Date: 20070118
Docket: T-2295-03
Citation: 2007 FC 50
Toronto, Ontario, January 18, 2007
PRESENT: The Honourable Mr. Justice O'Keefe
BETWEEN:
ABBOTT LABORATORIES and
ABBOTT LABORATORIES LIMITED
Applicants
and
THE MINISTER OF HEALTH and
PHARMASCIENCE INC.
Respondents
REASONS FOR ORDER AND ORDER
O’KEEFE J.
[1]
This is a
motion by the Applicants (Abbott) for an order pursuant to Rule 403 of the Federal
Court Rules, 1998, SOR/98-106, as amended, awarding Abbott costs in the
form of a lump sum to be fixed by the Court.
[2]
My
decision on the merits of this motion contained the following in the order:
Abbott shall have its costs of the
application.
[3]
My
decision on the merits was based on the doctrine of res judicata.
[4]
The main
application was for an order prohibiting the issuance of a notice of compliance
to Pharmascience Inc. until after the expiry of seven Canadian patents (the
Abbott patents).
[5]
Issue
estoppel related to the validity of the ‘732 patent which was also the subject
of a previous notice of allegation, involving the same parties (Pharmascience
I). Justice Gibson of this Court ruled that the ‘732 patent was valid in
Pharmascience I.
[6]
My res
judicata decision was based on issue estoppel which is a branch of res
judicata.
Issue
[7]
Should
Abbott be awarded a lump sum amount for costs which amount is to be set by the
Court?
[8]
Should
a lump sum amount be set for costs in this case?
Pharmascience submitted that
Rule 403 would not allow me to grant a lump sum for costs as I had already
granted Abbott its costs in my order. I do not agree, as Rule 403(2) states
that a motion, pursuant to Rule 403(1) may be brought “whether or not the
judgment included an order concerning costs”. The majority decision of the Federal
Court of Appeal in Consorzio del Prosciutto di Parma v. Maple Leaf
Meats Inc., [2003] 2 F.C. 451 (F.C.A.), at paragraph 4, stated that a
motion under Rule 403 is a motion asking the Court to give directions to an
assessment officer in the form of an order directing the assessment officer to
assess the party’s costs at a lump sum amount fixed by the Court. Accordingly,
I conclude that I have jurisdiction to set a lump sum amount for costs in this
case.
[9]
Jurisdiction
to award a lump sum amount
The Federal Court of Appeal in
Consorzio above stated that one advantage of a lump sum
award is the saving in costs to the parties that would have otherwise
resulted from the taxation of costs. The jurisdiction to award a lump sum
amount for costs is contained in Rule 400(4). I am of the view that a lump sum
award for costs is appropriate due to the amount of time and consequently, the
costs that would have been incurred in carrying out an assessment by an
assessment officer.
[10]
In coming
to the conclusion that a lump sum of costs should be awarded, I have considered
Pharmascience’s argument that the matter should be referred to an assessment
officer to assess the amount of the costs. I rejected this argument because I
believe that a lump sum can be set by the Court so as to avoid the extra costs
of an assessment by an assessment officer.
[11]
What
should the amount of the lump sum award be in this case?
Abbott submitted that the following factors
contained in Rule 400(3) should be considered when fixing the amount of costs:
|
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.
. . .
(3) In exercising its discretion under subsection (1), the
Court may consider
(a) the result of the proceeding;
(b) the amounts claimed and the amounts recovered;
(c) the importance and complexity of the issues;
. . .
(g) the amount of work;
. . .
(i) any conduct of a party that tended to shorten or unnecessarily
lengthen the duration of the proceeding;
. . .
(k) whether any step in the proceeding was
(i) improper, vexatious or unnecessary, or
(ii) taken through negligence, mistake or excessive
caution;
. . .
(o) any other matter that it considers relevant.
|
400.
(1) La Cour a le pouvoir discrétionnaire de déterminer le
montant des dépens, de les répartir et de désigner les personnes qui doivent
les payer. . . .
