Merck & Co., Inc. v. Apotex Inc., 2007 FC 312

 

Date: 20070322

Docket: T-884-03

Citation: 2007 FC 312

BETWEEN:

MERCK & CO., INC.

and MERCK FROSST CANADA & CO.

Applicants

and

 

APOTEX INC. and

THE MINISTER OF HEALTH

Respondents

 

ASSESSMENT OF COSTS - REASONS

 

PAUL G.C. ROBINSON

ASSESSMENT OFFICER

 

[1]               This is an assessment of costs pursuant to a decision of the Federal Court dated May 26, 2005 which dismissed this application and awarded costs to the Respondent, Apotex Inc. (hereafter the “Apotex Respondent”). This was an application brought on May 29, 2003 under section 6 of the Patented Medicines (Notice of Compliance) Regulations, SOR/93-133 by Merck & Co. Inc. and Merck Frosst Canada & Co. (hereafter the “Merck Applicants”) in response to a Notice of Allegation submitted by the Apotex Respondent on February 25, 2003. The Merck Applicants’ Notice of Application sought an order of prohibition against the Minister of Health preventing the issuance of a Notice of Compliance to the Apotex Respondent to market their generic drug until after the expiry of the Canadian Letters Patent No. 2,294,595. While dismissing the Notice of Application, the Federal Court indicated that the Apotex Respondent’s costs were to be calculated “on an ordinary scale”. It should be noted that the Respondent, the Minister of Health, made no oral or written submissions regarding this matter and no costs were awarded in favour of or against the Minister of Health.

 

[2]               The Apotex Respondent requested a Notice of Appointment for Assessment on February 5, 2006 and filed its Bill of Costs that same day.

 

[3]               The parties were contacted by the Toronto Registry separately regarding the possibility of settling this assessment of costs. Both parties indicated that the issue of settlement had previously been discussed but they were unable to reach any agreement. On February 22, 2006, I issued a timetable for the filing of all materials and scheduled a time, date and place for the oral hearing of this assessment of costs.  The parties filed all of their supporting and opposing materials within the initial time frames they had been provided and were able to agree on an extension of time for the Apotex Respondent to file its rebuttal submissions. After a number of adjournments, the oral hearing of this assessment of costs took place over two days on October 30 and 31, 2006 in Toronto and I reserved my decision at that time.

 

[4]               It is worthy to note, during the commencement of the hearing of the Merck Applicants’ oral representations for this assessment of costs, the lead counsel for the Merck Applicants indicated that there were only certain assessable services that they would be opposing. These specific assessable services included counsel fees for the Apotex Respondent’s second and third counsel, the assessable services fees associated with the travel by the Apotex Respondent’s various counsels during the course of this proceeding and a number of other items. However, the Merck Applicants also indicated they would be vigorously opposing many of the specific disbursement items claimed by the Apotex Respondent as well as the associated monetary amounts of those same disbursements.

 

Assessment

Lump Sum Awards of Costs

 

[5]               Section B of the Apotex Respondent’s Bill of Costs contains two fixed costs awards of $3,000.00 and $1,500.00 respectively for its item 5(c) (Prepare, serve and file Apotex’s motion to strike and/or remove Highly Confidential designation) and its item 5(d) (Prepare, serve and file responding motion to strike Apotex’s affidavits). With regard to the issue of lump sum awards of costs, it is appropriate that I refer to Rules 400(1), 400(4) and 401(1) of the Federal Courts Rules:

Rule 400(1) – The Court shall have full discretionary power over the amount and allocation of costs and the determination of by whom they are to be paid.

…

 

Rule 400(4) – The Court may fix all or part of any costs by reference to Tariff B and may award a lump sum in lieu of, or in addition to, any assessed costs.

…

 

Rule 401(1) – The Court may award costs of a motion in an amount fixed by the Court.

…

 

The Merck Applicants indicated during the oral hearing of this assessment of costs that they would not be opposing these items. However, the interlocutory Orders of the Prothonotary of the Federal Court dated April 19, 2004 and June 21, 2004 respectively for $3,000.00 and $1,500.00 awarded costs for these motions to the Apotex Respondent. In my opinion, the assessment of costs for these two assessable services has already been determined by the Federal Court and it is not appropriate that these lump sum awards be addressed again. For these reasons, the Apotex Respondent’s item 5(c) (Prepare, serve and file Apotex’s motion to strike and/or remove Highly Confidential designation) and its item 5(d) (Prepare, serve and file responding motion to strike Apotex’s affidavits) will not be considered within this assessment of costs.

 

Entitlement to Counsel Fees for Second and Third Counsel

 

[6]                In its Bill of Costs, the Apotex Respondent has claimed a total of 55 units for its item 14 Counsel Fee: (b) to second counsel, Andrew R. Brodkin, per hour in Court; and (c) to third counsel, Sorelle Simmons, per hour in Court. The Merck Applicants objected to these claims in their written submissions and during their oral submissions. Specifically, the Merck Applicants submit that item 14 of Tariff B of the Federal Courts Rules makes no mention of fees for third counsel. In addition, the Merck Applicants refer to the actual wording of item 14 of Tariff B of the Federal Courts Rules which states:

14.  Counsel fee:

 

(a)  to first counsel, per hour in Court; and

(b)  to second counsel, where the Court directs, 50% of the amount calculated

under paragraph (a).

 

 The Merck Applicants emphasize at paragraph 36 of the Written Submissions of the Applicants that the key phrase to be considered is “where the [c]ourt directs”. As additional support for this submission, the Merck Applicants refer to AB Hassle v. Genpharm Inc., 34 C.P.R. (4^th) (T.D.) at paragraph 22:

[22]      There are additional requests for directions regarding specific items of the Tariff, specifically item 14(b), item 24, and a number of requests for item 27. I concur with the comments of Mr. Justice Décary, writing for a unanimous court, in Wihksne v. Canada (Attorney General) (2002), 299 N.R. 210 (F.C.A.), when he stated that, absent special considerations, a factual determination of costs is better left in the hands of specialized taxing officers. All of the items requested under item 27 should be left to the assessment officer. I will address the requests with respect to item 14(b) and item 24 because, in the absence of directions from the court, the assessment officer does not have authority to deal with them.

 

[Emphasis added]

 

 

[7]               The Apotex Respondent notes in paragraph 26 of the Reply Submissions of the Respondent “that, although Justice Mosley did not issue a separate “direction” that Apotex be entitled to its fees for the three solicitors in attendance at the hearing, it can be inferred from His Lordship’s disposition on costs that Apotex be entitled to such amounts in accordance with Tariff B, Column III.” In addition, the Apotex Respondent submits in paragraph 25 of the same document “that it would have been a waste of judicial resources to move for further directions for various items on Apotex’s Bill of Costs.” In fact, in the previous paragraph 24 of the same document, the Apotex Respondent “submits that the requirement that a party specifically seek a “direction” from the Court under item 14(b) is to avoid a claim for unreasonable expenses outside the contemplation of the Judge presiding.”

 

[8]               I do not agree with the Apotex Respondent’s submissions that I have outlined above in paragraph [7]. Rule 403.(1) of the Federal Courts Rules state:

403. (1) Motion for Directions – A party may request that directions be given to the assessment officer respecting any matter referred to in rule 400,

 

(a)        by serving and filing a notice of motion within 30 days after

judgment has been pronounced; or

(b)        in a motion for judgment under subsection 394(2).

 

 

It is my opinion that Rule 403.(1) of the Federal Courts Rules offers any party to a proceeding a procedural opportunity to request and allow the Court to clarify and determine contentious issues associated with the assessment of the Bill of Costs. Any Order or directions that the Federal Court or Federal Court of Appeal issues, regarding a Bill of Costs under Rule 403.(1), may outline the specific parameters within which the assessment officer may or may not exercise his or her discretion. The Apotex Respondent did not utilize this specific procedural opportunity to determine this issue on its merits so they must rely on my discretion as an assessment officer. With regard to the request for counsel fees for second and third counsel, I am in agreement with the Merck Applicants’ submissions and the supporting proposition as outlined above in AB Hassle, supra, in paragraph [6] above. I do not have a Direction or Order of the Federal Court allowing counsel fees for second and third counsel. Therefore, I disallow the 55 units ($6,600.00) claimed for this assessable service.

Entitlement to Counsel Fees for Travel

 

[9]                 The Apotex Respondent has claimed 30 units in total for its items 24 (a), (b), (c), (d), (e), (f), (g), (h), (i) and (j) for travel associated with the cross-examinations of David Markowitz, Richard Mazess, Socrates Papapoulos, Gerald Devlin, Guy Saheb, Robert Langer, Juliet Compston and Michael Brian Fennerty. I note that two of these witnesses, Socrates Papapoulos and Michael Brian Fennerty, were interviewed on more than one date. In paragraph 39 of the Written Submissions of the Applicants, the Merck Applicants submit that item 24 of the Federal Courts Rules states that counsel may claim travel fees “at the discretion of the Court”. The Federal Court as outlined in AB Hassle, supra, in paragraph [6] above, has interpreted this provision of Tariff B of the Federal Courts Rules to require a direction from a judge. As a result, an assessment officer is not authorized to award fees under item 24 without a court direction. In support of these submissions, the Merck Applicants also refer to Beauliea v. Canada, [2000] F.C.J. No. 2127 (A.O.) at paragraph 10 which states:

... In item 24 of the bill of costs the respondent claimed the sum of $500 for travel by counsel. In her written submissions in reply Ms. Lavergne was prepared to reduce this amount to $100. At the same time, the appellant based her objection on the phrase "at the discretion of the Court" contained in item 24, which she submitted did not extend to the assessment officer where no specific directions to that effect had been given. The appellant is correct: only judges have the discretionary authority to compensate counsel for travel.

 

[Emphasis added]

 

In addition, the Merck Applicants refer to Canada (Canadian Food Inspection Agency) v. Walker, [2005] F.C.J. No. 510 (A.O.), Sarasin Consultadoria e Servocos Lda v. Roox’s Inc., [2005] F.C.J. No. 907 (A.O.), and Canadian Copyright Licensing Agency v. Apex Copy Centre, [2006] F.C.J. No. 133 (A.O.) which all make specific reference to the same paragraph 10 of Beaulieu, supra, as outlined above in this paragraph. The Merck Applicants submit that, since there is no order or direction of the Court permitting the Apotex Respondent to claim fees for travel, all assessable fees associated with item 24 should be removed from the Apotex Respondent’s Bill of Costs.

 With regard to Beaulieu, supra, the Apotex Respondent submits in paragraph 28 of the Reply Submissions of the Respondent that the specific assessment officer “determined that a claim for travel fees is only at the discretion of the Court and, accordingly, that particular assessment officer was not prepared to award counsel its fees in respect thereof.” In addition, the Apotex Respondent refers to paragraph 12 of International Brotherhood of Locomotive Engineers v. Cairns, [2002] F.C.J. No. 585 (A.O.) wherein that specific assessment officer allowed 1 unit associated with the assessable services for a travel claim under item 24 of the Federal Courts Rules. The Apotex Respondent notes that “the assessment officer awarded a claim for fees under item 24 and did not require this amount to be awarded only through a direction of a judge.” Similar to the argument outlined above in paragraph [7] regarding the claiming of fees for second and third counsel, the Apotex Respondent submits in paragraph 31 of its Reply Submissions of the Respondent “that, since the taxation officer’s discretion is exercised throughout an analysis of a party’s Bill of Costs, it is within his discretion also to make an award of costs in respect of Apotex’s fees for travel. It is impractical to carve out, item by item, various heads of fees and disbursements which ought to be subject to specific, additional, further directions of the Court.”

