Mandatory interlocutory injunctions, unlike standard interlocutory injunctions, are sometimes requested in estate and trust litigation. Whereas an interlocutory injunction restrains a party from taking certain actions until a legal dispute is resolved, a mandatory injunction compels a party to take positive action during the litigation, and is considered to be more intrusive. Since restorative relief can usually be obtained at trial, an applicant must satisfy an elevated threshold in order to justify a mandatory injunction, making this form of relief appropriate under only exceptional circumstances.
The Alberta Court of Appeal’s recent decision in Scrammell v Scrammell, 2025 ABCA 425, explores whether a mandatory interlocutory injunction can be used to compel a party to a lawsuit to return trust property that was distributed to them by the trustee, if breach of trust is alleged.
Background
The dispute in Scrammell was related to a family trust created to hold three parcels of land and associated surface leases. The mother acted as trustee of the trust, and her children were named as the beneficiaries. Between 2013 and 2019, the mother transferred all three trust properties to one of her daughters for nominal consideration. The mother died shortly after the final transfer, at which point that daughter and one of her brothers became successor co-trustees.
After the brother learned of the transfers, he commenced an action to recover the properties, alleging that the transfers breached the terms of the trust deed. More specifically, he took the position that the trust only authorized the trustee to sell, convey or transfer the trust properties to the beneficiaries for fair market value. He also sought the removal of his sister as co-trustee. The sister opposed the litigation, relying on another clause in the trust to argue that the trustee had broad, absolute discretion to distribute the properties to any beneficiary, even to the complete exclusion of the other beneficiaries.
A few years into the litigation, the brother applied to remove the sister as a co-trustee and replace her with one of their brothers. He also sought a mandatory interlocutory injunction to compel the sister to transfer the properties to them as trustees. All of the relief sought was granted by a chambers judge.
Decision Reversed on Appeal
Even though orders granting interlocutory injunctions are entitled to a high degree of deference, the Alberta Court of Appeal reversed the mandatory injunction in this case, finding that the chambers judge proceeded on a misunderstanding of the law.
While the chambers judge correctly identified the applicable test for obtaining a mandatory interlocutory injunction from R v Canadian Broadcasting Corp, 2018 SCC 5 – proof of a strong prima facie case, irreparable harm, and the balance of convenience favouring an injunction – the judge erred in finding that the test had been satisfied.
First, the Court of Appeal found that a strong prima facie case had not been established. In order to satisfy the threshold, an extensive review of the merits of the claim is required – an applicant must establish that they are very likely to succeed at trial, based on the law and the evidence presented. The chambers judge simply failed to engage in a sufficiently extensive review of the merits of the lawsuit. For example:
- In accepting that the trust deed required the trust properties to be sold for fair market value, the chambers judged failed to consider how this requirement was impacted by other provisions of the trust, including the broad discretionary powers which the trust granted to the trustee.
- There was no finding as to whether the brother would likely be able to prove at trial that the mother breached the terms of the trust in making the transfers to his sister, or that his sister was in breach by accepting them, even though breach of trust was pled in the statement of claim.
- The chambers judge relied on the existence of caveats, which the mother had previously placed on the title to the trust properties, as evidence of a strong prima facie case. However, as noted by the Court of Appeal, a caveat only provides notice of a claim, and does not establish its validity.
The Court of Appeal further noted that a mandatory interlocutory injunction should not have been granted since the chambers judge failed to consider whether there was a legal basis for making the sister liable for the return of the trust properties after they had been transferred to her. At the time of the transfers, the sister had been a beneficiary, not a trustee. The Court of Appeal acknowledged that “[a] stranger to a trust can be held liable as a constructive trustee for breach of trust in some circumstances – for example, if the stranger is found to be a trustee de son tort, to have knowingly assisted in a fraudulent and dishonest design, or to have knowingly received the property where there is constructive or actual knowledge of the breach.” However, since the arguments before the court did not even address whether or how the sister could be held liable, the applicant failed to establish a strong prima facie case in this regard.
The Court of Appeal also found that irreparable harm had not been established. There was no evidence to support the conclusion that the lands were unique, that substitute property was not available, or that damages would not be an adequate remedy. Furthermore, alleged losses – including unpaid rent, surface lease income, and losses that had not yet crystallized – were quantifiable and could be compensated with damages.
Lastly, the Court of Appeal noted that it would not be just and equitable to grant a mandatory interlocutory injunction. As noted by the Supreme Court of Canada in Google Inc v Equustek Solutions Inc, 2017 SCC 34, this is a fundamental question to consider, beyond the three-part test, when a party seeks an injunction.
Practical Takeaways
Scrammell is a pointed reminder that mandatory interlocutory injunctions are exceptional remedies. Applicants must be prepared to fully engage with the merits of their case at an early stage in order to satisfy the strong prima facie case requirement.
For trust disputes specifically, the Court’s decision underscores several practical considerations:
- If the provisions in the trust deed appear to be inconsistent, a mandatory interlocutory injunction should not be granted unless the court interprets the trust instrument as a whole.
- Establishing a breach of trust may not justify the use of a mandatory interlocutory injunction to compel the return of distributed trust property unless there is a strong prima facie case that the party who holds the property may be required to return it.
I hope you enjoy the rest of your day,
Suzana.