By Stephen Dugandzic
In Southwest Design & Construction Ltd v Janssens, 2024 ABKB 502, the Alberta Court of King’s Bench addressed an application for an interim injunction by Southwest Design & Construction Ltd. (“Southwest”) against its former employees, Blayne Janssens and David Mathieu, and their new company, Elevate Construction Partners (“Elevate”). Southwest alleged that the former employees breached fiduciary duties and contractual obligations by using proprietary information to start a competing business.
Background:
• Janssens and Mathieu, previously holding significant roles at Southwest, resigned after unsuccessful negotiations to purchase the company. They subsequently established Elevate, which began servicing several of Southwest’s clients. Southwest sought an injunction to prevent Elevate from bidding on projects known to the defendants during their tenure at Southwest and from soliciting Southwest’s clients and employees until September 2025.
Court’s Analysis:
• Fiduciary Duty: The court found a strong prima facie case that Janssens, due to his senior position and authority, owed fiduciary duties to Southwest. However, it did not find a strong prima facie case that Mathieu held a fiduciary role.
• Duty of Loyalty: The court determined there was a strong prima facie case that Mathieu breached his duty of loyalty by actively recruiting Southwest employees before his departure.
• Misuse of Business Opportunities: The court concluded there was insufficient evidence to establish a strong prima facie case that the defendants misused Southwest’s business opportunities.
• Injunction Criteria: Applying the RJR-MacDonald test, the court acknowledged serious issues to be tried but found no evidence of irreparable harm to Southwest if the injunction were not granted. Additionally, the balance of convenience did not favour issuing the injunction.
Outcome:
The application for an interim injunction was dismissed. The court emphasized the necessity for direct evidence of irreparable harm and noted that mere allegations or inferences were insufficient to warrant such relief. This decision underscores the challenges employers face in obtaining injunctions against former employees and highlights the importance of concrete evidence when alleging breaches of fiduciary duty or misuse of confidential information.
*Always seek legal advice. The above is for information purposes only.
Stephen Dugandzic received his Juris Doctor degree from the University of Alberta in 2013 and is Calgary-based. He previously practised with Bennett Jones LLP and Taylor Janis LLP before founding YYC Employment Law Group in 2018.