AB Hassle v. Genpharm Inc., 2004 FC 892

Date: 20040622

Docket: T-2005-01

Citation: 2004 FC 892

BETWEEN:

                                             AB HASSLE, ASTRAZENECA AB and

                                                  ASTRAZENECA CANADA INC.,

                                                                                                                                          Applicants,

                                                                         - and -

                        GENPHARM INC., TAKEDA CHEMICAL INDUSTRIES LTD.

                                                and THE MINISTER OF HEALTH,

                                                                                                                                     Respondents.

                                            REASONS FOR ORDER AND ORDER

LAYDEN-STEVENSON J.

[1]                This motion arises out of my judgment dated December 11, 2003, wherein I granted the applicants' application for an order prohibiting the Minister of Health from issuing a notice of compliance (NOC) to Genpharm with respect to its 10 mg and 20 mg omeprazole capsules until after expiration of the four patents that were in issue. With respect to costs, I ordered as follows:

Astra and Takeda are entitled to their costs throughout against Genpharm, such costs to be taxed on the ordinary scale. No costs will be awarded for or against the Minister.

[2]                The applicants AB Hassle, AstraZeneca AB and AstraZeneca Canada Inc. (collectively Astra) and the respondent Takeda, pursuant to Rule 403 of the Federal Court Rules, 1998, request an order providing directions to the assessment officer regarding the assessment of costs. Specifically, they request that I direct that costs be assessed in accordance with the highest end of column V of Tariff B. They additionally request that directions issue to the assessment officer regarding various items of the tariff. In the alternative, they seek an extension of time to bring the motion under Rule 397. At the hearing, counsel indicated that, while not withdrawing the alternative request, the applicants were "hanging their hat" on Rule 403.

The motion under Rule 397

[3]                I will address the alternative request first because I am not satisfied that the prerequisites for the granting of an extension of time have been made out. The conditions are delineated in Canada (Attorney General) v. Hennelly (1999), 244 N.R. 399 (F.C.A.). Neither Astra nor Takeda have provided evidence of a continuing intention to pursue the requested relief. The statement that "the jurisprudence fully supports the position that the appropriate rule to obtain increased costs is Rule 403, rather than 397" does not, in my view, constitute a reasonable explanation for the delay and no other reason has been advanced. The Rules require that a motion pursuant to Rule 397 be brought within 10 days after the making of an order. Taking into account the Christmas recess, the deadline for filing the motion was January 8, 2004. The motion was filed on January 26, 2004, and is out of time.

[4]                Additionally, the stated basis for the motion is that the question of the scale of costs "should have specifically been dealt with but was not" (Rule 397(1)(b)). There are two reasons why this submission fails. First, Rule 400 does not require the court to specifically refer to a particular scale when awarding costs. Since costs were awarded in the order, it cannot be said that the issue of costs was overlooked or accidentally omitted. Second, by virtue of Rule 407, column III of the table to Tariff B is the ordinary scale. Thus, my order did specify the scale. Even if I were persuaded that Astra and Takeda are correct that the scale must be specified, and I am not, Rule 397(1)(b), which requires that a matter that should have been dealt with has been overlooked or accidentally omitted, does not apply.

The motion under Rule 403

[5]                In its notice of application, Astra requested "costs". In Part IV of the Memoranda of Fact and Law, both Astra and Takeda requested "costs". The hearing of the application was set for five days and was completed in four and one half. Neither counsel for Astra nor counsel for Takeda addressed the issue of costs. Neither requested an opportunity to address costs either orally or by way of written submissions. Absent any indication from the parties that they were seeking costs other than on the normal basis - party and party costs in accordance with column III of the table to Tariff B - I awarded costs on the ordinary scale. The primary issue now is whether Rule 403 permits me to direct the assessment of costs on an increased scale. In my view, it is not open to me to provide that direction and even if it were, I would decline to do so in any event.

