Date: 20070301
Docket: T-1686-01
Citation: 2007 FC 236
BETWEEN:
APOTEX
INC.
Plaintiff
and
THE WELLCOME FOUNDATION
LIMITED
and GLAXOSMITHKLINE INC.
Defendants
REASONS FOR
ORDERS
GIBSON J.
INTRODUCTION
[1]
These
reasons follow the hearing on the 21st of February, 2007, at Toronto, of two
motions in appeal from two Orders of Prothonotary Milczynski dated the 30th
of August, 2006.
[2]
One
of the motions in appeal, (the “first motion”), was brought by the Plaintiff
Apotex Inc. (“Apotex”) and seeks to set aside the Order of Prothonotary
Milczynski in which she ordered the Plaintiff to provide answers to certain
questions posed on examination for discovery of Apotex’ nominee and follow-up
written interrogatories. The first Order and the questions at issue are attached
as Schedule “A” to these reasons.
[3]
The
second motion in appeal (the “second motion”) was brought by the Wellcome
Foundation Limited and GlaxoSmithKline Inc. (the “Defendants”) and seeks to set
aside the Order of Prothonotary Milczynski requiring the Defendants to provide
answers to certain questions posed to their nominee on examinations for
discovery. The Order at issue on the second motion and the related questions
are attached as Schedule “B” to these reasons.
[4]
Prothonotary
Milczynski provided no reasons for the Orders at issue.
BACKGROUND
[5]
This
action was commenced by Statement of Claim dated the 20th of
September, 2001. Apotex seeks various forms of relief in respect of the harm
allegedly caused to it by reason of the Defendants’ unsuccessful prosecution of
two applications under the Patented Medicines (Notice of Compliance)
Regulations
seeking to prohibit the Minister of Health from issuing a Notice or Notices
of Compliance to Apotex in respect of the drug acyclovir.
[6]
Section
8 of the Patented Medicines (Notice of Compliance) Regulations
specifically provides for relief by way of damages or profits in respect of
harm suffered by reason of any delay in the issuance of a Notice of Compliance
caused by the commencement of an application for prohibition under those Regulations.
In the claim, at paragraph 47, Apotex has asserted that, by reason of the Regulations
and the Defendants’ commencement of the prohibition proceedings, it was
prevented from obtaining a Notice of Compliance from mid-February, 1996 to
August 21, 1997. In the result, Apotex asserts that it suffered damages
flowing from, among other things, lost sales revenues for its acyclovir
tablets.
[7]
The
Defendants have defended this action on the basis that Apotex has no cause of
action either under section 8 of the Patented Medicines (Notice of
Compliance) Regulations, or in equity and hence, no damages are owing.
Alternatively the Defendants allege, even if Apotex has a cause of action under
section 8 of the Regulations, either Apotex suffered no damage or its
damages were not caused by the Defendants, but resulted instead from Apotex’
own trade practices and its entry into an already confounded market.
[8]
The
Defendants filed their Statement of Defence on the 8th of March,
2002 and amended their defence on the 17th of April, 2003.
[9]
Apotex
filed its reply on the 22nd of March, 2002 and its Amended Reply on
the 6th of May, 2003.
[10]
Apotex’s
representative, Dr. Bernard Sherman, was examined for discovery on the 5th
of July, 2005. On the 24th of August, 2005, the Defendants brought
a motion seeking an Order compelling Dr. Sherman to answer questions that were
refused on his examination.
[11]
The
Defendants’ motion above referred to was heard on the 27th of
October, 2005, and, on the 10th of November, 2005, Prothonotary
Lafrenière ordered that Apotex answer two (2) questions which had been
refused. That same day, counsel for Apotex provided the answers to the
questions ordered by Prothonotary Lafrenière to be answered. Following the
provision of those answers, the parties agreed that the second round of Dr.
Sherman’s examination dealing with the answers given, and questions arising
therefrom, would be continued by way of written interrogatories. On March 30,
2006, the Defendants delivered a set of written interrogatories to counsel for
Apotex. On the 30th of May, 2006 Apotex delivered its responses to
the written interrogatories. In responding, Apotex refused to answer a number
of the purported follow-up questions posed by the Defendants as Apotex considered
those questions to be irrelevant or otherwise improper for reasons given. The
Defendants’ motion before Prothonotary Milczynski leading to the Order that is
the subject of motion number one, now before the Court, followed.
