Date:20130812
Docket:
T-991-10
Citation:
2013 FC 862
BETWEEN:
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FOURNIER PHARMA INC. AND
LABORATOIRES FOURNIER S.A.
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Applicants
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and
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THE MINISTER OF HEALTH AND
SANDOZ CANADA INC.
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Respondents
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ASSESSMENT OF COSTS - REASONS
Bruce
Preston - Assessment Officer
[1]
By
way of Reasons for Judgment and Judgment dated June 15, 2012, the Court dismissed
the Application pursuant to the Patent Medicine (Notice Of Compliance)
Regulations. The Court also held that: “Sandoz Canada Inc. is entitled to
costs in accordance with these reasons”. At paragraph 143 of the Reasons for
Judgment, the Court held: “Sandoz is entitled to its reasonable costs. If the
parties are unable to agree on an amount, they may advise the Court and further
directions will issue”.
[2]
The
parties informed the Court that they were not able to reach an agreement on the
costs awarded to Sandoz Canada Inc. (Sandoz) and on July 3, 2012, the Court
issued a Direction for the exchange of Written Submissions on Costs. On
September 25, 2012, the Court issued one set of Reasons for Order and Order
concerning costs on this file and on file T-1184-10. At page 6 of the Reasons
for Order and Order, the Court rendered the following Order (the Costs Order):
THIS COURT ORDERS THAT in each application, Sandoz in
entitled to its costs assessed as follows:
a.
Its
costs assessed at the upper end of Column III and then reduced by one-third;
b.
Costs
of two counsel, one senior and one junior, at the hearing and when
conducting a cross-examination, provided two were present, and its
costs for one counsel when defending a cross- examination;
c.
Costs
in each application under Item 2 of the Tariff assessed at seven (7)
units for all of the respondent’s records and materials filed, and
seven (7) units under Item 19 for its memorandum of fact and law;
d.
Costs
under Item 8 of the Tariff shall not be increased for the preparation
for the cross-examination of Dr. Muzzio;
e.
Costs
for out of Province travel to be assessed in economy class, for a single
hotel room, and food, excluding entertainment and alcohol expenses;
f.
No
costs are awarded for the consolidation motion; and
g.
Sandoz
is awarded interest on the costs awarded at the rate of 2% from June 15, 2012.
[3]
Further
to the Costs Order, counsel for Sandoz filed an Amended Bill of Costs to be
assessed. Pursuant to the Directions issued January 18, 2013, March 8, 2013 and
April 2, 2013, the parties filed Affidavits and Written Submissions. The
hearing for the assessments of costs on files T-991-10, T-1051-10 and T-1184-10
was held on May 22, 2013.
[4]
At
the commencement of the hearing, counsel for Fournier Pharma Inc. and
Laboratoires Fournier S.A. (Fournier) addressed two over-arching issues; the
entitlement of Sandoz to costs of motions where no costs have been awarded by
the Court and the one-third reduction to be applied after the costs of Sandoz
have been assessed. I will commence by addressing the one-third reduction
first.
[5]
At
the hearing, counsel for both parties made extensive submissions concerning the
validity and infringement arguments made before the Court at the PMNOC hearing
and concerning the costs submissions made to the Court prior to the Costs Order
being rendered. Although I have considered these submissions, I am not going to
review them as I find that, once the Costs Order was rendered, the task in
applying the one-third reduction is centered in the wording of the Costs Order.
[6]
In
Sandoz’ Reply Written Submissions on Costs filed May 17, 2013, counsel submits
that the one-third reduction, by virtue of its place in the Costs Order and the
Written Reasons, clearly indicates that the one-third reduction applies only to
costs that are to be assessed on a scale, for example, the upper end of Column
III. Then, at paragraph 9, counsel submits;
If Justice Zinn had intended to reduce all the costs
including disbursements, he would have done so in a separate paragraph of the
Costs Order, to encompass all costs claimed by Sandoz. The placement of the
one-third deduction in the same paragraph as counsel fees is indicative of
Justice Zinn’s intention to restrict the deduction to counsel fees. As such,
the Assessment Officer does not have the discretion to reduce the disbursements
claimed by Sandoz in direct contradiction to Justice Zinn’s Order.
[7]
At
the hearing, counsel for Fournier submitted that the one-third reduction provided
for in the Costs Order applies to the costs as indicated in the Costs Order,
which includes disbursements and counsel fees. In support of this contention,
counsel referred to paragraph 5 on page 3 of the Reasons for Order and Order
rendered September 25, 2012, which states:
I am of the view that it is just to reduce the costs
otherwise payable to Sandoz; however, I am not persuaded that a reduction of
75% as proposed by Fournier is just. Recognizing that an award of costs is to
be neither punitive nor extravagant, I find a reduction of one-third is
warranted and more in keeping with the Court’s assessment of issues that had
little merit and ought not to have been pursued to hearing.