[6]                Rule 403 provides:

[7]                Astra and Takeda refer to Baker Petrolite Corp. v. Canwell Enviro-Industries Ltd. (2002), 23 C.P.R. (4^th) 349 (F.C.A.) (Baker Petrolite), Eli Lilly & Co. v. Novopharm Ltd. (1998), 83 C.P.R. (3d) 31 (F.C.T.D.) and Consorzio del Prosciutto di Parma v. Maple Leaf Meats Inc. (2002), 22 C.P.R. (4^th) 177 (F.C.A.) (Consorzio). They submit that in all three decisions, notwithstanding an order granting costs, the respective courts granted an order for fixed costs that departed from column III of Tariff B. Relying on Consorzio in particular, Astra and Takeda refer to the comment of the majority that "a motion under rule 403 must be considered a statutorily sanctioned procedure for the amendment or variation of a judgment". Accordingly, they argue that, following the noted jurisprudence and taking into account that the parties did not make submissions on costs, it is open to me to direct the assessment of costs on an increased scale pursuant to Rule 403.

[8]                I do not disagree that Consorzio permits an amendment or variation of a judgment. However, in the context in which the comment was made, Mr. Justice Rothstein was referring to circumstances where the judgment did not include an order for costs. Justice Rothstein also stated that Rule 403 is available in circumstances where the court has awarded "costs" without specification. In Consorzio, the court was ruling on a motion regarding an order for "costs". The word "costs", without more, lacks specificity. Absent indication to the contrary, under Rules 407 and 400(5), this means costs according to column III of the table to Tariff B. In my view, Consorzio stands for the proposition that where there is no specificity regarding an order for costs, and no directions are otherwise sought, the default provision then applies and costs will be assessed at Column III.

[9]                The costs in the impugned order provide direction to the assessment officer because costs are awarded on the ordinary scale. Astra and Takeda do not suggest that the ordinary scale can be taken to mean anything other than column III. Thus, a motion for directions to assess under a different column is, in substance, nothing other than a motion for a variation of the judgment; it is not a request for directions. I refer to the comments of Mr. Justice Strayer in Canada v. Canadian Pacific Ltd. (2002) 289 N.R. 159 (F.C.A.) at paragraphs 1 and 2 wherein he stated:

[...] In our judgment we dismissed the appeal "with costs".

The respondent now appears to want the Court to reconsider its judgment of December 21, 2001. The motion purports to be brought under Rule 403 for "directions" that the costs awarded are to include costs in other courts and in other proceedings. But what is now being sought is an award of costs which was not made by the Court in its judgment. That is not permitted under Rule 403.

[10]            Additionally, the moving party in Consorzio was seeking increased costs on a lump sum basis. Mr. Justice Rothstein determined that Rule 403 does not preclude "directing the assessment officer to assess increased costs on the basis of a lump sum". That is not what is being sought here. Astra and Takeda are requesting that I depart from my choice of column under the Tariff. Such a request is entirely different from that made in Consorzio. While Mr. Justice Décary (dissenting in part) had doubts about allowing a variation to provide for a lump sum, he was willing to consider it ( paragraphs 25-26). The court has, in the past, expressed a preference for awarding lump sum costs. In Barzelex v. "EBN Al Waleed" [1999] F.C.J. No. 2002, Mr. Justice Hugessen noted:

In my view, as a matter of policy the Court should favour lump sum orders. It saves time and trouble for the parties and it is a more efficient method for them to know what their liability is for costs.

See also: Baker Petrolite, supra.

[11]            Astra and Takeda, by their submissions, seek to persuade me that the terms of my order are wrong or inappropriate in all of the circumstances. It is open to Astra and Takeda to take issue with my award of costs. It is their unqualified right to do so in the appropriate manner, i.e., by appealing my order. The purpose of Rule 403 is to obtain precision with respect to costs: Trade Arbed Inc. v. Toles Ltd. (2000), 196 F.T.R. 299 (T.D.). It does not provide an avenue to vary an order that specifies the costs to be awarded.

Considerations under Rule 400(3)

[12]            In the event that I am wrong in my reasoning regarding the request for a direction that costs be assessed at the top end of column V of Tariff B, having now had the benefit of submissions in relation to costs, I would not be inclined to grant that request in any event.

[13]            Regarding the argument that my order ought to reflect the costs ordered by Madam Justice Dawson in relation to proceedings between the same parties and involving the same patents, I fail to see why this is so. As I understand it, there was no hearing on the merits in that matter. The proceeding was discontinued on the eve of the hearing and Justice Dawson, among other things, found that costs had been "thrown away". I consider that order to be discrete. It dealt with the particular set of circumstances existing at the time and is not analogous to the circumstances that are before me.