 

[10]           I note that the actual wording of item 24 of Tariff B of the Federal Courts Rules states:

24.              Travel by counsel to attend a trial, hearing, motion, examination or analogous procedure, at the discretion of the Court.

 

 

As submitted by the Apotex Respondent, the exercise of discretion by the assessment officer in International Brotherhood of Locomotive Engineers, supra, appears not to support the proposition contained in Beaulieu, supra, that the Court, which I interpret as the Federal Court or Federal Court of Appeal, must indicate within a judicial direction or by an Order of the Court that a party is entitled to fees for travel. I do not wish to speculate on any Orders of the Federal Court that may have set a time and place for that hearing, the affidavit evidence, written or oral representations, varied issues or the individual reasoning which influenced a different assessment officer to arrive at the decision he or she may have made with regards to a specific assessment of costs. I rely on the actual wording of item 24 above which states “at the discretion of the Court” and I note that the Apotex Respondent has submitted and admitted that no direction was sought from the Federal Court, although that particular procedural step was available.

 

[11]            In addition, I turn to the proposition and sentiment expressed by the Federal Court of Appeal as well as the Federal Court as outlined respectively in AB Hassle, supra, in paragraph [6] above and in Beaulieu, supra, in paragraph [9] above that only an Order or Direction of the Federal Court or Federal Court of Appeal gives an assessment officer the authority to allow the assessable fees associated with item 24. However, as I have expressed in Canada (Canadian Food Inspection Agency, supra and Sarasin Consultadoria e Servocos Lda, supra, which were also mentioned above in paragraph [9], I am of the opinion this does not prohibit me from allowing associated and necessary travel disbursements. For these reasons, I disallow the 30 units ($3,600.0) in total the items 24 (a), (b), (c), (d), (e), (f), (g), (h), (i) and (j) for the assessable  counsel fees associated with the cross-examinations of David Markowitz, Richard Mazess, Socrates Papapoulos, Gerald Devlin, Guy Saheb, Robert Langer, Juliet Compston and Michael Brian Fennerty.

 

Entitlement to Counsel Fees for the Affidavit of Frank Tassone

 

[12]           The Merck Applicants object to the 5 units claimed for the Apotex Respondent’s item 2(e) (Prepare, serve and file Affidavit of Franco A. Tassone;) in the Bill of Costs. Specifically, the Merck Applicants refer to paragraphs 60 and 61 of the Reasons for Order and Order dated May 26, 2005 in this proceeding which state:

[60]     Turning to the Tassone affidavit, in my view, it was improper for Apotex to use that means to submit evidence filed in a foreign proceeding as evidence in this case. Authentication by a clerk employed by a copying service does not meet the requirements of CEA section 23. The attachments to the affidavit constituted six volumes of material. Apotex made no real effort to explain how most of this material would be relevant and admissible. Even if it was properly authenticated, the question of its relevance and admissibility had to be established: Merck & Co., Inc. v. Apotex Inc., [1998] 3 F.C. 400 (T.D.).

 

[62]      I accept that section 23 is not the sole procedure by which foreign evidence can be proven. Relevance and admissibility can be established by other means, particularly where there is no doubt about the authenticity of the appended material: Suchon v. Canada (2002), 291 N.R. 250. There was no real doubt of authenticity in this case. But I think it was unnecessary and excessive to dump the U.S. trial evidence into the record in this manner and accordingly, I ruled that most of it was inadmissible. I would strongly discourage any repetition of this practice.

 

[Emphasis added]

 

It is worthy to note and repeat that the Federal Court expressed its concerns regarding the appended six volumes of materials as an improper means to file evidence and the Federal Court “strongly discouraged any repetition of this practice.”

 

[13]           The Apotex Respondent does not agree with the Merck Applicants’ submissions that the Apotex Respondent should not be compensated for the assessable fees associated with the Frank Tassone affidavit. In paragraph 69 of its Reply Submissions, the Apotex Respondent submits that it “is at a loss as to why it should be penalized for adducing evidence which was not relied upon. The Federal Court of Appeal has clearly stated that a distributive costs award is not appropriate when a party succeeds in a proceeding notwithstanding that it pursued and lost on a variety of issues within that proceeding.” In support of this latter proposition, the Apotex Respondent refers to Illinois Toolworks Inc. v. Fixations Cie (2004), 29 C.P.R. (4^th) 417 (F.C.A.).

 

[14]           I note the Reasons for Order and Order outlined above in paragraph [13] regarding the evidence appended to the Frank Tassone affidavit stated that “most of it was inadmissible”. However, the Federal Court did allow the Frank Tassone affidavit to be filed. In addition, the Apotex Respondent has referred to Illinois Toolworks, supra, as justification that it is entitled to these counsel fees. I think it is appropriate that I turn to Aird v. Country Park Village Properties (Mainland) Ltd., [2004] F.C.J. No. 1153 at paragraph 6 which echoes an almost identical proposition:

[6]      Costs should be neither punitive nor extravagant. It is a fundamental principle that an award of costs represents a compromise between compensating a successful party and not unduly burdening an unsuccessful party: Apotex Inc. v. Wellcome Foundation Ltd. (1998), 159 F.T.R. 233 (F.C.T.D.), aff'd. (2001) 199 F.T.R. 320 (F.C.A.). As a general rule, costs should follow the event. Absent an abuse of process, a successful plaintiff should not be penalized simply because not all the points advanced by the plaintiff have found favour with the court: Sunrise Co. Ltd. v. The "Lake Winnipeg" (1988), 96 N.R. 310 (F.C.A.). …

 

[Emphasis added]

 

It is my opinion that, although the Federal Court did not find “favour” with most of the evidence appended to the Frank Tassone affidavit, it did allow the actual affidavit to be filed. Both Illinois Toolworks, supra, and Aird, supra, support the Apotex Respondent’s submissions of entitlement to the associated counsel fees for this affidavit. However, I will deal with the appended evidence to this affidavit under the sub-heading Entitlement to Experts Fees within this assessment of costs. For these reasons, I allow the 5 units ($600.00) claimed for the assessable counsel fees.

 

Entitlement to Counsel Fees Associated with the Affidavit of David Weissburg

 

[15]           The Apotex Respondent has claimed 5 units, 3 units and 4 units respectively for its item 2(h) (Prepare, serve and file affidavit of David Weissberg), its item 8(f) (Preparation for the cross-examination of David Weissburg on October 8, 2004 and its item 9(f) (Attend at the cross-examination of David Weissburg on October 8, 2004. The Merck Applicants are concerned that the  Affidavit of David Weissburg, sworn on May 12, 2004, was only five pages in length and refer to the Reasons for Order and Order dated May 26, 2005 in this proceeding at paragraph 54 which states:

[54]      The Weissburg affidavit does not contain expert opinion evidence but rather describes events and hearsay statements made by others. Apotex relies upon those statements not for their truth but for the fact they were made. As determined by the Supreme Court of Canada in R. v. Khan, [1990] 2 S.C.R. 531 and subsequently applied to civil cases by a number of courts, hearsay is not inadmissible if found to be credible and reliable: e.g., Dye v. Morehouse (1999), 45 C.P.C. (4th) 329 (B.C.S.C.), E.S. v. D.M. (1996), 143 Nfld.&P.E.I.R. 192 (Nfld. S.C.). I allowed this evidence for the limited purpose of establishing that certain events occurred and statements were made and not for the truth of the contents of those statements.

 

[Emphasis added]

 

The Merck Applicants submit that, since the Federal Court has decided that the David Weissburg affidavit did not contain expert opinion evidence, the associated fees and disbursements should be removed from the Bill of Costs.

 

[16]           The Apotex Respondent submits in paragraph 66 of its Reply Submissions that the length of the affidavit of Mr. Weissburg “is absolutely irrelevant to the amount of fees incurred by Apotex in respect of same.” The Apotex Respondent argues that, although the Federal Court determined the David Weissburg affidavit did not contain expert opinion, it still remains a fact that the Apotex Respondent did expend monies obtain his opinion. In addition, the Apotex Respondent submits that the Merck Applicants treated him as an expert witness for the purposes of cross-examination.

 

[17]            I note that there were a number of interlocutory motions filed by the Merck Applicants which attempted to challenge the propriety of specific expert witness affidavits. However, I am of the opinion that the Reasons for Order and Order dated May 26, 2005 which is outlined above in paragraph [16] put this issue to rest when it allowed the evidence to be filed and considered for specific purposes.  For these reasons, I allow the total of 12 units ($1,440.00) for the assessable services associated with the affidavit of David Weissburg.

 

Entitlement to Counsel Fees for the February 28, 2005 Cross-Examination of Dr. Michael Brian Fennerty

 

[18]           The Apotex Respondent has claimed 3 units and 6 units for its item 8(o) (Preparation for the cross-examination of Dr. Michael Brian Fennerty on February 28, 2005) and its item 9(o) (Attend at the cross-examination of Dr. Michael Brian Fennerty on February 28, 2005). The Apotex Respondent submits in paragraph 34 of the Reply Submissions of the Respondent that the “result of Dr. Fennerty’s disposition to “fight” on cross-examination” necessitated a second cross-examination date. To further support this point, the Apotex Respondent refers to the Reasons for Order and Order dated May 26, 2005 in this proceeding at paragraph 64 which states:

 

[64]      … As for Dr. Fennerty, it was apparent from his truculence in answering questions on cross-examination that he had crossed the line between independence and advocacy. I accorded little weight to his evidence.

 

[Emphasis added]

 

Regarding this reference, the Apotex Respondent submits in the same paragraph 34 of the Reply Submissions of the Respondent that “it is reasonable to conclude that the reason it required two days to complete the cross-examination of Dr. Fennerty was due to the witness’ own demeanour.” 

 

[19]           However, at paragraph 45 of the Written Submissions of the Applicants, the Merck Applicants refer to Rule 409 of the Federal Courts Rules and submit that “an Assessment officer is entitled to “consider the factors referred to in subsection 400(3)”, including Rule 400(3)(i) which entitles the Assessment Officer to consider “any conduct of a party that tended to shorten or unnecessarily lengthen the duration of the proceeding”. At paragraph 46 of its Written Submissions, the Merck Applicants note the Apotex Respondent “took the position that it would complete the cross-examination of the Applicants’ witness, Dr. Michael Brian Fennerty, in Oregon in one day on January 25, 2005.” It is worthy to note that the parties had consented to the scheduling Order of the Prothonotary dated January 17, 2005 which ordered that “2. Cross-examinations on affidavits shall be completed on or before January 25, 2005.” Notwithstanding this fact, the Merck Applicants submit that both parties were required to make a second trip to Oregon on February 28, 2005 after the Apotex Respondent decided it required more time to complete the cross-examination of this witness. For these reasons, the Merck Applicants submit that all the assessable fees as well as the disbursements associated with the February 28, 2005 cross-examination of Dr. Fennerty should be removed from the Bill of Costs.  

 

[20]           In my opinion, Rules 409 and 400(i) of the Federal Courts Rules do not favour the Merck Applicants with regard to the assessable fees related to the cross-examination of Dr. Michael Brian Fennerty on February 28, 2005. As mentioned above in paragraph [19], the Reasons for Order and Order dated May 26, 2005 refer to the “truculence” of this witness in answering questions, suggested that he had crossed the line between “independence and advocacy” and gave little weight to his testimony. Considering the sentiment expressed by the Federal Court in its Reasons for Order and Order as outlined, it is apparent to me that this witness’ own actions did unnecessarily lengthen the time required for this part of the proceeding and forced the Apotex Respondents to incur increased costs for this specific cross-examination. For these reasons, I cannot find fault with the decision of the Apotex Respondent to complete the cross-examination of Dr. Fennerty on February 28, 2005. In my opinion, their actions were reasonable and justified and I exercise my discretion and allow a total of 9 units ($1,080.00) for these assessable services.

