Date:
20091002
Docket: T-1800-02
Citation: 2009 FC 1004
BETWEEN:
FOURNIER PHARMA INC. and
LABORATOIRES
FOURNIER S.A.
Applicants
and
THE MINISTER OF HEALTH
and APOTEX
INC.
Respondents
ASSESSMENT OF
COSTS - REASONS
Charles E. Stinson
Assessment Officer
[1]
The
Applicants sought an order prohibiting the Minister of Health from issuing a
Notice of Compliance (NOC) to the Respondent, Apotex Inc. (Apotex), for
100 mg or 160 mg fenofibrate tablets (to treat cholesterol levels) until after
the expiry of Canadian Patent 2,219,475. After the Applicants filed a notice of
discontinuance, Apotex applied for costs of $306,865.45 (solicitor-client costs
including disbursements). The Prothonotary, Roger R. Lafrenière, allowed a lump
sum of $20,000 for counsel fees only and disallowed entirely the claim for
disbursements on the basis of insufficient evidence of their necessity and
reasonableness. Apotex did not challenge the award of $20,000, but it did
appeal the disallowance of disbursements. The Court’s disposition on March 20,
2008 (the Decision) of that appeal held that rough justice was part of an
assessment of costs and that evidence in the nature of estimates of amount
or assertions of expenditures without the underlying invoices or supporting
documents should be considered. The Decision refused to set a lump sum for the
disbursements and instead directed that they be assessed.
[2]
Consistent
with my approach outlined in para.2 of Halford v. Seed Hawk Inc. (2009),
69 C.P.R. (4th) 1, [2006] F.C.J. No. 629 (A.O.) [Halford],
my account in these reasons of the respective positions of the parties is at
times somewhat summary in nature. It is detailed enough for an
understanding of the notion of issues between the parties, but should be read
keeping in mind that there are nuances and details of the issues in the record,
all of which I have read and considered. I have not summarized the respective
and general positions of the parties on sufficiency of evidence as my findings
in Abbott Laboratories v. Canada (Minister of Health) (2008), 66
C.P.R. (4th) 301, [2008] F.C.J. No. 870 (A.O.) [Abbott]
(under appeal) sufficiently canvassed that issue. As well, the Decision
(reported at [2008] F.C.J. No. 462 (F.C.)) was instructive on that issue.
[3]
Apotex
argued as it has in other NOC matters that the evidence, while less than
absolute, sufficiently establishes the relevance and reasonableness of the
disbursements. Apotex noted that the institution of NOC legislation can delay
market access for up to two years, and argued that although an issue of
non-infringement might be less complex than one of validity, that does not mean
that the former is simple. Apotex asserted that the only evidence here is that
the issue of non-infringement was quite complex. Apotex asserted that the
Applicants’ opinion of what work this litigation required was irrelevant for
Apotex’s decisions on what was necessary. Apotex asserted that the Applicants
had the monopoly on fenofibrate, but have never disclosed details of market
value meaning that the only evidence here of that huge market comes from
Apotex. The Applicants’ position overlooks the reality that this litigation
prevented Apotex from selling its drug product.
[4]
The
Applicants argued that this litigation was straightforward and that the notice
of allegation was brief and only put two claims concerning non-infringement in
issue. They argued that Apotex’s evidence is insufficient for a determination of
necessity and reasonableness.
[5]
My
findings in Halford above, Biovail Corp. v. Canada (Minister of
National Health and Welfare) (2007), 61 C.P.R. (4th) 33,
[2007] F.C.J. No. 1018 (A.O.), aff’d [2008] F.C.J. No. 342 (F.C.) [Biovail]
and Abbott above set out my views on the threshold of proof for
categories of costs and approach to their assessment. Paragraphs 68 to 72 inclusive
of Abbott above summarize the subjective elements and the notion of
rough justice in assessments of costs. In paragraphs 38 to 40 of Aventis
Pharma Inc. v. Apotex Inc., [2009] F.C.J. No. 56 (A.O.), I reinforced my
view that an assessment of costs should reflect the reality of the demands of
litigation. Paragraph 14 of Merck & Co. v. Apotex Inc., [2008]
F.C.J. No. 1656 (F.C.A.) held that “in view of the limited material available
to assessment officers, determining what expenses are “reasonable” is often
likely to do no more than rough justice between the parties and inevitably
involves the exercise of a substantial degree of discretion on the part of
assessment officers.”
