Date: 20081126
Docket: A-500-07
Citation: 2008 FCA 371
CORAM: RICHARD
C.J.
EVANS
J.A.
SHARLOW
J.A.
BETWEEN:
APOTEX INC.
Appellants
(Respondent)
and
MERCK & CO., INC. and
MERCK FROSST CANADA & CO.
Respondents
(Applicants)
and
THE MINISTER OF HEALTH
Respondent
(Respondent)
REASONS FOR JUDGMENT
EVANS J.A.
[1]
This is an
appeal by Apotex Inc. from a decision of the Federal Court (2007 FC 1035) in
which Justice Gibson granted a motion by Merck & Co. and Merck Frosst
Canada & Co. (“Merck”) under rule 414 of the Federal Courts Rules,
SOR/98-106, to review an assessment of costs by an assessment officer, Mr Robinson,
(2007 FC 312) in favour of Apotex. The dispute concerns the reasonableness of
the fees of two experts claimed as disbursements by Apotex as part of its
costs.
[2]
The costs
assessment arose from a proceeding by Merck under section 6 of the Patented
Medicines (Notice of Compliance) Regulations, SOR/93-133 (“PMNOC
Regulations”). Merck requested an order prohibiting the Minister of Health
from issuing a Notice of Compliance to Apotex for its version of Merck’s osteoporosis
medicine, FOSAMAX, until the expiry of a patent held by Merck which, if valid,
would be infringed by Apotex’s formulation. After a hearing lasting two days,
the Applications Judge, Justice Mosley, held that the allegation of invalidity
of the patent was justified, dismissed Merck’s application for prohibition, and
(at para. 141) awarded Apotex its costs “to be calculated on the ordinary
scale”.
[3]
Merck
challenged a number of the disbursements in Apotex’s bill of costs in a two-day
hearing before the Assessment Officer, who wrote 57 pages of reasons allowing
Apotex $605,575.78 of the $831,900.50 that it had claimed as costs. A number of
these items were reviewed by Justice Gibson in a hearing lasting a day. Before
this Court, the only issue in dispute concerned the fee paid to a Dr Langer
(assisted by a Dr Lipp) for an affidavit of 171 pages dealing with the various
grounds on which the patent was attacked, on some of which the Applications
Judge subsequently found Merck’s patent to be invalid.
[4]
Apotex
claimed as a disbursement the fee of $404,528.84 that it had paid for Dr
Langer’s affidavit, of which $322,512.84 was paid to Dr Langer and $82,016.00
to Dr Lipp. The fee was based on a total of 474 hours’ work at an hourly rate
of $1,389.00 for Dr Langer and $266.24 for Dr Lipp. Merck argued that this fee
was excessive and challenged the reasonableness of both the hourly rate and the
number of hours claimed.
[5]
Apotex
submitted to the Assessment Officer an affidavit from a solicitor stating that
these amounts had been paid by Apotex and were reasonable; Merck did not
cross-examine on this affidavit. The Assessment Officer also had before him the
complete record of the prohibition proceeding, including the experts’ affidavits
and the reasons of Justice Mosley indicating his reliance on the evidence of
Apotex’s experts, Dr Langer included, in reaching his conclusion that the
patent was invalid.
[6]
Merck
submitted no affidavit in support of its allegation that Dr Langer’s fee was
unreasonable, but relied on a comparison with the disbursements claimed by
Apotex in respect of the fees paid to their other expert witnesses. This
revealed that Dr Langer claimed for more than six times the number of hours
claimed by any other Apotex witness.
[7]
Assessment
Officer Robinson rejected (at para. 55) as “very arbitrary” Merck’s suggestion
that Dr Langer’s allowable hours and hourly rate be reduced by using one of
Apotex’s other expert witnesses as a “benchmark”. That proposal would have reduced
the fee to $19,600.00.
[8]
In the
event, the Assessment Officer reduced Dr Langer’s hourly rate to the highest
rate that he had been allowed as an expert witness in earlier related
proceedings, namely $695.00. This reduced the allowable fee for Dr Langer from
$322, 512.34 to $155,860.00, a reduction of approximately 50%. The combined fee
of Dr Langer and Dr Lipp was thus significantly reduced from $404,528.84 to
$237,696.00.
