Injunctions To Restrain Breach Of Contract - Stipulated Remedy Clauses - Old Habits Die Hard

INTRODUCTION

The issues that were before the court in 1465152 Ontario Limited v Amexon Development Inc.1 are substantial and far-reaching, particularly for the commercial real estate leasing industry. The decision is an excellent vehicle for the discussion of important issues relating to injunctions in the context of contractual property rights, equitable extortionate conduct, abuse of process, permissible breaches of contract on the basis of economic efficiency, and the interpretation and enforceability of contractual limitation of remedies clauses, particularly in the context of a claim that can be made under a concurrent tort.

OVERVIEW

The Landlord in Amexon wished to demolish a large commercial building in which the Tenant occupied leased premises, and redevelop the property. The premises constituted approximately 3% of the rentable area of the building. All of the other tenants had left as a result of agreements made with the Landlord, which offered to relocate the Tenant into similar (and better) premises in an adjoining building owned by the Landlord, and to pay compensation. After some bargaining, the Tenant refused to move.

It was the Landlord's position that the only reason for the Tenant's refusal to relocate was its desire to extract as much money from the Landlord as possible. There was nothing unique or special about the leased premises, nor any other reason why the Tenant had any need or compelling interest to remain there. The Landlord argued that damages were an adequate and suitable remedy for the Tenant in the circumstances of the case, that an injunction was an unreasonable and grossly disproportionate remedy, and that in any event the lease contained a stipulated remedy clause that plainly limited the remedies available to the Tenant for breach by the Landlord of any of its obligations under the lease to a claim for damages.

It is the author's view that the decisions made by the application judge and the CA in Amexon conflict with decisions of the Supreme Court of Canada,2 the House of Lords,3 the High Court of Australia,4 the British Columbia Court of Appeal,5 the Alberta Court of Appeal,6 and even sister panels of the Ontario Court of Appeal.7

FACTUAL BACKGROUND

The leased premises comprised approximately 3750 square feet of space in a Class B 5- storey-plus-basement office building originally constructed circa 1973 with a total rental area of 132,775 square feet. The nominal tenant was the management company for a...