Canada: 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 lease agreement. It is therefore equally inappropriate "to maintain a distinction in the approach to [injunctions] as between realty and personalty".

If a purchaser has no automatic entitlement to the remedy of specific performance where the purchased property is not proved to be unique,7 then why should a tenant have that entitlement to the remedy of an injunction where the leased premises are not shown to be unique? There is no basis for affording greater protection for a tenant's property rights than for those of a purchaser.

Semelhago has reversed the presumption that all properties are unique. Instead, there is now a presumption that damages are an adequate remedy; to rebut that presumption, there must be evidence that the property is unique or, if that cannot be proved, that damages, for some reason other than the absence of uniqueness of the property, would not be an adequate remedy. A tenant should have the same onus.

In addition to Semelhago, the SCC decision in Highway Properties8shows that the view that property rights deserve special treatment is now merely a historical anomaly for which there is no longer any persuasive justification:9

It is no longer sensible to pretend that a commercial lease, such as the one before this Court, is simply a conveyance and not also a contract. It is equally untenable to persist in denying resort to the full armoury of remedies ordinarily available to redress repudiation of covenants, merely because the covenants may be associated with an estate in land.

The SCC decisions referenced above have established the principle that where an equitable remedy is sought in the context of a property right (including a leasehold interest), the principles to be applied are no different than if the remedy were sought in a non-property context. More particularly, the applicant has an obligation to show that damages would not be an adequate remedy, and the normal (although not the only) way to do that is to prove that the property is unique.

There is little to recommend adherence to an outdated principle which is based on archaic conditions. Rahawanji directs that an injunction ought to be granted only in an exceptional case where the applicant has clearly demonstrated that forfeiture would be inequitable and unjust in all the circumstances. Rahawanji states, in fact, that that test is particularly appropriate where a commercial lease is involved.

Are Damages an Adequate Remedy?

The normal process where an owner wishes to redevelop is the negotiation of termination agreements with the tenants. The consideration provided to the tenant may vary. One or more of the tenants may, however, seek to take advantage of the situation by demanding compensation far greater than any true loss they would sustain through early surrender of possession. This is what I characterize as a demand for a windfall benefit, one which bears no relationship to the actual loss that would be suffered. Just as disgorgement is "an exceptional remedy that should not be invoked unless all other remedies are inadequate",10 so too is an injunction. In the circumstances of Amexon, the Tenant would have sustained no loss that could not have been monetized and recovered in the form of damages.

Equitable Extortion

The evidence in Amexon indicated that the Tenant had no business need to remain in the leased premises. It was argued by the Landlord that the true reason for the Tenant's position that it wished to remain in those premises was to employ that as a lever to obtain a windfall gain at the Landlord's expense. The Landlord submitted that that amounted in equity to extortionate pricing or conduct, as characterized in certain passages which were reproduced with approval in the Santarsieri decision.11

Abuse of Process

It is not the purpose of an injunction to provide a tool to be employed for purposes that are inequitable, or to enable a plaintiff to circumvent the requirement to prove entitlement to a remedy such as disgorgement of profits. To seek an injunction for either of those purposes amounts to an abuse of the court's process.

It was the Tenant's position in Amexon that it had no obligation to identify any purpose for its request for an injunction, for the simple reason that it had a right to remain in the premises, and an injunction was merely the mechanism for enforcing that right. The Landlord argued that the evidence showed that there was a purpose for the requested injunction, and that was to "hold up" the Landlord for more money in exchange for vacating the premises. Whether that was so or not, the mere fact that the Tenant had a contractual right to remain in the premises was no more a sufficient ground for the grant of an injunction than the fact that the purchaser in Semelhago had a contractual right to receive title to the purchased property was a sufficient ground for a grant of specific performance.

Negotiating Advantage

The appellate decisions in Denovan and Allard are in direct conflict with Amexon, as reflected in the following statements:

...I am of the opinion that damages, including the availability of possible punitive damages, provides an adequate remedy for any loss or inconvenience experienced by the [tenant] as a result of the landlord's alleged wrongful acts. I do not consider the negotiating advantage afforded to the [tenant] by the presence of the injunction is a justification for its continuation.12


The court can withhold [an injunction] in the interests of fairness…So for example an injunction will not be given which would give the plaintiff no substantive useful benefit, except a negotiating advantage because of the harm done by the injunction to the person enjoined.13

One of the ordinary objectives, and one of the reasonable expectations, of a purchaser of real property is to reap the reward of any increase in the value of the property. That would not, however, be a normal or usual objective or expectation of a lessee, particularly a lessee of a small part of a large commercial building. The important point, however, is not whether the Tenant in Amexon was entitled to receive or share in the profit from redevelopment, but rather that the question whether the Tenant had that entitlement was a matter to be determined through a claim for damages. Regardless of the strength or weakness of the Tenant's claim for profits, this was an issue to be raised and determined in the context of a claim for damages. The Tenant had no need for an injunction to advance that claim, nor should it have been permitted to metaphorically put a gun to the Landlord's head by way of an injunction.

Breach of Contract on the Basis ofEconomic Efficiency

If the early termination of the lease in Amexon, wrongful though it was, caused no loss or harm for which the Tenant could not have been compensated through an award of damages, then the situation would fall into the category of breaches of contract that are permissible on the basis of economic efficiency. In accordance with the definition of that concept in the Bank of America decision,14the Tenant would have been fully compensated and the Landlord would have been better off than if it had performed the contract. The court in Bank of America said:15

Efficient breach is what economists describe as a Pareto optimal outcome where one party may be better off but no one is worse off, or expressed differently, nobody loses. Efficient breach should not be discouraged by the courts. This lack of disapproval emphasizes that a court will usually award money damages for breach of a contract equal to the value of the bargain to the plaintiff.

