When Damages Are Not Enough: Ontario Court Orders A Permanent Injunction To Preserve A Long-Term Commercial Contract

A recent Ontario Superior Court of Justice (Commercial List) decision in CSN Collision (Canada) Inc v Lift Auto Group Ltd, 2026 ONSC 1396, is a useful reminder that a plaintiff seeking to enforce a commercial agreement may be entitled to injunctive relief where damages would be an inadequate remedy. The Court found that the defendant’s planned departure from a long-term brand and royalty arrangement would cause harm that was too complex, uncertain, and difficult to quantify to be adequately addressed through money damages alone.

Background

CSN Collision (Canada) Inc. (“CSN”) operated a collision repair network under a long-term royalty and licensing arrangements akin to a franchise system. Lift Auto Group Ltd. (“Lift”) operated numerous shops using CSN’s brand and business model.

The royalty agreement between CSN and Lift included three negative covenants: (i) Lift was not permitted to acquire a collision repair business without CSN’s permission; (ii) all of Lift’s shops were required to use the CSN brand; and (iii), Lift was not permitted to compete with the CSN network.

Lift also gave CSN a right-of-first refusal (“ROFR”) to buy Lift’s business.

In 2024, Lift’s investors started looking for ways to recoup their investment. The investors concluded that CSN’s ROFR would be a barrier to a beneficial sale of Lift’s business.

In October 2025, Lift notified CSN that Lift intended to unilaterally leave the relationship and rebrand its shops. Lift acknowledged that doing so would breach the agreement and that CSN may incur damages.

CSN responded by seeking a permanent injunction to restrain Lift from breaching the agreement’s negative covenants. The central issue before the Court was whether CSN had established that injunctive relief was appropriate, or whether damages would be an adequate remedy instead. Lift argued that damages were an appropriate remedy and it sought a trial to assess the amount of damages.

The Court’s Analysis and Decision

In weighing the parties’ arguments, the Court considered the concept of an efficient breach of contract. An efficient breach of contract may occur where a party concludes that it is better off breaching a contract and paying damages than continuing in the contract. As the Court held an efficient breach works best for contracts involving the sale of interchangeable property or contract with liquidated damages clauses. In such examples, a defendant can keep the plaintiff whole by paying damages.

By contrast, an efficient breach of contract may not be feasible where a party intends to breach an ongoing, long-term commercial relationship.

In this case, the Court held that a permanent injunction enforcing the negative convents in the royalty agreement was an appropriate remedy for Lift’s anticipated breach of contract.

Calculating CSN’s monetary damages would be complex, multi-layered, and protracted. CSN would suffer unquantifiable losses such as injuries to its branding and goodwill, and a loss of market share.

The Court accepted that the commercial arrangement was built around brand integrity, network stability, and ongoing royalty-based performance, all of which made a simple damages award an imperfect substitute for enforcement of the contract. In other words, the anticipated harm to CSN could not be calculated or compensated with a single damages figure.

Key Takeaways

In circumstances where damages are easily calculated or there is a liquidated damages clause, an efficient breach of contract may be a viable way to end a contract.

In more complex or long-term commercial relationships, however, getting out of contractual responsibilities may not be so straightforward. Indeed, injunctive relief may be available to enforce a contract if damages are an inadequate substitute for fulfilling the contract.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.