Executive Summary: Key Legal and Evidentiary Issues

• Civil contempt was found against three former Questor employees, Stagg, Nelson and Bouchard, for a joint scheme over roughly three years to mislead, conceal and falsify evidence under oath in litigation concerning their competing business, Emission Rx Ltd.

• The court held that for civil contempt based on false sworn evidence, the applicant must prove an intentional false act or omission beyond a reasonable doubt, but need not prove a separate “contumacious intent” to mislead the court, which instead is relevant to penalty.

• The Individual Defendants withheld a significant number of relevant records and repeatedly reaffirmed sworn evidence later admitted to be erroneous, only correcting the record after a Records Decision compelled broader disclosure.

• The judge rejected the characterization of these corrections as routine Rule 5.27 updates, finding that the Correct the Evidence Letter was prompted by the Records Decision and not by immediate recognition of innocent mistakes.

• On penalty, the court declined to impose imprisonment and declined to strike pleadings, but ordered a single fine of $150,000 against the three contemnors, jointly and severally, payable forthwith.

• Questor was awarded its reasonable solicitor-client costs for all contempt proceedings in the Court of King’s Bench, again payable forthwith and jointly and severally by the three contemnors.

Background and facts of the underlying dispute

Questor is described as “an environmental technology company in the waste gas combustion business.” It employed three Individual Defendants: Richard Stagg (also known as Ritchie Stagg) as Director of Sales and Marketing, Justin Bouchard as a junior engineer, and Jeffrey Nelson (also known as Jeff Nelson) as Engineering Manager. Stagg’s employment was terminated on April 5, 2018, Bouchard resigned on May 18, 2018, and Nelson resigned on June 1, 2018. While employed at Questor, Nelson and Bouchard were tasked with designing and engineering a low-pressure waste gas burner for use in Questor’s combustors. Before the Individual Defendants left Questor, they collaborated on starting up Emission Rx Ltd. (“Emission”) and on developing for Emission a new low-pressure waste gas combustor referred to as the “New Technology.” Emission was incorporated on November 14, 2017. Questor’s action alleges that the Individual Defendants breached duties owed to Questor during and after their employment, including creating Emission as a competing company and pursuing its interests instead of Questor’s. Questor considers information about what the Individual Defendants did and when they did it in relation to Emission and the New Technology to be important to its claim and says these are the matters the Respondents falsified, withheld and distorted under oath.

Procedural history and interlocutory applications

During the litigation, Questor brought several interlocutory applications. It applied for an injunction that would have prohibited Emission from competing, which was dismissed in a 2020 decision referred to as the “Injunction Decision.” It also applied for an order to preserve Emission’s profits, which was dismissed in the 2021 “Preservation Decision.” Questor submits that the behaviour of the Respondents in giving false and incomplete evidence played a role in those rulings and that both decisions had adverse consequences for its interests in the litigation process. Questor did, however, succeed in an application to compel the Defendants to disclose further and better records. In the 2022 “Records Decision,” the court ordered the Individual Defendants to provide access to personal email accounts for entries between March 2018 and September 2018 and to disclose correspondence related to the development of Emission’s designs. That order led to the disclosure of a significant number of additional records which told a different story than the one reflected in the earlier sworn evidence of the Individual Defendants.

The Correct the Evidence Letter and the admitted errors

Soon after the Records Decision, counsel for the Respondents sent the court and Questor’s counsel what became known as the “Correct the Evidence Letter.” In that letter, counsel stated: “We have been instructed by the defendants to correct the evidentiary record including affidavit evidence, questioning transcripts and answers to undertakings.” Attached were three tables, one for each Individual Defendant, comprising 16 pages in total of corrections to their sworn evidence (the “Admissions”). In November 2022, each of the Individual Defendants also swore Supplemental Affidavits of Records. In July 2023, each filed correcting affidavits in which they swore to the truth of the corrections introduced by the Correct the Evidence Letter. Questor then attached a further 59 pages in tabular form to its contempt application, listing additional alleged errors in the Individual Defendants’ sworn evidence that it said were revealed by the corrections. Questor argued that the Admissions, taken in their factual context, together with the new documents produced after the Records Decision, demonstrated that the Individual Defendants had knowingly provided false evidence, knowingly withheld evidence and knowingly misled both Questor and the court.