In the SCC decision in Bhasin, the court said:16

In commerce, a party may sometimes cause loss to another – even intentionally – in the legitimate pursuit of self-interest: Bram Enterprises Ltd. v A.I. Enterprises Ltd. 2014 SCC 12 at para. 31. Doing so is not necessarily contrary to good faith and in some cases has actually been encouraged by the courts on the basis of economic efficiency: Bank of America Canada v Mutual Trust Co. 2002 SCC 43 at para. 31.

Amexon is a classic example of a breach of contract that should be permissible (and, despite the right to recover damages, not characterized as wrongful conduct) on the basis of economic efficiency. The Tenant would have recovered money damages for whatever loss or harm it could show that it would have sustained from having to relocate, and for whatever value (if any) the bargain associated with its remaining leasehold interest might have had for it. The Landlord, for its part, would have been able to proceed with its redevelopment plan. This would have furthered the economic interests not just of the Landlord but of the general public. It would have encouraged, rather than hindered, the advancement of commerce.

Instead, the result in Amexon was disproportionately one-sided and wasteful. This is an example of a case where the emerging principle of economic efficiency ought to have been applied. An injunction ought not to be available where not only does the applicant sustain no loss or harm for which it cannot be compensated by way of damages, but the conduct of the respondent is actually to be encouraged because the societal economic consequences are beneficial.

Rewarding an Intentional Breach ofContract?

The argument can certainly be made that to deny an injunction in circumstances such as those in Amexon would be to condone, and perhaps even promote, intentional breaches of contract. That argument, however, applies equally in the case of a vendor who unilaterally refuses to transfer title to a purchaser, and the SCC in Semelhago demonstrated no qualms about disregarding that concern. That decision makes it clear that the focus of the court's attention should be directed at the test for granting an equitable remedy, not on whether the breach was intentional. The spotlight in circumstances such as those that existed in Amexon should be on the following matters:

  1. whether damages would be an adequate remedy;
  2. the true purpose for which the equitable remedy is being sought;
  3. the principle of proportionality;
  4. whether the breach of contract was permissible on the basis of economic efficiency; and (perhaps most importantly)
  5. whether granting the equitable remedy would lead to a reasonable and sensible result.

The following comment in another high court decision supports that view:17

It is true that the defendant has, by his own breach of contract, put himself in such an unfortunate position. But the purpose of the law of contract is not to punish wrongdoing but to satisfy the expectations of the party entitled to performance. A remedy which enables him to secure, in money terms, more than the performance due to him is unjust. From a wider perspective, it cannot be in the public interest for the courts to require someone to carry on business at a loss if there is any plausible alternative by which the other party can be given compensation. It is not only a waste of resources but yokes the parties together in a continuing hostile relationship.


1. 2015 ONCA 86, affirming an unreported decision delivered by handwritten endorsement. A separate costs endorsement is reported at 2014 ONSC 4384. An application for leave to appeal to the SCC was dismissed (2015 CanLII 38341, 2015 CarswellOnt 10072), although a settlement had been made between the parties shortly prior to the release of that dismissal.

2. Pointe East Windsor Limited v Windsor (City) 2014 ONCA 467, at para. 17; Denovan v Lee (1989) 65 D.L.R. (4th) 103, B.C.C.A. , at paras. 11-12; 472448 B.C. Ltd. v 343554 B.C. Ltd. 2006 BCSC 1075 at paras. 22-23 and 30.

3. Kerr v Baranow 2011 SCC 10 at para. 71.

4. As indicated in the following comment in Ruxley Electronics and Construction Ltd. v Forsyth [1996] 1 A.C. 344 (at p. 369): "[M]itigation is not the only area in which the concept of reasonableness has an impact on the law of damages. If the court takes the view that it would be unreasonable for the plaintiff to insist on reinstatement, as where, for example, the expense of the work involved would be out of all proportion to the benefit to be obtained, then the plaintiff will be confined to the difference in value. "

5. Semelhago v Paramadevan [1996] 2 S.C.R. 415.

6. At paras. 20-21 and 22.

7. In addition to Semelhago, see on this point Co-operative Insurance Society v Argyll Stores [1998] A.C. 1, at p. 11.

8. Highway Properties Limited v Kelly, Douglas and Company Limited [1971] S.C.R. 562.

9. At para. 27. That passage was quoted with approval by the High Court of Australia in Progressive Mailing House Pty. Ltd. v Tabali Pty. Ltd. (1985) 157 CLR 17, at p. 28, and the following was said (at p. 29): "The decisions in Australia and Canada, and the speeches in Panalpina, reflect the point made by William O. Douglas and Jerome Frank in Landlords' Claims in Reorganizations, Yale Law Journal, vol. 42 (1933), p. 1003, in footnote 6, that, as the law of landlord and tenant had outgrown its origins in feudal tenure, it was more appropriate in the light of the essential elements of the bargain, the modern money economy and the modern development of contract law that leases should be regulated by the principles of the law of contract. "

10. Apotex Inc. v Eli Lilly and Company 2015 ONCA 305, at para. 56.

11. Michael Santarsieri Inc. v Unicity Mall Ltd. (1999) 181 D.L.R. (4th) 136, Man. C.A.

12. Denovan, at para. 12.

13. Allard, at paras. 29-30.

14. Bank of America v Mutual Trust Co. 2002 SCC 43 at para. 31.

15. At para. 31.

16. Bhasin v Hrynew 2014 SCC 71, at para. 70.

17. Co-operative Insurance Society, at pp. 15-16.

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions