Date: 20071009
Docket: T-884-03
Citation: 2007 FC 1035
BETWEEN:
MERCK & CO., INC. and
MERCK FROSST CANADA & CO.
Applicants
and
APOTEX
INC. and THE MINISTER OF HEALTH
Respondents
REASONS FOR
ORDER
GIBSON J.
INTRODUCTION
[1]
These
reasons follow the hearing at Toronto on the 10th
of September, 2007 of a motion under Rule 414 of the Federal Courts Rules, (the “Rules”)
for a review of the award of costs on the underlying application in respect of
a Notice of Allegation from the Respondent Apotex Inc. (“Apotex”) to Merck
Frosst Canada & Co. pursuant to the Patented
Medicines (Notice of
Compliance) Regulations. In these
reasons, the Applicants are
referred to collectively as “Merck”.
[2]
Rule
414 reads as follows:
|
414.
A party who is dissatisfied with an assessment of an assessment officer who
is not a judge may, within 10 days after the assessment, serve and file a
notice of motion to request that a judge of the Federal Court review the
award of costs.
|
414.La
partie qui n’est pas d’accord avec la taxation d’un officier taxateur, autre
qu’un juge, peut demander à un juge de la Cour fédérale de la réviser en
signifiant et déposant une requête à cet effet dans les 10 jours suivant la
taxation.
|
BACKGROUND
[3]
The
underlying application was heard by my colleague Justice Mosley over three (3)
days in April of 2005. Justice Mosley dismissed the application with costs in
favour of the Respondent Apotex. In his reasons, Justice Mosley wrote with respect to
costs:
Apotex
submits that while Merck was entitled to initiate its application, the fact
that three jurisdictions have already considered the matter is relevant to the
question of costs, particularly after the decision of the U.S. Circuit Court of
Appeal came down in January of this year. Apotex suggests this should justify
an increase in the scale from column three to column five as most of the
preparation for the hearing took place following that decision. I do not agree
that this should be a relevant consideration or that there is any reason to
grant an increase in the scale. A cost award in this court should not depend
on the outcome of foreign proceedings.
Apotex is
entitled to its costs, to be calculated on the ordinary scale. There will be
no order as to costs either in favour of or against the respondent Minister of
Health.
For obvious reasons, the Minister of Health
took no part in this review.
[4]
Under
cover of an affidavit of Andrew Brodkin, a partner at the firm Goodmans LLP,
solicitors for Apotex, sworn the 7th of March, 2006, Apotex served
and filed a Bill of Costs for fees and disbursements totalling $831,900.50.
Mr. Brodkin attested:
At bar, the
parties were litigating over Apotex’s access to the Canadian market in respect
of its alendronate product. At the pertinent time, annual sales of alendronate
generated approximately $130,000,000.00 a year in Canada.
Accordingly,
given the extraordinary amount at issues, [sic] the costs incurred by Apotex in
responding to the proceedings were reasonable, and further, are costs that
Merck ought reasonably to have expected Apotex to incur in order to adequately
respond to these matters.
Before the Court, counsel for Merck urged
that market size, and therefore the economics underlying the litigation, is
simply not a relevant consideration on a costs assessment. I disagree. Rule
400(3) provides that, in exercising its discretion as to costs, the Court may
consider a wide range of enumerated factors including “any other matter that it
considers relevant.” I regard market size as such a factor that should reasonably
have led the Applicants herein to expect the underlying application to be
pursued by Apotex with determination, leading to the incurring of substantial
costs.
[5]
The
costs application was heard by assessment officer G.C. Robinson (the
“assessment officer”) over a period of two (2) days. On the 22nd of
March, 2007, he issued a Certificate of Assessment assessing and allowing
Apotex’ costs in the amount of $605,575.78 “…for assessable services and
disbursements which includes applicable GST, payable by the Merck Applicants to
the Apotex Respondent.” In support of his Certificate of Assessment, Officer
Robinson issued extensive reasons.
[6]
It
is the assessment officer’s award of costs that is here under review at the
initiative of Merck. The grounds for review cited by Merck in its Notice of
Motion are extensive and summarize the argument presented before the Court on
the hearing of this review. They are set out in full in Annex I to these
reasons.
GENERAL PRINCIPLES
[7]
The
standard of review on a review by the Court of an assessment by an assessment
officer is well settled. In Belemare v. Canada (Attorney
General), Justice
Desjardins, for the Court, wrote at paragraph 3:
The
applicable standard of review [in a matter such as that here before the Court]
is not in dispute. In Wilson v. Canada…Dawson J., stated
it in the following way:
“The Court’s
jurisdiction to intervene in the decision of an assessment officer does not
allow the Court to substitute its own view on the facts for that of the
assessment officer. As noted by Joyal, J., in Harbour Brick Co. v. Canada…,
intervention is limited to cases where an error in principle has occurred, or
to where the amount assessed can be shown to be so unreasonable that an error
in principle must have been the cause.”
[emphasis in
the original, citations omitted]
Thus, the standard of review to be applied
to a decision of an assessment officer is twofold: first, whether the
assessment officer committed an error in principle; and second, whether the
amount assessed is so unreasonable that an error in principle must have been
the cause.
[8]
Counsel
for Merck urged before the Court that, in reviewing disbursements for experts’
fees, which, on the facts of this matter, represent a very substantial portion
of Apotex’ disbursements, a principle which he described as the “benchmark or
band principle” can be derived from the authorities.
[9]
In
IBM Canada Ltd. v. Xerox of Canada Ltd., the Court had before it affidavits from
three (3) attorneys in the United States addressing essentially
the same issue. The Court noted that an analysis of the deponents’ statements
of account revealed a “…wide disparity between the hours spent in legal
research and in the hourly rates charged in the research…”. Justice Urie, for
the Federal Court of Canada, Appeal Division, wrote:
…The sole
question thus remaining to be settled in this appeal is whether or not the
District Administrator proceeded on a wrong principle in allowing the
disbursements made for the affidavits to which reference has previously been
made without regard to the wide differences in the amount of the fees paid or,
put [in] another way to allow such disbursements simply because those were the
amounts in fact paid, apparently without question, by the respondents.
In my opinion,
the District Administrator erred in two ways. Firstly, while apparently
accepting the essentiality of the affidavits, he did not examine the quality of
the proof submitted to him in support of the submission that each disbursement
itself was justified in the sense that it was one which could be chargeable to
an adverse party as being reasonable, on a taxation of a party and party bill
of costs. The nature of the proof submitted to him in this case falls
substantially short of that which should be submitted to justify or explain the
necessity for the considerable variations in expenditure of time and fees
charged (in one case four lawyers were involved each with different billing
rates).
Secondly, on
the face of the inadequate proof here submitted it was clear that the legal
problem with which each deponent was confronted was identical, the only
differences being in the ascertainment of how the United States federal
courts in each of several districts applied the same provisions of the United
States Code. Notwithstanding this the taxing officer allowed widely different
sums for their respective opinions. In my view, since there was a common
denominator in the nature of the opinions sought, as a matter of principle
there ought to be at least some relationship between the fees allowed in
payment for them, if fairness is to be accorded the adverse party liable for
the payment. …
[10]
Counsel
for Merck urged that this principle of application of a benchmark or band is
directly applicable here, in particular with respect to Apotex’ expert Dr.
Robert Langer, even though his expertise was different from that of other
experts relied upon by Apotex.
[11]
In
Apotex Inc. v. Syntex Pharmaceuticals International Ltd. et al., Justice
Reed wrote at paragraphs 20 and 21 of her reasons:
…
In addition, while the
amounts paid by the plaintiff to Drs. Robinson, De Luca and Carstensen were in
the same “ball park”, Dr. Langer’s charges appear to be outrageous. Dr. Langer
is pre-eminent in his field and he is an excellent witness – he presents his
evidence with confidence and with great simplicity, without becoming obviously
adversarial. He was the plaintiff’s main expert witness at the trial. At the
same time, the costs for which a defendant will be required to indemnify an opposing
party are the reasonable expenses of the litigation. If a party chooses to
hire a “Cadillac” of experts, the unsuccessful opposing party will not be responsible
to compensate for extravagance; …
I am not prepared to
instruct the assessment officer in the manner the plaintiff seeks. In the
context of the present case, four experts were excessive. Three could be
justified (two as witnesses and one as an advisor). The fact that the
defendants used only one expert witness is not significant. This could accord
with a decision by the defendants not to defend the action vigorously at
trial. It could result from difficulty finding experts to support the
defendants’ position. Only reasonable and properly documented experts’ fees
should be allowed. In addition, I consider an hourly or daily rate above that
charged by Dr. Robinson to be excessive.