[12]
The
Defendants’ representative on examinations for discovery was examined as part
of the first round of examinations on the 3rd of May, 2005. Answers
to undertakings arising from that examination, and answers to questions ordered
to be answered, were provided by the Defendants on the 11th of
August, 2005, the 10th of November, 2005 and the 1st of
December, 2005. A second examination of the Defendants’ representative took
place on the 30th of January, 2006 and answers to undertakings
arising from that examination, and answers to questions ordered to be answered,
were provided by the Defendants on the 31st of May, 2006.
[13]
Apotex
brought a motion to compel answers to questions that were refused by the
Defendants in connection with the second round of examinations for discovery,
leading to the Order of Prothonotary Milczynski that is before the Court on
appeal under motion number two.
STANDARD OF REVIEW
[14]
In
Apotex Inc. v. Pfizer Canada Inc., Pfizer
Corporation and Her Majesty the Queen, my colleague Justice de Montigny wrote at
paragraph 7 of his reasons:
There is no doubt that
discretionary and interlocutory decisions of prothonotaries ought not to be
disturbed and reviewed de novo unless the questions raised in the motion
are vital to the final issues of the case, or the order is clearly wrong in the
sense that the exercise of discretion by the Prothonotary was based upon a
wrong principle or upon a misapprehension of the facts: Canada v. Aqua-Gem
Investments Ltd., [1993] 2 F.C. 425, at p. 462-3 (F.C.A.); Merck &
Co. v. Apotex Inc. v. Apotex Inc., (2003), 30 C.P.R. (4th) 40,
at p. 53; Z.I. Pompey Industrie v. Ecu-Line N.V., [2003] 1 S.C.R. 450,
at p. 461.
While Justice de Montigny’s decision was
reversed on appeal,
the Federal Court of Appeal took no issue with the foregoing quoted paragraph
made in the context of reasons for decision arising in connection with an
appeal from a decision of a prothonotary regarding answers refused or taken
under advisement at examinations for discovery in an action, as here, under
section 8 of the Patented Medicines (Notice of Compliance) Regulations.
[15]
Counsel
were in agreement that the appeals here before the Court arose out of
discretionary and interlocutory decisions of a prothonotary and that the
foregoing quoted paragraph accurately
summarizes the appropriate standard of
review here, that is to say, the orders under review should not be interfered
with unless the learned Prothonotary’s decisions of either of them were or was
clearly wrong in the sense that the exercise of discretion by the Prothonotary
was based upon a wrong principle or upon a misapprehension of the facts.
APPROPRIATE PRINICPLES
OF LAW
[16]
In
Apotex Inc. v. Pfizer Canada Inc., Pfizer Corporation and Her Majesty the
Queen, supra, Justice de Montigny succinctly summarized the principles
of law applicable on the matter before him, and thus on this matter, and I can
do no better than to adopt his summary. Once again, I am satisfied that the
Federal Court of Appeal, in reversing Justice de Montigny, did not differ with
his summary of the principles of law but rather differed with his application
of those principles to the facts before him. In very brief reasons,
essentially a single paragraph, in that matter, Justice Sharlow, for the Court,
wrote:
We are all of the view
that this appeal should be allowed, the order of the judge set aside, and the
order of the prothonotary restored. We accept submissions of the appellant
[Apotex Inc.] that the disputed questions are relevant to claims made in the
pleadings, either to the allegation of common enterprise or to the computation
of damages, assuming that damages may be measured by reference to the
respondents’ profits.
[17]
Justice
de Montigny wrote at paragraphs [8] to [10] of his reasons:
[8] In the
present case, Pfizer has argued that the Prothonotary erred by failing to apply
the correct principles of law. More specifically, Pfizer submitted that the
Prothonotary erred in law by failing to follow the principle that relevance
must be determined by the pleadings. Since the Prothonotary has not given
reasons for her order, I must assume that she has adopted Apotex’ [here Apotex
on motion number one and the Defendants’ on motion number two] arguments and
proceed to review her decision on that basis.
[9] There is no dispute
between the parties that in order to assess the relevance of a question, one
must look at the pleadings. The purpose of discovery, after all, is to secure
admissions with a view to advance the case of the parties. As Martineau J.
stated in Apotex Inc. v. Merck & Co. et al. (2004), 33 C.P.R.(4th)
387 (F.C.) (QL), at par. 15 (affirmed (2005), 38 C.P.R.(4th) 289 (F.C.A.)):
The purpose of discovery, whether oral or by
production of documents, [and here, in part by responses to interrogatories],
is to obtain admissions to facilitate proof of all the matters which are
properly in issue between the parties. The question of whether a document
"relates" to an issue in the case depends upon a reasonable
interpretation of the pleadings. In this regard, the party demanding a document
must demonstrate that the information in the document may, either directly or
indirectly, advance its own case or damage the case of its
opponent...
