Weighing the Undertaking as to Damages Beat an Injunction Bid

The situation

Hanna owned a commercial building in North Bay that she had leased for several years to a growing technology company run by Meron. The lease included a clause giving the tenant a right of first refusal on the building if Hanna ever decided to sell — a common enough term, meant to let a good tenant buy the space they had built their business in rather than risk a new landlord.

By late 2025, Hanna had decided to sell. The building had appreciated, she was ready to retire from actively managing tenanted property, and she had a serious buyer, Oksana, lined up at roughly $1.3 million. She gave Meron's company notice of the offer, as the lease required, and waited for a response within the window the lease allowed. None came in time. Hanna proceeded to accept the third-party offer and set a closing date.

Two weeks before closing, Meron's company brought an urgent motion asking the Superior Court for an interlocutory injunction — a court order stopping Hanna from closing the sale until the underlying dispute over the right of first refusal could be resolved at trial. Meron argued the notice had been defective and that the right of first refusal was still very much alive.

The legal problem

An interlocutory injunction is an order made before trial, meant to preserve the status quo while a dispute is decided rather than to decide the dispute itself. Courts do not grant them lightly, because they restrain a person's conduct — here, the sale of Hanna's own property — before anyone has proven their case. To get one, a plaintiff generally has to show three things: a serious question to be tried, that they will suffer harm that cannot be fixed with money if the injunction is refused, and that the balance of convenience favours granting the order over refusing it.

Real estate is often treated as unique for this purpose, since no two properties are identical, and courts have sometimes accepted that losing the chance to buy a specific building is a harm money cannot fully repair. Meron's motion leaned heavily on that argument, framing the building as the physical home of a business that had grown up inside it and could not simply relocate.

But an injunction is not a one-way promise. A plaintiff who asks the court to freeze someone else's property or business pending trial is almost always required to give an undertaking as to damages — a formal commitment to compensate the defendant for whatever loss the injunction causes if it later turns out the injunction should never have been granted. The undertaking exists because an injunction can be wrong. If Meron's company won the injunction, stopped the sale, and then lost the underlying case at trial, Hanna would have been sitting on a building she could not sell for months, possibly missing her buyer entirely, with real carrying costs and a real risk the deal collapsed for good. The undertaking is meant to be her insurance against exactly that outcome.

The catch is that an undertaking is only as good as the party giving it. A young technology company, however promising, is not the same credit risk as an established institution, and the court is entitled to consider whether the undertaking is backed by anything real.

What we did

1. Reframed the hearing around the balance of convenience, not just the merits. Rather than spending the bulk of the argument disputing whether the right of first refusal notice was defective — a genuine dispute, but one for trial — our team focused the court's attention on what would happen to each side while the case was pending. Hanna stood to lose a firm buyer at a firm price; Meron's company, by contrast, would lose only the opportunity to negotiate a purchase it had not yet financed or agreed to.
2. Tested the substance behind the undertaking as to damages. We requested financial disclosure relevant to the company's ability to actually fund its undertaking, and where the plaintiff resisted, argued the court should weigh that resistance against the credibility of the promise. A three-year-old technology company with modest reserves offering to backstop potential losses that could run into six figures a month in carrying costs and a possibly lost sale is a materially different undertaking than one backed by an established, well-capitalized party.
3. Quantified Hanna's exposure precisely. We put concrete numbers before the court: the roughly $1.3 million sale price, the carrying costs of the property during any delay, the real prospect that Oksana — who had her own closing deadlines — would walk away if the sale was frozen for months, and the cost of remarketing the property from scratch if that happened. Vague claims of harm rarely move a judge; a clear ledger does.
4. Argued that damages, not an injunction, was the appropriate remedy for Meron. If the company's claim about the defective notice succeeded at trial, the court could still order Hanna to compensate Meron's company for the lost opportunity to buy, or in some circumstances order other relief. That gave the court a workable alternative to freezing the sale altogether, which mattered because courts are generally reluctant to grant an injunction where a later damages award can fairly repair the harm.
5. Kept the underlying dispute moving in parallel. Defeating the injunction motion does not end a lawsuit. Alongside the motion, we prepared Hanna's defence on the merits of the notice dispute, so that once the injunction question was resolved, the parties were not starting from zero on settlement discussions.

The outcome

The motion judge refused the injunction. The written reasons focused on exactly the ground our team had emphasized: any harm to Meron's company from losing the chance to negotiate a purchase could be addressed with a damages award if the underlying claim succeeded at trial, while the harm to Hanna from having a firm sale frozen for an indefinite period, on the strength of an undertaking the plaintiff had not clearly shown it could fund, was neither speculative nor easily reversed.

Hanna closed her sale on schedule. The underlying dispute over whether the right of first refusal notice had been valid did not simply disappear — that question still needed to be resolved. But with the pressure of an emergency motion removed and both sides facing the ordinary cost and delay of a trial, the parties returned to the table. Within a few months, Hanna agreed to pay Meron's company a settlement in the low six figures, reflecting a discounted estimate of what a court might have awarded for the lost opportunity to buy, in exchange for a full release of all claims. It was a fraction of the roughly $1.3 million sale price the injunction had briefly put at risk, and it let both sides move on without years of litigation hanging over either of them.

The case turned less on who was ultimately right about the lease notice — a question that was never fully litigated — and more on a piece of procedure that is easy to underestimate: an injunction is a promise on both sides, and a court asked to grant one will look hard at whether the side asking for it can actually keep its promise.

What you can learn from this