…
[citation
omitted]
The Dr. Langer to whom Justice Reed refers
is the same Dr. Langer who provided an expert affidavit on behalf of Apotex in
this matter.
[12]
The
benchmark or band principle is again reflected in a recent decision of Madam
Justice Snider in Laboratoires Servier v. Apotex Inc. where she
wrote at paragraphs 16 and 17 of her reasons:
…The
Plaintiffs also questioned the expert fee for David Matthew (the UK expert).
In my view,
the Defendants may have gone beyond a reasonable level in retaining their
experts for these motions. The Defendants should, therefore, bear some of the
costs of those experts. The expert fee paid to David Matthew was $97,907.58
CAD… . I agree with the Plaintiffs that this expert fee is
disproportionately high in comparison to the expert fee paid to Aidan Hollis,
Stephen Cole, Phillip Williams
and Des
Threlfall. The Plaintiffs should not have to pay for the Defendants’ “Cadillac”
expert.
…
…
[emphasis
added]
[13]
For
the foregoing conclusion, Justice Snider cites the quotation from Justice Reed
above.
[14]
I
will return to the benchmark or band principle in what follows regarding Apotex’
claim for disbursements in respect of experts.
GROUNDS FOR REVIEW OF
THE COSTS AWARD
[15]
In
what follows, I will, with some exceptions, follow the order of the items
disputed by the Applicants, as quoted in Annex I to these reasons.
The Expert Disbursements
[16]
Merck
relied on the affidavits of two (2) experts in the hearing of the underlying
application that took place before Justice Mosley. By contrast, Apotex relied
on the affidavits of seven (7) experts although the expertise of one, and
perhaps two, of the Apotex “experts” was questionable.
[17]
Justice
Mosley commented on the expert evidence before him in the following paragraphs
of his reasons:
[40] At the outset of
the hearing of this application, Merck renewed a motion to strike Apotex
affidavits. An initial motion to strike the Tassone, Weissburg and Mazess
affidavits was decided by Prothonotary Lafrenière on June 21, 2004. He ruled
that the relief sought was premature, in the absence of special circumstances,
and that evidentiary determinations should be left to the applications judge. The
motion was dismissed without prejudice to Merck to seek leave to file reply
evidence. Leave to file reply evidence was granted in a further order by the
Prothonotary on July 13, 2004 resulting in the filing of the Devlin affidavit
described above.
[41]
Merck filed a fresh motion on April 6, 2005 seeking
to have struck, in addition to the three affidavits addressed in the June 2004
motion, the affidavits of Drs. Langer and Mayersohn. I gave an oral ruling on
the motion before proceeding to hear the merits of the application.
[42]
Merck argued that the impugned affidavit evidence
should not be admitted primarily on the grounds that:
1. the Apotex
affiants were not properly qualified to give opinion evidence in the several
areas of knowledge to which they deposed.
2.
The evidence given was not relevant to
the determination of the issues that are before the court in this NOC
proceeding.
[43]
Applying the principles
enunciated by the Supreme Court of Canada in R. v. Mohan…
[1994] 2 S.C.R. 9 at para. 17, namely: (a) relevance; (b)
necessity in assisting the trier of fact; (c) the absence of any exclusionary
rule; and (d) a properly qualified expert, I concluded that the opinion
evidence proffered by Apotex was admissible.
[44]
Relevance is a threshold requirement for any
evidence. Logically relevant evidence may be excluded if its probative value is
overborne by its prejudicial effect, if the time required is not commensurate
with its value or if it can influence the trier of fact out of proportion to
its reliability (Mohan at para. 18).
[45]
Expert evidence, to be necessary, must likely be
outside the experience and knowledge of a judge or jury and must be assessed in
light of its potential to distort the fact-finding process. Necessity should
not be judged by too strict a standard. Expert evidence can be excluded if it
falls afoul of an exclusionary rule of evidence separate and apart from the
opinion rule itself, such as the hearsay rule (Mohan at paras. 21-23).
[46]
There are no specific credentials that potential
experts must have in order to be admitted as experts by the Court. Opinion
evidence may be given by a witness "who is shown to have acquired special
or peculiar knowledge through study or experience in respect of the matters on
which he or she undertakes to testify" (Mohan at para. 27). This
echoes statements by the court in R. v. Marquard,… [1993] 4 S.C.R. 223
at para. 35, citing R. v. Beland,… [1987] 2 S.C.R. 398 at para 16,
holding that "[t]he only requirement…is that the
expert witness possesses special knowledge and experience going beyond that of
the trier of fact".
[47]
As Sopinka, Lederman and Bryant state in The Law
of Evidence in Canada (1992) at 536-7,
The admissibility of [expert] evidence
does not depend upon the means by which that skill was acquired. As long as the
court is satisfied that the witness is sufficiently experienced in the subject
matter at issue, the court will not be concerned with whether his or her skill
was derived from specific studies or by practical training, although that may
affect the weight to be given to the evidence.
[48]
With respect to Drs. Langer and Mayersohn, Merck did
not object to these affidavits when it brought its earlier motion. It contends
that the weakness of their qualifications relevant to the issues in this
proceeding only became apparent on cross-examination. Merck now
objects to the reception of their evidence as they are not medical doctors and
argues that the issues upon which they were asked to provide expert
opinions, as characterized by Merck, relate solely to
the medical fields of gastroenterology and endocrinology.
[49]
I do not agree with Merck's contention that these
two witnesses were asked to comment on matters beyond their expertise. Dr.
Langer's relevant and very impressive qualifications are as an expert with
respect to pharmaceutical technology involving the formulation of drugs,
including bisphosphonate drugs. His opinion is tendered with respect to
formulation issues and thus does not exceed his expertise in pharmaceutics.
[50]
Dr. Mayersohn's qualifications are as an expert in
pharmacokinetics, biopharmaceutics and pharmaceutics. His testimony about the
equivalence of 70 and 80 mg of alendronate due to the low bioavailability of
the drug was never questioned on cross-examination. Apotex objected to Merck
questioning this evidence in oral argument as contravening the rule in Browne
v. Dunn (1893), 6 R. 67 (H.L.). I was satisfied the evidence was highly
relevant, uncontradicted and admissible.
[51]
Dr. Mazess's affidavit primarily describes events
surrounding the publication of his views on alendronate in the newsletter Lunar
News produced by the corporation he had founded to manufacture and
distribute bone densitometry equipment used in the diagnosis and treatment of
skeletal disease. Merck objects to Dr. Mazess's being permitted to comment on
the evidence of Drs. Papapoulos and Fennerty as he is not a physician. It also
objects to the relevance of his testimony about meetings and correspondence
between Dr. Mazess and Merck representatives concerning dosing regimens for
bisphosphonates. Finally, it submits that his writings in Lunar News
speak for themselves and he should not be explaining their meaning.
[52]
Dr. Mazess, through his academic and business
careers, has gained considerable knowledge about bone diseases, particularly
osteoporosis. While he is not qualified to treat patients, that does not
preclude him, in my view, from commenting on treatment regimes for bone
disorders. It is apparent from the record that his utterances in the Lunar
News carried considerable weight in the pharmaceutical and clinical worlds.
Drs Papapoulos and Fennerty comment at length on his writings in their
evidence. There was ample reason, in my view, to think that Dr. Mazess'
comments on their evidence would be helpful in determining the issues in this
matter.
