Date: 20031217
Docket: T-1118-00
Citation: 2003 FC 1480
BETWEEN:
APOTEX INC.
Plaintiff
and
THE MINISTER OF HEALTH and
THE ATTORNEY GENERAL OF CANADA
Defendants
REASONS FOR ORDER
LEMIEUX J.:
[1] The issue in this case is whether Apotex Inc. ("Apotex") is entitled to the disclosure of the contents of communications between officials at Health Canada and their legal advisors, through the principle of implied waiver of solicitor-client privilege, when the Minister of Health (the "Minister"), in the defence to an action brought by Apotex, is only relying on the fact of having taken legal advice to explain the delay in issuing a Notice of Compliance ("NOC") and is not relying on what her legal advisors told her officials.
[2] The defendants in this action, the Minister and the Attorney General for Canada, appeal Prothonotary Lafrenière's June 17, 2003 order requiring disclosure of the contents of communications between officials of Health Canada and their legal advisors over which solicitor-client privilege is asserted if they intend to rely at trial on the fact of having sought legal advice to explain, in part, the delay in the NOC's issuance in respect of Apotex' tableted medicine Apo-Oflox (the "medicine"). The Prothonotary put the defendants to an election. The following is the background to the Prothonotary's order.
[3] On June 28, 2000, Apotex sued the defendants in negligence, breach of statutory duty and discrimination because the Minister issued a NOC to Apotex for its medicine eight months after a settlement had been achieved between the patent holder and Apotex, confirmed by Justice Nadon's order of April 29, 1997, and after Apotex says it satisfied, by June 11, 1997, all of the Minister's inquiries on the safety and efficacy of Apotex's new drug submission ("NDS") for its medicine.
[4] In paragraph 34 of that statement of claim, Apotex describes the Minister's unlawful conduct in the following terms:
34. By reason of the Minister's actions as aforesaid, Apotex states that, by refusing to issue an NOC for Apo-Oflox tablets for a period of some eight months without any legitimate basis for doing so in the circumstances described above, the Minister:
(a) failed to carry out his statutory duty under the FDA Regulations;
(b) abused his discretion under the FDA Regulations by refusing to exercise his discretion at all from June 11, 1997 to February 3, 1998;
(c) unlawfully discriminated against Apotex in relation to the approval of other generic submissions based on a non-infringing process;
(d) dealt with Apotex' submission in an irrational and arbitrary fashion; and
(e) acted in bad faith by repeatedly refusing to acknowledge and correct his erroneous position in respect of the Apo-Oflox submission and by failing to deal with Apotex in a full and forthright manner.
[5] The defendants defended on July 28, 2000, asserting no duty of care and, in the alternative, if a duty of care was owed, the Minister acted reasonably.
[6] The defence focusses on what the defendants say was a change by Apotex after Justice Nadon's order in a solvent used to isolate and purify ofloxacin. Apotex disputes that its change in solvents had anything to do with its specific process for the synthesis of Ofloxacin which it had previously disclosed.
[7] Paragraph 8(c) of the statement of defence reads:
8. c. The Minister reasonably decided, on the basis of the evidence before him and given the significant legal and scientific ambiguity of the matter, that the change made by Apotex was a change to the process disclosed by Apotex in the prohibition proceeding within the meaning of the order of Justice Nadon. The Minister exercised reasonable care and acted without negligence in so interpreting the terms of the order. [emphasis mine]
[8] Paragraph 10 of their defence reads:
... he admits that the Minister issued a NOC to Apotex on February 3, 1998, after careful consideration of the submissions made by the plaintiff and a review of the scientific and documentary evidence.
[9] In further answer to paragraph 35 and the statement of claim as a whole, the Minister stated:
12. (a) ...
(b) In the alternative, he says if the defendant did owe the plaintiff a duty of care, which is not admitted, he denies that the defendant breached that duty. Even if the defendant did owe the plaintiff such a duty, which is denied, he says that the Minister acted, at all times, with reasonable care and without negligence. [emphasis mine]
[10] Sheila Hills, the Minister's representative, was discovered on May 29, 2002, with counsel for Apotex exploring the parameters of the defence. It was confirmed that as part of the defence of reasonableness, the Minister would be relying on the deliberations between HPB staff and its legal advisors to explain the delay in issuing the NOC, ie., the substance of the legal consultation. The defendants invoked both solicitor-client and litigation privilege to bar production of certain documents.
