Executive Summary: Key Legal and Evidentiary Issues

• Defendant McBurney repeatedly defied multiple court orders requiring production of financial documents and information relating to Medix Safety Inc., particularly for the period when he operated the business independently

• Court found McBurney's explanations for non-production implausible, concluding he deliberately concealed available financial information about Medix's solo operations from July 2020 onwards

• Multiple contempt findings were issued over extended periods, with escalating sanctions including fines and daily penalties

• Statement of defence and counterclaim were struck as contempt sanctions due to persistent and deliberate disobedience of disclosure orders

• McBurney ultimately provided sufficient additional disclosure through 2025 affidavits, allowing him to purge his contempt and have his pleadings reinstated

• Solicitor-client costs were ordered against McBurney for the contempt proceedings, though each party bore their own costs of the reinstatement application

Background of the dispute

The case involved a business dispute concerning Medix Safety Inc., a company originally operated by Christopher McBurney. In 2017, Art Stirrett (through his company 1254748 Alberta Ltd., referred to as "125") and McBurney joined forces to expand Medix. The business relationship deteriorated, and by roughly July 2020 (or perhaps November 2020), McBurney effectively began solo operations of Medix without any involvement of Stirrett and 125—this became known as the "going-solo period."

The plaintiffs sought financial information about Medix's operations. On July 29, 2022, Justice Inglis issued a production order requiring McBurney to produce documents and information. Justice Inglis gave McBurney approximately six weeks to produce the required records. He produced only a very modest subset of them.

Contempt proceedings and escalating sanctions

Justice Clackson found McBurney in contempt on November 18, 2022, for failing to comply fully with the Inglis Order. Justice Clackson gave him almost two more months to purge his contempt. No further records were produced and no further explanations of "not possible to produce" were provided.

On March 27, 2023, Justice Lema gave McBurney until April 14, 2023, to submit proof of his compliance with each paragraph of the Inglis Order, with 125 having until April 21, 2023, to comment. After reviewing McBurney's further submissions and Stirrett's comments, Justice Lema issued a decision on May 1, 2023 (reported as 2023 ABKB 264), finding that McBurney continued to be in default of the Inglis Order and had committed further contempt.

The effect of Justice Lema's March 27, 2023 order was to give McBurney, after the fact, a further fifteen months to comply or explain and then, going forward, a further two-week period to do the same. The Court imposed a $1,500 fine payable by May 31, 2023, and in default, a period of imprisonment to be set at a hearing. The Court also imposed a daily fine of $100 for each day (business and non-business) that McBurney remained in non-compliance with the Inglis Order. Solicitor-client costs were awarded to 125.

Specific disclosure failures

Justice Lema identified seven categories of information McBurney failed to provide for the period from at minimum July 1, 2020: an accounting of all profits made by Medix since (at minimum) July 1, 2020; all of the outstanding invoices for Medix or, in the alternative, an explanation for the gap between the invoices provided and the revenue figures reported by him; general ledgers for Medix since (at minimum) July 1, 2020; the July 2021 bank statement for the ATB account and any credit card statements since July 1, 2020 (or alternatively to show that no credit cards existed or were used in this period), as well as any bank statements for any other bank accounts used by Medix after July 1, 2020 or, alternatively, evidence that it used only the ATB account; shareholders' loan account statements for Medix from (at minimum) July 1, 2020; financial statements including balance sheets, cash-flow statements, income statements and profit calculations for Medix from (at minimum) July 1, 2020; and a completed Financial Information statutory declaration under the Civil Enforcement Act.

McBurney claimed he never had access to Medix's financial information, stating that Art Stirrett handled the financial aspect of the company in conjunction with bookkeepers, and that he never had a password to Medix's accounting software (QuickBooks). He also claimed that written invoices that employees would have drawn up were left in trucks that were returned to his property, and that in December 2020 six of these trucks were seized from his personal residence, and he suspected there were a number of hand-written invoices inside the trucks when they were seized by the Plaintiffs.