[53]
With regard to Dr. Mazess' evidence about
correspondence and meetings with Merck staff, I was satisfied that it was
relevant and admissible. Merck is correct that, as possible prior art
references, his writings in Lunar News must speak for themselves.
However, I was also satisfied that he could properly give evidence as to the
background and context of those writings. Accordingly, his evidence was
admissible subject to argument about its weight.
[54]
The Weissburg affidavit does not contain expert
opinion evidence but rather describes events and hearsay statements made by
others. Apotex relies upon those statements not for their truth but for the
fact they were made. As determined by the Supreme Court of Canada in R. v.
Khan,… [1990] 2 S.C.R. 531 and subsequently applied to civil cases by a
number of courts, hearsay is not inadmissible if found to be credible and
reliable:… I allowed this evidence for the limited purpose of establishing
that certain events occurred and statements were made and not for the truth of
the contents of those statements.
[55] Attached to the
Tassone affidavit are copies of documents filed by the defendant in the U.S.
District Court proceedings. Apotex' object in submitting this material was, in
part, to refute Drs. Papapoulos' and Fennerty's evidence that the prior art
references included in the NOA would not have been relied upon to demonstrate
the safety of high doses of alendronate in osteoporosis patients. Included in
the Tassone material is Merck's submission to the United States Federal Drug
Administration ("FDA") for approval of the 70 mg dosage of FOSAMAX®,
which indicates that Merck relied upon the same prior art references to show
that a dose of that size would be safe and effective.
…
[64]
Expert evidence presented
to the Court should be, and should be seen to be, the independent product of
the expert, uninfluenced as to form or content by the exigencies of litigation:
Whitehouse v. Jordan [1981] 1 All ER 267 (H.L.) at 276. I had little
difficulty coming to the conclusion in reading the evidence in this case that
where there was a conflict between the evidence of the Merck witnesses and the
Apotex witnesses, I preferred the latter. While Dr. Papapoulos is eminently
well qualified in his field, I found his evidence, as it was characterized by
Justice Jacob in the UK proceedings, to be
"rigid" and "extreme" when he was confronted on
cross-examination with prior art references inconsistent with Merck's position.
As for Dr. Fennerty, it was apparent from his truculence in answering questions
on cross-examination that he had crossed the line between independence and
advocacy. I accorded little weight to his evidence.
…
[110] As indicated above, I preferred the
Apotex witnesses' evidence. …
[some citations omitted]
Thus, Justice Mosley found the expert
evidence proffered by Apotex to be admissible and to be preferable to that of Merck’s
expert witnesses in circumstances where there was a conflict between the two
sides. Merck’s expert witnesses Compston, Mazess, Weissburg, Mayersohn and
Markowitz, according to the material that was before the assessment officer and
the Court, expended an average of sixty-three (63) hours to provide their
evidence and were compensated at hourly rates between $354.00 and $781.00 for
an average rate of $484.00. By contrast, Dr. Langer, together with his
associate Dr. Lipp, claimed to have devoted over four hundred fifty (450) hours
to the preparation of Dr. Langer’s expert affidavit and billed at the rate of
$1,389.00 per hour for Dr. Langer and $266.24 for Dr. Lipp. Not surprisingly,
counsel for Merck took particular exception to Apotex’ disbursement claim for
Dr. Langer and his associate.
[18]
In
the Annex hereto, counsel for Merck comments in a general way on the award by the
assessment officer in respect of expert disbursements in paragraph 8,
subparagraphs 9(i) to (iii) and paragraph 15.
[19]
In
general, in both written submissions provided to the Court and counsel’s
submissions at hearing before me, Merck alleges that witness fee disbursements
claimed by Apotex are unsupported and are not reasonable. In summary, at
paragraph 47 of counsel’s written submissions, the following appears:
In the present case, the
Assessment Officer allowed Apotex to recover more than $410,000 for the fees of
seven witnesses and one non-witness without properly considering the
reasonableness of any of those disbursements. In addition, the Assessment
Officer erroneously relied on the Apotex Counsel’s affidavit and failed to
address the considerable overlap in the evidence filed by Apotex. As such, the
Applicants submit that the Costs Award in respect of the witness fee
disbursements should be set aside.
[emphasis in
original]
[20]
The
assessment officer wrote at paragraph 65 of his reasons:
[65] The Apotex
Respondent has claimed $26,217.14 for the expert fees of Juliet Compston,
$16,612.42 for the expert fees of Richard Mazess, $37,214.62 for the expert
fees of David Markowitz and $64,027.27 for the expert fees of Michael
Mayersohn. I have corrected the invoice total for David Markowitz to
$38,214.62 since it appears to me that the Apotex Respondent has made a simple
addition error. The Merck Applicants have raised a concern that the invoice
amounts for Michael Mayersohn do not match the total invoice amount the Apotex
Respondent is claiming for this specific disbursement which, it submits,
justifies a reduction of these specific expert fees. Within Tab 2 of the
Affidavit of Andrew R. Brodkin, sworn March 7, 2006, I found a law firm invoice
from Ivor M. Hughes dated June 9, 2004 which contained a disbursement amount of
$23,772.20 in Canadian dollars for “Professional Fees (Michael Mayersohn).” As
mentioned by the Apotex Respondent in paragraph 58 of its Reply Submissions,
“the invoices provided by Apotex were those in its possession at the time that
the supporting material could be delivered to the Applicants in respect of this
assessment.” In my opinion, this is a reasonable explanation and I exercise my
discretion and accepted [sic] these submissions of the Apotex Respondent. In
addition, I have corrected and reduced the invoice total for to [sic] Michael
Mayersohn to $63,997.27 since it appears to me that the Apotex Respondent has
made an addition error when totalling all of the associated invoices.
[21]
I
will now turn to a consideration of the witness fee disbursements in respect of
each of Apotex’ expert affiants.
Dr. David
Weissburg
[22]
In
his reasons in support of his assessment of costs, the assessment officer wrote
at paragraphs 63 and 64:
[63] The
Apotex Respondent has claimed $28,236.46 for the expert fees of Dr. David
Weissburg. I repeat some of the Merck Applicants’ concerns raised above in
paragraph [16] that the Affidavit of David Weissburg, sworn May 12, 2004, was
only five pages in length. The Merck Applicants also refer to the Reasons for
Order and Order dated May 26, 2005 in this proceeding which noted that the
“affidavit does not contain expert opinion but rather describes events and
hearsay statements made by others.” In addition, the Merck Applicants submit
that the Dr. Weissburg invoices do not contain many details regarding the
“consulting time” spent by this specific expert. The Merck Applicants submit
in paragraph 89 of its [sic] Written Submissions of the Applicants that this “type”
of “bald statement” is insufficient evidence to justify costs for expert fees”
and refers [sic] to AlliedSignal, supra, at paragraph 47 which
states:
[47]…It is
the requirement that sufficient or reasonable proof be lead to satisfy the
Taxing Officer that expenses were incurred. It all becomes then a question of
degree of evidence. A [bald] statement of the kind singled out by Mr. Justice
Teitelbaum in the Diversified case and also found in the F-C Research Institute
case, would not be sufficient to satisfy a Taxing Officer. Likewise, absolute
and detailed evidence is not an indispensable requirement for an award to be
made. As my colleague Stinson, Taxing Officer, said on numerous occasions the
more thorough and complete the evidence is, the less the result will be bound
up into the Taxing Officer’s discretion, but that does not mean a Taxing
Officer is refrained from resorting to his discretion to make an award in the
absence of cogent evidence.
[64] As
determined in paragraph [18] above, the Federal Court allowed the Affidavit of
David Weissburg to be filed for limited purposes notwithstanding the fact that
the Merck Applicants filed motions to have this and several other Apotex
Respondent’s affidavits struck from the file. The invoices from David
Weissburg contained in Exhibit C to the Affidavit of Andrew R. Brodkin, sworn
on March 7, 2006, indicate a number of time periods (i.e.:-“14FEB04 -
31MAY04”), specific hours for each time period that David Weissburg claimed he
had worked on this proceeding and, also included, were a number of expenses
[sic] amounts within these invoices. Although the invoices do not contain
“absolute and detailed evidence” as described above in AlliedSignal, supra,
outlined in this paragraph, I am satisfied that the Apotex Respondent incurred
these expenses. For these reasons and relying on the sentiment expressed in Dableh,
supra, outlined above in paragraph [62], I exercise my discretion and allow the
$28,236.46 plus associated GST for this disbursement.
