ONTARIO BAR ASSOCIATION
REMEDIES FAST FORWARD
Wednesday, October 31, 2007
MANDATORY ORDERS - WHEN PROTECTING JUSTICIABLE RIGHTS REQUIRES
POSITIVE ACTION
By Jeffrey A. Kaufman, and
Richard D. Butler
© 2007
MANDATORY ORDERS - WHEN PROTECTING JUSTICIABLE RIGHTS REQUIRES
POSITIVE ACTION
Wednesday, October 31, 2007
By Jeffrey A. Kaufman, and
Richard D. Butler
© 2007
TABLE OF CONTENTS
1.
INTRODUCTION.......................................................................................... 2
2.
OVERVIEW OF INJUNCTIVE REMEDIES ............................................ 4
a)
b)
c)
3.
MANDATORY ORDERS APPLICABLE GENERAL
PRINCIPLES.................................................................................................. 8
a)
b)
4.
Inadequacy of Damages ................................................................................... 9
The Balance of Convenience Requisite ......................................................... 11
INTERLOCUTORY MANDATORY ORDERS ...................................... 13
a)
5.
Test for Interlocutory Mandatory Orders ....................................................... 14
SPECIAL CONSIDERATIONS FOR MANDATORY ORDERS .......... 20
a)
b)
c)
d)
e)
6.
Classification.................................................................................................... 4
Authority to Grant Injunctions ......................................................................... 5
Technical Requirements................................................................................... 6
Precision ......................................................................................................... 21
Ongoing Supervision...................................................................................... 22
Deliberateness of Defendant’s Conduct......................................................... 25
Vigilance of the Plaintiff ................................................................................ 26
Balance of Convenience................................................................................. 27
CONCLUSION............................................................................................. 29
Page
DM_TOR/211780-16426/2303335.3A
2
MANDATORY ORDERS - WHEN PROTECTING JUSTICIABLE RIGHTS REQUIRES
POSITIVE ACTION
Wednesday, October 31, 2007
By Jeffrey A. Kaufman, and
Richard D. Butler1
© 2007
1.
Introduction
An injunction is an order that requires a party to do a specific act (mandatory) or to refrain from
doing a specific act (prohibitory). Its sole overriding requirement is that the applicant must have
a cause of action entitling him or her to equitable relief - an injunction being a remedy, and not a
cause of action unto itself.
The core of the injunctive process is the prohibition, permanent or temporary, of conduct which
would interfere with the rights of others. The basis for granting this equitable relief is that
monetary compensation would be an inadequate remedy and that irreparable harm would result.
Equity further dictates that the court examine the balance of convenience between the parties.
A mandatory injunctive order is either restorative or preventive in nature and is made available
to protect an existing right: see Hon. Robert J. Sharpe, Injunctions and Specific Performance
(Canada Law Book 2005, paras 1- 10, i.570) A restorative order requires the respondent to repair
1
Jeffrey A. Kaufman is a partner at Fasken Martineau DuMoulin specializing in civil and commercial litigation
and privacy. Richard D. Butler is an associate at Fasken Martineau DuMoulin in the litigation and research
practice groups.
3
a situation consistent with the applicant’s rights.
A preventative order demands that the
respondent carry out an unperformed positive duty to act.
Mandatory injunctions, or mandatory orders2, are far less common than their prohibitory
brethren; and this is properly so. Obtaining a mandatory order requires additional considerations
including heightened requirements for precision in drafting and notice to parties, the potential for
advanced judicial supervision and problems with waste or unjust enrichment.
As a final
decision, a mandatory order may closely resemble (but is not the same as) specific performance.
At the interlocutory level, the classic focus on maintaining the status quo may not be applicable.
This is particularly the case in modern litigation where a well fought interlocutory motion may
extinguish the action.
Theoretically, the scope of injunctive relief is restrained only by the foundations of equity and
the discretion of the court.
On a more pragmatic level, injunctions - be they permanent,
temporary or interlocutory - are employed by advocates to modify the conduct of opposing
parties which have interfered, or will interfere, with the rights of their client. Mandatory orders
will always have practical utility given the increasing legal costs to the litigants, the substantial
delays inherent in the system and the requirement to deal with issues that well might become
moot prior to trial. The breadth of purpose of such orders and the flexibility of employment
ensures that injunctions remain a source of fascination for modern litigators.
2
For this paper, the terms mandatory injunction and mandatory order are used interchangeably.
4
2.
OVERVIEW OF INJUNCTIVE REMEDIES
a)
Classification
An injunction, being an order of the court, may be mandatory (positive) or prohibitive
(restrictive). A mandatory order requires a party to do a specific act, or to take positive steps. A
prohibitory injunction requires a party to refrain from doing. Generally, a mandatory order is
phrased in the positive - “the plaintiff seeks an order requiring the defendant to do”; with the
reverse being true for a prohibitory order - “the plaintiff seeks an order restraining the defendant
from doing”. However, it is trite to suggest that the boundary between positive and restrictive
relief is clear.
Mandatory orders are less common and more difficult to obtain than prohibitory orders,
particularly at the interlocutory stage, for reasons which will be explained below. Therefore,
counsel’s ability to reverse the proposition within which a prayer for injunctive relief is
contained can beneficially determine the legal standard to be met. For instance: “The plaintiff
seeks an order restraining the defendant from terminating the franchise agreement”; is this a
restrictive request or does it create a positive obligation to perform? Much will rest on the
court’s interpretation.
Injunctions can be classified by the time period by which they remain in force. A permanent,
final or perpetual injunction is a final judgment granted after a trial on the merits. It can be the
only component to the final judgment or it may be one ingredient in a more robust decision. A
claimant will be require to establish the existence of a justiciable right and the infringement of
that rights (or, in appropriate cases, an imminent threat of infringement).
5
An interlocutory injunction is an impermanent measure taken some time during the proceedings.
The authority for an interim injunction lies in the necessity of preserving the rights of a party
pending the ultimate result of the claim - this has often been referred to as keeping matters in
status quo until a final determination of the issues at trial. Interlocutory injunctions may also be
granted as an aid to preservation of evidence (Anton Pillar order3) or as an aid to enforcement
(Mareva injunction4).
