Court of Appeal Decision of the Week

Injunctions, in the Real Estate Context

Case: May v 1986855 Alberta Ltd, 2018 ABCA 94 (CanLII)

Keywords: Injunctive Relief; Three Storey Duplex; Negative Covenant; Lubicon Lake Band v Norcen Energy Resources Ltd., 1985 ABCA 12 (CanLII); Noise Solutions v Commercial Insulation Contracting, 1998 ABCA 257 (CanLII)

Synopsis:

The parties own neighbouring lots in a residential Edmonton neighbourhood and disagree about what the Respondents can build on their lot. The Appellant says the Respondents’ plan to build a three storey duplex (or, as the Court of Appeal wrote, “three story [sic] duplex” at paras. 3 and 5) would breach the terms of agreements which restrict future development on each lot to a single dwelling unit. The Respondents take a different view.

The Appellant applies for an interim injunction enjoining the Respondents from breaching or inducing a breach of the terms of the agreements, pending a final determination by the court as to the proper interpretation of those agreements. The Chambers Judge (Burrows J.) determines that, since the amount of her loss would be capable of proof and could be the subject of an award of damages, the Appellant had not established she would suffer irreparable harm.

The Court of Appeal finds the Chambers Judge erred. The appeal is allowed and an interim injunction is granted pending a final determination of the respective rights and obligations of the parties.

Importance:

This case offers clarification with respect to the second part of the test for granting an interim injunction – in this case, whether the building of a three storey duplex (in breach of a “clear negative covenant”) would cause the Appellant to suffer irreparable harm. The Court of Appeal acknowledged orders regarding interim injunctive relief are discretionary and courts generally do not interfere “…in the absence of an error in principle or unless the order is unreasonable in the circumstances”. (See para. 8). Nonetheless, the Court of Appeal was prepared to reverse the Chambers Judge’s decision.

The Court of Appeal cited Lubicon Lake Band v Norcen Energy Resources Ltd., 1985 ABCA 12 (CanLII) at paras. 31-32 and Noise Solutions v Commercial Insulation Contracting, 1998 ABCA 257 (CanLII) at para. 6 as authority for the appropriate test. For the Court of Appeal, irreparable harm does not simply mean injury beyond the possibility of repair by money compensation. Rather, the test is:

whether “no fair and reasonable redress can be had in a court of law unless the injunction is granted and that its refusal would be a denial of justice” (See para. 14).

The Chambers Judge’s decision did not “expressly or impliedly” take the test into account, and the Court of Appeal determined the failure to do so constituted reviewable error. (See para. 15).

The Court of Appeal found that denying an injunction would permit the Respondents to proceed with their development, a result which would “…potentially deprive the appellant of the ability to enforce the agreements, unless a court were prepared to order the development be torn down” and restrict the appellant to a remedy in damages. (See para. 16).

Ultimately, the Court of Appeal found that the “balance of convenience” favoured granting the injunction as against the Respondents pending final determination of the underlying dispute with respect to the interpretation of the agreements. (See para. 17).

Counsel for the Appellant: Jeremy Taylor, Leah McDaniel (Field Law, Edmonton)

Counsel for the Respondents: Brian Summers (Dentons Canada LLP, Edmonton)

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Posted: Wednesday, March 14, 2018