The Respondents, minority shareholders in Zybertech Construction Software Services Ltd. (“Zybertech”), alleged that the Appellant, Zybertech’s President and Director, misused corporate resources. The Court was tasked with determining two questions: whether the Appellant was properly served with the Contempt Application and whether service on the Appellant’s lawyer of record constituted good service. The Appellant emphasised the fact that he was not personally served with the second Contempt Application. However, the Court found that neither the Rules nor the jurisprudence required personal service.

The Court noted that Rule 10.52 requires an Application for a declaration of Civil Contempt to be served on the alleged contemnor in the same manner as a commencement document. The Court highlighted that while personal service is a common mode of service for commencement documents, the Rules set out other permissible ways to serve a commencement document on an individual in Alberta, namely Rule 11.15 and Rule 11.17. The Court stated that the Court of Appeal has expressly confirmed that service of a contempt application may be effected pursuant to Rule 11.17.

The Appellant argued that his lawyer could not be characterized as the lawyer of record or address for service in respect of the Contempt Application because the Application was quasi-criminal and constituted a new or distinct matter from the main Action. However, the Court disagreed and found that the Rules do not treat an Application for Contempt arising out of the alleged breach of a Court Order in a Civil Action as a fresh action, as Rule 10.52(1) requires the use of Form 27, which is the standard form for Applications, not Originating Applications, and also requires service “in the same manner as a commencement document”. The Court further stated that if contempt arising out of an alleged failure to comply with a Court Order were to be treated as a distinct Action, the Rules would presumably require an actual commencement document.

The Court also dismissed the Appellant’s argument that his lawyer had no obligation to accept service and if their lawyer did not accept service, then the lawyer had no obligation to take any further steps with respect to the Contempt Application. The Court found that an obligation to bring an application to the attention of a client is consistent with the explicit duties of a lawyer of record set out in Rule 2.25(1) and with the fiduciary obligation of a lawyer to disclose material information to their client. The Court did not accept the Appellant’s interpretation of Rule 10.52(2), which was used to support the Appellant’s argument that that unless a lawyer accepts service of a Contempt Application, the lawyer is not obliged to notify the client. Rather, the Court noted that Rule 10.52(2) must be read in the context of the Rules as a whole, including Rule 11.16.

Therefore, the Court dismissed the Appeal as premature and found that the appropriate first recourse for the Appellant was to apply to set aside the second Contempt Order pursuant to Rule 9.15.