The former president and CEO of Foremost Income Fund, who had his wrongful dismissal action tossed and was found liable for a series of breaches during his tenure, has been ordered to pay nearly $900,000 in legal costs by the Court of King’s Bench of Alberta.
The executive, PB, was held personally accountable for various financial improprieties, including unauthorized gifts and payments totaling substantial amounts — totaling nearly $170,000 in US dollars and another $110,250 in Canadian dollars.
The court also ordered him to pay $200,000 in damages for breaches of fiduciary duties and his employment agreement, as well as punitive damages of $50,000.
The parties were unable to agree on costs in the wake of that ruling, which put the matter back in front of the court. Foremost argued it was entitled to full indemnity costs, while PB argued it was only entitled to party-to-party costs.
The trial itself took more than four weeks and involved a number of witnesses and extensive argument, both interlocutory and final, the court said. It resulted in a 107-page trial decision.
“Both parties had multiple primary counsel,” the court said. “(PB) had two partners and one associate. The Foremost Group had one partner, one associate, and an articling student for the evidence portion. This speaks to the complexity of the issues and the steps taken to establish them.”
The court’s decision was guided by the Alberta Rules of Court, which allow for a successful party to be entitled to a costs award against the unsuccessful party. The decision meticulously considered various factors, including the outcome of the action, the complexity of the case, and the conduct of the parties.
The court, exercising its discretion, found this case to fit the criteria for full indemnity costs, given the rare and exceptional circumstances of PB’s pre-litigation and litigation conduct. This included a lack of forthrightness, making misrepresentations, and misusing company funds.
“He used the Foremost Group’s funds for his personal benefit,” the court said. “Finally, and importantly, (the trial decision) found that (PB) obtained funds through embezzlement, misappropriation, or defalcation while he was acting in a fiduciary capacity in relation to the Foremost Group.”
It said this case is “one of those rare, exceptional, or unusual circumstances in which full indemnity costs is warranted.”
CB argued it was not appropriate for Foremost to “weaponize this costs application in an effort to destroy (him) and his family” and that the court should not allow the company to “use costs as a tool of oppression.”
But the court, citing an earlier ruling, said, “Impecuniosity… is not a basis on which to refuse costs.”
The court awarded a total of $877,736.18, broken down as follows:
- Fees: $714,931.16
- Taxable disbursements: $23,832.64
- Non-taxable disbursements: $102,034.19
- GST: $36,938.19
For more information, see Breen v Foremost Industries Ltd, 2024 ABKB 9 (CanLII)
