Apotex Inc. v. Canada, 2004 FC 1598

20041115

Docket: T-485-02

Citation: 2004 FC 1598

Ottawa, Ontario, November 15, 2004

Present:           THE HONOURABLE MR. JUSTICE KELEN                              

BETWEEN:

                                                                  APOTEX INC.

                                                                                                                                               Plaintiff

                                                                                                                                   (Moving Party)

                                                                           and

             HER MAJESTY THE QUEEN, BRISTOL-MYERS SQUIBB CANADA INC.

                                        and BRISTOL-MYERS SQUIBB COMPANY

                                                                                                                                           Defendant

                                                                                                                            (Responding Party)

                                            REASONS FOR ORDER AND ORDER

[1]                This is a motion by Apotex Inc. to appeal parts of the Order of the learned Prothonotary dated June 24^th, 2004 that the witness, Ms. Mercier does not have to answer the following three groups of questions:

(1)         34, 37, and the question on page 13 (lines 4-8);

(2)         87-88; and,

(3)         132, 133 and 135, and the question at page 42 (lines 7-21).

[2]                The motion was originally before Mr. Justice von Finckenstein in September 2004. He adjourned the portion of the motion that is currently before me until the second Monday after the Court of Appeal rendered its decision in Apotex Inc. v. Eli Lilly and Company and Eli Lilly Canada Inc. 2004 FCA 358. The Court of Appeal rendered its decision on October 27, 2004.

[3]                The underlying litigation can be described briefly. Apotex commenced an action against the Crown, Bristol-Myers Squibb Canada Inc. ("BMS Canada") and Bristol-Myers Squibb Company ("BMS US") in March 2002. Apotex claims damages from the Crown caused by the Minister of Health's delay in approving Apotex's new drug, Apo-Pravastatin. Apotex also claims damages or an accounting of profits against the BMS defendants pursuant to section 8 of the Patented Medicines (Notice of Compliance) Regulations SOR/93-133.

STANDARD OF REVIEW

[4]                The standard of review to be applied on an appeal from a Prothonotary's order was set out in The Queen v. Aqua-Gem Investments [1993] 2 F.C. 425. Last year, this test was modified by the Federal Court of Appeal in Merck & Co. V. Apotex Inc., (2003), 315 N.R. 175 per Decary J.A. at paragraph 19:

Discretionary orders of Prothonotaries ought not to be disturbed on appeal to a judge unless:

(a) the questions raised in the motion are vital to the final issue of the case, or

(b) the orders are clearly wrong, in the sense that the exercise of discretion by the Prothonotary was based upon a wrong principle or upon a misapprehension of facts.

[5]                Consequently, the Court should not intervene with the Prothonotary's decision simply because it would have come to a different conclusion. If, however, the decision is clearly wrong or the questions are vital to the final issue of the case, then the Court must consider the issues de novo.

ANALYSIS

Federal Court of Appeal Decision

[6]                The Federal Court of Appeal in Apotex Inc. v. Eli Lilly and Co., supra, at paragraphs 13 and 14 held that the US parent of a Canadian patent drug company might be a "first person", and therefore a proper defendant under section 8 of the Regulations and that this is a question which involves issues of law and fact that cannot be determined without a trial. The Court of Appeal held whether a US parent is a "first person" is a "sufficiently difficult legal question to require a trial". Accordingly, the relationship between BMS Canada and BMS US is a relevant line of questioning.

First Group of Questions

[7]                The first group of questions (34, 37 and page 13, lines 4-8) relate to whether BMS Canada and another company, Linson Pharma ("Linson") have common officers, directors and employees. The Prothonotary ruled that these questions were irrelevant, although she did not provide any reasons. While BMS maintains its position that question 37 and page 13, lines 4-8 are irrelevant, they have agreed to answer these questions under the reserve of their objection.

[8]                Apotex claims that this question is relevant because it seeks to establish whether Linson is controlled by BMS Canada. In turn, the relationship between Linson and BMS Canada is important because Apotex alleges that it has lost profits because BMS pre-emptively launched its own generic product through its front company, Linson, during the period that Apotex was delayed from entering into the market.

