Date: 20090421
Docket: T-724-06
Citation: 2009 FC 399
BETWEEN:
ABBOTT LABORATORIES LIMITED
and
TAP PHARMACEUTICALS INC.
Applicants
and
THE MINISTER OF HEALTH, APOTEX
INC. and
TAKEDA PHARMACEUTICAL COMPANY LIMITED
Respondents
ASSESSMENT OF
COSTS - REASONS
Johanne Parent
Assessment Officer
[1]
On
April 25, 2006, a Notice of Application was filed under Section 55.2 of the Patent
Act and Section 6 of the Patented Medicines Regulations, seeking among
other relief, an order prohibiting the Minister of Health from issuing a Notice
of Compliance to Apotex for the production of the Apo-lansoprazole capsules. Further,
the respondent Apotex, filed a motion to dismiss the above application and by
order dated April 10, 2008, the Court (Madam Justice Simpson) granted that
motion and dismissed within the same decision, the application under Section
55.2 of the Patent Act and Section 6 of the Patented Medicines
Regulations, both with costs to the respondent Apotex. The Minister of
Health took no position and has not participated in this proceeding.
[2]
It
is worthy to note that both the main application and motion to dismiss were
scheduled to be heard at a three day hearing to start on March 18, 2008 with a further
3 days scheduled to commence on March 25, 2008. On the first day of hearing, only
the motion to dismiss was argued before the Court. The hearing of the application
was adjourned to May 21, 2008. Prior to the resumption of the hearing, the
Court granted the respondent Apotex’s motion to dismiss and dismissed the application.
[3]
Relying
on rule 400(3) of the Federal Courts Rules, counsel for the applicants
argued that there was “nothing inherently complex about this litigation.” It is
worth noting that Apotex claims that this file was of significant importance as
it affected its access to the Canadian market in respect to the Lansoprazole
capsules, however in its Bill of Costs, the respondent Apotex claimed the mid
or low-range of column III for all taxable services.
Timeliness of motion to
dismiss
[4]
One
of the contentious issues in this assessment of costs relates to the respondent
Apotex’s timing of the filing of their motion to dismiss the main application.
The applicants filed the originating notice of application seeking an order
prohibiting the respondent, the Minister of Health from issuing a Notice of
Compliance to Apotex regarding the production of the Apo-lansoprazole capsules,
on April 25, 2006. It was not until October 4, 2007 that the respondent Apotex
filed and served a motion to dismiss this application: seventeen months into
the proceeding. Said motion to dismiss was made returnable on November 1, 2007.
In the meantime, the applicants filed a motion for an order extending the
statutory stay and to adjourn Apotex’s motion to dismiss.
[5]
On
October 23, 2007, the Court (Madam Prothonotary Tabib) heard the applicants’
motion, delivering her order the next day. She dismissed the motion to adjourn
and scheduled the respondent Apotex’s motion to dismiss along with the
application on its merits to take place in Vancouver B.C. on March 18, 2008 for
three days and for a further three days beginning on March 25.
[6]
Applicants’
counsel argues that in awarding costs, the Assessment Officer should consider
that the duration of the proceeding was unnecessarily lengthened by the
respondent Apotex in delaying the filing of its motion to dismiss. It is
claimed that by not bringing the motion to dismiss in a timely manner, steps
such as the filing of experts’ affidavits had to be taken by the parties that
could have been avoided. Counsel for the applicants argues that such conduct
should be reflected in the Assessment Officer’s costs award in light of rules
409 and 400(3)(i), “In exercising its discretion, under subsection (1), the
Court may consider …. (i) any conduct of a party that tended to shorten or
unnecessarily lengthen the duration of the proceeding.” It is maintained that
the motion to dismiss relied on facts that were known on the date the
application was commenced, claiming that the respondent Apotex was aware, as of
the date of the Notice of Allegation, of the eligibility issue of the
Apo-lansoprazole.
[7]
In
her rationale, Madam Prothonotary Tabib deals with the manner the motion to
dismiss had been handled as follows:
….. What then of Apotex’s decision to
file, on October 3, 2007, more than 17 months into the 24 month stay, a motion
to dismiss pursuant to paragraph 6(5)(a) of the Regulations, based on
the same arguments it announced in its NOA, and the same evidence it filed on
the merits of the application? As a preliminary comment, Apotex’s motion was in
my view, not brought in a timely fashion. Apotex has led evidence explaining
what caused it to decide to bring that motion when it did, the cause being the
order of Justice Hugessen, dated August 29, 2007, upholding the decision of
Prothonotary Lafrenière to dismiss a similar application on the basis of
ineligibility for listing of a patent. That may explain why Apotex felt
confident enough about its chances of success to not want to wait anymore for
the hearing on the merits, but it in no way explains or justifies why the
motion could not – and should not – have been brought much, much earlier.
Still, the mere fact that Apotex, without
justification, delayed in bringing this motion for 17 months does not
necessarily entitle Abbott to an extension of the statutory stay. One must
consider whether, in the circumstances of this case, the mere fact that this
motion is brought prevents the timely determination of the application on its
merits and, as may be warranted, the issuance of a prohibition order…
…. Abbott then submits that
cross-examinations on the affidavits filed on the merits of the application and
the filing of application records ought to be suspended or stayed pending the
hearing and determination of Apotex’s motion to dismiss, and that this would
imperil the dates set aside for the hearing on the merits. However, there is
no evidence to support the necessity for a stay of the main application.
