Docket: T-1844-07
Citation:
2014 FC 634
Ottawa, Ontario, June 30,
2014
PRESENT: The
Honourable Mr. Justice Zinn
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BETWEEN:
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TEVA CANADA LIMITED
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Plaintiff
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and
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PFIZER CANADA INC.
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Defendant
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JUDGMENT AND SUPPLEMENTARY REASONS
[1]
In the Reasons for Judgment (2014 FC 248), the
parties were instructed to attempt to reach agreement on the quantum of damages
and costs. The parties have agreed, based on the various findings made in
these proceedings, that the total damages accruing during the Relevant Period (January
10, 2006 to August 1, 2007), is $92,228,000.00, as set out in the following
table.
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Month
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Period From
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Period To
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Non-Cumulative
Damages
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January 2006
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January 10, 2006
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January 31, 2006
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$5,342,000
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February 2006
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February 1, 2006
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February 28, 2006
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$3,281,000
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March 2006
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March 1, 2006
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March 31, 2006
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$4,574,000
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April 2006
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April 1, 2006
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April 30, 2006
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$4,635,000
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May 2006
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May 1, 2006
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May 31, 2006
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$5,859,000
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June 2006
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June 1, 2006
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June 30, 2006
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$6,484,000
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July 2006
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July 1, 2006
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July 31, 2006
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$6,471,000
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August 2006
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August 1, 2006
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August 31, 2006
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$7,163,000
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September 2006
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September 1, 2006
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September 30, 2006
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$6,574,000
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October 2006
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October 1, 2006
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October 31, 2006
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$7,220,000
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November 2006
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November 1, 2006
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November 30, 2006
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$7,402,000
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December 2006
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December 1, 2006
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December 31, 2006
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$8,632,000
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January 2007
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January 1, 2007
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January 31, 2007
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$3,833,000
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February 2007
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February 1, 2007
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February 28, 2007
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$2,572,000
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March 2007
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March 1, 2007
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March 31, 2007
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$2,841,000
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April 2007
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April 1, 2007
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April 30, 2007
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$2,736,000
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May 2007
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May 1, 2007
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May 31, 2007
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$2,426,000
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June 2007
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June 1, 2007
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June 30, 2007
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$2,200,000
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July 2007
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July 1, 2007
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July 31, 2007
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$1,921,000
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August 2007
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August 1, 2007
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August 1, 2007
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$61,000
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[2]
The parties have been unable to agree on the
quantum of costs. Additionally, they are not in agreement on the calculation of
prejudgment interest or on the rate of post-judgment interest. These Supplementary
Reasons address those outstanding issues.
Costs
[3]
The Plaintiff was the successful party and was judged
to be entitled to its costs. It claims costs of $2,078,235.07 but submits that
“in order to expeditiously bring this matter to a close”
it requests a lump sum award of $1,800,000. Alternatively, it requests that
the determination of the amount of costs be directed to an assessment officer
with directions that:
(a)
Costs be assessed at the upper level of Column
IV;
(b)
Costs (fees and disbursements) be allowed for
two senior counsel and one junior at the hearing;
(c)
Costs (fees and disbursements) be allowed for
two senior counsel or one senior counsel and one junior in conducting
discoveries;
(d)
Travel time and expenses be allowed for two
counsel attending discoveries and motions where two counsel were present;
(e)
Travel time and expenses be allowed for two
counsel for meetings with expert and fact witnesses;
(f)
Costs (fees and disbursements) for interlocutory
motions shall be taxed as follows:
i.
Where the Court has previously awarded an amount
or level of costs, that amount or level shall prevail;
ii.
Where the Court was silent as to costs, no costs
are ordered; and
iii.
Where costs are ordered but silent as to amount
or level of costs, costs are to be assessed for one senior counsel at the upper
level of Column IV;
(g)
Costs (fees and related disbursements) for all
case management conferences and pre-trial conferences are to be assessed for
one senior counsel at the upper level of Column IV;
(h)
The reasonable fees and disbursements paid to
the expert witnesses and fact witnesses;
(i)
Photocopy and binding charges at the rate of 15
cents per page for internal copies and at the amount indicated on the invoice
for external service providers;
(j)
All other disbursements charged to its client
are to be recovered in full; and
(k)
Interest on the costs awarded at the rate of
5.0% from the date setting the amount of damages payable.
