SUPREME
COURT OF CANADA
Between:
Nu-Pharm
Inc.
Appellant
and
Her
Majesty the Queen in Right of Canada,
Attorney
General of Canada and Director-General,
Therapeutic
Products Directorate of Health Canada
Respondents
Coram: Binnie, LeBel, Deschamps, Abella, Charron, Rothstein and
Cromwell JJ.
Reasons
for Judgment:
(paras. 1 to 21)
|
Rothstein J. (Binnie, LeBel, Deschamps,
Abella, Charron and Cromwell JJ. concurring)
|
Nu-Pharm
Inc. v. Canada (Attorney
General), 2010
SCC 65, [2010] 3 S.C.R. 648
Nu-Pharm Inc. Appellant
v.
Her Majesty The Queen in Right of Canada,
Attorney General of Canada and Director‑General,
Therapeutic
Products Directorate of Health Canada Respondents
Indexed as: Nu-Pharm Inc.
v. Canada (Attorney
General)
2010 SCC 65
File No.: 32830.
2010: January 20, 21; 2010: December 23.
Present: Binnie, LeBel, Deschamps, Abella, Charron,
Rothstein and Cromwell JJ.
on appeal from the federal court of appeal
Courts — Federal Court — Procedure — Plaintiff bringing action
in Federal Court against federal Crown for damages for various torts arising
from decisions prohibiting sale of drug — Plaintiff not seeking judicial review
of decisions — Whether plaintiff
entitled to seek damages by way of action without first proceeding by way of
judicial review — Federal Courts Act,
R.S.C. 1985, c. F‑7, ss. 17 , 18 .
In 1997, N
applied unsuccessfully to Health Canada to obtain authorization to sell its
drug Nu‑Enalapril in Canada. The decision was set aside on judicial
review, and Health Canada issued a notice of compliance, but that decision was
subsequently overturned on judicial review. As a result, N could no longer
sell and market the drug. In 2001, N initiated an application for judicial
review, alleging that Health Canada was acting unlawfully in requiring it to
obtain a notice of compliance and by prohibiting the sale of the drug, but
later discontinued its application. In 2002, N filed a statement of claim in
the Federal Court against the Crown seeking injunctive and mandatory relief and
damages for various torts. The Crown was successful in bringing a motion for
summary judgment dismissing the action on the basis that, absent a successful
challenge of the decisions of Health Canada by way of judicial review, the
Federal Court did not have jurisdiction to hear the matter in light of Canada
v. Grenier, 2005 FCA 348, [2006] 2 F.C.R. 287.
Held:
The appeal should be allowed.
For the reasons given in Canada (Attorney
General) v. TeleZone Inc., 2010 SCC 62, [2010] 3 S.C.R. 585, the Federal
Court should have decided N’s claim for damages without requiring it to first
be successful on judicial review. Section 17 of the Federal Courts Act
gives the Federal Court concurrent jurisdiction over claims for damages against
the Crown. Section 18 of the Act does not derogate from this concurrent
jurisdiction. Nothing in ss. 17 or 18 of the Act requires
a plaintiff to be successful on judicial review before bringing a claim for
damages against the Crown. N is currently authorized to distribute the
drug across the country and, since the discontinuance of the claims for injunctive
and declaratory relief, there is no longer any practical effect in seeking
judicial review. The merits of the defence of statutory authority, if raised,
may be determined at trial.
Cases Cited
Applied:
Canada (Attorney
General) v. TeleZone Inc.,
2010 SCC 62, [2010] 3 S.C.R. 585; overruled: Canada
v. Grenier, 2005 FCA 348, [2006] 2 F.C.R. 287; referred to: Nu‑Pharm Inc. v. Canada (Attorney
General), [1999] 1 F.C. 620; Merck & Co. v. Canada (Attorney General)
(1999), 176 F.T.R. 21, aff’d (2000), 254 N.R. 68, leave to appeal
refused, [2000] 1 S.C.R. xvii.
Statutes and Regulations Cited
Federal Courts Act, R.S.C. 1985, c.
F‑7, ss. 17 , 18 .
