Date: 20090702
Docket: T-775-06
Citation: 2009 FC 691
BETWEEN:
BAYER HEALTHCARE AG
and BAYER INC.
Applicants
and
SANDOZ CANADA INCORPORATED
and THE MINISTER OF HEALTH
Respondents
ASSESSMENT OF
COSTS - REASONS
Bruce Preston
Assessment Officer
[1]
By
way of Reasons for Judgment and Judgment dated June 6, 2007, the Court
dismissed the application for judicial review with costs.
[2]
On
March 13, 2009 the respondent, Sandoz Canada Incorporated (Sandoz) filed its
Bill of Costs together with a letter requesting an assessment of its Bill of
Costs in writing.
[3]
Upon
reviewing the file, it was determined that this was an assessment that would be
suitable for disposition by written submissions. By way of direction dated
March 16, 2009 a timetable was established for the filing of written
submissions. The time limits set by the direction have now passed and materials
have been filed by both parties.
[4]
In
its Written Submissions Sandoz raises two major issues; increased costs and
complexity. Concerning complexity, at paragraph 14 Sandoz submits:
This case was of more complexity than
would be the norm of a judicial review of a Minister’s decision to grant a NOC,
as it involved an interpretation of the NOC Regulations. Bayer submitted
evidence from its director of regulatory affairs (Manoj Saxena), a licenced pharmacist
(Diane Azzarello), a hospital pharmacist (Linda Dresser), and an expert
formulator (Dr. Gerald Brenner). All of Bayer’s experts were cross-examined in
different locations in Canada and the U.S.A.
[5]
In
support of this submission Sandoz makes reference to Consorzio Del Prosciutto
Di Parma v. Maple Leaf Meats Inc., 2002 FCA 417, [2002] F.C.J. No. 1504. At
paragraph 6 it was held:
I am satisfied in the circumstances of
this case, that the respondent should be awarded increased costs. This is an
intellectual property matter involving sophisticated clients. Where, as here,
numerous issues are raised on appeal and the issues involve complex facts and
expert evidence, the amount of work required of respondents’ counsel justifies
increased costs. To the argument that the complexity of this case was no
greater than that of most intellectual property cases that come before this
Court, I would say that such cases frequently present complex facts and give
rise to difficult issues.
[6]
The argument
of Sandoz relating to the increased costs is found at paragraph 11 of its
submissions:
When
a party has been entirely successful in a proceeding, as Sandoz was here, it is
appropriate to award increased costs. Sandoz was successful before the Minister
of Health, on judicial review before Mr. Justice O’Reilly of the Federal Court
(whose decision was subsequently affirmed).
[7]
In
support of this submission Sandoz makes reference to CCH Canada Ltd. v. Law
Society of Upper Canada, 2004 FC 1760, [2004] F.C.J. No. 2161, at paragraph
18:
I turn to the factors to consider in
awarding increased costs. This was a copyright case involving sophisticated
clients. There is no suggestion that the parties do not have reasonable
financial resources. Both parties retained highly experienced and specialized
counsel. The matter was of a high degree of complexity, with numerous
interconnected issues, many of which had not been considered in Canada.
[8]
In
reply to this, at paragraph 9 of their written submissions the applicants
submit:
Sandoz makes a number of incorrect
entries in its Bill of Costs. It has used the top of Column III without justification.
Given the costs award by Justice O’Reilly, and the failure of Sandoz to move
for any order of increased costs, the middle of Column III is the appropriate
amount to be assessed. The case was not one of great complexity. The Minister
of Health characterized this case as being “a simple one”.
[9]
In
support of the contention that the middle of Column III is the appropriate
amount, the applicants make reference to Pfizer Canada Inc. v. Canada
(Minister of Health), 2008 FC 11, [2008] F.C.J. No. 3; AB Hassle v.