[10] In Hayden
Manufacturing Co. v. Canplas Industries Ltd. (1998), 83 C.P.R. (3d) 19
(F.C.), this Court stated that there must be limitations placed on discovery
given the resources of the courts and concern over costs, congestion and delay.
The Court referred to the earlier case of Reading & Bates Construction
Co. v. Baker Energy Resources Corp. (1988), 25 F.T.R. 226 (F.C.) and
identified six principles which place limitations on the scope of discovery. It
is worth setting out these principles as presented by Prothonotary Hargrave in Hayden,
above:
1. The documents to which parties are entitled
are those which are relevant. Relevance is a matter of law, not discretion. The
test to apply, in determining relevance, is whether information obtained may
directly or indirectly advance one party's case, or damage that of the other
party.
2. Questions which are too general, or which
seek an opinion, or are outside the scope of a proceeding, need not be
answered.
3. Discovery is confined to matters relevant to
the facts which have been pleaded, rather than to facts which a party proposes
to prove and thus relevance, in the context of discovery, limits questions to
those that may prove or disprove allegations of fact which have not been
admitted.
4. A court should not compel answers which, although
perhaps relevant, are not likely to advance the party's legal position.
5. Before requiring an answer to a discovery
question, the court should weigh the probability of the usefulness of the
answer against the time, trouble, expense and difficulty which might be
involved in obtaining it: "One must look at what is reasonable and fair
under the circumstances..." (loc. cit.)
6. Fishing expeditions undertaken through
far-reaching, vague or irrelevant questions are to be discouraged.
APPLICATION OF THE
FOREGOING PRINCIPLES TO THE POSITIONS OF THE PARTIES, AGAINST THE APPROPRIATE
STANDARD OF REVIEW
Motion in Appeal Number One
[18]
Counsel
for Apotex urged that, since the learned Prothonotary provided no reasons for
her decision in Order number one, there is simply no basis upon which this
Court can discern how she applied the foregoing principles of law and that
thus, no deference should be accorded to her decision. Bearing in mind the
foregoing, counsel urged that the learned Prothonotary allowed follow-up
questions in respect of matters which are not pleaded and to which the answer,
if given, could not assist the Defendants in establishing any fact in issue and
more particularly, that it is impossible for this Court to discern what, if
any, unadmitted facts in the pleadings could or might be proved or disproved by
the answers ordered to be provided. Further, counsel urged, the Defendants have,
by the questions ordered to be answered, been permitted to pose follow-up
questions on a second round of examination where those questions arise out of
the initial round of questioning and could reasonably have been asked as
follow-up questions on the first round of discovery. Counsel urges that the
Order in question encourages a “never ending process that knows no boundaries”.
[19]
I
disagree. By reference to the words of Justice Sharlow in her very brief
reasons on the appeal in Apotex Inc. v. Pfizer Canada Inc. et al, supra,
I am satisfied that the questions at issue on the first motion in appeal are
relevant to claims made in the pleadings, in particular the Amended Statement
of Defence, in that they go to allegations of common enterprise and thus to the
computation of damages, particularly having regard to vague answers provided by
Apotex’ representative on the first round of discoveries that were not amenable
to detailed follow-up questions in the context of that round or, if followed
up, would likely only have led to greater confusion on the issue of common
enterprise and thus on the issue of computation of damages. Put another way, I
am satisfied that the questions ordered to be answered, when answered, are
likely to advance the Defendants’ position or to contribute towards
settlement. The questions do not amount to a fishing expedition undertaken
through far-reaching, vague or irrelevant questions.
Motion in Appeal Number
Two
[20]
Counsel
for the Defendants urges that the questions directed to be answered by the
Order under appeal in motion in appeal number two go beyond the scope of the
pleadings. In particular, as they relate to allegations of control, counsel
urges that those allegations, by the pleadings, are strictly related to the
direct relationship between the Defendants and do not relate to other
enterprises that might be part of a “common enterprise” designed to conceal, or
having the effect of concealing, information relevant to damages. Counsel
further urges that the questions at issue are vague, far-reaching, go beyond
the issue of transfer-pricing and, as such, even if relevant, amount to a “fishing
expedition” that could in no way advance Apotex’ legal position.