[6]
The
Applicants conceded travel ($4,863); telecopies ($366.50); couriers ($345.67);
transcripts ($2,094.70); process servers ($690) and the LPIC levy ($50).
I. Apotex’s Position
[7]
Apotex
noted that it has supplemented the evidence previously before the Court by
introducing all available supporting invoices and documents. The Applicants did
not cross-examine Apotex on its evidence and did not lead evidence of their
own, instead relying on written submissions. The Applicants have ignored the
Decision’s finding on threshold of evidence in an assessment of costs.
[8]
Apotex
asserted generally in support of its claims for its experts, Dr. Eli Shefter
($15,493.50) and Dr. Gilbert Banker ($89,291.72) that experts are important for
the complex issues of NOC litigation. The case law permits recovery of their
costs to prepare their evidence and their costs as technical consultants for
supervising counsel. Apotex argued that the Applicants cannot have the benefit
of the statutory 24-month injunction mandated upon institution of this judicial
review proceeding and then argue that Apotex’s costs were excessive because the
issues were simple. Costs should not be assessed in hindsight: see Apotex
Inc. v. Egis Pharmaceuticals (1991), 4 O.R. (3d) 321 at 331 (Ont. Ct.
Gen. Div.) [Egis Pharmaceuticals].
[9]
Apotex
asserted that although Dr. Shefter did not file an affidavit, he did provide
essential technical expertise to supervising counsel for case preparation
within the meaning of Biovail above. Dr. Shefter spent 36 hours at
US$275 per hour to analyze documents and prepare an affidavit not ultimately
filed. Apotex argued further to Carlile v. Canada (M.N.R.) (1997), 97 D.T.C.
5284 (T.O.) that the Applicants’ suggested disallowance of his account
would be an absurd result given the obvious relevance of his work. Apotex was
not noted in default for filing evidence beyond the deadline. Therefore, the
timing of Dr. Shefter’s work was relevant for Apotex’s evidence filed in April
2004 regardless of the strategic decision to not use his affidavit. The circumstances
of Adir v. Apotex Inc., [2008] F.C.J. No. 1343 (F.C.) [Adir] were
different. There, the trial judge who benefited from having heard the entire
trial entertained a request for lump sum costs and was in a position to
restrict or narrow the assessable services of the experts who appeared.
Here, the Decision did not restrict compensation for an expert who did not
appear.
[10]
Apotex
noted that Dr. Banker’s invoice dated February 20, 2003 (US$30,388.94 =
C$36,583.13) provided the details of his hours associated with his first
affidavit, including time for revisions further to discussions with
supervising counsel. Apotex was not able to locate the invoice from Dr. Banker
underlying the disbursement of C$25,061.94 for his work shown in the
February 17, 2004 billing statement to the client of Ivor M. Hughes
(co-counsel for Apotex), but rough justice should apply to allow this
portion of Dr. Banker’s total billing of $89,291.72, an amount reasonable
for the overall work required in this case. Dr. Banker’s final invoice dated April 12,
2004 billed US$19,607 (C$27,646.65) for preparation (US$400 per hour) for and attendance
(US$500 per hour) on the cross-examination on his affidavit. His affidavit was
33 pages and his performance during his three hour cross-examination was
arguably a factor in the Applicants’ decision to discontinue almost two
years into this litigation. The decision affirming Biovail above held in
para. 16 that the notion of rough justice means an assessment officer can assess
the expert’s charges as a whole as opposed to the sort of line by line inquiry
urged here by the Applicants.