 

Remaining Assessable Fees Claimed by the Apotex Respondent

 

[21]           As mentioned above in paragraph [4] above, during the commencement of the hearing of the Merck Applicants’ oral representations for this assessment of costs, the lead counsel for the Merck Applicants indicated that there were only certain assessable services that it would be opposing. On October 26, 2006, the Merck Applicants forwarded correspondence dated that same day to the Apotex Respondent and a copy to the Toronto Registry with an attachment titled Schedule “B” – Amended. This document was actually a ‘marked up’ version of the Apotex Respondent’s Bill of Costs within which the Merck Applicants had deleted or reduced specific assessable services and disbursements as claimed in the original Bill of Costs. This ‘marked up’ version of the Bill of Costs was referred to extensively during the oral hearing of this assessment of costs and, in my opinion, was actually quite helpful to all in attendance as a reference tool to both parties’ submissions and arguments.

 

[22]           The Apotex Respondent has claimed a total of 9 units for its item 27(a) (Prepare response to Notice of Status Review;), its item 27(b) (Prepare and attend on case management conference call;) and its item 27(c) (Preparation of Bill of Costs;). As outlined at the top of page 2 of the Merck Applicants’ letter dated October 26, 2006, the Merck Applicants submit “that contrary to Rule 407 of the Federal Courts Rules and the Order … dated May 25, 2005, Tariff B, item 27 of the Apotex Bill of Costs has been calculated at the high end of the ordinary scale, as opposed to the mid-level of column III. Accordingly, a unit value of 2, as opposed to 3, should have been applied to item 27.”  The Reasons for Order and Order dated May 26, 2005 in this proceeding mentioned in paragraph [1] above notes that the Apotex Respondent’s costs were to be calculated “on an ordinary scale”.

 

[23]           Within the Reasons for Order and Order dated May 26, 2005 in this proceeding, I note that the Federal Court dated did not mention the term “mid-level of column III” when it referred to the tariff units for the assessable services. However, in paragraph 14 of the Apotex Respondent’s Written Submissions, the Apotex Respondent submits “in preparation of its Bill of Costs, Apotex submits that it should be entitled to costs at the mid-level of Tariff B, Part II, Column III.” In addition, in paragraph 2 of the Reply Submissions of the Respondent, the Apotex Respondent makes an almost identical reference to the costs calculated in accordance with the mid-level of Tariff B, Part II, Column III. It appears to me that the Apotex Respondent has made an inadvertent error when it calculated the number of units for its item 27. In actual fact, the Apotex Respondent’s item 27(c) (Preparation of Bill of Costs;) should have actually been claimed under item 26 (Assessment of Costs).

 

[24]            For the reasons I have outlined in paragraph [24] above, I reduce item 27(a) to 2 units ($240.00) and item 27(b) to 2 units ($240.00) which is consistent with the mid-range for this assessable service. I note that 3 units is the approximate mid-range for item 26 (Assessment of Costs) which the Apotex Respondents appear to have inadvertently claimed as item 27(c). In my opinion, item 27(c) should actually be captured under item 26 but since the Merck Applicants have not raised any submissions in opposition to this specific assessable service, I rely on common sense and my discretion and allow the 3 units ($360.00) claimed by the Apotex Respondent. Therefore, I allow 7 units ($840.00) in total for these specific assessable services.

 

[25]           The Merck Applicants at the hearing of this assessment of costs made extensive oral submissions regarding their objections to specific assessable fees claimed by the Apotex Respondent. As mentioned in paragraph [22] above, the ‘marked up’ version of the Apotex Respondent’s Bill of Costs outlines quite clearly, with a series of checkmarks and crosses, those specific assessable items that the Merck Applicants did not oppose. Below are the remaining assessable items that appear to be uncontested or those assessable items which the Merck Applicants indicated they considered to be reasonable.

 

A. Originating Documents and Other Pleadings

Tariff No.         Assessable Service                                           Units Claimed               Unit Value

2(a)                  Review notice of Application; prepare and        5 x 120                                    $600.00

file Notice of Appearance of Apotex Inc.;

 

2(b)                  Prepare, serve and file Affidavit of Richard        5 x120                         $600.00

                        B. Mazess;                  

 

2(c)                  Prepare, serve and file Affidavit of Juliet            5 x 120                                    $600.00

                        Elizabeth Compston;

 

2(d)                  Prepare, serve and file Affidavit of David           5 x120                         $600.00

                        Markwitz;

 

2(f)                   Prepare, serve and file Affidavit of Michael        5 x 120                                    $600.00

                        Mayerson;

2(g)                  Prepare, serve and file Affidavit of Robert         5 x 120                                    $600.00

                        S. Langer;

 

 

B. Motions

 

5(a)                  Prepare, serve and file responding motion          5 x 120                                    $600.00

                        Materials to Merck’s motion re; Protective

                        Order;

5(b)                  Prepare, serve and file Apotex’s Motion to       5 x 120                                    $600.00

                        Appealing Order of Milczynski dated

                        March 16, 2004;

 

 

C. Discovery and Examinations

 

 

8(a)                  Preparation for the cross-examination of            3 x 120                                    $360.00

                        Dr. Michael Brian Fennerty on July 14,

2003;

 

8(b)                  Preparation for the cross-examination of            3 x 120                                    $360.00

                        Marcelo Sarkis on July 14, 2003

 

8(c)                  Preparation for the cross-examination of            3 x 120                       $360.00

                        Jeffrey Spenser on January 20, 2004;

 

8(d)                  Preparation for the cross-examination of            3 x 120                                    $360.00

                        Michael Mayersohn on September 20, 2004;

 

8(e)                  Preparation for the cross-examination of            3 x 120                                    $360.00

                        David Markowitz on September 27, 2004;

 

8(g)                  Preparation for the cross-examination of            3 x 120                                    $360.00

                        Richard Mazess on October 14, 2004;

 

8(h)                  Preparation for the cross-examination of            3 x 120                                    $360.00

                        Socrates Papapoulos on August 20, 2004;

 

8(i)                   Preparation for the cross-examination of            3 x 120                                    $360.00

                        Gerald Devlin on November 4, 2004;

 

8(j)                   Preparation for the cross-examination of            3 x 120                                    $360.00

                        W.H. Guy Saheb on November 4, 2004;         

8(k)                  Preparation for the cross-examination of            3 x 120                                    $360.00

                        Robert Langer on November 12, 2004;

 

8(l)                   Preparation for the cross-examination of            3 x 120                                    $360.00

                        Juliet Compston on December 8, 2004;

 

8(m)                 Preparation for the cross-examination of            3 x 120                        $360.00

                        Socrates Papapoulos on December 6, 2004;

 

8(n)                  Preparation for the cross-examination of            3 x 120                        $360.00

                        Dr. Michael Brian Fennerty on February 28,

                        2005;

 

9(a)                  Attend at the cross-examination of Dr. 1hr x 2 =                      $240.00

                        Michael Brian Fennerty on July 14, 2003;         2 x 120

 

9(b)                  Attend at the cross-examination of Marcelo       0.5hr x 2 =                   $120.00

                        Sarkis on July 14, 2003;                                   1 x $120

 

9(c)                  Attend at the cross-examination of Jeffrey         1hr x 2 =                      $240.00

                        Spenser on January 20, 2004;                           2 x 120

 

9(d)                  Attend at the cross-examination of Michael       2hrs x 2 =                     $480.00

                        Mayerson on September 20, 2004;                   4 x 120

 

9(e)                  Attend at the cross-examination of David          6hrs x 2 =                     $1,440.00

                        Markowitz on September 27, 2004;                 12 x 120

 

9(g)                  Attend at the cross-examination of Richard        2hrs x 2 =                     $720.00

                        Mazess on October 14, 2004;                          6 x 120

 

9(h)                  Attend at the cross-examination of Socrates      2.5hrs x 2 =                  $600.00

                        Papapoulos on October 21, 2004;                    5 x 120                                   

 

9(i)                   Attend at the cross-examination of Gerald         2hrs x 2 =                     $480.00

                        Devlin on November 4, 2004;                           4 x 120

 

9(j)                   Attend at the cross-examination of W.H.           0.5hrs x 2 =                  $120.00

                        Guy Saheb on November 4, 2004;                   1 x 120

 

9(k)                  Attend at the cross-examination of Robert         3hrs x 2 =                     $720.00

                        Langer on November 12, 2004;                        6 x 120

9(l)                   Attend at the cross-examination of Juliet            7hrs x 2 =                     $1,680.00

                        Compston on December 8, 2004;                     14 x 120

 

9(m)                 Attend at the cross-examination of Socrates      6.5hrs x 2 =                  $1,560.00

                        Papapoulos on December 6, 2004;                   13 x 120

 

9(n)                  Attend at the cross-examination of Dr. 7.5hrs x 2 =                  $1,800.00

                        Michael Brian Fennerty on January 25,  15 x 120

                        2005;

 

D. Pre-Trial and Pre-Hearing Procedures

 

 

13.                   Counsel Fee: (a) Preparation for hearing;           3.5hrs x 120                 $420.00

 

                        Counsel Fee: (b) Preparation for hearing,          2.5hrs x 120                 $300.00

                        Per day in Court after the first day

 

 

E. Trial or Hearing

 

 

14.                   Counsel Fee: (a) to first counsel, H.B.               22hrs x 2.5                   $6,600.00

                        Radomski, per hour in Court;                            55 x 120

 

 

G. Miscellaneous

 

 

25.                   Services after judgment not otherwise                1 x 120                                    $120.00

                        specified;

 

 

The remaining assessable fees of the Apotex Respondent as outlined above total 226 units. These unopposed assessable fees appear reasonable and will be allowed in their entirety for 226 units ($27,120.00).

 

Entitlement to Travel Disbursements

 

[26]           The Apotex Respondent has claimed $81,896.48 in various travel disbursements. The Merck Applicants have objected to this claim as unreasonable. It is my opinion that those same objections were part of their submissions to item 14 and item 24, which I have dealt with above within paragraphs [6] to [12] inclusive, under the sub-headings of Entitlement to Counsel Fees for Second and Third Counsel and Entitlement to Counsel Fees for Travel. Basically, the Merck Applicants have submitted that a judicial direction or Order of the Federal Court must be issued before the assessment officer has the authority to allow the disbursements claimed in this proceeding for the travel expenses associated with second and third counsel. For these reasons, the Merck Applicants have submitted that the Apotex Respondent’s travel disbursements should be reduced to $35,737.74. I am assuming that the Merck Applicants’ reduction for travel costs from $82,896.48 to $35,737.74 was proposed to reflect the costs of the travel costs of a single counsel attending at all of the cross-examinations.

 

[27]           With regards to the travel disbursements of second and third counsel, I do not agree with the submissions of the Merck Applicants. Both item 14 and item 24 of Tariff B of the Federal Courts Rules have a condition in their wording which states respectively “where the Court directs” and “at the discretion of the Court.” Pursuant to the Federal Courts Act, sections 3 and 5(1) which defines the Federal Court and Rule 2 of the Federal Courts Rules which defines an assessment officer, since the “Court” did not exercise its discretion, it is my opinion that I have the jurisdiction and authority to deal with the travel disbursements associated with second and third counsel in this proceeding. In addition, Rule 405 of the Federal Courts Rules states:

405.          Costs shall be assessed by an assessment officer.

 

As I stated above in paragraph [12], this authority does extend to necessary travel disbursements as I have expressed in Canada (Canadian Food Inspection Agency, supra and Sarasin Consultadoria e Servocos Lda, supra. Finally, it is my opinion that, since neither party has exercised their rights under Rule 403 to request and allow the Federal Court to clarify and determine contentious issues associated with the assessment of the Bill of Costs, they must now rely on my discretion and experience as an assessment officer.