[9]                Apotex argues that the Prothonotary erred in principle when she declined to order Ms. Mercier to answer the first group of questions because she had already accepted that the relationship between the two companies was relevant. For example, she ordered Ms. Mercier to advise whether Linson is related to BMS Canada and what the corporate relationship is between the two parties. The purpose of the question still in issue is to identify whether there are any employees in common between the two companies. In my view, this question is relevant because the relationship between Linson and BMS is raised in the pleadings.

Second Group of Questions

[10]            The second group of questions that Apotex seeks to have answered actually consists of one question (87-88) which the Prothonotary ruled was hypothetical. The question is:

If BMS Canada made a preliminary decision to commence prohibition proceedings in response to a notice of allegation, to advise whether BMS U.S. could veto this decision.

[11]           Ms. Mercier answered that "she did not know" and that she could not think of an example where it had happened. BMS argues that the question is hypothetical because it requires the witness to speculate.

[12]           In the present case, the witness did not know of an instance where BMS U.S. had vetoed the decision of BMS Canada in respect of prohibition proceedings, and there was no established practice from which Ms. Mercier could formulate an answer. If the power of the US parent to veto such a decision is specified in a policy somewhere, the question is one of fact, and BMS is obliged to correct the answer on the record. However, if the power to veto is not specified, so that the question would require the witness to speculate, the witness is not required to answer further. BMS Canada must advise Apotex in this regard.

Third Group of Questions

[13]           The third group of questions (132, 133, 135 and page 42, lines 7-21) relate to the involvement of BMS U.S. in the conduct of prohibition proceedings commenced in the name of BMS Canada. The Prothonotary ruled that all of the questions are privileged and that question 132 is also irrelevant.

[14]           In support of the Prothonotary's decision, BMS argues that the third group of questions is irrelevant as well as being privileged. It argues that it does not matter whether BMS U.S. was involved in the litigation of BMS Canada because BMS U.S. cannot be sued under the Patented Medicines (Notice of Compliance) Regulations, for damages or profits because it is not a "first person" as defined in those Regulations. The decision of the Court of Appeal in Apotex v. Eli Lilly, supra, undermines that assertion. Accordingly, the only question that needs to be addressed by this Court is whether the third group of questions is privileged.

[15]           The questions at issue are:

132 - To advise, whether, other than Ms. Esposito, anyone at BMS Canada was involved in drafting or reviewing any of the motion materials or the application materials filed in the prohibition proceeding that bore Court File No. T-2020-99. [Ms. Esposito swore an affidavit].

133 - To advise whether General Counsel at BMS U.S. was involved in the drafting or reviewing of the materials filed in the prohibition proceeding that bore Court File No.

T-2020-99.

135 - To advise whether documentation (such as memoranda or e-mails) is generated as part of the "collaborative effort" that goes into deciding whether a prohibition proceeding will be commenced in response to a notice of allegation.

Page 42, lines 7-21 - If such documentation is generated, to produce any such documents that are not covered by solicitor-client privilege and, for those documents that are privileged, to provide a list of the documents.

[16]           Apotex argues that its questions do not seek to discover the substance of any communication between solicitor and client. Rather, it wants to know who was involved in preparing and reviewing materials for a specific case and whether there were correspondences between the BMS U.S. and BMS Canada in relation to that litigation.

[17]           BMS argues that the principles of privilege should be broadly construed. Consequently, it should not be forced to reveal who worked on the pleadings nor should it be required to advise whether documentation was generated between the two companies in deciding whether to proceed with the litigation.

[18]           I agree with BMS that privilege is to be construed broadly. As the Court of Appeal noted in Samson Indian Nation and Band v. Canada, [1995] F.C.J No. 734,

Privilege has gradually been given a particularly broad scope. Solicitor-client privilege, therefore, is not to be interfered with except to the extent absolutely necessary, and any conflict should be resolved in favour of protecting confidentiality.

