BC Supreme Court grants injunction restraining Indigenous financial-services business from competing with former employer
December 30, 2025
BY Kevin Zakreski
In a case decided near the end of December 2025, the BC Supreme Court considered the application of the three-stage test for a pre-trial injunction to a case involving the enforcement of restrictive covenants in a contractual dispute.
People Corporation v White Raven Consulting Ltd., 2025 BCSC 2525, concerned an application for “an interlocutory injunction temporarily restraining the defendants, White Raven Consulting Ltd. . . . and its principal, Nickolas Calla, from competing with it, soliciting its clients, or accepting work from its clients pending trial”:
[2] The application arises from a 2022 transaction in which Mr. Calla sold Eagle Bay Financial Services Ltd. . . .—his Indigenous-focused benefits and retirement advisory practice—and Calla Financial Services Ltd. . . .—his independent financial services agency—to People Corporation for $10.5 million. Before the sale, Mr. Calla owned and operated both Eagle Bay and CFS . . . and had built longstanding, trusted relationships with its clients. Both parties recognized that his reputation in the Indigenous benefits and retirement sector was central to Eagle Bay’s success and that this goodwill made up a significant part of the business’s value. Accordingly, most of the purchase price was allocated to Eagle Bay’s goodwill, trade names, and client relationships.
[3] As part of the commercial sale of the Companies, Mr. Calla agreed not to compete with his former businesses, solicit their clients, or accept work from their clients for a defined period. To give effect to those promises, he entered into a series of restrictive covenants prohibiting him from engaging in those activities. People Corporation submits that these covenants were essential to protecting the value of what it purchased and that interlocutory relief is now necessary because the defendants are engaging in activities that breach them.
The court assessed these claims using the three-stage test set out in RJR-MacDonald Inc. v Canada (Attorney General), [1994] 1 S.C.R. 311,1994 CanLII 117 (SCC), which “held that the applicant must establish that”:
a) there is a serious issue to be tried or, in some circumstances, a strong prima facie case;
b) the applicant will suffer irreparable harm if the injunction is not granted; and
c) the balance of convenience favours the granting of the injunction.
As a prelude to applying this test, the court noted a specific feature of the dispute at issue, which had an impact on its analysis:
[43] Courts are expected to be cautious about interfering with contracts negotiated between informed parties of equal bargaining power. Judges are not meant to second guess what those parties considered reasonable in their commercial relationship and public policy generally supports enforcing their agreements and giving effect to their reasonable expectations.
[44] At the same time, parties cannot contract out of the court’s independent responsibility to assess whether injunctive relief is warranted. Even where a restrictive covenant stipulates that a breach will cause irreparable harm and entitle the purchaser to an injunction, such language cannot displace the court’s obligation to determine for itself whether the legal test for an injunction is met. While remedy stipulations may be relevant and may support an inference of irreparable harm, they are not determinative. The court must ultimately make its own assessment based on the evidence before it.
Given the nature of the parties’ dispute, the court focused much of its attention on the first element of the test. “Ordinarily,” the court observed, “the question is whether there is a serious issue to be tried, meaning that the claim is neither frivolous nor vexatious. However, in some circumstances, a higher threshold of a strong prima facie case is required.”
In this case, the court concluded that the lower standard was appropriate:
[93] The governing principles, recently reviewed in Northam, confirm that the applicable standard depends on both the covenant’s context and the injunction’s practical impact. Generally, courts apply the serious issue standard in the commercial sale of business context where the injunction merely preserves the status quo, recognizing that parties negotiate such covenants at arm’s length and with counsel. The strong prima facie standard is reserved for exceptional cases—typically employment cases—where the injunction would effectively dispose of the underlying dispute or eliminate the respondent’s livelihood before trial.
[94] In this case, the restrictive covenants arise from a sophisticated commercial transaction involving a $10.5 million payment that primarily covered the purchase of goodwill, client relationships, and trade names. The covenants were negotiated over many months, were expressly made conditions of closing, were initially proposed by Mr. Calla’s own counsel, and were executed with acknowledgements of reasonableness and independent legal advice. In such circumstances, the common law presumes commercial covenants to be valid and enforceable, subject to a later determination of reasonableness at trial. That presumption accords with Payette, in which the Supreme Court of Canada emphasized that covenants negotiated in a sale-of-business context operate against the backdrop of equal bargaining power and the purchaser’s expectation of non-competition in exchange for consideration.
[95] I do not accept that the strong prima facie case standard applies to these facts. While the defendants contend that enforcement of the covenants would cause serious hardship, several features of the record mitigate the concern that interlocutory relief would constitute a final determination of the action.
After finding that the lower threshold applied, the court found in short order that the applicant had met the other two stages of the test (irreparable harm and balance of convenience favouring an injunction).
On the last point, there was one unusual feature of this case. The defendant raised public-interest factors as part of the balance of convenience. The court noted this argument, but said it would have to wait to be addressed at trial:
[157] While our Court of Appeal recently held in Gitxaala v. British Columbia (Chief Gold Commissioner), 2025 BCCA 430 at paras. 92, 143, that DRIPA “requires that British Columbia’s laws be interpreted to conform with the binding international rights, obligations and principles recognized in UNDRIP,” thereby incorporating “UNDRIP in its entirety into British Columbia positive law,” the adjudication of the defendants’ complex public policy argument is best left for trial. At the interlocutory stage, I give limited weight to broad public policy arguments that would effectively resolve contested issues—including the application of DRIPA, the scope of Indigenous economic development rights, and the legality of TIPI-based eligibility requirements—before trial. These issues raise complex questions of fact, regulatory context, and policy that must be assessed on a full evidentiary record. The established public interest principle relevant at this stage is that commercial agreements negotiated at arm’s length, with the benefit of legal advice and significant consideration, should generally be enforced unless doing so would clearly offend the public interest.
“Applying the RJR-MacDonald framework,” the court “concluded that the ‘serious issue to be tried’ standard governs this application. The restrictive covenants arise from a sophisticated commercial sale of the Companies, not an employment relationship, and the injunction sought merely preserves the contractual status quo rather than determining the ultimate rights of the parties.”