Lastly, an injunction may be brought prior to the legal rights of the claimant having been
infringed, and in some circumstances, prior to pleadings. This type of injunction is referred to as
obtaining relief quia timet, meaning literally “because he fears”. The discretion for this type of
injunction is rooted in the belief that “…to prevent the jurisdiction of the courts being stultified
equity has invented the quia timet action, that is an action for an injunction to prevent an
apprehended legal wrong…”5. An order is made that includes injunctive relief without evidence
of actual harm to a plaintiff.
b)
Authority to Grant Injunctions
The authority to grant injunctions in Ontario and other forms of equitable relief is found in the
Courts of Justice Act6 (“CJA”). Part VII - Court Proceedings contains the subsection “Common
Law and Equity” within which Ontario courts are vested with the power to administer,
3
4
5
6
Anton Pilar orders originate from the matter Anton Piller KG v. Manufacturing Processes, [1976] 3 All E.R. 779
(C.A.). The basis of the order is preservation of evidence by requiring the defendant to permit entry to its
premises for the purpose of searching for and removing documents, or other items, relevant to the litigation.
Mareva injunctions originate from the matter Mareva Compania Naviera S.A. v. International Bulkcarriers Ltd.,
[1975] 2 Lloyd’s Rep. 509 (C.A.). Mareva, or “freezing orders”, enjoins the defendant from dealing with his or
her property prior to trial to ensure that such property is not dissipated in advance of judgment. This injunctive
remedy is an exception to the prohibition of “execution before judgment”.
Redland Bricks Ltd. v Morris, [1970] A.C. 652 (H.L.) per Lord Upjohn at pg. 664.
R.S.O. 1990, c. C.43.
6
concurrently, all rules of equity and the common law7. Equitable remedies include, inter alia,
rescission, rectification, specific performance and injunctions. Authority under section 99 of the
CJA also includes jurisdiction to award damages in addition to, or in substitution for, an
injunction or specific performance.
The authority to grant interlocutory injunctions, both mandatory and prohibitive, is found in
section 101 of the CJA. The language of section 101 affords discretion to grant such an order
“where it appears to a judge of the court to be just or convenient to do so.”; part (2) provides
further discretion to include such terms in the order as are considered just. This power is
codified in the Rules of Civil Procedure (the “Rules”) under r. 40 - Interlocutory Injunction or
Mandatory Order. This rule advances the technical requirements for seeking an interlocutory
injunction or mandatory order, including provisions for moving without notice, formalizing the
requirement of an undertaking as to damages and further necessitating factums as part of the
filed motion materials.
c)
Technical Requirements
Although an equitable remedy, there are a number of technical requirements for injunctions of
which parties should be aware.
First, a party seeking a permanent injunction must claim such relief in his or her pleadings and
such claim must be for a cause of action in law entitling him or her to substantive relief. For
example, an individual cannot obtain an injunction which prevents events from happening in the
7
Sections 96 through 100.
7
abstract8. Further, a private citizen may not obtain an injunction to prevent the commission of a
criminal offence, unless he or she can prove that they will suffer damage amounting to an
actionable tort9.
Similarly, it follows that there can be no interlocutory injunction obtained in a proceeding unless
a permanent injunction is claimed in the originating process. This is consistent with the language
of the seminal decision regarding interlocutory injunctions American Cyanamid Co. v. Ethicon
Limited10, wherein the House of Lords highlighted the principle that no interlocutory relief will
be granted where there is no prospect for a specific remedy being granted on a full trial of the
merits11. Further, in Cellular Rental Systems Inc. v. Bell Mobility Cellular Inc.12 the Divisional
Court found that the motions judge had no jurisdiction to grant the mandatory order against the
defendant directing it to continue to deal with the plaintiff as an approved agent pending the
disposition of the plaintiff's application. The Court found held that it was a “…fundamental
principal that in the absence of a pending proceeding, or an intended proceeding, in which a
permanent injunction is claimed, the Court has no jurisdiction to grant an interlocutory
injunction”13.
8
9
10
11
12
13
In Thorne v. BBC, [1967] 2 all E.R. 1225, the court refused an injunction restraining the BBC from broadcasting
anti-German programs, where the plaintiff had no cause of action.
MacMillan Bloedel Ltd. v. Simpson, [1996] S.C.J. No. 83; see the discussion at paras. 17 - 21.
[1975] 1 A.L.L. E.R. 504 (H.L.).
J. Sharpe, Injunctions and Specific Performance (Canada law Book: Loosefleaf Ed., November 2001), at 1.670,
states that this principle must be applied flexibly, citing Mareva injunctions and long term contracts as examples
where a final injunction or specific performance, respectively, would not necessarily have been granted
following a full trial on the merits; at para 2.570.
(1995), 23 O.R. (3d) 766 (Div. Crt.)
Ibid, at pg. 778.
8
Injunctions are usually granted only against a named party, however, occasionally orders are
made contra mundum (that is, against the whole world). In several cases involving protests or
other large groups of people the court has been willing to extend an interlocutory order
restraining trespass to persons unknown. The process by which the sheriff or local police
enforce the order provides notice to persons unknown at the time the order is granted, but
included by the wording of the pleadings and order14.
Rule 40.03 requires that a moving party, be it the plaintiff or defendant in the main action, give
an undertaking as to damages. The moving must undertake to abide by any order concerning
damages that the court may make if it is ultimately appears that the granting of the injunctions
causes damage to the responding party.
The purpose of this requirement is to protect
respondents from the consequences that may flow if an interlocutory order is granted upon a
factual basis which is later found, following a more thorough review by the trier of fact, to be
without merit.
3.
MANDATORY ORDERS APPLICABLE GENERAL PRINCIPLES
The most common form of injunction is a prohibitive order which restrains the defendant from
committing a specific act. Prohibitive injunctions are more readily granted than mandatory
injunctions, the general belief being that prohibitive orders are easier to define and to enforce
than positive ones15. According to David Bean, “By granting a prohibitory injunction the court
14
15
MacMillan Bloedel Ltd., supra note 9; see also Henco Industries Ltd. v. Haudenosaunee Six Nations
Confederacy Council, [2006] O.J. No. 4790.
Sharpe, supra note 11, at 1.30.