The reference in the foregoing quotation to
“AlliedSignal” is to AlliedSignal Inc. v. Dupont Canada Inc. et al..
The reference to “Dableh” is to Dableh v. Ontario Hydro.
[23]
Despite
the urgings of counsel for Merck that the assessment officer erred in principle
in allowing this disbursement by failing to properly consider the
reasonableness of this expense and by allowing Apotex to recover this
disbursement in the absence of proper evidence of reasonableness, I reach a different
conclusion. The assessment officer’s determination to allow the disbursement
in respect of the claim by Dr. Weissburg accords with the principles governing
the exercise of his discretion and certainly was not so unreasonable “…that an
error in principle must have been the cause.”
Dr. Michael
Mayersohn
[24]
For
ease of reference, I repeat here Justice Mosley’s comments at paragraph 50 of
his reasons:
[50] Dr. Mayersohn's
qualifications are as an expert in pharmacokinetics, biopharmaceutics and
pharmaceutics. His testimony about the equivalence of 70 and 80 mg of
alendronate due to the low bioavailability of the drug was never questioned on
cross-examination. Apotex objected to Merck questioning this evidence in oral
argument as contravening the rule in Browne v. Dunn… . I was
satisfied the evidence was highly relevant, uncontradicted and admissible.
[citation omitted, emphasis]
[25]
Counsel
for Merck urged that the assessment officer erred in principle in accepting the
disbursement claim in respect of Dr. Mayersohn which, he alleged, was partially
unsupported by invoices. The assessment
officer responded to this concern on behalf of Merck by noting that he had
uncovered an invoice, not previously identified, that is referred to in the quotation
in paragraph 20 above. While the invoice discovered does not amount to a
complete response to counsel’s submission, it is a very substantial response
and it is entirely possible that the difference remaining might be attributable
to conversion rates between Canadian and U.S. currencies.
[26]
I
am satisfied that the assessment officer made no error of principle or erred in
the assessment of the disbursement in respect of Dr. Mayersohn such that the
assessment is so unreasonable that an error in principle must have been the
cause.
Professor
Compston, Dr. Mazess and Dr. Markowitz
[27]
The
assessment officer allowed Apotex to recover disbursements of $26,217.14 in
respect of Professor Compston, $16,612.42 in respect of Dr. Mazess and $38,214.62
in respect of Dr. Markowitz. He concluded at paragraph 67 of his reasons:
…
Although the Merck
Applicants have raised a number of novel arguments regarding the lack of
reasonableness of the Apotex Respondent’s expert fees, I have given them little
weight. I have preferred to rely on the fact that the Federal Court has allowed
specific evidence of the Apotex Respondent to be filed and its stated reliance
on that evidence as outlined within paragraph 64 [earlier quoted here] of the
Reasons for Order and Order dated May 26, 2005 in this proceeding… .
[28]
Once
again I conclude that the assessment officer’s determinations in this regard
were entirely open to him in the exercise of his discretion.
Franco A.
Tassone
[29]
Mr.
Tassone and his role are described in paragraph 37 of Justice Mosley’s reasons
as:
…an employee of Parcels
Inc., the copy service for the United States District Court for the District of
Delaware. He was asked to obtain copies of publicly available documents from
the U.S. trial in Merck
& Co., Inc. v. Teva Pharmaceuticals USA, Inc., supra and
attached them to his affidavit.
As such, it is hard to conclude that he
qualified as an expert.
[30]
The
assessment officer wrote at paragraph 51 of his reasons:
The Apotex Respondent
has claimed $3,501.53 in its Bill of Costs associated with the expert fees of
Franco Tassone in addition to the assessable counsel fees which I determined
and allowed in paragraphs [13] to [15] above. The Merck Applicants submit in
paragraph 100 of its [sic] Written Submissions that “expert fees are not
recoverable where the trial judge finds the report to be “unnecessary or the
contents useless.” In support of this submission, the Merck Applicants refer
to John A. Carruthers v. The Queen,… which states:
…In cases in
which experts are called by both parties and they give conflicting opinions,
the Court has to choose the opinion of one of the experts as preferable to the
other, unless the Court chooses to reject both opinions and substitute its own
based on the evidence, but the fact that one expert’s report is rejected, or
not accepted in full, would not justify non-payment of his fees for the
preparation of same, unless the Court finds that the requisitioning of such a
report was entirely unnecessary or the contents useless. …
Since the Federal Court ruled
that most of the evidence attached to the Affidavit of Frank Tassone was
“unnecessary” and that “most of it was inadmissible,” it is my opinion that the
Apotex Respondent should not be entitled to claim these expert fees in their
entirety. For these reasons and considering the proposition expressed in Grace
M. Carlile, supra, that “a result of zero dollars would be absurd”,
I exercise my discretion and allow a reduced amount of $500.00 for the
associated expert fees of Frank Tassone.
[citation
omitted]
[31]
The
assessment officer himself noted in paragraph [12] of his reasons that, at
paragraphs [60] and [61] of his reasons, Justice Mosley found that it was
improper for Apotex to use the Tassone affidavit to submit evidence, that
Apotex made no real effort to explain how most of the material annexed to that
affidavit would be relevant and admissible and that it was unnecessary and
excessive to “dump” the U.S. Trial evidence into the record by the use of the
Tassone affidavit. He ruled that most of the material under cover of the
Tassone affidavit was inadmissible and he strongly discouraged “any repetition
of this practice”.
[32]
In
light of Justice Mosley’s comments I consider the assessment officer’s reliance
on Carlile v. Canada (Minister of National
Revenue) in this
context, a decision of a fellow assessment officer, to be ill-founded
and the resulting amount allowed for the disbursement to Mr. Tassone to be so
unreasonable that an error in principle must have been the cause. In the
result, I would reduce the assessed costs by $500.00 to nil on this account.
Dr. Robert S.
Langer and his associate Dr. Michael Lipp
[33]
Dr.
Lipp was unknown to Justice Mosley and his role in support of Dr. Langer was
equally unknown to Justice Mosley and indeed to counsel for Merck until Apotex’
Bill of Costs was delivered. He filed no expert affidavit. Inevitably, he was
not cross-examined.
[34]
As
earlier noted in these reasons, the claimed hours by Dr. Langer toward the
preparation of his affidavit far exceeded the claimed hours of any other of
Apotex’ experts and were exceeded only by the claimed hours of his associate
Dr. Lipp. Further, Dr.
Langer’s claimed an hourly rate that far
exceeded that of any other of Apotex’ experts while, by contrast, Dr. Lipp’s
claimed rate was lower than any of the rates of those who themselves filed
expert affidavits.
[35]
The
assessment officer wrote at some length in his reasons regarding the claim for
expert fees for Drs. Langer and Lipp. The relevant paragraphs from the
assessment officer’s reasons, paragraphs 52 to 62, are set out in full in Annex
II to these reasons. It is of note that while the assessment officer notes
“…the Merck Applicants’ concerns with regard to the number of hours both Dr.
Langer and Dr. Lipp spent on preparing one expert affidavit…”, the assessment
officer essentially does not address this issue. While he reduces Dr, Langer’s
hourly rate based on the “benchmark or band principle” and on a benchmark other
than that advocated by the Applicants, he provides no equivalent analysis and
reduction, or reason for rejecting a reduction, in relation to the number of
hours devoted to research and development of Dr. Langer’s affidavit. The
exception to what I have just noted is contained in paragraph [55] of the
assessment officer’s reasons quoted in Annex II where he rejects the Applicants’
proposed reduction of the Langer and Lipp fees to $19,600.00 on the basis that
he is “…uncomfortable with this suggestion for the simple reason that the
proposal seems to be a very arbitrary method of determining the expert fees…”.