 

[28]           With regard to this specific issue of the disbursements associated with travel costs, the Merck Applicants have concentrated the content of their submissions around the implied requirement for a judicial direction or Order of the Federal Court allowing second and third counsel fees. In addition, the Merck Applicants rely on the requirements of section 1(4) of Tariff B of the Federal Courts Rules which refers to the standard of evidence for disbursements which they submit must be “reasonable” and “established by affidavit or by the solicitor appearing on the assessment that the disbursement was made or is payable by the party.” I have understood this argument to extend to the Apotex Respondent’s travel disbursements associated with the cross-examinations in this proceeding. I have also noted that the Apotex Respondent’s have attached a “Break-Down of Travel Disbursements” within Exhibit “C” in the Affidavit of Andrew R. Brodkin, sworn March 7, 2006. In my opinion, my task in determining these disbursements would have been greatly assisted if the Apotex Respondent had also attached the pertinent receipts for the specific airfares, hotels, meals, taxis and miscellaneous items associated with these trips. However, the Merck Applicants have not made any specific oral or written challenges regarding the quantum of these costs.

[29]           I am of the opinion that during the course of litigation certain decisions must be made by counsel during the discovery stages of any proceeding to understand the case they must prove or the case that they can be expected to respond to. The use of two counsels for cross-examinations seems a prudent and reasonable decision to me when I consider the volume of work and the total number of expert witnesses that were involved in the preparation for this proceeding. As noted above in paragraph [28], I cannot extend this logic to the assessable fees of second and third counsel for the hearing of this matter without a judicial direction or Order of the Federal Court but I can exercise my discretion and extend it to the travel disbursements. For the reasons I have outlined in this paragraph and above in paragraphs [27], [28] and [29], it my opinion that the travel disbursements of two counsel, not three as claimed, should be allowed for the Apotex Respondent’s disbursement described as 24 (f) (Travel by counsel to attend the cross-examination of Robert Langer in Boston, Mass. on November 12, 2005). Therefore, I reduce the total amount of $6,044.59 claimed for the travel costs associated with this cross-examination by one third to $4,029.73.

 

[30]            Regarding the remaining travel disbursements, it is appropriate that I turn to the decision in Grace M. Carlile v. Her Majesty the Queen, [1997] F.C.J. No. 885 (TO) at paragraph 26:

… 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.  My Reasons dated November 2, 1994, in T-1422-90:  Youssef Hanna Dableh v. Ontario Hydro cite, [1994] F.C.J. No. 1810, at page 4, a series of Reasons for Taxation shaping the approach to taxation of costs. Dableh was appealed but the appeal was dismissed with Reasons by the Associate Chief Justice dated April 7, 1995, [1995] F.C.J. No. 551.  I have considered disbursements in these Bills of Costs in a manner consistent with these various decisions. Further, Phipson on Evidence, Fourteenth Edition (London:  Sweet & Maxwell, 1990) at page 78, paragraph 4-38 states that the "standard of proof required in civil cases is generally expressed as proof on the balance of probabilities". Accordingly, the onset of taxation should not generate a leap upwards to some absolute threshold. If the proof is less than absolute for the full amount claimed and the Taxing Officer, faced with uncontradicted evidence, albeit scanty, that real dollars were indeed expended to drive the litigation, the Taxing Officer has not properly discharged a quasi-judicial function by taxing at zero dollars as the only alternative to the full amount.  Litigation such as this does not unfold solely due to the charitable donations of disinterested third persons.  On a balance of probabilities, a result of zero dollars at taxation would be absurd. …

 

                        [Emphasis added]

 

For the reasons I have outlined above and considering the sentiment expressed in Grace M. Carlile, supra, I exercise my discretion to reduce and allow the remaining travel disbursements of $75,851.89 plus applicable GST. For greater clarification, the total travel costs of $79,881.62, which includes the amount of $4,029.73 in paragraph [30] above, are allowed for all of the disbursements associated with all of the cross-examinations for this proceeding.

 

Entitlement to Photocopy Disbursements

 

[31]           The Apotex Respondent has claimed $36,647.49 for photocopy disbursements associated with this proceeding. The Merck Applicants submit at paragraph 102 of the Written Submissions of the Applicant that the Apotex Respondent “has failed to demonstrate the reasonableness of this amount in this proceeding.” In support of this argument, the Merck Applicants refer to Diversified Products Corp. v. Tye-Sil Corp., [1990] F.C.J. No. 1056 (T.D.) at page 275 which states:

It is therefore necessary for the party claiming photocopying disbursements to give satisfactory evidence to the Taxing Officer that the photocopying disbursement being claimed was essential for the conduct of the action.

 

In the case before me, I do not have to determine the meaning of "as having been essential for the conduct of the action" as no evidence was submitted to the Taxing Officer as to any photocopy made being "essential for the conduct of the action". The only evidence submitted by the Plaintiffs with regard to photocopies is found in paragraph 23 of the affidavit of Christopher Pibus dated June 11, 1990.

 

In respect of photocopying charges, I am informed and verily believe that the computerized system utilized by our office invoices at a rate of 25 cents per photocopies page.

 

Therefore, the Taxing Officer erred in law in allowing the sum of $4,635.43.

 

I would also comment with regard to the charge of $.25 per page of photocopied material.

 

With respect, I cannot agree with the reasoning of the Taxing Officer. The item of photocopies is an allowable disbursement only if it is essential to the conduct of the action. Therefore, this is intended to reimburse a party for the actual out-of-pocket cost of the photocopy.  The $.25 charge by the office of Plaintiffs' counsel is an arbitrary charge and does not reflect the actual cost of the photocopy.  A law office is not in the business of making a profit on its photocopy equipment.  It must charge the actual cost and the party claiming such disbursements has the burden to satisfy the Taxing Officer as to the actual cost of the essential photocopies.

 

[Emphasis added]

 

With reference to Diversified Products Corp., supra, the Merck Applicants submit at paragraph 104 of their Written Submissions that “Apotex has not submitted any evidence to indicate that these charges were “reasonable” or “essential for the conduct of the action”, including inter alia any evidence of the number of copies made, the costs per page, the type of documents copied, or the destination of the copies.” In addition to Diversified Products Corp., supra, the Merck Applicants refer to AlliedSignal Inc. v. Du Pont Can. Inc. (1998), 81 C.P.R. (3d) 129 which it submits supports the proposition “on the necessity and reasonableness of the claim” associated with the photocopying charges. In their Written Submissions, the Merck Applicants proposed a formula for calculating the Apotex Respondent’s photocopying charges with the total amount to be estimated at $8,400.00. In their correspondence dated October 26, 2006, the Merck Applicants indicated they had inadvertently made an error in their proposed calculation formula and corrected and reduced the estimated photocopying charges to $2,100.00 plus GST.

 

[32]           At paragraph 70 of its Reply Submissions, the Apotex Respondent “maintains that all requests for costs are reasonable and were necessarily incurred in the circumstances. In any event, the Bill of Costs attached to the affidavit of Mr. Brodkin was not challenged by Merck. Merck had the unbridled right to challenge Mr. Brodkin and did not do so.” The Apotex Respondent submits that it is not appropriate for the Merck Applicants to be blamed for its decision to file seven expert affidavits and to rely on 53 items of prior art since it was only responding to the case that the Merck Applicants had put forward. To support the Apotex Respondent’s proposition that it is not appropriate to apply the test of hindsight to determine whether a charge for disbursements was not reasonably necessary to defend their position, the Apotex Respondent refers to Apotex Inc. v. Egis Pharmaceuticals (1991) 4 O.R. (3d) 321 (Ont.Gen. Div.) which states at page 331:

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.

 

In essence, the Apotex Respondent has submitted that their respective photocopy disbursements have not been challenged and are appropriate given the circumstances of how this proceeded.

 

[33]           With regards to the charges associated with the photocopying, I share the concerns of the Merck Applicants regarding the Apotex Respondent’s evidence to support the claim of $36,647.49 for this disbursement. A review of the Affidavit of Andrew R. Brodkin, sworn March 7, 2006, in support of the Bill of Costs, includes a great many invoices attached as Exhibit “E” to this affidavit. In fact, the invoices to the client from the lead counsel’s law firm, which request payments for associated legal services, are actually in excess of $38,000.00 for photocopies. In addition, the invoice exhibits contained in Tab 2 of this affidavit from the associated law firm working with the lead counsel in this matter, total in excess of $14,000.00 for photocopies. However, the Apotex Respondent in this matter has not outlined how these charges were “reasonable” or “essential for the conduct of the action.” As well, the Apotex Respondent has not indicated either in its oral or written submissions whether these photocopies were done within the law firm’s office or by an outside photocopying firm. Finally, I note, with regard to the invoice exhibits mentioned above and the oral and written submissions of the Apotex Respondent, that there is no detail regarding “the number of copies made, the costs per page, the type of documents copied, or the destination of the copies.”

 

[34]           The Merck Applicants proposed formula appears to be a simple method to determine a rough estimate of the number of copies and total amount of the photocopy charges that they submit should be allowed. However, I am of the opinion not that this proposal does not adequately reimburse the Apotex Respondent for its photocopy disbursements. With regards to this issue, I determined that it was appropriate for me to review the entire Toronto Registry file, including all of the pertinent documents filed in this matter similar to the assessment officer in Grant v. Canada (Min. of Indian & Northern Affairs), [1991] 1 F.C. D-45 (A.O.). I have also considered the sentiment expressed in Apotex v. Wellcome Foundation, [1998], F.C.J. No. 1736 which states:

[6]      In Wellcome Foundation Ltd. v. Apotex Inc. (1992), 40 C.P.R. (3d) 376, 31 A.C.W.S. (3d) 1157 (F.C.T.D.) ["Wellcome Foundation"], MacKay J. noted as follows:

 

...In the exercise of discretion in relation to directions to a taxing officer, my colleagues have recognized certain general principles.  Included among these are that parties cannot expect to recover all their costs under the tariff relating to party-and-party costs and that exorbitant increases over the tariff items should not be countenanced for the court should not interfere lightly with the rules relating to sums intended to be allowed on a party-and-party basis: Diversified Products Corp. v. Tye-Sil Corp. (1988), 23 C.P.R. (3d) 313 at p. 324-5, 21 C.I.P.R. 49, 12 A.C.W.S. (3d) 404 (F.C.T.D.), per Cullen J.; Stiga Aktiebolag v. S.L.M. Canada Inc. (1991), 34 C.P.R. (3d) 258 at p. 261, 43 F.T.R. 221 (T.D.), per Dubé J.  While patent cases by their nature may be somewhat complex, general tariffs are set and there is no provision that patent cases should be accorded a treatment different from other types of cases: Reliance Electric Industrial Co. v. Northern Telecom Ltd. (1990), 30 C.P.R. (3d) 469 at p. 470, 19 A.C.W.S. (3d) 649 (F.C.T.D.), per Reed J., and per Dubé J. in Stiga Aktiebolag, supra, at p. 261.

 

[7]      It should be emphasized that the above decision predated the changes to Tariff B which incorporate the various columns to be selected in the discretion of the Court. However, I agree with Mr. Radomski that costs should neither be punitive nor extravagant and that the present Tariff "B" strives to accomplish that balance.  An important principle underlying costs is that an award of costs represents a compromise between compensating a successful party and not unduly burdening an unsuccessful party.