[11]
Apotex
argued that Toronto and the United
States
as the respective locations of supervising counsel and the experts justified
the telephone charges ($666.74). As well, counsel travelling on other business
matters would have used long distance calls to continue to work on this matter.
Paragraph 69 of Merck & Co. Inc. v. Apotex Inc., [2007] F.C.J. No.
428 (A.O.), aff’d [2007] F.C.J. No. 1337 (F.C.) [Merck] held that such
disbursements are assessable as part of the ordinary course of litigation.
[12]
Apotex
argued that the evidence is that the routine rate of $0.25 per page, an amount
approved in para. 113 of Shire Biochem Inc. v. Canada (Minister of
Health),
[2008] F.C.J. No. 690 (F.C.), was charged for photocopies ($4,187.55). This
addressed prior art, materials required by the experts and the filed
affidavits.
[13]
Apotex
argued that the translation charges ($3,303) were reasonable and necessary.
Supervising counsel and the client were both English and required translation
from French to English of the patent at issue. As well, a relevant article “THE
TABLET” required translation from German to English.
[14]
Apotex
asserted that most of the charges ($535.65) for meetings addressed food for
relevant work extending beyond or through lunch and dinner breaks.
[15]
Apotex
argued that although the prior art was not in issue, the search for relevant
documents in the field, i.e. patents and patent file histories, required
payments to third parties for the search itself and any documents. The total
charge ($185.90 + $4.60) is modest and this work was likely curtailed once it
was confirmed that patent invalidity was not an issue.
[16]
Apotex
argued that the charges for computer research ($67.66) and Quicklaw ($390.53)
were in part necessary to address certain allegations that were tantamount
to fraud. Although the Court ultimately discounted Apotex’s position on that
point, Apotex had to research jurisprudence to prepare for that issue.
[17]
Apotex
conceded the Applicants’ concern for GST charged for the American experts and at least
one transcript for a deposition taken in the United States (May 11,
2004 invoice for US$314.85 = C$445.20). Apotex conceded my interjection that I
might have to reduce GST charges if I think they were also applied to other
items such as hotel nights in the United States.
II. The Applicants’ Position
[18]
The
Applicants argued generally that the notice of allegation and the notice of
application for prohibition were both straightforward and brief documents, as
were the evidence and materials by both sides. The discontinuance was filed
soon after the cross-examinations. The Applicants argued that Apotex’s
assertion of tens of millions of dollars of market share at risk is flawed in
that said estimate addressed the market for all dosage forms of fenofibrate which
exceeded the market for the 100 mg and 160 mg dosages.
[19]
The
Applicants argued that the Decision did not, as Apotex apparently asserts,
determine what was reasonable necessary and allowable, that determination
having been specifically assigned to the assessment officer. Apotex’s evidence
is insufficient for such a determination. The Applicants discounted Apotex’s
position further to Egis Pharmaceuticals above, i.e. that an assessment
of costs should not take the form of hindsight analysis, by arguing that said
case is not applicable because it addressed the fixing of costs by a judge
and did not in any event remove my onus to determine necessity and
reasonableness.
[20]
The
Applicants argued that Dr. Shefter’s February 3, 2003 invoice (US$9,900 = C$15,493.50)
provided no details of his actual work, which occurred after Apotex had missed
its deadline for filing its evidence, or the purpose of his affidavit. Nothing
of significance occurred until Apotex provided their disclosure in April 2003,
well after this work occurred. The Applicants relied on Adir above to
argue that the costs of an expert not called at the trial must be disallowed if relevance,
as here for Dr. Shefter who did not file an affidavit, is not proved.
[21]
The
Applicants argued that of the US$30,388.94 in Dr. Banker’s February 20, 2003
invoice, only US$23,988.94 appears to relate to this matter. There is very
little information and, as with Dr. Shefter, the timing of his work does
not accord with deadlines or events in this litigation. The Applicants argued
further to para. 32 of Biovail above that they should not have to pay
for the nine hours (January 5 – 7) in this invoice for him to review patents
and background documents in a field in which he purports to be an expert. This
invoice should be disallowed or significantly reduced.