Abbott accepts that there is no reason in principle for any aspect of the
merits of an application to be stayed pending final determination of a motion
to dismiss. All cases must be considered on their particular facts and
circumstances. Here, Abbott cannot point to any prejudice whatsoever in
proceeding on the motion and on the application concurrently, save for the
possible waste of time and expenses if it turns out that the application is
dismissed on the motion. For this, however, Abbott has recourse in costs.
(Indeed, it is Apotex who chose the timing of its motion, and Apotex is
specifically urging that the application and motion continue to be prosecuted
concurrently). I am therefore satisfied that there is no reason to suspend the
prosecution of the main application pending the final determination of the motion
to dismiss…..
…. I now turn to the issue of when
Apotex’s motion is to be heard. Both parties were adamant that the motion has
to be heard, not only before the merits of the application but in advance and
independently of it. Both parties referred to the recent Court of Appeal’s
decision in Ratiopharm Inc. v. Wyeth et al., 2007 FCA 264, where the
Court stated that the purpose of paragraph 6(5)(a) of the Regulations
“can be achieved only if the motion is made and dealt with prior to the hearing
on the merits of the application” (at par. [36]). While it is most desirable
that such a motion be made at the outset of an application, so that it can be
dealt with in time for its objective to be met, I do not believe one should
interpret the Court of Appeal’s reasons in Wyeth to mandate the Court to
hear and determine such a motion before beginning the hearing of an
application, regardless of how late the motion is made, and regardless of
whether it will be possible to do so before the start of a scheduled hearing of
the application. To do so would leave the Court’s scheduling at the mercy of
the whims of the parties, who could chose to delay bringing such a motion until
the eve of a scheduled hearing, forcing the Court to adjourn the hearing so
that the motion could be dealt with, possibly even to final appeal.
Accordingly, while I accept that such a motion ought, if reasonably possible,
be heard and determined before a hearing on the merits, it may be that
circumstances will not permit it…..
...As for costs, Apotex was successful in
opposing Abbott’s request for a stay of proceedings in the main application and
the extension of the 24-month stay. Nevertheless, by the late filing of its
motion to strike, with an unrealistic return date on general sittings when a
special sitting of one day is clearly required, and without addressing in a
satisfactory manner the significant scheduling and procedural issues that arise
from its belated motion, Apotex has created immediate difficulties that
required, and should have been immediately referred to the attention of the
case management team. Abbott’s motion achieved that purpose, but in a
round-about manner. Much of the reproaches levelled against Apotex were either
overstated or irrelevant. Nevertheless, it is not appropriate to assess and
allocate by way of costs on this motion all the possible cost consequences of
the motion brought by Apotex, nor even of the possible withdrawal of that
motion by Apotex. Thus, Abbott shall have its costs of this motion, but in
accordance with the middle of column III of the Tariff…..
[8]
On
the timeliness of the motion to dismiss, Madam Prothonotary Tabib clearly
states that the applicants could have recourse in costs but also indicates that
the timing issue raised should have been referred to the attention of the Case
Management Team. The timeliness of the motion to dismiss was brought before
Madam Prothonotary Tabib who, in turn, made specific comments regarding
Abbott’s recourse on costs.
[9]
It
appears that Madam Prothonotary Tabib recognized the respondent Apotex’s delay
in awarding costs to the applicants, despite dismissing their motion. I am of
the opinion that the issue of timeliness raised before Madam Tabib once, should
have been raised before and decided by Madam Justice Simpson at the March 2008
hearing or later via a motion for directions pursuant to rule 403 of the Federal
Courts Rules.
Fees
[10]
Under
Item 2 of Tariff B of the Federal Courts Rules, the respondent Apotex
claims twenty-eight units as assessable services for the preparation and filing
of the affidavits of Jane P. Costaris, John Hems, Christopher Gleave, Robert
Langer, Harold Hopfenberg and Joanne Frosolone, as well as for the preparation
and filing of the responding application record. Assessment Officer Robinson
in Merck & Co. v. Canada (2007 FC 312) allowed under
Item 2, assessable services for multiple affidavits prepared for the same
application. Despite this view, Senior Assessment Officer Stinson in Abbott
Laboratories v. Canada (2008 FC 693) held, “The
key words in fee item 2 are Preparation … of all…respondents’ records or
materials. The use of the adjective “all” would embrace the experts’ affidavits.”
In accord with this later opinion and in spite of the obvious work that was put
in responding to this application, I conclude that a single Item 2 fee shall be
allowed. Therefore, a total of seven units will be allowed under Item 2.
[11]
The
claim made under Item 6 for the attendance of first counsel at the hearing
before Madam Justice Simpson on March 18, 2008, is allowed as claimed. Taking
into consideration that the Court did not provide any directions allowing fees
for second counsel, the claim for second counsel is disallowed: see Nature’s
Path Foods Inc. v. Country Fresh Enterprises (2007 FC 116).
[12]
In
keeping with article 2(2) of Tariff B: “On an assessment, an assessment officer
shall not allocate to a service a number of units that includes a fraction,” Item
13 (counsel fee for preparation of hearing) will be allowed at four units regardless
of the three and one half units claimed.
[13]
Under
Item 24 (travel by counsel), the respondent Apotex claims three units for each
counsel (first and second) to attend the hearing in Vancouver, B.C. on March
18, 2008. In the decision of Merck & Co. v. Canada (2007 FC 312), Assessment
Officer Robinson reviewed at length the state of the jurisprudence on the topic
of the discretion of the Court within the meaning of Item 24. In accordance
with his conclusion that the wording of Item 24 calls for explicit directions
from the Court and in view of the fact that the Court did not provide any
specific direction for travel fees, I disallow the claim made under Item 24.