Apotex Inc., 2008 FC 184, [2008] F.C.J. No. 236 and Eli Lilly Canada
Inc. v. Apotex Inc., 2006 FC 953, [2006] F.C.J. No. 1210. Each of these
decisions contains a direction of the Court that costs are awarded at the
middle of Column III.
[10]
By
way of rebuttal to the applicants’ argument that the middle of Column III
should be used, at paragraph 19 of its Reply Written Submissions, Sandoz
submits:
The judgments of the Federal Court and
Federal Court of Appeal did not provide for specific directions as to the
applicable column of Tariff B to be used. In the absence of such directions,
Rule 407 provides, “Unless the Court orders otherwise, party-and-party costs
shall be assessed in accordance with column III of the table to Tariff
B” [emphasis added].
[11]
Further,
in rebuttal to the applicants’ submission that this judicial review was not
complex, at paragraph 22 of its Reply Written Submissions Sandoz submits:
Bayer has, however, mischaracterized the
heading in the Minister of Health’s Memorandum of Fact and Law. The Minister
was addressing the myriad of irrelevant issues that were submitted by Bayer,
and in cutting away the “smoke and mirrors” of Bayer’s argument, stated, “Here,
the drug used by Sandoz for the purpose of demonstrating bioequivalence was
simply not the drug protected by Bayer’s patent”.
[12]
As
there is no direction of the Court, I must determine where in the range of
values under Column III assessable services should be allowed. Having reviewed
the Bill of Costs in its entirety it is evident that Sandoz has not claimed at
the upper end on Column III for all Items. In fact, for the one motion for
which Column V costs were awarded, by order of January 29, 2007, Sandoz
submitted claims utilizing the middle of Column V. Further, I find that absent
directions of the Court, Rule 407 makes no reference to the middle of Column
III. Also, it has been decided in several decisions that not all items need be
treated the same. In Nature’s Path Foods Inc. v. Country Fresh Enterprises
Inc., 2007 FC 116, [2007] F.C.J. No. 151, it was held at paragraph 21:
I concluded at para. [7] in Starlight v. Canada, [2001]
F.C.J. No. 1376 (A.O.) that the same point in the ranges throughout the Tariff
need not be used, as each item for the services of counsel is discrete and must
be considered in its own circumstances. As well, broad distinctions may be
required between an upper versus lower allowance from available ranges.
[13]
I
find the approach taken by Sandoz to be in keeping with this decision.
[14]
Having
regard to the applicants’ submission that the Minister of Health characterized
this case as a simple one, although I make no judgment concerning the relevance
of issues or the “smoke and mirrors”, having reviewed the Memorandum of Fact
and Law of the Minister of Health, I find that the applicant did mischaracterize
the reference to “a simple one”. Having reviewed the decision of the Court and
the file as a whole, I find this case to have a high degree of complexity with
numerous interconnected issues. It is an intellectual property case involving
sophisticated pharmaceutical companies which retained highly experienced and
specialized counsel to litigate the issues. Consequently, I conclude that this
is a case justifying costs up to the high end of Column III.
[15]
For
the above reasons I will allow Items 2, 5, 6, 13, 14 and 25 as presented. There
are however other Items which raise concerns. I will address these Items
individually.
[16]
The applicants submit that the costs of cross-examination for Dr. Saxena,
Ms. Dresser and Dr. Brenner should be divided evenly between T-762-06 and the
case at bar. At paragraph 3 of their submissions the applicants state:
Bayer brought an interlocutory injunction application in T-762-06
at the same time it brought the instant judicial review. Some evidence was
relevant to both cases, and as a result a number of virtually identical
affidavits were served and cross examinations of the same affiants for both
proceedings occurred under one transcript.