 

[Emphasis added]

 

Notwithstanding that Apotex, supra, as outlined immediately above makes reference to “tariff items”, it is my opinion that the sentiment expressed by the Federal Court extends to and includes disbursements.

 

[35]           Although the Apotex Respondents many invoice exhibits outline various amounts charged to the client, I am of the opinion that the Apotex Respondent has not satisfied me that all of these photocopy charges were “essential for the conduct of the action” as expressed in Diversified Products Corp, supra, above in paragraph [32]. I also turn to the decision in Grace M. Carlile, supra, which is outlined in paragraph [31] above and I repeat the latter part of that decision “that the "standard of proof required in civil cases is generally expressed as proof on the balance of probabilities". Accordingly, the onset of taxation should not generate a leap upwards to some absolute threshold. If the proof is less than absolute for the full amount claimed and the Taxing Officer, faced with uncontradicted evidence, albeit scanty, that real dollars were indeed expended to drive the litigation, the Taxing Officer has not properly discharged a quasi-judicial function by taxing at zero dollars at taxation would be absurd.”

 

[36]           As I mentioned above in paragraph [35], I reviewed the Toronto Registry main file documents and the filed materials in the many annexes associated with this proceeding. I have determined that approximately 5,000 pieces or copies of paper were created to form the both the specific filed and received documents forwarded to the Toronto Registry and relied upon in this proceeding. To attain a final total of photocopies, I have estimated a reasonable number of 8 copies that were served on all parties, filed in the Federal Court and utilized by the Apotex Respondent during this proceeding. In addition, I have considered the various sentiments as outlined in Grace M. Carlile, supra, Apotex, supra, Diversified Products Corp., supra, and AlliedSignal Inc., supra, and I have considered the photocopy disbursement formula as suggested by the Merck Applicants, notwithstanding that I consider the latter to be flawed. Based on my calculations, the photocopy disbursements of 5,000 copies of paper for pertinent materials multiplied by 8 copies (of all documentation) and multiplied by an amount of $0.25, allow me to arrive at a reasonable amount of $10,000.00 for photocopying disbursements. Please note that I have considered and estimated in this charge of $0.25 the associated and reasonable costs for front covers for all documents, binding, tabs/separators, collating, stapling, plain and coloured paper and other general items that may or may not be applied to each and every document. For all of the reasons I have outlined regarding this specific photocopying disbursement in this specific proceeding, I exercise my discretion to reduce and allow the photocopying disbursements in the amount of $10,000.00 plus applicable GST.

Entitlement to Disbursements Associated with Prior Art

 

[37]           The Apotex Respondent has claimed $7,205.51 in disbursements for prior art. The Merck Applicants submit in paragraph 49 of the Written Submissions of the Applicants that “a party must establish that disbursements are both reasonable and payable in order to be recoverable under the Rules.” In addition, in Schedule “E” of the Written Submissions of the Applicants, the Merck Applicants submits the chart comparing the prior art cited by the Apotex Respondent in its Notices of Allegations for Fosamax #1 and Fosamax #2 only cited 20 additional prior art references in Fosamax #2. The Merck Applicants submit in paragraph 50 of its Written Submissions that “the remaining 33 prior art references cited in Fosamax #2 would have already been payable by Apotex during the Fosamax #1 proceeding. Apotex’s Bill of Costs was settled between the parties and has already been satisfied by the payment of the Applicants.” In essence, the Merck Applicants submit that this claim for prior art is a duplication of the costs the Apotex Respondent has already recovered for the Fosamax #1 proceeding. For these reasons, the Merck Applicants submit that the Apotex Respondent’s prior art disbursements should be reduced by 65% to $2,521.93.

 

[38]           The Apotex Respondent submits in its Reply Submissions at paragraph 36 that “the amount paid for Prior Art in a previous proceeding is separate, distinct and confidential. The only relevant matter to this assessment is the actual amount of Apotex’s disbursement for Prior Art in this proceeding.” In addition, Apotex Respondent submits that it was charged $7,205.51 for the prior art and therefore, it should be awarded that amount for this proceeding.

 

[39]           It is worthy to note the actual wording of section 1(4) of Tariff B of the Federal Courts Rules which states:

1(4) Evidence of disbursements – No disbursement, other 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 by the party.

 

In this proceeding, the Apotex Respondent has claimed $7,205.51 as a disbursement for the 53 pieces of prior art that formed part of the evidence that was before the Federal Court in this proceeding as outlined in the comparative Schedule “E” of the Written Submissions of the Applicants. Within its Reply Submissions and during the hearing of this assessment of costs, the Apotex Respondent submitted that this amount was its actual costs for these specific disbursements. Notwithstanding the Apotex Respondent’s submissions, the Merck Applicants have submitted that the charges for 33 of the prior art references were satisfied when the Fosamax #1 Bill of Costs was settled between the parties. On a final note on this issue, as submitted by the Apotex Respondent, the terms and conditions of the settlement of the Fosamax #1 Bill of Costs was and is confidential.

 

[40]           In my opinion, it is almost trite to note that the terms and conditions of that settlement have not been presented by either party in opposition to or in support of the Apotex Respondent’s Bill of Costs. As well, I note that the Apotex Respondent has complied with section 1(4) of Tariff B of the Federal Courts Rules and, as I outlined in the first sentence in this paragraph with regards to the terms and conditions of a previous settlement, the evidence was never put before me. For these reasons, I exercise my discretion and allow the $7,205.51 plus GST for this specific disbursement.

 

Entitlement to Experts’ Fees

 

[41]           Much of the Merck Applicants written and oral submissions refer to the Apotex Respondent’s experts alleged duplication of evidence, the propriety of specific experts to comment on relevant subject matter in their respective affidavits and the similarity of expertise of certain experts. As mentioned above in paragraph [5], the Merck Applicants filed motions in the Federal Court to strike a number of the expert affidavit evidence submitted by the Apotex Respondent. It is appropriate that I refer to the Reasons for Order and Order in this matter dated May 26, 2005 wherein the Federal Court states:

[40]      At the outset of the hearing of this application, Merck renewed a motion to strike Apotex affidavits. An initial motion to strike the Tassone, Weissburg and Mazess affidavits was decided by Prothonotary Lafrenière on June 21, 2004. He ruled that the relief sought was premature, in the absence of special circumstances, and that evidentiary determinations should be left to the applications judge. The motion was dismissed without prejudice to Merck to seek leave to file reply evidence. Leave to file reply evidence was granted in a further order by the Prothonotary on July 13, 2004 resulting in the filing of the Devlin affidavit described above.

 

[41]      Merck filed a fresh motion on April 6, 2005 seeking to have struck, in addition to the three affidavits addressed in the June 2004 motion, the affidavits of Drs. Langer and Mayersohn. I gave an oral ruling on the motion before proceeding to hear the merits of the application.

 

[42]      Merck argued that the impugned affidavit evidence should not be admitted primarily on the grounds that:

 

1.         The Apotex affiants were not properly qualified to give opinion evidence in the several areas of knowledge to which they deposed.

2.         The evidence given was not relevant to the determination of the issues that are before the court in this NOC proceeding.

 

[43]      Applying the principles enunciated by the Supreme Court of Canada in R. v. Mohan [1994] 2 S.C.R. 9 at para. 17, namely: (a) relevance; (b) necessity in assisting the trier of fact; (c) the absence of any exclusionary rule; and (d) a properly qualified expert, I concluded that the opinion evidence proffered by Apotex was admissible.

 

[Emphasis added]

 

Since this issue has already been determined by the Federal Court, it is my opinion that I need not address these specific issues again but I will address the issues that I believe are pertinent to the disbursements of the experts’ fees.

 

[42]           The Apotex Respondent has claimed $580,338.28 in total for the expert fees of Robert Langer, Michael Lipp, Juliet Comston, Richard Mazess, David Weissburg, Michael Mayersohn, David Markowitz and Franco Tassone. Given the “extraordinary amounts at issue”, the Apotex Respondent submits in paragraph 9 of its Written Submissions that “the costs incurred by Apotex in responding to the proceedings were reasonable, and further, are costs that Merck ought reasonably to have expected Apotex to incur in order to adequately respond to these matters.” The Apotex Respondent notes that “experts charge significant fees for their time and opinions” and as “apparent from the decision … the outcome of the proceeding turned on the evidence of the various experts submitted by the parties.” For these reasons, the Apotex Respondent submits that “the expert fees were necessary and appropriate in the circumstances.”

[43]           The Merck Applicants submit that the Affidavit of Andrew R. Brodkin, sworn March 7, 2006, was ‘light’ in substance regarding the Apotex Respondent’s share of the aledronate market. In paragraph 29 of its Written Submissions, the Merck Applicants submit that “Apotex’s characterization of the amount of market at stake in these proceedings [is] unsupported by any evidence, it is also misleading.” The Merck Applicants also submit that the Intercontinental Medical Statistics Inc. (“IMS”) is a standard source of information in the pharmaceutical industry. According to the IMS data attached as Schedule “C” to the Merck Applicants’ Written Submissions, the Apotex’s 70 mg alendronate product generated approximately just under $30,000,000.00 in 2005 which is an overstatement of its share of the Canadian alendronate market made by the Apotex Respondent. For these reasons, the Merck Applicants submit that the Apotex Respondent’s share in this market does not justify their respective costs in this proceeding. Finally, the Merck Applicants question the relevance of the Apotex Respondent’s submissions regarding the amounts of monies at stake in this proceeding and refers to TRW Inc. v. Walbar of Can. Inc., (1992) 43 C.P.R. (3d) 449 (F.C.A.) which stands for the proposition that it is the importance of the legal issues and not the economic and business significance that should be considered when assessing costs.

 

[44]           The Apotex Respondent at paragraph 18 of its Reply Submissions submit that the Merck Applicants “misunderstood Mr. Brodkin’s evidence in that he was not giving facts regarding only Apotex’s market stake but that of the alendronate drug product for all of Canada.” The Apotex Respondent notes that the Merck Applicants did not cross-examine Mr. Brodkin on his affidavit but chose instead to simply suggest that the Apotex Respondent had overstated its position regarding the massive size of the alendronate market in Canada. In support of this submission, the Apotex Respondent submits in paragraph 19 of its Reply Submissions “that the Applicants’ choice not to cross-examine Mr. Brodkin engages the rule in Browne v. Dunn* and precludes challenges to Mr. Brodkin’s credibility.”

*Browne v. Dunn (1893), 6 R. 67 at 70-71

In other words, since the Merck Applicants have not cross-examined Mr. Brodkin, they cannot raise the issue of credibility regarding his affidavit evidence. In addition, the Apotex Respondent refers to Eli Lilly Canada Inc. v. Novopharm Ltd., [2006] F.C. J. No. 1002 which it submits supports its submissions that it is not appropriate to question Mr. Brodkin’s evidence which was not challenged on cross-examination:

[15]     As for disbursements, the affidavit of Nancy Schuurmans establishes that all disbursements set out in the draft bill of costs presented by Lilly were incurred and invoiced to Lilly in the preparation and for the purposes of these proceedings. The charges appear consistent with the record, showing that Lilly has prepared and filed nine affidavits, of which eight were expert affidavits. I therefore find that Lilly has established the reasonableness of these disbursements on a prima facie basis. While it is true that Lilly did not file invoices or supporting documents, it did not have to do so to establish a prima facie case. Novopharm had the opportunity to cross-examine on Ms. Schuurmans' affidavit and demand production of the supporting documents. It chose not to do so, and the evidence it tendered in response falls short of showing that the disbursements claimed were not in fact incurred for this matter or were excessive or unreasonable. Disbursements are therefore assessed at $73,277.71.