[14]
Compensation
for the preparation of a compendium has been requested by the respondent Apotex
under Item 27. In their written submissions on costs, the applicants are right
to affirm that such materials was never required to be placed before the Court.
Nevertheless, the Court in her order of April 10, 2008 reflected that: “And
upon reviewing the material filed including compendia from both parties which I
found most helpful, experts’ reports, memoranda of fact and law and bound and
recent authorities.” The compendium is a document that is more likely to
be used in large files and as in this case, has been appreciated by the Court
in many other substantial files. The compendium is not a pleading within the
meaning of Items 2 or 15 of the Tariff but a summary of the documentation
already in the Court file and organized for the better use of the Court. Since this service is not addressed by the Tariff and was
considered useful by the Court, I will allow two units under Item 27. Item 27(b)
for the preparation of the Bill of Costs is allowed as claimed but under Item
26. Items 5 (preparation and filing of a motion) and 25 (services after
judgement) are allowed as claimed, at 5 and 1 units respectively.
Disbursements
[15]
In
assessing disbursements, the Assessment Officer’s role is to determine if costs
were incurred, and once this has been established, whether the costs were
reasonable and necessary. In the course of the hearing of this assessment, it
was conceded that there was not much dispute that costs were incurred during
this process. The contentious issue regards their reasonableness and necessity.
In argument, reference was made to rule 1(4) of Tariff B, “No disbursements,
others than fees paid to the Registry, shall be assessed or allowed under this
Tariff unless it is reasonable and it is established by affidavit or by the
solicitor appearing on the assessment that the disbursement was made or is
payable to the party.” This rule is unambiguous: only the fact that
disbursements were made and payable can be established by way of affidavit or
by solicitors appearing, not their reasonableness. Abbott Laboratories v. Canada (2008 FC 693
(A.O.) ) addressed that issue at paragraph 64:
Palmer
(decided December 21, 1979) addressed fact evidence and at pages 781-782 agreed
with case law referencing Browne that there can be no general or absolute rule
of evidence in the absence of cross-examination. John Sopinka et al.,
The Law of Evidence in Canada, 2nd ed. (Toronto:
Butterworths, 1999), pp. 954-956, at 16.146-16.148, addressed various
authorities and agreed. I note and agree with the taxing officer’s assertion in
paragraph 20 of Allied Signal that he was not bound by “a general affirmation
on the reasonableness of the fees and disbursements made by one of the counsel,
whatever the context in which it was made” and that reasonableness “in the
context of an assessment is the domain of the Taxing Officer” (there arising
out of correspondence between opposing counsel). Having accepted prima facie
that the costs were incurred, I must determine the reasonableness and necessity
of the various items of costs and allow, reduce or disallow each as I find
appropriate.
[16]
The
affidavit establishing costs in this case brings less than absolute proof. In Abbott
Laboratories (previously cited), Senior Assessment Officer Stinson stated:
However,
that is not to suggest that litigants can get by without any evidence by
relying on the discretion and experience of the assessment officer.
The proof here was less than absolute, but I think there is sufficient
material in the respective records of the Federal Court and the Federal Court
of Appeal for me to gauge the effort and associated costs required to
reasonably and adequately litigate Apotex’s position. A lack of details makes
it difficult to confirm whether the most efficient approach was indeed used or
that there were no errors in instructions, as for example occurred in Halford,
requiring remedial work. A paucity of evidence for the circumstances underlying
each expenditure make it difficult for the respondent on the assessment of
costs and the assessment officer to be satisfied that each expenditure was incurred
further to reasonable necessity. The less that evidence is available, the more
that the assessing party is bound up in the assessment officer’s discretion,
the exercise of which should be conservative, with a view to the sense of
austerity which should pervade costs, to preclude prejudice to the payer of
costs. However, real expenditures are needed to advance litigation: a result of
zero dollars at assessment would be absurd.
[17]
The
affidavit of Andrew R. Brodkin and exhibits attached, sworn on November 17,
2008, although succinct, is the only evidence presented that the disbursements
were made. Said affidavit brought evidence that the other side could have rebutted.
Since they have not taken that opportunity, the role of the Assessment Officer
is now to establish reasonableness and necessity on all challenged items on the
face of the evidence on file.
Expert fees – Jane
Costaris
[18]
The
respondent Apotex retained the services of four experts to prepare three
affidavits tendering evidence on different aspects of this case. One of these
experts, Jane P. Costaris signed an affidavit on April 23, 2007 providing
technical expertise in her assessment of the term “manufacturer” specified on
Form IV submitted to Health Canada. The applicants’ opinion on this affidavit
is that it supported an argument that had nothing to do with the motion to
dismiss and was therefore irrelevant.
[19]
It
is acknowledged that Madam Justice Simpson did not refer to this specific
affidavit in her decision and upon consultation of the Court record, it is
noted that the affidavit of Madam Costaris was discussed in the respondent
Apotex’s application record and, therefore, was part of the file before the
Court on March 18, 2008. Considering the view I expressed regarding costs and
the timeliness of the motion to dismiss, I consider that the parties had to be
fully prepared to proceed on both the motion to dismiss and the application on
its merits on March 18.
[20]
As
indicated to me several times during the course of this assessment and established
in Apotex Inc. v. Egis Pharmaceuticals (1991) 4 O.R. (3d) 321 by Mr.
