An antidote for irreparable confusion: Mosaic and the standard of proof for irreparable harm

To obtain an interlocutory injunction, it is not enough that a plaintiff show that they are likely to prevail on the merits of the dispute. Instead, the plaintiff must show that they will suffer harm that is “irreparable” if the injunction is not issued that is “irreparable”.

The “irreparable harm” requirement is often the main issue on motions for interlocutory injunctions, and the requirement that plaintiffs find most difficult to satisfy. As a result, considerable debate has arisen as to the standard of proof necessary to establish irreparable harm.

In its carefully considered judgment in Mosaic Potash Esterhazy Limited Partnership v. Potash Corporation of Saskatchewan Inc, the Saskatchewan Court of Appeal has provided welcome guidance to this issue.[1] This approach has been cited with approval by its counterparts in Manitoba[2]. Yet Ontario, among other provinces, appears to have overlooked the benefit of this guidance.[3]

Irreparable harm refers to the nature of harm, not the magnitude of harm. Harm is “irreparable” if it cannot be quantified in monetary terms or cannot be cured by a judgment, usually because one party cannot collect damages from the other.[4] Such harm may occur, for example, if the plaintiff will lose market share or goodwill, suffer remote losses that cannot be reasonably quantified, or be the subject of an infringement of a property or other right that cannot be remedied by a money judgment.

The Court in Mosaic began by noting the differing standards of proof that have been applied in other jurisdictions, including a requirement for “doubt as to the adequacy of damages”[5] (the British Columbia Court of Appeal), consideration of “whether or not it is probable that irreparable harm will be suffered”[6] (the Alberta Court of Appeal), or a need for evidence that is “clear and not speculative”[7] (the Federal Court of Appeal).

The Mosaic court then found that the proper standard of proof must be determined in light of the balancing exercise inherent in the balance of convenience test. The risk of irreparable harm involves both the likelihood of the harm materializing and the magnitude of that harm. To impose too high a threshold of likelihood would unnecessarily truncate this balancing exercise. For example, it could prevent an injunction from being issued where there was a medium risk of a catastrophic amount of irreparable harm.

As with the assessment of the merits of the case (the “serious case to be tried” standard), a lower threshold is appropriate in determining irreparable harm, while still screening out speculative claims of irreparable harm. As a result, the Court of Appeal found that a plaintiff must “establish a meaningful risk of irreparable harm or, to put it another way, a meaningful doubt as to theadequacy of damages if the injunction is not granted” (at para. 61).

The value of this analysis is not in the coining of a new “meaningful risk” standard of proof. Rather, the value of the Mosaic decision is in reminding litigants that the likelihood that irreparable harm will be suffered is simply one factor, albeit an important factor, to consider before issuing an injunction. Although Ontario courts[8] have recognized that irreparable harm generally is a factor to consider, rather than an independent hurdle to be established, the Mosaic court provides valuable guidance as to how to weigh the likelihood of irreparable harm as a factor.

The Mosaic approach fits comfortably with the guidance provided by the United States’ Seventh Circuit with respect to interlocutory injunctions. In American Hospital Supply Co. v. Hospital Products Ltd., Judge Posner noted that the purpose of the traditional injunction analysis was to minimize the harm caused by the inevitable errors arising from a judge’s preliminary evaluation of the merits of a case.[9]

Judge Posner found that an injunction should issue “only if the [irreparable] harm to the plaintiff if the injunction is denied, multiplied by the probability that the denial would be an error . . . exceeds the [irreparable] harm to the defendant if the injunction is granted, multiplied by the probability that granting the injunction would be an error” (at p. 593), distilled into the following formula:

P (probability of plaintiff’s success) X Hp (irreparable harm to plaintiff) >

(1 – P) x Hd (irreparable harm to the defendant)

In grappling with the standard of proof for irreparable harm, the Mosaic court has made clear that the “irreparable harm” in the American Hospital formula is in fact a product of the expected amount and risk of irreparable harm – the multiple of the probability that the irreparable harm will materialize and the magnitude of that irreparable harm. As in American Hospital, the proper approach is to minimize the cost of error associated with the necessarily preliminary assessment of the merits by weighing the likelihood and magnitude of the potential irreparable harm for each party.

Of course, this formal analysis does not exhaust the factors that a judge should consider in determining whether an injunction is equitable and just in the circumstances – the impact upon third parties being one important factor. Nor does it even modify the traditional analysis. What the Mosaic decision does do is to provide helpful guidance as to how the traditional weighing of the balance of convenience should be carried out – and it may serve as an antidote for the confusion surrounding the proof of irreparable harm.

[1] 2011 SKCA 120 [Mosaic]

[2] Hudson Bay Mining & Smelting Co., Limited v. Dumas et al., 2014 MBCA 6, at para. 85.

[3] Morguard Corporation v. InnVest Properties Ottawa GP Ltd., 2012 ONSC 80 refers to Mosaic at paras. 14-15, with respect to its discussion about differing standards between prohibitive and mandatory injunctions, but not with respect to the standard for irreparable harm generally.

[4] RJR Macdonald, at para. 59

[5] B.C. (A.G.) v. Wale, 1986 CanLII 171 (BC CA), [1987] 2 W.W.R. 331 (B.C. C.A.) at p. 345

[6] Wang v. Luo, 2002 ABCA 224 (CanLII), 2002 ABCA 224 at para. 17

[7] See, for example:  Syntex Inc. v. Novopharm Ltd. (1991), 126 N.R. 114 (F.C.A.) at para. 15.

[8] See, e.g., Brown v. First Contact Software Consultants Inc., [2009] O.J. No. 3782 (S.C.J.) at para. 22: “The branches of the test are not meant to be treated as watertight compartments in a step-by-step analysis. A proper assessment of an injunction motion considers foremost the substance of the parties’ dispute, and: The checklist of factors … should not be employed as a series of independent hurdles. They should be seen in the nature of evidence relevant to the central issue of assessing the relative risks of harm to the parties from granting or withholding interlocutory relief” [citations omitted].

[9] 780 F.2d 589 (7th Cir. 1986), [American Hospital]