[14]            Astra and Takeda argue that they are entitled to the increased scale of costs when regard is had to the result of the proceeding, the importance and complexity of the issues and the amount or volume of work. I begin by stating that this was not a patent infringement or validity action. It was an application for an order of prohibition. Thus, the evidence was filed by way of affidavit and the issue for determination was whether the generic company was justified in its allegations of non-infringement or invalidity. It is intended that such matters be dealt with summarily.

[15]            Success normally entitles a party to costs, not increased costs. Costs should be neither punitive nor extravagant. It is a fundamental principle that an award of costs represents a compromise between compensating a successful party and not unduly burdening an unsuccessful party: Apotex v. Wellcome Foundation Ltd. (1998), 159 F.T.R. 233 (F.C.T.D.), aff'd. (2001) 199 F.T.R. 320 (F.C.A.). The discretion to order increased costs is not to be exercised lightly and is the exception: Consorzio, supra.

[16]            It is true that intellectual property cases frequently present complex facts and give rise to difficult issues. However, general tariffs are set and there is no provision that patent cases should be accorded a treatment different from other types of cases: Stiga Aktiebolag v. S.L.M. Canada Inc. (1991), 34 C.P.R. (3d) 258 (F.C.T.D.); Reliance Electric Industrial Co. v. Northern Telecom Ltd. (1990), 30 C.P.R. (3d) 469 (F.C.T.D.). In Monsanto Canada Inc. v. Schmeiser (2002), 19 C.P.R. (4^th) 524 (F.C.T.D.), aff'd. (2002), 22 C.P.R. (4^th) 455 (F.C.A.), Mr. Justice MacKay addressed the issue of awarding higher than normal party-and-party costs, as represented in Tariff B by column III, in the context of a patent infringement action. He concluded that, in relation to the high volume of work and the greater expenses involved, the costs reflecting those consequences should not be expected to be borne by the defendants. They are an aspect of overall business expenses. The fact that some inventions may be inherently more expensive to defend than others is a factor that should not be reflected in a higher than normal level of party-and-party costs.

[17]            Regarding the importance and complexity of the issues, it is the legal significance and complexity, including the number of issues, that are to be considered and not the factual subject matter: TRW Inc. v. Walbar of Canada Inc. (1992), 43 C.P.R. (3d) 449 (F.C.A.); Unilever PLC v. Procter & Gamble Inc. (1995), 61 C.P.R. (3d) 499 (F.C.A.); Porto Seguro Companhia De Seguros Gerais v. Belcan S.A. (2001) 214 F.T.R. 291 (F.C.T.D.).

[18]            Astra and Takeda submit, and tendered evidence to establish, that the drug LOSEC is a commercially successful and economically important drug to each of them. Counsel representing Astra at the hearing (not on the motion) swore an affidavit stating that the proceeding was one of the most complex proceedings with which he had been involved both from a legal and scientific perspective. Takeda submitted evidence that a patent agent assisted counsel in preparation for the hearing and at the hearing.

[19]            No one suggested that there was a novel issue of law to be determined. The proceeding did not involve issues that extended beyond the immediate interests of the parties involved. Astra's counsel's affidavit contains no specificity regarding the broad statement that he considered the matter to be complex from either a legal or a scientific perspective. I do not consider the submissions with respect to complexity to be compelling.

[20]            As for the amount of work, it is indisputable that the record was voluminous. There were four patents involved and the record consisted of more than 30 volumes containing 8861 pages. Additional volumes of compendia were submitted during the hearing - 6 for Astra, 6 for Genpharm and 2 for Takeda. The memoranda of fact and law were lengthy - 75 pages for Astra and Genpharm and 34 pages for Takeda. Astra filed 73 authorities; Genpharm filed 39, and Takeda filed 15. While a significant amount of the evidence was imported from three previous proceedings, for which costs have already been awarded, significant additional evidence was added. Volume can be a relevant factor in assessing costs: Unilever PLC, supra.

[21]            In these circumstances, I agree that the amount of work is such that greater precision regarding costs, within the column, is warranted. I am of the view that it is open to me, pursuant to Rule 403, to direct that the costs to be awarded on the ordinary scale should be at the upper end of column III.

Specific Tariff Items

[22]            There are additional requests for directions regarding specific items of the Tariff, specifically item 14(b), item 24, and a number of requests for item 27. I concur with the comments of Mr. Justice Décary, writing for a unanimous court, in Wihksne v. Canada (Attorney General) (2002), 299 N.R. 211 (F.C.A.) when he stated that, absent special considerations, a factual determination of costs is better left in the hands of specialized taxing officers. All of the items requested under item 27 should be left to the assessment officer. I will address the requests with respect to item 14(b) and item 24 because, in the absence of directions from the court, the assessment officer does not have authority to deal with them.