Counsel for Fournier also contended
that the phrase “costs otherwise payable to Sandoz” includes counsel fees and
disbursements. Further, at paragraph 9 of Fournier’s Responding Costs
Submissions, counsel argues:
Sandoz’ interpretation of the Costs Order erroneously
equates “costs” with “counsel fees”. It is without a doubt that “counsel fees”
and “disbursements” are distinct and discrete items of “costs” as addressed by
Tariff B. A clear reading of the above quoted paragraph (paragraph 5 of the
Reasons for Order on Costs ) indicates that the one-third reduction applies to
the “costs otherwise payable to Sandoz”. This is particularly so given the
quoted paragraph is under the sub-heading, “Level of Award of Costs”. As a
result, Sandoz’ total costs award must be reduced by one-third. (parenthesis
added)
Concerning the definition of costs,
at the hearing of the assessment, counsel for Fournier submitted that as
contemplated by Tariff B, the costs referred to at paragraph 1 of the Costs
Order, include counsel fees and disbursements. Counsel for Fournier also referred
to the Judgment in Adir v Apotex, 2008 FC 1070, in support of the
contention that any reduction should be applied to the total amount of
disbursements and counsel fees. In Fournier’s Responding Costs Submissions,
counsel argues that in citing Adir in the Costs Order, and specifically
quoting the Court’s observation, that an award of costs may be reduced in cases
of divided success, it is clear that Justice Zinn was ordering a one-third
reduction of Sandoz’s total costs award. Referring to the Costs Order, the
final submission of counsel for Fournier was that the Court has explicitly
allowed the seven items as enumerated in the Order and that, outside the seven
items enumerated, there is no authority for any costs to be allowed to Sandoz,
either counsel fees or disbursements. Counsel contended that the Costs Order is
not just a Direction but is an Order that supersedes the award granted to
Sandoz in the original Judgment. Counsel argued that if paragraph 1 of the
Costs Order were to read “counsel fees assessed at the upper end of Column III
and then reduced by one-third”, as suggested by counsel for Sandoz, the effect
would be that Sandoz would not be entitled to any disbursements. Counsel
explained that the reference to costs, which they argue includes counsel fees
and disbursements, in paragraph 1 of the Costs Order is the only place where
disbursements could be included in the Costs Order as the other paragraphs
specifically address counsel fees and interest.
[8]
Concerning
the one-third reduction to costs, at the hearing, counsel for Sandoz submitted
that Assessment Officers, in conducting assessments of costs, are bound by the
Judgment of the Court and not the Reasons of the Court and that in this
particular proceeding the award of counsel fees and disbursements is found in
the Judgment, not in the Costs Order. Counsel contended that paragraph 1 of the
subsequent Reasons for Order and Order dated September 25, 2012, makes it clear
that the Costs Order only deals with the eight issues in dispute between the
parties, those issues enumerated in the Costs Order. Counsel continues by
submitting that Fournier could have raised any issue but they chose to only
raise those eight. Therefore, the Costs Order does not set the limits for all
costs but has the effect of fencing in those eight issues. Counsel submitted
that the Costs Order has no effect on the other costs claimed. Counsel for
Sandoz continued by arguing that in See You In-Canadian Athletes Fund Corp.
v Canadian Olympic Committee, 2009 FC 908, at paragraph 7, it was held that
without a clear Direction of the Court, an Assessment Officer is without
jurisdiction to reduce the costs awarded. Counsel submitted that paragraph 1 of
the Costs Order is clear that the reduction of costs is only applicable to the
counsel fees claimed. Counsel for Sandoz then referred to Sanofi-Aventis
Canada Inc v Apotex Inc, 2009 FC 1138, at paragraph 27, which reduced the
overall award of costs. Counsel argued that this direction clearly specifies
that the overall award of costs was to be reduced; there is no ambiguity as to
whether the reduction is to be applied to the counsel fees alone. Counsel then
referred to Adir (supra) at paragraph 28, which states:
One hopes that, in light of these reasons, the
parties could now come to agreement on costs. However, in the event that this
is not possible, the assessment officer is to allow 90% of Servier’s taxed
costs and disbursements, at the upper end of Column IV and in accordance with
the directions set out in these reasons.
Counsel continued by contending
that at page 12 of Adir (supra), the Court, at paragraph 1 of the
Judgment, awards costs throughout against the Defendants and, at paragraph 2,
clearly states that the “total award is then to be reduced by 10%”. Counsel
argues that although the Court cited the Adir decision in the present
Costs Order, when rendering the Costs Order the Court chose not to follow it.
The Court did not provide for the reduction in a separate paragraph but, in the
same paragraph states; “costs assessed at the upper end of Column III and then
reduced by one-third”, which is clear that the one-third reduction applies to
only those costs assessed pursuant to the scale in Tariff B. Counsel then argued
that if this is not the situation, if the Order is ambiguous, an assessment
officer does not have the jurisdiction to make any other deduction. Sandoz next
submission concerning the one-third reduction was that, if Fournier is correct,
it would negate the need for Assessment Officers. Counsel argued that, to agree
with Fournier would mean that unless the Court provides detailed directions as
to costs as in Janssen-Ortho Inc. v Novopharm Ltd, 2006 FC 1333, a trial
judge would need to enunciate every single disbursement that a party could be
entitled to on an assessment of costs. Finally, at paragraph 14 of Sandoz Reply
Written Submissions on Costs, counsel submits:
Where a judge has held that a party is entitled to
its costs, reasonable disbursements are automatically recoverable even if the
judge did not make any specific references to disbursements. Sandoz’
entitlement to its disbursements originates from Justice Zinn’s judgment in Fournier
Pharma Inc. v Canada (Minister of Health), 2012 FC 741, which stated that
Sandoz was entitled to its costs. Justice Zinn’s Costs Order provided that
disbursements for travel be assessed in economy class etc. but otherwise
Justice Zinn’s Costs Order does not address or alter Sandoz’ right to
reimbursement for its disbursements. Fournier’s allegation that Sandoz is not
entitled to any of its disbursements because Justice Zinn made no reference to
the word “disbursements” in the Costs Order is fundamentally flawed, because
Sandoz’ entitlement to the disbursements had already been established prior to
the Costs Order.