Justice Henry, this case should not be approached from the perspective of
hindsight:
For the sake of clarity I add a
postscript. Whether a service is performed or engaged in contemplation of
adversarial proceedings in court is essentially a matter of judgment. I have
looked for the exercise of judgment, together with prudence, foresight and
imagination, in assigning services to the motion in this case as the test of
fairness, reasonableness and necessity in applying the guiding principles. It
is not appropriate to apply the test of hindsight (20/20 vision) to determine
whether a service charged for was an extra service or frill not reasonably
necessary to defend the client’s position. The time to view the decision to
commit services to the project is before the hearing or trial - - not on the
basis of hindsight which might indicate that as it turned out, the service was
unnecessary. In the case at bar, I did not even call on counsel for the defendants
yet it was essential that they be fully prepared in case I had done so.
[21]
I
am satisfied with the evidence provided regarding the billing of Jane Costaris’
services that the disbursement was made and paid by the client and with no
other argument from the opposing party on the reasonableness of hours or rates
charged, I allow the disbursement as claimed.
Expert fees – Michael
Lipp
[22]
In
its Bill of Costs, the respondent Apotex claims $54,828.32 for the expert fees
of Michael Lipp. Dr. Lipp did not present an affidavit in the course of this
matter. The respondent Apotex submits that Dr. Lipp is a Ph.D.; a colleague of
Dr. Langer who helped Dr. Langer put his ideas on paper in preparing his
expert’s affidavit. Dr. Lipp’s services would have been retained for provision
of functions beyond the expert report, as recognized in the Merck’s cases
(2007 FC 312 A.O. and 2007 FC 1035).
It is submitted that the nature of the work
performed by Dr. Lipp was beyond the ability of Mr. Brodkin as supervisory
counsel. Reference was made to the decision of Senior Assessment Officer Stinson
in Biovail Corporation v. Canada (2007 FCJ 1018) as upheld by Madam
Justice Simpson (2008 FC 278), regarding experts’ additional functions and
supervising counsel responsibility:
Experts may provide technical assistance
in addition to the work for their own reports and their oral evidence, an area
of case preparation beyond the capacity of supervising counsel. However, such
work potentially recoverable on full indemnity basis as a function of
reasonable necessity should not stray into areas for which supervising counsel
bear sole responsibility.
[23]
The
applicants submit that Dr. Lipp should not be indemnified as he did not
“testify” or provide any affidavit. By analogy, they refer to the decision of
Mr. Justice Wetston in Apotex Inc. v. Wellcome Foundation Ltd (1998 FCJ
1736) on directions to the assessment officer, where in the context of a trial,
Glaxo Wellcome Inc. were “not entitled to recover costs for fees and
disbursements related to experts not called at trial.” Reference is also made
to the additional reasons in Janssen-Ortho Inc. v. Novopharm Ltd (2006
FC 1333) where the Court (Mr. Justice Hughes) in dealing with directions
regarding the assessment of costs held that:
I am concerned with what has been
increasingly observed as mounting and often extravagant fees charged by expert
witnesses. While a party is free to engage a person for expert services and pay
whatever fee is negotiated, that fee should not become simply allowable on an
assessment. Therefore, such fees should, for assessment purposes, be capped for
days spent by the witness in attendance in Court, whether testifying or not, at
the lesser of fees actually charged or those charged for daily services to the
same client for senior counsel attending at trial.
[24]
The
applicants further indicate that there is no evidence regarding Dr. Lipp’s
qualifications, his expertise or experience. They brought forward the only
evidence of his presence on this file, in Mr. Brodkin’s affidavit: “Dr. Langer
was assisted by his colleague, Dr. Lipp, in the preparation of his affidavit
which allowed an efficient use of Dr. Langer’s time as well as an opportunity
to analyze and confirm the ideas of Dr. Langer. The collaborative effort put
forward by Dr. Langer and Dr. Lipp in finalizing Dr. Langer’s affidavit
minimized the potential confusion in expressing Dr. Langer’s opinion. The
affidavit was collaborative in a sense that Dr. Langer provided Dr. Lipp his
ideas and opinions who in turn expressed them on paper. In my experience, this
type of collaboration is common in the drafting of affidavits. Often experts
work alongside lawyers and other consultants to finalize this form of
affidavit.”
[25]
They
further cited Andrew Reddon for the applicants, in his affidavit sworn on
November 28, 2008: “Prior to the receipt of the affidavit of Mr. Brodkin and
Apotex’s bill of costs, I was unaware of the role, let alone the existence of
Dr. Lipp in this proceeding. I am unaware of any other expert in any other proceeding
who has drafted an affidavit (or prepared for a cross-examination) in the
“collaborative” manner of Dr. Langer and Dr. Lipp in this proceeding. The
collaboration between Dr. Langer and Dr. Lipp clearly did not result in an
efficient use of Dr. Langer’s time, when it is considered that Dr. Langer still
billed for over 100 hours, even by itself an unreasonably high amount,
considering the work that was required in this case.”
[26]
Considering
the lack of evidence on Dr. Lipp’s qualifications as expert and the fact that
he did not tender an affidavit, the applicants submit that it has not been
established that his fees are reasonable.
[27]
As
mentioned numerous times by Senior Assessment Officer Stinson, “assessment of
costs is, at its best, rough justice”. In all cases as in this one, once the
expenses have been proven, the services claimed must meet the threshold of
necessity and reasonableness. As set in Engine & Leasing Co. v. Atlantic
Towing Ltd (93 FTR 181), there is no automatic recovery for costs:
I should observe at the outset that we
are dealing with party-and-party costs. It is well established that parties
cannot recover all their costs under that kind of award. Also, compensation of
an expert witness during trial at the hourly rate allowed for preparation may
be found to be too generous. Further, there is no foundation for the notion
that counsel may incur any expert witness costs for which, in the event of
success, they will be fully compensated.
[28]
Dr.
