Date: 20091002
Docket: T-1965-05
Citation: 2009 FC 1003
BETWEEN:
SANOFI-AVENTIS CANADA INC.
Applicant
and
NOVOPHARM LIMITED and THE
MINISTER OF HEALTH
Respondents
and
SCHERING CORPORATION
Respondent/Patentee
ASSESSMENT OF
COSTS – REASONS FOR DECISION AND DECISION
Bruce
Preston
Assessment Officer
[1]
At
issue in the matter before me are two preliminary questions:
1.
A ruling as to whether Schering Corporation
(Schering) was jointly and severally responsible for the costs awarded to
Novopharm.
2. Having regard to the
decision by Sanofi to appeal my decision on question 1 above, how should the
assessment of costs proceed.
Background
[2]
On
May 8, 2006 the Court, Milczynski P., dismissed the motion of the Respondent
Novopharm Limited (Novopharm) for an order dismissing the application (NOC)
pursuant to subsection 6(5) (b) of the Patented Medicines (Notice of
Compliance) Regulations SOR/93-133
(NOC Regulations). On September 25, 2006 the Court, Tremblay-Lamer
J. granted Novopharm’s appeal of the order of May 8, 2006, dismissing the NOC
application as an abuse of process, the whole with costs. By way of
judgment dated April 23, 2007, the Federal Court of Appeal dismissed Sanofi-Aventis
Canada Inc.’s (Sanofi), appeal of the order of September 25, 2006, with costs.
[3]
Further
to submissions of the parties, on January 18, 2008 the Federal Court of Appeal
ordered that “costs will be awarded in favour of Novopharm Limited against
Sanofi-Aventis Canada Inc. and Schering Corporation to be assessed by the
Assessment Officer at the middle of column III in Tariff B for one counsel and
one junior counsel for the preparation and attendance at the hearing of the
appeal”.
[4]
Further
to the motion of Novopharm filed December 7, 2007, on January 22, 2008 the
Court, Tremblay-Lamer J. directed “that costs of this proceeding should be
assessed at:
i)
at
the high end of column IV, Tariff B;
ii)
including
disbursements for expert witness fees;
iii)
for
one senior counsel and one junior counsel at the hearing of each motion;
iv)
for
two counsel preparing respondent’s evidence; and
v)
the
costs of this motion.”
[5]
The
hearing of the assessment of costs was scheduled to commence on September 17,
2009 in Toronto. 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 for all
parties felt this would be helpful. Upon resuming, counsel indicated that the
parties had proceeded as far as possible without a ruling as to question 1
above. Counsel made submissions as to the liability of Schering and an oral
decision was rendered finding that Schering was not jointly and severally liable
for the costs of Novopharm.
[6]
Faced
with the above decision the parties attempted to resolve outstanding issues.
When it became apparent that this was not possible due to the possible appeal
by Sanofi, I was asked to make a finding as to how the assessment should
proceed. After submissions from counsel an oral decision was rendered
adjourning the assessment pending decision on any appeal.
[7]
The
following are my reasons for decision and decision relating to questions 1 and
2 above.
Liability of Schering
[8]
On the liability of Schering, counsel for
Novopharm indicated that they had no substantive submissions to make other than
to submit that Novopharm was the successful Respondent entitled to costs and
that Schering made submissions at the hearing of the motion and subsequent
appeals.
[9]
Counsel for Sanofi acknowledged that the
order dismissing the application and the direction as to costs do not
specifically grant costs against Schering. It was further acknowledged that
Schering as Respondent/Patentee is not an Applicant but is required to be added
as a Respondent pursuant to section 6 (4) of the NOC Regulations. It was
submitted that the Respondent/Patentee has interests in the proceeding not
necessarily identical to the applicant’s and is fully entitled to represent its
independent interest in the proceeding. In support of this argument Sanofi
referred to Sepracor Inc. v. Schering-Plough Canada Inc., 2008 FCA 230.