[9]
Upon
completion of their submissions concerning the one-third reduction in costs,
counsel for both parties were asked for submissions concerning the phrase
“Sandoz is entitled to its costs assessed as follows”, found in the preamble to
the Costs Order.
[10]
In
response, counsel for Fournier submitted that the phrase is an indication by
the Court that the Costs Order supersedes the award of costs to Sandoz in the
Judgment and that Sandoz is entitled to costs assessed according to the Costs
Order. Counsel for Fournier argued that this is in keeping with Fournier’s
position concerning the one-third reduction, that Sandoz’ costs, not just legal
fees, but the total costs should be reduced by one-third. Counsel for Fournier further
submitted that at times one does not always perfectly state our words the way
one would in retrospect but that when you look at the overall intent of the
Court, it is clear that the reduction by one-third can only be addressing the
total costs award.
[11]
In
Sandoz response, counsel submitted that grammatically the preamble was seen as
boilerplate since it did not form part of the operative section of the Costs
Order and that it did not supersede the award of costs in the Judgment. In
support of this, Counsel for Sandoz referred to paragraph 3 of the Reasons for
Order on Costs, which states: “The Court has already determined that Sandoz is
entitled to its costs; accordingly, the submission that it should receive
nothing is rejected”. Counsel suggested that the Court is reiterating that
costs have already been awarded so the Costs Order cannot supersede the award.
Counsel for Sandoz submitted that the Costs Order merely fenced in the costs in
dispute between the parties. Concerning Fournier’s contention that one does not
always perfectly state words as one would in retrospect, counsel for Sandoz
argued that if the Court had intended to separate the reduction of one-third
from the scaling of counsel fees, the insertion of a comma by the Court would support
Fournier’s position, but the Court continues through stating “costs assessed at
the upper end of Column III and then reduced by one-third”.
[12]
To
summarize the submissions of counsel for both parties, Sandoz submitted that
paragraph 1 of the Costs Order means that only the legal fees, hereafter
referred to as assessable services, should be reduced by one-third and Fournier
submitted that all costs, assessable services and disbursements, should be
reduced by one-third.
[13]
Upon
reviewing Tariff B of the Federal Courts Rules, it appears that there
are three terms used to describe the subject matter of assessments of costs:
assessable costs, assessable services and disbursements. From Tariff B 2(1), it
is clear that assessable costs are calculated by multiplying the number of units
for each assessable service found in the Table to Tariff B by the unit value
and adding the assessable disbursements allowed by the Assessment Officer. In
other words, assessable costs include both assessable services and
disbursements. At no point does Tariff B refer to assessable costs as being
synonymous with either assessable services or disbursements alone.
[14]
Using
the above framework, I must determine the plain meaning of the phrase: “costs
assessed at the upper end of Column III and then reduced by one-third” as found
in paragraph 1 of the Costs Order. Counsel for Sandoz has submitted that the grammatical
construction of this phrase clearly suggests that the word “costs” is referring
to assessable services due to the reference to Column III immediately
thereafter. Although at first glance it appears that this may be correct, when
framed in the use of the term “assessable costs” as found in Tariff B, I find
that the specific word “costs”, as used by the Court, refers to both assessable
services and disbursement.
[15]
In
addition, counsel for Sandoz has argued that if the Court intended the
reduction to be applied to the overall costs, the Costs Order would have
clearly and explicitly stated so, as was done in Adir (supra) and
Sanofi-Aventis (supra). Once again, I find that in using the term
“costs” instead of “assessable services” or “disbursements”, the Court clearly
directed that the reduction should be applied to the overall costs, including
assessable services and disbursements. I also find that paragraph 5 of the
Reasons for Order, attached to the Costs Order, as set out at paragraph 6
above, supports this finding. In the Reasons, the Court states: “I am of the
view that it is just to reduce the costs otherwise payable to Sandoz”. In this
phrase the Court is clearly using the term “costs” in a manner consistent with
Tariff B to mean assessable services and disbursements otherwise awarded in the
Judgment dated June 15, 2012. This is supported by the fact that there is no
modifier to limit the reference to costs to either assessable services or
disbursements. Further, when taking the Reasons as a whole, there is nothing to
indicate that the Court intended anything different and there is no evidence
that the use of the term costs in the Reasons does not accord with the use of
the term costs in the Costs Order. If this were not the case, there would be no
provision for any disbursements, since the Costs Order makes no other provision
for the assessment of the disbursements, other than the reference to costs in paragraph
1.
[16]
Further,
I do not agree with counsel for Fournier that the preamble to the Costs Order
suggests that the Costs Order supersedes the award of costs in the Judgment. I
also do not agree with counsel for Sandoz, that the preamble is a “boilerplate”
which does not form part of the operative section of the Costs Order, nor do I
agree with counsel for Sandoz that the phrase merely fences in the costs in
dispute between the parties. However, I do find that the preamble “Sandoz is
entitled to its costs assessed as follows” grammatically contains the award of
costs made in the Judgment and encompasses all of the costs allowable. Therefore,
the only costs Sandoz is entitled to are those allowed pursuant to the Costs
Order. By extension, to be consistent with the preamble to the Costs Order and
the Judgment which awarded Sandoz’ costs; paragraph 1 of the Costs Order must
logically encompass all costs, that is, all assessable services and
disbursements.