Michael Lipp, as he is referred to in the affidavit of Andrew Brodkin, did not submit
an affidavit and evidence as to his expert qualifications or expertise cannot
be found in any of the documentation submitted. As per evidence on file, his
services were utilized to assist Dr. Langer in the preparation of his
affidavit, “to allow for an efficient use of Dr. Langer’s time”. As such,
through this “collaborative effort”, Drs. Lipp and Langer computed one-hundred
and sixty-six hours to draft Dr. Langer’s affidavit.
[29]
The
details of the duties performed are found on the invoices submitted in support
of the Bill of Costs:
April
14, 2007
-
Dr. Lipp: Review and analysis of the ‘548 Patent, the Apotex NOA and 23
Schedule A Documents attached thereto, the Apo-Lanzoprazole and Prevacid
photographs, the Biovail decision, the Prevacid Product Insert, the Zegerid
Prescribing Information Document, and he(sic) Affidavits of Sonia Atwell, Dr.
Levi and Dr. Byrn, discussions with Dr. Langer and Rick Tuzi, Drafting, editing
and submission of first Draft Report.
-
Dr. Langer: Review and analysis of the ‘548 Patent, the Apotex NOA and 23
Schedule A Documents attached thereto, the Apo-Lanzoprazole and Prevacid
photographs, the Biovail decision, the Prevacid Product Insert, the Zegerid
Prescribing Information Document, and he(sic) Affidavits of Sonia Atwell, Dr.
Levi and Dr. Byrn, discussions with Dr. Lipp, Drafting, editing and submission
of first Draft Report.
May
4, 2007
-
Dr Lipp: Review of materials, conversion of Draft report into Affidavit
form, discussions with Rick Turzi and Bob Langer, editing, finalization and
submission of May 04, 2007 Affidavit.
-
Dr. Langer: Review of materials, discussions with Mike Lipp, editing,
finalization and submission of May 04, 2007 Affidavit.
November
16, 2007
-
Dr Lipp: Prep for the ‘548 Deposition (review of Bob’s affidavit + all
accompanying materials, identification of potential cross-examination
questions, etc.)
-
Dr Langer: Prep for the ‘548 Deposition (review of Bob’s affidavit + all
accompanying materials, identification of potential cross-examination
questions, etc.)
[30]
In
the Merck decisions previously referred to, Dr. Lipp’s services were
recognized as compensable but, neither the Assessment Officer nor Mr. Justice
Gibson specifically recognized Dr. Lipp as an expert while the Court of Appeal
did not comment on that issue.
[31]
I
do not question the renown of Dr. Langer, nor does the opposing party.
Nevertheless, this established fact does not justify requiring the opposing
party to pay for the use of another doctor to draft one’s affidavit. Dr. Langer
chose to work in a collaborative manner to prepare his affidavit and
cross-examination, but based on the principles of reasonableness and partial
indemnity, the applicants should not have to pay to uphold such a choice. There
is no evidence on file to confirm that Dr. Lipp is an expert, nor that his
services were necessary to advance Apotex’s position in the matter before the
Court. For the above reasons, the disbursements relating to Dr. Lipp will not
be allowed.
[32]
I
note in passing that the applicants’ counsel referred, via supplementary
submissions, to the recent decision of the Federal Court in Bristol-Myers
Squibb Canada Co. v. Apotex Inc. (2009 FC 137) in which Mr. Justice Hughes,
in giving directions with respect to the assessment, stated:
Further, fees for experts shall
be limited to fees for the services only of the experts who attested to
affidavits filed by Apotex in this proceeding namely Drs. McClelland, Langer
and Cima. No fees are allowed for experts or others who may have been
retained by Apotex or by these named experts to assist them.
Expert fees – Professor Hopfenberg
[33]
The
respondent Apotex filed the experts’ affidavits of Professor Harold Hopfenberg
sworn on May 7, 2007 and Dr. Robert S. Langer sworn on May 4, 2007, in response
to Abbott Laboratories and TAP Pharmaceuticals’ application.
[34]
The
respondent Apotex argues that this was a complex matter needing expert
witnesses that could provide support and opinions on technical and scientific
issues. As well, they argued at length that this assessment should not be dealt
with by considering only the preparation for the motion to dismiss and I agreed
with that proposition earlier in these reasons. As referred to in their
argument in relation to Madame Costaris’ affidavit, they suggest that a
hindsight approach should not be taken in assessing Professor Hopfenberg’s costs.
[35]
I
have reviewed the affidavits of Dr. Langer and Professor Hopfenberg. From my
reading of those documents, the scope of the assignment for each affidavit are
as follows:
Professor Hopfenberg: - Review
Canadian Patent No. 1,312,548;
i.
Review
of the Notice of Allegation (NoA) and schedule A to be interpreted as read and
understood by a “person of ordinary skill in the art” ;
ii.
Review
of the NoA with respect to allegations of non-infringement;
iii.
Review
and comment on the affidavits of the applicants’ experts: Drs. Devy and Byrn
iv.
Review
of Apotex’s Lanzoprazole Master formula
Dr.
Langer: -
Provide comments and opinions concerning the NOA in respect of Canadian Letters
Patent No. 1,312,548 (inclusive of schedule A)
v.
Review
Canadian Patent No. 1,312,548
vi.
Review
of the NoA with respect to allegations of non-infringement
vii.
Review
and comment the affidavits of the applicants’ experts: Drs. Byrn and Devi and
Sonia Atwell.
[36]
This
rough analysis shows that both experts’ mandates covered similar issues.
However, in reading the documents carefully, it appears that their approaches
were different although they arrived at similar results. Without any direction
from the Court on this subject, other than the fact that only the affidavit of
Professor Hopfenberg was referred to in the reasons for decision, I am not
convinced that counsel for Apotex acted out of excess caution in utilizing two
different experts to make their case.
