Interlocutory injunctions: revisiting the three-pronged test.

• Author: Groleau, Jean-Philippe

The three-pronged test that courts in Canada and in other jurisdictions apply in considering applications for interlocutory injunctions is well established: the applicant must demonstrate that (1) there is a serious question to be tried, (2) he will suffer irreparable harm if denied the relief, and (3) the balance of inconvenience pending trial favours him. This article examines the premises underlying this test. First, the test presumes that the hearing on an application for an interlocutory injunction is conducted at a time when only incomplete and disputed evidence is available to the court. From this premise flows the low threshold of determining whether there is a serious question to be tried. Second, the test presumes that the remedy is sought to preserve the rights of the parties pending trial. From this arises the necessity of determining whether the harm will be reparable at trial and where the balance of inconvenience lies in the interim.

The author argues that these assumptions are inaccurate for many applications for interlocutory injunctions--applications that involve no material facts in dispute or that finally dispose of the dispute between the parties. In all these cases, it is argued that the three-pronged test is ill-conceived and that the court should adjudicate primarily on the merits. The author closes his analysis by proposing a general approach to assess the importance to be given to the merits and the balance of inconvenience in any given case. He bases this approach on where that case falls with regard to its potential end-result and its degree of factual complexity.

Le test qu'appliquent les tribunaux judiciaires du Canada et d'autres juridictions dans leur analyse d'une demande d'injonction interlocutoire est bien etabli: le demandeur doit demontrer que (1) le litige se base sur une question serieuse, (2) le demandeur subirait un prejudice irreparable si l'interjonction est refusee et (3) l'equilibre des inconvenients le favorise avant et durant le litige. Cet article examine les premisses soutenant ce test. Premierement, le test presuppose que l'audience relative a une demande d'injonction interlocutoire est menee lorsque la cour n'a que de la preuve incomplete et disputee a sa disposition. De cette premisse decoule la premiere dimension du test, qui est de determiner si le litige presente une question serieuse, un seuil facile a atteindre. Deuxiemement, le test presume que le remede tente de preserver les droits des partis avant et durant le litige. Ceci engendre la necessite de determiner si le prejudice qu'une partie subirait sans injonction serait reparable ou non par un litige, ainsi qu'ou l'equilibre des inconvenients se trouve entre-temps, des questions formant les deux autres dimensions du test.

L'auteur soutient que ces premisses sont inapplicables dans un grand nombre de demandes d'injonction interlocutoire, c'est-a-dire celles qui n'impliquent que peu ou pas de preuves materielles disputees ou qui disposent de la dispute entre les partis. Dans tous ces cas, il est soutenu que le test n'est pas bien concu et qu'afin de proteger les droits des partis avant et pendant le litige, la cour doit juger sur la base des merites de l'affaire. L'auteur conclut son analyse en proposant une approche generale pour evaluer l'importance a donner aux merites et l'equilibre des inconvenients d'une affaire. Il base cette approche sur le resultat possible de l'affaire ainsi que sur son degre de complexite.

Introduction I. Contemporary Approach to Interlocutory Injunctions A. The American Cyanamid Three-Pronged Test B. The Attack on American Cyanamid and its Upshot II. Propounded Approach: Revisiting the Three-Pronged Test A. The First Exception: Final Determination of the Rights of the Parties 1. The Nature and Scope of the Exception 2. The Return of the Strong Prima Facie Case 3. The Irrelevance of the Two Other Prongs of the Traditional Test a. Redundancy of the "Irreparable Harm" Prong b. Inapplicability of the "Balance of Inconvenience" Prong B. The Second Exception: No Obstacles to Adjudication on the Merits 1. Cases with Undisputed Facts a. The Nature of the Exception b. The Standard 2. Cases with a Complete Record of Facts a. The Nature of the Exception b. The Standard 3. The Limited Value of the Balance of Inconvenience C. The Amended Three-Pronged Test: Two Spectra Conclusion Introduction

It is now viewed as trite law that an applicant for an interlocutory injunction must fulfill three conditions before the court will grant his application, namely, he must show that (1) there is a serious question to be tried, (2) he will suffer irreparable injury if refused the interlocutory relief, and (3) the balance of inconvenience resulting from granting or denying the interlocutory relief lies with him rather than with the respondent. (1)

Two important premises underlie this three-pronged test. First, the test assumes that the hearing on an application for an interlocutory injunction is conducted upon incomplete and disputed evidence. Consequently, the motions judge is not in a position to properly assess the relative strength of the parties' cases. This premise creates a low threshold for the applicant to meet in order to fulfill the requirement of the first prong: demonstrating that there is a serious question to be tried.

