The Court of King’s Bench of Alberta has denied an application by five former brokers of NE2 Canada to remove affidavits and cross-examination transcripts from the court record in an ongoing employment dispute — underscoring the primacy of the open court principle over concerns of personal embarrassment.
Justice R.A. Neufeld rejected the brokers’ attempt to strike both a Security for Costs Application and a Restricted Court Access Application, along with all supporting materials. The brokers — D.V., J.W., C.D., R.B., and C.S. — had argued that the documents contained sensitive information irrelevant to the case and that their disclosure would cause undue reputational harm.
“This decision concerns two applications,” Justice Neufeld stated. “Potential personal embarrassment of a party is not a sufficient reason to keep applications, supporting affidavits, and cross-examination transcripts off the court record.”
Background
The dispute originates from a series of events at NE2 Canada Inc., a Calgary-based crude oil brokerage founded by T.G. Under his leadership, NE2 developed a lucrative business, with brokers earning over $1 million annually. However, in early 2020, T.G. began transitioning the company to a digital trading platform, raising concerns among brokers about job security and compensation.
On Feb. 1, 2022, two executives sent him a letter outlining necessary changes at NE2, effectively inviting him to step aside. The letter resulted in the termination of one of the executive’s employment and the resignation of the other. Shortly thereafter, in April 2022, the five brokers resigned from NE2. They had employment contracts requiring six months of paid “garden leave” before joining a competitor.
Upon expiry of the garden-leave restrictions, the brokers joined Modern Commodities, a new brokerage started by M.B. — one of the two executives who left. This led to litigation, with M.B. suing NE2 and T.G. for constructive dismissal, alleging a toxic workplace environment created by T.G. NE2 counterclaimed, alleging that the brokers and executives conspired to unlawfully start a competing brokerage, breaching fiduciary duties and misappropriating clients.
Interim injunction sought
In December 2022, NE2 and T.G. applied for an interim injunction to prevent Modern Commodities from operating, claiming theft of client lists and intellectual property. Justice Neufeld denied the application, noting that “the alleged misconduct of (T.G.) was a factor in my decision to deny the injunction application.”
In February 2023, the brokers filed a Security for Costs Application, supported by affidavits alleging workplace toxicity. NE2 and T.G. conducted cross-examinations on these affidavits, which revealed information the brokers later deemed sensitive and irrelevant.
In October 2023, the brokers filed a Restricted Court Access Application, seeking to redact portions of the cross-examination transcripts containing what they described as “scandalous information related to brokers’ personal lives.” During a chambers hearing on Oct. 20, 2023, Justice Neufeld directed that the transcripts not be filed until the application was heard, which was scheduled for Nov. 17, 2023.
However, the brokers later abandoned both the Security for Costs Application and the Restricted Court Access Application. In May 2024, they filed the Strike Application to remove these applications and all supporting materials from the court record. They argued that the materials were no longer relevant and that their disclosure would cause unnecessary harm.
Justice Neufeld rejected this reasoning, stating, “Disagreement with a previous counsel’s approach does not ‘justify rebutting the strong presumption favouring open courts.'” He added that personal privacy alone does not constitute an important public interest sufficient to override the open court principle.
Clarification/variation application
The court also addressed a Clarification/Variation Application filed by NE2 and T.G., seeking to confirm that they could file the cross-examination transcripts. Justice Neufeld clarified that “as of November 17, 2023, there was no outstanding direction of the Court preventing the filing of the cross-examination transcripts.”
The brokers had contended that the transcripts contained irrelevant information and that their previous counsel had failed to object appropriately during cross-examination. Justice Neufeld was unmoved by this argument, noting that “I do not agree that evidence regarding the behaviour of those working at NE2 is irrelevant to the action.”
He further emphasized the importance of procedural fairness, stating, “(T.G.’s) alleged misbehaviour would continue to be a matter of public record and interest, while the alleged misbehaviour of the opposing parties would be kept secret. This is not fair.”
Affidavit
Justice Neufeld also addressed the issue of a comprehensive affidavit sworn by T.G. on June 14, 2024, which the brokers sought to keep from being filed or disseminated. The affidavit responded to the brokers’ allegations of a toxic work environment, detailing instances of their own misconduct as revealed during cross-examinations and discoveries.
“The issue of workplace toxicity is central to the action as pleaded,” Justice Neufeld stated. He allowed the affidavit to be filed, subject to appropriate redactions to protect the identities of third parties and sensitive market information, as previously agreed upon by the parties.
The decision highlights the challenges HR professionals and employment lawyers face when litigation involves sensitive personal information. It underscores the difficulty of balancing privacy interests against the fundamental principle of open courts.
“The proper procedure to keep court records secret is to apply for a restricted court access order,” Justice Neufeld noted. “This allows a proper balancing of the public’s interest in maintaining open court processes and practices, and of the litigants’ interests.”
He concluded by denying the brokers’ application, stating that “the affidavits and cross-examination transcripts filed in support of the Restricted Court Access Application and the Security for Costs Application contain evidence that is relevant and material to those applications, as well as to the action as a whole.”
Costs were awarded to NE2 and T.G, with Justice Neufeld stating, “As NE2 and (T.G.) have been successful in this proceeding, they are entitled to costs.”
For more information, see Bennett v NE2 Canada Inc, 2024 ABKB 695 (CanLII).