[11] However, in her letter of November 19, 2002, counsel for the defendants advised counsel for Apotex as follows:
Finally, however, the remaining documents listed in Schedule II are covered by solicitor-client privilege and for that reason we will not be producing them. We do not share your view that we implicitly waived the privilege with respect to these documents. We did not rely in our Statement of Defence upon any privileged communication to defend against your client's claim, and we wish to correct the answer given at question 394 of the discovery .... We will not be relying, as part of our defence, on the substance of any deliberations and consultations between Health Canada and its legal advisors. [emphasis mine]
[12] Sheila Hills's examination for discovery continued on February 27, 2003. The following exchange occurred at pages 156/157 of the discovery transcript for that day.
MS CROWLEY: [for the defendants] It is our opinion that the fact that Health Canada sought legal advice is not a waiver of privilege. If we had been relying on the substance, then I would see your point. But simply that we took legal advice, the fact that we sought legal counsel is not a waiver of privilege.
... OBJECTION
MR. DE LUCA: [for Apotex] We can disagree about that. I just want it to be clear. You will be relying on the fact that it took time to get either opinions or consult with lawyers as explaining why it took between June of 1997 to February of 1998 to issue the NOC.
MS CROWLEY: Yes.
MR. DE LUCA: Okay. My request stands and you have refused it. [emphasis mine]
[13] The examination for discovery continued and the following specific objections were taken by counsel for the defendants on the basis of solicitor-client privilege, all references are to the transcript of the February 27, 2003 discovery:
(1) At page 159. The content of Sheila Hills' discussion with her legal advisor Stuart Archibald, a conversation which was mentioned in a memorandum she had sent to one of her colleagues on July 13, 1997.
(2) At page 225, the production of a memorandum(s) from J. Sanderson Graham to Stuart Archibald dated December 7, (8), 1997.
(3) At page 226/227, memorandum dated December 12, 1997, from Sheila Hills to Mary Carman.
(4) At page 227, memorandum dated January 5, 1998, from Mr. Graham to Sheila Hills.
[14] Mr. Graham is also a legal counsel at the Department of Justice.
The Prothonotary's decision
[15] The following is the essence of the reasons rendered by Prothonotary Lafrenière in his June 17, 2003 order:
During the course of examinations for discovery, the Defendants undertook not to rely on the substance of the deliberations and consultations with, or advice received from, their legal advisors during the period from June 1997 to February 1998 (the "Relevant Period") as part of their defence of this action. However, the Defendants have recently indicated that they will be relying on the fact of having deliberated and consulted with, and received advice from their legal advisors during the Relevant Period in their defence of this action.
While solicitor-client privilege is fundamental to our justice system in Canada and must be jealously protected, it is not absolute. The privilege may be waived expressly or implicitly in situations where one of the parties makes the communications with counsel an issue in the claim or in the defence - and, particularly with respect to the latter, where such communications are raised to base a defence of reasonableness or good faith (see for example Alberta wheat Pool v. Estrin, [1987] 2 W.W.R. 532, ... aff'd (1987), C.P.C. (2d) (Alta. C.A.) and R. v. Shirose (1999), 171 D.L.R. (4th) 193 (S.C.C.)). This is precisely the case here.
The Defendants seek to rely on the fact of having taken legal advice to, at least partially, ground their defence that the delay in issuance of a Notice of Compliance from June 11, 1997 to February 3, 1998 was reasonable. However, they have refused to answer questions and produce documents relating to the seeking of that advice. The Defendants cannot have it both ways. Either they are relying on their deliberations and consultations with counsel (in any respect), or they are not. If they are, the Plaintiff is entitled to documentary and oral discovery to determine whether the Defendants were acting reasonably. [emphasis mine]
[16] The order Prothonotary Lafrenière made reads in part:
1. The Defendants shall have the opportunity to vary their position and to advise the Plaintiff within 30 days of this order, of such other time as may be extended by the Court, that they will not be relying, in any respect, on their deliberations and consultations with, or advice received from their legal advisors, during the period from June 1997 to February 1998, in their defence of this action. Such advice, if given, shall be in he form of an undertaking to be delivered to the Plaintiff.
2. Failing such undertaking, the Defendants shall answer the following questions, including by way of production of documents, arising from the continued examinations of Sheila Hills on behalf of the Defendants on February 27, 2003.
[17] The Prothonotary's order then lists the objections taken at pages 156, 159, 225, and 227 (twice) referred to previously in these reasons.
