Hassle v. Apotex Inc., 2002 FCT 222

                                                                                                                                            Date: 20020228

                                                                                                                                       Docket: T-1747-00

                                                                                                                Neutral citation: 2002 FCT 222

Ottawa, Ontario, this 28^th day of February, 2002

PRESENT: THE HONOURABLE MR. JUSTICE BLANCHARD

BETWEEN:

                                                AB HASSLE, ASTRAZENECA AB and

                                                    ASTRAZENECA CANADA INC.

                                                                                                                                                      Applicants

                                                                              - and -

                                                                 APOTEX INC. and

                                                        THE MINISTER OF HEALTH

                                                                                                                                               Respondents

                                               REASONS FOR ORDER AND ORDER

NATURE OF PROCEEDINGS:

1                      This is a motion by the respondent, Apotex Inc. ("Apotex") for an order striking the affidavit of Jacinta M. De Abreu, sworn November 27, 2001, the affidavit of Yoon Kang, sworn October 23, 2000, as well as paragraphs 6-11 of the affidavit of Karen Feltmate, sworn October 5, 2000.

FACTS:

2                      On August 1, 2000, Apotex Inc. provided a notice of allegation pursuant to the Patented Medicines (Notice of Compliance) Regulations, SOR/98-166 ("Regulations") in respect of Apo-Omeprazole tablets. In the notice of allegation, Apotex alleged that no claim for the medicine itself and no claim for the use of the medicine in Canadian Patents of the applicants Nos. 1,292,693, 6,302,891 and 2,166,483 (collectively the "Patents") would be infringed by the making, constructing, using or selling by Apotex of its Apo-Omeprazole tablets.

3                      In response to the notice of allegation, the applicants filed a notice of application seeking an order prohibiting the Minister from issuing an notice of compliance to Apotex until after expiration of the Patents. The applicants also seek a declaration that the notice of allegation does not comply with and does not constitute a notice of allegation under the Regulations.

4                      The grounds for the application were the following:

(1)        that the notice of allegation fails to identify the drug or active ingredient for which Apotex seeks approval;

(2)        that the notice of allegation lacks adequate details to permit the applicants to assess whether or not the allegation is justified;

(3)        that the notice of allegation is an abuse of process in view of earlier Court proceedings between the same parties (Court File Nos. T-179-98 and T-180-98);

(4)        that the allegation of non-infringement is not justified.

5                      By notice of motion dated October 6, 2000, Apotex sought an order, pursuant to paragraph 6(5)(b) of the Regulations, dismissing the application on the grounds that it was frivolous, vexatious and an abuse of process ("dismissal motion").

6                      In support of the dismissal motion, Apotex relied upon an affidavit of Dr. Bernard Sherman affirmed October 6, 2000 and an affidavit of its expert Dr. Sefton sworn October 24, 2000.         

7                      In response to the dismissal motion, the applicants relied, among other affidavits, upon the affidavits of Karen Feltmate, and Yoon Kang. The Feltmate affidavit addresses facts relevant to the notice of allegation being an abuse of process and facts relating to the non-compliance of the notice of allegation for not identifying the active ingredient. The Kang affidavit also addresses facts pertaining to the applicants' argument that the notice of allegation is an abuse of process.

8                      By order dated November 29, 2000, Associate Senior Prothonotary Giles granted the relief sought by Apotex and dismissed the application as frivolous, vexatious and abusive.

9                      On appeal by the applicants, Mr. Justice Blais, by order dated May 25, 2001, set aside the order of the Associate Senior Prothonotary Giles. However, in his reasons, Mr. Justice Blais made certain observations agreeing in part with the decision of the Associate Senior Prothonotary regarding the procedural complaints made by the applicants. Such observations are:

-           (Paragraph 34, Blais J., reasons for order) "I agree with the Prothonotary that the Regulations do not require that the drug or active ingredient be identified in a notice of allegation."

-           (Paragraph 41, Blais J., reasons for order) "I agree with the Prothonotary that the matter is not res judicata nor that it is an abuse of process."

-           (Paragraph 65, Blais J., reasons for order) "..., I agree with Apotex that construction of a patent is always engaged by an assertion of non-infringement in any proceeding. Furthermore, as was pointed out by Apotex, the applicants had the opportunity to file expert evidence as to the construction of the Patents. I do not believe that the Prothonotary erred in making a determination about patent construction on a motion for summary dismissal."

10                  Following the order of Mr. Justice Blais, the applicants brought a motion for disclosure of information relevant to Apotex' Apo-Omeprazole tablets. By order dated July 16, 2001, Prothonotary Aronovitch ordered disclosure of Apotex's regulatory submission and verification of same by the Minister.

11                  The applicants, by letter dated November 30, 2001, indicated their intention to adduce the following affidavits as part of their evidence in the underlying application:

           (a)        The affidavit of Jacinta De Abreu, a law clerk employed by the applicant's counsel, attesting to the chronology and detail of the interlocutory proceedings in this application, notably the dismissal motion and the disclosure motion. In so doing the applicants propose to adduce the affidavits of Dr. Sherman and Dr. Sefton by attaching them to the Abreu affidavit as exhibits filed in respect of the dismissal motion together with all transcripts from cross-examinations on those affidavits.

