Date: 20091201
Docket: T-697-04
Citation: 2009 FC 1230
BETWEEN:
BAYER AG, BAYER HEALTHCARE AG
and
BAYER INC.
Applicants
and
NOVOPHARM LIMITED and
THE MINISTER OF HEALTH
Respondents
ASSESSMENT OF
COSTS - REASONS
Bruce
Preston
Assessment Officer
[1]
By
way of Reasons for Judgment and Judgment dated March 24, 2006, the Court
granted the application for judicial review and further ordered that the
Applicants (Bayer) shall have their costs and disbursements assessed in
accordance with the top end of Column III of the Federal Court Tariff.
[2]
On
February 21, 2007 Bayer filed a Bill of Costs and on June 1, 2007 they filed an
Amended Bill of Costs. Materials were filed by the parties and after several
adjournments the hearing of the assessment proceeded on September 23, 2009.
[3]
At the commencement of the hearing counsel
were asked if it would be helpful to allow some time for them to discuss the
issues on assessment prior to commencing the assessment. Counsel felt this would
be helpful. Upon resuming, counsel indicated that the parties had proceeded as
far as possible and were able to agree on several Items under assessable
services. The only assessable services which remain outstanding are second
counsel fees under Items 9 and 14(b) and travel by counsel under Item 24.
[4]
With regard to Items 14(b) and 24, in its
Written Submission in response to the Bill of Costs the Respondent Novopharm
(Novopharm) submitted:
The Applicants have improperly claimed
amounts under Items 14 (second counsel) and 24 (travel by counsel to attend a
hearing or examination) of Tariff B. Item 14 contains the limiting words “where
the Court directs”, while Item 24 contains the limiting words “at the
discretion of the Court”. Given the definitions of “Court and “assessment
officer” in the Federal Courts Rules, a specific direction from Phelan
J. would have been required in order for the Applicants to be entitled to
anything under Items 14 and 24. It was open to the Applicants to seek such a
direction, but they did not. Therefore, the Applicants are not entitled to
anything under Items 14 and 24 (reference to Item 14 (second counsel) is taken
as reference to Item 14(b)).
[5]
In
support of this position Novopharm referred to AB Hassle v. Genpharm Inc.
(2004), 34 C.P.R. (4th) 18 at paragraph 22 and Merck & Co. v.
Apotex Inc. 2007 FC 312 at paragraph 6. Each of these decisions held that
absent a specific direction of the Court, Assessment Officers are without
jurisdiction to allow second counsel under Item 14(b) or Travel by counsel
under Item 24.
[6]
In
reply Bayer submitted:
…in the Order granting an entitlement to
costs at the top end of Column III, Justice Phelan contemplated that Bayer had
two solicitors on record, therefore inevitably satisfying the requirement that
the fees for second counsel were directed or were within the discretion of the
Court. It is Bayer’s submission that to seek direction for costs of second
counsel in a separate proceeding would be a waste of judicial resources.
[7]
In
support of this position Bayer’s counsel referred to the order of Prothonotary
Lafrenière dated July 15, 2009 in Nycomed Canada Inc. v. Novopharm
(T-1836-06), which allowed costs for two counsel. In opposition to the decision
in AB Hassle v. Genpharm (supra) counsel referred to International
Brotherhood of Locomotive Engineers v. Cairns 2002 FCA 120, which allowed
travel for counsel.
[8]
I
am in agreement with counsel for Novopharm. It has been held on several
occasions that, absent a clear direction of the Court, an Assessment Officer
has no jurisdiction to allow costs under either Item 14(b) or Item 24. Justice
Phelan in awarding costs at the high end of Column III may have recognised the
work of second counsel; however, he did not award the costs of second counsel.
[9]
In
Nycomed Canada Inc. v. Novopharm (supra) Prothonotary Lafrenière had
jurisdiction to allow second counsel as, pursuant to Rule 2, prothonotaries are
included in the definition of Court. As was submitted by Novopharm, Assessment
Officers are not included in the definition of Court. Further the decision of
Assessment Officer Scott in International Brotherhood of Locomotive
Engineers v. Cairns (supra) pre-dates the finding of Justice
Layden-Stevenson in AB Hassle v. Genpharm (supra). For the above reasons
the amounts claimed under Items 14(b) and 24 are not allowed.
[10]
Although
Novopharm made no written submission as to why Item 9 should not be allowed for
second counsel, at paragraph 11 of its written submission Novopharm includes a
table of amounts that must be deducted from the fees claimed. In this table
Novopharm refers to three claims for second counsel under Item 9. At the hearing
Counsel submitted that Item 9 makes no provision for second counsel and
referred to Abbott Laboratories et al v. Canada(Minister of Health) 66
C.P.R. (4th) 301 paragraph 101:
I allow the various Item 9 claims as
presented for first counsel. I think that the use of second counsel was prudent
and reasonable. However, the scheme of the Tariff providing that a direction of
the Court is necessary to claim second counsel under item 14, for example,
indicates to me that item 9 not containing comparable language means that the
item 9 allowance in intended to be a global fee regardless of the number of
counsel engaged.
[11]
In
its written submissions in reply Bayer submitted:
The fees for second counsel claimed under
item 9 of Tariff B – attendance on cross-examination – is allowable and not
specified by the Tariff to be at the discretion or direction of the Court.