Sanofi submitted that Schering participated by filing Motion Records and made
submissions at the hearings. As further evidence of Schering’s participation it
was submitted that Madam Justice Trembay-Lamer commented on Schering’s
submissions throughout her Reasons. It was further submitted that the direction
of the Court of Appeal as to costs dated January 18, 2008, awarding costs
against both Sanofi and Schering is determinative of the issue.
[10]
Sanofi
submitted that costs are
assessed between opposing parties and acknowledged that although Schering is
not an opposing party it was active in the process. It was submitted that
logically costs should be against both Sanofi and Schering otherwise Schering
would not be responsible for the work Novopharm was caused to perform by
Schering’s participation.
[11]
The final submission of Sanofi was that
there was no specific direction indicating that Schering was not jointly and
severally liable for costs and that Novopharm clearly asked both the Federal
Court and Federal Court of Appeal for costs against both Sanofi and Schering.
[12]
Counsel
for Schering submitted that no costs have been awarded against Schering. The
NOC application was brought by Sanofi and the only party who could have commenced
the application was Sanofi. It was submitted that Schering owns the patent and
pursuant to Section 6 (4) of the NOC Regulations the owner shall be made a
party to the application: Schering had no choice in the matter. Schering
submitted that it would not allow the patent to be disparaged through the NOC process
and that in Sepracor (supra at Para. 26) the Court found the patentee
has a right to file evidence. It was further submitted that, as patentee,
Schering has no rights under the NOC regulations, only an obligation to be a
party. Schering submitted that the benefits or liabilities of the process go to
the parties not the patentee and that costs follow the event.
[13]
Schering
submitted that the dismissal of the application by Madam Justice Tremblay-Lamer
was with cost and acknowledged that the Court may order an unsuccessful
defendant to pay the costs of a successful defendant but that there is no such
order here. It was submitted that the order on this file is essentially the same
as the order of Madam Justice MacTavish in Aventis Pharma Inc v. Apotex
2005 FC 1283 (T-1742-03) and that, in the assessment on that file, Sanofi did
not pursue costs from Schering. Further Schering submitted that the fact that
the Court of Appeal awarded costs against Schering does not create the same
liability here. They are separate proceedings and the decision of the Court of
Appeal cannot be read into the decision of Madam Justice Tremblay-Lamer.
Furthermore, it would be inconsistent to read in a provision that does not appear
on the face of the order.
[14]
In
the alternative Schering submitted that costs follow the application and if
there is liability that liability is to be decided by the Court based on the
role of the parties in the process. Schering is not 50% liable as it did not
take 50% of the role: it did not cause Novopharm 50 % of the work performed.
Schering submitted that, in any event, the order, on its face, does not award
costs against Schering and the direction as to costs, in not mentioning either
Sanofi or Schering, does not vary the order.
[15]
By
way of reply Novopharm submitted that Schering’s submissions ignore the actions
taken by Schering, the four Schering affidavits to which Novopharm had to
respond, and that Novopharm should be compensated in whole for that work.
[16]
Sanofi
agreed with the reply submission of Novopharm and submitted that Sanofi should
not be responsible for the work done by Novopharm as a result of Schering’s
participation. It was submitted that Sanofi and Schering collaborated as
parties. Schering was not a passive participant but an active participant, which
created a certain amount of work for Novopharm. It was submitted that if Sanofi
had been successful Schering would have had something to gain. Since Sanofi was
not successful, Schering should be liable for their share of the costs. It was further
submitted that in T-1742-03 the issue of liability did not arise before Madam Justice
MacTavish and was therefore not addressed. Sanofi’s final submission was that although
the Court of Appeal is a different proceeding than the one in issue here, the
same circumstances apply.
[17]
By
way of rebuttal Schering submitted that they chose to actively participate. It
was submitted that although the Minister of Health (The Minister) does not
always actively participate in these proceedings, they do on occasion, and in
any event, the Minister is always a party to the proceeding and copies of
documents are provided to them, creating costs for which they are not held
liable. Schering submitted that the Order of Madam Justice Tremblay-Lamer is
dispositive of the matter and that the order does not mention Schering. It was
submitted that the Order of the Court of Appeal clearly awards costs against
Sanofi and Schering and they are “on the hook” to pay costs. In the absence of
a similarly specific order there is no cost liability in the Federal Court.