[22]
The
Applicants argued that the amount of C$25,061.94 claimed in the law firm
billing statement dated February 17, 2004, and which has the incorrect invoice
attached, should be disallowed for lack of information. Dr. Banker’s invoice
dated April 12, 2004 (US$19,607.55 = C$27,646.65) charged preparation time of
34.5 hours (US$400 per hour) less the hours charged for his travel to the venue
of his three hour cross-examination on a 33-page affidavit. This is very
unreasonable and should be discounted significantly.
[23]
The
Applicants argued that the evidence for the telephone charges consisted simply
of single line entries in the client billing statement for amounts such as
$120.76 or $268.37 without explanations of relevance. Similarly, the evidence
is inadequate for the photocopying charge.
[24]
The
Applicants noted that it may not be realistic to expect everyone appearing in
the Federal Court to be able to speak French. However, that does not mean that
the Applicants must indemnify Apotex for the costs of translating a patent from
one official language to the other: see paras. 16-20 of Maison des Pâtes
Pasta Bella Inc. v. Olivieri Foods Ltd. (1999), 86 C.P.R. (4d) 356
(F.C.T.D.) and paras. 14-15 of Jean Patou Inc. v. Luxo Laboratories Ltd,
[2001] F.C.J. No. 1935 (A.O.). There was no evidence of relevance of the
article translated from German to English and Dr. Banker’s affidavit did
not mention it. The Applicants do not suggest that only the costs of
translation of materials put in as evidence are assessable, but there must be
proof of relevance.
[25]
The
Applicants argued that nothing should be allowed for meetings given the
complete lack of supporting evidence. Similarly, nothing should be allowed for
prior art and search fees. The only issue was non-infringement.
[26]
The
Applicants asserted that the timing of some of the Quicklaw and computer
research did not match events in this litigation. As well, paras. 180 and 182
of Halford above held that such costs should be sharply reduced in the
absence of evidence of the search parameters. The Court found that taking issue
with a notice of allegation is not in itself allegation of fraud.
[27]
The
Applicants argued that GST on certain expenditures, i.e. experts, hotels,
transcript and conference facilities in the United States, should not
be allowed.
III. Assessment
[28]
In
paragraph 41 of Mercury Launch & Tug Ltd. v. Texada Quarrying Ltd.,
[2009] F.C.J. No. 390 (A.O.) [Mercury Launch], I confirmed that costs
for experts not ultimately called (apart from those clearly superfluous) are
assessable. I do not have here the extent of evidence in Mercury Launch above
or in the cases referred to therein. The evidence in support of Dr. Shefter’s
role was essentially that he provided a technical resource for supervising
counsel in case preparation. That the Applicants here chose, as has
happened in several NOC matters before me, not to incur additional expense in
probing such spare evidence via cross-examination does not mean I must accept
Dr. Shefter’s account without question. I read Apotex’s materials associated
with its request for lump sum costs. I have held that supervising counsel in
NOC matters may need the technical assistance of an expert in case preparation.
The evidence provides little detail of that. I allow a reduced amount of $9,500
for Dr. Shefter.
[29]
I
have had in the past access in several NOC matters to the transcripts of the
cross-examinations of the affiants. This matter was discontinued before Dr.
Banker’s transcript and the respective memoranda of fact and law could be
filed. I did read the notice of allegation and his affidavit. In addition to
the subject patent and the notice of allegation, supervising counsel also
provided him with five other documents which could have been the “patents and background
documents” addressed by the nine hours in the February 20, 2003 invoice as
opposed to the refreshment of his knowledge in the field suggested by the
Applicants.
[30]
Dr.