Counsel submitted that the absence of a
provision requiring a direction, as is found in Item 14(b), does not preclude a
claim for second counsel under Item 9. Counsel submitted that it is clear that
second counsel can be claimed under Item 9 and recovered on assessment. Counsel
relied on the decision in Nycomed (supra) which allowed second counsel
under both Item 14(b) and Item 9.
[12]
I
am in agreement with Novopharm. As was found in Abbott Laboratories et al v.
Canada (Minister of
Health)
(supra), the language of Item 9, absent a direction of the Court, is intended
to allow for a global fee, regardless of the number of counsel engaged. My
reasoning concerning Nycomed (supra) in paragraph 9 above, also applies
here. For these reasons, second counsel fee for Item 9 is not allowed.
[13]
Before
addressing disbursements, at the end of the assessment I asked Bayer’s counsel
questions concerning the claims under Item 15 and Item 28 as these issues had
not been discussed. Concerning Item 15, I asked whether he could point me to a
direction or ruling of the Court allowing the preparation and filing of written
argument. Counsel indicated that the only instance was at hearing when a
PowerPoint presentation was provided to the Court. Although I have not seen the
PowerPoint presentation, I do not consider this to be the same as written
argument requested or permitted by the Court, therefore Item 15 is not allowed.
[14]
Concerning
Item 28, services of a student at law, law clerk or paralegal, the only claim
relates to “Maintenance and review of Accounts; Meeting with K. Clark and N.
Rizkalla-Kamel re: drafting of Bill of Costs”. Counsel was asked whether the
Sr. Law Clerk had performed any other duties besides those relating to the Bill
of Costs. Counsel submitted that the work entailed pulling together receipts and
drafting the Bill of Costs. As this work is allowed for under Item 26, Item 28
is not allowed in order to prevent indemnification twice for the same service.
[15]
Bayer
withdrew the claim under Item 4 as there was no award of costs on the motion;
the remaining assessable services are allowed as presented.
[16]
At
the hearing of the assessment counsel reached an agreement on several of the
Applicants’ disbursements. Commencing at page 7 of the Bill of Costs counsel
agreed on the following:
a) disbursements
No. 24 through 31 are allowed for a global amount of $20,000.00;
b) disbursement
number No. 32 is allowed at $1,080.00;
c) disbursements
No. 33 through 36 are allowed as presented;
d) disbursements
No. 38 and 39 are allowed as presented; and
e) disbursement
No. 47 is withdrawn by Bayer.
[17]
The
most contentious disbursement included in the Applicants’ Bill of Costs was the
fee for Dr. George Arcieri, presented at $212,378.22.
[18]
Bayer
included Dr. Arcieri as an expert in their Bill of Costs.
[19]
Counsel
for Novopharm disputed that Dr. Arcieri was an expert and submitted that he was,
in fact, a fact witness, giving evidence concerning who did what, when and
where. However, counsel also submitted that the conclusions at Paragraphs 38
and 39 of the Arcieri affidavit could be construed as opinion.
[20]
Concerning
Dr. Arcirei’s conclusions, Novopharm submitted that regard must be had who he was and what he did. Novopharm
submitted that the work done was as a former employee of Bayer, not as an
expert. In support of this counsel submitted an exerpt from The Law on Costs
Second Edition Volume 1. On page 2-277 it
states:
As to a witness who gives opinion
evidence and also gives evidence pertaining to material facts at issue in the
trial, the general rule has been suggested that “if a witness would, in all
probability, have been called to testify as to knowledge of facts in issue in
the action, that witness should not be treated for assessment purposes as an
expert simply because he or she was also able to give some relevant opinion
evidence.
[21]
By
way of analogy counsel for Novopharm submitted that a doctor who witnesses a
motor vehicle accident is, in fact, a fact witness as he is testifying
concerning the “who, what and where” of the accident, not concerning medical
opinion. Novopharm submitted that as a fact witness the provisions of Tariff A 3(1)
must be applied limiting reimbursement to “$20.00 per day plus reasonable
travel expenses, or the amount permitted in similar circumstances in the
superior court of the province where the witness appears, whichever is the
greater”.
[22]
In
support of this counsel referred to Wellcome Foundation v. Apotex Inc.
40 C.P.R. (3rd) at 376. At page 386 the Court held:
The principle that party-and-party costs should not include
expenses of the successful party in instructing counsel and attending the
hearing, however necessarily they have been incurred, should apply in relation
to fees charged for services as an expert of one who is deemed to be in a
position equivalent to that of an employee of a party.
[23]
Counsel
for Novopharm also referred to Halford v. Seed Hawk Inc 2006 FC 422. At
paragraph 103 it was held:
I acknowledge the shift in circumstances leading to the
involvement of these fact witnesses respected, however, for their special
knowledge in this particular field and which made their potential testimony
prudent and relevant. I have no doubt whatsoever that, without an inducement by
way of payments for their time, counsel for the Seed Hawk Defendants would not
have been able to get them to come within our jurisdiction. That said, I do not
think, regardless of my views of the extent of my jurisdiction or discretion as
a function of various authorities, or even recourse to the remedial provisions
of the Interpretation Act, s. 12, that the
provisions of tariffs cited before me permit me to overcome the application and
limitation of Federal Court Tariff A3(1) regarding fact witnesses, ie. by
permitting the contractual or otherwise expenses for their time. As well, my
decision to limit them to witness fees (the Manitoba allowance) was not influenced by what some might view as their
leveraging of the circumstances: it is all simply beyond my jurisdiction.