THE MINISTER'S POSITION
[18] Counsel for the Minister argues the Prothonotary applied a wrong principle of law when ordering the defendants to disclose the contents of their privileged communications with their legal advisors if they intend to refer to the fact of having sought legal advice to explain the delay in issuing the NOC. The Prothonotary's error, according to counsel to the Minister, is his finding of the fact of having taken legal advice to explain the delay amounted to an implied waiver of the privilege attaching to the contents of the confidential communications and that fairness required disclosure of the contents. In so doing, the defendants say the Prothonotary applied a wrong principle of law.
[19] Counsel for the Minister argues the defendants are not relying on the contents of the legal advice given to defend the plaintiff's claim but are simply alleging that legal consultations took place, that time was required for these legal consultations and that this explains in part the delay in issuing the NOC. In these circumstances, counsel for the Minister says merely citing that communications with legal advisors were made cannot be considered a waiver of solicitor-client privilege.
ANALYSIS
[20] There is no disagreement between the parties on the standard of review I should apply. Both agree that in order to allow the appeal, I must find the Prothonotary was "clearly wrong in the sense that the exercise of discretion... was based upon a wrong principle...". (See Canada v. Aqua-Gem Investments Ltd. (1993), 149 N.R. 273 (F.C.A.), at 297.
[21] Apotex goes one step further since the Prothonotary's order was made in the context of case management. Apotex argues such order should not be disturbed except "in the clearest case of a misuse of a judicial discretion" relying upon the Federal Court of Appeal's decision in Remo Imports Ltd. v. Jaguar Cars Ltd. (2003), 24 C.P.R. (4th) 348, (F.C.A.).
[22] Both parties also recognized that no claim to privilege, even to solicitor-client privilege, is absolute and that such privilege can be waived either expressly or by implication.
[23] What separates Apotex and the Minister, in this case, is in the manner the Prothonotary applied the concept of implied waiver to the facts of this case.
[24] In the case of Hunter v. Rogers, [1982] 2 W.W.R. 189 (B.C.S.C.), Meridith J. approved the following statement in 8 Wigmore, Evidence, (McNaughton Rev.), 1961 cited in Sopinka et al., The Law of Evidence in Canada, at page 666 on what waiver by implication signifies:
As to what constitutes waiver by implication, Wigmore said:
Judicial decision gives no clear answer to this question. In deciding it, regard must be had to the double elements that are predicated in every waiver, i.e. not only the element of implied intention, but also the element of fairness and consistency. A privileged person would seldom be found to waive, if his intention not to abandon could alone control the situation. There is always also the objective consideration that when his conduct touches a certain point of disclosure, fairness requires that his privilege shall cease whether he intended that result or not. He cannot be allowed, after disclosing as much as he pleases, to withhold the remainder. He may elect to withhold or to disclose, but after a certain point his election must remain final.
[25] Justice Ground in Bank Leu Ag v. Gaming Lottery Corp. (1999), 43 C.P.C. (4th) 73 at page 77, wrote the following on the concept of implied waiver of privilege:
¶ 5 Privilege may be waived expressly or impliedly. In the case at bar it is not disputed that there was no express waiver of privilege by GLC. When determining whether privilege should be deemed to have been waived, the court must balance the interests of full disclosure for purposes of a fair trial against the preservation of solicitor client and litigation privilege. Fairness to a party facing a trial has become a guiding principle in Canadian law. Privilege will be deemed to have been waived where the interests of fairness and consistency so dictate or when a communication between a solicitor and client is legitimately brought into issue in an action. When a party places its state of mind in issue and has received legal advice to help form that state of mind, privilege will be deemed to be waived with respect to such legal advice. [emphasis mine]
[26] Justice Ground's decision was upheld by the Ontario Divisional Court, reported at (2000), 132 O.A.C. 130.
[27] The Supreme Court of Canada in Campbell and Shirose v. The Queen (1999), 171 D.L.R. (4th) 193, examined the concept of waiver in the context of a stay application which was opposed by the Crown.
[28] Justice Binnie put it this way at paragraph 2 of the reasons for judgment he delivered on behalf of the Court:
¶ 2 As part of their case for a stay the appellants sought, but were denied, access to the legal advice provided to the police by the Department of Justice on which the police claimed to have placed good faith reliance. The Crown indicated that the undisclosed advice assured the police, rightly or wrongly, that sale of cannabis resin in the circumstances of a reverse sting was lawful. The appellants argue that the truth of this assertion can only be tested by a review of the otherwise privileged communications.
[29] Justice Binnie held the assertion of police good faith was based in part on advice received from the Department of Justice (" DOJ") and the clear implication sought to be conveyed was the R.C.M.P. accepted DOJ's advice and acted in accordance with it. The RCMP made an issue of the legal advice received and the Court concluded the appellants were entitled to have the bottom line of that advice corroborated on the basis the RCMP waived solicitor-client privilege.
