Executive secretly launched competing company, diverted key client, inflated inventory by nearly $460,000
A company president who secretly incorporated a rival business, diverted a client contract, inflated financial records, withdrew $70,000 USD from a subsidiary account, and then deleted emails to cover her tracks has lost her wrongful dismissal claim on appeal.
In a decision penned by Justice Quigg on March 19, 2026, the New Brunswick Court of Appeal reversed a trial ruling that had awarded Laura Araneda $115,240 in damages, finding instead that her employer, VIC Progressive Diamond Drilling Inc., had established after-acquired cause for dismissal.
Laura Araneda had served as president of VIC, a family-owned diamond drilling business, since 2006, and began using the title of CEO in 2015. In early July 2020, while still in that role, she met with a solicitor to incorporate HIT Drilling, a direct competitor. She reserved the domain name, opened bank accounts, arranged insurance, and set up email addresses for the new company.
She then prepared a business plan with former VIC senior manager Kevin Kyle, dated July 22, 2020, that divided all responsibilities between the two of them. The plan budgeted Araneda a salary of $1,800 per week and described her role as "Silent Partner as necessary." Her common-law partner, Patrick Shaun McQuinn, was listed as CFO and Secretary-Treasurer on the incorporation documents but had no active involvement.
When placing insurance for HIT Drilling, Araneda told the broker: "I put my common-law, Patrick McQuinn as the shareholder … I will still be running the company with Kevin." She set up the HIT Drilling bank account with only herself and Kyle as signing officers. McQuinn, despite being listed as CFO, had no signing authority.
Diverting contracts, destroying evidence
In July 2020, Araneda redirected a recurring VIC client contract to HIT Drilling. By August, she was introducing Kyle to a VIC client over lunch to discuss further projects. On September 4, she submitted a bid for HIT Drilling on a Newfoundland and Labrador contract rather than bidding on behalf of VIC.
When VIC later requested her emails from that summer, some arrived in a format that was difficult to read and contained no attachments. It was found that emails had been deleted from her account, only some of which were retrievable with the assistance of a forensic IT specialist.
Separately, VIC discovered that Araneda had inflated the company's inventory records by $457,800.56 between late December 2019 and January 2020, then submitted those figures to the Royal Bank of Canada, which relied on inventory values as security for a $500,000 operating line of credit. She also withdrew $70,000 USD from VIC's US subsidiary bank account on September 20, 2020, writing herself a cheque. VIC did not discover this until February 2021.
After the exit, misconduct still matters
When VIC's board moved Araneda from CEO to CFO on September 7, 2020, she did not reply to the new president's message about her future role. Instead, she resigned and filed a wrongful dismissal claim. The trial judge awarded her damages, but the Court of Appeal found the trial judge had committed palpable and overriding errors by failing to assess the full scope of Araneda's misconduct.
The court applied a two-part test: the misconduct must be sufficiently serious to warrant summary dismissal, and the employer must not have been aware of it at the time of dismissal. Justice Quigg concluded that "Working for a competing company and acts of dishonesty are types of misconduct that warrant dismissal."
Of Araneda's activities, Justice Quigg wrote: "Laura was running HIT Drilling – dealing with the lawyers, the bank, IT people, and the insurance broker. She was costing and bidding projects, meeting with clients, signing cheques and contracts as the CFO of HIT Drilling – all while not undertaking any of those duties for VIC and hiding her involvement from VIC." The appeal was allowed in part. The constructive dismissal finding was overturned, the trial judgment awarding damages was set aside, and judgment was entered against Araneda for $70,000 USD plus interest. The appeal of the decision to deny rectification of share ownership was dismissed, as was Araneda's cross-appeal. VIC was awarded costs of $3,000 payable by Araneda.
