For anyone seeking or about to seek an injunction - be forewarned. Either bring your "A" game when filing your application and evidence, or save your time and money. The recent Alberta Court of King's Bench decision Southwest Design & Construction Ltd v Janssens provides renewed guidance on injunctions in the commercial context.¹

The plaintiff, Southwest, sought an interim injunction against two former employees and a new competing company they founded called Elevate. Southwest alleged the two former employees breached their fiduciary duties, as well as their contractual duty of good faith and loyalty, by using proprietary information from Southwest to start the new business.

The legal test for injunctions remains the same

The test for injunctions is still the three-part analysis from RJR-MacDonald Inc v Canada (Attorney General).

• The case must have a serious issue to be tried.
• Irreparable harm must occur if the injunction is not granted.
• The balance of convenience must favour granting the injunction.

The court found a strong case for one of the employees having owed fiduciary duties to Southwest since he was an essential employee with financial responsibilities.

The court also found a strong case for a breach of the duty of loyalty when the second employee took active steps to recruit Southwest employees.

Nevertheless, Southwest did not receive its injunction.

It is acceptable for fiduciaries to prepare to leave a workplace if they are meeting employment obligations

Southwest argued that the former employees had breached their duties by engaging in start-up activities to create Elevate (e.g., buying insurance, creating marketing materials) and misusing established business relationships at Southwest to benefit Elevate, all while still working for Southwest.

The court found none of these activities violated any duties, including for the employee that was found to be a fiduciary. It goes against public policy, the court reasoned, to prevent employees from planning to leave their jobs. The critical requirement on the part of the employee is to keep meeting any employment obligations.

The only concerning behaviour noted by the court was the solicitation of current employees - on that basis alone, Southwest demonstrated a serious issue to be tried regarding a breach of the duty of loyalty, and satisfied part one of the RJR-MacDonald test.

A breach of the duty of loyalty is not enough to receive an injunction

This case also demonstrates that even if there was a breach of the duty of loyalty, an injunction does not automatically follow.

The party seeking an injunction still needs to give evidence regarding the irreparable harm that will be suffered without an injunction. Critically, Southwest did not introduce evidence about actual financial or reputational harm it would suffer absent an injunction. "Vague assertions" of negative financial impacts and client relationships being in disarray is not enough to secure an injunction. The court wants real, tangible evidence.

Injunction language must be specific and cannot be too broad

Even if irreparable harm had been demonstrated, the injunction Southwest sought was deemed too broad, and thus failed the "balance of convenience" portion of the legal test. Southwest wanted to, among other things:

• Prevent the former employees from bidding on work that Southwest had bid on, or had the opportunity to bid on, during their employment at Southwest;
• Prevent the former employees from bidding on work that they became aware of during their employment at Southwest; and
• Prevent the former employees from soliciting Southwest's clients or current employees until September 2025.

The court's first problem with this language is that it could have prevented Elevate from accepting unsolicited work, merely because the employees heard about it while working at Southwest. This was too broad a restriction. In that same vein, the court expressed concern about restricting an independent third party's ability to hire the contractor of its own choosing - in this case, Elevate. It also rejected the September 1, 2025, timeframe for non-solicitation of employees, calling it "longer than reasonable."

Key takeaways

We often hear from clients who are in the midst of having an issue unfold, and the first question is, "Can I get an injunction to stop this?"

Injunctions are a powerful and useful tool that have a place in commercial litigation, but they are not "one-size-fits-all." In this case, we saw allegations of some troubling behaviour, evidence that at least one Southwest document was used improperly, and proof of employees being solicited by the competition. None of this was enough.

Direct evidence is required not just for financial harm, but for all of the allegations being made - in this case, solicitation of employees, misuse of confidential information, and damage to client relationships. The court wants to see data instead of speculation, and facts instead of inferences.

The author would like to thank Jonah Secreti, articling student, for his contribution to preparing this legal update.

Footnotes