[24]
Counsel
submitted that as Dr. Arcieri was a former employee of Bayer, the fee may be
something the Applicants are willing to pay but not something Novopharm should
pay in a party and party assessment.
[25]
In
support of the position that Dr. Arcieri was a fact witness counsel referred to
paragraph 18 of the Reasons for Judgment and Judgment, specifically:
His mandate was to provide his
recollection of the process for developing the i.v. formulation for
ciprofloxacin, specifically with respect to overcoming the problems that were
encountered in developing the i.v. formulations and how solutions were arrived
at.
[26]
Novopharm
also referred to paragraph 20 of the Reasons for Judgment and Judgment,
specifically:
Novopharm attacks Bayer’s fact witnesses,
Drs. Ruhl-Fehlert, Serno and Arcieri because they were employees of Bayer,
working in Bayer’s laboratories on the development of infusion solutions of
Cipro. As such, they did not represent a “person ordinarily skilled in the art”
(sometimes referred to as a “POSITA”) as envisaged by Novopharm.
[27]
In
the alternative Novopharm submitted that, should Dr. Arcieri be found to be an
expert, the amounts charged are outrageous. Counsel pointed to Tab 52 of
Novopharm’s Responding Record and submitted that the invoices are completely
devoid of the evidence needed to justify 340 hours of work. In their written
submission Novopharm submitted:
Dr. Arcieri’s invoices are completely
lacking in the kind of detail that might justify such an exorbitant amount of
time apparently spent by a witness who ultimately filed only a 19-page factual
affidavit and was cross examined out of court for five hours. Mysterious and
vague descriptions such as “Meeting with Mr. Belmore” and “File Review” in Dr.
Arcieri’s dockets fall far short of what is required to demonstrate that such
large expenditures of time were reasonable and justified, especially in the
current context of growing concern over out-of-control expert fees.
[28]
Counsel
for Bayer submitted that he is not contesting that Dr. Arcieri was a fact
witness but submitted that counsel for Novopharm stopped short of indicating
that he was purely a fact witness. Counsel submitted that the entire foundation
of Novopharm’s position is premised on cases that are purely fact witness
cases. Counsel submitted that Novopharm’s contention that paragraphs 38 and 39
of the Arcieri affidavit could arguably be construed as opinion was true and
that Justice Phelan was swayed by those opinions in deciding in favour of
Bayer.
[29]
Bayer’s
counsel submitted that it is not unusual for a witness to fill both roles; it
is more than
common to call a fact witness and have him fulfil the role as expert as well. The
principle issue was that Dr. Arcieri was a person of ordinary skill in the art.
Justice Phelan found that a person of ordinary skill in the art includes a
clinician and Dr Arcieri is a clinician. Dr. Arcieri talked about the studies
as they apply to the patents; he looked at the problems in the first patent (Canadian
Letters Patent No. 1,228,547), talked about them, looked at the problems in the
second patent (Canadian Letters Patent No. 1,282,006) and distinguished them.
Counsel submitted he was performing the role of a person of ordinary skill in
the art; he was an expert.
[30]
Counsel
for Bayer submitted that Dr. Arcieri was not a Bayer employee when he was
retained for the case. This is a distinction from Halford (supra). It was
submitted that the fact witnesses in Halford (supra) were employees.
[31]
Bayer
further submitted that there was no finding that Dr. Arcieri was not an expert.
As evidence that Justice Phelan considered Dr. Arcieri an expert, counsel for
the Applicants referred to paragraph 23 of the judgment which qualified all of
the witnesses as experts. Specifically, the Court states:
All of the witnesses were qualified as
experts. In the absence of direct evidence to the contrary, the Court accepts
that their evidence was truthful. More specifically, the Court rejects the
suggestion that because a witness is paid for his/her expert opinion or has a
long relationship with one of the parties, that his /her evidence will
necessarily be less than forthright.
[32]
In
addition, counsel referred to paragraphs 26, 43, 45, 47 and 50 of the Reasons
for Judgment and Judgment as evidence that Justice Phelan relied on the expert
evidence of Dr. Arcieri and found the evidence of all the Bayer experts
believable, even if he did not refer to them all by name.
[33]
In
reply to Novopharm’s alternate argument, Bayer submitted that the fee of Dr.
Arcieri was not outrageous given what was at stake. In support of this, counsel
referred to Merck & Co. v. Apotex Inc. (supra) at paragraphs 57 and
59. In the Merck decision the expert fee was reduced from in excess of
$1,200.00 per hour to $695.00 per hour. Counsel submitted that in that case the
hourly rate was in question and that is not the situation here. In this case
Novopharm is questioning the number of hours Dr. Arcieri billed. Counsel
submitted that the work of Dr. Arcieri was a legitimate exercise; he was
required to review the path Bayer took 20 years ago and render an opinion. It
was submitted that the test is not the length of the affidavit or cross examination;
the test is whether what was said carries the day.
