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Injunctions - Real Property

1465152 Ontario Limited v. Amexon Development Inc. (Ont CA, 2015)

In this case the Court of Appeal upheld a lower court permanent injunction against a landlord who was trying to obtain possession of leased commercial premises. On the key injunction criteria of whether failure to grant would cause irreparable harm to the applicant (ie. harm that was not compensable with a damage award), the court held that despite the modern judicial inclination to treat leases as any other contract, there was still a residual real property interest which could apply to avoid the irreparable harm rule. That is, the court acknowledged some remaining force in the previously conventional law that real estate entitlements could be subject to specific performance as of right:
[22] First, the Landlord contends that in Pointe East Windsor Limited v. Windsor (City), 2014 ONCA 467 (CanLII), 374 D.L.R. (4th) 380, at para. 17, this court held that equitable relief, such as a permanent injunction, is only available where damages are an inadequate remedy. The Landlord submits that the leased premises are not unique, so an award of compensatory damages to the Tenant would serve as an adequate remedy. However, in Pointe East Windsor Limited, the issue of remedy arose in the context of an action for breach of contract, not where the holder of an interest in property, such as the Tenant, was alleging a wrongful interference with a proprietary interest.

[23] As the law in Ontario currently stands, different considerations apply in the latter circumstance, as was explained in Robert J. Sharpe, Injunctions and Specific Performance, loose-leaf (consulted on 30 January 2015), (Toronto: Canada Law Book, 2014), at 4.10 and 4.20:
Where the plaintiff complains of an interference with property rights, injunctive relief is strongly favored. This is especially so in the case of direct infringement in the nature of trespass.



The reason for the primacy of injunctive relief is that an injunction more accurately reflects the substantive definition of property than does a damages award. It is the very essence of the concept of property that the owner should not be deprived without consent. An injunction brings to bear coercive powers to vindicate that right. Compensatory damages for a continuous and wrongful interference with a property interest offers only limited protection in that the plaintiff is, in effect, deprived of property without consent at an objectively determined price. Special justification is required for damages rather than an injunction if the principle of autonomous control over property is to be preserved. A damages award rather than an injunction permits the defendant to carry on interfering with the plaintiff’s property. [Footnotes omitted.]
[24] The Landlord relies on the decision of the British Columbia Court of Appeal in Evergreen Building Ltd. v. IBI Leaseholds Ltd., 2005 BCCA 583 (CanLII), 50 B.C.L.R. (4th) 250, leave to appeal to S.C.C. granted, [2006] S.C.C.A. No. 43,[1] in support of its position that the application judge should not have granted a permanent injunction. That case also involved an argument by a landlord that it should be permitted to re-enter leased premises in order to demolish a building for redevelopment even though the lease did not contain a demolition clause and the tenant had not breached the lease. The British Columbia Court of Appeal, at para. 31 of its reasons, held that the chambers judge had erred in granting a permanent injunction because he had treated the remedies related to a lease and a contract as “water-tight compartments”, leading him to ignore the issue of whether damages were an adequate remedy in the circumstances. The British Columbia Court of Appeal re-instated the interim injunction restraining the landlord from breaching the covenant of quiet enjoyment and remitted the issue of the permanent injunction back to the British Columbia Supreme Court for consideration of the equities between the parties.

[25] In the present case, the application judge turned his mind to the adequacy of an award of damages and then went on to observe, correctly, that “[i]njunctions remain a powerful arrow to preserve property rights and to restrain tortious misconduct.” The Landlord sought to trespass by seeking to enter the leased premises without any authority, terminate the Lease and demolish the leased premises. Under those circumstances it fell within the discretion of the application judge to restrain the Landlord from committing such a trespass, and I see no error in his exercise of that discretion.

[26] Second, the Landlord argues that the Tenant was seeking an injunction for an improper purpose, namely to enhance its bargaining position with the Landlord. Such a motivation, according to the Landlord, operated as a reason to deny granting an injunction. Certainly some courts have refused to grant an injunction where they have found that the request for injunctive relief was being used to force a hard bargain rather than protecting the actual enjoyment of bona fide property rights: Michael Santarsieri Inc. v. Unicity Mall Ltd. (1999), 1999 CanLII 5082 (MB CA), 181 D.L.R. (4th) 136 (Man. C.A.), at para. 25 and Denovan v. Lee (1989), 65 D.L.R. (4th) 103 (B.C.C.A.), at p. 106. In the present case, however, the application judge made no such finding of improper purpose on the part of the Tenant and, by contrast, found that the Landlord had engaged in tortious misconduct.

[27] Finally, the Landlord submits that the permanent injunction constituted a disproportionate remedy in the circumstances, arguing that it was unreasonable to permit the Tenant to continue to occupy premises which amounted to less than three per cent of the building’s total rental area when all other tenants had vacated the building. I would not accept that submission for two reasons. First, as pointed out in Injunctions and Specific Performance, at 4.590:
Where there is a direct interference with the plaintiff’s property constituting a trespass, the rule favoring injunctive relief is even stronger than in the nuisance cases. Especially where the trespass is deliberate and continuing, it is ordinarily difficult to justify the denial of a prohibitive injunction. A damages award in such circumstances amounts to an expropriation without legislative sanction … In trespass, there has been less concern than in nuisance with the problem of “extortion”. Even if the plaintiff is merely holding out for the highest possible price, and suffers no out-of-pocket loss because of the trespass, the courts have awarded injunctions. Such orders may be said to vindicate the plaintiff’s right to exploit the property for whatever it is worth to the defendant and prevent the defendant from circumventing the bargaining process. [Footnotes omitted.]
[28] In addition, the application judge balanced the parties’ respective interests and tailored the scope of the injunction to that which was necessary to restrain the specific unlawful conduct of the Landlord – i.e. its intention to trespass onto the leased premises pursuant to the Notice to Vacate in order to terminate the tenancy. His endorsement clearly states that the injunction would not protect the Tenant from the consequences of future breaches or future application of the Lease, nor did it address the issue of the right of the Tenant to renew the Lease upon the expiry of its current term on March 31, 2016.

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