Docket: T-1791-13
Citation:
2016 FC 107
Montréal, Quebec, January 29, 2016
PRESENT: The Honourable Mr. Justice Locke
|
BETWEEN:
|
|
LEO PHARMA INC.
|
|
Applicant
|
|
and
|
|
TEVA CANADA
LIMITED AND THE MINISTER OF HEALTH
|
|
Respondents
|
|
and
|
|
LEO PHARMA A/S
|
|
Respondent/Patentee
|
ORDER AND REASONS
[1]
This decision concerns costs in this matter
following my judgment dated November 18, 2015 (Leo Pharma Inc v Teva Canada
Limited, 2015 FC 1237) in which I granted LEO Pharma Inc.’s (LEO’s)
application under section 6 the Patented Medicines (Notice of Compliance)
Regulations, SOR/93-133 (the Regulations), for an Order prohibiting the
Minister of Health from issuing a Notice of Compliance to Teva Canada Limited
(Teva) in respect of 50 mcg/g calcipotriol and 0.5 mg/g betamethasone (as
dipropionate) ointment until after the expiry of Canadian Patent No. 2,370,565.
[2]
In my November 18, 2015 judgment, I indicated
that Teva was liable to pay LEO’s costs, and invited the parties to make
written submissions on the amount of those costs. LEO filed submissions,
including a bill of costs and supporting documentation, on November 30, 2015.
LEO claims $118,953.14 in fees and $470,604.66 in disbursements for a total of
$589,557.80. Teva filed responding submissions on December 15, 2015. It
disputes some of LEO’s claims and argues that costs should be $266,000
(including $41,000 in fees and $225,000 in disbursements). LEO also filed reply
submissions.
[3]
I have now reviewed and considered those
submissions. It is most efficient for me to use LEO’s bill of costs as a
starting point and to weigh Teva’s various arguments in dispute of that bill of
costs, as well as LEO’s reply to such arguments. To the extent that I agree
with Teva’s arguments, I deduct the appropriate amount from LEO’s bill of costs.
The amended bill of costs is attached as an Annex to this decision. The
headings below roughly follow those used in Teva’s submissions.
[4]
Though Teva has asked, in the alternative, that
the issue of costs be sent for assessment, I find that setting a lump sum now
will determine the issues in the just, most expeditious and least expensive
manner.
I.
Counsel Fees
A.
Applicable Scale
[5]
Teva argues that there is nothing notably
complex in this matter that justifies departing from the default scale for
counsel fees, the middle of Column III of Tariff B of the Federal Courts
Rules, SOR/98-106. I disagree. The complexity of issues in this matter is
demonstrated by the number of expert witnesses put forward (five by LEO and
three by Teva).
[6]
Though Teva argues that there is no general
recognition in the jurisprudence that Column IV is the norm in matters brought
pursuant to the Regulations, there is likewise no general recognition that the
threshold for finding complexity is any higher in such matters. LEO need not
establish that this matter was more complex than a typical proceeding under the
Regulations.
[7]
Though LEO argues that fees should be calculated
at the top of Column IV, I find that the middle of Column IV is more
appropriate. The figures for LEO’s bill of costs are adjusted accordingly.
B.
Amount of work
[8]
Teva argues that the amount of work required for
LEO in this matter was inflated at least in part because LEO retained two
different law firms. Teva may be right, but I am not persuaded that any such
increased amount of work is reflected in LEO’s bill of costs.
[9]
The parties also disagree as to whether I should
take into account the fact that, in its evidence, LEO addressed many issues
that were raised by Teva in its notice of allegation but that Teva did not
pursue at the hearing before me. LEO argues that Teva never informed it that
Teva was not intending to pursue these issues, and so it was reasonably
necessary at the time for LEO to address them in its evidence. Teva responds
that, since LEO was the applicant in this matter with the burden of proving its
case, Teva had no obligation to inform LEO of issues it did not intend to
pursue. Teva argues that its conduct was neither abusive nor improper such as
to merit increased costs. Though I agree, I am of the view that LEO’s work on
such issues was indeed reasonably necessary at the time it was done.
[10]
I make no change to LEO’s bill of costs in
regard to the amount of work.
C.
Travel Time
[11]
Teva argues that counsel fees for time spent
travelling should not be allowed because LEO has not established that it
actually paid for counsel’s travel time. In the absence of comment on this
point by LEO in reply, I agree with Teva. Accordingly, I disallow LEO’s claim
under item 24 of Tariff B.
D.
Documentary Discovery
[12]
Teva argues that no amount should be allowed for
documentary discovery because proceedings under section 6 of the Regulations
are summary proceedings in which there is no defined documentary discovery
phase. In the absence of comment on this point by LEO in reply, I agree with Teva.