[21]
Once
again, by reference to the words of Justice Sharlow above referred to, I cannot
agree. I am satisfied that the disputed questions are relevant to claims made
in the pleadings in that they relate to common enterprise and to transfer
pricing and thus the computation of damages. While the questions at issue are
indeed far-reaching, I am satisfied that they at least when answered, may prove
or disprove allegations of fact which have not been admitted and that they are
thus likely to advance the legal positions of the parties, thus contributing to
the trial process herein or to settlement. Weighing the probability of the
usefulness of answers to the questions at issue against the time, trouble,
expense and difficulty that might be involved in obtaining answers, I am
satisfied that the weighing process favours upholding the questions. The
questions do not amount to a “fishing expedition” outside the bounds of
permitted discovery.
CONCLUSION
[22]
Based
upon the foregoing brief analysis, against the standard of review earlier
enunciated, I cannot conclude that the Orders under review, or either of them,
are or is clearly wrong in the sense that the exercise of discretion by the
learned Prothonotary was based on a wrong principle or upon a misapprehension
of the facts, facts better known to her in the intensive involvement that she
and her colleague Prothonotary Lafrenière have had with the progress of this
action to date, than they are known to this Judge after a relatively brief
hearing of these motions. In the result, both motions in appeal will be
dismissed.
[23]
Both
Apotex and the Defendants seek costs on both motions. Following the precedent
set in the Orders of the learned Prothonotary that are here under appeal, costs
on both orders flowing from the motions in appeal that are before the Court
will be in the cause.
“Frederick
E. Gibson”
Ottawa,
Ontario
March
1, 2007
QUESTIONS
I. B. Written
Interrogatories refused as follow-up to the answer to Question No. 8
…
(c) If the “common
parent” is a corporation, to provide the date and jurisdiction of
incorporation of the “common parent”.
(d) If the “common
parent” is a corporation, to advise whether the “common parent” is a private or
public company.
(e) If the “common
parent” is a corporation, to advise who the officers and directors of the
“common parent” were between February 22, 1991 and August 21, 1997.
…
(h) To advise whether
Apotex and Nu-Pharm were related companies in that they were each under the
control of the “common parent” at that time that the arrangement referred to at
paragraph 22 of the Statement of Claim was entered into.
(i) To confirm that,
between February 22, 1991 and August 21, 1997, Apotex and Nu-Pharm were
directly controlled by the “common parent”.
(j) To advise whether
the “common parent” controlled the time and manner in which Medichem would
apply for and obtain a compulsory license for acyclovir.
(k) If the “common
parent” did not control the time and manner in which Medichem would apply for
and obtain a compulsory license for acyclovir, to advise what, if any, role the
“common parent” played in determining the time and manner in which Medichem
would apply for and obtain a compulsory license for acyclovir.
(l) To advise whether
the “common parent” controlled the time and manner in which Nu-Pharm would
apply for and obtain a Notice of Compliance in respect of acyclovir.
(m) If the “common
parent” did not control the time and manner in which Nu-Pharm would apply for
and obtain a Notice of Compliance in respect of acyclovir, to advise what, if
any, role the “common parent” played in determining the time and manner in
which Nu-Pharm would apply for and obtain a Notice of Compliance in respect of
acyclovir.
…
(p) To advise whether
the “common parent” controlled the time, manner and jurisdictions in which
Nu-Pharm would manufacture and sell Nu-acyclovir.
(q) If the “common
parent” did not control the time, manner and jurisdictions in which Nu-Pharm
would manufacture and sell Nu-acyclovir, to advise what, if any, role the
“common parent” played in determining the time, manner and jurisdiction in
which Nu-Pharm would manufacture and sell Nu-acyclovir.
(r) To advise whether
the “common parent” controlled which of Apotex, Nu-Pharm or Medichem would
apply for a compulsory license for acyclovir.
(s) If the “common
parent” did not control which of Apotex, Nu-Pharm or Medichem would apply for a
compulsory license for acyclovir, to advise what, if any role it played in
determining which of Apotex, Nu-Pharm or Medichem would apply for a compulsory
license for acyclovir.
(t) To advise whether
the “common parent” controlled which of Apotex or Nu-Pharm would apply for an Abbreviated
New Drug Submission for acyclovir.
(u) If the “common
parent” did not control which of Apotex or Nu-Pharm would apply for an
Abbreviated New Drug Submission for acyclovir, to advise what role, if any, the
“common parent” played in determining which of Apotex, Nu-Pharm would apply for
an Abbreviated New Drug Submission for acyclovir.
(v) To advise what
role, if any, the “common parent” played in arriving at the arrangement
referred to at paragraph 22 of the Statement of Claim.
…
II. B. Written
Interrogatory refused as follow-up to the answer to Question No. 9
(a)
To advise
what provinces Nu-Pharm marketed and sold Nu-acyclovir commencing in April 1996.
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