[17]
By way of rebuttal Sandoz submits at paragraph 8:
Bayer’s submission is moot, particularly because Sandoz has
explicitly disclaimed double recovery of costs associated with the cross-examinations
of Ms. Dresser, Dr. Brenner, and Dr. Saxena. Sandoz is therefore estopped from
claiming such costs twice, rendering Bayer’s allegations baseless. In Pfizer,
cited by Bayer, Justice Hughes held that duplication of costs is to be
avoided. In that case, no apportionment was made between the two related
proceedings.
[18]
In Milliken
& Co. v. Interface Flooring Systems (Canada) Inc., 2003 FC 1258,
[2003] F.C.J. No. 1586, it was held at paragraph 33:
As noted above, the apportionment of costs as an approach in a bill of costs, to address
work done relative to various awards of costs, is acceptable, but I must keep
in mind that these awards were made independent of one another. That is, I am
not necessarily bound to apply apportionment.
[19]
Also,
at paragraph 72 of Pfizer Canada Inc. v. Canada (Minister of
Health),
2008 FC 11, [2008] F.C.J. No. 3, The Honourable Justice Hughes held: “Since
applications T-209-06 and T-210-06 were heard together, no duplication as to
costs or disbursements is allowed unless shown to have been actually incurred”.
Given that at paragraph 27 of its submissions in support of its Bill of Costs
Sandoz agrees not to subsequently claim double recovery of the costs of the
cross-examination of Dr. Brenner, Dr. Saxena and Ms. Dresser. In the
circumstances of this case, the costs associated with these cross-examinations
will not be divided equally between this file and T-762-06 and subject to my
findings below, will be allowed as submitted.
[20]
Having
regard to the cross-examinations of Ms. Anne Bowes and Ms. Dresser, Sandoz has
claimed 2 units/hour for 2 hours each under Item 9. Although I have no concerns
with respect to the unit value, upon reviewing the transcript for each of the
affiants it appears that 1.5 hours is a sufficient duration for each. Although
I am not averse to allowing some additional time for preparation immediately
prior to the cross-examination, given the duration of the examinations and the
fact that Ms. Bowes was the affiant of a co-respondent, I find that the time claimed
was excessive.
[21]
Sandoz
has claimed 6 units under Item 10, preparation, and 3 units/hour for 1 hour
under Item 11, attendance, for the case management conferences held October 4,
2006 and January 18, 2007. Although the applicants do not address these items
in their submissions, they have submitted a proposed Bill of Costs which would
not allow any units for these conferences. I have reviewed the orders and the
abstract of hearing which resulted from these case management conferences and given
that the conferences dealt with scheduling matters and had a duration of somewhat
less than 30 minutes each, I find the amounts claimed to be excessive. I will
allow 4 units under Item 10 for the conference held October 4, 2006. As it
appears from the order that the conference held January 18, 2007 dealt with
scheduling in a more detailed way, which may have required additional
preparation, I will allow 5 units under Item 10 for the second case management conference.
Further, under Item 11, I will allow 2 units/hour, for a duration of 30
minutes, for attendance at each of the case management conferences. This allows
for any last minute preparation that may have been required.
[22]
Further
to paragraph 29 of the Reasons for Judgment and Judgment of Justice O’Reilly,
the parties were asked to make submissions concerning the confidentiality of
the reasons. Sandoz has claimed 7 units under Item 15, preparation and filing
of written argument for its submissions. It is noted that Sandoz meets the
requirement that the written submissions must have been requested by the Court.
[23]
The
applicants, at paragraph 11(b) of their Brief in Reply submit:
Sandoz seeks 7 units for a letter to the
Court regarding its position on confidential information in Justice O’Reilly’s
Order. Sandoz’s letter explicitly states that it “makes no submissions in this
regard”. Seeking $840 for this letter is a blatant example of Sandoz seeking
too much for too little work.
[24]
By
way of rebuttal at paragraph 27 of its reply Sandoz submits:
Sandoz’s submissions to the Court
regarding the confidentiality of the Reasons for Judgment of Justice O’Reilly
was not as flippant as alleged by Bayer. Sandoz was required to review the
Reasons for Judgment for any matter that was covered by the Confidentiality
Order. This review ultimately led to Sandoz’s conclusion that the Reasons for
Judgment could be released publicly in their present form.