I disallow LEO’s claim in this regard under item 7 of Tariff B.
E.
Motions
[13]
Teva argues that, though the December 18, 2014
Order of Justice Sean Harrington (on appeal from the October 20, 2014 Order of
Prothonotary Mireille Tabib on LEO’s motion to submit reply evidence) granted
LEO’s appeal in part, Justice Harrington’s Order granted costs only in respect
of the motion before him, and did not alter Prothonotary Tabib’s Order as it
concerned costs. Prothonotary Tabib’s Order required that LEO pay Teva its costs
of the motion before her. Consequently, Teva argues, it is entitled to have the
costs of the motion before Prothonotary Tabib assessed and set off against
LEO’s bill of costs. I agree with Teva.
[14]
Teva submitted a bill of costs concerning the
motion before Prothonotary Tabib in the amount of $7,561.52, including $4,081.56
in fees and $3,479.96 in disbursements. However, the fees portion of this bill
of costs is based on the middle of Column III. Having concluded that this is
too low for LEO’s bill of costs, it is my view that the amount of Teva’s costs
for the motion before Prothonotary Tabib should be increased. I would assess
the amount of Teva’s costs for this motion at $9,000, inclusive of taxes and
disbursements, to be set off against LEO’s costs.
F.
Cross-Examination
(1)
Motion for Reply Evidence
[15]
Teva argues that no costs should be awarded to
LEO for cross-examinations conducted with respect to its motion to submit reply
evidence. This argument concerns preparing for and attending the following
cross-examinations: Kenneth Walters on October 7, 2014, Steven Feldman on
October 8, 2014, and William Bosch on October 9, 2014. For the same reasons as
discussed above in relation to motions, and in the absence of comment on this
point by LEO in reply, I agree with Teva.
[16]
Consequently, the amounts claimed in LEO’s bill
of costs in relation to these three cross-examinations in Tariff B under items
8 and 9 should be removed.
(2)
Goldberg Cross-Examination
[17]
Teva also argues that the amount claimed under
item 9 of Tariff B for attending the cross-examination of Dr. Goldberg on
January 15, 2015, is excessive. In the absence of comment on this point by LEO
in reply, I agree with Teva. The recognized time for this cross-examination
should be reduced from seven hours to four.
G.
Trial
[18]
Teva argues that LEO should not be allowed to
claim more than one senior counsel and one junior counsel in attendance at the
hearing on the merits. Though LEO had four counsel at the hearing and claims
for three, I am persuaded by the fact that Teva was represented at the hearing
by just two counsel. I agree with Teva that LEO should not be allowed costs for
more than one senior counsel and one junior counsel. The amount claimed by LEO
under item 14(b) of Tariff B for a second junior counsel is disallowed.
H.
Assessment of Costs
[19]
Teva argues that LEO should be denied the costs
of this assessment of costs under item 26 of Tariff B. As will be shown below,
my conclusion on costs in this matter is close to the mid-point between the
figure put forward by LEO and that put forward by Teva. In fact, it is slightly
closer to Teva’s position. Therefore, I agree with Teva that no costs should be
allowed for this assessment of costs. I disallow LEO’s claim in this regard.
II.
Experts Fees
A.
Duplication of Expert Witnesses
[20]
Teva argues that LEO relied on expert witnesses
who duplicated the work of other expert witnesses, and therefore should not be
allowed in assessing costs. Firstly, Teva argues that LEO’s reliance on two
clinical experts (Paul Contard and Neil Shear) to address some of the same
issues was unnecessary, and that costs associated with Dr. Shear’s testimony
should not be allowed. Secondly, Teva argues that LEO’s choice to have two
formulation experts (Arthur Goldberg and Kenneth Walters) addressing some of
the same issues should likewise disentitle it to costs associated with the
testimony of Dr. Goldberg.
[21]
During the hearing of this matter on the merits,
I had no sense that there had been any needless duplication of expert evidence,
and Teva’s argument does not persuade me that any of LEO’s expert evidence was
not reasonably necessary.
[22]
I make no change to LEO’s bill of costs in this
regard.
B.
Excessive Costs
(1)
Expert’s Time
[23]
Teva argues that LEO is not entitled to (i)
costs for an expert’s time spent meeting with counsel, (ii) costs incurred by
an expert after the conclusion of their evidence, or (iii) an expert’s time
during breaks in their cross-examination.
