Injunctions are court orders directing a company or individual to act or refrain from activities designed to prevent damage, repair damage or avoid additional damage.
There are two types of injunctions in BC Business Dispute law. A prohibitive injunction usually requires a person or a company to refrain from specified conduct, and a mandatory injunction compels a company or individual to take a specific course of action to right a wrong or repair damage done. Injunctions can be used to protect a wide array of legal rights. Most injunctions are sought to restrain a continuing violation of your rights, but you may also seek a preventative injunction before the wrong has occurred or before you suffer any damage.
Injunctions are often sought in business settings to enforce contractual provisions, protect intellectual property and prevent breaches of duties by former officers or directors. Contract provisions that may require enforcement by an injunction include non-competition agreements, non-solicitation agreements and confidentiality clauses. These contractual provisions are put in place to ensure that following the termination of a contract, sale of a business or disclosure of confidential information, the recipient does not unfairly compete in the business place.
Injunctions can also be sought to protect trademarks, copyright and patents from being copied and used without proper authority. Finally, former officers and directors of companies still owe fiduciary duties to the company even after leaving it and injunctions can be used to enforce these duties. As a result, an officer or director cannot go to a business across the street and start using the information it obtained as a director or officer of one company to unfairly compete with it. Injunctions can be granted to prevent this unfair competition from happening.
A powerful remedy, most injunctions are interim or valid for a specific period of time. A common interim injunction type is interlocutory, meaning the injunction order is valid until trial. The final and less common type is a final or permanent injunction.
If you are seeking an interlocutory injunction, you must meet a three-part test for the court to grant your order:
- First, you must demonstrate there is a serious issue to be tried; your claim needs to be more than frivolous.
- Second, you need to show you would suffer irreparable harm if the order is not granted; will a future award of damages not adequately compensate you for the harm alleged?
- Third, the court will decide if the balance of convenience favours granting the injunction, understanding the overarching case has yet to be determined. This final step allows the court to consider any and all factors, including evaluating which party has acted to alter the balance of the relationship and affect the status quo, the likelihood a future damages award would actually get paid, and other matters affecting the public interest.
An experienced business dispute lawyer can help you determine if seeking an injunction is your best course of action, and how to demonstrate that your situation meets the conditions for an injunction to be granted.
Application for an Injunction
As a practical matter, before considering the application for an injunction you need to decide whether a monetary award is sufficient or whether harm will occur before trial, such that you have to prevent it. The courts will not grant an injunction if they conclude that a monetary award will be sufficient at the end of the day. Considering the balance of convenience, the court will be reluctant to grant an injunction that results in one of the parties’ business getting shut down. Shutting down one of the parties’ business can have dire consequences and will not be done lightly before that person has had the right to a full trial of the matters. Again, a court will consider the balance of convenience and what can be done to preserve the status quo without causing harm prior to trial.
The test for a final injunction requires the court to evaluate the legal rights of the parties involved at a full trial. The evidence a court would normally use to evaluate irreparable harm and balance of convenience are helpful but not determinative. A court will decide if a final injunction is the appropriate remedy after the parties establish their legal rights before the court.