Date: 20080903
Docket: A-589-05
Citation: 2008 FCA 253
BETWEEN:
SANOFI AVENTIS CANADA INC. and
SANOFI-AVENTIS
DEUTSCHLAND GmbH
Appellants
and
APOTEX INC. and
THE MINISTER
OF HEALTH
Respondents
ASSESSMENT OF
COSTS – REASONS
Charles
E. Stinson
Assessment Officer
[1]
On
November 4, 2005, the Federal Court dismissed an application by the Appellants
for an order prohibiting the Minister of Health from issuing a Notice of
Compliance (NOC) to the Respondent, Apotex Inc. [Apotex], for rampiril
oral capsules of various dosages (rampiril) until after the expiration of
Canadian Patent No. 1,246,457 (the ‘457 Patent) (2nd NOC decision).
That proceeding (2nd NOC proceeding) had been brought further
to a Notice of Allegation (NOA) asserting invalidity due to obviousness, a
position accepted by the Federal Court. Earlier, Apotex had advanced an NOA
asserting that it would not infringe the ‘457 Patent because its rampiril
product would not be used to treat heart failure, a position rejected by the
Federal Court on October 11, 2005 (the 1st NOC decision) in
Federal Court file T-1851-03 and resulting in prohibition of issuance of an
NOC.
[2]
This
proceeding is the Appellants’ appeal of the 2nd NOC decision. The
Federal Court of Appeal allowed with costs Apotex’s motion to dismiss the
appeal (the 2nd NOC appeal decision) and dismissed the appeal
with costs on the ground of mootness. Essentially, Apotex’s position at the
hearing was that the expiry of the ‘457 Patent and the existence of its
undertaking to abandon its appeal (the 1st NOC appeal) (ultimately
discontinued on October 13, 2006) of the 1st NOC decision in the
event of success here, meant that there was no longer a statutory obstacle
preventing issuance of an NOC and that there was nothing left to decide.
[3]
I
have not set out the respective submissions of the parties on counsel fee items
17 (preparation of notice of appeal), 25 (services after judgment), 26
(assessment of costs) and 27 (such other services as the assessment
officer may allow) as I am satisfied that my findings in Abbott Laboratories
v. Canada (Minister of
Health),
[2008] F.C.J. No. 870 (A.O.) [Abbott] apply. I allow fee item 25. I
disallow fee items 17 and 27 as claimed respectively for review of the appeal
and for preparation of the bill of costs. As in Abbott, I refuse to
allow fee item 27 as an alternative to fee item 17. I allow fee item 26 as
presented at the mid-range value used throughout the bill of costs. Fee items
18 (review appeal books) and 19 (memorandum of fact and law) and disbursements
not in issue are allowed as presented. Given my finding below on item 22,
nothing is allowable for item 22(b) (second counsel at an appeal hearing).
I. Apotex’s Position
[4]
Further
to Rules 419 and 420(2)(b) (settlement offer), Apotex claimed doubling of fee
items 21 (preparation and hearing of motion) and 22 amounting to an additional
$2,400. Apotex by e-mail dated June 29, 2006 (e-mail) proposed settlement on
the basis that a Federal Court of Appeal decision in another proceeding (the
jurisprudence) had rendered this appeal moot, the ‘457 Patent having expired,
and asserted that it would seek “full indemnification” of costs if the
Applicants did not agree to a dismissal order. The full text of the e-mail made
it clear that it was a proposal to settle, contained the element of compromise
requisite for Rule 420(2)(b) by precluding costs of the appeal hearing and was
capable of acceptance.
[5]
Apotex
argued that the Appellants’ position that the e-mail could not be read as an
offer to settle is preposterous given their response by their counsel on July
19, 2006, characterizing it as “a proposal which our clients are not prepared
to accept” and asserting that “the proposal was not accepted/acceptable.” The
Appellants’ evidence did not suggest a lack of understanding of what was being
proposed. As well, the Appellant’s materials asserted that the avoidance of an
adverse award of costs had not been any incentive to forego protection of the
‘457 Patent. That position clearly demonstrated the presence of an element of
compromise in the e-mail which was not a call for capitulation and confirmed
the Appellants’ understanding of that.
[6]
Apotex
noted the concession by the Appellants of fee item 21(a) (preparation of motion
to dismiss on the ground of mootness) and 21(b) (attendance on the motion) and
their objection to fee item 22(a) (attendance on the hearing of an appeal) made
on the basis that there had not actually been a hearing of the appeal. Apotex
argued that its success on the motion to dismiss was in effect disposition of the
appeal thereby creating entitlement to costs of the appeal. In the event that
the motion was dismissed, counsel had to be prepared to argue the appeal
itself.