[34]
Concerning
the sufficiency of the evidence, Bayer’s counsel submitted that the evidence
was not devoid of particulars. The evidence provided an outline of what was done.
Novopharm did not specifically refer to any situations where they claimed
evidence was deficient. In support of this submission counsel for Bayer
referred to the decision in Dableh v. Ontario Hydro [1994] F.C.J. No
1810 at paragraph 15:
The test or threshold, for
indemnification of disbursements such as these, is not a function of hindsight
but whether, in the circumstances existing at the time a litigant’s solicitor
made the decision to incur expenditure, it represented prudent and reasonable
representation of the client both in terms of leading and responding to…expert
evidence and of filling the void of technical expertise requisite to the
solicitor’s preparation and conduct.
[35]
Having
reviewed paragraphs 38 and 39 of the Affidavit of Dr. Arcieri, it is clear that
he was providing opinion evidence. On the other hand, counsel for Bayer has
acknowledged that Dr. Arcieri was a factual witness as well. Faced with this
duality, I must determine, for the purposes of costs, howthe invoices of Dr. Acieri
should be treated.
[36]
Novopharm
has submitted that Dr. Arcieri’s mandate as characterized in paragraph 18 of
the Reasons for Judgment and Judgment suggests that he was a fact witness;
however, from a thorough reading of paragraph 18 in its entirety, it is clear
that the Court is outlining the evidence of the key expert witnesses identified
by the parties. In the first sentence of paragraph 18 the Court states: “the
evidence was largely submitted through experts called on behalf of both sides”
and immediately preceding the summary of Dr. Arcieri’s evidence is the
sub-heading Bayer’s Experts.
[37]
Further
I find the Court’s reference to “fact witnesses”, at paragraph 20 of the
Reasons for Judgment and Judgment, to be a characterization of Novopharm’s
argument. I do not find this to be a determination by the Court. In the event
that I am incorrect in this assertion, when the decision is read in its
entirety, there is no doubt that the Court considered Dr. Arcieri an expert.
[38]
At
paragraph 23 of the Reasons for Judgment and Judgment, the Court clearly made a
finding that all of the witnesses were qualified as experts. At no point does
the Court make a determination which excludes Dr. Arcieri from this finding. Although
it appears that Dr. Arcieri provided evidence which was both factual and
opinion based, the fact that the Court made the above finding is determinative
of the fact that Dr. Acieri should be considered an expert in any determination
of costs.
[39]
Counsel
for Novopharm has characterized the invoices of Dr. Arcieri as being completely
devoid of the evidence needed to justify 340 hours of work. I find this
submission to be harsh. Although, as is usually the situation, it would be preferable
to have a better explanation of the expenses, a thorough review of the invoices
reveals that there was a breakdown of the expenses by event.
[40]
In
reviewing the fees charged by Dr. Arcieri, two matters became apparent. First,
Dr. Arcieri expensed in excess of 56 hours at $500.00/hr for travel. Although
counsel may have felt that this was necessary, given that the Court did not
award counsel fees for travel, I do not find this to be a reasonable expense
for Novopharm to have to reimburse in a party and party assessment. Also, the
invoice of November 1, 2004 includes a notation “split with Bayer v. PPC file
50/50”. In confirming the invoices and taking into account the exchange from US
dollars, it does not appear that this invoice was split.
[41]
Although
I am in agreement with the Applicant that the test is not the length of the
affidavit or cross examination; but rather whether what was said carries the
day, I also agree with the finding in Dableh v. Ontario Hydro (supra)
which held the test was “whether, in the circumstances existing at the time a
litigant’s solicitor made the decision to incur expenditure, it represented
prudent and reasonable representation of the client”. In light of this
decision, I find the sum of 340 hours for the drafting of a 19 page affidavit
to be somewhat excessive. Although, in the preparation of his affidavit, it may
have been necessary for Dr. Arcieri to take the time to review the path Bayer
took 20 years ago, I find that it is not prudent and reasonable for Novopharm
to be required to reimburse the full amount claimed. Having reviewed the
affidavit of Dr. Arcieri and taking into account the success of Bayer at the
judicial review and having deducted 50% of the invoice for November 1, 2004 and
56 hours for travel, I will allow a disbursement for Dr. Arcieri in the amount
of $138,375.00
[42]
Novopharm
makes essentially the same submissions concerning both Mr. Evans and Dr. Brenner.
Counsel submitted that the invoices contained entries for meetings which do not
provide the evidence needed in order to determine that these amounts were
reasonably incurred and were necessary. In support of this, counsel referred to
Les Laboratoires Servier et al v. Apotex 2007 FC 344 where the Court
found that for the purposes of an assessment of costs the category “meeting” is
quite vague.
[43]
Specifically
concerning Mr Evans, in its Written Submissions Novopharm submits:
Dr. Evans’ charges are even more
unreasonable when one considers that it appears that this litigation was not
Dr. Evans’ first involvement with ciprofloxacin I.V. minibags. Dr. Evans’ first
entry on his May 24, 2004 receipt reads “Re-evaluation of documents received
previously from Simmons and Simmons”.
