CASE LAW
Penalty for the destruction of relevant evidence
Fuller Wester Rubber Linings Ltd. v Spence Corrosion Services Ltd., 2012 ABCA 137.
In this matter before the Court of Appeal of Alberta, Spence Corrosion Services Ltd. and Norman Spence brought two appeals from an interlocutory injunction and from a finding of contempt. The individual appellant had been employed by the respondents for 22 months. In September 2010, the appellant left to set up his own company, competing directly with the respondents and obtaining contracts from the respondent's customers, as well as employing former co-employees. There was also evidence that the appellant made use of confidential proprietary information.
With regard to the interlocutory injunction, the appellant's contract with the second respondent, Fuller Industrial Corporation, contained non-competition and non-solicitation covenants. These had been modified by the parties, and the appellants argued that the uncertainty of the effective time period made the covenant unenforceable. While the statement of claim was issued in March 2011, and served along with the application for the interlocutory injunction, this application was not heard until February 2012, with the injunction granted in March 2012. The Court of Appeal found the basis for issuing the injunction unclear, including uncertainty over the time period, the evidence of the former co-employees, and the use and return of the confidential information.
The Court of Appeal referenced the established three-part test for granting an injunction in their decision to allow the appeal. They found no satisfactory evidence of irreparable harm, and the effective 6 month shutdown of the appellant's business outweighed the balance of convenience. It was held that the parties be left to remedies in damages to be calculated at the conclusion of the claim and counterclaim.
The second appeal was against a finding of contempt against the individual appellant. When leaving the employment of the respondents, the appellant had taken with him a manual in electronic form. This had been used to create a physical manual, and it is this that the respondents had requested be returned. The appellant sent a modified copy to a third party, before deleting the original. The third party then sent this modified copy to a representative of the respondents, and this was later attached to a request for an order preventing the destruction of documents. There is also evidence that the appellant contacted the Third Party and encouraged him to destroy the copy of the manual.
Previously, the chambers judge ordered that the appellant pay the cost of the application on a full indemnity basis, and also ordered a full computer forensic investigation. The Court of Appeal found that there was no error in the finding of contempt, however allowed the appeal in part, ruling that the remedy of the full forensic investigation be deleted. There was no evidence of the destruction of any other document, and the cost of such an investigation was unwarranted at this stage.
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