9
does not more than prevent for the future the continuance or repetition of the conduct of which
the claimant complains.”16
A mandatory injunction has been broadly described as an order which requires a respondent not
to continue some wrongful omission; or to undo the consequences of a wrongful act.17 Case law
in Canada supports this the dual purpose of requiring a respondent (a) to ensure the performance
of a duty owed by the defendant; or (b) a positive act is required so as to correct a past wrong or
restore the applicant’s rights.18
The discretion to award mandatory injunctions is governed by the same principles which apply to
restrictive injunctive relief. There must exist a right coupled with circumstances which make it
equitable to grant the order.19 The analysis is altered only by the fact that a mandatory order
requires the defendant to undertake a positive course of action.
a)
Inadequacy of Damages
Common to both mandatory and prohibitive injunctions is the traditional principle of the
inadequacy of damages. In some circumstances, courts have found prima facie that an injunction
is not available to restrict actionable wrongs if the claimant can be fully compensated by an
award of damages. This is consistent with the position that specific performance of a contract,
being a form of permanent mandatory order, will not be ordered when damages are an adequate
remedy.20
16
17
18
19
20
David Bean, Q.C., Injunctions, 8th ed. (Toronto: Carswell, 2005) at pg. 21.
John McGhee, Q.C., Snell’s Equity, 31st ed. (Toronto: Carswell, 2004) at 16-03.[herein Snell]
Sharpe, supra note 11, at 1.10.
McGhee, supra note 17, at 16-06.
Co-operative Insurance Society Ltd v. Argyll Stores, [1998] AC 1; [1997] All ER 297
10
Justice Sharpe states “… it is not possible to define the inadequacy of damages in a precise way.
It is a vague principle which takes shape depending upon the context.”21; meaning that whether
damages are inadequate can only be ascertained based on a review of the factual matrix, the
issues presented for adjudication, as well as the specifics of the order sought.
There are some situations where courts generally accept that damages, as a remedy will be
inadequate, and an injunction may flow “as of course” and irreparable harm need not be proved.
One example is when the parties have agreed or contracted as to their own remedy and the
defendant is in breach of a valid express negative covenant. The classic statement of this
principle come from Doherty v. Allman, 22 which has since been adopted in Canada:
"My Lords, if there had been a negative covenant, I apprehend, according to wellsettled practice, a Court of Equity would have had no discretion to exercise. If
parties, for valuable consideration, with their eyes open, contract that a particular
thing shall not be done, all that a Court of Equity has to do is to say, by way of
injunction, that which the parties have already said by way of covenant, that the
thing shall not be done; and in such case the injunction does nothing more than
give the sanction of the process of the Court to that which already is the contract
between the parties. It is not then a question of the balance of convenience or
inconvenience, or of the amount of damage or by injury -- it is the specific
performance, by the Court, of that negative bargain which the parties have made,
with their eyes open, between themselves."
Another example of the inadequacy of damages is where the property rights of a plaintiff are
infringed, and such interference is likely to continue. An injunction is often considered to be the
proper remedy for the torts of trespass or nuisance where “… the conventional primacy of
21
22
Sharpe, supra note 11, at 1.70
Doherty v. Allman (1878) 3 App. Cas. 709, as quoted in Sharpe, ibid, at 9.10 and adopted in Hardee Farms
International Ltd. v. Cam & Crank Grinding Ltd. et al., [1973] 2 O.R. 170, and later by McLachlin J., as she then
was, in Montreal Trust Co. v. Montreal Trust Co. of Canada(1988), 48 D.L.R. (4th) 385.
11
common law damages over equitable relief is reversed.”23 This is particularly so where a refusal
of an injunction could constitute denial of an attribute of ownership, such as quiet enjoyment,
where the court can be said to be responsible for licensing the infringement of property rights to
those who are willing and able to afford the damage award.
The behaviour of the parties, or the consequences of their action, can lead to a finding that
damages will be inadequate. Where the defendant acts in a high-handed manner, or attempts to
steal a march upon the claimant, or evade the jurisdiction of the court, an injunction will be
appropriate24. Similar to the rationale regarding property rights, the defendant may not buy the
privilege of infringing the claimant’s rights.
b)
The Balance of Convenience Requisite
Since specific remedies can be more intrusive than an award of damages, consideration of the
benefit to the plaintiff weighed against the burden to the defendant is appropriate.
This
balancing is an inherent component of any discretionary decision to award equitable remedies.25
This need to balance benefit versus burden exists even when one is prima facie entitled to
injunctive relief for infringement of property. Shelfer v. City of London Electric Lighting Co.26
was a nuisance case in which the lower court awarded an injunction to restrain noise and
vibrations created by the defendant’s generators.
Although the injunction was worded as
restrictive, in a nuisance case the actual impact on the factory, being an alteration of machinery
and manufacturing processes, is tantamount to a mandatory order. The House of Lords upheld
23
24
25
Sharpe, supra note 11, at 4.10 & 4.20.
Redland Bricks Ltd , supra, note 5; see also Gross v. Wright,[1923] S.C.R. 214, infra.
Snell, supra, note 17 at 16-12.
12
the injunction, but in doing so examined contextual factors that could, in some circumstances,
provide for a remedy in damages rather than an injunction. The Lords agreed that (i) if the injury
to the claimant’s legal rights is small, (ii) the injury is one which is capable of being estimated in
money, (iii) the injury is one which can be adequately compensated by a small money payment;
and the case is one in which it would be oppressive to the defendant to grant an injunctions - then
damages in substitution for an injunction may be given.
Canadian courts, while generally following Shelfer, tend to demonstrate a more flexible approach
and engage in a greater cost/benefit analysis. One of the leading cases, Canada Paper Co. v.
Brown27 illustrates the balanced approach of Canadian authorities. In Canada Paper, the plaintiff
complained that sulphate fumes emanating from the defendant’s pulp and paper factory
interfered with enjoyment of his property. For this review the authors note and contrast the
decisions of Idington J. and that of Duff J, both of whom agreed that the appropriate remedy was
an injunction, but for different reasons.
