Date: 20080229
Docket: T-14-05
Citation: 2008 FC 278
Ottawa, Ontario, February 29, 2008
PRESENT: The Honourable Madam Justice Simpson
BETWEEN:
BIOVAIL
CORPORATION (d.b.a. BIOVAIL PHARMACEUTICALS CANADA)
BIOVAIL
LABORATORIES INC. AND GLAXOSMITHKLINE INC.
Applicants
and
THE
MINISTER OF NATIONAL HEALTH AND WELFARE AND
SANDOZ CANADA
INC.
Respondents
REASONS FOR JUDGMENT AND JUDGMENT
[1]
The
applicants, Biovail Corporation et al. (Biovail) have moved pursuant to Rule
414 of the Federal Courts Rules, S.O.R./98-106 to reduce the amount of
assessed costs on the sole ground that the assessment officer committed an
error in principle by allowing $104,000.00 towards the fees charged by
Dr. Metin Celik, who was an expert witness for Sandoz Canada Inc.
(Sandoz).
BACKGROUND
[2]
On
January 6, 2005, Biovail launched an application to prohibit the Minister of
National Health and Welfare from issuing Notices of Compliance to Sandoz.
Sandoz had proposed to manufacture a generic version of bupropion
hydrochloride, an anti-depressant. Biovail held two patents, Canadian Patent no.
2,142,320 and Canadian Patent no. 2,168,364, which combined bupropion
hydrochloride with a sustained release agent and with a stabilizing agent,
respectively. Following a two day hearing, Mr. Justice James O’Reilly dismissed
Biovail’s application on June 21, 2006 with costs to Sandoz on the grounds
that Biovail’s patents would not be infringed. That decision is reported at
2006 FC 784.
[3]
This
was not the first time Biovail had sought prohibition orders for bupropion
hydrochloride. On March 31, 2003 and February 12, 2004, Biovail filed
two applications against Novopharm Limited (the Novopharm Applications), and on
September 22, 2004, Biovail filed an application against Pharmascience
Inc. On January 6, 2005, Mr. Justice Sean Harrington dismissed the
Novopharm Applications, and on May 11, 2006, Biovail discontinued the
application against Pharmascience.
THE COSTS AWARD
[4]
Assessment
Officer Robinson wrote the parties on October 12, 2006. He noted that
“this matter appears appropriate for disposition by way of written submissions”
and set out a timetable for those submissions. Assessment Officer Robinson also
invited the parties “to contact this office by letter/fax if you have any
concerns.” Biovail raised no concerns about the decision to proceed without an
oral hearing.
[5]
On
October 23, 2006, Sandoz submitted a Revised Bill of Costs which included $127,937.12
for the expert witness fees of Dr. Celik. The Bill of Costs was appended to an
affidavit prepared by David Katz (the Katz Affidavit), who at the time was an
articling student employed by counsel for Sandoz. Mr. Katz had no
significant involvement in the application prior to preparing this affidavit.
[6]
In
their written representations filed on November 10, 2006, Biovail argued
that the Revised Bill of Costs was “completely insufficient to support the
amounts” Sandoz was claiming and that “[o]ral cross-examination of Sandoz’s
expert witnesses (particularly Dr. Celik) and affiant Mr. Katz is the only way to expose problems with the many vague
and incomplete documents Sandoz has provided.” However, Biovail never actually asked
to cross-examine Dr. Celik or Mr. Katz.
[7]
One
of Biovail’s arguments was that Dr. Celik, in addition to being an expert
witness for Sandoz, had also been an expert witness for Novopharm in the
Novopharm Applications. Biovail alleged that the affidavit evidence filed by
Dr. Celik on behalf of Sandoz in Biovail’s application was almost identical to
the evidence he had provided in the Novopharm Applications. Biovail also said
it was prevented from proving this allegation because the relevant affidavit
evidence remained subject to protective orders. Nevertheless, Biovail never
sought to vary the protective orders so that it could bring the affidavits in
question before Assessment Officer Charles Stinson.
[8]
Stinson
A.O. allowed Sandoz a total of $152,906.24 in costs, including $104,000.00 for Dr. Celik.
His decision is reported at 2007 FC 767.