[44]
In
response to Novopharm’s submission that Mr. Evans had prior involvement with
the patents at suit, Bayer submitted:
Dr. Evans was not an expert in another
foreign proceeding on this drug. Novopharm has adduced no evidence that by
reason of Dr. Evans’ possible familiarity with the ciprofloxacin I.V. minibags,
his time to prepare his evidence in this proceeding was excessive. Indeed,
there is no evidence that Dr. Evans did not already reduce his fees due to
possible familiarity, if any, with the ciprofloxacin I.V. minibags.
[45]
Although
Novopharm contends that invoices for Mr Evans are unreasonable due to the
possibility that this is not his first litigation related to ciprofloxacin I.V.
minibags, they have not presented any evidence that this is actually the case.
[46]
It
is clear from the Reasons for Judgment and Judgment that the Court found the
Bayer experts, specifically Mr Evans, to be very persuasive. Having reviewed
the affidavits and invoices for both Mr. Evans and Dr. Brenner I find that in
addition to the entries for meetings there are numerous other entries with
sufficient particularization to determine that these amounts were prudent,
reasonably incurred and necessary, except 18 hours for travel claimed by Dr.
Brenner which will be deducted, as was done with Dr. Arcieri. For these reasons
the disbursement for Mr. Evans is allowed as presented and the disbursement for
Dr. Brenner is allowed at $50,000.00.
[47]
Concerning
Dr. Ball, Novopharm submitted it has no objection to the amount charged except
to the extent that Dr. Ball’s hourly rate of about $440.00 may exceed half the
hourly rate of Bayer’s senior counsel.
[48]
In
response to Novopharm’s submission that Dr. Ball’s fees should be limited to
one half of Bayer’s senior counsel, Bayer submitted:
Novopharm has not demonstrated what the
benchmark for an expert fee should be and the arbitrary suggestion that an
expert’s fees be reduced in the above manner based on one case in the
jurisprudence is unjustified. In the recent assessment of Merck & Co. v.
Canada, the assessment officer allowed an expert hourly rate of $695/hour
plus GST.
Merck & Co. v. Apotex (supra) at paragraph 312
[49]
I
find Novopharm’s argument concerning Dr. Ball to be interesting. They do not
dispute the amount charged but they challenge the hourly rate. I also find it
interesting that the hourly rate charged was not raised for the other experts
who charged the same or more per hour. In fact, Novopharm challenged Dr.
Arcieri’s bill for the number of hours billed but had no apparent concern with
the hourly rate, even though it was higher than that of Dr. Ball. Furthermore,
Novopharm has not produced any evidence concerning the hourly rate of Bayer’s
senior counsel. Bayer is correct in noting that in Merck & Co. v. Apotex
(supra), an hourly rate substantially higher than that of Dr. Ball was allowed.
[50]
Although
I find the disbursement for Dr. Ball to be reasonable and prudent, it is noted
that, once again, the Applicant has included a charge for travel time for Dr.
Ball. I will deduct the time for travel to Canada and for the
reasons stated above, I allow the disbursement for Dr. Ball in the amount of
$30,000.00.
[51]
Concerning
disbursement of $542.52 to the Receiver General of Canada (No. 37
found on page 8 of the Bill of Costs), counsel for Novopharm submitted that the
only receipt provided as proof of payment to the Receiver General was for
$50.00, for the filing of the Notice of Application. It was further submitted
that the Disbursement Report provided by the Applicants does not provide
adequate support to justify that the articles and loan renewals were reasonable
and necessary. Counsel submitted they do not object to the $50.00 filing fee.
[52]
Counsel
for Bayer submitted that the Receiver General disbursements were clearly
indicted by the Disbursement Report printout and the Affidavit in Support
indicated that they were paid to the Receiver General and relate to filing of
documents or photocopying of court records. Counsel referred to Pharmacia
Inc v. Canada (Minister of
Health and Welfare) [1999] F.C.J. No. 1770 at paragraph 55 in
support of the submission that copies of printouts from a law firm’s accounting
reports are sufficient evidence of expenditures.
[53]
I
agree with counsel for Bayer that, as was found in Pharmacia Inc
(supra), the process of an assessment is rough justice, compounded of much
sensible approximation. I also agree that a party should not be placed in the
position of having to incur greater expense to prove costs than the costs intended
to be recovered. There is, however, an obligation to provide evidence which is
consistent. Counsel has submitted that the fees to the Receiver General were
for filing of documents and photocopying of court records. Having reviewed the
printout I was able to confirm the filing fee, however other expenditures were
for articles and loan renewals. I was not able to locate any expenditure for
photocopying court records. There may well be an issue with the method of
recording the law firm’s disbursements, however, the evidence required to
persuade me that the disbursements to the Receiver General, other than the
filing fee, were reasonable and necessary, is lacking. I will allow this
disbursement at $50.00.