While Idington J. followed the traditional U.K.
approach, Duff J. expanded the analysis in Shelfer to consider the burden to the mill that the
injunction would impose. Duff J. held that:
“An injunction will not be granted where, having regard to all the
circumstances, to grant it would be unjust; and the disparity between the
advantage to the plaintiff to be gained by the granting of that remedy and the
inconvenience and disadvantage which the defendant and others would suffer in
consequence thereof may be a sufficient ground for refusing it.”28
26
[1895] 1 Ch. 287; as cited in Sharpe, supra note 11, at 4.130
(1921), 63 S.C.R. 243.
28
Ibid. at page 252.
27
13
The Ontario Court of Appeal recently addressed this balance in Bellini Custom Cabinetry
Ltd. v. Delight Textiles Ltd.29 The Court agreed with the trial judge that despite the appellants
submission that a mandatory order removing an encroaching wall would be oppressive, the
appellants led no proper evidence as to the cost. The encroachment of the wall constituted a
direct interference with the respondent's property rights, and the trial judge held (with which the
Court of Appeal agreed) that the trespass was likely to worsen. The trail judge cites Shelfer as
the authority on striking a balance between damages and a mandatory order. Despite a suggested
a figure of $220,000, there was no evidence of their ability to pay, or whether the mandatory
order would be oppressive in that context, especially considering the already poor state of the
wall.
4.
INTERLOCUTORY MANDATORY ORDERS
The purpose of an interlocutory injunction is to ensure that the rights of the plaintiff, asserted in
the main action, may be enforced by the court in the event that the action ultimately succeeds.
Interlocutory injections are granted with a view to preserving the status quo, to
assuring that the subject matter of the litigation is not destroyed or irreversibly
altered before trial, and to protect the rights of the plaintiff as set up in the action
from being defeated by some act of the defendant before trial.30
Interlocutory injunctions are commonly referred to as being granted to preserve the status quo,
however, Sharpe J. questions whether this phraseology is appropriate.31
What should be
addressed during a motion for interlocutory relief is not the state of affairs between the parties,
29
[2007] O.J. No. 2179 (Ont. C.A.)
Cellular Rental Systems Inc., supra note 12 at para. 30, citing City of London v Talbot Square Ltd. (1978), 22
O.R. (2d) 21 at 29-30.
31
Sharpe, supra note 11, at 2.550.
30
14
but the alleged rights of the plaintiff which will be the subject matter for determination at trial.
At the interlocutory stage, the Court is granting an injunction to protect the plaintiff from some
irreparable injury for which damages are inadequate, at a time when those rights are still
uncertain32.
Experienced counsel will be familiar with the more specific test described by the House of Lords
in American Cyanamid Co. v. Ethicon Limited, adopted by the Supreme Court in R.J.R.MacDonald Inc. v. Canada (Attorney General)33 for granting an interlocutory injunction,
reproduced herein for completeness:
1.
Serious issue to be tried – whether a preliminary assessment of the plaintiff’s
claim discloses a serious issue to be tried on its merits?
2.
Irreparable harm – would the applicant suffer irreparable harm if the injunction is
not granted?
3.
Balance of convenience – which of the parties would suffer the greater harm from
the granting or refusing of the injunction pending a decision on the issue?
The focus of this paper is mandatory orders, so a complete review of interlocutory injunctions is
unnecessary. Instead, below, are instances and case law that deals with mandatory interlocutory
injunctions and the way in which the analysis modifies the R.J.R. test.
a)
Test for Interlocutory Mandatory Orders
A leading decision on Ontario regarding interlocutory mandatory orders is Ticketnet Corp. v. Air
Canada34. In this case, the parties sought to restrain one another regarding the rights to develop
and use ticket reservations software. Ticketnet also sought a mandatory order compelling Air
32
33
American Cyanamid Co., supra note 10.
[1994] 2 S.C.R. 311. [herein R.J.R.]
15
Canada to deliver copies of the software that were in development.
The Motions Judge
concluded that to grant an injunction, he had to be able to find there was a “high degree of
assurance that at the trial it will appear that the injunction was rightly granted”.35 The Motions
Judge in Ticketnet refused to award a mandatory order, finding that there was no agreement
between the parties.
In his review of the matter, and contrary to the direction provided the Supreme Court in R.J.R.,
the motions judge engaged in an exhaustive examination of the merits and made detailed
findings of fact.36 These authors support the detailed analysis undertaken in Ticketnet and query
how a court could avoid a more significant review of the facts given obvious requirement of
precision in the drafting of a mandatory order, described in more detail below. The requirement
of precision, and fair notice to the party obligated to undertake a positive course of action, will
generally require that when seeking a mandatory order the court should undertake a more
thorough review of the facts.
Ticketnet stands for the proposition that the test for a mandatory interlocutory injunction is
higher than that of a interlocutory prohibitive injunction. A higher standard may also exists for
cases where the granting of an interlocutory injunction would amount to an effective, final
determination of the action37. In Ticketnet the test was “a high degree of assurance”. Courts
have used a number of ways of expressing this test, some of which imply a very stringent review
of the plaintiff’s chance of success at trial. For example:
34
(1987) 21 C.P.C. (2d) 39
Ibid., at para 15.
36
R.J.R. at pg. 337-338.
37
Ibid.
35
16
“almost certain to succeed” - Barton-Reid Canada Ltd. v. Alfresh Beverages Canada
Corp.38
“strong and almost certain to succeed” - Grewal v. Conservative Party of Canada39
“strong prima facie case” - Toronto (City) v. Republic Services Inc.40
Naturally, good counsel will understand the significance of being found to be seeking a
prohibitory injunction rather than a mandatory injunction and falling under the less onerous test.
A leading case on the difference between positive and negative orders is TDL Group Ltd. v.
106028441. TDL appealed an order enjoining it from evicting the defendants arguing that the
order was mandatory and the motions judge erred by failing to use the standard of a strong prima
facie case. Despite the prohibitory form, TDL argued that because it required the franchisor to
continue to do business with the defendant, which is did not wish to do, this was a mandatory
order.
The Divisional Court reviewed a number of authorities that stand for the proposition that
requiring parties to continue business constitutes a mandatory order, including Parker v.