[36]
With
great respect, I conclude that the arbitrary rejection by the assessment
officer of a reduction in the number of hours devoted to the production of Dr.
Langer’s expert affidavit by Dr. Langer himself and Dr. Lipp constitutes an
error in principle or an element of his assessment that “…is so unreasonable
that an error in principle must have been the cause”.
[37]
Substituting
my discretion for that of the assessment officer, and applying the “benchmark
or band principle” to the number of hours claimed in respect of Drs. Langer and
Lipp at the hourly rates adopted by the assessment officer, and adopting the benchmark
or band proposed by Merck, I conclude that the adjusted disbursement allowed by
the assessment officer in respect of Drs. Langer and Lipp should be further
reduced from $237,696.00 plus associated GST to $31,785.00. This represents an
allocation of (thirty-one) 31 hours to Dr. Langer and thirty-two (32) hours to
Dr. Lipp, the approximate ratio of their claimed hours, and representing a
total of sixty-three (63) hours, which is the average number of hours claimed for
Apotex’ other experts, at rates of $695.00 and $320.00 respectively, the rates
adopted by the assessment officer. The net reduction of assessable
disbursements by reason of this adjustment is, according to my calculations,
$205,911.00.
[38]
While
other bases of adjustment with respect to the disbursement for fees of Drs.
Langer and Lipp were urged on behalf of the Applicants, I am satisfied that no
reviewable error is evident on the face of the reasons of the assessment
officer that would justify further adjustment.
Prior Art Disbursements
[39]
Counsel
for Merck urged that the assessment officer erred in allowing Apotex to recover
$7,205.51 in disbursements related to the collection of prior art. Merck urged
that the assessment officer ignored Merck’s unchallenged evidence that this was
an unreasonable duplication of costs.
[40]
The
assessment officer summarizes the Applicants’ submissions in this regard at
paragraph [37] of his reasons and the Apotex response at paragraph [38] of
those reasons. In paragraph [39], the assessment officer cites the wording of
subsection 1(4) of Tariff B of the Federal Courts Rules and concludes in
this regard at paragraph [40] of his reasons, as follows:
[40] In my opinion, it
is almost trite to note that the terms and conditions of that settlement
[settlement of an earlier proceeding in respect of the drug “Fosamax®”] have
not been presented by either party in opposition to or in support of the Apotex
Respondent’s Bill of Costs. As well, I note that the Apotex Respondent has
complied with section 1(4) of Tariff B of the Federal Courts Rules and,
as I outlined in the first sentence in this paragraph with regards to the terms
and conditions of a previous settlement, the evidence was never put before me.
For these reasons, I exercise my discretion and allow the $7,205.51 plus GST
for this specific disbursement.
[41]
I
am satisfied that the assessment officer made no reviewable error in deciding
as he did in this regard.
Travel Disbursements
[42]
At
paragraph 26 of his reasons, the assessment officer noted under the heading “Entitlement
to Travel Disbursements”:
The Apotex Respondent
has claimed $81,896.48 in various travel disbursements. The Merck Applicants
have objected to this claim as unreasonable. It is my opinion that those same
objections were part of their submissions in item 14 and item 24, which I have
dealt with above within paragraphs [6] to [12] inclusive under the sub-headings
of Entitlement to Counsel Fees for Second and Third Counsel and Entitlement
to Counsel Fees for Travel. Basically, the Merck Applicants have submitted
that a judicial direction or Order of the Federal Court must be issued before
the assessment officer has the authority to allow the disbursements claimed in
this proceeding for the travel expenses associated with second and third
counsel. For these reasons, the Merck Applicants have submitted that the
Apotex Respondent’s travel disbursements should be reduced to $35,737.74. I am
assuming that the Merck Applicants’ reduction for travel costs from $82,896.48
to $35,737.74 was proposed to reflect the costs of the travel costs of a single
counsel attending at all of the cross-examinations.
The discrepancy between the amount claimed
in the first line of the above quotation and in the third to last line is of no
consequence.
[43]
After
a brief analysis of the positions of the parties on the above, the assessment
officer concluded at paragraph 30 of his reasons as follows:
[30] Regarding the
remaining travel disbursements, it is appropriate that I turn to the decision
in Grace M. Carlile v. Her Majesty the Queen,…:
…Taxing
Officers are often faced with less than exhaustive proof and must be careful,
while ensuring that unsuccessful litigants are not burdened with unnecessary or
unreasonable costs, to not penalize successful litigants by denial of
indemnification when it is apparent that real costs were indeed incurred.
This presumes a subjective role for the Taxing Officer in the process of
taxation. My Reasons…: [in] Youssef Hanna Dableh v. Ontario
Hydro…[cite]a series of Reasons for Taxation shaping the approach to taxation
of costs. Dableh was appealed but the appeal was dismissed with Reasons by the
Associate Chief Justice… . I have considered disbursements in these Bills of
Costs in a manner consistent with these various decisions. Further, Phipson on
Evidence,…states that the “standard of proof required in civil cases is
generally expressed as proof on the balance of probabilities”. Accordingly,
the onset of taxation should not generate a leap upwards to some absolute
threshold. If the proof is less than absolute for the full amount claimed and
the Taxing Officer, faced with uncontradicted evidence, albeit scanty, that
real dollars were indeed expended to drive the litigation, the Taxing Officer
has not properly discharged a quasi-judicial function by taxing at zero dollars
as the only alternative to the full amount. Litigation such as this does not
unfold solely due to the charitable donations of disinterested third persons.
On a balance of probabilities, a result of zero dollars at taxation would be
absurd.
[emphasis
added in the assessment officer’s reasons]
For the
reasons I have outlined above and considering the sentiment expressed in Grace
M. Carlile, supra, I exercise my discretion to reduce and allow the
remaining travel disbursements of $75,851.89 plus applicable GST. For greater
clarification, the total travel costs of $79,881.62, which includes the amount
of $4,029.73 in paragraph [30] above, are allowed for all of the disbursements
associated with all of the cross-examinations for this proceeding.
[44]
Despite
the urgings of counsel for Merck that the assessment officer erred in principle
in allowing the amount that he did in respect of travel disbursements, I am
satisfied that the assessment officer’s conclusion accords with the principles
governing the exercise of his discretion and certainly was not so unreasonable
“…that an error in principle must have been the cause.”
Photocopy Disbursements
[45]
Apotex
claimed $36,647.49 for photocopy disbursements associated with this
proceeding. The assessment officer examined this claim at some length in
paragraphs [31] to [36] of his reasons. Notwithstanding the voluminous nature
of the Court files in this regard, he allowed the claim at $10,000.00 after
examining the files in the Toronto Registry where the main file of documents in
this matter is located. He based this conclusion on photocopy disbursements
for 5,000 pages multiplied by eight (8) copies of all documentation and by a
factor of $0.25 per page.
[46]
While
this issue is raised among those set out in Annex I to these reasons, see
paragraph 18 thereof, the issue was not addressed in the Applicants’ memorandum
and was essentially withdrawn in submissions before me.
[47]
I
find no basis to interfere with the decision of the assessment officer in this
regard.
Other Disbursements
[48]
Under
this general heading, in an annex to the Applicants’ Written Submissions on
this review, the Applicants identified the following disbursements:
|
Item
|
Amount
Claimed
|
Amount
Allowed
|
|
Computer searches
|
$ 731.32
|
$ 731.32
|
|
Computer time charges
|
$ 3,036.26
|
$ 3,036.26
|
|
Courier/postage
|
$ 4,066.91
|
$ 4,066.91
|
|
Court Reporter/Transcripts
|
$11,490.64
|
$11,490.64
|
|
Meetings
|
$ 3,360.98
|
$ 3,360.98
|
|
Telephone charges
|
$ 1,890.96
|
$ 1,890.96
|
|
Telecopy charges
|
$ 676.69
|
$ 676.69
|
|
Total
|
$25,247.66
|
$25,247.66
|
[49]
Counsel
for the Applicants urged, among other things, that the evidence in support of
the foregoing alleged disbursements was simply inadequate to support these
amounts as essential to the conduct of this proceeding.