(3) Dans l’exercice de son pouvoir
discrétionnaire en application du paragraphe (1), la Cour peut tenir compte
de l’un ou l’autre des facteurs suivants:
a) le résultat de l’instance;
b) les sommes réclamées et les sommes
recouvrées;
c) l’importance et la complexité des
questions en litige;
. . .
g) la charge de travail;
. . .
i) la conduite d’une partie qui a eu pour
effet d’abréger ou de prolonger inutilement la durée de l’instance;
. . .
k) la question de savoir si une mesure
prise au cours de l’instance, selon le cas:
(i) était inappropriée, vexatoire ou
inutile,
(ii) a été entreprise de manière négligente, par erreur ou
avec trop de circonspection;
. . .
o) toute autre question qu’elle juge
pertinente.
|
[12]
When
fixing the amount of costs awarded, there are certain principles that are
applicable. Although it is not the norm, the Court has discretion to award
increased costs. When the Court does not make a specific order as to the type
of costs to be awarded, then the default position is Column III of Tariff B.
[13]
In Consorzio
above, Justice Rothstein stated the following at paragraphs 9 and 10:
However, the objective is to
award an appropriate contribution towards solicitor-client costs, not rigid
adherence to column III of the table to Tariff B which is, itself, arbitrary.
Subsection 400(1) makes it clear that the first principle in the adjudication
of costs is that the Court has "full discretionary power" as to the
amount of costs. In exercising its discretion, the Court may fix the costs by
reference to Tariff B or may depart from it. Column III of Tariff B is a
default provision. It is only when the Court does not make a specific order
otherwise that costs will be assessed in accordance with column III of Tariff
B.
The Court, therefore, does have
discretion to depart from the Tariff, especially where it considers an award of
costs according to the Tariff to be unsatisfactory. Further, the amount of
solicitor-and-client costs, while not determinative of an appropriate party-and-party
contribution, may be taken into account when the Court considers it appropriate
to do so. Discretion should be prudently exercised. However, it must be borne
in mind that the award of costs is a matter of judgment as to what is
appropriate and not an accounting exercise.
[14]
Also in Consorzio
above, Justice Rothstein stated the following at paragraphs 5, 6, 7 and 8:
The respondent has submitted that
12 issues were raised on appeal and each required a full response. The issues
involved complex questions of fact, including having to deal with expert
evidence and survey methodology. The argument in the appeal lasted close to a
whole day.
I am satisfied in the
circumstances of this case, that the respondent should be awarded increased
costs. This is an intellectual property matter involving sophisticated clients.
Where, as here, numerous issues are raised on appeal and the issues involve
complex facts and expert evidence, the amount of work required of respondent's
counsel justifies increased costs. To the argument that the complexity of this
case was no greater than that of most intellectual property cases that come
before this Court, I would say that such cases frequently present complex facts
and give rise to difficult issues.
The increased costs to be awarded
are party-and-party costs. They do not indemnify the successful party for its
solicitor-client costs and they are not intended to punish the unsuccessful
party for inappropriate conduct.
An award of party-and-party costs
is not an exercise in exact science. It is only an estimate of the amount the
Court considers appropriate as a contribution towards the successful party's
solicitor-client costs (or, in unusual circumstances, the unsuccessful party's
solicitor-and-client costs). Under rule 407, where the parties do not seek
increased costs, costs will be assessed in accordance with column III of the
table to Tariff B. Even where increased costs are sought, the Court, in its
discretion, may find that costs according to column III provide appropriate
party-and-party compensation.
[15]
The solicitor
and client costs in this case amount to approximately $986,000. According to
Abbott’s submissions, the Column III award would be $407,000 and its Column V
award would be approximately $466,000. Pharmascience’s submissions included a
proposed Column III award of $168,556.07 and a Column IV award of $176,818.07.
In reaching the amount for disbursements, Pharmascience allowed Abbott 70% of
its disbursements.
