headed a division of Spielo before he was terminated after 10 years of service - He was given 12 months' notice - Doucet sued for wrongful dismissal - Spielo counterclaimed, alleging that just cause for the termination was discovered after the termination which entitled them to recover the notice paid to him - They alleged that Doucet demanded and received a secret commission or kick-back from a company that Spielo did business with - They also alleged that Doucet was actively involved with the management of a company (Dovico) operated by his sister while he was still employed by Spielo and used other employees of Spielo to assist Dovico without any permission or compensation for such services - Spielo's president had some knowledge of Doucet's involvement with Dovico but not the full extent - The trial judge held that the defendants had sufficient grounds to dismiss Doucet for subsequently acquired cause - The New Brunswick Court of Appeal ordered a new trial - The trial judge appeared to treat Dovico as a competing business and failed to consider whether Doucet's conduct warranted immediate dismissal - There was also errors committed respecting the alleged kick-back evidence - See paragraphs 14, 15 and 92 to 113.

Master and Servant - Topic 8409Dismissal Employment and labour standards - Layoff or dismissal - Written reason for - The New Brunswick Court of Appeal stated that "While the concept of 'after acquired cause' for dismissal provided employers with a valid defence to an action for wrongful dismissal, the defence is circumscribed by s. 30(2) of the Employment Standards Act ... This provision overrides the common law by requiring employers to provide employees with written reasons if the dismissal is for cause." - See paragraph 13 - The court discussed the legal framework for an employer's defence of after acquired cause for dismissal - See paragraphs 74 to 86 - The court stated that "In summary, the plea of after discovered cause for dismissal has two key elements: (1) the employer must not have known of the misconduct at the time of the dismissal; and (2) the misconduct, had it been known, would have warranted summary dismissal. If the employer was aware of the misconduct and the notice of dismissal failed to specify that the misconduct was the reason for the dismissal, s. 30(2) of the Employment Standards Act would preclude the employer from subsequently raising the matter." - See paragraph 87.

Master and Servant - Topic 8409Dismissal Employment and labour standards - Layoff or dismissal - Written reason for - The New Brunswick Court of Appeal stated that "At this point, it is best to summarize how s. 30(2) of the Employment Standards Act differs from the common law when it comes to the concept of after discovered cause for dismissal. At common law, it makes no difference whether the employer knew of the earlier misconduct. If, however, the employer knew of the earlier misconduct, the employee has the right and obligation to establish employer condonation. By contrast, under s. 30(2), if the employer knew of the earlier misconduct and does not specify this fact as a ground of dismissal, that is the end of the matter. The employer may not amend its reasons by adding a new cause for dismissal. Accordingly, the employee does not have to go the further step of establishing employer condonation. On the other hand if the employer complies with s. 30(2) and gives written reasons for the dismissal, the employee can raise the defence of condonation ..." - See paragraph 88.

Practice - Topic 7004Costs - Party and party costs - General principles and definitions - Scale of costs - Fixing of - The New Brunswick Court of Appeal stated that "One must also recognize the residual or overriding discretion of trial judges to adjust a costs award even though the award departs from the strict application of the Tariff. This residual discretion can be traced to Rule 59.01(2)(a) which states that nothing in the Rule shall be construed so as to interfere with the authority of the court to fix costs of a proceeding with or without reference to the Tariff... In summary, not only does the trial judge retain the discretion to adopt the appropriate Scale and percentage rate to be applied to the excess amount, he or she retains the discretion to make an award that deviates from the strict application of the Tariff in order to respond to the exigencies of the case." - See paragraph 33.

Practice - Topic 7004Costs - Party and party costs - General principles and definitions - Scale of costs - Fixing of - The New Brunswick Court of Appeal stated that "A costs award predicated on an

'amount involved' under a Tariff system is inherently problematic. There is no immediate or obvious relationship between the amount claimed and the costs incurred in either pursuing or defending the lawsuit. This case adds another layer of difficulty because it involves multiple and overlapping claims embracing a dollar amount that the drafters of the 1982 Tariff could not reasonably have envisaged. Of course, the cost of legal services has increased dramatically over the last three decades, thereby rendering the assumptions, on which the Tariff was first predicated, dated. The Tariff remains relevant today because of the residual discretion which Rule 59 of the Rules of Court vests in trial judges to make needed adjustments. Standing by itself, the Tariff continues to serve as a guidepost for those concerned about the financial ramifications of being declared an unsuccessful litigant, and as a protection against lump sum awards which are the product of 'scratchpad justice'." - See paragraph 16.

Practice - Topic 7004Costs - Party and party costs - General principles and definitions - Scale of costs - Fixing of - The New Brunswick Court of Appeal stated that "This case retraces the analytical framework laid down in Rule 59 for determining the 'amount involved' and to explain the approach the drafters of the 1982 Tariff had anticipated would be followed when moving away from the 'basic' scale (Scale 3). But it is not so much the scale which is of critical significance to a costs award as it is the percentage rate to be applied to the amount exceeding the first $100,000. Obviously, the difference between 1% and 5% is immense when the amount involved stretches into the millions. The jurisprudence cited to the Court forces us to reflect on the purposes underscoring a costs award, the difference between partial and substantial indemnification, and how our Tariff is able to provide the successful party with meaningful compensation without undermining the primary goal of ensuring 'access to justice'. Affidavit evidence of actual legal fees (billed hours or time spent and hourly rate) in cases involving large scale litigation is unavoidable." - See paragraph 17.