The legal test for civil contempt and the mens rea issue

In the 2024 Liability Decision, the court set out the established three-part test for civil contempt: (1) an existing requirement of the court; (2) notice of the requirement to the person alleged to be in contempt; and (3) an intentional act or failure to act that breaches the requirement. The court noted that, in cases involving breach of a court order, the Supreme Court of Canada in Carey v Laiken confirmed that the intention element for civil contempt is an intentional act or omission, and that “contumacious intent” (an intent to disobey or to show disregard for the court’s authority) is not required to establish liability, but goes to penalty. The Respondents argued that where civil contempt is based on lying under oath, the standard should be that for perjury, which requires proof beyond a reasonable doubt that the statement was false, that the person knew it was false, and that the statement was made with intent to mislead the court. They relied on several authorities to suggest that intent to deceive the court is an essential element of contempt involving alleged perjury. The judge disagreed and held that, even where the alleged contempt consists of lying under oath, the required intention for civil contempt is the intentional making of the false statement or omission with knowledge of its falsity. The court held that proof of an additional intent to mislead the court is not an element of civil contempt. The judge also emphasized that civil contempt is distinct from perjury and from criminal contempt, although the same conduct may sometimes engage more than one remedy.

Application of the test and findings on the pattern of false evidence and nondisclosure

The court found that, for all of the categories of alleged contempt identified by Questor, the first two elements of the test were satisfied. The Individual Defendants were repeatedly reminded of the requirement to tell the truth when swearing affidavits and when being questioned under oath, and they knew that the court required their complete honesty. The crucial issue was whether Questor had proven beyond a reasonable doubt that the impugned statements and omissions were intentional. The court grouped the alleged incidents into six categories. One specific allegation (regarding Stagg’s evidence about a particular contact in common between his customer list and Questor’s) was not included in the Correct the Evidence Letter or later corrections. For that instance, the court was not satisfied beyond a reasonable doubt that the evidence was false, noting possible inconsistency with another affiant’s evidence, and found that conflicting affidavit evidence by itself could not ground a contempt finding on the criminal standard. For several other points, such as statements about whether any steps were taken to move Emission forward “in any real or substantive way” or when Emission’s technology was “conceptualized,” the language was found to be too imprecise or subjective to support a conclusion of intentional falsity beyond a reasonable doubt. The court also declined to treat certain statements about what constituted “Emission Rx’s technology” or “Emission Rx’s commercial technology” as proven contempt at this stage, because those questions overlap with disputed issues of fact at the core of the underlying action. However, for the remaining categories, the judge concluded that Questor had proved the falsehood of the original evidence beyond a reasonable doubt based on the Admissions, and that the only reasonable inference in context was that the Individual Defendants knew their earlier evidence was false when they gave it.

Examples supporting intentional lying and intentional withholding

A central example concerned Nelson’s compliance with a June 24, 2019 order requiring him to answer a contested undertaking. That order required him “to produce any records of his discussions and research and other activities in relation to Emission for the time period between incorporation and when he left Questor,” that is, from November 14, 2017 to June 1, 2018. Nelson responded quickly and produced a substantial volume of records in several tranches, but in November 2022 the Correct the Evidence materials disclosed about 400 records, 269 of which were new, that plainly fell within the category of records required by the order. Many of these records referred to Emission-related activities at times when one or more of the Individual Defendants were still employed at Questor and were inconsistent with the earlier sworn narrative of minimal or no substantive Emission activity during that period. The court rejected the argument that the fact these records were not destroyed suggested they had not been intentionally withheld. The judge explained that this reasoning rested on a logical fallacy and that there could be other reasons why records were retained. The court also noted that if the additional records had been omitted only due to haste in gathering documents for the imminent hearing in June 2019, one would have expected them to be produced soon after. Instead, they were disclosed only after the September 2022 Records Decision. On the volume, content, and timing of the withheld records, and the absence of any plausible alternative explanation, the judge inferred that Nelson intentionally withheld them. In another key example, the court examined Bouchard’s sworn evidence about what he called the “expired patent prototype.” In cross-examination in June 2019, Bouchard testified that he started gathering materials around April 2018, that he personally did most of the fabrication, that Aero-Tech Fabrication was only brought in later in mid-July to fix poor welds on a prototype he had assembled, and that he built a stack in one day in May 2018 after leaving Questor. In the November 2022 corrections and later affidavits, this evidence was changed. The corrected evidence stated that Aero-Tech had fabricated the original prototype in March 2018, while Bouchard was still employed by Questor, and that work done in May 2018 involved modifying the combustor rather than building it from scratch. The judge concluded that Bouchard’s earlier evidence was not an innocent error but part of the overall pattern, and that he had persisted in false evidence over time. The court also found that, in their July 2019 affidavits of records, all three Individual Defendants swore that, apart from listed documents, they had no other relevant records, yet later produced numerous additional documents relating to Emission and the New Technology for the same time period. From the sheer volume and consistent subject matter of the late-disclosed documents, the court found that Stagg, Nelson and Bouchard each withheld evidence intentionally. The judge noted that the withheld and falsified materials all tended to downplay or conceal anything the Individual Defendants did or said about Emission or the New Technology before they left Questor and that they acted “in consort” in accordance with a “pre-designed common objective.”