[19]           While solicitor-client privilege should be given broad application, it is important to recognize that the privilege is an evidentiary rule that protects communications between a client and his solicitor for the purpose of obtaining legal advice. It does not protect physical objects, facts that exist independent of a communication or acts of counsel. See Stevens v. Canada (Prime Minister) (1998), 228 N.R. 142. Accordingly, it is possible that the information sought by Apotex concerning the extent to which BMS lawyers were involved in the application for prohibition is not a matter covered by solicitor-client privilege, but simply an issue of "confidentiality". Confidentiality is a much broader concept than privilege and it is prone to more exceptions. Confidentiality is an ethical obligation that prevents a lawyer from disclosing any information about his client, including the fact that the lawyer has been consulted or retained.

[20]           Although solicitor-client privilege and confidentiality are different concepts, both belong to the client in the sense that only the client may waive his right to privilege or confidentiality. In the present case, I am satisfied that BMS has waived its rights concerning the identity of the lawyers who worked on the application materials. During the examination for discovery, Ms. Mercier deposed that both BMS US legal counsel as well as persons at BMS Canada instruct Canadian counsel once a notice of allegation is received. In my view, she "opened the door" to allow Apotex to specifically ask whether BMS US Counsel or persons at BMS Canada worked on the materials in the litigation at issue. These questions are relevant to the relationship between BMS US and BMS Canada and they do not seek to obtain the substance of lawyer-client communications. Consequently, questions 132 and 133 should be answered by Ms Mercier.

[21]           I am equally satisfied that Ms Mercier should be required to answer question 135. This question does not seek to obtain the substance of solicitor-client communications, but simply asks whether documentation is generated as part of the "collaborative effort" between BMS US and BMS Canada in deciding whether to commence a prohibition proceedings.

[22]           With respect to the question on page 42, lines 7 - 21 these documents are privileged because they concern specific solicitor-client communications. Accordingly, a list of these documents does not have to be provided. In support of its position that the list of documents should be produced, Apotex cited Blank v. Canada (Minister of the Environment), [2001] F.C.J. No. 1844 in which the Court of Appeal found that basic information such as the date and title of a privileged document should be disclosed. That case is distinguishable because it involves the Access to Information Act, R.S.C. 1985, c. A-1 which specifically provides that the government is required to disclose non-privileged portions of a privileged document. Moreover, the Access to Information Act, by its very nature, is to be given a liberal interpretation so that as much as possible is disclosed. In the present case, there is no legislative requirement that BMS disclose portions of its privileged documents and, thus, the principle of solicitor-client privilege should be construed broadly in its favour.

                                                                      ORDER

THIS COURT ORDERS THAT:

The appeal is allowed with costs, and the witness, Ms. Mercier, is required to answer the first group of questions as well as questions 132, 133 and 135 of the third group of questions. With respect to the second group of questions, BMS is obliged to correct the witness' answer if it is not correct, i.e., if BMS US has a policy to veto the preliminary decision in question.

                                     "Michael A. Kelen"                                                                                                        _______________________________

          JUDGE

                                                             FEDERAL COURT

                                                     SOLICITORS OF RECORD

DOCKET:                               T-485-02

STYLE OF CAUSE: APOTEX INC. v.

HER MAJESTY THE QUEEN,

BRISTOL-MYERS SQUIBB CANADA INC. and

BRISTOL-MYERS SQUIBB COMPANY

PLACE OF HEARING:         TORONTO, ONTARIO

DATE OF HEARING:           NOVEMBER 8, 2004

.                                               

REASONS FOR ORDER

AND ORDER BY:                 THE HONOURABLE MR. JUSTICE KELEN           

DATED:                                  NOVEMBER 15, 2004

APPEARANCES:

SOLICITORS OF RECORD:

                         FEDERAL COURT

                                                         Date: 20041115

                                                      Docket: T-485-02

BETWEEN:

APOTEX INC.

Plaintiff

(Moving Party)

and

HER MAJESTY THE QUEEN,

BRISTOL-MYERS SQUIBB CANADA INC., and BRISTOL-MYERS SQUIBB COMPANY

Defendants

                                                   (Responding Party)

REASONS FOR ORDER

AND ORDER