[17]
Therefore,
for the above reasons, I find that the Court’s reference to costs in paragraph
1 of the Costs Order is a reference to both assessable services and
disbursements and, consequentially, pursuant to paragraph 1 of the Costs Order,
Sandoz’ costs will be assessed and then the total assessed costs, inclusive of
assessable services and disbursements, will be reduced by one-third.
Assessable
Services
[18]
The
second overarching issue raised at the hearing was the approach to be taken
when assessing the costs of interlocutory motions. In Sandoz’ Reply Written Representations,
commencing at paragraph 19, counsel submits:
19.
In
Part “F” of the written reasons for the Costs Order, Justice Zinn dealt with the
costs of interlocutory motions and he stated that “No party is awarded costs of
the consolidation motion.” Also, Justice Zinn specifically wrote in the Costs
Order that “No costs are awarded for the consolidation motion”. Since Justice
Zinn did not disallow costs of other motions, Sandoz is entitled to such costs.
To interpret otherwise would render Justice Zinn’s specific decision regarding
the consolidation motion redundant.
20.
Where
the disposition of an interlocutory motion is silent with respect to costs, it
is appropriate to award costs in the cause. As the entirely successful party in
this proceeding, Sandoz is entitled to costs of the motions other than the
consolidation motion, the only motion for which Justice Zinn specifically
disallowed costs,
In support of this contention, counsel
referred to Letourneau v Clearbrook Iron Works Ltd, 2004 FC 1626 at
paragraph 8.
[19]
At
the hearing of the assessment, counsel for Sandoz argued that in situations
when Fournier brought a motion and Sandoz was compelled to respond, if the
order is silent as to costs and even if Fournier was successful, Sandoz should
be entitled to costs as costs in the cause to the successful party on the PMNOC
Application. Concerning the Protective Order dated October 6, 2010, counsel for
Sandoz contended that, although the Order is silent as to costs, in the normal
course, protective orders are a necessary step in proceedings of this type.
Counsel argued that in other proceedings with protective orders the Court
awarded costs; therefore, Sandoz should be allowed its costs in the cause for
the Protective Order in this proceeding.
[20]
At
the hearing of the assessment, counsel for Fournier submitted that there is not
an issue when the Court awarded costs and when there is an order which
specifically states “without costs”. However; in circumstances where Sandoz has
claimed costs for motions which were disposed of by an order silent as to costs,
counsel for Fournier argues that no costs may be allowed on the assessment.
[21]
In
support of this, at paragraph 16 of Fournier’s Responding Costs Submissions,
counsel submits:
“The discretion described in Rule 400(1) must be a
visible allowance by way of an order or judgment.” Parties are only entitled to
fees for motions when established by order. Where said order is silent as to
costs, none shall be awarded.
Counsel for Fournier refers to Canadian
Environmental Law Assn v Canada(Minister of the Environment), 2001 FCA 233
at paragraph 33, GRK Fasteners Inc v Canada (Attorney General), 2011 FC
1027 at paragraph 18 and Carr v Canada, 2009 FC 1196 at paragraph 4 in
support of this contention.
[22]
Counsel
for Fournier further submitted that Sandoz, in asking that orders silent as to
costs be treated as orders awarding costs in the cause, is asking that the
actual Order of the Court be changed. Concerning the Protective Order, counsel
for Fournier argued that the order, as signed, was a draft order submitted to
the Court on the consent of both parties. Counsel submitted that it was
Fournier’s understanding there was to be no award of costs in the Protective
Order because the order was made on consent.
[23]
Concerning
the Protective Order, by way of rebuttal, counsel for Sandoz submitted that if
Fournier understood that there would be no costs, it was Fournier’s
responsibility to ensure that there was a provision that no costs were to be
awarded.
[24]
Concerning
Sandoz argument, that where an order is silent as to costs it should be taken
that the Court has awarded costs in the cause, the decision counsel referred to
in support of this contention, Letourneau (supra), was a decision
of Prothonotary Hargrave concerning costs on a motion. As Prothonotary Hargrave
was a member of the Court, he was able to exercise his discretion, under Rule
400(1), and award costs in the cause. On the other hand, pursuant to Rules 4,
5.1(1) and 2 of the Federal Courts
Rules,
Assessment Officers are not members of the Court and do not have the necessary
authority to award costs under Rule 400(1). Further, in both Canadian
Environmental Law Assn (supra) and Carr (supra), the
Assessment Officers have relied on other jurisprudence to reach the conclusion
that unless the Court awards costs of a motion, no costs may be allowed by an
Assessment Officer. Concerning the Protective Order, in keeping with the
existing case law, I find that the intentions of the parties are not relevant
at this point as the Court made no award of costs in the Protective Order. For
the above reasons, I find that Sandoz is not entitled to the costs of any
motions for which the Orders of the Court, disposing of the motions, are silent
as to costs.