[4]
The Defendant submits that the costs claimed are
“extravagant and over-inflated,” includes costs
previously decided in the proceeding, and claims more than is reasonable and
what the Federal Courts Rules, SOR/98-106 [Rules] allow. It
further submits that the costs submissions are deficient and are lacking in
supporting documentation and it urges an award of costs of $614,440.00.
[5]
It further submits that the draft Bill of Costs
submitted by the Plaintiff is deficient and excessive for the following
reasons, among others:
(a)
It includes costs for seven interim motions in
which the Court specifically ordered that no costs were to be paid and one
where the Order was silent on costs;
(b)
It includes costs for preparing the statement of
claim four times, contrary to Tariff B;
(c)
It includes claims for costs for six supplements
of its affidavit of documents contrary to Tariff B; and
(d)
It includes costs for preparing a subpoena as a
separate item, contrary to Tariff B.
[6]
The Defendant further submits that contrary to
Tariff B, the Bill of Costs claims costs for multiple counsel for all pre-trial
steps and submits that the claim for three counsel at trial is excessive and
unwarranted. Lastly, it raised a number of objections to the disbursements
related to the expert evidence including the size of the fees and the
disbursements incurred.
[7]
Given the numerous objections to the Bill of
Costs, most of which cannot be determined summarily on the record before the
Court, it is concluded that this is not an appropriate case for the Court to
award a lump sum; the costs must be assessed. The assessment is to be done in
accordance with the following directions, which are guided by the decisions in Janssen-Ortho
Inc v Novopharm Ltd, 2006 FC 1333, [2006] FCJ No1684, and Apotex Inc v H
Lundbeck A/S, 2013 FC 1188, [2013] FCJ No 1294:
(a)
The Plaintiff is entitled to its costs awarded
at the upper level of Column IV;
(b)
The Plaintiff is entitled to tax costs of one
senior counsel and one junior counsel, provided two were present, at all
pre-trial procedures, save and except for those where a judge or prothonotary
ordered that a motion was to be without costs or was silent as to costs;
(c)
The Plaintiff is entitled to tax costs at trial
of two senior counsel and one junior counsel;
(d)
The Plaintiff is entitled to tax the reasonable
disbursements of counsel for travel, accommodation and related expenses on the
basis of economy fare and single rooms;
(e)
No costs or disbursements are recoverable for in-house
counsel, law clerks, students, paralegals, or other support staff;
(f)
The Plaintiff is entitled to recover the expert fees
paid for those persons who deposed affidavits filed in the this action and also
testified at the trial, at the lesser of the actual fees charged or the daily
rate of senior counsel, but shall not include any fee related to assisting
counsel in the preparation of the case or responding to discovery questions;
(g)
The Plaintiff is entitled to recover the
reasonable disbursements billed by those experts whose fees are recoverable;
(h)
The Plaintiff is entitled to recover the fees
and disbursements paid to fact witnesses who testified at trial; and
(i)
No fees or disbursements are again recoverable
that were previously determined to be payable to the Plaintiff in this
proceeding by the Court of Appeal.
Interest
Principles Relating to an Award of Interest
[8]
The modern theory underpinning an award of interest
is meant to compensate rather than punish: Bank of America Canada v Mutual Trust Co, [2002] 2 S.C.R. 601, [2002] SCJ No 44 at para 36 [Bank of
America].
[9]
The need to include interest in an award for
damages to fully compensate a plaintiff arises from the concept of the
time-value of money and the principle that the value of a dollar today is more
valuable than a dollar in the future. This is due to lost opportunities to use
the money, risk, and inflation: Bank of America at paras 21-22.
Interest should be used to “compensate a plaintiff for
the interval between when damages initially arise and when they are finally
paid:” Bank of America at para 38.
[10]
More specifically, the purpose of prejudgment
interest is “compensation for being deprived of damages
from the date they are suffered:” South Yukon Forest Corp v Canada, 2010 FC 495, [2010] FCJ No 532 at para 1348 [South Yukon]. The Court in that
judgment at para 1350 also noted that overcompensation is to be avoided. In a
similar vein, the Ontario Court of Appeal has stated that a court should avoid
giving the plaintiff a windfall: Celanese Canada Inc v Canadian National
Railway Company, [2005] OJ No 1122 at para 17 [Celanese].