Canadian Tire Corp.42, where Sharpe J. refuses a motion by the plaintiff for an interim
injunction requiring that Canadian Tire not to evict him from his store and to continue supplying
him with goods. In Parker, Sharpe J. looked beyond the prohibitory language of the relief to the
underlying order to be made: an order requiring continuation of a business relationship forcing
38
39
40
41
[2002] O.J. No. 4116 (Ont. Sup. Ct.)
[2004] O.J. No. 2299.
[2006] O.J. No. 3184 (Ont. Sup. Ct).
[2001] O.J. No. 3614 (Div. Crt.)
17
the defendant to continue working with a franchise dealer they do not want to have. While the
nature of the plaintiff’s harm could be described as irreparable or immeasurable, taking all
factors into account, Sharpe J. found that the balance of convenience did not favour injunctive
relief.
The authors agree with the decision in Parker, supra, that the court ought to take into
consideration the practical implications of ordering two parties to contract with one another
when one party has expressed a clear desire to end the relationship. While it may possible to
contemplate circumstances in which parties should be held to their bargain, in only the clearest
of cases should the court intervene to order parties to extend a contract that has reached the end
of its term or as been properly terminated. One can imagine the chaos that can occur as a result
of court-ordered contracts that no longer represent the intentions of the parties and fail to
properly allocate market risk.
The Divisional Court distinguished Parker stating that the facts in the case at hand did not
require the higher standard, since the court was not being asked to create rights not contemplated
by the parties in their contract.
“In prohibiting the franchiser from taking steps to evict the defendants or
interfering with the ordinary course of the business, the court is enforcing a right
created by the parties. An order preventing the denial of a right previously agreed
to is very different from an order establishing a new right never agreed to and
requiring a party to act accordingly. In our view, this order was not a mandatory
injunction. Its essence is the prohibition of what is alleged to be a breach of
contract. That one effect of this is to require both parties to act in accordance
with their contract while the dispute is being tried, does not change the essence of
42
[1998] O.J. No. 1720
18
the matter. It follows, therefore, that Mesbur J. committed no error in applying the
R.J.R.-MacDonald test.”43
Interestingly, TDL can be contrasted with Barton-Reid44 where Mesbur J., also the motions judge
in TDL, held that an injunction restraining the defendants from terminating an exclusive
distribution agreement with the plaintiff was mandatory. In Barton-Reid45 the court considered
whether to grant an order forcing the parties to continue a relationship when there was a
complete lack of trust between them. In this case the court, properly in the opinion of these
authors, refused to enjoin the defendant and require them to continue supplying a plaintiff who it
appeared had purposely breached the distribution agreement. A failure to provide very strong
evidence of irreparable commercial harm should be fatal to the motion for mandatory
interlocutory relief, as was the case in Barton-Reid.
By requiring the parties continue contracting in TDL, even if such legal rights were contemplated
in the agreement, TDL expands the scope and definition of prohibitory remedies. Previously, we
have seen courts restrain parties from contracting with any other party as part of prohibitory
order. This does no more than require the enjoined party to contemplate whether it wishes to do
business with the moving party who obtained the injunction, or none at all.46 However, the
decision in TDL goes one step further by requiring the defendant to actively engage in business
with the plaintiff; there is no room for inactivity on the part of the defendants. The Divisional
Court in TDL accepts that the parties are being ordered to contract with one another, but
maintains that so ordering does not change the “essence of the matter”.
43
Ibid., at para. 9.
Supra, note 37.
45
Supra, note 23.
44
19
The rationale from TDL has been followed by a number of decisions where the court adopts the
lower prohibitory-order test to enjoin one of the parties from ceasing to perform its obligations
under a contract. In Erinwood Ford Sales Ltd. v. Ford Motor Co. of Canada
47
the court held
that where a party sought to prevent early termination of a dealer agreement, the party was not
asking the court to create a new right, but rather to preserve the status quo. This would leave the
issue of whether or not the termination was proper for the trier of fact. In Look Communications
Inc. v. Bell Canada48, the court followed TDL, and held that an order that establishes new rights,
never agreed to by the parties, is mandatory; while an order requiring the parties to act in
accordance with an agreement is prohibitory.
These decisions follow the proposition from TDL that an injunction requiring the parties to
continue contracting will be granted under the more lenient prohibitory injunction test so long as
the parties to the contract have agreed to the terms which the moving party seeks to enforce.
Contrast these decisions with Toronto (City) v. Republic Services Inc.49 wherein Swinton J.
refused to order that the defendants receive Toronto’s biosolid waste to their Michigan landfill
site, pursuant to a contract to provide waste services. In this case, the defendant was required to
meet the more stringent test of a strong prima facie case in order to succeed. Given the potential
complexities involved in supervising the order Swinton J. found it unlikely a court, following a
hearing on the merits, would be willing to order specific performance rather than damages.
46
47
48
49
This is referred to as the “Doherty v. Allman” principle by Sharpe, at para. 9.70;
[2005] O.J. No. 1970 at paras. 55 and 61.
[2007] O.J. No. 2995 at para 12.
Supra, note 39.
20
Swinton J., as part of an analysis of the balance of convenience, refused to craft a technical
mandatory order requiring technical, and ongoing, engineering and environmental compliance.
These authors believe that the expansion of a the prohibitory injunction test to force parties to
contract with one another is akin to the granting a temporary form of specific performance
without a full investigation of the availability of this equitable remedy.50 Given the present day
realities of litigation, including costs of preparation and the time between the interlocutory
decision and trial, a grant of “temporary” specific performance may not, in reality, be temporary.
The authors submit that it should be a rare event that an order requiring parties to contact with
one another be decided using the prohibitory injunction-test rather than the more stringent
mandatory injunction-test.
5.
SPECIAL CONSIDERATIONS FOR MANDATORY ORDERS
Courts are more reluctant to grant mandatory orders51.
Although the general principals
governing the availability of injunctive relief apply, the very fact of requiring a positive course of
action to either take steps to repair or carry out a future act - raises special problems. These
issues were addressed by the House of Lords in Co-operative Insurance Society Ltd. v. Argyll
Stores (Holdings) Ltd, supra52 in which Lord Hoffman reviewed the law relating to, and cited a
number of considerations for, the granting of permanent mandatory orders.