REASONS OF STINSON A.O.
[9]
Stinson
A.O. commented about the evidence supporting Dr. Celik’s charges at
paragraph 27 of his decision. He said:
The lack of details makes it difficult to
confirm whether the most efficient approach was indeed used or that there were
no errors in instructions … requiring remedial work. A paucity of evidence for
the circumstances underlying each expenditure makes it difficult for the
respondent on the assessment of costs and the assessment officer to be
satisfied that each expenditure was incurred as a function of reasonable
necessity.
[10]
Stinson
A.O. also concluded at paragraph 29 of his decision that the Katz Affidavit
“set out in general terms the instructions for the experts’ work, but not in so
much detail for Dr. Celik, for example, to permit confirmation that there
were not any flawed instructions from supervising counsel resulting in
unnecessary costs”.
[11]
Stinson
A.O. accepted that supervising counsel could not presume that Dr. Celik’s
work in the Novopharm Applications could be transplanted to the Biovail
Application. However, he acknowledged that Dr. Celik’s work in the
Novopharm Applications should have made the preparation of his affidavit for Sandoz
more straightforward.
[12]
Stinson
A.O. mentioned a number of Dr. Celik’s charges which appeared to be
excessive or inappropriate, including 1.5 hours to read a book on organic
chemistry. However, instead of doing a line-by-line review of Dr. Celik’s
invoices, he decided to exercise his discretion to determine what would be a
reasonable expenditure in the circumstances. In doing so, Stinson A.O.
described the assessment process as “more of an art form than an
application of rules and principles”, essentially reiterating Mr. Justice Richard Mosley’s
holding in Dimplex North America Ltd. v. CFM Corp., 2006 FC 1403 at paragraph
39 that “an assessment of costs is, at best, rough justice”.
[13]
Stinson A.O. looked at the Revised Bill of Costs and concluded
that Dr. Celik’s work was in large measure reasonable and necessary. That
said, he disallowed $23,937.12 or roughly 18.7% of the amount claimed for Dr. Celik’s
fees in the Revised Bill of Costs for an award of $104,000.
DISCUSSION
[14]
In
its written representations, Biovail alleged a number of errors in the
assessment of costs and sought an order to have the costs for Dr. Celik reduced
to nil. At the hearing before me, it conceded that at least some of Dr. Celik’s
costs, including all his disbursements, were reasonable and appropriate. It
accepted the first (4.83 hours) and the 21st to 25th items
(28.58 hours total) in Dr. Celik’s May 17, 2005 invoice, the first and
last items (4 and 5.5 hours respectively) in his May 31, 2005 invoice and
the 15th (4.17 hours), 17th (4 hours), 19th (4
hours) and 20th (10.42 hours) in his August 1, 2005 invoice, for a
total of 65.5 hours.
[15]
It
became apparent during oral submissions that the order Biovail really wants on
this motion is one which requires the items still in contention to be referred
back to the assessment officer for a reassessment after allowing Sandoz to file
additional affidavit evidence to show that each charge was incurred as a
function of reasonable necessity. Biovail acknowledged that many of the charges
it has not accepted could probably be justified as reasonable if more
supporting evidence were provided.
[16]
In
my view, an assessment officer is not obliged to review each charge on
Dr. Celik’s invoices. The kind of line-by-line inquiry Biovail seeks is
not what is meant by the notion of “rough justice”. In this case, the
assessment officer was satisfied that Dr. Celik did the work and that it
was necessary. He was therefore entitled to assess his charges as a whole.
[17]
In
order to interfere with an assessment officer’s discretion, “the amounts
allowed [must be] so inappropriate or his decision … so unreasonable as to
suggest that an error in principle must have been the cause” (IBM Canada
Limited v. Xerox of Canada Ltd., [1977] 1 F.C. 181 (C.A.) at 185). For the
above reasons, I find no such error in principle.
JUDGMENT
UPON reviewing the
material filed and hearing the submissions of counsel for both parties in Toronto on Monday, October 22,
2007;
NOW THEREFORE
THIS COURT ORDERS AND ADJUDGES that for the
reasons given above the motion is hereby dismissed with costs.
“Sandra
J. Simpson”
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