[7]
Apotex
argued that its evidence established prima facie the reasonableness of
computer research ($576.99) and file retrieval ($91.00) put in issue by the
Appellants. The identification of relevant case law for the memorandum of fact
and law (hearing of the appeal) and for the motion to dismiss was prudent. The
charge for file retrieval (storage and access) is not overhead. Both of these
categories of costs have been allowed previously.
II. The Appellants’ Position
[8]
The
Appellants characterized the e-mail as an alleged settlement offer and argued
that it lacked clarity and was no more than a call to capitulate, i.e. by
dropping their appeal in exchange for Apotex not seeking full indemnity for
costs. That was not a compromise. As well, there could be no guarantee of an
award of solicitor-client costs and there was nothing in the record to indicate
conduct warranting such an award. Alternatively, the e-mail was not a clear and
unequivocal offer of settlement, but rather a proposal to attempt negotiation
of a settlement. Said proposal, which here did not request a response, is not
an offer to settle.
[9]
The
Appellants conceded that Apotex is entitled to costs of the appeal for
disbursements and for fee items such as 18 and 19. The filing of a
discontinuance would entitle a party to costs of an appeal (Rule 402), but fee
item 19 could not be claimed if the discontinuance preceded any work on the
memorandum of fact and law. Similarly, if a motion to dismiss an appeal on
grounds such as here for mootness is successful, the effect is that an appeal
hearing never takes place thereby precluding fee item 22 because no attendance
within the meaning of said item occurred. Preparation for a hearing in the
Federal Court of Appeal falls under fee items 18 or 19. Fee item 22 is confined
to appearance. The structure of the Tariff contemplates recovery of a separate
fee item 21(a) for preparation for the motion, but nothing for preparation
for the appeal hearing. The evidence did not adequately support the
disbursements.
III. Assessment
[10]
The
e-mail asserted to opposing counsel that he would “surely agree” that the
jurisprudence had “effectively determined the outcome of two outstanding
appeals between our clients,” being an unrelated appeal and the 1st
NOC appeal and that an order of dismissal was “the only sensible way to
proceed”. The e-mail also addressed a third (unrelated) appeal. Apotex’s
counsel followed up on July 19, 2006, with a request for a response.
[11]
I
do not think that the mingling in the e-mail of references to three different
appeal proceedings confused the Appellants. I think that the e-mail was a
settlement offer although that specific term was not used. Paragraphs 14-16
inclusive of Biovail Corp. v. Canada (Minister of
National Health and Welfare), 61 C.P.R. (4th) 33, [2007]
F.C.J. No. 1018 (A.O.) [Biovail], aff’d [2008] F.C.J. No. 342 (F.C.)
outlined my concerns with Rule 420 in certain circumstances. I allow doubling
of fees here, but I will make minimal allowances to blunt its effect further to
Rules 409 and 400(3)(o) (any other matter considered relevant) because I think
as I did in Biovail that the offer here barely met the technical
threshold for doubling of costs and that the Appellants never for an instant
gave it any consideration in the circumstances of market share at stake.
[12]
The
order dated April 12, 2006 directed that “Apotex’s motion to dismiss the appeal
will be heard at the same time as the appeal by the panel designated by the
Chief Justice to hear the appeal on its merits.” The implication of that
wording was that the hearing of the motion was distinguishable from the hearing
of the appeal, being discrete events. Fee item 21 addresses the former and fee
item 22 the latter. The order dated July 11, 2006 directed that the
“Respondent’s motion to dismiss and the Appeal” were set down for hearing on
October 11, 2006, again indicating to me discrete events. Paragraph 14 of the 2nd
NOC appeal decision held that “the appeal became moot as a result of the
expiration of the patent in issue.” Paragraph 16 stated that the “only issue,
therefore, is whether this Court should nevertheless exercise its discretion to
hear the appeal.” Paragraphs 18-21 inclusive held that the Appellants had not
justified a hearing of the appeal. I agree with the Appellants’ submissions on
item 22 because costs are an indemnity. That is, if there was no hearing,
counsel for Apotex could only have billed for his appearance on the motion.
Therefore, the Appellants are liable to indemnify Apotex only for the costs of
what occurred, i.e. the motion but not for what did not occur, i.e. the appeal
hearing. I disallow the claims under item 22. Doubling per Rule 420(2)(b)
therefore applies only to fee items 21(a) and (b) which I reduce to their
respective minimum values to minimize its effect for the reasons above. As in Biovail,
GST is applied to the relevant fees before they are doubled, but not to the
amount added further to Rule 420(2)(b) because Apotex would not have paid GST
on that added amount.
[13]
Some
of my findings in Abbott addressed appeal proceedings for NOC issues.
The evidence here was comparable to the evidence there. Further to my approach
in Abbott, I disallow file retrieval and allow computer research as
presented. The bill of costs of Apotex, presented at $10,562.69, is assessed
and allowed at $9,122.52.
“Charles
E. Stinson”
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