Date:
20071127
Docket:
A-130-07
Citation:
2007 FCA 374
CORAM: NOËL
J.A.
SEXTON
J.A.
TRUDEL
J.A.
BETWEEN:
APOTEX INC.
Appellant
and
THE GOVERNOR IN COUNCIL,
THE MINISTER OF HEALTH and
THE ATTORNEY GENERAL OF CANADA
Respondents
REASONS FOR JUDGMENT
SEXTON J.A.
[1]
This
is an appeal by Apotex Inc. (“Apotex”) from the Order of Shore J. (the “Motions
Judge”), which allowed the respondents’ motion to strike out Apotex’s Notice of
Application and dismissed the proceeding on the basis that Apotex had no
standing to bring the application for judicial review.
[2]
Apotex
is seeking a judicial determination of the vires of a recently enacted
amendment to section C.08.044.1 of the Food and Drug Regulations C.R.C.,
c. 870 by the Regulations Amending the Food and Drug Regulations (New Data
Protection Regulations) (the “New Data Protection Regulations”). The respondents
essentially argue that the judicial review of Apotex is premature: Apotex’s
Application should be struck as they are not currently affected by the New Data
Protection Regulations, though they admittedly will be in the foreseeable
future.
[3]
This
appeal concerns the question of when courts should decide preliminary issues in
a Motion to Strike, as well as the relevant considerations regarding the issue
of standing in a judicial review that is based primarily on vires
grounds. For the reasons that follow, I would allow the appeal.
Background
[4]
Apotex
is a company that manufactures and distributes generic drugs. It is
challenging the recently enacted New Data Protection Regulations, which were
published on October 18, 2006. In its Notice of Application filed less than a
month later, Apotex alleged that the New Data Protection Regulations are ultra
vires its enabling legislation (subsection 30(3) of the Food and Drugs
Act, R.S. 1985, c. F-27), and, to the extent should it be found that the
New Data Protection Regulations are not ultra vires, the enabling
legislation is also ultra vires.
[5]
The
operative portion of the New Data Protection Regulations is subsection
C.08.004.1(3), which provides as follows (emphasis is my own):
|
(3) If a manufacturer seeks
a notice of compliance for a new drug on the basis of a direct or indirect
comparison between the new drug and an innovative drug,
(a) the
manufacturer may not file a new drug submission, a supplement to a new drug
submission, an abbreviated new drug submission or a supplement to an
abbreviated new drug submission in respect of the new drug before the end
of a period of six years after the day on which the first notice of
compliance was issued to the innovator in respect of the innovative drug; and
(b) the
Minister shall not approve that submission or supplement and shall not issue
a notice of compliance in respect of the new drug before the end of a
period of eight years after the day on which the first notice of compliance
was issued to the innovator in respect of the innovative drug.
|
(3) Lorsque le
fabricant demande la délivrance d'un avis de conformité pour une drogue
nouvelle sur la base d'une comparaison directe ou indirecte entre celle-ci et
la drogue innovante :
a) le
fabricant ne peut déposer pour cette drogue nouvelle de présentation
de drogue nouvelle, de présentation abrégée de drogue nouvelle ou de
supplément à l'une de ces présentations avant l'expiration d'un délai de
six ans suivant la date à laquelle le premier avis de conformité a été
délivré à l'innovateur pour la drogue innovante;
b) le
ministre ne peut approuver une telle présentation ou un tel supplément et ne
peut délivrer d'avis de conformité pour cette nouvelle drogue avant
l'expiration d'un délai de huit ans suivant la date à laquelle le premier
avis de conformité a été délivré à l'innovateur pour la drogue innovante.
|
[6]
The
New Data Protection Regulations have two obvious effects: (1) a six-year ban on
the filing of a generic Abbreviated New Drug Submission (ANDS) after the
date of the first Notice of Compliance (NOC) issued to the innovator’s drug;
and (2) an eight-year ban on the issuance of an NOC to a generic product after
the date of the first NOC issued to the innovative drug.
[7]
Apotex
is the largest Canadian generic drug manufacturer. Apotex, like most generic
companies, typically designs and markets products that are bioequivalent to
products already accepted by Health Canada as safe and effective. In
an Affidavit by its President, Dr. Bernard Sherman, Apotex presented evidence
that stated that the New Data Protection Regulations “directly affect the
manner, timing and extent to which Apotex and other generic drug manufacturers
can secure marketing approval for their drug products from the Minister of
Health.” In addition, Dr. Sherman stated that “These regulations will
considerably delay Apotex’s introduction of drug products, resulting in lost
profits and greater drug development expenses.”
