A recent Alberta Court of Appeal decision has reaffirmed a longstanding legal principal: significant deference is owed to discretionary interlocutory decisions, even when the reasoning of the chambers judge may be less than clear.
In Great North Equipment Inc. v. Penny, 2025 ABCA 16, the Court emphasized that unless there is a clear error of law or fact, or the result is patently unjust, appellate intervention will be limited – especially on procedural matters. This decision underscores the importance of judicial efficiency and deference – a principle with real implications for litigators navigating procedural disputes.
Background and procedural history
This dispute began in June 2023 when certain employees (the "Departed Employees") resigned from their positions at Great North Equipment Inc. ("Great North"). Following their resignations, Great North commenced an action alleging that the Departed Employees had breached their fiduciary and contractual obligations by misusing confidential information to assist in launching a competing business venture.
In August 2023, the parties consented to a temporary interim injunction (the "Interim Injunction Order") that imposed several obligations on the Departed Employees:
- Surrender of company equipment – The Departed Employees were to return their work electronic devices for inspection by an independent supervising solicitor.
- Confidential information and non-compete – The Departed Employees were prohibited from using, disclosing, altering, or destroying confidential information. They were also barred from engaging in business activities involving products or systems developed at Great North.
- Non-solicitation – The Departed Employees were restricted from soliciting Great North's employees, customers, or clients until June 20, 2024, or further order of the court.
These obligations were later clarified and temporarily extended by subsequent court orders. However, Great North's application to further extend the injunction—particularly concerning non-solicitation, non-competition, and confidentiality—was ultimately dismissed by Justice M.J. Lema.1
The appeal: Great North Equipment v. Penney, 2025 ABCA 16
Great North and a related corporate entity appealed two interlocutory decisions:
- Justice Dilts' Decision – This concerned the interpretation of the forensic protocol order and the appellants' access to evidence held by the independent supervising solicitor.
- Justice Lema's Decision – The appellants argued that Justice Lema not only declined to extend certain terms of the Interim Injunction Order, but also effectively rescinded it in its entirety.
The Court of Appeal upheld both chambers judge's decisions and reaffirmed the high threshold for appellate intervention in discretionary pre-trial decisions. Relying on the Supreme Court of Canada's decision in Canada v. Fontaine, 2017 SCC 47, the Court noted that intervention is appropriate only where the chambers judge has clearly misdirected themselves on the facts or the law, acted arbitrarily, or rendered a decision so clearly wrong as to amount to an injustice.
The Court of Appeal found that both orders were exercises of discretion and neither chambers judge misdirected themselves on facts or law, or reached an arbitrary or unjust conclusion. The Court also emphasized that the decisions related to procedural steps in the litigation and did not make any permanent factual or legal determinations.
Notably, the Court acknowledged there was ambiguity in the lower court decisions, particularly in the language used by Justice Lema. Despite this, the Court was not persuaded that the ambiguity rose to the level of reversible error. Rather, it interpreted Justice Lema's decision as not intending to revoke key portions of the original injunction—specifically, those relating to the use of confidential information and competition. The Court confirmed that these provisions remained in force and amended the formal order accordingly.
Similarly, while the issues around document access from the independent supervising solicitor remained unresolved, the Court held that those matters could still be addressed in the trial court or through procedural mechanisms, such as further disclosure applications.
Contrast with other recent Court of Appeal decisions
The Court of Appeal's restrained approach in Great North stands in contrast to the Court's more interventionist stance in other recent decisions, where legal errors at the chambers level have justified appellate interference; for example, a misapplication of established legal principles, particularly in the context of interim injunctions or interlocutory relief, can cross the line from permissible discretion into reviewable error.
Great North underscores that appellate review of procedural decisions is guided not by perfection in reasoning, but by whether the decision falls within the range of acceptable outcomes. On the other hand, when a chambers judge fails to properly apply a legal test or engages in flawed reasoning on a key legal issue, the court may show a greater willingness to intervene.
The foregoing reinforces the importance of a clear and principled record at the chambers level. Where the lower court is simply exercising its discretion within a permissible range, appellate review may be limited.
Key takeaways
- Deference to discretion – The Court of Appeal generally defers to discretionary interlocutory rulings, especially those involving procedural steps intended to advance a matter toward trial.
- High threshold for intervention – The Court of Appeal will only intervene where there is a clear misapplication of the law, factual misdirection, or a decision so flawed that it results in an injustice.
- Procedural orders are not final – Unless an interlocutory decision purports to finally decide substantive rights, it does not prevent the issues from being raised again at trial.
Final thoughts
Great North confirms that appellate courts will typically defer to the discretion exercised by the lower court(s) for interlocutory decisions — provided the lower court's decision falls within the bounds of fairness and legal accuracy. However, where a discretionary decision reflects a misapplication of established legal principles, or is so clearly wrong that it amounts to an injustice, the Court of Appeal is more likely to intervene.
Footnote
1. Great North Equipment Inc v Penney, 2024 ABKB 533.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