[50]
The
assessment officer concluded:
[69]…this proceeding was
commenced on May 29, 2003 and a decision was rendered almost two years later.
Many of the attached invoices contained within the exhibits to the Affidavit of
Andrew R. Brodkin, sworn March 7, 2006, [in support of Apotex’ claim for costs]
do not contain specific detail regarding these specific disbursements.
However, I have considered the factors to advance litigation such as the case
at bar which include the various city and country locations for many of its
expert witnesses, the efforts required to assemble and forward pertinent
information for the experts’ respective consideration, the various methods
required to have the pertinent material before the experts, researching
materials and evidence from various sources, the necessary meetings,
preliminary and follow-up telephone…calls and related correspondence. It seems
reasonable to me considering the factors that I have outlined that, over the
course of two years, the Apotex Respondent would incur significant expenses to
advance this litigation above those normally associated with the overhead
expenses of its law office. For these reasons, it is my opinion that the
disbursement amounts for computer searches, computer time charges,
courier/postage, court reporter/transcripts, meetings, telephone charges and
telecopy charges appear to be reasonable. For these reasons, I exercise my
discretion and allow a total of $25,247.66 plus applicable GST for these
specific disbursements.
Based upon the material before the Court
and the submissions of counsel at hearing, I find no reviewable error in the
foregoing conclusion.
A RECOMMENDATION
[51]
In
Stanley M. Smith et
al. v. Her Majesty the Queen, in brief
reasons relating to “appeals” in two (2) actions from the decision of a Taxing
Officer, the then Associate Chief Justice wrote:
…I should underline here
that the proper compensation for expert witnesses is invariably best dealt with
by the Trial Judge and wherever possible, appeals from decisions such as these
should be returned to the Judge who presided over the trial.
This review of a taxation of costs, though
not following a trial, focussed primarily on disbursements for the fees of
expert witnesses. I endorse the Associate Chief Justice’s quoted statement in
the context of a Patented Medicines Notice Of Compliance proceeding where the
presiding judge will invariably develop a stronger familiarity and appreciation
with the affidavit evidence and the cross-examination on affidavit evidence of
expert witnesses than, for example, I was able to do in this matter. I
benefited substantially from the commentary in the reasons of Justice Mosley,
who presided over the underlying proceeding, that were directed to his
appreciation of the various experts who provided opinion evidence in the
matter. However, I remain convinced that a presiding judge could bring
substantially greater insight than could a judge such as myself, who approached
the review of the taxation of costs with no knowledge of the file.
COSTS
[52]
In
Montreal Fast Print
(1975) Ltd. v. Polylok Corporation, Justice Cattanach, in
the context of an Order as to costs and an “appeal” of that Order, wrote at
page 210:
In accordance with the
discretion I have I shall follow the practice as I understand has prevailed in
this court and there shall be no award of costs for or against either party
upon this review of the certificate of the taxing officer.
[53]
I
adopt the “practice” endorsed by Justice Cattanach. Finality to litigation
should be encouraged. The hearing of this PMNOC proceeding took place over
three (3) days. The hearing before the assessment officer took two (2) days.
The hearing before me took another full day. In sum, it has taken as long to
settle the issue of costs, and I acknowledge
that that issue may not yet be finally
settled, as it took to adjudicate on the substance of the PMNOC. Such should
not be the case. The assessment officer evidently laboured long and hard over
this assessment. He wrote extensive reasons. What remained to be decided
should have been settled between the
parties.
[54]
There
will be no Order as to costs.
CONCLUSION
[55]
In
accordance with the foregoing reasons, this review of an assessment of costs
will be allowed in part in favour of Merck. The Certificate of Assessment
issued herein by the assessment officer will be adjusted to reduce the
assessment allowed by $206,411.00 with the result that the Apotex Respondent’s
Bill of Costs will be assessed and allowed in the amount of $384,686.01 for
assessable services and disbursements which includes applicable GST, payable by
Merck to the Apotex Respondent.
“Frederick
E. Gibson”
Ottawa,
Ontario
October
9, 2007
ANNEX I
(paragraph
[15])
…
Grounds for Review of the Costs Award
The Expert Disbursements
8. In the Costs Award, the Assessment Officer
erred in allowing Apotex to recover a total of $411,473.91 in respect of the
expert fees incurred by eight Apotex witnesses, some of which were unsupported
by the evidence, all of which were unreasonable.
9. The Assessment Officer also committed an
error of principle by misapprehending the legal test for determining the
“reasonableness” of these fees, and by ignoring the relevant guiding
jurisprudence of this Court, including:
(i) The Assessment Officer ordered Merck to pay
Apotex expert fees of $411,473.91, an amount more than 12 times higher than the
total counsel fees taxed at the ordinary Tariff rate (as ordered by Justice
Mosley). Awarding this amount of expert fees is not only punitive, but
unprecedented in a PM(NOC) proceeding and tantamount to issuing Apotex a
“blank cheque award”. This Court has expressed concern with escalating expert
fees, and has issued directions that these fees should not exceed those allowed
for lead counsel in preparing and arguing the case;
(ii) The Assessment Officer awarded Apotex its
costs for eight experts, even though this Court has declared this to be an
“excessive” number of expert witnesses in a PM(NOC) proceeding. Many of
these experts were asked to address the same issues resulting in unnecessary
duplication in the material filed;
(iii) In awarding Apotex expert fees in the amount
of $411,473.91, the Assessment Officer has effectively made a punitive cost
award that is entirely unjustified by the decision on the merits. Justice
Mosley determined that the key issue at stake in this litigation concerned a
therapeutic treatment protocol, namely the once-weekly administration of the 70
mg dose to avoid the side-effects commonly associated with daily doses of
FOSAMAX®. Clearly, Justice Mosley recognized that this was not an overly
complex case, as he explicitly rejected Apotex’s request for costs assessed at
column five and awarded costs “on the ordinary scale”;
(iv) Many of Apotex’s experts, including Dr.
Langer, were involved in previous litigation regarding the drug FOSAMAX® and,
as such, were already well-acquainted with the prior art and issues at play in
this proceeding; and
(v) The Assessment Officer failed to properly
consider and weigh the actual “reasonableness” of the expert fees. In
particular, he placed inordinate focus on the fact that Apotex’s evidence was
accepted for filing, and preferred by Justice Mosley, as justification for making
the Costs Award.
10. The Assessment Officer erred in allowing
Apotex to recover $155,680.00 in respect of the expert fees incurred by Dr.
Langer. Dr. Langer’s expert fees were more than seven times higher than any of
the other expert fees at issue. Merck should not be required to reimburse
Apotex for hiring a “Cadillac” expert. The Assessment Officer failed to
properly assess the reasonableness of Dr. Langer’s fees in view of the fees and
hours billed by other experts in the proceeding for comparable work, the role
his evidence played with respect to the key issues at stake in the litigation,
his involvement in related Canadian litigation, and the inadequate
documentation proffered to support the claimed fees.
11. The Assessment Officer further erred in
allowing Apotex to recover an additional $82,016.00 in respect of the expert
fees incurred by Dr. Langer’s assistant, Dr. Lipp. The Assessment Officer
failed to properly consider that Dr. Lipp did not file an affidavit in this
proceeding, yet charged the second highest amount of expert fees (after Dr.
Langer). In fact, the fees incurred by Dr. Lipp in assisting Dr. Langer were
anywhere from $20,000.00 to $40,000.00 more than experts who filed comparable
affidavit evidence in this proceeding. Further or in the alternative, the
Assessment Officer failed to consider the reasonableness of Dr. Lipp’s fees in
view of the inordinately high amount already being charged by Dr. Langer for
the same work product, and the inadequate documents tendered to support the fees
claimed.
12. The Assessment Officer also erred in allowing
Apotex to recover $28,236.46 in respect of the expert fees incurred by Mr.