Prejudgment Interest in
Section 8 Claims
[11]
In this action, the Defendant submits that the
Plaintiff would only be able to earn interest on the profits it actually earned
at any given point in the Relevant Period (January 10, 2006 to August 1, 2007) and
that to permit the Plaintiff to recover interest from January 10, 2006, on all profits
earned during the entire 19 months, before that profit could actually have been
earned, leads to a windfall and is not consistent with jurisprudence.
[12]
The Plaintiff submits that paragraphs 258 and
259 of the Reasons for Judgment in the action indicate that interest runs from
when the loss “begins to be suffered” and in this
case, it runs from January 10, 2006 on the full damages award, since that was
the beginning of the Relevant Period. It says that in accordance with the
Court’s discretion under both the Federal Courts Act, RSC 1985, c F-7,
and the Courts of Justice Act, RSO 1990, c C43, prejudgment interest
should be awarded on the full amount as of the start of the Relevant Period
because the Defendant should be prevented from profiting from its wrongful
actions, and “the profits the innovator will make during
the Statutory Stay will outstrip any potential liability to the generic under
section 8.”
[13]
In the Reasons for Judgment, it was found that prejudgment
interest runs from January 10, 2006. However, the issue now being raised was
not addressed, namely on what sum is the interest calculated.
[14]
In Celanese, the Ontario Court of Appeal
found that in accordance with subsection 128(3) of the Ontario Courts of
Justice Act, the plaintiff’s claim was for past pecuniary loss and
therefore it was an error for the trial judge to award prejudgment interest
from the date the cause of action arose in accordance with subsection 128(1).
In that case, the plaintiff claimed damages resulting from an accident that
damaged their physical plant as well as damages for lost profits on lost
production and business interruption.
[15]
The Court’s analysis in Celanese at para
17 is instructive:
The purpose of s. 128(3) is to achieve fairness
in the payment of the prejudgment interest on pecuniary damages by ensuring
that a plaintiff will not recover a windfall that would otherwise result were
s. 128(1) to be applied. It does so by providing a formula for the accrual
of interest on pecuniary damages as they are incurred, in lieu of requiring
the court to conduct a series of individual calculations. Section 128(3)
accords with the underlying compensatory principle for awarding prejudgment
interest, which is to compensate a party for the loss of the use of its money.
(emphasis added)
[16]
In my view, where the damages claimed are for
pecuniary loss that accrues over a period of time, it is appropriate when calculating
prejudgment interest to do so in a manner that prevents overcompensating the
plaintiff and that recognizes that the loss occurred over time.
[17]
The Defendant’s model appropriately accounts for
this. It describes that approach as follows:
[A]t the end of the first month of Teva’s
but-for sales, Teva is entitled to prejudgment interest on that month’s
profits; at the end of the second month of Teva’s but-for sales, Teva is
entitled to prejudgment interest on the cumulative profits for the first two
months, etc., until all of Teva’s lost profits are earned as of the end of the
date of section 8 damages. Thereafter prejudgment interest applies to the
total amount of section 8 damages, until the date of final judgment.
[18]
The appropriate calculation under the Courts
of Justice Act of prejudgment interest on pecuniary damages that accrue
over a period of time is described in Chandran v National Bank, 2011
ONSC 4369. The Judge there noted that under the Courts of Justice Act, “[i]nterest is due for a month as soon as the payment is owed,
not after the payment has been outstanding for a month.” In this case,
and consistent with subsection 128(1) of the Courts of Justice Act, the
monthly “payments” became due as of January 10, 2006, and thereafter on the first
of each month following during the Relevant Period.
[19]
The prejudgment interest on the damage award is calculated as
follows: First, the interest owed from the beginning of the Relevant Period to
the end must be calculated from the beginning of each month on the basis of the
damages accruing that month and second, the interest on the total amount of the
award outstanding at the end of the Relevant Period must be calculated from the
end of the Relevant Period to the date of judgment.