[9]
The
Assessment Officer reached this conclusion on the basis of the evidence before
him. He referred correctly to the general principles established by the
jurisprudence on the taxation of costs, including the warning that a losing
party should not have to pay for “the ‘Cadillac’ of experts”, and noted that,
as is common in assessments, the material before him was far from exhaustive.
[10]
In lengthy
reasons written to dispose of Merck’s motion to review the certificate of
costs, Justice Gibson correctly identified the applicable standard of review as
that prescribed in Bellemare v. Canada (Attorney General) (2004), 437
N.R. 179 (F.CA.), namely, that a Judge may intervene only when an error of
principle is apparent in the assessment, or where it can be inferred from the
amount of the assessment that such an error must have been committed.
[11]
Justice
Gibson held (at para. 36) that, in view of the fact that Dr Langer claimed a
far greater number of hours than Apotex’s other expert witnesses, who had
prepared affidavits on the same aspects of the case as Dr Langer, the
Assessment Officer committed an error in principle in his “arbitrary rejection”
of a reduction in Dr Langer’s allowable hours.
[12]
Having
thus concluded that his intervention was warranted, Justice Gibson reduced Dr
Langer’s hours to the average number of hours claimed by Apotex’s other
experts, namely, 31 hours for Dr Langer and 32 hours for Dr Lipp. The result
was to reduce dramatically their allowable fees from the $237,696.00 assessed
by the Assessment Officer to $31,785.00, which is approximately half the fee
allowed to Apotex’s highest paid expert. In nearly all other respects, Justice
Gibson upheld the assessment.
[13]
With all
due respect, I cannot agree that the Assessment Officer committed an error of
principle warranting the intervention of the Court when he neither reduced Dr
Langer’s allowable number of hours, nor explained explicitly why he had not
done so. Indeed, he had rejected as arbitrary Merck’s suggestion that he should
calculate Dr Langer’s allowable fee by reference to the hours claimed by
another witness. I infer from the officer’s reasons when read as a whole that,
having reduced the hourly rate substantially, he was satisfied that, in light
of all the circumstances, he had arrived at a reasonable total fee. On these
facts, I do not think that he was required as a matter of law to add to already
lengthy reasons by detailing further why he did not also reduce Dr Langer’s
allowable hours.
[14]
In view of
the limited material available to assessment officers, determining what
expenses are “reasonable” is often likely to do no more than rough justice
between the parties and inevitably involves the exercise of a substantial
degree of discretion on the part of assessment officers. Like officers in other
recent cases, the Assessment Officer in this complex case, involving very large
sums of money, gave full reasons on the basis of a careful consideration of the
evidence before him and the general principles of the applicable law.
[15]
Justice
Gibson referred to these considerations, including the importance of finality
of litigation, when he refused (at para. 53) to award any costs in the motion
to review the assessment of costs in the underlying proceeding. In my opinion,
these contextual factors are equally relevant to a determination of whether
when an assessment officer has erred “in principle” in assessing the
reasonableness of costs.
[16]
For courts
to intervene in assessments in any but the plainest cases is likely a poor use
of judicial resources. In my view, devoting three and a half days to
determining the allowable costs of a two-day “summary” proceeding under the PMNOC
Regulations has done little to advance the public interest in the due
administration of justice.
[17]
Since I am
of the view that Justice Gibson ought not to have intervened, it is not
necessary to decide whether he committed any reversible error in “benchmarking”
Dr Langer’s allowable hours on the basis that he did.
[18]
Finally, I
would strongly endorse Justice Gibson’s recommendation (at para. 51) that the
judge who presided at the underlying proceeding is in the best position to
review the assessment of costs and that, whenever possible, the presiding judge
should conduct any review of an assessment officer’s decision.
[19]
Better
still, the parties should always endeavour from the outset to reach an agreement
on costs. And, equally important, when they cannot agree, they should identify
contentious issues at an early stage, and request the presiding judge to give
directions to the assessment officer as provided by rule 403 of the Federal
Courts Rules.
[20]
For these
reasons, I would allow the appeal with costs, and vary the Motion Judge’s order
so that the amounts assessed by the Assessment Officer for the fees of Dr
Langer and Dr Lipp are restored.
“John M. Evans”
“I agree
J. Richard C.J.”
“I agree
K. Sharlow J.A.”
Email this Content