[37]
As
per evidence on file, Professor Hopfenberg was hired with relatively the same
mandate as Dr. Langer, filed an affidavit with the Court roughly the same
length as Dr. Langer’s and charged a little less than half of Dr. Langer’s fees
for the preparation of his affidavit. Professor Hopfenberg’s billing was never
contested by the opposing party. On the contrary, it was utilized by them to
benchmark the analysis of both experts. I am satisfied that the fees claimed
for his services were incurred. They have not been contested, are reasonable
and will be allowed as claimed.
[38]
The
exhibits attached to the affidavit of Andrew Brodkin and the applicants’
written submissions disclose different US exchange
rates throughout. After careful review and consultation of the Bank of Canada
website, Professor Hopfenberg’s invoice for March 1, 2007 will be allowed at $5,833.07
CDN ($4,980.00 US at 1.1713 exchange rate) and the invoice for May 8, 2007,
$21,079.58 CDN ($19,080. US at 1.1048 exchange rate).
Expert fees – Dr. Langer
[39]
According
to the respondent Apotex’s counsel, Dr. Langer is recognized as one of the most
influential experts in the world, the most cited engineer in history. To make
that point clear, Dr. Langer’s biography was filed as an exhibit to Andrew
Brodkin’s affidavit. It appears from that document that Dr. Langer is a
renowned Institute Professor at the Massachusetts Institute of Technology (MIT)
with credentials, distinctions and awards that go far beyond North America.
The respondent Apotex claims that they should
not be dissuaded from engaging such experts to respond to complex matters and
Dr. Langer should be entitled to compensation for the work performed. It is
claimed that Dr. Langer spent more hours than the other Apotex experts in this
case
because of the high standards to which he
holds himself.
The applicants’ counsel suggested that no
costs should be assessed or in the alternative, the time charged should be
reduced by 80%. In support of that argument, they put forth that Dr. Langer’s
affidavit was repetitive of Professor Hopfenberg’s, despite Dr. Langer’s
reputation. Considering the number of hours charged by Professor Hopfenberg, it
is suggested that Dr. Langer should not be assessed more than forty hours,
similar to the number of hours billed by Professor Hopfenberg to prepare and
draft an affidavit similar in size to Dr. Langer.
[40]
The
applicants’ counsel also suggested that Dr. Langer’s hours spent preparing and drafting
the affidavit, be benchmarked as Mr. Justice Gibson did in Merck v. Apotex
(2007 FC 1035) i.e. averaging the time spent for all experts on the case. To
advance this argument forward, they cite the Federal Court of Appeal decision in
Merck & Co. v. Apotex (2008 FCA 371 (C.A.)):
Since I am of the view that Justice
Gibson ought not to have intervened it is not necessary to decide whether or
not he committed any reversible error in benchmarking Dr Langer’s allowable
hours on the basis that he did.
The applicants’ position is that although
the Court of Appeal allowed the appeal, it did not specifically reject the benchmarking
principle for experts’ hours as enunciated by Justice Gibson. Apotex’s counsel
responded that this approach does not take into consideration the different
ways that people work, the different mandates faced in a proceeding and how
they are approached.
[41]
From
the evidence on file, Dr. Langer’s billed $1,000.00 per hour. Arguing that this
hourly rate is excessive and totally out of range in comparison to rates
charged by similar experts in Federal Court files, the applicants’ counsel
suggested that Dr. Langer’s hourly rate be benchmarked to close the disparity
gap in fees claimed for other experts in this file. An analysis of some Federal
Court decisions on costs was prepared by the applicants’ counsel, compiling the
rates at which experts’ fees were assessed for the year 2008. This exercise
would suggest that the average rate for experts’ fees was roughly $375.00 per
hour. In comparison with the $1,000.00 per hour charged by Dr. Langer in this
file, they claim that $375.00 per hour would be a reasonable figure since the
cases referred to were patent cases including NOC matters similar to the case
at hand. In counter-argument, Apotex argues that a fixed principle should not
apply. Consideration should be given to the nature of one’s expertise, the
manner in which a problem faced is approached and/or the differences in the
strengths and opinions given.
[42]
Another
way put forth by the applicants to approximate the rates is to employ the rates
of senior counsel i.e. the experts should not be paid a rate higher than the
senior counsel on file. Applicants’ counsel cited two decisions of the Federal
Court (Shire Biochem Inc. v. Canada (2008 FC 538) and Pfizer Canada
Inc v. Canada (2008 FC 11)) with regard to this approach. Should this
argument be accepted by the Assessment Officer, counsel went further discussing
which lawyer from the firm should be considered senior counsel on this file in
order to establish the capping rate. Apotex’s counsel argued that this way of
proceeding has been used by one member of the Federal Court in giving
directions on costs and considering that these comments were made by the Court offering
directions on specific files, they should not be applied widely.
[43]
Applicants’
counsel argues that there is no automatic recovery for costs (Engine and
Leasing Company et al v. Atlantic Towing Ltd 93 FTR 181) especially for
experts’ fees. “It might be reasonable for a party to put forward the best
expert but unreasonable to pass along all the costs to the unsuccessful party”
(Allied Signal Inc. v. Dupont Canada Inc. 81 CPR (3d) 129) and Janssen-Ortho
Inc. v. Novopharm Ltd (2006 FC 1333)). The affidavit provided in support of
the Bill of Costs does not offer any analysis of Dr. Langer’s claims and there
is nothing in this affidavit to justify the time and money spent, except his
reputation. Reference was further made to the fact that Madam Justice Simpson
only referred to Professor Hopfenberg’s affidavit in her decision and not Dr.