Food and Drug Regulations, C.R.C., c. 870, ss. C.08.001, C.08.002(1).
Patented Medicines (Notice of Compliance) Regulations, SOR/93‑133.
APPEAL from a judgment of the Federal Court of
Appeal (Linden, Nadon and Sexton JJ.A.), 2008 FCA 227, 387 N.R. 300, 67 C.P.R. (4th) 175,
[2008] F.C.J. No. 1054 (QL), 2008 CarswellNat 2294, affirming a decision of
Hugessen J., 2007 FC 977, [2007] F.C.J. No. 1273 (QL), 2007 CarswellNat 3146.
Appeal allowed.
Andrew Brodkin and Cynthia L. Tape, for the appellant.
Christopher M. Rupar, Alain Préfontaine and Bernard Letarte, for the respondents.
The judgment of the Court was
delivered by
[1]
Rothstein J. — The issue in this appeal is whether a plaintiff, who seeks
damages for a decision by Health Canada to prohibit the sale of a drug, must
first invalidate that decision by way of judicial review in the Federal Court.
I. Facts
[2]
Nu-Pharm is a generic drug manufacturing and
distribution company. It produces the product “Nu-Enalapril”, a cardiovascular
medication for the treatment of hypertension. In 1997, Nu-Pharm filed an
abbreviated new drug submission with Health Canada in order to obtain
authorization to sell Nu-Enalapril in Canada. In the submission, Nu-Pharm
relied on a comparison with a generic version of a drug produced by Merck and
Co. Health Canada refused to accept the abbreviated new drug submission
because it failed to reference a valid Canadian reference product, a
requirement under the Food and Drug Regulations, C.R.C., c. 870. Health
Canada’s decision was set aside on judicial review at the Federal Court (Nu-Pharm
Inc. v. Canada (Attorney General), [1999] 1 F.C. 620).
[3]
As a result, Health Canada reviewed the
abbreviated new drug submission and issued a notice of compliance for
Nu-Enalapril, which is a requirement for the advertisement and sale of the drug
(Food and Drug Regulations, s. C.08.002(1)(b)). Merck applied
for judicial review of the decision to grant the notice of compliance because
Nu-Pharm had compared its product to the generic version of Merck’s drug but
not the patented version, Vasotec. The application for judicial review was
allowed at the Federal Court on the basis that the decision to issue a notice
of compliance was in violation of the Patented Medicines (Notice of
Compliance) Regulations, SOR/93-133 (Merck & Co. v. Canada (Attorney
General) (1999), 176 F.T.R. 21). The decision was upheld at the Federal
Court of Appeal (Merck & Co. v. Canada (Attorney General) (2000),
254 N.R. 68). This Court dismissed Nu-Pharm’s leave to appeal application
([2000] 1 S.C.R. xvii).
[4]
As a result of these proceedings, Nu-Pharm no
longer had a notice of compliance for the marketing of Nu-Enalapril. The
Director General of the Therapeutic Products Directorate of Health Canada
advised the provincial drug benefit managers and Registrars of Pharmacists that
the sale or advertisement of Nu-Enalapril was now prohibited:
1. Letter
of March 22, 2000:
A recent judgment from the Federal Court of Appeal has
affected the status of the Notice of Compliance (NOC) for Nu-Enalapril 2.5, 5,
10 and 20 mg tablets, issued on February 25, 1999.
On March 13th, 2000, in Court File No. A-804-99,
a decision was delivered by the Court which dismissed the appeal sought by
Nu-Pharm of the trial division’s decision in Court File No. T-398-99.
Pursuant to the decision, the NOC for Nu-Enalapril is no
longer valid. Consequently, the Nu-Enalapril products may no longer be sold or
advertised pursuant to the NOC issued on February 25, 1999, subject to any
further judicial consideration of the decision.
2. Letter
of March 31, 2000:
Unless a further judicial order is made to the contrary, the
NOC for Nu-Enalapril is invalid from the date of issuance of the Judgment of
the Court of Appeal, March 13, 2000. Continued sale or advertisement of
Nu-Enalapril by anyone is contrary to section C.08.002 of the Food &
Drug Regulations. This includes the distributing or dispensing of existing
stock of the drug purchased from Nu-Pharm prior to the Judgment.