Rejection of the Rule 5.27 explanation and characterization of the conduct

The Respondents argued that their corrections were part of normal litigation practice under Rule 5.27, which requires a person who has been questioned to correct an answer that was incorrect or misleading, or has become so, by affidavit served as soon as practicable. They said this showed that the situation involved errors being corrected rather than contempt. The judge disagreed. He observed that the impugned evidence had been given between 2019 and 2021, that there were “months and months of silence” about any errors, and that corrections only followed the Records Decision in September 2022. The court found that the Record Decision was the trigger for the belated admissions, that the corrections were not made “as soon as practicable” after the errors were known to the Individual Defendants, and that the Individual Defendants knew of the inaccuracies when they first testified. The judge further commented that nothing in the Correct the Evidence Letter or the July 2023 correcting affidavits referred to Rule 5.27. The court also held that even if Rule 5.27 had played a role in how the Defendants chose to proceed once the Records Decision was issued, later corrections pursuant to the Rule do not eliminate or excuse contempt arising from earlier knowing falsehoods. The court stated that accepting such an approach would risk proliferation of contempt by encouraging litigants to lie initially and only correct their evidence if and when they are about to be found out.

The contempt findings against each Individual Defendant and next steps

In the 2024 Liability Decision, the court found that Questor had proven each essential element of civil contempt beyond a reasonable doubt, and the absence of any reasonable excuse, in relation to specific incidents. The judge held that Stagg, Nelson and Bouchard (collectively referred to as the “Contemnors”) were each guilty of civil contempt. The findings were: Stagg for the withholding of evidence by his July 2019 affidavit of records (category 3) and the related February 2020 amended affidavit of records (category 5, entailed in 3); Nelson for breaching the June 2019 order when responding to Undertaking 2 (category 2(a)), for the withholding of evidence in his July 2019 affidavit of records (category 3), and the related February 2020 amended affidavit of records (category 5, entailed in 3); and Bouchard for falsifying evidence during his June 2019 cross-examination (category 2(b)), for withholding evidence in his July 2019 affidavit of records and later affirming completeness (category 3, with category 6 entailed in 3), and for falsifying and withholding evidence of combustor design and fabrication in January and February 2018 in his August 2019 affidavit (category 4(a)). The court directed the parties to immediately schedule a return attendance. Until that attendance, the Contemnors were not permitted to leave Alberta and were required to relinquish their passports to counsel in trust. The judge indicated that, at the next attendance, the parties would address travel restrictions and the process for the second-stage hearing on possible consequences. The court also indicated it was considering requiring each Contemnor to obtain independent legal advice about personal liability before the second stage, given the potential for differing degrees of moral culpability and contumacious intent to be considered.

Appeal and penalty phase

The Liability Decision was appealed. In the 2026 Penalty Decision, the judge noted that the Court of Appeal had upheld the Liability Decision in a 2025 decision referred to as the “Appeal Decision.” The Court of Appeal summarized the contempt as a joint scheme in which the Contemnors “offered intentionally false evidence in affidavits and during cross-examination under oath, intentionally withheld evidence when swearing their affidavits of records, and intentionally falsified and withheld evidence when swearing other affidavits.” The Court of Appeal stated that the Contemnors “collectively persisted” in that scheme for roughly three years and that the trial judge considered the conduct to be egregious. In the Penalty Decision, the judge then turned to the available sanctions for civil contempt set out in Rule 10.53 of the Alberta Rules of Court. Those include imprisonment (until the contempt is purged or for a fixed term), fines (with possible imprisonment in default), striking out pleadings or other procedural sanctions, and costs, with the court empowered to consider one or more in its discretion. The judge also referred to the Court of Appeal’s emphasis in prior cases that courts have both the discretion and the obligation to address contempt of court and must fashion sanctions that are proportional, consider aggravating and mitigating circumstances, and serve deterrence, while exercising judicial restraint. The concept sometimes called the “jump principle” or “laddering” was expressly mentioned as a factor in considering the escalation of sanctions for repeat contempt.