 

[Emphasis added]

 

In other words, since Mr. Brodkin was not cross-examined on his affidavit, the Apotex Respondent submits that it is not appropriate for the Merck Applicants to suggest that the disbursements claimed were excessive or unreasonable.

[45]           In response to the Merck Applicants’ submissions regarding the legal issues and complexity of this proceeding and the associated case precedent of TRW Inc., supra, the Apotex Respondent at paragraphs 13 and 14 of its Reply Submissions submits that:

13.              Contrary to its suggestions in paragraphs 22 to 25 of Merck’s Written Submissions, the issues in dispute in this proceeding were not succinct and simple. As noted …, Apotex challenged the validity of the ‘595 Patent on a variety of grounds including:

 

(a)                an allegation that the ‘595 Patent was obvious in light of the prior art;

(b)               and allegation that the ‘595 Patent was anticipated by several individual pieces of prior art;

(c)                an allegation that the ‘595 Patent invalid for failure to demonstrate utility or to make a sound prediction of utility;

(d)               an allegation that the disclosure in the ‘595 Patent was insufficient or ambiguous; and

(e)                an allegation that, because the ‘595 Patent attempted to patent a method of treatment, it was not an invention as defined in the Patent Act.

 

Notwithstanding that the Reasons for Order and Order dated May 26, 2005 in this proceeding dealt and analyzed at length with the legal issue of obviousness, the Apotex Respondent submits that the “evidence was raised by the parties on all of the various allegations of invalidity which contributed to the complexity of the proceeding.” For these reasons, the Apotex Respondent submits that it was reasonable and necessary to rely on the opinions and evidence of its expert witnesses for the preparation of this proceeding to properly address the complexity of the issues raised.

 

[46]           However, in its written and oral submissions, the Merck Applicants refer to the unreasonableness of the Apotex Respondent’s use of eight expert witnesses and submit in paragraph 54 of the Written Submissions of the Applicants that “the Canada Evidence Act limits each party in a proceeding to a maximum of five expert witnesses:” and quotes the Canada Evidence Act, R.S.C., E-10, s.7 which states:

Where, in any trial or other proceeding, criminal or civil, it is intended by the prosecution or the defence, or by any party, to examine as witnesses professional or other experts entitled according to the law or practice to give opinion evidence, not more than five such witnesses may be called on either side without leave of the court or judge or person presiding. 

 

In support of these submissions, the Merck Applicants refer to Pfizer Canada Inc. v. Apotex Inc. and the Minister of Health, (March 23, 2005), Doc T-2282-01 (unreported), wherein it submits that the Federal Court indicated that the use of eight expert witnesses was considered excessive in that proceeding, since many of the experts had similar expertise and appeared to be overly expensive.

 

[47]           The Apotex Respondent submits in paragraph 38 of its Reply Submissions that the “Federal Court has clearly followed a litany of jurisprudence which interprets section 7 … as a limitation upon the total number of experts per issue, rather than for the case as a whole.” In support of this submission, the Apotex Respondent refers to the decision in Merck & Co. et al. v. Apotex Inc. et al (2003), 30 C.P.R. (4^th) 342 (F.C.T.D.) which states:

[13]      There was no good reason why the Prothonotary should not have followed and applied the jurisprudence of this Court that has interpreted s. 7 as a limitation upon the total number of experts per issue, rather than for the case as a whole. My finding in this regard is sufficient to dispose of this appeal and to grant it.

 

[Emphasis added]

 

Notwithstanding the Merck Applicants submissions and considering the proposition immediately above, I share the opinion of the Apotex Respondent that they have not violated section 7 of the Canada Evidence Act with regard to the number of experts they relied upon to support their position in this proceeding.

 

[48]            Although the Apotex Respondent claimed in paragraph [46] above that the experts’ fees were reasonable and necessary given the complexity of the issues to be determined, the Merck Applicants submit that the experts’ fees were overly expensive and refer to the considerations and sentiments expressed by the Assessment Officer in AlliedSignal Inc., supra, at paragraph 20 which states:

…I am not bound by a general affirmation on the reasonableness of fees and disbursements made by one of the counsel, whatever the context in which it was made. Reasonableness in the context of an assessment of costs is the domain of the Taxing Officer. It must be appreciated from that perspective, not from the dictates of the parties.

 

 

In addition, the Merck Applicants refer to paragraph 77 of this precedent which states:

 

[77]      Of course, a party has the right to hire the expert or experts of its choice to advance the merits of its case, but that does not mean a losing side must, invariably, foot the bill of the expert or experts chosen by the winning side without questioning the fees and disbursements claimed. The jurisprudence is replete with cases that attack such bills essentially on two fronts; the first, on whether or not the fees being exacted are reasonable and, second, on whether or not the disbursements claimed, as otherwise perfectly legitimate items to be included in such a bill, denote a lavish style of living. In other words, the level of expertise required in a particular case may justify the hiring of the "cadillac" of expert witnesses, but that does not mean the unsuccessful party will necessarily have to pay for a "cadillac" when other expert witnesses were available and charged lower fees. I glean this cautious approach from the statement of Mr. Justice Sirois of the Saskatchewan Court of Queen's Bench who said in Angelstad v. Frederick Estate24 [1989] S.J. No. 645 (QL) [reported 80 Sask. R. 274 at p. 276] that:

 

Some experts witnesses seem to charge whatever the traffic will bear, while others are very reasonable about the remuneration they receive to give testimony before the court. This places the lawyer in an unenviable position if he feels the expert's testimony is important to his client's case because he may feel it is necessary to call the witness whatever the cost. While this is an acceptable and legitimate decision on counsel's part, it follows that the court will not necessarily approve the expert's fees as an item which is all chargeable to the losing litigant. A practice seems to have developed among counsel to simply pay the expert's bill and seek to charge it off as a disbursement. There is an onus on counsel seeking payment of the expert witness's charges to justify the expense in the sense that the losing side should not be required to pay costs which are not reasonable having regard to the importance of the witness's evidence to the outcome of the trial and the complexity of the expertise.

 

[Emphasis added]

 

On a final point regarding this specific case precedent, the Merck Applicants refer to paragraph 81 of the same decision which states:

[81]      I have read the authorities suggested by the parties and I note that there is a common thread running through most of those cases.25 Engine and Leasing Co. v. Atlantic Towing Ltd. (1995), 93 F.T.R. 181 (T.D.) (Joyal J.); Sanmammas Compania Maritima S.A. v. The Ship "Netuno" (1995), 102 F.T.R. 181 (T.D.) (Tremblay-Lamer J.); Aerlinte Eireann Teoranta v. Canada, [1993] F.C.J. No. 1462 (QL) (T.D.) (Wendt, Taxing Officer) and Dableh v. Ontario Hydro, [1994] F.C.J. No. 1810 (QL) (Stinson, Taxing Officer).25 I note in particular the following guidelines:

 

(1) The hiring of an expert must, in the circumstances existing at the time, be prudent and reasonable representation of the client;

 

(2) The hiring of an expert must not constitute a blank cheque for an award;

(3) What reliance was placed on the expert's testimony by the trial judge?

[Emphasis added]

 

Finally, the Merck Applicants submit at paragraph 76 of their Written Submissions, that considering the “absolute unreasonableness of Dr. Langer’s proposed fees, it was not possible for the Applicants’ to estimate a “fair” reduction.”

 

[49]           Similar to the sentiments expressed and outlined above in paragraph [49], the Merck Applicants noted in paragraph 61 of their Written Submissions that a specific Judge of the Federal Court has “commented on the Court’s concern with escalating expert fees.” The Merck Applicants refer to the sentiment expressed by the Federal Court in Pfizer Canada Inc. v. Minister of Health., [2005]  F.C. 1725 (T.D.) at paragraph 78 when the Federal Court “suggested that submissions on costs should be guided by the consideration that expert fees should not “exceed those allowed for lead counsel in preparing for and arguing the case.” However, with regard to this latter concern expressed by the Federal Court, I share the opinion of the Apotex Respondent that the Federal Court Judge was expressing his own specific concerns with escalating expert fees. I also state that I am not aware of any judicial pronouncement that expert fees must be frozen at a rate equal to that of lead counsel.

 

[50]           To assist the parties and assessment officer, the Merck Applicants provided a set of graphs and an ‘Experts Spreadsheet’ which compared certain criteria for each of the Apotex Respondent’s experts. The column headings for this spreadsheet included:

-                     name (of expert)

-                     Affidavit filed (yes or no)

-                     Fact or Expert (type of affidavit – expert , fact, hearsay or unknown))

-                     Medical Doctor (yes or no and added commentary of work profession)

-                     Worked on previous alendrate cases (yes or question mark)

-                     Invoices submitted (yes, no or incomplete)

-                     Claimed hours (Number of hours or question mark)

-                     Claimed Rate converted to Canadian dollars (blended in some cases)

-                     Total Fees Supported by Invoices

-                     Total Fees Claimed in Bill of Costs

-                     Amount Unsupported by Invoices (Approximate)

-                     Reasonable Hours

-                     Reasonable Rate

-                     Reasonable Fees

 

 

The ‘Experts Spreadsheet’ was quite helpful in following the arguments and submissions of the Merck Applicants. However, I do note that the three latter column headings were only estimates of the total individual expert fees, rates to be charged and number of hours that, in the opinion of the Merck Applicants, were appropriate for this proceeding.

 

[51]           The Apotex Respondent has claimed $3,501.53 in its Bill of Costs associated with the expert fees of Franco Tassone in addition to the assessable counsel fees which I determined and allowed in paragraphs [13] to [15] above. The Merck Applicants submit in paragraph 100 of its Written Submissions that “expert fees are not recoverable where the trail judge finds the report to be “unnecessary or the contents useless.” In support of this submission, the Merck Applicants refer to John A. Carruthers v. The Queen, [1983] 2 F.C. 350 (T.D.) which states:

… In cases in which experts are called by both parties and they give conflicting opinions, the Court has to choose the opinion of one of the experts as preferable to the other, unless the Court chooses to reject both opinions and substitute its own based on the evidence, but the fact that one expert's report is rejected, or not accepted in full, would not justify non-payment of his fees for the preparation of same, unless the Court finds that the requisitioning of such a report was entirely unnecessary or the contents useless. …

 

 

Since the Federal Court ruled that most of the evidence attached to the Affidavit of Frank Tassone was “unnecessary” and that “most of it was inadmissible,” it is my opinion that the Apotex Respondent should not be entitled to claim these expert fees in their entirety. For these reasons and considering the proposition expressed in Grace M. Carlile, supra, that “a result of zero dollars would be absurd”, I exercise my discretion and allow a reduced amount of $500.00 for the associated expert fees of Frank Tassone.

 

[52]           The Apotex Respondent has claimed $322,512.84 for the expert fees of Dr. Robert Langer. The Merck Applicants submit in paragraph 72 of its Written Submissions that “Apotex has failed to demonstrate the reasonableness of this amount in these proceedings.” The Merck Applicants note that Dr. Langer had already filed an expert affidavit in the related Fosamax #1 and should have been familiar with a majority of the prior art. In addition, the Merck Applicants submit that the number of hours that both Dr. Langer and his assistant Michael Lipp spent on this file was 474 hours, or 224 hours and 250 hours respectively, which it submits is approximately four months of full-time work in relation to a single expert affidavit. (Please note that I have corrected the number of hours claimed for Dr. Lipp and the total number of hours claimed since it appears that the Merck Applicants have inadvertently stated an incorrect total). Finally, the Merck Applicants note that the billing rate of Dr. Langer for this proceeding appears to have more than doubled between the commencement of all four associated Fosamax proceedings (T-568-03, T-884-03, T-1053-03 and T-1106-03) even though they were initiated within three months of each other. The Merck Applicants submit that this is in essence a “blank cheque award” approach to hiring expert “Cadillac” witnesses and refer to Apotex Inc. v. Syntex Pharmaceuticals International Ltd. (1999), 2 C.P.R. (4^th) 368 (T.D.) at paragraphs 20 to 21 wherein, the Federal Court refers to “outrageous” expert fees, “reasonable expenses of the litigation” and that “the unsuccessful party will not be responsible to compensate for extravagance.”