Banker’s affidavit was sworn on January 8, 2004. His February 20, 2003 invoice indicates
59.5 hours about one year prior for background preparation, a draft affidavit
and a revised affidavit for a total charge of C$36,583.13. The C$25,069.94
shown in the February 17, 2004 Ivor M. Hughes billing for Dr. Banker
likely included minor disbursements and therefore represents several more hours
of either work on his affidavit or technical assistance for supervising counsel
additional to that being supplied by Dr. Shefter, but not preparation for
cross-examination given the assertion in Dr. Banker’s April 12, 2004 invoice
that such preparation began on February 18, 2004. I am not satisfied that the
Applicants should have to pay the C$25,069.94 and therefore disallow it. I allow
the C$36,583.13 for the February 20, 2003 invoice.
[31]
I
do not equate Dr. Banker’s work to prepare his affidavit with his work to
prepare himself for cross-examination on that affidavit. However and even
conceding that the evidence indicates about one year from the initial stages of
his work on this matter to the swearing of his affidavit, the elements of
the work for preparation for cross-examination likely were not completely
divorced from the elements of preparation of his affidavit. That preparation
consumed 42.5 hours less the time charged for a 260-mile roundtrip to attend
the venue. Based on my reading of the available materials and conceding the
reasoning of Apotex that his performance could have influenced the decision to
discontinue, I find that his third account should be reduced from C$27,646.65
to C$21,000 leaving his services assessed at a total of C$57,583.13.
[32]
I
agree with the sentiment of Merck above concerning the ordinary workings
of a solicitor’s office in litigation and allow the telephone charges as
presented at $666.74.
[33]
Paragraph
65 of Abbott above summarized my practice for photocopies including the
need “to strike the appropriate balance between the right of a successful
litigant to be indemnified for its reasonably necessary costs and the right of
an unsuccessful litigant to be shielded from excessive or unnecessary costs.”
The proof here was less than absolute. I allow a reduced amount of $3,850.
[34]
I
find that the decision by counsel for Apotex to incur costs of translating the
subject patent from French to English was prudent and necessary and that the
invoiced amount was reasonable. I defer to the case law holding that such
costs are not indemnifiable between litigants in this Court and disallow the
$1,906 claimed. I allow the $1,397 claimed for the German article.
[35]
As
in Abbott above, I have difficulties with meeting charges. The evidence
is too obscure to link them with specific events advancing the litigation and I
therefore disallow the claimed $535.65.
[36]
The
notice of allegation dated September 5, 2002 does not challenge the subject
patent on the ground of validity and confines itself to assertions of
non-infringement. Apotex’s evidence before me included several affidavits in
the record. Dr. Banker referred to documents of possible relevance in the field,
references not duplicated by the other affiants. I am not prepared to discount
entirely the role of prior art in this matter, but its relevance seems obscure
in the circumstances. I allow a reduced amount of $80 for prior art. I
allow the search fee of $4.60 as presented.
[37]
Paragraph
111 of Abbott above outlined my usual concerns with computer research.
I find the amounts reasonable in the circumstances of this litigation
and allow them as presented, i.e. computer research ($67.66) and Quicklaw
($390.53).
[38]
It
is fairly clear which items did not attract GST and therefore a modified GST
exclusion calculation, as referred to in para. 53 of Astrazeneca AB v.
Apotex Inc., [2009] F.C.J. No. 1019 (A.O.) is not necessary. Instead, I
applied an exclusion calculation in the assessed bill of costs to the following:
Dr. Shefter and Dr. Banker ($9,500 and $57,583.13 respectively); transcript
($445.20); hotel ($1,253.54); transportation ($214.95) and conference room
rental, beverages and snacks during cross-examination ($965.18). I did not take
into account prior art as its allowance was modest.
[39]
Apotex
sought costs of the assessment, which I allow at 5 units ($120 per unit) under
fee item 26 (available range = 2 – 6 units). Apotex’s bill of costs for
disbursements, presented at $130,720.96, is assessed and allowed at $83,388.66.
“Charles
E. Stinson”
Vancouver, B.C.
October
2, 2009
Email this Content