[23]            Both Astra and Takeda request that directions be provided to the assessment officer to assess second counsel fees for each of them, for attendance at the hearing, under item 14(b). I am prepared to allow Astra's request. Astra carried the argument with respect to all four patents in issue. The arguments were divided between two counsel and it is both reasonable and fair to allow the second counsel fees.

[24]            I am not so inclined with respect to Takeda's request. Takeda was concerned with only one of the four patents. It adopted the arguments of Astra regarding its patent and made additional submissions. While two counsel presented argument, in my view, it was not necessary to have second counsel to argue the "onus of proof" issue. This issue had been canvassed by Astra, and Takeda's supplemental submissions could have been accomplished through one counsel. While Takeda's counsel's attendance at the hearing was necessary until counsel was called upon to argue, Takeda required only 4 ½ hours out of 4 ½ days to present its submissions. I am not prepared to grant Takeda's request for second counsel costs.

[25]            The request in relation to item 24 relates to travel expenses for Takeda's counsel to attend the cross-examinations of Dr. Rowe and Dr. Brennan and for travel expenses for counsel to attend the hearing. Genpharm does not take issue with the first request, but argues that the second should be denied because the Requisition for Hearing indicated that the "hearing should preferably be held in Toronto, although other cities such as Ottawa and Montreal are acceptable". Since Takeda did not dispute this choice of venue, Genpharm maintains that it should not be liable to Takeda for its travel costs. In my view, parties should not be penalized for indicating a willingness to be flexible. Two counsel were based in Toronto and one was based in Ottawa. It was inevitable that someone would have to travel. It is not unreasonable that Takeda's counsel be permitted to claim economy class airfare between Ottawa and Toronto as a travel expense for his attendance at both the cross-examinations of Dr. Rowe and Dr. Brennan as well as for his attendance at the hearing.

[26]            Success on the motion has been divided, but for the most part, Genpharm has been successful. If the parties are unable to agree on the costs of the motion, I will accept written submissions, not to exceed three pages double-spaced, to be filed within ten days of the date of the reasons for order and order herein.

                                               ORDER

IT IS HEREBY ORDERED THAT the assessment officer is directed as follows:

1.          Astra and Takeda are entitled to their costs throughout against Genpharm, such costs to be taxed at the upper end of column III of Tariff B.

2.          Second counsel fees are to be assessed for Astra pursuant to Item 14(b) of Tariff B.

3.          Economy class airfare between Ottawa and Toronto is to be assessed for Takeda's counsel with respect to his attendance at the cross-examinations of Dr. Rowe and Dr. Brennan and for his attendance at the hearing.

4.         If the parties cannot agree on the costs of the motion, written submissions, not to exceed three pages double-spaced, are to be filed within 10 days of the date of this order.

__________________________________

   Judge

Ottawa, Ontario

June 22, 2004

                         FEDERAL COURT OF CANADA

                  Names of Counsel and Solicitors of Record

DOCKET:                                           T-2005-01

STYLE OF CAUSE:             AB HASSLE et al.

Applicants

- and -

GENPHARM INC. et al.

Respondents

PLACE OF HEARING:                      TORONTO, ONTARIO

DATE OF HEARING:                       MAY 12, 2004

REASONS FOR ORDER

AND ORDER BY:                             LAYDEN-STEVENSON J.

DATED:                                               JUNE 22, 2004

APPEARANCES BY              Ms. Nancy P. Pei

For the Applicants

Ms. Martha Savoy

For the Respondent, "Takeda Chemical

Industries Ltd."

Ms. Kamleh J. Nicola

For the Respondent, "Genpharm Inc."

SOLICITORS OF RECORDS:         Ms. Nancy P. Pei

Smart & Biggar

Toronto, Ontario

For the Applicants

Ms. Martha Savoy

Gowling, Lafleur, Henderson LLP

Ottawa, Ontario

For the Respondent, "Takeda Chemical

Industries Ltd."

Ms. Kamleh J. Nicola

Sim, Hughes, Ashton & McKay LLP

Toronto, Ontario

For the Respondent, "Gempharm Inc."

Morris Rosenberg

Deputy Attorney General of Canada

For the Respondent, "The Minister of Health"