[25]
I
have reviewed the Amended Bill of Costs of Sandoz and the Orders of the Court
disposing of the motions claimed and, in keeping with the above reasons, I find
that the claims for; the Protective Order, the Motion for reversal of evidence,
the Motion to compel the re-attendance of Dr. Muzzio and, the Motion for
confidentiality, are not allowed. The only other motions for which costs were
claimed are the Motion for leave to file an Affidavit of Sonia Atwell (Motion
for leave) and the Motion to strike the Affidavits of Dr. Muzzio (Motion to
strike). At the hearing of the assessment, counsel for Sandoz withdrew the
claim for the appearance of Christopher Tan, second counsel, at the hearing of
the Motion to strike. As the Orders relating to the Motion for leave and the Motion
to strike awarded costs in the cause, and as Fournier did not oppose the
amounts claimed under Item 5 and Item 6, the amounts claimed for those motions,
other than the claim for Mr. Tan, mentioned above, are allowed as presented in
the Amended Bill of Costs.
[26]
The
next group of assessable services in dispute are the amounts claimed, under
Items 10 and 11 to the Table in Tariff B, for the preparation and attendance at
case management conferences. At the hearing of the assessment, counsel for Fournier
submitted that for the Case Management Conferences held September 14, 2010,
January 10, 2011, January 16, 2012 and March 14, 2012, the issues discussed at
the conferences related to more than this file (T-991-10) and that the amounts
claimed for preparation and attendance should be allocated between files
T-991-10, T-1051-10 and T-1184-10, as the case may be.
[27]
By
way of rebuttal, counsel for Sandoz argued that the issues on each file were
distinct. However, counsel took no issue with splitting the amount claimed for
attendance between the files. On the other hand, counsel for Sandoz argued that
claiming the time for preparation for each file was reasonable since the issues
on each file were distinct and all required separate preparation.
[28]
I
have reviewed the court record for each file and, as submitted by counsel for
Fournier, it appears that the Case Management Conferences held September 14,
2010, January 10, 2011, January 16, 2012 and March 14, 2012 were common to
files T-991-10, T-1051-10 and T-1184-10. On the other hand, Sandoz has
submitted that they take no issue with splitting the amount claimed for
attendance. Further, counsel for Fournier has not presented any evidence to
counter Sandoz’ claim that each file required distinct preparation time. Under
these circumstances, I find that Sandoz’ claims under Item 10 for preparation
are reasonable and necessary and are allowed as claimed. However, I find that
the claims under Item 11 are excessive in that there was only one attendance
encompassing files T-991-10, T-1051-10 and T-1184-10. Therefore, for the Case
Management Conferences held September 14, 2010, January 10, 2011, January 16,
2012 and March 14, 2012, the amounts claimed under Item 11 are allowed as
presented in this file. However, any claims under Item 11 for case management
conferences on these dates in files T-1051-10 and T-1184-10 will not be
allowed. Finally, the amounts claimed under Item 10 and Item 11 for preparation
and attendance at the Case Management Conference held October 21, 2011 were not
contested by Fournier and are allowed as presented.
[29]
At
the hearing of the Assessment, counsel for Sandoz agreed to withdraw the
amounts claimed under Item 13(a), preparation for hearing, for Mary McMillan, as
this amount was not provided for in the Costs Order. As the amounts claimed under
Item 13(a) for Warren Sprigings were not contested, they are allowed as
presented in the Amended Bill of Costs.
[30]
Concerning
Sandoz claim under Item 13(b), preparation for hearing per day in Court after
the first day, for second counsel Mary McMillan, at paragraph 36 of Fournier’s
Responding Costs Submissions, counsel contend that the Costs Order awarded
second counsel for the hearing but made no provision for second counsel for
preparation for the hearing under Item 13 (b).
[31]
Sandoz
only submission concerning the claim for second counsel under Item 13(b) was
that preparation is an essential and integral part of the hearing and that it
was necessary for second counsel to prepare for the hearing.
[32]
Having
reviewed the Costs Order, I agree with Fournier that the Costs Order makes no
provision for second counsel for preparation for hearing. Further, Item 13(b)
in the Table to Tariff B makes no provision for second counsel. Given that
there is nothing granting me the jurisdiction to exercise discretion for second
counsel under Item 13(b), I find that I lack the authority to allow a claim for
second counsel. Therefore, Sandoz’ claim for second counsel under Item 13(b) is
not allowed. As the amounts claimed under Item 13(b) for Warren Sprigings were
not contested, they are allowed as presented in the Amended Bill of Costs.
[33]
At
the hearing of the assessment, counsel for Sandoz was informed that the amounts
claimed for the discontinuance of the Notices of Appeal in files A-99-12 and
A-100-12 could not be allowed on this assessment as they were not Federal Court
matters. Counsel for Sandoz was also informed that this decision was without
prejudice and that Sandoz was able to file Bills of Costs in the appropriate
files and claim the costs of those discontinuances separately.
[34]
Concerning
travel fees (Item 24), at paragraph 37 of Fournier’s Responding Costs
Submissions, counsel contends:
Sandoz has claimed fees for visiting experts
numerous times. However, Sandoz has failed to establish the necessity or
reasonableness of multiple meetings with their expert affiants. Based on the
principles of reasonableness and partial indemnity, Fournier should not be
forced to bear the expense for the convenience of Sandoz’ counsel taking
numerous trips to visit their experts. Fournier submits a more fair and
reasonable approach would be to limit the assessment of Sandoz’ travel fees
such that one counsel be entitled to one general meeting with an expert, and
then once more for defending that expert’s cross-examination.