Langer’s.
[44]
Emphasis
was also put by the applicants on the manner the invoicing seemed to have been
prepared by Dr. Lipp, not signed by Dr. Langer, repetitive, lacking details
regarding the tasks performed and the amount of time spent per task, all this
contrary to Professor Hopfenberg’s.
[45]
Reference
was made to one specific invoice in which both Drs. Lipp and Langer billed
forty hours (eighty hours combined) for a cross-examination scheduled to take
place on December 10, 2007, which never occurred. In the affidavit of Andrew
Reddon in response to the Bill of Costs, it is stated that this
cross-examination was confirmed on November 7 and cancelled on November 16.
Reasonableness is raised when eighty hours are charged over a nine-day period
of time to prepare for a cross-examination due to happen many more days later. In
considering Dr. Langer’s renowned work, the applicants suggested that spending forty
hours in the span of nine days preparing for a cross-examination, due to happen
much latter, is excessive.
[46]
On
this specific invoice, “reserve deposition time” was also charged for the
cancellation of the scheduled cross-examination three weeks before it was due
to take place. The applicants argue that this advance cancellation fee is
completely unreasonable considering the length of time between the two events.
[47]
Applicants’
counsel did not cross-examine Mr. Brodkin on his affidavit claiming that the questions
they would have needed answers for, dealt with experts’ invoices that were sent
and dealt with by a different law firm acting for Apotex’s counsel in that file.
As an alternative, they requested the documents that could substantiate the
experts’ claims by way of letter. Mr. Reddon’s affidavit contains Apotex’s
letter refusing to provide additional information on the experts’ fees claiming
that the information was privileged, irrelevant or overreaching. In argument,
they propose that the Assessment Officer draws a negative inference from the
fact that back-up documentation to establish the time spent existed and was not
provided.
[48]
Several
factors are found in the jurisprudence and have been put before me to help
assess experts’ fees. These different manners all seem to provide formulas, the
application of which would effectively equalize experts’ fees. Considering
the different mandates for which experts are called before the Federal Courts
and with no specific directions from the Court in this case, I find it difficult
to benchmark the hours billed or the rates per hour charged by the experts
called to testify. Each expert has an explicit mandate which calls for specific
qualifications. In taking the approach of comparing one with the other, we lose
sight of the different circumstances of each file.
[49]
The
approach consisting of not paying experts a higher rate than the senior counsel
on file is quite tempting but considering the variation in legal fees across
the country, it may be seen as disproportionately benefiting parties
represented by counsel in larger municipalities and it should be applied with
careful consideration. Also, I have reviewed the decision of the Court in Bristol-Myers
Squibb Canada Co. v. Apotex Inc. (2009 FC 137) as submitted by counsel for
the applicants subsequent to the hearing. I recognize that fees allowed for one
particular expert should not be disproportionately large when compared to the
fees charged by another expert. . However, in my view and in the circumstances
of this case, there is no need to determine whether one of these approaches
should be adopted.
[50]
I
have read the Notice of Allegation, the experts’ affidavits and the memoranda
of fact and law for the applicants and the respondent Apotex. In this matter,
none of the affiants were ever cross-examined and the case did not proceed to a
full hearing. In making her final decision, Madam Justice Simpson could only refer
to counsels’ arguments and the unchallenged affidavits found on file. The hours
claimed for the preparation of Dr. Langer’s affidavit are 30% greater than for
the hours billed for the preparation of Professor Hopfenberg’s affidavit, while
dealing with a similar mandate. After considering that the affidavit was
prepared with the help of another doctor, and despite the high standard Dr.
Langer holds himself to, I am of the opinion that the time taken to prepare the
affidavit is excessive. With regards to cross-examination, the only evidence
found on file is an invoice that contains no details on preparation,
consultation or communication with counsel. After considering this evidence and
the timing of the cancellation of the scheduled cross-examination, I am
nonetheless convinced that some time must have been necessary for consultation
and preparation between counsel and experts on cross-examination, but not the
number of hours claimed. The amount claimed for Dr. Langer’s expert fees will
be reduced to $60,000.00 CDN.
Other disbursements
[51]
The
travel expenses ($4,822.53) claimed for the two counsel for the respondent
Apotex to attend the hearing in Vancouver B.C. on March 18, 2008, are allowed
despite the fact that I have disallowed Items 24 and 6(b) for second counsel.
Given the nature of this court case, I find that the presence of both counsels
was essential at the hearing and, the amount reasonable in the circumstances.
[52]
Agents’
fees are claimed in the Bill of Costs to recover fees for two explicit tasks:
Roys Copier Service (Vancouver) to prepare the respondent Apotex compendium and
Smith Katzenstein, Furlow, for corporate searches. The amount claimed for Roys
Copier Service was amended at the hearing of this assessment of costs to
$451.62. Considering my position on the reasonableness of the use of a
compendium (paragraph 6 of these reasons) and the invoice to the client from
the lead counsel’s law firm attached as exhibit to the affidavit of Andrew
Brodkin, I allow the amount as claimed inclusive of GST.
[53]
I
accept that the amount of $517.09 was paid to the firm of Smith Katzenstein
Furlow as evidenced in exhibit E attached to the affidavit of Andrew Brodkin.