[18]
I
will commence by addressing this last point first. The situation with which I
am faced appears to be unique to NOC applications due to the nature of the
proceeding before the Court and the provisions of the NOC Regulations. In the
present case it is clear that Schering is a named respondent pursuant to
Section 6(4) of the NOC Regulations. Similarly, my reading of Section 6(1) of
the NOC Regulations, together with Rule 303(1) of the Federal Courts Rules,
necessitates naming the Minister as a Respondent. This finding is supported in Pfizer
Canada Inc. v. Canada (Minister of Health) 2007
FC 169. In this particular case, as both the patentee and the Minister are
respondents as a result of a provision found in the regulations, in the absence
of an explicit exercise of discretion by the Court awarding costs against one
or the other, the approach taken with respect to the assessment of costs should
be consistent for both. It is interesting to note that none of the parties made
submissions arguing that the Minister was liable for costs even though the
Minister is party to the proceeding and copies of documents were provided to
the Minister.
[19]
Having read the Reasons for Order and Order of Madam Justice
Tremblay-Lamer dated September 25, 2006 it is clear that Schering was an active
participant in the Appeal of the Order of Madam Prothonotary Milczynski. At
paragraphs 28, 30, 32 and 33 references are made to Sanofi and Schering. Despite
these references, the order grants the appeal and dismisses the application,
the whole with costs. The order makes no mention of an award of costs against
any party specifically and there is not an explicit award of costs against or
Schering.
[20]
Further, I have
reviewed Novopharm’s Amended Notice of Motion for Directions filed December 7,
2007 and the materials filed in support. The motion was
for:
1. an order
fixing the costs of this proceeding at $85,982.73 payable jointly and severally
by the Applicant, Sanofi- Aventis Canada Inc. and the Respondent/Patentee,
Schering Corporation forthwith;
2.
in the alternative, direction, pursuant to Rule 403, for the
assessment officer, that the costs of this proceeding be assessed at the high
end of Column IV, Tariff B;
3.
the costs of this motion; and
4.
such further and other relief as this Honourable Court seems
just
[21]
It is noted that there is no request for costs
against the Minister and the only mention of Schering being jointly and
severally responsible for costs is found in paragraph 1 of the prayer for
relief, seeking an order fixing costs. I find it interesting that in their
alternative relief and in their submissions Novopharm did not request a
direction that the costs be payable jointly and
severally by the Applicant, Sanofi- Aventis Canada Inc. and the
Respondent/Patentee, Schering Corporation.
[22]
Further, having reviewed Sanofi’s material filed
December 17, 2007 in response to the motion, I can find no submission
suggesting that Schering be held jointly and severally liable for the costs of
Novopharm. On the other hand, Schering at paragraph 2 of its written
submissions filed December 20, 2007 submits:
Novopharm is seeking costs in the amount
of $85,982.73, payable jointly and severally by Schering and Sanofi-Avenis Canada
Inc (“Sanofi”). However, Novopharm has not recognized that Schering did not
commence the within Application but was in fact a party required by statute.
Novopharm has not indicated why any costs should be attributed to Schering nor
how such costs should be allocated. As such, it is respectfully submitted that
no costs should be payable by the Respondent/Patentee Schering.
[23]
A review of the direction of Madam Justice
Tremblay-Lamer, concerning costs, dated January 22, 2008 reveals that there is
no mention of an award of costs against Schering and no direction that Sanofi
and Schering are jointly and severally responsible for the costs of Novopharm.