           (b)        The affidavits of Yoon Kang and Karen Feltmate, both of which were also used as evidence on the dismissal motion and which deal with issues relevant to the notice of allegation, abuse of process, and non-compliance of the notice of allegation.

ISSUES:

           1.         Should this motion be heard and determined by a motions judge or be deferred to the hearing judge?

2.         Are the observations of Mr. Justice Blais regarding the procedural complaints raised by the applicants, in his order in the dismissal motion determinative and binding on the parties, based on the principle of res judicata and if so, are the affidavits of Kang and Feltmate, which purport to adduce evidence on the issues dealt with by Mr. Justice Blais, relevant?

           3.         Is the Affidavit of Jacinta De Abreu irrelevant on the basis that it constitutes pure hearsay?

DISCUSSION:

12                  Apotex seeks to strike the Kang affidavit and paragraphs 6 to 11 of the Feltmate affidavit on the basis that the issues to which that evidence is directed have been decided by the Court and hence there is an estoppel due to the application of res judicata. These affidavits address facts relevant to the notice of allegation being an abuse of process and facts relating to the non-compliance of the notice of allegation for not identifying the active ingredient of the drug. I am of the view that res judicata does not apply in these circumstances. In my view, Mr. Justice Blais' observations in his reasons setting aside the order of Associate Senior Prothonotary Giles were not and could not form part of the ratio of his decision. His decision was to effectively "dismiss" the dismissal motion, and the observations made in his reasons regarding the procedural complaints made by the applicants were not, in my view, necessary for the decision. It is also apparent that the applicants, who were successful on the motion, could not appeal the impugned observations, since an appeal can only be taken from an order and not from reasons. I am in substantial agreement with the arguments advanced by the applicants on this issue, in particular those submissions found in paragraphs 31 to 39 of the applicants' written representations. I therefore conclude that the Kang and Feltmate affidavits should not be stuck on the principle of res judicata or issue estoppel.

13                  Apotex seeks to strike the De Abreu affidavit on the basis that it is irrelevant, in that it is "pure hearsay" evidence. Apotex also asserts that it would be prejudiced in that it would be deprived of any right of cross-examination as to the truth of the contents of the exhibits attached to the affidavits.

14                  The affidavit of De Abreu is stated to be based on personal knowledge, and provides context and a chronology of activity in the proceeding to date. The chronology and the exhibits which form part of the De Abreu affidavit provide factual evidence of the following matters:

(1)        Apotex, in resisting the disclosure motion, took the position that the Patents contain claims to compositions (as distinct from claims containing process limitations);

           (2)        Apotex submitted in its written representations in opposition to the disclosure motion, that the Court had no authority to order Apotex to produce samples;

           (3)        The affidavits of Dr. Sherman and his cross-examination, transcript, which contain statements pertaining to the composition of Apotex's Apo-Omeprazole tablets;

           (4)        The affidavit of Apotex's expert, Dr. Sefton and the transcript containing the cross-examination thereon, which contain statements pertaining to construction of the Patents.

15                  The applicants submit that the De Abreu affidavit should not be excluded at this stage of the proceedings since it is not presented for the truth of its contents but rather to provide context and to detail the chronology of the proceeding. They also allege that this affidavit provides evidence on positions adopted by Apotex on legal issues in the case which may preclude Apotex from taking a contrary position before the hearing judge.

16                  The applicants also argue that the affidavits attached to Jacinta De Abreu's affidavit fall into the hearsay exception on two grounds. Firstly, in applying the principled approach of necessity and reliability and, secondly, in using the recognized exception of admissions.

17                  With respect to the first ground, the applicants argue that they meet the test of reliability in that both Dr. Sefton and Dr. Sherman gave evidence on the dismissal motion on behalf of Apotex and that Apotex is ill placed to assert their evidence lacked reliability. To support the test of necessity, the applicants assert that since both witnesses were proffered by Apotex, there would be no other way that the applicants could ensure that the statements made by these witnesses will find their way into evidence, there being no guarantee that Apotex will file the same or any evidence from either witness.

18                  On the basis of the second ground, the applicants claim that when Drs. Sefton and Sherman were cross-examined on their evidence for Apotex on the construction of the claims of the Patents, they recanted their positions set out in their affidavits and agreed with the applicants' construction of the claims. They also state that the admissibility of Dr. Sefton's evidence is further supported by the fact that he was ordered by Mr. Justice Blais to re-attend to answer other questions previously refused.

19                  Apotex submits that since the evidence in Jacinta De Abreu affidavit pertains to issues that have been fully determined in the Dismissal Motion and the Disclosure Motion, that the affidavit is irrelevant to the sole remaining issue to be determined on this Application, namely, whether Apotex's allegation of non-infringement is justified. Consequently, Apotex argues that the affidavit should be struck. As discussed above in these reasons, I have determined that the res judicata argument advanced by Apotex cannot be sustained in these circumstances.

