Agreement or Ambitious Aspiration: Injunctive Overreach
When international actors become embroiled in litigation, the plaintiff’s goal is to obtain a judgment that they can collect from. Often International actors seek injunctions to prevent defendants from dissipating assets, selling shares, and more generally changing the status quo before a judgment is obtained.
However, before parties bring injunction motions, they should be aware of the stringent test that must be met. In Odumodu v Odumodu, 2025 ONSC 2439 Justice Chalmers of the Ontario Superior Court of Justice applied the test for injunctive relief in the context of share sales and in doing so clearly delineated the test to be met by the moving party. The case involved a dispute over control and ownership of a family business with respect to a group of pharmacies that also involved other shareholders and directing minds. The core of the dispute rested on alleged rights of succession from father to son. The son had commenced an action a number years earlier to pursue his claimed rights of succession, but had not pursued it in the hope of settlement. He then brought forward an application for injunctive relief when he received notice that portions of his father’s interests in various pharmacies may be purchased by a third party.
A few months after receiving a third party’s letter of intent to purchase the father’s shares in a number of pharmacies, the son brought a motion for an interlocutory injunction restraining the father from selling his shares. The son’s position was that he and his father agreed to a succession plan agreement, wherein the father’s shares must be valued and sold to him. The motion was argued before Justice Chalmers on April 7, 2025.
Justice Chalmers applied the test for injunctive relief outlined in RJR-McDonald Inc. v Canada (Attorney General) [1994] 1 S.C.R. 311, which requires the moving party to establish:
- A serious issue to be tried;
- Irreparable harm if the relief is not granted; and,
- The balance of convenience favours the moving party.
Serious issue to be tried
With respect to the first part of the injunction test, the court must first examine whether the relief is mandatory or prohibitive. The former requires a moving party to show a strong likelihood that the allegations contained in the claim will be proven at trial. Conversely, the test for a prohibitive injunction is less intrusive and more easily met.
In this case, Justice Chalmers found that the relief sought was for the most part, prohibitive in nature. Despite applying the less stringent test, the judge found that there was no evidence to support the son’s essentially equitable claim of rights of succession and that no agreement existed to that effect.
Irreparable Harm
With respect to irreparable harm, the moving party must show clear and non-speculative evidence that they will suffer harm that cannot be quantified in monetary terms or through damages. Justice Chalmers found that the son had not established he would suffer irreparable harm. The potential sale of his father’s shares would not have an impact on the son’s existing shareholdings, and the son could still offer to purchase his father’s share interests pursuant to limited rights of first refusal and otherwise on terms acceptable to the father..
Balance of Convenience
Lastly, with respect to the balance of convenience, Justice Chalmers considered the fact that father was of advanced age and looking to retire from the family business in a manner that would benefit his family as a whole. If the injunction were to be granted, the father would not be able to sell his shares to whomever he wanted and would not be able to maximize the value of his shares in an arm’s length transaction with a third party. Absent the injunction, the son would continue to own his shares and could still exercise his limited rights of first refusal and compete with any third party offers.
While this was a domestic case, it clearly shows for the benefit of international actors the stringent test applied by the courts on Injunction Motions. The high level of scrutiny is required given the serious and potentially devastating effects that an injunction can have on a responding party’s rights.