The applicants maintain that there is no indication of how the searches made by
this professional firm were relevant to the litigation, while the respondent
Apotex claims that the purpose of obtaining copies of TAP Pharmaceuticals and
TAP Products Inc.’s corporate documents was a live issue on the main
application hence the evidence filed by Ms. Costaris responding to matters
raised in the Notice of Allegation. According to article 1(4) of Tariff B, the
Assessment Officer must be satisfied that the disbursements incurred were
reasonably necessary for costs to be allowed. The issue for which the services
were retained was never addressed in Court since the main application was never
argued. However and
as mentioned before, I am of the opinion that the parties had to be fully
prepared on both the application to dismiss and the main application, for the
hearing before the Court on March 18, 2008. The fact that the main application
was dismissed with no further hearing should have a minimal impact on the
assessment of costs and the disbursements incurred by the parties to prepare.
For that reason, the amount claimed for these agent fees will be allowed
$493.78 CDN ($465.22 US at the exchange rate of 1.0614).
[54]
On
the respondent Apotex’s claim of $12,285.80 for photocopies, it is submitted
that the charges were reasonable in the circumstances. Moreover and as
evidenced by the exhibits attached to the affidavit in support of the Bill of Costs,
these photocopy costs were reimbursed by the client for the actual
out-of-pocket costs of the photocopying, as essential to the conduct of the
action. The applicants submit that the only evidence supporting the claim for
photocopies is found in the 1177 pages of the responding application record. At
this point, I would like to refer to the following excerpt from Diversified
Products Corp. v. Tye-Sil Corp. (1990 FCJ 1056)
... It is therefore necessary for the party claiming photocopying
disbursements to give satisfactory evidence to the Taxing Officer that the
photocopying disbursements being claimed was essential for the conduct of the
action….The item of photocopies is an allowable disbursement only if it is
essential to the conduct of the action…
[55]
As
stated by my colleague in Carlile v. Canada (1997 FCJ 885),
…Taxing Officers are often
faced with less than exhaustive proof and must be careful, while ensuring that
unsuccessful litigants are not burdened with unnecessary or unreasonable costs,
to not penalize successful litigants by denial of indemnification when it is
apparent that real costs were indeed incurred. This presumes a subjective role
for the Taxing Officer in the process of taxation…
Notwithstanding
the numerous invoices exhibiting the amounts charged to the client and
submitted by the respondent Apotex, I am not convinced that all photocopies
charged for were essential to the conduct of the action. It is obvious that
actual photocopy expenses were necessary in the conduct of this proceeding and
as such, I have examined all the material in the Court file submitted by the
respondent for which costs had been awarded to the respondent by the Court and
made an approximate calculation of the number of copies needed by the Court and
for service. In light of the jurisprudence mentioned above and my calculations,
I reduced the amount to $6,200.00 as a reasonable disbursement for photocopy
expenses and all associated costs applicable to photocopies.
[56]
The
invoices for courier and process server, found in support to the affidavit of
Andrew Brodkin, and submitted to the client Apotex for payment reflect
precisely the claim in the respondent’s Bill of Costs. Nevertheless, I am not
convinced that all material served and/or couriered were all associated with
proceedings for which costs had been awarded. Without a doubt, those services
were utilized, be it to file material with the Court or send material to Vancouver from Toronto for the
hearing. Considering the vagueness of the evidence on these claims, I allow
$1,400.00 and $400.00 for courier and process server charges.
[57]
The
applicants argue that the respondent Apotex should not be permitted to make
full recovery of QL Searched / Computer time charges since no details were
provided to determine relevance and reasonableness. The respondent Apotex
submits that costs for on-line computer research should be allowed since actual
disbursements were charged to the client as established in the affidavit in
Andrew Brodkin and considering the complexity of the legal issues involved, the
costs are reasonable. On the issue of research charges, I share my colleague’s views
in Englander v. Telus Communications Inc. (2004 FC 276):
A result of nil dollars at assessment would be absurd given that I
think the Respondent's counsel had an obligation to carry out research for the
assistance of the Court in resolution of the issues. However, the Applicant is
not obligated to pay for the costs of irrelevant research.
I have had the opportunity to examine the
authorities submitted to the Court during the course of this matter along with
the invoices attached to Mr. Brodkin’s affidavit. I agree that not much
relevant information can be retrieved from the billing to the client other than
for the approximate time the actual researches were done. With this meagre
information, it is not clear to me that all of the research was relevant to the
matters that were before the Court and for which costs had been allowed. Therefore,
I allow the reduced amounts of $1,850.00 (QL search) and $110.00 (Computer
time).
[58]
The
disbursements claimed for the parking/cab/mileage ($284.25), the Prior Art
($432.73), the telephones ($170.02), the telecopies ($105.50), the file retrieval
($168.24) and the LPIC Levy ($50.00) as substantiated by affidavit and in
counsel’s representations, were not contested, considered all charges necessary
to the conduct of this matter and will therefore be allowed.
[59]
The
respondent Apotex claimed GST on all disbursements in its Bill of Costs. It is
not readily apparent from the documents submitted in support of the Bill of Costs
whether GST was not included in the amounts claimed. Considering that the bulk
of the disbursements relate to experts’ fees incurred in the United States, GST
should not be claimed for those disbursements, while from the record, the
invoice for the Canadian expert fee appears to be inclusive of GST. Given the
incomplete evidence and its uncertainty, I have done a GST exclusion calculation
as previously done by Senior Assessment Officer Stinson in paragraph 112 of the
Abbott decision (previously cited). The total for allowed disbursements
is $106,282.82. From that amount, I have subtracted all experts’ claims and
expenses for which I suspect, were inclusive of GST. I used a GST rate of 5% to
calculate the balance of disbursements.
[60]
The
Bill of Costs is allowed for a total amount of $111,251.36.
“Johanne Parent”
Toronto, Ontario
April 21, 2009
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