[24]
In support of point (i), Teva relies on the
decision of Justice Howard Wetston in Apotex Inc v Wellcome Foundation Ltd,
[1998] FCJ No 1736 (QL) at para 63, including the following statement:
… I find that Glaxo should, however, be
granted costs for experts' fees and disbursements which arose as a result of
experts' time spent in: preparing their affidavits; reviewing the patent,
reviewing the other experts' affidavits, and attendance in court. Glaxo shall
receive costs for experts' travel, but only with respect to their attendance in
court. I deny Glaxo's request for costs for experts' time spent meeting with
counsel. …
[25]
I do not read this statement as being of general
application. I prefer the reasoning of Assessment Officer Charles E. Stinson in
Mercury Launch & Tug Ltd v Texada Quarrying Ltd, 2009 FC 331 at para
38 [Mercury Launch]:
… With respect, I am uncertain as to how the
bar in Wellcome to compensation for the time of experts in meeting with
counsel can be reconciled with the practical and reasonably necessary
requirement, in my view, of having supervising counsel shape, further to
meetings either in person or by teleconference, an expert’s work to mesh with
the former’s case strategy. Compensation for the role of counsel is limited by
the partial indemnity provisions of the Tariff as required by Rule 407, but
compensation for the role of an expert is generally fully recoverable within
the limitations of reasonable necessity … Costs for the time of experts meeting
with supervising counsel are assessable if necessary and not duplicative of
either previous meetings or work more properly the responsibility of
supervising counsel.
[26]
I am satisfied that experts' time spent meeting
with counsel in this case was reasonably necessary, except as indicated below.
[27]
With regard to point (ii) above, it is not clear
to me that any of the costs incurred by LEO’s experts occurred after the
conclusion of their evidence.
[28]
Finally, with regard to point (iii), I revert to
Assessment Officer Stinson’s statement in the Mercury Launch decision.
There is an important difference in concept between costs for counsel’s time
(which are generally calculated on a partial indemnity basis by reference to
Tariff B) and expert’s costs (which are generally fully recoverable within the
limitations of reasonable necessity). Though counsel time should be calculated
after removing time for breaks, this is not necessarily the case for an
expert’s time.
[29]
I make no change to LEO’s bill of costs pursuant
to any of Teva’s arguments under this heading.
(2)
Dr. Goldberg’s Billable Rate
[30]
Teva argues that, to the extent that costs are
allowed for the work of Dr. Goldberg, the billable rate should be reduced to
that charged by Dr. Walters. I am not persuaded that Dr. Goldberg’s billable
rate was unreasonably high or that it should be reduced simply because it is
higher than Dr. Walters’ rate.
[31]
I make no change to LEO’s bill of costs in this
regard.
(3)
Preparing Expert Response that was Never Served
or Filed
[32]
Teva argues that costs should be disallowed for
the 27 hours spent by Dr. Goldberg in September 2014, on the preparation of a
response that was never served or filed to one of Teva’s experts. I agree. It
is difficult to justify as reasonably necessary work that was never relevant to
or admissible in the proceeding. The disallowed expenses amount to US$13,500. I
calculate that amount to have corresponded at the time to roughly CDN$16,000,
which is deducted from LEO’s bill of costs.
(4)
Dr. Goldberg’s Meetings in Preparation for his
Cross-Examination
[33]
Teva argues that two days of meetings in New
York City and four days of meetings in Montreal in the days leading up to Dr.
Goldberg’s cross-examination in January 2015, should be disallowed or reduced
as they are excessive. I agree that this seems excessive. Dr. Goldberg’s bill
for January 2015, was US$29,171.61, which corresponded to roughly CDN$35,000.
In my view, a substantial reduction in the amount of CDN$20,000 is called for.
C.
Expert Affidavit of Fritz Blatter
[34]
Teva argues that no amount should be allowed for
the work of LEO’s expert Fritz Blatter because, though he provided an expert
report and was cross-examined thereon, no reference was made to his evidence at
the hearing on the merits. Indeed, as it turned out, LEO did not need to refer
to Dr. Blatter’s evidence. Nevertheless, I am not persuaded that his evidence
was not reasonably necessary. In my view, Dr. Blatter’s evidence was reasonably
necessary at the time it was prepared.
[35]
Teva also argues, in the alternative, that costs
should not be allowed for Dr. Blatter’s time spent on travel to meetings and
other non-productive work. I agree, in part because of the admission that such
work is non-productive. I am also struck that the amount of such time recorded
in Dr. Blatter’s invoice of April 27, 2015, (27 hours) far exceeds the amount
of his productive time (12 hours).
[36]
The amount of time in dispute on this point is
28 hours (27 hours in Dr. Blatter’s invoice of April 27, 2015, and one hour in
his invoice of December 23, 2013) which amounts to 5,600 Swiss Francs. Using a
rough exchange rate, I reduce the amount of LEO’s costs in association with the
work of Dr. Blatter by CDN$7,000.
