Former drilling company president loses $115,240 dismissal award over concealed rival business

The New Brunswick Court of Appeal has overturned a $115,240 constructive-dismissal award to the former president of a family-owned drilling company, finding that misconduct uncovered after her departure justified dismissal without notice. In VIC Progressive Diamond Drilling Inc. v. Araneda, 2026 NBCA 26, released March 19, 2026, the court found that Laura Araneda had secretly helped run a competing business while leading VIC and that the trial judge had failed to address important evidence of financial misrepresentations.

The appeal was allowed in part. Araneda must repay US$70,000 taken from a subsidiary’s bank account, with interest, and pay VIC $3,000 in appeal costs. However, the court rejected VIC’s separate attempt to change corporate records showing that she owned 47 shares.

Leadership change led to a dismissal claim

VIC was founded by Araneda’s parents in 1987. She began acting as president in 2006 and started receiving a salary for that position and using the CEO title in 2015.

The company had become heavily dependent on work for the Potash Corporation of Saskatchewan. Its finances deteriorated after the Penobsquis mine closed, and by September 2020 it was struggling to meet its obligations.

At an emergency meeting on September 7, 2020, the other directors appointed Araneda’s brother Robin Fournier president and moved her to the chief financial officer role. Araneda resigned as a director and as CEO of the board, then claimed that her employment had been wrongfully terminated without notice.

After a five-day trial, the Court of King’s Bench found that the change in role amounted to constructive dismissal and awarded 15 months’ compensation. It set off the money Araneda had withdrawn from the U.S. subsidiary against that award. The trial court also dismissed her oppression claim, which was not appealed.

Undisclosed conduct changed the employment result

Justice Quigg, writing for a unanimous appeal panel, applied the test for after-discovered cause: the misconduct must be serious enough to warrant dismissal without notice, and the employer must not have known about it when the employment ended.

The evidence went beyond an arrangement to rent idle VIC drills to another operator. Araneda initially discussed a plan with former VIC manager Kevin Kyle to pursue a job on which VIC could not bid. She testified that she told her mother about that plan and that it could generate rental income for VIC.

The appeal court found that her involvement subsequently expanded into running the competing HIT Drilling business. She helped incorporate it, arranged banking and insurance, signed contracts as its CFO and took responsibility for substantial parts of its operations. She also arranged for a recurring contract sought from VIC to be issued to HIT Drilling and used VIC’s business knowledge and client contacts to move work to the competitor.

Justice Quigg found that the trial judge had focused too narrowly on the initial rental proposal without addressing the full extent of Araneda’s role. The record supported a finding that the competing activities were concealed from VIC.

The court also identified unaddressed evidence about VIC’s financial reporting. Used drilling supplies purchased for $40,283 had been entered into inventory at their purchase price. Araneda later adjusted the figures to values for new equipment, increasing the recorded inventory value by approximately $457,800. She provided reports containing the inflated figures to RBC, which relied on inventory as security for VIC’s operating credit line.

The incorrect reporting was discovered after Robin Fournier became president. The trial judge’s failure to assess that evidence, and the evidence about HIT Drilling, warranted appellate intervention.

Family ties did not replace disclosure to the company

The trial judge had treated Araneda’s discussions with her mother as evidence that the competing activities were known. The appeal court held that this was mistaken. Her mother was a minority shareholder, and Araneda had not disclosed the full extent of her activities to her.

The court stressed that a director’s fiduciary duty is owed to the corporation. Full disclosure of material facts to its board was required so the company could make an informed decision. Disclosure to an individual shareholder did not satisfy that obligation on this record.

The court also rejected the trial judge’s treatment of deleted relevant emails as a matter of personal conscience within a family dispute. Parties must disclose relevant evidence, and the family-business setting did not create a different rule.

Repayment ordered, shareholding ruling preserved

Araneda’s challenge to repayment of the US$70,000 failed because the U.S. subsidiary had assigned its recovery claim to VIC. The company could therefore sue on that debt without disregarding the separate corporate entities. Araneda had acknowledged that she needed to repay the money with interest and had not contested the assignment’s validity.

VIC was unsuccessful on its share-rectification claim. Records dating to 2015 showed Araneda held 47 shares, and other evidence supported the trial judge’s finding that the remaining shareholders had accepted that position for years. The appeal court found no reviewable error in refusing to alter the records.

The ruling removes the dismissal damages while preserving the shareholding result. Its employment conclusion rests on serious, previously undisclosed conduct established in this case; the court did not need to decide whether Araneda’s efforts to find other work were sufficient to reduce her losses.