Parties’ positions on penalty

On penalty, Questor asked the court to strike the pleadings of all Defendants. In addition or alternatively, it sought a fine against the Contemnors in an amount reflective of Questor’s wasted costs in the litigation and an order for solicitor-client costs in Questor’s favour for the contempt proceedings. Questor maintained that incarceration fell within the appropriate range of penalties given the circumstances of the contempt, though it was not pressing for imprisonment and stated that, if imposed, any custodial penalty should be in addition to striking pleadings, a substantial fine, and solicitor-client costs, not in lieu of those. The Respondents opposed incarceration, opposed striking their pleadings, opposed a fine tied to Questor’s asserted costs, and opposed solicitor-client costs. They proposed a fine of $5,000 per incident of contempt found, which they counted as nine incidents, for a total of $45,000. They acknowledged that they would have to pay costs but argued that any such award should be on a party-and-party scale. They maintained that the contempt proceeding was not needed to coerce correction of their evidence because they had already made corrections after the Records Decision, and they suggested the court should exercise restraint, emphasizing that they were already subject to public censure as contemnors and that their overall credibility would suffer in the remaining litigation. They contended that any additional penalty should be limited to their proposed $45,000 aggregate fine and nominal costs.

Reasons for declining imprisonment

In the Penalty Decision, the judge acknowledged that “nothing might better achieve both specific and general deterrence” for such egregious civil contempt than “a short, sharp time in prison” and that imprisonment would clearly communicate the depth of the court’s concern about conduct that undermines and subverts the justice system. Nonetheless, the court declined to include time in prison as part of the penalty. The judge gave several reasons. First, the contempt, while egregious, was not primarily designed to defy the court’s authority; its primary purpose was to gain personal advantage in the lawsuit by deception, with the effect on the court’s authority being ancillary. The objective of the Contemnors was described as being driven by personal gain rather than a desire to challenge the court’s role in maintaining an orderly society, and the judge concluded that a fit penalty should respond in kind by way of monetary loss rather than loss of liberty. Second, this was not a case like Braun (Trustee of) v Braun, in which successive terms of imprisonment were imposed in increasingly harsh measure to coerce compliance with an order. In the present case, once discovered, the contempt was largely, if not fully, corrected. Third, the conduct, while serious, was not as extreme in terms of harm to third parties, the legal profession or the authority of the courts as the cases involving lawyers who had been sentenced to imprisonment in other authority the court discussed. The judge also remarked that if new allegations of civil contempt by these Contemnors were successfully made in future, he would find it hard to conceive of a penalty that did not include imprisonment, all else being equal.

Reasons for declining to strike pleadings

Questor’s proposal to strike Emission’s pleadings was also declined, although the judge accepted that it was a coherent suggestion in light of the fact that the acts of contempt were taken to benefit the common business undertaking of Emission, were committed jointly, and were defended in common. First, Emission itself had not been found in civil contempt, and the judge was not persuaded that it should bear the “paramount penalty” for the contempt of its owners or agents without having been found in contempt directly. Second, the judge emphasized that penalties for civil contempt are not primarily aimed at remedying harm suffered by a litigation opponent. While harm is a relevant factor in setting a penalty, the sanction is not compensatory and does not reduce or offset any compensation to which the victim of the contempt might otherwise be entitled. Separate compensatory relief remains available on a separate application. Third, striking Emission’s defence would likely adversely affect third parties such as suppliers, a major creditor, an exclusive reseller and perhaps employees and a landlord. The judge regarded those consequences as needless for stakeholders who were not before the court. Fourth, striking a party’s defence effectively denies that party the opportunity to answer claims in court, and courts do not take that step lightly. The judge noted that the level of ongoing defiance of court authority described in cases like Dickie v Dickie, which involve “continuing disobedience with court orders,” was not present here, given that the Individual Defendants had largely, if not fully, admitted their falsehoods and attempted to rectify their falsified evidence. Similarly, the judge declined to strike the pleadings of the Individual Defendants themselves. He was not persuaded that their contempt now prevented Questor from fully prosecuting its claims, and he found that they had “largely if not fully purged” their contempt. He noted that striking only their pleadings, but not Emission’s, would not end the litigation but would likely complicate trial for all, including the court. The judge concluded that such a consequence would be harsher than necessary in the circumstances because he was satisfied that lesser sanctions could suffice.