[30] At paragraph 47 of his reasons, Justice Binnie stated the RCMP waived the right to shelter behind solicitor-client privilege the contents of the advice thus exposed and relied upon.
[31] The Court went on to examine the B.C. Court of Appeal's judgment in Rogers v. Bank of Montreal, [1985] 4 W.W.R. 508, a case where the bank said it had relied on the receiver's advice in putting the customer into receivership. However, the receiver denied detrimental reliance by the Bank on its advice, and wanted to know what other professional advice it had received at the relevant time. In particular, the receiver wanted to know what legal advice the bank had received from its own lawyers. The bank claimed solicitor-client privilege over that correspondence. The Court denied the Bank of Montreal that privilege.
[32] The Court quoted with approval the words of Hutcheon J.A. in Rogers, supra, who stated at page 513 of the report:
¶ 17 The issue in this case is not the knowledge of the Bank. The issue is whether the Bank was induced to take certain steps in reliance upon the advice from the Receiver on legal matters... . The extent to which the Bank had been advised about that decision, not merely of its result, is important in the resolution of the issue whether the Bank relied upon the advice of the Receiver. [emphasis mine]
[33] Justice Binnie stated as follows about the Rogers case, supra:
It appears the court in Rogers found that any privilege with respect to correspondence with the bank's solicitors had been waived as necessarily inconsistent with its pleading of reliance, even though the bank itself had not referred to, much less relied upon, the existence of advice from its own solicitors.
[34] Justice Binnie went on to conclude as follows as paragraphs 70 and 71 of his reasons for judgment:
¶ 70 The present case presents a stronger argument for waiver than Rogers. The Crown led evidence from Cpl. Reynolds about his knowledge of the law with respect to reverse sting operations -- he testified that he had read the Superior Court decision in Lore, supra, and was of the view that the operation in question was legal. But Cpl. Reynolds also testified, in answer to the appellants' counsel, that he sought out the opinion of Mr. Leising of the Department of Justice to verify the correctness of his own understanding. The appellants' counsel recognized that this alone was not enough to [page235] waive the privilege. Cpl. Reynolds was simply responding to questions crafted by the appellants, as he was required to do. Appellants' counsel accepted that he had no right at that point to access the communications. His comment to the judge was simply that "I certainly don't want to hear the argument that 'Oh well, the police acted in good faith because they acted on legal advice'". The critical point is that the Court did hear that precise argument from the Crown at a later date. The RCMP and its legal advisers were explicit in their factum in the Court of Appeal, where it was argued that "regard must be had to the following considerations . . . (f) the R.C.M.P. . . . consulted the Department of Justice with regard to any problems of illegality" (emphasis added). We understand that the same position was advanced to the trial judge. As Rogers, supra, shows, it is not always necessary for the client actually to disclose part of the contents of the advice in order to waive privilege to the relevant communication of which it forms a part. It was sufficient in this case for the RCMP to support its good faith argument by undisclosed advice from legal counsel in circumstances where, as here, the existence or non-existence of the asserted good faith depended on the content of that legal advice. The clear implication sought to be conveyed to the court by the RCMP was that Mr. Leising's advice had assured the RCMP that the proposed reverse sting was legal.
¶ 71 Cpl. Reynolds was not required to pledge his belief in the legality of the reverse sting operation (comparable to the bank's putting in issue its belief in the correctness of the advice it was obtaining from the receiver in Rogers, supra). Nor was it necessary for the RCMP to plead the existence of Mr. Leising's legal opinion as a factor weighing against the imposition of a stay of proceedings (which went beyond what was done in Rogers). The RCMP and the Crown having done so, however, I do not think disclosure of the advice in question could fairly be withheld. [emphasis mine]
[35] Alberta Wheat Pool v. Estrin et al., a decision by Justice Chrumka of the Alberta Court of Queen's Bench, [1987] 2 W.W.R. 532, is the other case relied on by Prothonotary Lafrenière.
[36] Estrin acted as a solicitor in a real estate transaction and was sued for negligent misrepresentation having provided a letter attached to an offer to purchase that he was holding in trust a bank draft when in fact he only had a non-certified cheque post-dated to the date of closing.
[37] On discovery, he asserted before issuing the letter or a similar one, he had consulted two lawyers, each from a different law firm, and had discussions with them. He was then asked a series of questions by counsel for the plaintiff which related to when the discussions were held, why they were held, and the contents of those discussions. Estrin objected to answering the questions on the ground he was seeking legal advice and those discussions were between a solicitor and a client and, as such, were privileged.