The TPP has clarified the above interpretation with
Nu-Pharm.
[5]
Nu-Pharm wrote to the Director General advising
that it disagreed with the position of Health Canada and the statements in the
letters. Nu-Pharm argued that Nu-Enalapril was not a new drug, as defined in
the regulations. Accordingly, a notice of compliance was not necessary for its
lawful sale. In a further letter to the Director General, Nu-Pharm noted that
the Therapeutic Products Directorate’s official policy provided that seven
years after the initial date of marketing a medicinal substance, a drug
containing that medicinal substance would no longer be considered “new”.
Nu-Pharm requested that the Director General agree with its position that
Nu-Enalapril was not a “new drug” and lift the prohibition on its sale and
marketing.
[6]
The Director General responded to Nu-Pharm’s
letters and indicated that he did not agree with Nu-Pharm’s position on the necessity
of obtaining a notice of compliance for the marketing of Nu-Enalapril.
Nu-Pharm and the Director General exchanged several more letters over the
course of several months. Neither party changed its view on the matter.
[7]
On February 22, 2001, Nu-Pharm initiated an
application for judicial review, alleging that the Director General was acting
unlawfully in requiring Nu-Pharm to obtain a notice of compliance and by
prohibiting the sale of Nu-Enalapril. Nu-Pharm later discontinued this
application.
[8]
On February 12, 2002, Nu-Pharm filed a statement
of claim in the Federal Court bringing an
action against Her Majesty the Queen, the Attorney General of Canada and the
Director General (collectively, the “Crown”). The statement initially sought:
• an order enjoining the Director General from publishing
further statements advising that the sale of Nu-Enalapril is unlawful;
• a mandatory order requiring the Director General to
retract the previous statements to the same effect; and
• damages for misfeasance in public office, abuse of
authority, illegal interference with Nu-Pharm’s economic interests, and gross
negligence, or alternatively negligence.
Nu-Pharm
brought this action to mitigate its financial losses resulting from the
prohibition on the marketing of its product.
[9]
During these proceedings, Nu-Pharm obtained
authorization to market Nu-Enalapril in Canada. Therefore, the injunctive and
mandatory orders that it sought are moot and Nu-Pharm no longer pursues these
claims. All that remains of Nu-Pharm’s action against the federal Crown is the
claim for damages incurred during the period between the Director General’s
first letter and the moment it was able to market its product (approximately
from March 2000 to October 2006).
[10]
On April 13, 2007, the Crown filed a notice of
motion for summary judgment on the ground that “Nu-Pharm is not entitled to
seek damages in an action resulting from the decisions of the Director-General
without first proceeding by way of judicial review in order to have the
decision invalidated” (R.R., vol. I, at p. 41).
II. Judicial
History
A. Federal
Court, 2007 FC 977 (CanLII)
[11]
Mr. Justice Hugessen allowed the Crown’s motion
for summary judgment on the basis of Canada v. Grenier, 2005 FCA
348, [2006] 2 F.C.R. 287. He concluded that
the obtaining of the damages claimed in
paragraph 1(c) of the amended statement of claim above is entirely dependant
upon the plaintiff showing the unlawful character of the Director-General’s
decisions . . . . The addition of an allegation of negligence, gross or not, in
the action cannot be divorced from the allegation that the Director-General
acted unlawfully. [para. 16]
[12]
Having determined that Nu-Pharm’s action was
“fatally flawed by its failure to maintain its application for judicial review”
(at para. 17), Hugessen J. considered possible alternative remedies. Hugessen
J. ordered a temporary stay of his judgment to allow Nu-Pharm to seek an
extension of time to file for judicial review and to pursue that course of
action. If Nu-Pharm was successful on judicial review, Hugesson J.’s judgment
could be vacated. If unsuccessful, the judgment would become permanent.