Assessment of harm, aggravation and mitigation in setting the fine

In quantifying the fine, the judge considered that the evidence did not provide a reliable basis for differentiating among the three Contemnors in terms of gravity of their offences or degrees of moral culpability, and that they had continued with common counsel and had not attempted to distinguish their roles for penalty purposes. The court therefore set a common fine, with each Contemnor jointly and severally liable. Regarding harm to Questor, the judge accepted that the contempt needlessly extended the litigation process for over five years, combining roughly three years during which the scheme was perpetrated with a further two-plus years spent on the contempt proceedings after the Correct the Evidence Letter. The court noted that both parties contributed to the length of the contempt proceedings through vigorous advocacy, but found that, but for the contempt, the main action could have been litigated more efficiently without this multi-year diversion. Questor also led evidence of legal fees it incurred which it said were directly related to the contempt, broken down by application (excluding disbursements and GST and rounded by the court to the nearest $5,000): approximately $665,000 for the Injunction Application, $185,000 for the Preservation Application, $410,000 for the Compel Records Application, and $635,000 for the Contempt Application up to July 2025, as well as $103,000 in costs Questor had been ordered to pay the Defendants following the dismissal of the Injunction Application. The Contemnors contested the connection between some of those costs and the contempt and argued that certain application outcomes were unaffected by the contempt. The judge made clear that he was not, in the penalty phase, deciding whether Questor should be compensated for all of these sums but was considering them as evidence of harm in setting a penalty. He accepted that Questor remained free to seek further relief in a separate application and that nothing in the Penalty Decision precluded such claims. In terms of mitigating considerations, the judge recognized that the Contemnors had, through the Correct the Evidence Letter and later affidavits, largely purged their contempt. He accepted that this had a “some ameliorative effect” on penalty and that it weighed in favour of a less severe sanction. He also treated the fact that the contempt should be considered a first offence, rather than multiple separate offences for each day or repetition, as relevant under the “laddering” approach: the continued failure to comply with court obligations over time would constitute one contempt for penalty purposes. At the same time, the judge noted that the Contemnors had offered no apology or expression of contrition and that their submissions continued to characterize what occurred as merely a “failure to provide completely accurate evidence,” a description the court rejected in strong terms. The judge treated contumacious intent—the knowledge that they were lying to the court—as an aggravating factor, relying in part on the Court of Appeal’s statement that knowingly giving false evidence normally supports an inference of intent to mislead the court and concluding that this was such a case.

The fine and costs orders

Having weighed these factors, the judge ordered a total fine of $150,000 payable forthwith by the Contemnors to Questor. Each of Stagg, Nelson and Bouchard is jointly and severally liable for that total amount. The court also awarded Questor its reasonable solicitor-client costs throughout the contempt application proceedings in the Court of King’s Bench. Those costs are to be calculated based on the evidence Questor provided as to its legal fees up to the date of its most recent invoice (with costs attributable to the appeal and cross-appeal of the Liability Decision excluded, as those are for the Court of Appeal to set), plus additional costs incurred from that invoice date up to the conclusion of finalizing the order resulting from the Penalty Decision. The judge stated that Questor “ought not to have been put to the expense” of the contempt application, that it should not have had to bear the costs of enforcing court orders, and that Questor’s substantial success on contempt issues justified solicitor-client costs rather than party-and-party costs. The court found no meaningful basis on the record to conclude that Questor’s legal costs exceeded what was reasonable for pursuing the contempt application in a detailed manner, given the scope of the deception and the Responents’ resistance to relief at every step. The judge also expressly considered the magnitude of the solicitor-client costs in determining the quantum of the fine and reduced the fine from what it might otherwise have been in light of those anticipated costs. The costs, like the fine, are payable forthwith, and each Contemnor is jointly and severally responsible for payment. The judge concluded by emphasizing that the contempt penalty and costs orders do not preclude or reduce any other remedies to which Questor may be entitled at law or in equity in relation to the underlying conduct.