[38] In his statement of defence, Estrin alleged, in the alternative, that if the representations were untrue, they were not negligently or fraudulently made.
[39] Alberta Wheat Pool submitted Estrin had put in issue his intention, the state of his knowledge and the information he had at the time he prepared the letter. Alberta Wheat Pool further submitted that because the denial of fraudulent and negligent behaviour could not be tried in absence of evidence of the legal advice which Estrin received prior to the preparation of that letter, the plaintiff must be entitled to examine upon this aspect. Justice Chrumka agreed. He stated at pages 542-543 as follows:
The Defendant Estrin's assertions that before he prepared the letter of January 18, 1982, he consulted two lawyers and sought legal advice raises the question whether he was induced to write the letter in reliance upon the advice of the two lawyers or either of them. If he was advised by one or both lawyers that the post-dated cheque was not a bank draft and was not in compliance with the offer, and he drafted and sent the letter regardless, this evidence is material to the issue of whether he acted fraudulently or negligently or whether he had an honest belief. During the Examination for Discovery he put forward as a partial basis for his defence the communications with legal counsel. Doing so, in my view, he waived the privilege that would have otherwise attended to the communications... .
In effect what the Defendant Estrin is saying is that he did not act on his own but that he sought and obtained legal advice from two lawyers and that he was relying, at least in part, on that advice when he wrote the letter. Evidence of his knowledge of the law and all the information he had at the time he wrote the letter is relevant to determine the issue as to what induced him to act and decide as he did. By his testimony the Defendant Estrin has voluntarily raised a defence which makes his intention and knowledge of the law relevant and he has thereby waived his solicitor-client privilege.
This case, in my view, involves the question of whether the solicitor-client privilege is waived whenever the communication between the solicitor and the client is legitimately put in issue in the action... .
[40] I do not think the case law supports the proposition advanced by counsel for the Minister that no implied waiver of solicitor-client privilege occurs if a party is not relying on the contents or the substance of the legal advice received.
[41] The cases cited tell us that when determining whether solicitor-client privilege is deemed to have been waived, fairness to a party facing a trial is a guiding principle.
[42] How that element of fairness will be balanced against the values underlying solicitor-client privilege will depend on the circumstances and, in particular, on the underlying pleadings.
[43] This is the approach followed by Prothonotary Lafrenière. In his reasons, he stressed the point the Minister would be relying on the fact of the Minister having taken legal advice to explain the delay in issuing the NOC to Apotex and thereby contribute to proving her actions were reasonable which is the essence of her defence.
[44] I think the Prothonotary was correct in reaching the conclusion he did. In the circumstances of this case, by relying on the fact of taking legal advice necessarily puts in issue the communications between the Minister's officials and her legal advisors in such a way that it would be unfair to shield those communications from disclosure.
[45] Put in another way, by relying on the fact of having asked for and received legal advice to explain the delay the Minister made relevant the contents of the legal advice received entitling Apotex to test whether, how and to what extent the communications between them on the issue of the impact of a change of solvent by Apotex on Justice Nadon's order, in fact, contributed to the delay in issuing the NOC. Apotex cannot get at the bottom of this issue without the disclosure of the contents of the communications between the Minister's officials and her legal advisors.
[46] For these reasons, the appeal from Prothonotary Lafrenière's June 17, 2003 order is dismissed with costs.
"François Lemieux"
J U D G E
OTTAWA, ONTARIO
DECEMBER 17, 2003
FEDERAL COURT
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: T-1118-00
STYLE OF CAUSE: APOTEX INC. v. MINISTER OF HEALTH
PLACE OF HEARING: OTTAWA, ONTARIO
DATE OF HEARING: SEPTEMBER 16th, 2003
REASONS FOR ORDER : THE HONOURABLE MR. JUSTICE LEMIEUX
DATED: DECEMBER 17th, 2003
APPEARANCES:
MR. NANDO DE LUCA FOR PLAINTIFF
MR. ALEX GUAY FOR DEFENDANTS
SOLICITORS OF RECORD:
GOODMANS LLP
2400-250 YONGE ST.
TORONTO, ONTARIO
M5B 2M6 FOR PLAINTIFF
DEPARTMENT OF JUSTICE
BANK OF CANADA BUILDING
ROOM 1222, EAST TOWER
234 WELLINGTON STREET
OTTAWA, ONTARIO
K1A OH8 FOR DEFENDANTS
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