Courtesy of Blakes. View original article here.
With the federal government recently approving major pipeline projects, it is expected that environmental and other special interest or lobbying groups will commence actions in an attempt to prevent or delay those projects from proceeding, which may include applying for injunctive relief. Those opponents face significant obstacles in obtaining such relief.
While the test for an injunction is well settled and set-out in the leading decision of the Supreme Court of Canada (SCC) in RJR-MacDonald Inc. v. Canada (Attorney General) (RJR), there are some interesting aspects of applying that test in the context of proposed pipelines.
SERIOUS ISSUES TO BE TRIED
While the first branch of the test requires the applicant to establish a serious issue to be tried, that threshold is generally quite low. The SCC in RJR noted that, generally, so long as the application is neither vexatious nor frivolous, the court should proceed to consider the second and third parts of the tripartite test.
The SCC identified, however, three exceptions to the general rule that a court should not engage in a prolonged examination of the merits with respect to the first branch of the test: (i) when the result of the motion will, in effect, amount to a final determination of the action; (ii) when the question of constitutionality presents itself as a simple question of law alone; and (iii) the court kept open the possibility for an exception in non-Charter cases in which the factual record is largely settled prior to the application being made.
In the context of injunctions relating to pipelines, there is another important factor to consider when determining if there is a serious issue to be tried. A number of decisions have held that there is no serious issue to be tried given that there is often a robust regulatory process that has not only approved a pipeline but also had jurisdiction over it. In those cases, the courts have found that injunctive relief is nothing more than a collateral attack on the regulatory decision-making process and denied that relief.
Given the time, expense and related approval process involved with pipelines, in considering an injunction against a pipeline, the court should engage in a closer examination of the merits as granting an interim injunction would practically, in many cases, amount to a final determination.
The second branch of the test requires the applicant to establish irreparable harm, which is typically the most difficult to establish. Generally speaking, the applicant must establish injury that is beyond the possibility of repair by money. It must establish harm of such a nature that no fair and reasonable redress may be had unless injunctive relief is granted and the refusal to grant the injunction would be a denial of justice. “Irreparable” typically refers to the nature of the harm suffered rather than its magnitude; it means harm that either cannot be quantified in monetary terms or that cannot be cured.
Many injunction applications fail on this branch of the test largely because damages are often an adequate remedy and the evidence of irreparable harm tendered is often speculative in nature. In the context of challenges to pipelines, applicants frequently make allegations of health and other claimed environmental consequences. Those allegations are often speculative in nature and do not satisfy the evidentiary requirements for this branch of the test.
It should be emphasized that the fact that damages could be difficult to calculate does not, in itself, support a finding of irreparable harm. Mere difficulty in calculating damages does not necessarily mean that damages are not an appropriate remedy.
BALANCE OF CONVENIENCE
The final branch of the test, known as the balance of convenience branch, requires a determination as to which of the two parties will suffer the greater harm from the grant or refusal of an interlocutory injunction pending the disposition of the matter at trial on the merits.
The expenditure of money, time and commercial activity, including obtaining regulatory approvals, has been recognized by the courts as an important consideration in denying injunctive relief. This is particularly so in the context of major pipelines. For example, in Dastous v. Canadian Natural Resources Limited, the court noted that an injunction would have the result of delaying a substantial development project — a project that, at full production, would supply hundreds of thousands of barrels per day of crude oil over a significant period of time. In those circumstances, the court found that the balance of convenience favoured the denial of the injunction since to grant it would undermine a project that was “critical in sustaining Canada’s oil needs for the future.”
In addition, it is a common and well established practice that an applicant must give an undertaking to be responsible for, and pay forthwith, any damages suffered by the respondent if it is ultimately determined that an interim injunction should not have been granted. A requirement to post an undertaking is codified in some jurisdictions. The lack of an undertaking can be fatal to such applications.
Although, in exceptional circumstances, the court can relieve against the requirement to post an undertaking, the underlying purpose of an undertaking is to protect a respondent from the damages and costs arising from the granting of an interlocutory injunction which is ultimately set aside at trial. The courts have recognized the importance of giving an appropriate, meaningful and enforceable undertaking as a prerequisite to obtain injunctive relief. Moreover, the undertaking must be provided in advance of the hearing to allow the respondent time to assess the scope and adequacy of the undertaking. In those circumstances, given the significant investments at stake, the courts would likely require a sizable undertaking to be meaningful in the pipeline context given the huge monetary amounts involved. That obstacle would likely be overwhelming for most applicants to provide.
While opposition by way of the commencement of court proceedings may occur in connection with one, some, or all of the proposed pipelines, opponents will face very difficult obstacles in obtaining injunctive relief from the court, especially in circumstances where regulatory and other approvals have approved the pipelines.