Weissburg. The Assessment Officer failed to properly consider the
reasonableness of these fees in view of the weight this evidence was afforded
at trial, and the fees and hours billed by other experts in the proceeding. He
further erred in assessing the reasonableness of these fees on the basis of
inadequate evidence.
13. The Assessment Officer further erred in allowing
Apotex to recover $63,997.27 in expert fees for Dr. Mayersohn. In so doing,
the Assessment Officer erred in assessing fees on the basis of inadequate
documents tendered to support the claimed fees.
14. The Assessment Officer further erred in
allowing Apotex to recover a total of $81,044.18 in expert fees for Dr.
Compston, Dr. Mazess, and Dr. Markowitz. In so doing, the Assessment Officer
failed to consider the involvement, and subsequent accumulated expertise of
these witnesses in related litigation in Canada and other jurisdictions.
15. Further or in the alternative, and for all of
the reasons above, the amount of expert fees assessed is excessive and
unreasonable to the extent that an error of principle was the cause.
The Prior Art Disbursements
16. The Assessment Officer erred in allowing
Apotex to recover $7,205.51 in disbursements related to the collection of prior
art. The Assessment Officer ignored the Applicants’ unchallenged evidence that
this was an unreasonable duplication of costs. In so doing, the Assessment
Officer committed an error of principle by misapprehending the legal test for
considering the evidence of disbursements, including the adequacy of evidence
in support of this disbursement. Further or in the alternative, the amount assessed
was so unreasonable that an error of principle was the cause.
The Travel Disbursements
17. The Assessment Officer further erred in
assessing travel disbursements for two counsel in the amount of $79,881.62.
The Assessment Officer failed to properly assess the reasonableness of this
expense for many of the reasons listed in paragraph 9 above, and failed to
properly weigh the related fact that Apotex did not obtain a court direction to
claim counsel fees for more than one counsel. Further or in the alternative,
the amount assessed was so unreasonable that an error of principle was the
cause.
The Photocopy Disbursements
18. The Assessment Officer also erred in assessing
photocopy disbursements in the amount of $10,000.00 by estimating that eight
copies were necessary to satisfy the service, filing and use of documents by
the Respondent. The Assessment Officer failed to assess the unreasonableness
of this disbursement in view of the evidence provided and by over-estimating
the number of copies necessary to satisfy the requirements of the Federal
Court Rules.
Other Disbursements
19. The Assessment Officer also erred in assessing
disbursements for computer searches, computer time charges, courier/postage,
court reporter/transcripts, meetings, telephone charges and telecopy charges in
the amount of $25,247.66 . The Assessment Officer failed to properly assess
the reasonableness of these expenses in view of many of the reasons listed in
paragraph 9 and committed an error of principle by misapprehending the legal
test on evidence of disbursements, including the adequacy of evidence in
support of these disbursements as being essential to the conduct of the
action. Further or in the alternative, the amount assessed was so unreasonable
that an error of principle was the cause.
…
ANNEX II
(paragraph
[35])
[52] The
Apotex Respondent has claimed $322,512.84 for the expert fees of Dr. Robert
Langer. The Merck Applicants submit in paragraph 72 of its Written Submissions
that “Apotex has failed to demonstrate the reasonableness of this amount in
these proceedings.” The Merck Applicants note that Dr. Langer had already filed
an expert affidavit in the related Fosamax #1 and should have been familiar
with a majority of the prior art. In addition, the Merck Applicants submit that
the number of hours that both Dr. Langer and his assistant Michael Lipp spent
on this file was 474 hours, or 224 hours and 250 hours respectively, which it
submits is approximately four months of full-time work in relation to a single
expert affidavit. (Please note that I have corrected the number of hours
claimed for Dr. Lipp and the total number of hours claimed since it appears
that the Merck Applicants have inadvertently stated an incorrect total).
Finally, the Merck Applicants note that the billing rate of Dr. Langer for this
proceeding appears to have more than doubled between the commencement of all
four associated Fosamax proceedings (T-568-03, T-884-03, T-1053-03 and
T-1106-03) even though they were initiated within three months of each other.
The Merck Applicants submit that this is in essence a “blank cheque award”
approach to hiring expert “Cadillac” witnesses and refer to Apotex Inc. v.
Syntex Pharmaceuticals International Ltd. (1999), 2 C.P.R. (4th)
368 (T.D.) at paragraphs 20 to 21 wherein, the Federal Court refers to
“outrageous” expert fees, “reasonable expenses of the litigation” and that “the
unsuccessful party will not be responsible to compensate for extravagance.”
[53] In response to the Merck
Applicants submissions that a number of the expert fees are excessive,
including those of Dr. Langer and Dr. Lipp as I have outlined above, the Apotex
Respondent repeats its submissions regarding the “extraordinary amounts at
issue” which it suggests may reach one billion dollars. The Apotex Respondent
submits at paragraph 61 of its Reply Submissions that “Apotex sought to engage
one of the highest qualified experts in the field.” I note that a short summary
of some of Dr. Langer’s achievements are attached to the Reply Submissions at
Tab 3 and I do not dispute that Dr. Langer is well regarded and respected
within the world scientific community. In support of its justification to
engage the services of Dr. Langer, the Apotex Respondent refers once again to
the proposition expressed in Apotex Inc., supra, as outlined above in
paragraph [33] that it “is not appropriate to apply the test of hindsight
(20/20 vision) to determine whether a service was for an extra service or frill
not reasonably necessary to defend the client’s position.” In other words, the
Apotex Respondent submits at paragraph 62 of its Reply Submissions, “when
assessing costs, the Courts have stressed the importance of not reviewing a
party’s fees with hindsight.”
[54] The Apotex Respondent notes that
the Merck Applicants took two full days to cross-examine Dr. Langer on his
evidence which it submits favours the significance of his testimony and the
complexity of the proceeding. The Apotex Respondent also notes the Merck
Applicants’ concerns with regard to the number of hours both Dr. Langer and Dr.
Lipp spent on preparing one expert affidavit. The Apotex Respondent submits at
paragraph 64 of its Reply Submissions that the “Merck argument that Drs. Langer
and Lipp ought to have performed their work more efficiently is absurd.” The
Apotex Respondent submits that the quality of work for this evidence was
“performed by some of the most renowned [sic] experts in the
world. For these reasons, the Apotex Respondent submits that the Merck
Applicants’ submissions regarding the expert fees of Dr. Langer and Dr. Lipp
“must be rejected.”
[55] It should be noted that
the Merck Applicants have suggested a proposed billing formula that uses one of
the Apotex Respondent’s expert’s hourly rate and billable hours as benchmarks
to reduce the expert fees of Dr. Langer. When factoring in a suggested reduced
hourly rate and a reduced number of hours for Dr. Langer, the Merck Applicants
submit that Dr. Langer’s expert fees should be reduced to $19,600.00. I am
uncomfortable with this suggestion for the simple reason that the proposal
seems to be a very arbitrary method of determining the expert fees, so I will
not explore or outline this proposal any further.
[56] Exhibit
“K” and Exhibit “L” to the Affidavit of Sharon O’Connor, sworn on March 20,
2006, are the respective copies of the Bills of Costs and copies of the three
charts itemizing the Apotex Respondent’s expert fees disbursements in relation
to the three Fosamax proceedings (T-568-03, T-1053-03 and T-1106-03). During my
review of these three charts itemizing the Apotex Respondent’s expert fees
disbursement amounts, I determined that the amounts of the expert fees
disbursements from the three charts matched the amounts of the expert fees
disbursements claimed in the respective Bills of Costs which were forwarded to
the Merck Applicants for the associated Fosamax proceedings (T-568-03, T-1053-03 and T-1106-03). Initially, I shared the
concerns of the Merck Applicants that Dr. Langer’s invoices (which also
contained the separate invoiced amounts for Dr. Lipp), which are attached to
the Affidavit of Andrew R. Brodkin, sworn March 7, 2006, did not match the
amounts claimed by the Apotex Respondent. However, within Tab 2 of the
Affidavit of Andrew R. Brodkin, sworn March 7, 2006, I found a law firm invoice
from Ivor M. Hughes dated February 4, 2004 which contained two disbursement
amounts of $19,320.00 and $15,456.00 in Canadian dollars for “Professional Fees
(Robert Langer)” and “Professional Fees (Michael Lipp),” respectively. (Please note
that Ivor M. Hughes is a barrister and solicitor associated with Apotex Inc.
and works with the lead counsel’s law firm in patent matters.) When the
$19,320.00 is added to the remaining Dr. Langer invoices, the expert fees for
this individual actually total $322,242.25 in Canadian dollars. I intend to
assess this specific amount regarding the expert fees of Dr. Langer.