[54]
Concerning
disbursements for legal research and texts (No. 48 to 51 found on page 8 of the
Bill of Costs), counsel for Novopharm submitted that the amount of $3,581.03 for
books, texts and legal research seems exorbitant. Counsel referred to Biovail
Corporation v. Sandoz Canada Inc. 2007 FC 767 in
support of their submission that: “Bayer’s materials do not offer any
assistance to the Assessment Officer in determining “whether all, none or only
part of the research was reasonably necessary, irrelevant or simply in the
nature of cautionary or secondary authorities”. Counsel also referred to Aventis
Pharma Inc. v. Apotex Inc. 2009 FC 51, Abbott (supra) and Pharmacia
Inc. (supra) in support of a reduction of the disbursement for legal
research when faced with “bare-bones” printouts of what online computer
searches cost. Novopharm submitted that this amount should be reduced to
$500.00.
[55]
Counsel
for Bayer responded that in the cases Novopharm referred to, the reason for a
reduction in online research was a lack of evidence that the charges were
strictly for the case under assessment. It was submitted that in the present
case the disbursement record indicates the code for the particular file and
there is no reason to say they were incurred for another file. Furthermore, the
case law submitted by Novopharm included charges of $3,000.00, an amount not
dissimilar to the present case. Counsel submitted that it is a fact of life
that this is the way legal research is now conducted.
[56]
Online
legal research is indeed a fact of life. Although I have been able to confirm
that the on-line research relates to this file, having reviewed the
Disbursement Record of Bayer, it appears that multiple search engines
(Quicklaw, Westlaw and Lexis Nexis) were used on the same dates. As was found
in Abbott (supra) this is excessive and duplicative. I will allow
$2,400.00 for reasonable and necessary legal research.
[57]
For
the reasons that follow, disbursements for travel and meeting expenses (No. 40
to 46 found on page 8 of the Bill of Costs), claimed at $121,259.83 are allowed
at $97,991.46.
[58]
As
a preliminary point I will not be allowing telephone, parking and car rentals.
Bayer has already claimed long distance telephone calls and has not provided
any evidence which would convince me that, in a party and party assessment,
these expenses were reasonable and necessary to the litigation process.
[59]
Concerning
the other expenses, since argument addressed these disbursements according to
meetings with witnesses and client, I will follow the same approach where
practical. There are, however, some disbursements which do not fit neatly into
this approach, and these will be addressed separately.
[60]
Counsel
for Novopharm submitted that the meetings with Dr. Arcieri, Dr. Ball, Dr.
Brenner and Mr. Evans were excessive in number (Arcieri – 7 trips, Ball – 2
trips, Brenner – 2 trips and Evans - 2 trips). It was submitted that none of
these expenses should be allowed; there is no evidence that what was
accomplished at those meetings could not have been done using telephone calls,
videoconferencing, faxing, e-mails and couriers. Counsel submitted that none of the
associated expenses should be allowable because there is no evidence that would
justify why there was a need to have so many in‑person meetings for a matter
that would proceed to hearing based on written evidence as opposed to a hearing
with oral testimony from witnesses. In the alternative, counsel submitted that
the expenses are excessive (Arcieri - $25,138.07, Ball - $20,888.10, Brenner -
$7,702.50 and Evans - $19,072.57).
[61]
Counsel
for Novopharm submitted that the two meetings with Dr. Ball in Javea, Spain were
unjustifiable expenses as Dr. Ball swore his affidavits in Clachan
Seil, Scotland, the location where he resides.
[62]
At
paragraph 20 of their written submissions in reply Counsel for Bayer submitted:
Novopharm contests a majority of the
costs of these disbursements on the basis that there was no evidence that what
was accomplished at those meetings could not have been done using telephone
calls, video conferencing, faxes, emails and couriers. It is submitted that
given the complexity of the technical issues and the volume of prior
art/affidavit evidence that needed to be reviewed by each witness, as evidenced
in Justice Phelan’s reasons for judgement under the conclusions found for each
expert, it is apparent on its face that the meetings with experts were not
conductive to telephone calls emails etc.
[63]
Concerning
the trips to Spain to meet with
Dr. Ball, counsel for Bayer submitted that Dr. Ball is retired and spends the
winter months at his home in Spain. It was submitted that, as the meetings
were held in our winter time, they were held where he lives.
[64]
I
will commence with Dr. Ball. Having reviewed the evidence produced and the
Affidavit of Dr. Ball, I accept the explanation of counsel for Bayer. The trips
to Spain were in
April and November and the Affidavit was sworn in June. Given that Dr. Ball is
retired, the discrepancy in locations is explained by a winter home in a warm
climate.
[65]
When
dealing with decisions concerning the conduct of a proceeding I must be mindful
of the decision in Carlile v. Canada (Minister of National Revenue - M.N.R.) [1997]
F.C.J. No. 885 at paragraph 5, which held:
Ultimately, the Federal Court of Appeal was not unanimous in
disposing of the issues but the measure for this and any item is not applied
in hindsight but rather as the gauge of the effort required at the time for
prudent representation of the client. This must be balanced against the
notion that litigants need not indemnify their opponents' professional
representatives to educate themselves generally on the law as opposed to the
permissible research relevant for the subject litigation (emphasis added).
[66]
Having regard to the above, I am in agreement with counsel for
Bayer that,
given the complexity of the technical issues and the volume of prior
art/affidavit evidence that needed to be reviewed by each witness, what was
accomplished at those meetings could not have been done using telephone calls,
videoconferencing, faxing, e-mails and couriers. The determination of the best
method of proceeding must be made at the time without the benefit of hindsight.