 

[53]           In response to the Merck Applicants submissions that a number of the expert fees are excessive, including those of Dr. Langer and Dr. Lipp as I have outlined above, the Apotex Respondent repeats its submissions regarding the “extraordinary amounts at issue” which it suggests may reach one billion dollars. The Apotex Respondent submits at paragraph 61 of its Reply Submissions that “Apotex sought to engage one of the highest qualified experts in the field.” I note that a short summary of some of Dr. Langer’s achievements are attached to the Reply Submissions at Tab 3 and I do not dispute that Dr. Langer is well regarded and respected within the world scientific community. In support of its justification to engage the services of Dr. Langer, the Apotex Respondent refers once again to the proposition expressed in Apotex Inc., supra, as outlined above in paragraph [33] that it “is not appropriate to apply the test of hindsight (20/20 vision) to determine whether a service was for an extra service or frill not reasonably necessary to defend the client’s position.” In other words, the Apotex Respondent submits at paragraph 62 of its Reply Submissions, “when assessing costs, the Courts have stressed the importance of not reviewing a party’s fees with hindsight.” 

 

[54]           The Apotex Respondent notes that the Merck Applicants took two full days to cross-examine Dr. Langer on his evidence which it submits favours the significance of his testimony and the complexity of the proceeding. The Apotex Respondent also notes the Merck Applicants’ concerns with regard to the number of hours both Dr. Langer and Dr. Lipp spent on preparing one expert affidavit. The Apotex Respondent submits at paragraph 64 of its Reply Submissions that the “Merck argument that Drs. Langer and Lipp ought to have performed their work more efficiently is absurd.” The Apotex Respondent submits that the quality of work for this evidence was “performed by some of the most renowned [sic] experts in the world. For these reasons, the Apotex Respondent submits that the Merck Applicants’ submissions regarding the expert fees of Dr. Langer and Dr. Lipp “must be rejected.”    

 

[55]            It should be noted that the Merck Applicants have suggested a proposed billing formula that uses one of the Apotex Respondent’s expert’s hourly rate and billable hours as benchmarks to reduce the expert fees of Dr. Langer. When factoring in a suggested reduced hourly rate and a reduced number of hours for Dr. Langer, the Merck Applicants submit that Dr. Langer’s expert fees should be reduced to $19,600.00. I am uncomfortable with this suggestion for the simple reason that the proposal seems to be a very arbitrary method of determining the expert fees, so I will not explore or outline this proposal any further.

                       

[56]           Exhibit “K” and Exhibit “L” to the Affidavit of Sharon O’Connor, sworn on March 20, 2006, are the respective copies of the Bills of Costs and copies of the three charts itemizing the Apotex Respondent’s expert fees disbursements in relation to the three Fosamax proceedings (T-568-03, T-1053-03 and T-1106-03). During my review of these three charts itemizing the Apotex Respondent’s expert fees disbursement amounts, I determined that the amounts of the expert fees disbursements from the three charts matched the amounts of the expert fees disbursements claimed in the respective Bills of Costs which were forwarded to the Merck Applicants for the associated Fosamax proceedings (T-568-03, T-1053-03 and T-1106-03). Initially, I shared the concerns of the Merck Applicants that Dr. Langer’s invoices (which also contained the separate invoiced amounts for Dr. Lipp), which are attached to the Affidavit of Andrew R. Brodkin, sworn March 7, 2006, did not match the amounts claimed by the Apotex Respondent. However, within Tab 2 of the Affidavit of Andrew R. Brodkin, sworn March 7, 2006, I found a law firm invoice from Ivor M. Hughes dated February 4, 2004 which contained two disbursement amounts of $19,320.00 and $15,456.00 in Canadian dollars for “Professional Fees (Robert Langer)” and “Professional Fees (Michael Lipp),” respectively. (Please note that Ivor M. Hughes is a barrister and solicitor associated with Apotex Inc. and works with the lead counsel’s law firm in patent matters.) When the $19,320.00 is added to the remaining Dr. Langer invoices, the expert fees for this individual actually total $322,242.25 in Canadian dollars. I intend to assess this specific amount regarding the expert fees of Dr. Langer.

 

[57]           During my review of the three Bills of Costs associated with the Fosamax proceedings (T-568-03, T-1053-03 and T-1106-03) and the expert fees of Dr. Langer, I estimated and determined that Dr. Langer’s per hour rate ranged from a low of $597.00 Canadian dollars to a high of $695.00 Canadian dollars approximately, which took into consideration the currency conversion rate from U.S. to Canadian dollars at the time that invoice amount was determined.  However, in this proceeding, I note that Dr. Langer invoices indicated that he charged approximately $1,230.00 to $1,435.00 Canadian dollars per hour rate for 208 hours and approximately $1,845.00 Canadian dollars per hour rate for 16 hours, which took into consideration the currency conversion rate from U.S. to Canadian dollars at the time that invoice amount was determined. As mentioned in the paragraph immediately above, the Dr. Langer invoices total $322,242.25 in Canadian dollars when the conversion is done from U.S. to Canadian dollars.

  

[58]           I share the concerns of the Merck Applicants that the per hour rate of Dr. Langer for the associated Fosamax proceedings (T-568-03, T-1053-03 and T-1106-03) seem to be at a much lower rate than was invoiced in the case at bar. It is appropriate regarding the issue of Dr. Langer’s per hour rate that I refer to the sentiment expressed in Grace M. Carlile, supra, that “… 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.” The Merck Applicants refer to the sentiment in AlliedSignal Inc., supra, as outlined above in paragraph [49] and repeated here in part:

[77]      … a party has the right to hire the expert or experts of its choice to advance the merits of its case, but that does not mean a losing side must, invariably, foot the bill of the expert or experts chosen by the winning side without questioning the fees and disbursements claimed. … The jurisprudence is replete with cases that attack such bills essentially on two fronts; the first, on whether or not the fees being exacted are reasonable and, second, on whether or not the disbursements claimed, as otherwise perfectly legitimate items to be included in such a bill, denote a lavish style of living.

 …

[59]           It is my opinion that the expert fees claimed for Dr. Langer by the Apotex Respondent in this proceeding are not reasonable when I consider the per hour rate claimed for the associated Fosamax proceedings (T-568-03, T-1053-03 and T-1106-03). Lord Justice Russell in Re Eastwood (deceased) (1974) 3 All E.R. 603 at 608 referred to a practical and reasonable approach to the taxation of costs:

…In our view, the system of direct application to taxation of an independent solicitor’s bill to a case as this has relative simplicity greatly to recommend it, and it seems to have worked without it being thought for many years to lead to significant injustice in the field of taxation where justice is in any event rough justice, in the sense of much sensible approximation...

 

I have taken into consideration the sentiments expressed in AlliedSignal Inc., supra, Grace M. Carlile, supra, and Re Eastwood (deceased), supra and it is my opinion that a more conservative amount is appropriate for these specific expert fees. Using the maximum per hour rate that I estimated in the associated Fosamax proceedings (T-568-03, T-1053-03 and T-1106-03) of $695.00, I exercise my discretion to reduce and allow the 224 hours invoiced by Dr. Langer at $695.00 for a total of $155,680.00 in Canadian dollars plus associated GST for this specific disbursement.

 

[60]           The Apotex Respondent has claimed $82,016.00 in expert fees for Dr. Lipp’s assistance in preparing the Affidavit of Dr. Langer. The Merck Applicants submit at paragraph 80 of the Written Submissions of the Applicants that “Dr. Lipp did not submit an affidavit in this proceeding.” Regarding the assistance in the preparation of Dr. Langer’s affidavit, the Merck Applicants, as mentioned above in paragraph [55], submit that “by charging such high hourly rates in addition to billing time for an assistant, Dr. Langer and Dr. Lipp should have accomplished their work in this proceeding far more efficiently.” The Merck Applicants point out that Dr. Compston and Dr. Markowitz appear to have accomplished the same work in much less time and their total expert fees are much less than that claimed by Dr. Langer and Dr. Lipp. For these reasons, the Merck Applicants submit that all expert fees related to Dr. Lipp be removed from the Bill of Costs since their proposed reduced amount of $19,600.00 for Dr. Lipp are reasonable and sufficient in the circumstances of this proceeding.

 

[61]           I do not agree with the Merck Applicants’ submissions regarding the amount and reasonableness of Dr. Lipp’s expert fees. The Apotex Respondent’s have referred to Apotex Inc., supra, as outlined above in paragraph [33], which the Apotex Respondent submits stands for the proposition whether it is appropriate to apply the test of hindsight to determine whether a charge for disbursements was not reasonably necessary to defend their position. However, I rely on the sentiment expressed in Dableh v. Ontario Hydro, [1994] F.C.J. 1810, which may be more on point, wherein the Taxing Officer at paragraph 15 stated:

[15]      It may seem anomalous that one professional in the process i.e. the solicitor; qualifies only for partial indemnification and another professional in the process i.e. the engineer; qualifies for full indemnification but that is the scheme of costs relative to the principle of partial indemnity set up in the Rules and Tariff subject to the authority of Rule 344(1) or other overriding legislation.  The test, particularly in the face of a disinterested business relationship without collusion between an expert selling his or her services and a litigant purchasing said services to fill a void in the expertise requisite to success in the litigation, is not to cut experts' accounts down to some lowest common denominator.  I have evidence here of real invoices apparently received and paid.  The test or threshold, for indemnification of disbursements such as these, is not a function of hindsight but whether, in the circumstances existing at the time a litigant's solicitor made the decision to incur the expenditure, it represented prudent and reasonable representation of the client both in terms of leading and responding to Rule 482 expert evidence and of filling the void of technical expertise requisite to the solicitor's preparation and conduct.  Austerity must be a factor in costs:  I am not suggesting that experts should always be indemnified for the entire period of a trial.  Here, Dr. Laithwaite left on the last day of his testimony but was subsequently consulted briefly via long distance telephone.  At taxation, Defendant's counsel supplemented the evidence with oral explanation and invited me to infer, from the record, the importance of Dr. Laithwaite and Dr. Lavers both as experts and consultants.  The Mills affidavit supporting the Bill of Costs did not address this.  My Reasons supra indicate that the uses of experts encompass both Tariff B1(2)(a) and (b) and further that the taxing party faces variable results depending on the proof led. Further, they indicate that, in the absence of sufficiently detailed proof, the result may be necessarily conservative so as to embrace the interests of the respondent at taxation but coincidentally not provide an absurd result for the taxing party.

 

[Emphasis added]

 

 

[62]           During my review of the joint invoices of Drs. Lipp and Langer, I noted that there was ample detail of the various types of technical work that Dr. Lipp performed while reviewing expert reports, references and related materials. In addition, I note the ‘Experts Spreadsheet’ as prepared by the Merck Applicants, clearly compares all of the ‘Claimed Rate converted to Canadian dollars (blended in some cases)’ for the medical and technical experts. I further note that Dr. Lipp’s per hour rate is the lowest for any of these specific experts so I consider the use of this expert to be a prudent and reasonable decision by the Apotex Respondent. For these reasons and considering the sentiment expressed in Dableh, supra, as outlined above, I exercise my discretion and allow the disbursements of $82,016.00 plus associated GST for the expert fees of Dr. Lipp.