Practice - Topic 7006Costs - Party and party costs - General principles and definitions - Purpose of party and party costs - The New Brunswick Court of Appeal stated that "A costs award predicated on an 'amount involved' under a Tariff system is inherently problematic. There is no immediate or obvious relationship between the amount claimed and the costs incurred in either pursuing or defending the lawsuit. This case adds another layer of difficulty because it involves multiple and overlapping claims embracing a dollar amount that the drafters of the 1982 Tariff could not reasonably have envisaged. Of course, the cost of legal services has increased dramatically over the last three decades, thereby rendering the assumptions, on which the Tariff was first predicated, dated. The Tariff remains relevant today because of the residual discretion which Rule 59 of the Rules of Court vests in trial judges to make needed adjustments. Standing by itself, the Tariff continues to serve as a guidepost for those concerned about the financial ramifications of being declared an unsuccessful litigant, and as a protection against lump sum awards which are the product of 'scratchpad justice'." - See paragraph 16.

Practice - Topic 7006

Costs - Party and party costs - General principles and definitions - Purpose of party and party costs - The New Brunswick Court of Appeal stated that "This case retraces the analytical framework laid down in Rule 59 for determining the 'amount involved' and to explain the approach the drafters of the 1982 Tariff had anticipated would be followed when moving away from the 'basic' scale (Scale 3). But it is not so much the scale which is of critical significance to a costs award as it is the percentage rate to be applied to the amount exceeding the first $100,000. Obviously, the difference between 1% and 5% is immense when the amount involved stretches into the millions. The jurisprudence cited to the Court forces us to reflect on the purposes underscoring a costs award, the difference between partial and substantial indemnification, and how our Tariff is able to provide the successful party with meaningful compensation without undermining the primary goal of ensuring 'access to justice'. Affidavit evidence of actual legal fees (billed hours or time spent and hourly rate) in cases involving large scale litigation is unavoidable." - See paragraph 17.

Practice - Topic 7109Costs - Party and party costs - Special orders - Discretion to exceed scale of costs - The New Brunswick Court of Appeal stated that "One must also recognize the residual or overriding discretion of trial judges to adjust a costs award even though the award departs from the strict application of the Tariff. This residual discretion can be traced to Rule 59.01(2)(a) which states that nothing in the Rule shall be construed so as to interfere with the authority of the court to fix costs of a proceeding with or without reference to the Tariff... In summary, not only does the trial judge retain the discretion to adopt the appropriate Scale and percentage rate to be applied to the excess amount, he or she retains the discretion to make an award that deviates from the strict application of the Tariff in order to respond to the exigencies of the case." - See paragraph 33.

Practice - Topic 7109Costs - Party and party costs - Special orders - Discretion to exceed scale of costs - The New Brunswick Court of Appeal stated that "One has to ask whether our 1982 Tariff bears any relationship to the realities of litigation costs today. To the extent the 1982 Tariff sets out party-and-party costs payable in actions involving $1,000 to $100,000, based on one of five scales, the Tariff is arguably reflective of a legal era long past and, therefore, is unresponsive to a party's plea for fair and meaningful reimbursement for costs in successfully pursuing or defending an action. The Tariff's other obvious short-fall is the lack of a logical relationship between the amount being claimed and the amount reasonably needed to pursue or defend a law suit... Despite obvious shortcomings, the Tariff possesses an advantage that simply does not exist if the trial judge elects to make a lump sum costs award. The Tariff promotes certainty and predictability in the law by providing lawyers and clients with the ability to anticipate or calculate the potential magnitude of a costs award ... it forces the parties to evaluate the merits of each claim and to estimate fairly the amount of damages likely to be recovered ...The other advantage of our Tariff system is that it is not really as rigid as one thinks. The discretion built into Rule 59, for the benefit of trial judges to craft an award that responds to present day realities and the facts of the case, cannot be overlooked... The essential feature of New Brunswick's Tariff, despite its outdated scales, is that it continues to ensure that access to

justice remains the fundamental objective." - See paragraphs 119 to 121.

Practice - Topic 7115Costs - Party and party costs - Special orders - Increase in scale of costs - Difficulty and complexity of proceedings - The plaintiffs were employees and minority shareholders of the corporate defendant - They sued the defendants alleging, inter alia, wrongful dismissal, oppression, unjust enrichment, failure to negotiate in good faith, negligent misrepresentation and breach of fiduciary duty - The action involved extensive court time - The action was dismissed - The trial judge found that the plaintiffs made this action more complex and prolix than it needed to be - The court determined the amount involved to be $14.8M - Using Tariff "A", Scale 5, given the complexity of the matters raised, the court awarded the defendants party and party costs of $745,325 respecting the action - The New Brunswick Court of Appeal held that trial judge's decision to fix the "amount involved" at $14.8M was justifiable - The court agreed with his decision to award costs based on Scale 5 and to apply 5% to the excess amount - There were valid reasons for moving from Scale 3 to Scale 5 and applying the maximum percentage - Two of the plaintiffs' claims were "erected on legal foundations of straw" - See paragraphs 18 and 161 to 188.

Practice - Topic 7247.1Costs - Party and party costs - Offers to settle - Costs to successful defendant - The plaintiffs were employees and minority shareholders of the corporate defendant - They sued the defendants alleging, inter alia, wrongful dismissal, oppression, unjust enrichment, failure to negotiate in good faith, negligent misrepresentation and breach of fiduciary duty - The action involved extensive court time - The defendants offered to settle the action for $1M 10 days before the trial - The offer was not accepted - The action was dismissed - The trial judge awarded the defendants $745,325 for party and party costs and augmented the costs award by $93,165.62 because the plaintiffs' rejection of the settlement offer or because the case was unnecessarily complex - The New Brunswick Court of Appeal deducted the augmented amount ($93,165.62), stating, inter alia, that, despite first appearances, the offer was not "substantial" given the size of the monetary claims - It would not have even covered the plaintiffs' legal fees to date - See paragraphs 19 and 189 to 191.

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