[35]
At
paragraph 29 of Sandoz’ Reply Written Submissions, counsel argues:
Justice Zinn ordered that Sandoz was entitled to
costs for out of province travel as assessed in economy class, for a single
hotel room, and food, excluding entertainment and alcohol expenses. Sandoz’
Amended Bill of Costs has been prepared in accordance with the Costs Order. All
the visits to the experts were reasonable and necessary for the proceeding as
it progressed through different stages. The assessment of costs is not to be
taken from a position of hindsight. In any event, Justice Zinn did not limit
the number of trips to visit the experts.
[36]
In
support of the contention that an assessment of costs should not be taken from
a position of hindsight, counsel for Sandoz referred to Bayer AG v Novopharm
Ltd, 2009 FC 1230 at paragraph 41, which held that the appropriate test is
whether, in the circumstances existing at the time a litigant’s solicitor made
the decision to incur an expenditure, it represented a prudent and reasonable
representation of the client.
[37]
At
the assessment hearing, counsel for Sandoz submitted that the claim for travel
to meet with Dr. Bogardus is due to the fact that he was a witness and not a
consultant in file T-991-10. Finally, counsel submitted that Fournier has
presented no evidence to support their contention that multiple trips to meet
with experts were not warranted.
[38]
Concerning
travel, at paragraph 12 of the Reasons attached to the Costs Order, the Court
indicates that Sandoz seeks costs to travel outside Ontario to attend cross-examinations
and meet with witnesses. Then at paragraph 5 of the Costs Order, the Court
states: “Costs for out of Province travel to be assessed in economy class, for
a single hotel room, and food, excluding entertainment and alcohol expenses”.
At no point in either the Reasons or the Costs Order does the Court limit the
number of trips allowable. Further, as suggested by counsel for Sandoz, it has
been frequently held that an assessment of costs is not to be taken from a
position of hindsight. Considering this, I can find no reason to second guess
the approach taken by counsel for Sandoz in the advancement of the proceeding.
Further, as submitted by counsel for Sandoz, Fournier has presented no evidence
to support their contention that multiple trips to meet with experts were not
warranted. Therefore, I find that the amounts claimed under Item 24 are
reasonable and necessary for the advancement of the proceeding and are allowed
as presented in the Amended Bill of Costs.
[39]
Concerning
Item 25 and Item 26, counsel for Sandoz withdrew the claim for second counsel,
Mary McMillan, for both of these Items. As the amounts claimed for Warren
Sprigings were not contested, they are allowed as presented in the Amended Bill
of Costs.
[40]
As
all other assessable services claimed were not contested by Fournier, the
amounts claimed for Item 2, Item 8, Item 9, Item 14, Item 19 and Item 28 are
allowed as presented in the Amended Bill of Costs.
Disbursements
[41]
At
the assessment hearing, the first disbursement raised by counsel for Fournier
was the fee paid to Charles Yeung, a consultant who was not called as an expert
witness. Counsel submitted that paragraph 20 in the Affidavit of Warren
Sprigings, was the first indication Fournier had that Sandoz had contracted a
consultant other than their expert witnesses. Counsel argued that there is no
evidence that the consultant added any value other than to provide advice on
the preparation of Sandoz’ case and that the consultant was not qualified as an
expert by the Court. Counsel argued that Sandoz should not be allowed to
recover the costs of the consultant as the services provided are part of the
normal overhead costs of the litigation process. In support of this, counsel
referred to Sanofi-Aventis Canada Inc v Apotex Inc, 2009 FC 1138, at
paragraph 19 and Bristol-Myers Squibb Canada Co v Apotex Inc, 2009 FC
137, at paragraph 192. Counsel further contended that Sandoz had already
retained expert witnesses and the costs of the extra consultant should not be
borne by Fournier. Finally, counsel for Fournier submitted that the case law
submitted by Sandoz, Buddy L. Consultants Ltd v Her Majesty The Queen,
2000 D.T.C. 2157, is a tax case which is factually distinct from the present
PMNOC case.
[42]
In
reply, counsel for Sandoz argued that the Affidavit of Warren Sprigings
presented evidence concerning Mr Yeung and counsel for Fournier did not
cross-examine on that evidence, therefore this evidence is to be taken as
factually true. Counsel contended that the same is true concerning Mr. Yeung’s
qualifications, counsel could have cross-examined Mr. Sprigings. Counsel
further contended that the subject matter of the PMNOC was complex and
necessitated the use of a consultant. Concerning the decision in Buddy
Consultants (supra), counsel argued that the Court allowed a
consultant and there should be no distinction between PMNOC and tax matters;
they are both complex in their own manner. Counsel submitted that due to this
complexity, the fees of a consultant should not be considered overhead as there
was a requirement for this particular case. Counsel further contended that the
fees charged by Mr. Yeung, a PhD student, were considerably less than those
charged by the expert witnesses; therefore, it is much more cost effective to
contract with Mr. Yeung and Sandoz should not be penalized for taking a cost
effective approach. Concerning Sanofi-Aventis (supra) and Bristol-Myers
(supra), counsel for Sandoz argued that these were both decisions of the
Court, which we do not have in the present matter and there is no general
contention that non-testifying experts are excluded from assessments. Counsel
argued that in this matter the Court did not make a restriction and, absent a
clear direction, an Assessment Officer does not have the discretion to limit
this type of reasonable claim.