50
51
52
See Sharpe, supra note 11, at para. 7.410 where he quotes from Williston on Contracts.
The first circumstance in which mandatory injunctive relief could be granted, as outlined in Redland Bricks,
supra, per Lord Upjohn, is “…where the plaintiff shows a very strong probability upon the facts that grave
damage will accrue to him in the future.... It is a jurisdiction to be exercised sparingly and with caution but in the
proper case unhesitatingly.” at page 665.
Supra, note 20.
21
a)
Precision
First, Lord Hoffman addressed the point that imposition of an obligation to act positively
necessarily requires improved precision, by the court, in defining the relief ordered. This was
also addressed in Morris v. Redland Bricks Ltd, wherein Lord Upjohn held that “… the court
must be careful to see that the defendant knows exactly what he has to do, and this means not as
a matter of law, but as a matter of fact.” 53
The need for precision in crafting a mandatory order was a significant part of the decision in
Mandrake Management Consultants Ltd. v. Toronto Transit Commission54 in the context of a
nuisance suit. The Superior Court issued a permanent mandatory order to effect the alteration of
the TTC subway system in an effort to reduce noise and vibrations causing disturbance to the
offices of the plaintiff consulting firm. The Court of Appeal overturned the order finding that no
actionable nuisance existed. Galligan J. further commented on the difficulties associated with
the Court mandating a change to a complex system such as the Toronto subway. In Mandrake,
the Court of Appeal was concerned with judicial intervention into an area requiring technical
expertise:55
An injunction is a discretionary remedy. In a case such as this one, I would expect
that a mandatory injunction requiring the alteration of a complex subway system
would be made only after carefully balancing the harm which would occur if the
order were not made with the harm which the making of such an order could
cause to the public at large.
A public transit system like the Toronto subway is an incredibly complex thing.
This subway was planned after meticulous study and wide consultation. Experts
53
Supra, note 5, at page 666.
54
[1993] 102 D.L.R. (4th) 12 (Ont. C.A.);
55
Ibid at pages 42 & 43.
22
in the fields of transportation, construction and safety had input into its design,
construction and operation. The courts have none of that expertise and should be
reluctant indeed to remove a part of that system particularly when, as in this case,
the suggestion to do so came on its own motion.
While I am not prepared to say that there could never be a case where a court
might be entitled to order a change in the structure or operation of a public transit
system I would think a court would only do so in circumstances where it was
responding to the infliction of serious harm to many people and where it was clear
that the order could not possibly compromise the safety or efficiency of the
system. This is not such a case. This mandatory order should not have been made.
b)
Ongoing Supervision
Second, where a mandatory order requires ongoing or complex performance by a defendant the
Court will not grant an injunction.56 In Co-operative Insurance Society Ltd, Lord Hoffman
describes a distinction between mandatory orders which require a defendant to carry on an
activity and mandatory orders which require her to achieve a result. In his analysis:
“The possibility of repeated applications for rulings on compliance with the order
which arises in the former case [carry on activity] does not exist to anything like
the same extent in the latter [achieve result]. Even if the achievement of the result
is a complicated matter which will take some time, the court, if called upon to
rule, only has to examine the finished work and say whether it complies with the
order.
While there may be some reluctance by the court to undertake constant supervision of litigants’
business, the modern Superior Court does not generally shy away from case management. The
Supreme Court of Canada has affirmed the power of a trial judge to make an order requiring
ongoing supervision. In Ducette-Budreau v. Nova Scotia (Minister of Education)57 a group of
francophone parents applied to the Court for an order directing the province to provide French
56
West Nipissing Economic Development Corp. v. Weyerhaeuser Co. [2002] O.J. No. 4731.
23
language school facilities. The Supreme Court overturned the Court of Appeal and held that the
trial judge was correct in ordering the Province to build schools and provide programs for
francophone students. The trial judge retained jurisdiction to monitor compliance and receive
progress reports. The Supreme Court concluded that the remedy was appropriate since it was
crafted specifically to ensure prompt compliance with the Charter and required in light of the
critical rate of assimilation of francophone students. The reporting requirements were not so
vague as to be invalid.
A more recent example of ongoing court supervision of injunctive remedies is Platinex v.
Kitchenuhmaykoosib Inninuwug First Nation58. Although the matter was heard at the interim
and interlocutory levels, the dispute provides a good example of the modern civil court managing
numerous parties and complex facts through mandatory orders. In this matter, the court took the
unprecedented step of ordering the parties to the negotiation table when they could not establish
terms of an agreement amongst themselves, and further managing consultation, thereby
rendering a hearing of the main action effectively moot.
This dispute involved both parties seeking injunctions: Platinex sought access to their mining
claims and the KI Nation sought to restrain any exploration of the property. Platinex, the junior
mining company sought an injunction against the KI First Nation to prevent their interference
with mineral exploration. The KI First Nation sought an injunction against Platinex to block
their exploration until there was consultation and negotiations regarding their aboriginal rights.
Smith J. took carriage of the matter and issued an “interim, interim” injunction preventing any
57
58
[2003] 3 S.C.R. 3.
272 D.L.R. (4th) 727 (Ont. S.C.)
24
exploration activity until the hearing of the interlocutory motion. The interim, interim injunction
was conditional on two points59:
1.
KI forthwith releasing to Platinex any property removed by it or its
representatives from Platinex’s drilling camp located on Big Trout Lake and this
property being in reasonable condition failing which counsel may speak to me
concerning the issue of damages;
2.
KI immediately shall set up a consultation committee charged with the
responsibility of meeting with representatives of Platinex and the Provincial
Crown with the objective of developing an agreement to allow Platinex to conduct
its two-phase drilling project at Big Trout Lake but not necessarily on land that
may form part of KI’s Treaty Land Entitlement Claim.
Smith J. also waived the requirement of a undertaking for damages stating that denial of
injunctive relief due to the inability of the KI First Nation to undertake to pay damages of the
magnitude claimed by Platinex’s was unjust.60
Several months later, following the hearing of the motion for an interlocutory injunction, Smith
J. dismissed the injunction, but issued a declaratory order.61 Under the authority afforded by s.
97 of the CJA, he required the parties to continue negotiations, in good faith, including drafting a
consultation protocol, timetable, and Memorandum of Understanding for mineral exploration.
