Date: 20070423
Docket: T-1800-02
Citation: 2007
FC 433
Vancouver, British Columbia, April
23, 2007
PRESENT: Roger R. Lafrenière, Esquire
Prothonotary
BETWEEN:
FOURNIER PHARMA INC. and
LABORATOIRES FOURNIER S.A.
Applicants
and
THE MINISTER OF HEALTH
and APOTEX INC.
Respondents
REASONS FOR ORDER AND ORDER
[1]
The
Applicants, Fournier Pharma Inc. and
Laboratoires Fournier S.A. (hereinafter referred to in the singular as
“Fournier”), commenced
an application pursuant to section 6 of the Patented Medicines (Notice of
Compliance) Regulations (the PMNOC Regulations). The proceeding was
discontinued shortly after the Federal Court of Appeal dismissed Fournier’s
appeal related to a motion for further productions from the Respondent, Apotex
Inc. (“Apotex”). Eleven months after the Notice of Discontinuance was filed,
Apotex brought the present motion in writing to recover its costs of the
proceeding.
[2]
The
specific relief requested by Apotex is as follows:
1. An Order awarding Apotex its
costs of this proceeding in the amount of $306,865.45, representing its
solicitor and client fees and all disbursements;
2. In the alternative, an Order
awarding Apotex its costs and all disbursements in the amount of $158,597.40,
representing its costs in accordance with Tariff B, Column V, in the maximum
allowable units;
3. In the further alternative, an
Order awarding Apotex its costs and all of its disbursements in the amount of
$146,299.40, representing its costs in accordance with Tariff B, Column III;
4.
Costs of
this motion.
[3]
Fournier
does not dispute that Apotex is entitled to its costs of the proceeding, but
questions the propriety of the claim for solicitor and client costs, the sufficiency
of the evidence adduced in support of the claim for disbursements, and the
jurisdiction of this Court to revisit costs awarded by the Federal Court of
Appeal.
[4]
In
short, Fournier submits that an entitlement to solicitor and client costs has
simply not been made out by Apotex. It maintains as well that Apotex’s claim
for disbursements must be rejected in its entirety on the grounds no evidence
has been adduced to satisfy the Court the expenses were either reasonable or
necessary for the application. As for the costs before the Court of Appeal,
Apotex acknowledges in reply that the amounts contained in Item F of its Bill
of Costs are not properly recoverable in the within motion, and has reduced its
claim accordingly.
Issues to be Determined
[5]
By
way of preface, the relief requested on this motion can only apply to those
costs that that have not yet been the subject of an order in this proceeding.
For example, the protective order issued on August 5, 2003 states that there
would be no costs of the motion. If Apotex was dissatisfied with the cost
disposition, it could have appealed or requested reconsideration. It is no
longer open to Apotex to seek to recover its costs related to that particular
motion, let alone increased costs.
[6]
In
addition, the Order dated October 6, 2003 dismissing Fournier’s motion for
production states that the costs of the motion are to be payable by Fournier in
any event of the cause. Rule 407 provides that, unless the Court orders
otherwise, party-and-party costs should be assessed in accordance with column
III in Tariff B. While Rule 403 provides that a party may request that
directions be given to an assessment officer respecting the awarding of costs,
and while the Court may consider awarding increased costs where the issue was
not thoroughly canvassed at the motion, Rule 403 also provides that such
requests must be made by motion within 30 days after the order was made. It was
therefore incumbent upon Apotex to either seek increased costs at the hearing
of the motion, or request directions within the 30 day period provided under
Rule 403. Apotex has offered no valid excuse for its delay in seeking
directions. As a result, the costs relating to Fournier’s failed motion for
production must and will be assessed at the ordinary scale. The same reasoning
would apply to the costs of the appeal by Fournier, which was dismissed with
costs by Mr. Justice Yvon Pinard on November 7, 2003.
[7]
The
issues to be determined on this motion can be summarized as follows: (1)
whether Apotex is entitled to solicitor-client costs for its costs of this
proceeding; (2) if not, whether Apotex is entitled to increased costs; and (3)
whether the disbursements claimed by Apotex are reasonable and were properly
incurred in connection with the proceeding.