[43]
At
paragraph 20 of the Affidavit of Warren Sprigings, Sandoz’ evidence concerning
Mr. Yeung, it is suggested that Mr. Yeung “provided Sandoz and its counsel
with searching services related, inter alia, to the prior art and publications
written by the affiant” (emphasis added). Although Sandoz has suggested
that the services of Mr. Yeung were necessary, I question the necessity of
paying him to search for publications written by the expert affiants already
retained for the proceeding. Further, although the Court has not provided directions
concerning consultants in this particular matter, I find that this does not
limit my discretion in reaching a determination concerning consultant fees. On
the other hand, I find that I am not bound by the decisions in Sanofi-Aventis
(supra) and Bristol-Myers (supra). However, I do find them
instructive, specifically, specifically at paragraph 192 of Bristol-Meyers,
which makes a distinction between experts who “attested affidavits” and
“experts or others who may have been retained by Apotex or by these named
experts to assist them” (emphasis added). In that decision, the Court
did not allow costs for experts retained to assist, which is the situation with
the present consultant, Mr. Yeung. Concerning the decision in Buddy
Consultants (supra), at the middle of paragraph 14 it states:
… The Respondent submitted that it was decided not
to call Mr. Groeneveld as a witness because another witness could serve the
purpose.
[44]
Further,
a thorough review of the Buddy Consultants decision reveals that in
allowing the costs of the consultant it was reasoned that there were costs
associated with providing information to the Respondent to determine what
evidence could be elicited from the witness. In the present proceeding, there
is no evidence that Sandoz ever intended to call Mr. Yeung as a witness. If
such evidence was present, the facts in Buddy Consultants may have
assisted in determining whether the disbursements for the services of Mr. Yeung
should be allowed. However, absent evidence that Sandoz intended to call Mr.
Yeung as a witness, I find the fact situation to be more in line with Bristol-Myers
as Mr. Yeung was contracted to provide assistance, specifically searching
services. Therefore, in keeping with the decision in Bristol-Meyers, the
costs associated with contracting Mr. Yeung are not allowed.
[45]
Concerning
photocopies, at the hearing, counsel for Fournier submitted that the proof of
the photocopies claimed is not precise and based on the hearsay evidence of Deborah
Zak who, on cross-examination confirmed that the amounts claimed were provided
by a bookkeeper and that she did not actually review the invoices that had been
submitted to Sandoz or independently verify the amounts claimed and that some
of the copies were for internal use by counsel. Counsel further argued that
Sandoz has provided no evidence concerning what the photocopies were required
for or a description of the charges. In support of the contention that
photocopies are only allowable if they are essential to the conduct of the
action, counsel for Fournier referred to Diversified Products Corp. v
Tye-Sil Corp., [1990] F.C.J. No. 1056. Counsel also referred to Advance
Magazine Publishers Inc v Farleyco Marketing Inc, 2010 FCA 143, in support
of the contention that the less evidence available, the more the assessing
party is bound in the assessment officer’s discretion, “the exercise of which
should be conservative with a view to the sense of austerity”. Finally, at
paragraph 34 of Fournier’s Responding Costs Submissions, counsel argues for an
allowance of $4,933.85 based upon the procedural steps taken in the Application
and the approximate number of pages of documents received. In support of this,
counsel refers to paragraph 19 of the Affidavit of Sonia Atwell.
[46]
At
the assessment hearing, counsel for Sandoz referred to paragraph 26b of the Affidavit
of Deborah Zak and submitted that photocopies are billed separately by each
file number at a rate of $0.25 per copy and are tracked by way of commonly used
automated technology for counting copies. Concerning Fournier’s suggestion that
the evidence is hearsay, counsel suggested that the evidence was admissible as
it related to a regular business record and that in order to meet Fournier’s
standard Ms. Zak would have had to witness the production of each photocopy,
which is unreasonable to expect. Concerning the allowance found at paragraph 19
of the Affidavit of Sonia Atwell, counsel for Sandoz contended that, on
cross-examination, Ms. Atwell confirmed that the count was based on an
estimation of documents served on Fournier and did not include Authorities,
motion materials or documents, such as the compendia produced in Court. Counsel
also argued that Ms. Atwell, on cross-examination, confirmed that not all of
the exhibits to the affidavits were counted as she had not scanned them. Counsel
argued that there is a requirement for seven copies of each record filed; three
copies for the Court, a copy of Fournier, two copies for themselves and a copy
for the expert. Finally, referring to Diversified Products (supra),
counsel submitted that a charge of $0.25 per page was accepted and still
twenty-three years later Sandoz is claiming $0.25 per page.
[47]
Sandoz
has claimed $18,139.69 for photocopying. I have reviewed the evidence of Sandoz
presented at paragraph 26 of the Affidavit of Deborah Zak and note that bulk
discounts are provided to clients for copies when over 1,000 pages is required.