 

[63]           The Apotex Respondent has claimed $$28,236.46 for the expert fees of Dr. David Weissburg. I repeat some of the Merck Applicants’ concerns raised above in paragraph [16] that the Affidavit of David Weissburg, sworn May 12, 2004, was only five pages in length. The Merck Applicants also refer to the Reasons for Order and Order dated May 26, 2005 in this proceeding which noted that the “affidavit does not contain expert opinion but rather describes events and hearsay statements made by others.” In addition, the Merck Applicants submit that the Dr. Weissburg invoices do not contain many details regarding the “consulting time” spent by this specific expert. The Merck Applicants submit in paragraph 89 of its Written Submissions of the Applicants that this “type of “bald statement” is insufficient evidence to justify costs for expert fees” and refers to AlliedSignal, supra, at paragraph 47 which states:

[47] … It is the requirement that sufficient or reasonable proof be lead to satisfy the Taxing Officer that expenses were incurred. It all becomes then a question of degree of evidence. A [bald] statement of the kind singled out by Mr. Justice Teitelbaum in the Diversified case and also found in the F-C Research Institute case, would not be sufficient to satisfy a Taxing Officer. Likewise, absolute and detailed evidence is not an indispensable requirement for an award to be made. As my colleague Stinson, Taxing Officer, said on numerous occasions the more thorough and complete the evidence is, the less the result will be bound up into the Taxing Officer's discretion, but that does not mean a Taxing Officer is refrained from resorting to his discretion to make an award in the absence of cogent evidence.

 

 

[64]           As I determined in paragraph [18] above, the Federal Court allowed the Affidavit of David Weissburg to be filed for limited purposes notwithstanding the fact that the Merck Applicants filed motions to have this and several other Apotex Respondent’s affidavits struck from the file. The invoices from David Weissburg contained in Exhibit C to the Affidavit of Andrew R. Brodkin, sworn on March 7, 2006, indicate a number of time periods (i.e.:- “14FEB04 – 31MAY04”), specific hours for each time period that David Weissburg claimed he had worked on this proceeding and, also included, were a number of expenses amounts within these invoices. Although the invoices do not contain “absolute and detailed evidence” as described above in AlliedSignal, supra, outlined in this paragraph, I am satisfied that the Apotex Respondent incurred these expenses. For these reasons and relying on the sentiment expressed in Dableh, supra, outlined above in paragraph [62], I exercise my discretion and allow the $28,236.46 plus associated GST for this disbursement.

 

[65]           The Apotex Respondent has claimed $26,217.14 for the expert fees of Juliet Compston, $16,612.42 for the expert fees of Richard Mazess, $37,214.62 for the expert fees of David Markowitz and $64,027.27 for the expert fees of Michael Mayersohn. I have corrected the invoice total for David Markowitz to $38,214.62 since it appears to me that the Apotex Respondent has made a simple addition error. The Merck Applicants have raised a concern that the invoice amounts for Michael Mayersohn do not match the total invoice amount the Apotex Respondent is claiming for this specific disbursement which, it submits, justifies a reduction of these specific expert fees. Within Tab 2 of the Affidavit of Andrew R. Brodkin, sworn March 7, 2006, I found a law firm invoice from Ivor M. Hughes dated June 9, 2004 which contained a disbursement amount of $23,772.20 in Canadian dollars for “Professional Fees (Michael Mayersohn).” As mentioned by the Apotex Respondent in paragraph 58 of its Reply Submissions, “the invoices provided by Apotex were those in its possession at the time that the supporting material could be delivered to the Applicants in respect of this assessment.” In my opinion, this is a reasonable explanation and I exercise my discretion and accepted these submissions of the Apotex Respondent. In addition, I have corrected and reduced the invoice total for to Michael Mayersohn to $63,997.27 since it appears to me that the Apotex Respondent has made an addition error when totalling all of the associated invoices.

 

[66]           The Merck Applicants have noted that Juliet Compston, Richard Mazess and David Markowitz all have been involved in associated Fosamax proceedings and/or they have been involved with equivalent proceedings in foreign jurisdictions. The Merck Applicants submit that the fees for all of these experts should be reduced to reflect their familiarity with their associated work on the Fosamax proceedings and their work in other foreign jurisdictions. In addition, the Merck Applicants submit at paragraph 96 of the Written Submissions of the Applicants that David Markowitz who has been a medical doctor since 1985 and therefore, “has less experience as a medical doctor than Dr. Compstom, an MD since 1972.”  For these reasons, the Merck Applicants submit that David Markowitz’s fees should be reduced.

 

[67]           In my opinion, the Apotex Respondent has made best efforts to present its case to the Federal Court by relying on the opinions of its experts and affidavit evidence that it submitted. Although not all of the evidence found favour with the Federal Court, I do note that at paragraph 64 of the Reasons for Order and Order dated May 26, 2005 in this proceeding the Federal Court stated:

[64]      Expert evidence presented to the Court should be, and should be seen to be, the independent product of the expert, uninfluenced as to form or content by the exigencies of litigation: Whitehouse v. Jordan [1981] 1 All ER 267 (H.L.) at 276. I had little difficulty coming to the conclusion in reading the evidence in this case that where there was a conflict between the evidence of the Merck witnesses and the Apotex witnesses, I preferred the latter. …

 

[Emphasis added]

 

Although the Merck Applicants have raised a number of novel arguments regarding the lack of reasonableness of the Apotex Respondent’s expert fees, I have given them little weight. I have preferred to rely on the fact that the Federal Court has allowed specific evidence of the Apotex Respondent to be filed and its stated reliance on that evidence as outlined within paragraph 64 of the Reasons for Order and Order dated May 26, 2005 in this proceeding as outlined in this paragraph. For these reasons, I exercise my discretion to correct and allow $26,217.14 for the expert fees of Juliet Compston, $16,612.42 for the expert fees of Richard Mazess, $38,214.62 for the expert fees of David Markowitz and $63,997.27 for the expert fees of Michael Mayersohn for a total of $145,041.45 plus associated GST.

 

[68]           The Apotex Respondent has claimed specific disbursements amounts for the following:

- Computer Searches                $731.32

- Computer Time Charges        $3,036.26

- Courier/Postage                     $4,066.91

- Court Reporter/Transcripts     $11,490.64

- Meetings                                $3,360.98

- Telephone Charges                $1,890.86

- Telecopy Charges                  $670.69

 

The Merck Applicants have submitted at paragraph 107 of its Written Submissions of the Applicants that “for all of the reasons stated above, many of the remaining disbursements appear excessive and are unreasonable.” For these reasons, the Merck Applicants submit that all of the disbursements above should be reduced by 25 %. The Apotex Respondent submits in its Reply Submissions at paragraph 72 that this suggested 25 % reduction “is entirely unsupported by any evidence and ought to be rejected.” In support of this submission, the Apotex Respondent refers to Apotex inc., supra, which is outlined above in paragraph [33] and refers to the proposition that it is not appropriate to apply the test of hindsight to determine whether a charge for a disbursement was not reasonably necessary to defend a client’s position.

 

[69]           As noted above, this proceeding was commenced on May 29, 2003 and a decision was rendered almost two years later. Many of the attached invoices contained within the exhibits to the Affidavit of Andrew R. Brodkin, sworn March 7, 2006, do not contain specific detail regarding these specific disbursements. However, I have considered the factors to advance litigation such as the case at bar which includes the various city and country locations for many of its expert witnesses, the efforts required to assemble and forward pertinent information for the experts’ respective consideration, the various methods required to have the pertinent material before the experts,  researching materials and evidence from various sources, the necessary meetings, preliminary and follow-up telephone phone calls and related correspondence. It seems reasonable to me considering the factors that I have outlined that, over the course of two years, the Apotex Respondent would incur significant expenses to advance this litigation above those normally associated with the overhead expenses of its law office. For these reasons, it is my opinion that the disbursement amounts for computer searches, computer time charges, courier/postage, court reporter/transcripts, meetings, telephone charges and telecopy charges appear to be reasonable. For these reasons, I exercise my discretion and allow a total of $25,247.66 plus applicable GST for these specific disbursements.

 

[70]           The Apotex Respondent has claimed specific disbursements amounts for the following:

- File Histories                          $265.50

- LPIC Levy                             $50.00

- Parking/Cab/Mileage              $342.40

- Process Server                       $1,759.25

- Search of Court Document     $133.44

- Translation Services               $122.00

 

The Merck Applicants at the oral hearing of this assessment of costs indicated that these disbursements amounts which total $2,672.59 were reasonable and would not be opposed. For these reasons, I allow $2,672.59 plus applicable GST for these disbursements.

 

[71]           Finally, the Apotex Respondents has claimed $460.80 for disbursements identified as “Receiver General (Federal Court Documents)” within its Bill of Costs. Similar to the disbursements outlined in paragraph [71] above, the Merck Applicants at the oral hearing of this assessment of costs indicated that this disbursement amount was reasonable and would not be opposed. However, I note that no GST is charged or collected by the Federal Court Registry staff when any tariff amounts are paid at any of the respective Federal Court Registry offices. For this reason, the disbursement amount of $460.80 will be allowed but no GST will be applicable.

 

[72]            As outlined in this assessment of costs, I have determined that the assessable services of the Bill of Costs payable by the Merck Applicants to the Apotex Respondent as indicated in paragraphs [15], [18], [21], [25] and [26] to be $600.00, $1,440.00, $1,080.00, $840.00 and $27,120.00, respectively, for a total of $31,080.00. I have determined in paragraphs [31], [37], [41], [52], [60], [63], [65], [68 ][70], [71] and [72] that the allowed disbursements are $79,881.62, $10,000.00, $7,205.51, $500.00, $155,680.00, $82,016.00, $28,236.46, $145,041.45, $25,247.66, $2,672.59 and $460.80, respectively, for a total of $536,942.09. I have determined that the applicable GST which is based on $536,481.29 (which does not include the fees associated with the “Receiver General (Federal Court Documents”) is $37,553.69. When added together, the assessable fees ($31,080.00) and disbursements ($536,942.09) plus applicable GST ($37,553.69) total $605,575.78.

[73]           The Apotex Respondent’s Bill of Costs is assessed and allowed in the amount of $605,575.78 payable by the Merck Applicants to the Apotex Respondent. A Certificate of Assessment is issued to the Apotex Respondent for $605,575.78 payable by the Merck Applicants to the Apotex Respondent.

     “Paul Robinson”

 

Toronto, Ontario

March 22, 2007

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FEDERAL COURT

 

NAMES OF COUNSEL AND SOLICITORS OF RECORD

 

 

DOCKET:                                          T-884-03                    

 

STYLE OF CAUSE:                          MERCK & CO., INC.

and MERCK FROSST CANADA & CO.

 

Applicants

                                                            and

 

                                                           

APOTEX INC. and

THE MINISTER OF HEALTH

 

Respondent

 

                                               

ASSESSMENT OF COSTS WITH PERSONAL APPEARANCE OF THE PARTIES

 

ASSESSMENT OF COSTS -                       

REASONS BY:                                  PAUL G.C. ROBINSON, Assessment Officer

                                                                                   

DATED:                                             March 22, 2007

 

 

SOLICITORS OF RECORD:

 

 

OGILVY RENAULT LLP                  

Barristers & Solicitors                                                                          

Toronto, Ontario                                  FOR THE APPLICANTS

 

 

GOODMANS LLP                            

Barristers & Solicitors                                      

Toronto, Ontario                                  FOR THE RESPONDENT – APOTEX INC.