Therefore,
I will allow all of the trips to meet with witnesses, however, the quantum of
the disbursements relating to these trips is an amalgam of the various
disbursements addressed below.
[67]
Counsel
for Novopharm submitted that all flights in business class must be reduced by
half as Novopharm should not be made to reimburse Bayer for business class
travel. In support of this counsel referred to Dableh (supra) at
paragraph 20:
The issue of economy versus business or first class fares has
arisen on occasion and resulted in the approval of economy fares with
commentary to the effect that they should be the norm. This item is of
particular relevance for this Court being uniquely national with sittings in
all provinces and territories. Fare savers come in a variety of forms usually
with penalty clauses of varying severity. Given the volatility at times of
legal schedules and the need for adjustments on short notice, and the point was
not argued before me, I am not yet convinced that they should be the norm. I
allow the economy fare.
[68]
Counsel also referred to Astrazeneca AB v. Apotex Inc 2009 FC
822 at paragraph 43 and Pharmacia (supra)
at paragraph 42 to support this position. It was acknowledged that the reasons in
Goodman Yachts LLC v. Penguin Boats International Ltd. 2002 FCT 1168 at
paragraph 4, held:
The
length of a flight and the circumstances may mandate business class travel. To require a person to travel
through many time zones and then require that person, as a witness to get his
or her act together, after minimal rest, is unreasonable. It does not allow the
witness to properly represent his principal. Here, business class travel is in
order
It was submitted, however, that this may be
distinguished from the present case as the person whose business class travel
was reimbursed there was a witness.
[69]
At
paragraph 6 in the Affidavit of Anna Hucman counsel for Novopharm submitted a
list of fare codes for various classes of air travel. These codes have created
significant debate as to their accuracy. As indicated at the hearing, I have
been able to confirm that the codes submitted are generically used by many
airlines, including Air Canada, the airline used by Bayer for the majority
of their flights.
[70]
Counsel
for Bayer submitted that all domestic flights and flights to New York and Philadelphia were economy
class fares. It's
commonly recognized that the practice is to work during flights. As these matters
are under protective orders it is not feasible to work on them in economy class
due to the proximity of other passengers. Counsel further
submitted:
The overseas flights to meet the experts
were arranged so that multiple witnesses could be visited within the same trip
where possible. The flights overseas were mostly business class. Bayer submits
for the assessment officer’s discretion that the length of the flights and the
circumstances of assisting to prepare technical affidavit evidence and
preparing witnesses for cross-examination over a short amount of time mandates
business class travel. Not only does counsel have to be “on” when meeting
witness, it needs to be able to work on the flights to be prepared for the
meetings with the experts.
[71]
Counsel
referred to Goodman Yachts (supra) in support of this arguing that in the circumstances of long
distance travel, there should not be a distinction between a witness and a
lawyer when both are critical to the case.
[72]
It
has been held several times that full fair economy class is the accepted
practice: Dableh (supra); Astrazeneca (supra); Pharmacia
(supra); Fournier Pharma Inc. v. Canada (Minister of Health) 2008
FC 929;
Almecon Industries Ltd. v. Anchortek Ltd. 2003 FC 1298; Korea
Heavy Industries & Construction Co. v. Polar Steamship Line 2002 FCT 1041. I have reviewed the electronic tickets for the
various flights. The flight of January 25, 2006 from Toronto to Vancouver and return
for Mr. Belmore was a business class domestic flight and is allowed at a
reduced amount of $1,560.00, an amount comparable to a full fare economy
ticket. The other domestic flights and the flights to New York and Philadelphia were full
fare economy tickets and are allowed as submitted.
[73]
Concerning
the international travel, the overseas flights were all claimed as business
class. I am of the opinion that overseas flights of a duration exceeding six
hours may be distinguished from longer domestic flights of substantially
shorter duration. In Goodman Yachts (supra), Prothonotary Hargrave
allowed business class fare for the overseas flights of a witness. Counsel for
Bayer has presented a convincing argument and I find that the reasoning in Goodman
Yachts (supra) should apply to counsel. For the above reasons and in the
circumstances of this particular case, business class fares are allowed for all
international flights.
[74]
Counsel
for Novopharm submitted that Bayer’s counsel have an office in Vancouver and “there
was therefore no need to book a conference room at the Wedgewood Hotel in
Vancouver at a cost of $2,910.32 so that counsel for Bayer could have the
luxury of avoiding having to travel between their hotel and their firm’s
Vancouver office”.
[75]
In
reply counsel for Bayer submitted that the meeting room expenses were real
costs that were reasonably incurred; it was a three-hour time change and they
were living and working in their hotel, which was close to the court. Counsel explained
that they were running the case from their home office in Toronto with people
doing the research and contacting them. It was contended that it is
unreasonable to apply a hindsight approach to out-of-town case preparation.
[76]
In
my view, this is not a situation where the finding in Carlile (supra) applies.
I am in agreement with Novopharm concerning the rental of a meeting room. Counsel
for Bayer submitted that they were running the case from their home office in Toronto with people
doing the research and contacting them. Here the case preparation could have
been accomplished from Gowling’s Vancouver office without the need
to rent meeting space and equipment. Although I understand and can fully
appreciate the convenience of conducting the case from the hotel, this is not
an expense that is reasonable and necessary in a party and party assessment.