Solicitor and Clients
Costs
[8]
Apotex
submits that it should be allowed to recover its costs on a solicitor-client
scale on four grounds: first, that Fournier persisted in prosecuting its
application without merit; second, that Fournier brought frivolous appeals;
third, that Fournier made baseless allegations of fraud; and fourth, that
Fournier brought the application for a collateral and improper purpose.
Fournier argues that the claim for solicitor-client costs must fail since the
grounds Apotex relies upon fall far short of the “reprehensible, scandalous or
outrageous conduct” that is required for an award of solicitor-client costs. I
will deal with each ground raised by Apotex in turn.
[9]
The
fact that a party’s claim has little merit or is weak is not a basis for
awarding solicitor-client costs: see Roberts v. Canada, (1999) 247 N.R.
350 (FCA). With respect to the merits of the application, I am not satisfied
that the proceeding brought by Fournier was bereft of any possibility of
success. Fournier’s contention that the notice of allegation provided no
information with respect to the composition of Apotex’s tablets or its method
of manufacture was factually correct, and its complaint regarding the
sufficiency of the notice of allegation was not wholly unfounded. It is
somewhat telling that Apotex proceeded to file extensive affidavit evidence
from three deponents, including one expert, in response to Fournier’s evidence.
If the application was so clearly without merit, Apotex should have moved
immediately to dismiss the proceeding as being frivolous or vexatious, or otherwise an
abuse of process, as it was entitled to do under section 6(5) of
the Regulations.
[10]
As
for the alleged lack of merit of Fournier’s motion for production and
subsequent appeals, such arguments, including submissions for increased costs,
ought to have been made to the prothonotary, judge, or the panel of the Court
hearing the particular motion or appeal. In any event, the fact that a party
did not succeed on a motion for production does not serve to establish that the
application itself is without foundation.
[11]
Apotex
also maintains that Fournier advanced serious allegations that are baseless, as
well as unfounded allegations of fraud, such as implying that Apotex was
deliberately misleading by providing incomplete and inaccurate formulation
documents. In my view, Apotex’s professed indignation and outrage is misplaced.
Taking issue with the correctness or veracity of statements in a notice of
allegation, or the credibility of a deponent, is not, in itself, improper in
the context of litigation. In any event, I do not agree with Apotex’s
characterization of Fournier’s evidence.
[12]
Finally,
Apotex has failed to establish that Fournier brought the application for the
collateral and improper purpose of prohibiting Apotex’s entry into the market
for a time sufficient to permit Fournier to list another fenofibrate patent on
the Patent Registry. The evidence is undisputed that the application for the
second patent was filed by Fournier some six months prior to Apotex delivering
the Notice of Allegation at issue in the application. There is no evidence
however, other than speculation by Apotex’s counsel, that Fournier brought this
application for the purpose of frustrating Apotex’s entry into the market. In
any event, a motion for costs is not a substitute for Apotex’s remedy under s.
8(1) of the Regulations to bring an action for damages for delayed market
entry.
[13]
I
am mindful that subsection 6(9) of the PMNOC Regulations provides that
the court may make any order in respect of costs, including on a solicitor and
client basis, for proceedings brought under subsection (1). It remains that
that the Federal Court of Appeal has repeatedly stated that solicitor-client
costs are to be awarded only in exceptional circumstances. Such circumstances
have not been established in this case.
Increased Costs
[14]
Fournier
submits that Apotex should be limited to its reasonable costs assessed under
column III of Tariff B, particularly in light of its delay in seeking costs.
Although the Federal Courts Rules provide a number of deadlines for
taking steps in a proceeding, there is no provision directing that a taxation
of costs must be requested within a particular time. Preferably, an assessment
of costs should be requested within weeks, as opposed to months, of the
conclusion of a proceeding. While I agree with Fournier that a party could be
estopped from claiming its costs for undue delay, I am not satisfied that the
delay in this case was excessively long, or that Fournier was prejudiced as a
result of the delay. In the circumstances, I am not prepared to discount
Apotex’s claim for costs on the grounds of delay.
[15]
Rule
400(1) requires the Court to consider a number of factors when assessing costs.
As explained above, I am not satisfied that the allegations of improper conduct
on the part of Fournier are founded. Further, the court should be encouraging
parties to discontinue or abandon unmeritorious proceedings, and not penalizing
them by imposing a substantial award of costs for acting responsibly.