The Court rejected McBurney's explanations as implausible. Justice Lema found it made no sense that McBurney would, on the one hand, pursue work with Medix equipment and personnel with the express aim of "continu[ing] to operate Medix to ensure that it didn't go under," and, on the other, leave invoices unprocessed and receivables unlogged. McBurney provided as Exhibit "O" only seven Medix invoices for work done for two different customers between September 22, 2020 and May 28, 2021. Bank statements (Exhibit "N") showed only deposits totalling approximately $36,000 in June 2021 from vehicle sales and the deduction of $5 monthly banking fees—the ATB account did not reflect inflows of any revenues from Medix's operations from summer or fall 2020 through to spring 2021.

Striking of pleadings

Despite the contempt findings and financial penalties, McBurney's affidavits sworn on July 24, 2023 and October 3, 2024 provided no additional information reflecting the financial results of the going-solo period. The plaintiffs brought an application seeking to strike McBurney's statement of defence and counterclaim as a contempt sanction.

On December 9, 2024, Justice Lema granted this relief (reported as 2024 ABKB 732). The Court emphasized that McBurney had been in non-compliance with the Inglis Order's provisions covering the going-solo period for a period now measuring 28 months, and despite three further orders directing production (November 18, 2022, March 27, 2023, and May 1, 2023). The Court noted over 24 months had passed since the Clackson Order and over 19 months since Justice Lema's Order.

The Court emphasized several critical factors: the deliberate nature of the disobedience of these orders; the defiance continuing despite the initial (Inglis) Order, the Clackson Order, and third Order, which was accompanied by detailed reasons in 2023 ABKB 264 confirming the scope of the earlier orders; the modest disclosure in response to these orders not excusing the outstanding non-disclosure; McBurney's self-represented status not excusing the non-disclosure, particularly where he had the benefit of the detailed reasons and periodic assistance from legal counsel; and McBurney's failure to pay the $500 in costs imposed by Inglis J. and the solicitor-client-level costs imposed in 2023 ABKB 264.

The Court concluded this was a case of persistent contempt requiring decisive action. The statement of defence and counterclaim were struck in their entirety. The Court cancelled the $100 daily penalty imposed in 2023 ABKB 264, including the accumulated arrears. Solicitor-client costs of the sanctioning-of-contempt application were awarded to Stirrett and 125.

Purging contempt and reinstatement

McBurney brought an application filed September 9, 2025, seeking a declaration that he had complied to the extent reasonably possible with the disclosure orders and requesting reinstatement of his statement of defence.

Justice Lema heard this application on September 25, 2025, and issued his decision on October 15, 2025 (reported as 2025 ABKB 603). The Court found that via McBurney's affidavits sworn July 22, 2025 and September 2, 2025 (and, to the extent not incorporated by reference in those affidavits, his earlier affidavits), he had provided whatever information he possessed or that was reasonably accessible to him and had provided reasonable explanations for being unable to provide any further information, whether because such documents or information did not exist or were not reasonably accessible by him.

The Court rejected 125's argument that McBurney's 2025 affidavits simply repackaged pre-existing disclosure. Justice Lema found they provided materially incremental and illuminating information concerning: the continuing critical role played by "Medix Central" in performing various administrative functions (e.g. invoice processing, payroll, expense repayment including fuel) even after McBurney moved assets away from Medix and carried on its business solo; his inability, from the outside, to obtain various information under the control of Medix Central; the nature and scale of his activities during the solo period; and his efforts to provide information to, and to obtain information from, Medix Central in that period.

The Court found that the delay in providing the incremental disclosure via the 2025 affidavits did not disqualify McBurney from the requested relief in the circumstances, particularly with his relatively recent retention of counsel and his enhanced understanding (via counsel) of the particularity of the ordered disclosure. The Court also noted that the contempt sanction was levied for non-disclosure (now remedied or reasonably explained), not for any (possible) breach of the Mareva order.

In the final ruling, Justice Lema declared that McBurney had, via the combined effect of his 2025 and earlier affidavits, sufficiently purged his contempt and thus become entitled to the reinstatement of his statement of defence (hereby reinstated). While McBurney succeeded on this application, the Court found it appropriate in the circumstances for the parties to bear their own costs.