The disbursements for meeting expenses have been reduced by $2,910. 32.
[77]
Counsel
for Novopharm relied upon Janssen-Ortho Inc. v. Novopharm Ltd 2006 FC
1333 at paragraph 24 and Allied Signal Inc. v. Dopont Canada Inc.
(1998), 81 C.P.R. (3rd) 129 at paragraph 111, to support his
contention that it is inappropriate to include expenses for a client in a Bill
of Costs.
[78]
Counsel
for both parties agreed that the amounts claimed for Dr. Kirsch should be
deducted from the Bill of Costs. Having reviewed the chart found at paragraph
31 of Novopharm’s Written Submissions, and having reduced the amounts claimed
for Dr. Kirsch by the factors agreed upon, travel expenses for meals have been
reduced by $1,725.00.
[79]
Novopharm
has submitted that there should be a 25% reduction of Bayer’s total amount
claimed in this proceeding. It was submitted that after commencing this
proceeding Bayer commenced a proceeding against Pharmaceutical Partners of
Canada (PPC) relating to the same two patents for the same drug. Since there
was significant overlap in the timing between the filing of the reply
Affidavits in this proceeding and the Affidavits filed in the PPC proceeding.
It was submitted that Bayer has exhibited some awareness of this overlap as
some of the expenses on the expense report bear the notation “split 50/50 with
PPC”. Counsel further submitted that Bayer settled the PPC proceeding without
costs leading to the irresistible inference that this assessment is being used
as a vehicle for Bayer to recover costs that would be recoverable from PPC.
[80]
In
its written submissions counsel for Bayer submitted:
Bayer has split up costs between the two
files where appropriate and this can be evidenced on pages 193, 258, 328 and
337 of Novopharm’s own motion (sic – assessment) record. Novopharm cannot
presume without evidence that Bayer’s work in the Novopharm matters are easily
transplanted into the other matter.
[81]
Bayer
submitted that at paragraph 30 of Biovail (supra) the Assessment Officer found that previous work should have made
the work on a subsequent file somewhat more straightforward. Counsel submitted
that this is not the case here as this was the case leading the other.
Counsel’s final submission was that it is disingenuous, without evidence, to
suggest that Bayer falsified entries and is using this assessment “as a vehicle
for Bayer to recover costs that would be recoverable from PPC”.
[82]
I
am not convinced that there should be a 25% reduction of Bayer’s total assessed
Bill of Costs. I agree with counsel for Bayer that the circumstances in the Biovail
(supra) proceeding are different than in this case. If the PPC case had
continued on to trial, the work on this file may have had the affect of
rendering the work on the PPC file more straightforward, but that is not at
issue here.
[83]
In
Milliken & Co. v.
Interface Flooring Systems (Canada) Inc. 2003 FC 1258 it was held:
As noted above, the apportionment of costs as an approach in a bill of costs, to address
work done relative to various awards of costs, is acceptable, but I must keep
in mind that these awards were made independent of one another. That is, I am
not necessarily bound to apply apportionment.
[84]
What
Novopharm is proposing is not an apportionment of costs but the principle is
similar. There has been an award of costs in this file and the PPC file was settled
without costs. The two files are independent and will be treated as such.
[85]
On
the other hand, I have attempted to confirm, without success that the amounts
Bayer has indicated were split between the two files were split on the Bill. As
mentioned in paragraph 34 the split did not appear to have been executed for
Dr. Arcieri’s bill. I have also reviewed travel disbursements. There appears
to be a discrepancy between the Disbursement Summary Report and the Bill of
Costs. As the disbursements which relate to both files relate to travel and
meetings the final assessed disbursement for travel and meetings has been
reduced by 10%.
[86]
Counsel
for Novopharm referred to Janssen-Ortho (supra) where it was held by the
Court that “no alcohol, movies or entertainment expenses may be allowed” to
support his claim that the $355.01 claimed by Bayer should not be allowed as
it relates to alcoholic beverages.
[87]
In
Written Submissions counsel for Bayer submitted that $200.00 of the amount
Novopharm is challenging was not included in the Bill of Costs. At the hearing
counsel submitted that the consumption of alcohol with dinner is a part of
normal life and consequently, the cost of alcohol should not be distinguished
from the cost of the meal.
[88]
I am in
agreement with counsel for Novopharm. Disbursements for alcoholic beverages
having been challenged, even during meals, are not reasonable and necessary on
a party and party assessment. The amount allowed for meals has been adjusted
accordingly.
[89]
I
will allow GST in the amount of $2,227.39 for fees and $9,678.23 for
disbursements.
[90]
Bayer
having requested interest on its Bill of Costs and neither party having made
submissions concerning interest, interest is allowed, pursuant to Section 37
(1) of the Federal Courts Act, from the date of judgment. Interest
shall be calculated according to the laws relating to interest on judgments in
causes of action between subject and subject that are in force in the Province of Ontario.
[91]
Further
to these reasons, the Bill of Costs presented at $605,293.01 is allowed for a
total amount of $483,860.04. A certificate of assessment will be issued.
“Bruce Preston”
Toronto, Ontario
December 1, 2009
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