20                  In addition, the respondents allege that Jacinta De Abreu has no personal knowledge of the contents of the affidavit, particularly, of the two appended affidavits of Drs. Sherman and Sefton. The respondents argue, therefore, that all affidavits and cross-examinations introduced by way of affidavit sworn on information and belief is hearsay. The only personal knowledge she has is of the actual existence of the affidavits.

21                  The prejudice Apotex claims to suffer is the deprivation of any right of cross-examination on the affidavits.

22                  Mr. Justice Rothstein, in the case of James v. Canada (M.N.R.), 1996 F.C.J. 1053, para. 2 and 3, stated that affidavits used elsewhere can be used:

The banking documents are attached to affidavits of bank employees who deposed that the documents are ordinary records of the bank, maintained in the custody of control of the bank, and that the entries in question were made in the usual and ordinary course of business of the bank. However, the affidavits were sworn in 1984 in respect of certain criminal proceedings against the plaintiff in the Provincial Court Criminal Division of the Judicial District of York. Those proceedings relate to the present one in that they arise out of the same events in respect of the plaintiff's income tax liability.

The plaintiff objects to the admission of the documents on the grounds that the affidavits are "stale-dated" and were sworn in respect of criminal proceedings and not these proceedings. That the affidavits were sworn in respect of criminal proceedings is of no consequence. Nothing in section 29 requires that the affidavits thereunder be case specific. As long as the affidavit produced contains the information required by subsection 29(2), the copies of entries in the books of the bank shall be admitted.

23                  I am of the view that the De Abreu affidavit is not hearsay evidence. The exhibits annexed to the affidavit are either affidavit evidence or arguments properly tendered in interlocutory motions to the within proceeding, and are therefore properly before the Court. Further it should be noted that the affidavits of Drs. Sherman and Sefton were originally tendered by Apotex and not made on information and belief and have been subject to cross-examination.

24                  If I am wrong, I am of the view that the impugned affidavit would still be admissible. The issue is whether this evidence is admissible as an exception to the hearsay rule.

25                  It is apparent that with the exception of the evidence of Dr. Sherman and Dr. Sefton and the written representations submitted by Apotex on the disclosure motion, the De Abreu affidavit and its exhibits do not seek to rely on the truth of the contents of the exhibits. I will therefore deal firstly with this evidence of Drs. Sherman and Sefton and exhibits tendered for the truth of their contents.

26                  The Federal Court of Appeal in Canadian Tire Corporation Limited v. Part Source Inc. (2000), 11 C.P.R. (4th) 386 at 390-391, held that hearsay evidence is admissible in such proceedings in accordance with the principled approach to hearsay. The Supreme Court of Canada, in R. v. Khan, [1990] 2 S.C.R. 531 and in R. v. Smith, [1992] 2 S.C.R. 915, recognized the so-called "principled approach" and held that hearsay evidence may be admitted if it is demonstrated that the evidence is reliable and that its admission is necessary.

27                  With respect to the evidence in issue, both Dr. Sefton and Dr. Sherman gave evidence under oath in the present proceeding on behalf of Apotex. It is difficult for Apotex to assert that the evidence, at this point, is not reliable or lacks credibility. I am satisfied that on the evidence available to me on the record, that threshold reliability is established, as defined in R. v. Starr, [2000] 2 S.C.R. 144 at p.254.

28                  With respect to the question of necessity, I am in substantial agreement with the applicants' contention that since both witnesses were proffered by Apotex there is no way that the applicants can ensure that the statements made by these witnesses will find their way into evidence and there is no assurance that Apotex will file the same or any evidence from either witness. This is particularly likely since the original position advanced by Apotex has allegedly been recanted by its own expert on cross-examination. As a result, the applicants argue that there is no reasonable way in which they could tender the evidence. Moreover, the applicants argue that the statements made by Dr. Sherman and Dr. Sefton, as well as Apotex's written representations are admissible as against interest, a recognized exception to the hearsay rule. The applicants submit that Dr. Sefton was Apotex's expert on the construction of the claims of the Patents and allege that he recanted the position set out in his affidavit and agreed with the applicants construction of the claim. The applicants contend that such admissions are admissible. I will leave for the hearing judge to determine whether this evidence does constitute an admission and one sufficient to be considered an exception to the hearsay rule. I am however satisfied that reliability and necessity have been established for the purpose of admitting the evidence of Dr. Sherman and Dr. Sefton and the written representations submitted by Apotex on the dismissal motion as an exception to the hearsay rule.

29                  I am also of the view that since the balance of the materials in the De Abreu affidavit is not tendered for the proof of the truth of the contents but rather to demonstrate the context in which the proceeding has developed, and that the applicants have satisfied me that this evidence may be useful at the hearing of this matter and should not be struck. It is, of course, for the hearing judge to determine what weight should be given this evidence.

30                  For the above reasons this motion will be dismissed.

                                                                            ORDER

THIS COURT ORDERS that:

1.         The motion by Apotex for an order striking the affidavit of Jacinta M. De Abreu, sworn November 27, 2001, the affidavit of Yoon Kang, sworn October 23, 2000, as well as paragraphs 6-11 of the affidavit of Karen Feltmate, sworn October 5, 2000, is dismissed.

2.                    The applicants will have their costs.

                                                                                                                                                               Judge