Date: 20060619
Docket: T-1734-04
Citation: 2006 FC 781
Ottawa, Ontario, Monday, this 19th day of June 2006
PRESENT: MADAM PROTHONOTARY MIREILLE TABIB
BETWEEN:
ELI LILLY CANADA INC.
Applicant
- and -
NOVOPHARM LIMITED and
THE MINISTER OF HEALTH
Respondents
- and -
ELI LILLY and COMPANY LIMITED
Respondent/Patentee
REASONS FOR ORDER AND ORDER
[1] The present application, brought by Eli Lilly Canada Inc. ("Lilly") pursuant to the Patented Medicines (Notice of Compliance) Regulations, SOR 93-133 (the "Regulations") is to be discontinued. The discontinuance results from the withdrawal, by the Respondent Novopharm Limited ("Novopharm"), of the Notice of Allegation which formed the basis of the application.
[2] The parties are ad idem that in view of the unique procedural mechanism contemplated under the Regulations, the discontinuance of this application in the circumstances should not subject Lilly to the obligation to pay Novopharm's costs in application of the general rule embodied in Rule 402. Rather, because of the dynamics of proceedings under the Regulations, the spirit and intent of Rule 402 should in such cases dictate the opposite: That unless otherwise ordered or agreed to by the parties, Lilly be entitled to its costs of the discontinued proceedings.
[3] Lilly, however, not only seeks its costs, but an order that these costs be assessed on a solicitor and client basis. For its part, Novopharm argues that costs should be "apportioned" between various proceedings involving olanzepine, or that the issue be deferred to the Judge hearing the merits of another application involving the same parties, filed under Court number T-787-05.
[4] Lilly does not allege, and it has not been established, that Novopharm was guilty of misconduct in issuing the initial Notice of Allegation and in the steps it took to defend this application, such as would normally justify an award of solicitor-client costs. Rather, Lilly submits that Novopharm's misconduct - or abuse of process - arises from the fact that after withdrawing its original Notice of Allegation, and having had the benefit of seeing Lilly's argument and evidence, it then issued a new Notice of Allegation raising, in part, substantially the same grounds. For the proposition that such conduct can give rise to an award of solicitor-client costs, Lilly relies on the following authorities: Merck Frosst Canada Inc. v. Canada (Minister of Health and Welfare) et al. (1997) 76 C.P.R. (3d) 501 (F.C.T.D.); Sandoz v. Canada Inc. et al. v. Apotex Inc. et al. (unreported, F.C.T.D., May 2, 1997, Court file T-860-95 and T-1463-93); Bayer AG v. Canada (Minister of Health and Welfare) et al. [1997] F.C.J. No. 1785; and Novartis Pharmaceuticals Canada Inc. et al. v. Apotex Inc. et al. (2003) 24 C.P.R. (4th) 216; 2003 FCT 243.
[5] I note that Justice Rothstein, in his reasons in Merck Frosst, made it very clear that in both Merck Frosst and Sandoz, Apotex had itself submitted that it should pay the Applicant's costs on a solicitor and client basis. Indeed, in both cases, the motion to terminate the proceedings had been brought by Apotex itself. I therefore cannot take these cases as establishing a rule or general principle that the withdrawal of a Notice of Allegation and subsequent issuance of a new Notice of Allegation justifies, in and of itself, an award of solicitor-client costs.
[6] Again, in Bayer, it appears that the parties had agreed that costs be payable on a solicitor and client basis. The reasons for order begin by stating that "The only issue to be decided is the appropriate form of order to be issued...", the controversy being whether the application should be granted or dismissed for mootness. The reasons for order set out the forms of order advocated by each party: both provide for payment of solicitor-client costs.
[7] In Novartis, the Court refers to the Merck decision and comments that awarding solicitor-client costs "appears to have been justifiable in those situations" but ultimately distinguishes the factual situation with which it was seized.
[8] I fail to find that these decisions establish a principle that solicitor-client costs are payable upon withdrawal and subsequent re-issuance of a Notice of Allegation. At most, in my view, the cases cited by Lilly establish that the Court will give effect to the agreement or undertaking of parties with respect to the scale of costs, and that in the past, parties have themselves recognized that the withdrawal of a Notice of Allegation could in certain circumstances justify an award of solicitor-client costs. What these circumstances include - apart from or in addition to the subsequent filing of a similar Notice of Allegation - is not apparent from the cases cited.