The declaratory order, allowed court to stay involved as development progressed, allowed the
parties to return to court and seek whatever order(s) were necessary whenever agreement and
accommodation could not be reached. Smith J. held that “[o]ngoing supervision will serve to
59
60
61
Ibid, at para 139.
Ibid, at paras. 119-124.
2007 CanLII 16637 (ON S.C.).
25
promote a more precise balancing of the rights of the parties, with the ultimate goal of with
achieving fairness.”
c)
Deliberateness of Defendant’s Conduct
In addition to balancing the benefits and costs to each party, mandatory injunctions may require
the balancing of circumstances which nevertheless require positive acts by the defendant to put
matters right. Where the added cost to the defendant is significant, it may be appropriate to
consider the extent of the defendant’s blameworthiness. For example, a defendant who has
behaved “unscrupulously” will be given less consideration than one who has behaved without
fault.62 In Redland Bricks, Lord Upjohn addressed the distinction between a defendant who has
acted reasonably and one who has acted without regard to the complainant’s rights. The conduct
of the defendant will also be relevant to situation where a party has tried to “steal a march”, or
attempts to evade the jurisdiction of the courts.63
In Gross v. Wright64, the Supreme Court of Canada upheld a mandatory order requiring the
demolition of a partly wall built where it appeared that the defendant had deliberately deceived
the plaintiff and gained access to his property to construct the wall in a manner which violated an
agreement between the parties and very much favoured the defendant.
Although on the
plaintiff’s side, the wall had been constructed in a manner consistent with the agreement, the
defendant had reduced its thickness on his own side.
The Supreme Court found that the
behaviour of the respondent was so egregious as to constitute not only a breach of contract, but
also the tort of trespass. While the loss to the plaintiff was insubstantial the Court held the
62
63
Redland Bricks, supra, note 5.
Co-operative Insurance Society Ltd., supra
26
deliberate and deceitful nature of the defendant’s conduct required that the wall to be brought
down, despite the possibility of waste.
Similarly, the defendant who acts in the face of a firm warning that the plaintiff intends to assert
his or her rights is clearly less entitled to plead that the burden of restoring matters ought not to
be imposed than the defendant who proceeds innocently and without warning.65
Many
prospective defendants tend to ignore or discount such warning letters, even though there is a
judicial basis for the provisions of such warnings. Caution should therefore be exercised by
counsel even at this early stage.
d)
Vigilance of the Plaintiff
On the other hand, a plaintiff that fails to act early on may find themselves in an equally
precarious situation. A plaintiff who fails to assert his or her rights may be less entitled to later
insist that the defendant bear the burden of restoration.
Expense incurred, or goodwill
accumulated, by the defendant that could have been avoided had the plaintiff acted with haste are
properly taken into account by a reviewing court.66
This is consistent with Justice Sharpe’s analysis of the burden and benefit of mandatory
injunctions. An injunction granted before the defendant has commenced the wrongful activity
will impose a minimum burden. The defendant will have incurred no costs and expended little
64
65
66
[1923] S.C.R. 214.
Smith v. Day (1880) 13 CH. D. 651, as cited in Sharpe, supra note 11.
D. Bean, supra, note 16 at 2.25.
27
or no effort before being stopped67.
By allowing the defendant to continue, a restorative
mandatory order becomes more costly and, as a result, more difficult to obtain.
Take, for example, the ruling in Jaggard v. Sawyer68, where the defendants built a house at the
end of a private cul-de-sac. When the building work began, the claimant threatened, but did not
make, an application for an interim injunction to enforce covenants prohibiting access over her
part of the cul-de-sac. Millett J. stated that if the claimant had applied for an interlocutory
injunction at an early state she would have almost certainly obtained it. He cited a collection of
U.K. cases where injunctions were granted to restrain cranes and other trespasses to airspace,
wherein the grant of an injunction restored the parties to the same position with the same
bargaining strength, as before the act of trespass. The judge’s decision to refuse the injunction
was based on the Shelfer framework, finding that the benefit to the plaintiff was outweighed by
the waste and burden to the defendants. By the time of trial the building was complete, and a
mandatory injunction removing the building was held to be oppressive.
e)
Balance of Convenience
A mandatory order may in itself cause a significant shift in the balancing of burden to the
plaintiff versus benefit to the defendant. An order to take positive steps to set matters right an
involve not only sacrificing costs already incurred, but include the imposition of additional costs
which will be incurred by that positive course of action. Significant evidence may be required to
67
68
Sharpe, supra note 11 at 1.530.
[1995] 1 W.L.R. 268. (C.A.)
28
properly assess the situation. This proposition was summarized in Charrington v. Simmons &
Co. Ltd.69:
Different considerations may, I think, arise in a case where the court has to
consider whether a defendant should be compelled by a mandatory order to
remedy a breach of contract which he has committed from those which would
arise if the question were whether the court should restrain a threatened breach of
contract. …
Where a mandatory order is sought the court must consider whether in the
circumstances as they exist after the breach a mandatory order, and, if so what
kind of a mandatory order, will produce a fair result. In this connection the court
must, in my judgment, take into consideration amongst other relevant
circumstances the benefit which the order will confer on the plaintiff and the
detriment which it will cause the defendant. A plaintiff should not, of course, be
deprived of relief to which he is justly entitled merely because it would be
disadvantageous to the defendant. On the other hand, he should not be permitted
to insist on a form of relief which will confer no appreciable benefit on himself
and will be materially detrimental to the defendant. [emphasis added]
The significance of balancing burden and benefit and the different treatment accorded prohibitive
and mandatory injunctions is well illustrated by cases dealing with express negative covenants.
Where the defendant has expressly undertaken not to do something, a prohibitive injunction
stopping him or her from pursuing that action will often be granted70. In theory, there will be
little burden placed on the defendant by restraining him or her before they have acted, and proof
of irreparable harm may not be required.
However, where the plaintiff sues for a mandatory order after the defendant has violated the
agreement the court may be reluctant to impose positive obligations.71 Even though the plaintiff
69
[1970] 1 W.L.R. 725; adopted and quoted in Esmail v. Petro-Canada, [1995] O.J. No. 3515 (Gen. Div.).