[16]
However,
Apotex must be viewed as completely successful in defending the application
since the proceeding was discontinued unconditionally. Moreover, the
application was an intellectual property proceeding brought pursuant to the PMNOC
Regulations, requiring a substantial amount of work by counsel for both
parties, and involving relatively complex facts and expert evidence. I am
therefore satisfied that costs should be awarded in excess of Column III of
Tariff B, based roughly on Column V of Tariff B.
Disbursements
[17]
With
respect to disbursements, Fournier maintains that Apotex has not put forward
any evidence to establish that the expenses were reasonable and necessary for
this application. It therefore urges that the claim for disbursements be
disallowed in its entirety.
[18]
Apotex
relies heavily on the affidavit of Mr. H. B. Radomski in support of its
submission for reimbursement of its disbursements. At paragraphs 43-45 of his
affidavit, Mr. Radomski addresses the factual basis for the requested cost
award.
Particulars
of the fees and disbursements charged by our firm to Apotex are set out on a
solicitor and client basis in a Bill of Costs attached hereto as exhibit “N” to
my affidavit. The fees and disbursements charged to Apotex in connection with
this matter were entirely reasonable, particularly given the seriousness of
Fournier’s allegations and that the proceeding had very significant
consequences for Apotex.
[19]
Exhibit
‘N’ includes a table of disbursements, set out in one page with different
categories of expenses in one column, and the amount claimed under each
category in an adjoining column. There is no further breakdown of the
disbursements and no explanation provided that might assist the court in
determining the basis for the disbursements, or reasonableness of the expenses.
[20]
By
way of example, travel expenses totaling $4,863.00 are claimed, yet Apotex does
not identify who was traveling, when the travel took place, the purpose of the
travel, or even the mode of travel and the fare. Apotex also claims telephone
charges of $805.14, photocopy charges of $4,554.05, and process service fees of
$690.00, without providing any details or supporting documents explaining how
the amounts were calculated.
[21]
In
addition, no explanation is provided to substantiate Apotex’s claim for its
costs for “translation services” in the amount of $3,303.00, for “meetings” totaling
$535.65, and for “prior art charges”, “computer time charges”, “search fee” and
“QL Search” in the amount of $819.90. Mr. Radomski’s opinion that the
disbursements were “entirely reasonable” is of no assistance, since it is the
function of the Court to determine on the evidence whether the disbursements
are reasonable and necessary.
[22]
The
absence of any detailed explanation or supporting documentation is particularly
problematic as it relates to the amounts claimed for experts, which represent
the lion’s share of the disbursements. No information is provided about the
fees charged by the “expert witnesses”, other than the amount they were paid.
In fact, Apotex claims the amount of $15,493.50 for a Eli Shefter, and yet this
Mr. Shefter does not appear to have produced any affidavit in this proceeding,
and his role in this proceeding is not disclosed. As for Gilbert Banker,
although there is evidence that he signed a 33 page affidavit and was
cross-examined, no explanation is provided as to why his services warranted the
rather extravagant fee of $79, 291.72.
[23]
The
onus was on Apotex to establish, with proper evidence, that its disbursements
were related to defending the proceeding and that they were reasonable in the
circumstances. Apotex declined to comment in reply on the reasonableness of its
disbursements, or to seek leave to adduce further evidence, despite the very
direct and detailed challenge by Fournier. Apotex submits that costs obviously
and properly incurred in connection with various stages of a proceeding should
be accepted and should not require rigorous proof. Since the reasonableness of
the amounts claimed is less than obvious, and the propriety of certain
disbursements has not been established, I am not prepared to make an arbitrary
award for disbursements.
Conclusion
[24]
Rule
400 provides discretion for the Court, in appropriate cases, to fix costs in a
lump sum in lieu of assessed costs. Recognizing that an award of costs is not
an exact science, and taking into account the submissions of the parties,
including their
draft Bills of Costs, I would fix Apotex’s costs at $20,000, inclusive
of GST. The claim for disbursements is denied in its entirety.
ORDER
THIS COURT ORDERS that
1. The Applicants shall pay to the
Respondent, Apotex Inc., its costs of the proceeding in the fixed amount of
$20,000, inclusive of GST, plus interest at the rate of 5% per annum from the
date Apotex’s motion record was served on the Applicants.
2. There shall be no order as to
costs of this motion.
“Roger
R. Lafrenière”
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