III.
Travel Transportation
[37]
LEO indicates in its submissions that the amount
it claims under this heading has been reduced by 50% of the actual costs. Teva
argues that this reduction is insufficient to reflect impermissible costs such
as (i) costs associated with LEO’s motion to submit reply evidence, (ii)
multiple meetings with experts which could have been held by telephone or
video-conference, and (iii) multiple counsel attending meetings and
cross-examinations.
[38]
I disagree. Firstly, I am not persuaded that
meetings in person with experts were not reasonably necessary. Such meetings
are often much more efficient than a video-conference. Secondly, while I would
have been inclined to reduce the total expenses incurred for travel if LEO had
not already done so, I find that the 50% reduction applied by LEO is adequate.
[39]
Accordingly, I make no change to LEO’s bill of
costs in this regard.
IV.
Online Research
[40]
Teva argues that LEO’s claims for costs
associated with online searches, if allowed at all, should be properly
supported. The evidence provided by LEO is scant. The supporting Affidavit of
Christian Leblanc includes an Exhibit 8 comprising over 100 pages of invoices
and computer printouts, together with the following statement by Mr. Leblanc at
paragraph 34 of his affidavit:
The preparation of the evidence and
submission at trial required a substantial amount of scientific and legal
research, both on behalf of LEO and its experts. The expenses incurred by LEO
in the payment of online research services were necessary and reasonable.
[41]
In my view, the evidence that the online
research was necessary and reasonable amounts to little more than a bald
statement. Also, it is not clear to me whether the claimed online research
expenses represent actual disbursements by LEO’s counsel, or merely amounts
that were charged to LEO but which were not disbursements by LEO’s counsel
(much like internal photocopying). I find that the amount of expenses allowable
for online research should be reduced to $3,000.
V.
Photocopying, Binding, Scanning, Stationery
A.
Photocopying
[42]
Teva argues that LEO is entitled to costs
associated with photocopying only in respect of certain steps in this matter,
and only if they are essential to the conduct of the proceeding. Teva also argues
that LEO has failed to provide information in support of the indicated rate of
25 cents per page. Other than the fact that the test for permissibility of
photocopy charges is reasonable necessity (rather than essentiality), Teva is
correct.
[43]
As with costs for online research, the
evidentiary support for photocopying expenses is scant. The reasonable
necessity of such expenses is likewise supported by what is little more than a
bald statement to that effect in the Leblanc Affidavit.
[44]
LEO’s claim of $65,923.25 corresponds to over
260,000 copies. While I accept that 25 cents per page is a reasonable rate for
photocopies, I agree with Teva that the number of copies is excessive, and that
a more reasonable number would be 80,000, which corresponds to $20,000.
B.
Binding
[45]
LEO claims $1,872.45 as costs of binding. I
agree with Teva’s argument that binding costs are overhead and should not be
allowed.
C.
Stationery
[46]
I reach the same conclusion in respect of LEO’s
claim for $66.02 in stationery costs.
D.
Scanning
[47]
LEO claims $1,390 for costs of scanning at a
rate of 25 cents per page (which corresponds to 5,560 pages). I agree with
Teva’s argument that the rate per page for scanning should be less than that
for photocopying (since there are no costs for paper or ink), and should be set
at an acceptable commercial rate. Based on the decision in Novopharm Limited
v Janssen-Ortho Inc, 2012 FCA 29 at para 18, it appears that an acceptable
commercial rate is 17 cents per page. Based on 5,560 pages of scanning, a
reasonable amount for the costs associated with scanning is $945.20.
E.
Conclusion on Photocopying, Binding, Scanning,
Stationery
[48]
Based on the foregoing, the amount allowed under
this category of disbursements is reduced to $20,945.20.
VI.
Stenographers
[49]
Teva argues that expenses for expediting
cross-examination transcripts should not be allowed. I disagree. Given the
short timelines involved in this matter, and in the absence of any reference by
Teva to any authority to the contrary, it is my view that expediting
cross-examination transcripts was reasonably necessary.
[50]
Teva also argues that court reporter expenses
should not be allowed for cross-examinations conducted in relation to LEO’s
motion for reply evidence. I agree. The only such expense I see claimed in
LEO’s bill of costs concerns the cross-examination of Steven Feldman on October
8, 2014, the invoice for which is in the amount of $510.49. This amount is
deducted.
VII.
Conclusion
[51]
For the reasons provided above, I have concluded
that LEO’s bill of costs should be amended as indicated in the Annex to this
decision.
Email this Content