B. Federal
Court of Appeal, 2008 FCA 227, 387 N.R. 300
[13]
Nu-Pharm’s appeal was dismissed at the Federal
Court of Appeal, again on the basis of Grenier. Nadon J.A., writing for
a unanimous court, concluded that Nu-Pharm’s action constituted a collateral
attack on the decisions of the Director General. As the court had found in Grenier,
the decisions could only be challenged by way of judicial review.
III. Relevant
Provisions
[14]
Food and Drug Regulations, C.R.C., c. 870
C.08.001. For the purposes of
the Act and this Division, “new drug” means
(a) a
drug that contains or consists of a substance, whether as an active or inactive
ingredient, carrier, coating, excipient, menstruum or other component, that has
not been sold as a drug in Canada for sufficient time and in sufficient
quantity to establish in Canada the safety and effectiveness of that substance
for use as a drug;
(b) a
drug that is a combination of two or more drugs, with or without other
ingredients, and that has not been sold in that combination or in the
proportion in which those drugs are combined in that drug, for sufficient time
and in sufficient quantity to establish in Canada the safety and effectiveness
of that combination and proportion for use as a drug; or
(c) a
drug, with respect to which the manufacturer prescribes, recommends, proposes
or claims a use as a drug, or a condition of use as a drug, including dosage,
route of administration, or duration of action and that has not been sold for
that use or condition of use in Canada, for sufficient time and in sufficient
quantity to establish in Canada the safety and effectiveness of that use or
condition of use of that drug.
. . .
C.08.002. (1) No person shall sell or advertise a new drug unless
(a) the
manufacturer of the new drug has filed with the Minister a new drug submission
or an abbreviated new drug submission relating to the new drug that is
satisfactory to the Minister;
(b) the
Minister has issued, pursuant to section C.08.004, a notice of compliance to
the manufacturer of the new drug in respect of the new drug submission or
abbreviated new drug submission;
(c) the
notice of compliance in respect of the submission has not been suspended
pursuant to section C.08.006; and
(d) the manufacturer of the new drug has
submitted to the Minister specimens of the final version of any labels,
including package inserts, product brochures and file cards, intended for use
in connection with that new drug, and a statement setting out the proposed date
on which those labels will first be used.
IV. Analysis
[15]
The Crown’s position is that the decisions by
the Director General are decisions of a federal board, commission or tribunal,
and, as such, any challenge to the lawfulness of these decisions must occur
through an application for judicial review in the Federal Court.
[16]
For the reasons set out by Binnie J. in the
companion case of Canada (Attorney General) v. TeleZone Inc.,
2010 SCC 62, [2010] 3 S.C.R. 585, the Crown’s argument must fail.
[17]
Unlike in TeleZone, the Federal Court’s
jurisdiction is not at issue in this appeal. Nu-Pharm brought its action in
the Federal Court. However, the correct procedure — action or application for
judicial review — is at issue. Section 17 of the Federal Courts Act,
R.S.C. 1985, c. F-7 , gives the Federal Court concurrent jurisdiction over
claims for damages against the Crown. Section 18 of the Federal Courts Act
does not derogate from this concurrent jurisdiction. There is nothing in ss.
17 or 18 that requires Nu-Pharm to be successful on judicial review before
bringing its claim for damages against the Crown.
[18]
Nu-Pharm is now authorized to distribute
Nu-Enalapril across the country. As Nu-Pharm has recognized by discontinuing
its claims for injunctive and declaratory relief, there is no longer any
practical effect in seeking judicial review. It now seeks to recover damages
for loss that occurred as a result of, what it says, was intentional or
negligent conduct on the part of the Director General. It brings its claim in
tort.
[19]
It is true that the decisions by the Director
General were made pursuant to federal legislation. Thus, it is expected that
in the case on its merits, the Crown will argue the defence of statutory
authority. However, that is an issue that will have to be resolved at trial.
[20]
For the reasons given in TeleZone, the
Federal Court should have decided Nu-Pharm’s claim for damages without
requiring it to first be successful on judicial review.
V. Conclusion
[21]
I would allow the appeal with costs throughout.
Appeal
allowed with costs.
Solicitors for the
appellant: Goodmans, Toronto.
Solicitor for the
respondents: Attorney General of Canada, Ottawa.