Doherty v. Allman, supra note 22.
71
Charrington v Simons & Co. Ltd, supra, note 49.
70
29
may word the relief for injunctive relief as an express negative covenant, such a restorative
mandatory order is, in fact, a request for specific performance of a contract. This is logical since
specific performance of a contract is also an equitable remedy based on the inadequacy of
damages recoverable for the breach.
Sharpe explains this point72:
The strength of the distinction between negative and positive obligations would
appear to rest both on the nature of the burden imposed and upon the ease of
enforcement. The essence of a negative obligation in this context is that the
defendant is restrained from doing one particular and specific act or activity. The
argument in favour of specific relief is that, by forbidding the doing of that act,
the defendant is free to do anything else and the obligation is both readily
enforceable and relatively unburdensome because of the agreement. The essence
of enforcing a positive obligation is to require the defendant to undertake a certain
specific course of action. Whether the court is asked to do this by a specific
performance decree requiring that act to be carried out or by way of an injunction
restraining the defendant generally from doing anything else which is inconsistent
with that obligation should not matter. The important point is that a certain
positive course of action is required and principles governing the availability of
specific performance should not be circumvented on the basis of form wording of
the obligation or of the order the court is asked to make.
6.
CONCLUSION
Obtaining a mandatory order is, generally, more difficult than obtaining a prohibitory order. The
discussion above outlines many of the reasons for this higher threshold. Ordering a party to take
positive steps, expend money and engage in a business relationship properly requires a higher
standard of review than ordering a party to refrain from acting. These authors submit that any
trend to reduce the legal standard by which parties can be required to engage or maintain in a
contractual relationship with one another should be avoided. Further, the court should look past
72
Sharpe,supra note 11 at 9.100.
30
the form of the relief requested and understand the practical implications of the order sought by
the plaintiff/applicant. An injunction is an extraordinary remedy in any event. An injunction
that creates new obligations or contractual relations should be reviewed with even more
stringency.
31
TABLE OF AUTHORITIES
1. Anton Piller KG v. Manufacturing Processes, [1976] 3 All E.R. 779 (C.A.).
2. Mareva Compania Naviera S.A. v. International Bulkcarriers Ltd., [1975] 2 Lloyd’s Rep.
509 (C.A.).
3. Redland Bricks Ltd. v Morris, [1970] A.C. 652 (H.L.)
4. Courts of Justice Act, R.S.O. 1990, c. C.43.
5. Thorne v. BBC, [1967] 2 all E.R. 1225
6. MacMillan Bloedel Ltd. v. Simpson, [1996] S.C.J. No. 83.
7. American Cyanamid Co. v. Ethicon Limited, [1975] 1 A.L.L. E.R. 504 (H.L.).
8. Injunctions and Specific Performance (Canada law Book: Loosefleaf Ed., November
2001)
9. Cellular Rental Systems Inc. v. Bell Mobility Cellular Inc. (1995), 23 O.R. (3d) 766 (Div.
Crt.)
10. Henco Industries Ltd. v. Haudenosaunee Six Nations Confederacy Council, [2006] O.J.
No. 4790.
11. David Bean, Q.C., Injunctions, 8th ed. (Toronto: Carswell, 2005).
12. John McGhee, Q.C., Snell’s Equity, 31st ed. (Toronto: Carswell, 2004)
13. Co-operative Insurance Society Ltd v. Argyll Stores, [1998] AC 1; [1997] All ER 297
14. Doherty v. Allman (1878) 3 App. Cas. 709
15. Hardee Farms International Ltd. v. Cam & Crank Grinding Ltd. et al., [1973] 2 O.R. 170
16. Montreal Trust Co. v. Montreal Trust Co. of Canada(1988), 48 D.L.R. (4th) 385.
17. Shelfer v. City of London Electric Lighting Co, [1895] 1 Ch. 287
18. Canada Paper Co. v. Brown (1921), 63 S.C.R. 243.
32
19. Mandrake Management Consultants Ltd. v. Toronto Transit Commission, [1993] 102
D.L.R. (4th) 12 (Ont. C.A.);
20. West Nipissing Economic Development Corp. v. Weyerhaeuser Co., [2002] O.J.
No. 4731.
21. Toronto (City) v. Republic Services Inc., [2006] O.J. No. 3184.
22. Ducette-Budreau v. Nova Scotia (Minister of Education), [2003] 3 S.C.R. 3.
23. Platinex v. Kitchenuhmaykoosib Inninuwug First Nation, 272 D.L.R. (4th) 727 (ON
S.C.); and also 2007 CanLII 16637 (ON S.C.).
24. Gross v. Wright, [1923] S.C.R. 214.
25. Smith v. Day (1880), 13 CH. D. 651.
26. Jaggard v. Sawyer, [1995] 1 W.L.R. 268. (C.A.).
27. Charrington v. Simmons & Co. Ltd., [1970] 1 W.L.R. 725;
28. Esmail v. Petro-Canada, [1995] O.J. No. 3515 (Gen. Div.).
29. Parker v. Canadian Tire Corp.,[1998] O.J. No. 1720.
30. City of London v Talbot Square Ltd. (1978), 22 O.R. (2d) 21 at 29-30.
31. R.J.R.-MacDonald Inc. v. Canada (Attorney General), [1994] 2 S.C.R. 311.
32. Grewal v. Conservative Party of Canada, [2004] O.J. No. 2299.
33. Ticketnet Corp. v. Air Canada (1987), 21 C.P.C. (2d) 39
34. Barton-Reid Canada Ltd. v. Alfresh Beverages Canada Corp., [2002] O.J. No. 4116 (Ont.
Sup. Ct.).
35. TDL Group Ltd. v. 1060284, [2001] O.J. No. 3614 (Div. Crt.).
36. Erinwood Ford Sales Ltd. v. Ford Motor Co. of Canada, [2005] O.J. No. 1970 (Ont. Sup.
Ct).
37. Bellini Custom Cabinetry Ltd. v. Delight Textiles Ltd.,[2007] O.J. No. 2179 (Ont. C.A.)
38. Look Communications Inc. v. Bell Canada, [2007] O.J. No. 2995 (Ont. Sup. Ct)