LITIGATION
Injunctions in Commercial Litigation: When the Court Must Act Quickly?
In some disputes, obtaining a judgment years later is not enough. If assets are being dissipated, confidential information is at risk of disclosure, or a party is taking steps that could permanently damage a business, the court may grant an injunction to preserve the status quo until the dispute can be resolved.
An injunction is an extraordinary remedy that either restrains a party from taking certain actions or requires a party to take specific steps. Courts have broad discretion to grant injunctive relief, but applicants must satisfy well-established legal tests. The general framework originates from the Supreme Court of Canada's decision in RJR-MacDonald Inc. v. Canada (Attorney General).
Prohibitory Injunctions
A prohibitory injunction prevents a party from doing something. Common examples include:
Preventing the misuse of confidential information
Restricting breaches of non-competition or non-solicitation obligations
Preventing the transfer of disputed property
Restricting conduct that threatens contractual rights
To obtain a prohibitory injunction, an applicant must generally establish:
A serious issue to be tried;
Irreparable harm if the injunction is not granted; and
That the balance of convenience favours granting the injunction.
Mandatory Injunctions
A mandatory injunction requires a party to take positive action, such as returning property, restoring access to business records, or removing improperly obtained confidential information.
Because mandatory injunctions impose affirmative obligations and may effectively determine the dispute before trial, courts apply a more stringent test. The applicant must generally establish a strong prima facie case, in addition to demonstrating irreparable harm and that the balance of convenience favours relief.
Mareva Injunctions
A Mareva injunction, often called a freezing order, prevents a defendant from disposing of or transferring assets before judgment.
These orders are commonly sought in fraud, shareholder, and commercial disputes where there is evidence that assets may be moved beyond the reach of creditors or the court. The applicant must generally establish a strong underlying claim and evidence of a real risk that assets will be dissipated before judgment.
Because a Mareva injunction can significantly interfere with a person's property rights, courts require full and frank disclosure of all material facts.
Preservation Orders
Injunctions are among the most powerful remedies available in commercial litigation. Whether seeking urgent court intervention or responding to an injunction application, early advice is often critical. Success frequently depends upon assembling persuasive evidence and moving quickly before the harm occurs.
How Raf Law Assists
At Raf Law, we assist businesses with injunction applications arising from shareholder disputes, employment matters, construction disputes, contractual conflicts, and other commercial litigation.
Disclaimer
This article is provided for general informational purposes only and does not constitute legal advice. The information contained herein is not intended to be relied upon as legal advice and may not reflect current legal developments.
Reading this article does not create a solicitor‑client relationship between you and Raf Law Corporation or its lawyers. Legal advice should be obtained from a qualified lawyer regarding your specific circumstances.