Second, the test assumes that the remedy's raison d'etre is to preserve the rights of the parties in the most equitable fashion pending trial. This premise underlies the last two prongs of the test: (1) determining whether the applicant will suffer irreparable harm if the injunction is refused, (2) and (2) finding where the balance of inconvenience lies in granting or denying the injunction, or in other words, who between the applicant and the respondent will be most disadvantaged by the grant or denial of the interlocutory injunction.

These two assumptions are misguided in at least some applications for interlocutory relief. (3) Undermining the validity of the first assumption are those cases that present no material facts in dispute at the interlocutory hearing or whose factual records before the motions judge are complete. In such cases, the very reason for refusing to consider the merits is absent. It is thus puzzling why a court would grant an interlocutory injunction when it could easily determine that the right it serves to protect does not appear to exist. The best test to adjudicate on an application for an interlocutory injunction is always whether the right the applicant seeks to protect does indeed seem to exist: the balance of inconvenience test is merely second-best.

In addition, not all interlocutory injunctions are sought merely to preserve rights pending trial, negating the relevance of the second assumption. Indeed, the nature of many interlocutory injunctions is that they dispose of the dispute between the parties, thus having a final effect. In such cases, where both the successful and unsuccessful party on the interlocutory application have negligible incentives to proceed to trial, courts should engage in an extensive review of the merits at the interlocutory stage, notwithstanding the difficulties involved. The predominant--if not the only--consideration should be the strength of each party's case. Weighing the balance of inconvenience is only relevant where the court's mission is to find the most equitable way to preserve the respective rights of the parties pending trial. Since there will be no trial in such cases, any examination of this condition is unnecessary.

It follows from the above that the three-pronged test is only just and convenient when applied to a specific set of circumstances, that is, where the factual record is incomplete and where the remedy is sought to preserve rights pending trial. Only by assessing where the circumstances of each application for an interlocutory injunction fall with respect to the premises underlying the traditional three-pronged test will courts be able to come to just and convenient results. This article aims to provide an analytical framework within which the courts can make that assessment. It is hoped that the propositions laid down in this article will at least help to reveal the true nature of the contemporary three-pronged test: a convenient guideline to be applied in cases that truly warrant it. This test should not be applied as a straitjacket, for doing so could only result in what the test sought to avoid in the first place--inequitable and impractical solutions.

1. Contemporary Approach to Interlocutory Injunctions

   1. The American Cyanamid Three-Pronged Test

      For the greater part of the nineteenth anal twentieth centuries, applicants for interlocutory injunctions had to meet the test laid out by William Williamson Kerr in 1888, namely that "[t]he Court must, before disturbing any man's legal right, or stripping him of any of the rights with which the law has clothed him, be satisfied that the probability is in favour of his case ultimately failing in the final issue of the suit." (4) The rationale motivating this rule was set forth by Justice Laddie in Series 5 Software Ltd. v. Clarke:

      There was obvious sense in this approach, since if the court came to the preliminary view on the hearing of the application for interlocutory relief that the defendant was likely to win at the trial it would normally be unjust that he should be restrained pending the trial even if the plaintiff gave a cross-undertaking in damages. (5) This test, according to which the applicant had to show a prima facie case, a case which on the evidence before the court at the interlocutory hearing shows that the applicant's rights are (or about to be) violated by the respondent, was applied by the House of Lords in J.T. Stratford & Son Ltd. v. Lindley (6) and as late as 1975 in F. Hoffmann-La Roche & Co. A.G. v. Secretary of State for Trade and Industry. (7) As a consequence, courts generally assessed the rights...