Further, although I find the information provided at the bottom of the table
found in Exhibit P to the Affidavit of Deborah Zak of Sandoz presented at
paragraph 26 of the Affidavit of Deborah Zak helpful, I would have preferred to
have been presented with more detailed descriptions of the claims for
photocopies. On the other hand, because of the technology and records keeping
methods used, I do not find the evidence submitted by Sandoz to be inadmissible
as hearsay. Further, I have reviewed the materials filed of record and although
I find the amount claimed to be excessive, I find the allowance suggested by
Fournier to be excessively low considering the volume of material produced in
this proceeding. Also, before reaching a determination of an allowance for
photocopying, it is important to note that, at the hearing of the assessment, counsel
for Sandoz confirmed that the claim for photocopies included charges for the
photocopying of motion materials. As a significant number of the motions
claimed have not been allowed, this will have an impact on the allowance for
photocopying. Having considered the submissions of counsel and reviewed the
materials submitted, including the cross-examination of Sonia Atwell, and
having noted the volume of materials filed and deducted materials filed for the
motions which have not been allowed on this assessment, and having considered
the bulk discount provided to clients, photocopying is allowed at $10,950.00.
[48]
Concerning
the claim for online case law search fees, at paragraph 37 in Fournier’s
Responding Costs Submissions, counsel submits that Sandoz has provided no
invoices to support the amount claimed and refers to Janssen Inc v Teva
Canada Limited, 2012 FC 48, at paragraph 152, in support of the contention that
it is necessary to demonstrate the relevance of online searches to the
litigation process. Counsel for Fournier concludes by suggesting that an
allowance of $800.00 is a more reasonable amount.
[49]
At
paragraph 33 of Sandoz Reply Written submissions, counsel submits that the
amount claimed for online searches is reasonable and necessary in light of the
complexity of the issues involved in the proceeding. Further, at Exhibit Q of the
Affidavit of Deborah Zak, there is evidence presented concerning the disbursement
for online searches.
[50]
I
have reviewed the Affidavit of Deborah Zak and note that there is no evidence
concerning the relevance of the online searches to the litigation process.
However, it is also noted that the amount charged to Sandoz was only 15 percent
of the actual cost incurred. Further, despite the lack of evidence concerning
specific subject matters searched, given the nature of the proceeding, I do not
find the amount claimed to be unreasonable. Therefore, online computer searches
are allowed as claimed at $1,642.22
[51]
Concerning
disbursements for travel, at paragraph 39 of Fournier’s Responding Costs
Submissions, counsel submits that their arguments for one trip to meet with
expert witnesses prior to cross-examination, as outlined at paragraph 32 above,
apply to Sandoz’ disbursements. Counsel also submits that any disbursements for
second counsel in respect of meetings with experts should be disallowed.
[52]
Counsel
for Sandoz has presented no submissions further to those concerning Item 24
above.
[53]
Counsel
for Fournier has presented no arguments concerning the specific amounts claimed
for travel disbursements. It is noted that Sandoz has not submitted, as they
did in file T-1184-10 that Fournier’s allegation concerning second counsel is
unfounded. However, Sandoz has only claimed for one counsel under Item 24 and a
review of the evidence provided by Sandoz would suggest that only one counsel
travelled to meet with the experts. Therefore, having concluded, at paragraph
42 above, that the assessable services claimed for travel are reasonable and
necessary for the advancement of the proceeding, I find that the disbursements
relating to that travel, as claimed in the Amended Bill of Costs, are
reasonable and necessary. It is also noted that in situations when travel also
related to filed T-1051-10 and T-1184-10, the amount claimed was appropriately
distributed among the files. For these reasons, the amounts claimed for travel
disbursements are allowed as presented for a total of $18,165.60.
[54]
Concerning
Sandoz’ claim of $831.98 for miscellaneous disbursements, at paragraph 40 of
Fournier’s Responding Costs Submissions, counsel submits that on
cross-examination Deborah Zak was unable to produce any receipts for the
expenditures claimed.
[55]
At
paragraph 34 of Sandoz’ Reply Written Submissions, counsel argues that Sandoz
provided evidence of the expenditures at paragraph 27 and Exhibit Q to the
Affidavit of Deborah Zak. Further, counsel refers to Bayer AG v Novopharm
Ltd, 2009 FC 1230, in support of the argument that a party should not be
expected to incur greater expense to prove costs that the costs intended to be
recovered.
[56]
Paragraph
27 and Exhibit Q to the Affidavit of Deborah Zak refer to miscellaneous
expenses for long distance telephone calls, computer case law searches,
facsimile charges, transcripts and courier. It is interesting to note that
these expenses have been claimed elsewhere in the Amended Bill of Costs and,
with the exception of online case law searches; Fournier has not opposed these
disbursements. Further, I have not been provided with any evidence to indicate
that the amounts claimed under miscellaneous disbursements are for expenditures
different than those claimed individually. In fact, it appears that the amounts
claimed are identical, with the exception of transcripts which do not appear to
be included under miscellaneous. Therefore, given the lack of evidence that the
amount claimed is a separate claim, the $831.98 claimed under miscellaneous is
not allowed.
[57]
For
the above reasons, I find that Sandoz entitlement to costs, prior to the one-third
reduction, is $221,794.12. After applying the one-third reduction to assessable
services and disbursements, Sandoz is entitled to a total amount of $147,863.48
[58]
Therefore,
Sandoz’ Bill of Costs is assessed and allowed at $147,863.48 plus 2% post
judgment interest from June 15, 2012. A Certificate of Assessment will be
issued.
“Bruce
Preston”
Toronto, Ontario
August 12, 2013
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