[57] During
my review of the three Bills of Costs associated with the Fosamax proceedings (T-568-03, T-1053-03 and T-1106-03) and the expert fees of Dr.
Langer, I estimated and determined that Dr. Langer’s per hour rate ranged from
a low of $597.00 Canadian dollars to a high of $695.00 Canadian dollars
approximately, which took into consideration the currency conversion rate from
U.S. to Canadian dollars at the time that invoice amount was determined.
However, in this proceeding, I note that Dr. Langer invoices indicated that he
charged approximately $1,230.00 to $1,435.00 Canadian dollars per hour rate for
208 hours and approximately $1,845.00 Canadian dollars per hour rate for 16
hours, which took into consideration the currency conversion rate from U.S. to Canadian dollars at the time that
invoice amount was determined. As mentioned in the paragraph immediately above,
the Dr. Langer invoices total $322,242.25 in Canadian dollars when the
conversion is done from U.S. to
Canadian dollars.
[58] I share the concerns of the Merck
Applicants that the per hour rate of Dr. Langer for the associated Fosamax
proceedings (T-568-03, T-1053-03 and T-1106-03) seem to
be at a much lower rate than was invoiced in the case at bar. It is appropriate
regarding the issue of Dr. Langer’s per hour rate that I refer to the sentiment
expressed in Grace M. Carlile, supra, that “… Taxing Officers are often faced with less than
exhaustive proof and must be careful, while ensuring that unsuccessful
litigants are not burdened with unnecessary or unreasonable costs, to not
penalize successful litigants by denial of indemnification when it is apparent
that real costs were indeed incurred.” The Merck Applicants refer to the
sentiment in AlliedSignal Inc., supra, as outlined above in
paragraph [49] and repeated here in part:
[77] … a party has the right to hire
the expert or experts of its choice to advance the merits of its case, but that
does not mean a losing side must, invariably, foot the bill of the expert or
experts chosen by the winning side without questioning the fees and
disbursements claimed. … The jurisprudence is replete with cases that attack
such bills essentially on two fronts; the first, on whether or not the fees
being exacted are reasonable and, second, on whether or not the disbursements
claimed, as otherwise perfectly legitimate items to be included in such a bill,
denote a lavish style of living.
…
[59] It is my opinion that the expert
fees claimed for Dr. Langer by the Apotex Respondent in this proceeding are not
reasonable when I consider the per hour rate claimed for the associated Fosamax
proceedings (T-568-03, T-1053-03 and T-1106-03). Lord Justice
Russell in Re Eastwood (deceased) (1974) 3 All E.R. 603 at 608 referred
to a practical and reasonable approach to the taxation of costs:
…In our view, the system of direct
application to taxation of an independent solicitor’s bill to a case as this has
relative simplicity greatly to recommend it, and it seems to have worked
without it being thought for many years to lead to significant injustice in the
field of taxation where justice is in any event rough justice, in the sense of
much sensible approximation...
I have taken into
consideration the sentiments expressed in AlliedSignal Inc., supra, Grace M.
Carlile, supra, and Re Eastwood (deceased),
supra and it is my opinion that a more conservative
amount is appropriate for these specific expert fees. Using the maximum per
hour rate that I estimated in the associated Fosamax proceedings (T-568-03, T-1053-03 and T-1106-03) of $695.00, I exercise my
discretion to reduce and allow the 224 hours invoiced by Dr. Langer at $695.00
for a total of $155,680.00 in Canadian dollars plus associated GST for this
specific disbursement.
[60] The Apotex Respondent has claimed
$82,016.00 in expert fees for Dr. Lipp’s assistance in preparing the Affidavit
of Dr. Langer. The Merck Applicants submit at paragraph 80 of the Written
Submissions of the Applicants that “Dr. Lipp did not submit an affidavit in
this proceeding.” Regarding the assistance in the preparation of Dr. Langer’s
affidavit, the Merck Applicants, as mentioned above in paragraph [55], submit
that “by charging such high hourly rates in addition to billing time for an
assistant, Dr. Langer and Dr. Lipp should have accomplished their work in this
proceeding far more efficiently.” The Merck Applicants point out that Dr.
Compston and Dr. Markowitz appear to have accomplished the same work in much
less time and their total expert fees are much less than that claimed by Dr.
Langer and Dr. Lipp. For these reasons, the Merck Applicants submit that all
expert fees related to Dr. Lipp be removed from the Bill of Costs since their
proposed reduced amount of $19,600.00 for Dr. Lipp are reasonable and
sufficient in the circumstances of this proceeding.
[61] I do not agree with the Merck
Applicants’ submissions regarding the amount and reasonableness of Dr. Lipp’s
expert fees. The Apotex Respondent’s have referred to Apotex Inc., supra,
as outlined above in paragraph [33], which the Apotex Respondent submits stands
for the proposition whether it is appropriate to apply the test of hindsight to
determine whether a charge for disbursements was not reasonably necessary to
defend their position. However, I rely on the sentiment expressed in Dableh
v. Ontario Hydro, [1994] F.C.J. 1810, which may be more on point, wherein
the Taxing Officer at paragraph 15 stated:
[15] It
may seem anomalous that one professional in the process i.e. the
solicitor; qualifies only for partial indemnification and another
professional in the process i.e. the engineer; qualifies for full
indemnification but that is the scheme of costs relative to the principle of
partial indemnity set up in the Rules and Tariff subject to the authority of
Rule 344(1) or other overriding legislation. The test, particularly
in the face of a disinterested business relationship without collusion between
an expert selling his or her services and a litigant purchasing said services
to fill a void in the expertise requisite to success in the litigation, is not
to cut experts' accounts down to some lowest common denominator. I
have evidence here of real invoices apparently received and paid. 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 the expenditure, it represented
prudent and reasonable representation of the client both in terms of leading
and responding to Rule 482 expert evidence and of filling the void of technical
expertise requisite to the solicitor's preparation and
conduct. Austerity must be a factor in costs: I am not
suggesting that experts should always be indemnified for the entire period of a
trial. Here, Dr. Laithwaite left on the last day of his
testimony but was subsequently consulted briefly via long distance
telephone. At taxation, Defendant's counsel supplemented the
evidence with oral explanation and invited me to infer, from the record, the
importance of Dr. Laithwaite and Dr. Lavers both as experts and
consultants. The Mills affidavit supporting the Bill of Costs did
not address this. My Reasons supra indicate that the uses of experts
encompass both Tariff B1(2)(a) and (b) and further that the taxing party faces
variable results depending on the proof led. Further, they indicate that, in
the absence of sufficiently detailed proof, the result may be necessarily
conservative so as to embrace the interests of the respondent at taxation but
coincidentally not provide an absurd result for the taxing party.
[Emphasis
added]
[62] During my review of the joint
invoices of Drs. Lipp and Langer, I noted that there was ample detail of the
various types of technical work that Dr. Lipp performed while reviewing expert
reports, references and related materials. In addition, I note the ‘Experts
Spreadsheet’ as prepared by the Merck Applicants, clearly compares all of the
‘Claimed Rate converted to Canadian dollars (blended in some cases)’ for the
medical and technical experts. I further note that Dr. Lipp’s per hour rate is
the lowest for any of these specific experts so I consider the use of this
expert to be a prudent and reasonable decision by the Apotex Respondent. For
these reasons and considering the sentiment expressed in Dableh, supra,
as outlined above, I exercise my discretion and allow the disbursements of
$82,016.00 plus associated GST for the expert fees of Dr. Lipp.
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