[20]
The prejudgment interest to the date of judgment
is calculated based on an annual prejudgment rate of 4.5% or 0.375% per month.
The period from January 10, 2006 to August 1, 2007, both inclusive, is 18.74
months, and August 1, 2007 is 0.032 of a month.
(a)
The prejudgment interest in the Relevant Period
is as follows:
January 10, 2006 –
January 31, 2006: $5,342,000 x 0.375% for 18.74 months = $375,409.05
February 1, 2006 –
February 28, 2006: $3,281,000 x 0.375% for 18 months = $221,467.50
March 1, 2006 – March
31, 2006: $4,574,000 x 0.375% for 17 months = $291,592.50
April 1, 2006 – April
30 2006: $4,635,000 x 0.375% for 16 months = $278,100.00
May 1, 2006 – May
31, 2006: $5,859,000 x 0.375% for 15 months = $329,568.75
June 1, 2006 –
June 30, 2006: $6,484,000 x 0.375% for 14 months = $340,410.00
July 1, 2006 –
July 31, 2006: $6,471,000 x 0.375% for 13 months = $315,461.25
August 1, 2006 –
August 31, 2006: $7,163,000 x 0.375% for 12 months = $322,335.00
September 1, 2006
– September 30, 2006: $6,574,000 x 0.375% for 11 months = $271,177.50
October 1, 2006 –
October 31, 2006: $7,220,000 x 0.375% for 10 months = $270,750.00
November 1, 2006 –
November 30, 2006: $7,402,000 x 0.375% for 9 months = $249,817.50
December 1, 2006 –
December 31, 2006: $8,632,000 x 0.375% for 8 months = $258,960.00
January 1, 2007 –
January 31, 2007: $3,833,000 x 0.375% for 7 months = $100,616.25
February 1, 2007 –
February 28, 2007: $2,572,000 x 0.375% for 6 months = $57,870.00
March 1, 2007 –
March 31, 2007: $2,841,000 x 0.375% for 5 months = $53,268.75
April 1, 2007 – April
30, 2007: $2,736,000 x 0.375% for 4 months = $41,040.00
May 1, 2007 – May
31, 2007: $2,426,000 x 0.375% for 3 months = $27,292.50
June 1, 2007 –
June 30, 2007: $2,200,000 x 0.375% for 2 months = $16,500.00
July 1, 2007 –
July 31, 2007: $1,921,000 x 0.375% for 1 month = $7,203.75
August 1, 2007 –
August 1, 2007: $61,000 x 0.375% for .032 of a month = $7.32
Sub Total:
$3,828,847.62
(b)
The lump sum prejudgment interest on the damage
award following the end of the Relevant Period (August 1, 2007) to the date of
Judgment (June 30, 2014) is as follows. The daily prejudgment interest = $92,228,000
x 4.5% per annum = $4,150,260 a year divided by 365 days in a year = $11,370.58
of interest per day. The lump sum period is 2,525 days. Total lump sum interest = $11,370.58 x 2,525 days = $28,710,702.74.
Total prejudgment
interest owed = (a) + (b) = $32,539,550.36
Post-judgment Interest
[21]
I agree with the Defendant that the Courts of Justice Act governs
post-judgment interest in this case. Section 127(1) of the Courts of
Justice Act provides that post-judgment interest is calculated as: “the bank rate at the end of the first day of
the last month of the quarter preceding the quarter in which the date of the
order falls, rounded to the next higher whole number where the bank rate
includes a fraction, plus 1 per cent.” According to the
Defendant, that is 3.0% if final judgment is issued in this quarter. This is
the appropriate post-judgment interest rate.
[22]
Section 129(1) of the Courts of Justice Act makes clear that
post-judgment interest accrues on the money owed including costs, from the date
of the order at the post-judgment interest rate. In the Reasons for Judgment, the
submission that post-judgment interest should commence as of the date of the
final judgment was accepted. Post-judgment interest is also payable on prejudgment
interest: Weaver v Casey’s Welding Service Ltd, [2007] OJ No 880, para
5. Thus post-judgment interest is payable from the date of judgment on $124,766,550.36
until payment. Post-judgment interest of 3.0% is also due on the costs as
assessed from the date of judgment.
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