Injunctions To Restrain Breach Of Contract

First published in the Advocates' Quarterly volume 45, Number 4 - Reproduced by permission of Thomson Reuters Canada Limited. This is a condensed version. For the full article please download the pdf. Part 2 of 2 of condensed version - See part I.

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 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 premises in an adjoining building, 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, and that an injunction was an unreasonable and grossly disproportionate remedy.

General Principles Regarding theCircumstances in Which an Equitable Remedy, Such as an Injunction, Will beIssued

It is a general rule that an injunction will not be granted where damages are an adequate remedy.2 On a higher level, the approach that is taken is reflected in the following comment:3

The Court has often emphasized the flexibility of equitable remedies and the need to fashion remedies that respond to various situations in principled and realistic ways

...Similarly, in the context of the constructive trust, McLachlin J. (as she then was) noted that "[e]quitable remedies are flexible; their award is based on what is just in all the circumstances of the case".

As it ought to be in most aspects of the law, reasonableness should be a necessary criterion when selecting the remedy suitable to the facts and circumstances of the case, as should proportionality, which is, in reality, merely an aspect of reasonableness.4 As an injunction is an equitable and discretionary remedy, equitable considerations are at the forefront of the matters taken into consideration by the court.

Conflict With Semelhago5

The SCC decision in Semelhago involved the issue of specific performance of an agreement of purchase and sale of land. The following comments were made:6

While at one time the common law regarded every piece of real estate to be unique, with the progress of modern real estate development this is no longer the case. Both residential, business and industrial properties are mass produced much in the same way as other consumer products. If a deal falls through for one property, another is frequently, though not always, readily available.

It is no longer appropriate, therefore, to maintain a distinction in the approach to specific performance as between realty and personalty. It cannot be assumed that damages for breach of contract for the purchase and sale of real estate will be an inadequate remedy in all cases.

...

Specific performance should, therefore, not be granted as a matter of course absent evidence that the property is unique to the extent that its substitute would not be readily available.

As the evidence in Amexon itself showed, commercial rental properties are at least as fungible as are properties for sale. In addition, there is a high degree of similarity between the equitable remedies of specific performance and injunction. An injunction granted to a tenant corresponds to the remedy of specific performance granted to a purchaser of property. In the circumstances of Amexon, the permanent injunction was the functional equivalent of an order for specific performance by the Landlord of the...