In dismissing a motion for an interlocutory injunction, the Ontario Superior Court in Homestead House Paint Co. Inc. v Jamieson, 2019 ONSC 2660 (“Homestead”), recently reiterated that a clause deeming a breach to cause irreparable harm does not displace the courts’ exclusive role to determine whether injunctive relief is appropriate and whether or not irreparable harm has been established.
The RJR MacDonald Test
In RJR-MacDonald v Canada (AG), 1994 SCC 117, the Supreme Court of Canada established the well-known test for an interlocutory injunction. The moving party is required to prove that:
- There is a serious issue to be tried;
- That the moving party will suffer irreparable harm if the relief is not granted; and
- The balance of convenience favours granting the injunction.
Irreparable harm is defined as harm that “cannot be quantified in monetary terms or which cannot be cured” [RJR-Macdonald].
In Homestead, the moving party argued that irreparable harm was established by an alleged clause whereby the parties agreed that:
“Actual or threatened disclosure or use of the Confidential Information by the Contractor in breach of this Agreement shall be deemed to cause The Company irreparable harm for which monetary damages are not an adequate remedy. The Company shall be entitled to seek injunctive relief to prevent any actual or threatened disclosure, and the Contractor consents to the granting of such relief without proof of actual damages.”
The Court held that a clause deeming a breach to constitute irreparable harm “cannot usurp the exclusive jurisdiction of this court to determine whether injunctive relief is appropriate and whether or not irreparable harm has been established” [para 34; Brown v First Contact Software Consultants Inc., 2009 ONSC 48504 at para 61].