[25]
Although
I recognize that Sandoz was required to review the Reasons for Judgment, and in
all likelihood the Confidentiality Order, prior to submitting its letter, the
parties were required to address only one issue, that of confidentiality. I
will allow 4 units under Item 15 to make allowance for the work required prior
to the filing of Sandoz’s brief comments.
[26]
Under
Item 26 Sandoz has claimed 6 units for the Assessment of its Costs. Although
the applicants make no submission concerning the assessment, in their proposed
Bill of Costs they submit 4 units for the assessment. At the request of Sandoz,
this assessment went ahead by way of written submissions. Although the
submissions were quite extensive, the evidence provided was not overly
comprehensive. I will allow 4 units under Item 26.
[27]
I
will allow 1 unit under Item 27 for the preparation and filing of a Notice of
Appearance. In McRae v. Canada (Attorney General), 2006 FC 801, [2006]
F.C.J. No. 1018, a case submitted by Sandoz in support of this claim, the
Respondent was allowed 1 unit for the filing of an appearance.
Disbursements
[28]
Sandoz
has submitted $2,684.75 for photocopies. The applicants submit: “The costs for
photocopies sought to be recovered by Sandoz have not been substantiated. The
evidence provided by Sandoz is deficient and vague”.
[29]
By
way of rebuttal Sandoz refers to Pfizer Canada Inc. v. Canada (Minister of
Health), 2008 FC 11, [2008] F.C.J. No. 3, at paragraph 71 which held that
multiple copies beyond that provided to the Court and to the other side are to
be limited to three.
[30]
At
paragraph 16 of its rebuttal Sandoz submits:
Therefore, counsel for Sandoz are not
required to share the single copy of materials provided by Bayer, and are
entitled to make photocopies for internal use and claim reasonable costs for
such.
[31]
It
has been held on several occasions that real expenditures are needed to advance
litigation: a result of zero dollars at assessment would be absurd (Métis
National Council of Women v. Canada (Attorney General), 2007 FC
961, [2007] F.C.J. No. 1259, Vogan v. Canada (Attorney General), 2009 FC
245, [2009] F.C.J. No. 299, Fakih v. Canada, 2009 FC 178, [2009]
F.C.J. No. 222). Having reviewed the file, including material filed by the applicants,
and in keeping with the above, I find the disbursement for photocopies to be
reasonable and necessary and allow them as claimed.
[32]
Having
determined that cross-examinations would not be divided between this file and
T-762-06 and having reviewed the disbursements for travel and transcripts
relating to the cross-examinations and found them to be reasonable, I will
allow these disbursements, as submitted, at $1,310.18 and $1,548.65
respectively.
[33]
Finally,
with the exception of the Law Society of Upper Canada levy, the applicants in
their proposed Bill of Costs have reduced miscellaneous disbursements to zero.
Sandoz in rebuttal submits: “Bayer has adduced no evidence to suggest that any
of the miscellaneous disbursements claimed by Sandoz were unreasonably
incurred”. Although I find the evidence presented by Sandoz to be scant, I find
the amounts claimed to be reasonable. The disbursements for long distance,
computer searches, facsimile, postage, Law Society of Upper Canada levy and
courier are allowed as claimed for a total of $422.39. The amount claimed for
mileage cannot be allowed as I am of the opinion that it was not necessary for
the litigation process.
[34]
Sandoz
has requested post-judgment interest at a rate of 6%. As the applicants have
not objected to this, it is allowed as requested.
[35]
Further
to these reasons, the Bill of Costs presented at $23,411.51 is allowed for a
total amount of $21,392.15. A certificate of assessment will be issued.
“Bruce Preston”
Toronto, Ontario
July 2, 2009
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