[24]
I agree with counsel for Schering concerning the order
of Madam Justice MacTavish in T-1742-03. Having reviewed that decision, I find
the determination of the Court with respect to costs is substantially the same
as the determination in this file; the application was dismissed with costs. In
addition, having reviewed the Reasons for Assessment on T-1742-03, 2009 FC 51,
there is no mention of submissions that costs should be jointly and severally
paid. In fact the decision is silent concerning that issue.
[25]
I cannot agree with Sanofi that the decision in
Court of Appeal is determinative of the issue. Schering has submitted that
absent a similar direction in the Federal Court, Schering has no liability for
costs. In Canada (Minister of Citizenship and Immigration) v. Oberlander;
2008 FC 497 Justice Hugessen of the Federal Court held; “following
the revocation decision by the Governor in Council, Mr. Oberlander brought
judicial review proceedings which were dismissed by a judge of this Court but
later allowed by the Federal Court of Appeal "with costs here and below" and I am now asked to fix the amount of such costs”. In
the present case, without an award of costs “both here and below”, the Court of
Appeal decision concerning costs is not determinative of the issue in the
Federal Court. If this were the case, there would not have been a need for the
motion for directions and the resulting directions given by the Federal Court.
[26]
As
a general rule, costs should follow the event: Aird v. Country
PartyVillageProperty (Mainland) Ltd.[2004] F.C.J. No. 1153. In this proceeding, the event is the granting of the appeal and
the dismissal of the application, the whole with costs. As it is the
application of Sanofi which was dismissed it follows that the award of costs
was against Sanofi. I can find no exercise
of discretion by the Court awarding costs against the Minister or Schering in
either the decision of September 25, 2006 or the Direction of January 22, 2008.
Further, there is no provision similar to that found in the Court of Appeal
decision awarding costs jointly and severally against Sanofi and Schering.
[27]
It has been held that an Assessment Officer is
not a member of the Court and that absent an exercise of
discretion by the Court, an assessment officer has no jurisdiction to allow
costs not previously awarded; Balisky v. Canada,
[2004] F.C.J. No.536.. As the Court did not exercise its discretion to award
costs against the Minister or Schering or jointly and severally against Sanofi
and Schering, I am unable to allow any costs against Schering.
How to Proceed
[28]
Counsel
for Novopharm submitted their desire to have the assessment resolved at the
hearing. Two ways of moving forward were suggested; 1) there is an agreement
between Sanofi and Novopharm as to the quantum of damages, the problem being,
if Sanofi appeals the decision concerning Schering’s liability for costs and is
successful, Schering may seek to contest the settlement concerning the quantum
of damages; or 2) proceed with the assessment as there is a requirement for a
decision as to the quantum of costs.
[29]
Counsel
for Sanofi submitted that should they be successful on any appeal the question
remains, would Schering agree to the quantum that was agreed upon in the
absence of Schering? It was submitted that Sanofi was prepared to go ahead with
the assessment, but with the presence of Schering. Sanofi also submitted that
the assessment could be adjourned.
[30]
Counsel
for Schering submitted that the Court has determined that Schering is not
liable for costs; therefore Schering should not be forced to proceed with the
assessment and make submissions. It is premature. It was submitted that the
fairest way to proceed is to wait until after any appeal and decide the quantum
if Sanofi is successful.
[31]
By
way of rebuttal counsel for Novopharm submitted that had the decision been
different or had I reserved my decision, Schering would have had to make
submissions as to costs. That however is not the situation here.
[32]
Faced
with my decision determining that Schering is not liable for costs, I am
reluctant to require counsel for Schering to argue the assessment of costs at
this time. They may be making submissions that, in the end, are not necessary.
[33]
Given
the circumstances of this particular file and the uncertainty as to the
decision on any appeal, I agree with counsel for Sanofi that this assessment of
costs should be adjourned pending a decision on any appeal.
Decision
[34]
For
the above reasons, I consider Schering not liable for any costs awarded to
Novopharm. The assessment of costs is adjourned pending decision on any appeal.
This assessment may be resumed, upon request from counsel, on a date to be
fixed.
“Bruce Preston”
Toronto, Ontario
October 2, 2009
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