[16]
In its
submissions before me, Abbott submitted that it should receive a lump sum award
somewhere between the Column III award of $407,000 and a solicitor and client
award of $986,000. Specifically, Abbott urged that a lump sum amount of
$769,603 be awarded for costs.
[17]
Pharmascience
submitted that Abbott’s award for costs should be reduced because Abbott did
not plead res judicata in its application. However, as I noted in my
reasons, Abbott addressed the res judicata issue in its memorandum of
fact and law and Pharmascience replied to the argument in its memorandum of fact
and law. As well, both parties argued the issue before me. Consequently, I do
not agree that this fact should cause the cost award to be lower.
[18]
Pharmascience
also stated that there should be an impact on the amount of the costs because
Abbott should have applied to have res judicata (issue estoppel)
determined prior to the main hearing or it could have applied pursuant to Rule
107 for a separate determination of whether issue estoppel applied in this
application. I am not satisfied given the time parameters when issue estoppel
became available, that the approach used by Abbott should result in costs
consequences for it.
[19]
Pharmascience
also urged upon me that Abbott should have cost savings because the same
experts had been used in other similar applications. I cannot conclude from the
evidence before me that the amount charged for the experts in this application
related to any file other than the files at issue in this application.
[20]
Abbott
submitted that what occurred in the application was an abuse of process and that
consequently, it should receive a higher cost award. I would note that my
decision with respect to the ‘732 patent was based on issue estoppel and not
abuse of process.
[21]
In the
application for judicial review, the parties filed many pages of material. The
case involved seven patents and there were three expert witnesses for each
side. The judicial review hearing required four days of hearing time. Although
the decision was based on the issue of res judicata (issue estoppel),
many other issues were presented and argued. As already noted, the solicitor
and client costs amounted to $986,000.
[22]
There is
no doubt that the Court has full discretion to depart from Schedule B. That
discretion must be used prudently. Solicitor and client fees may be taken into
account where appropriate but Tariff B should also always be considered (see Astrazeneca
Canada Inc. v. Apotex Inc. (2004), 34 C.P.R. (4th) 477 (F.C.)).
[23]
I have
considered the factors of Rule 400(3) which were put forward by the applicant,
namely, Rule 400(3)(a), (b), (c), (g), (i) and (k).
[24]
Rule
400(3)(a) The Result
In this case, Abbott has been
successful in having the prohibition order issued.
[25]
Rule
400(3)(b) Amount Claimed
Because the order prohibited
the Minister from issuing a notice of compliance until 2017,
the amount of money involved for both parties was in the
hundreds of millions of dollars.
[26]
Rule
400(3)(c) Importance and Complexity
The case was important to both
parties as it dealt with market exclusivity until 2017. The
case was more complex than normal because of the extent and
amount of scientific evidence that was filed.
[27]
Rule
400(3)(g)
A review of the time entries
and the filed materials shows that a great amount of work was
required to prepare and complete the file.
[28]
Rule
400(3)(i) and (k) Conduct of a Party and Unnecessary Steps
Although the decision was
based on res judicata (issue estoppel) in relation to the ‘732 patent,
there were still issues to be argued with respect to the other patents.
[29]
Having
considered all of the relevant factors, I would award a lump sum amount of
$515,000 for party and party costs, including the costs of this motion and any
applicable GST.
[30]
The
Applicants claimed post-judgement interest on all costs awarded with the
interest to run from the date of my decision which was March 16, 2006. The
Respondents stated that interest should run 30 days from the date of the
decision. In line with the jurisprudence of the Federal Court of Appeal in CCH
Canadian Ltd. V. Law Society of Upper Canada [2004 ] FCA 278, I would award
interest on the costs owed from March 16, 2006.
ORDER
THIS COURT ORDERS that:
1.
Abbott be
awarded a lump sum of $515,000 for party and party costs, including the cost of
this motion and applicable GST.
2.
The
Applicants will have interest on the costs owed from March 16, 2006.
“John A. O’Keefe”
Email this Content