[9] For my part, I cannot see how Novopharm's subsequent filing should be sanctioned through an award of costs in these proceedings. If there is indeed substance to Lilly's assertion that Novopharm's new Notice of Allegation is founded on similar grounds and constitutes an abuse of process, then the issue should properly be determined in the context of the application in T-787-05, concerned with that Notice of Allegation. If found to be an abuse of process, Lilly will have its remedy in that application on the merits or on costs. If abuse there is, it resides in the actions of Novopharm subsequent to the withdrawal of the Notice of Allegation. It is therefore in the consequences of that abuse that sanctions should be visited - not in the circumstances that preceded the abuse. There is no sense or logic in sanctioning future conduct by awarding solicitor-client costs in a proceeding which was not of itself abusive.
[10] There is equally no merit to Novopharm's suggestion that the costs in this matter be apportioned or referred to be determined in file T-787-05.
[11] Novopharm's argument is premised on the observation that the same or similar evidence is being used by Lilly in different proceedings and that there is therefore a risk that Lilly would be recovering costs that are or could be referable to other proceedings. That, however, is purely a matter of taxation. A party seeking to have its costs taxed or assessed can only recover those costs it can establish to have been reasonably incurred in the prosecution or defence of the proceedings for which they are awarded. One expects that Lilly's experts and counsel do not charge twice for the same work, and that if a particular disbursement has already been recovered as costs in a matter, the disbursement is not claimed - or the recovery is credited - in subsequent taxation of costs involving the same charge. As to Novopharm's argument that "expenses incurred for the benefit of several matters should not be pinned exclusively to Novopharm simply because this motion represents Lilly's first opportunity to recover its costs" it is a specious argument. Again, the issue of whether costs were incurred and are properly recoverable in relation to a specific proceeding is a matter of taxation. Furthermore, Novopharm has triggered a legal proceeding through the filing of a Notice of Allegation. It chose the timing of its filing; it chose to withdraw the Notice of Allegation and the timing thereof. These choices were not forced upon it by anything Novopharm did or did not do. By exercising this choice, it became liable to pay all Lilly's party-and-party costs properly and reasonably incurred in the prosecution of this proceeding. There is no injustice in giving Lilly its due.
[12] Accordingly, I find that there are no reasons to deviate from the general rule that Lilly's costs of these proceedings should be awarded to it on a party-and-party basis.
[13] I understand from Lilly's motion and Novopharm's response that, whatever my decision regarding the request that costs be awarded on a solicitor-client scale, it is part of the prayer for relief that I should assess and award, so far as can be supported on the evidence before me, costs as a lump sum rather than simply remitting the matter to a taxation officer.
[14] As to the Column of the Tariff upon which the taxable services ought to be assessed, proceedings under the Regulations do tend to be more complex than most applications, but mainly by reason of the technical nature of the evidence and the need for expert evidence. The added costs which the preparation of expert evidence represent can however be compensated under item G(27) of the Tariff, as Novopharm has done in the draft bill of costs contained in its motion record. The record before me does not otherwise establish that these proceedings were more complex or difficult than other proceedings under the Regulations. I therefore adopt the assessment of taxable services prepared by Novopharm on the basis of the high end of Column III of the Tariff, in the amount of $10,207.80.
[15] As for disbursements, the affidavit of Nancy Schuurmans establishes that all disbursements set out in the draft bill of costs presented by Lilly were incurred and invoiced to Lilly in the preparation and for the purposes of these proceedings. The charges appear consistent with the record, showing that Lilly has prepared and filed nine affidavits, of which eight were expert affidavits. I therefore find that Lilly has established the reasonableness of these disbursements on a prima facie basis. While it is true that Lilly did not file invoices or supporting documents, it did not have to do so to establish a prima facie case. Novopharm had the opportunity to cross-examine on Ms. Schuurmans' affidavit and demand production of the supporting documents. It chose not to do so, and the evidence it tendered in response falls short of showing that the disbursements claimed were not in fact incurred for this matter or were excessive or unreasonable. Disbursements are therefore assessed at $73,277.71.
[16] Success being divided, no costs are awarded on this motion.
IT IS ORDERED THAT:
1. The within application is discontinued.
2. The Applicant shall have its costs of the application, in the lump sum of $83,485.50, payable solely by the Respondent Novopharm Inc.
3. There shall be no costs on this motion.
"Mireille Tabib"
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