[8]
In
his decision that is the subject of this appeal, the Motions Judge first analyzed
whether Apotex had the standing required to bring the Application, and
subsequently addressed the question of whether the Application should be struck
out. The Motions Judge concluded that Apotex was neither directly affected by
the New Data Protection Regulations, nor did it have public interest standing.
Of note is the Motions Judge’s suggestion for how Apotex would be able to
obtain standing, located at paragraphs 25 and 27 of his decision (emphasis in
original):
There is no
evidence that the Data Protection Regulations have been applied to impose any
actual limitation on Apotex -- or on any other drug manufacturer seeking a
notice of compliance. As in the cases described above, the possibility that
Apotex may at some time in the future be affected by the Regulations does
not give it standing now.
[…]
At some
future time, particularly given the known litigiousness of this industry, the
appropriate case will arise in one of two situations. A generic
drug manufacturer will make a submission for a notice of compliance for its
version of a particular drug made by an innovator manufacturer, and the
Minister will make a decision that implements the Data Protection Regulations.
In one situation, the Minister may refuse to accept the submission, or to approve
it, or to issue a notice of compliance. The generic drug manufacturer can then
initiate a Judicial Review Application on appropriate grounds (including, if so
advised, those raised here). In that Application, the Applicant would name as a
Respondent the innovator manufacturer of the drug to which the generic drug is
compared. In the second situation, the Minister may accept the submission,
approve it, and issue a notice of compliance. The innovative drug's
manufacturer can then, on appropriate grounds, initiate a Judicial Review
Application. In that Application, the Applicant would name as a Respondent the
generic manufacturer of the drug to which the notice of compliance is issued.
[9]
Of
note in the decision below is the brief reference made to the decision of Canadian
Generic Pharmaceutical Association v. Canada (Governor in Council) 2007 FC
154, a case also involving the vires of the New Data Protection
Regulations, in which Harrington J. refused to grant a Motion to Strike against
the Canadian Generic Pharmaceutical Association, and also granted Canada’s
Research-Based Pharmaceutical Companies leave to intervene. In that decision,
Harrington J. declined to ultimately adjudicate on the issue of standing,
deciding to leave it to the merits of the application for judicial review. He
observed at paragraph 26:
It seems to
me that the Association has raised serious issues. It is not plain and obvious
to me that it lacks standing in its own right, or as informally representing a
class of litigants, or that public interest mitigates against giving it
standing. Consequently I shall dismiss the motion, without prejudice to the
respondents taking the same points when the application for judicial review is
heard on the merits.
[10]
The
Motions Judge made reference to Harrington J.’s decision, but otherwise did not
address Harrington J.’s reasons in the decision below. The appeal of
Harrington J.’s decision is being heard concurrently with the case at bar.
Issues
[11]
Before
any of the issues are addressed, it needs to be emphasized that, above all
else, this is an appeal of a motion to strike. It is not an appeal of a
preliminary determination of a question of law. Thus, there is really only one
question: is it plain and obvious that the application for judicial review is
bereft of success?
[12]
With
this in mind, that question can be divided into four issues:
·
What
is the standard of review?
·
What
is the test for allowing a motion to strike?
·
Was
it plain and obvious that Apotex was not “directly affected” by the New Regulations?
·
Was
it plain and obvious that Apotex was not entitled to public interest standing?
[13]
It
is not always appropriate for motions to strike to be the context to make a
binding decision on a question of standing, especially when the motion is to
strike out an application for judicial review. Rather, a judge should exercise
her discretion as to whether it would be appropriate in the circumstances to render
a decision on standing, or whether a final disposition of the question should
be heard with the merits of the case. Evans J. (as he then was) briefly
discussed the considerations a judge should take in exercising her discretion
in Sierra Club of Canada v. Canada (Minister of Finance) [1999] 2
F.C. 211 (T.D.) (“Sierra Club”) at paragraph 25 (emphasis added):
In my view, a
court should be prepared to terminate an application for judicial review on a
preliminary motion to strike for lack of standing only in very clear cases. At
this stage of the proceeding, the court may not have all the relevant facts before
it, or the benefit of full legal argument on the statutory framework within
which the administrative action in question was taken. To the extent that
the strength of the applicant's case, and other factors, are relevant to the
ground of discretionary standing, the Court may not be in a position to make a
fully informed decision that would justify a denial of standing.
I agree with Evans J. that this discretion
should be exercised sparingly. This is affirmed by the principle that
applications for judicial review are supposed to be decided summarily, and that
interlocutory motions are to be avoided. This, indeed, as will be discussed
below, explains why the test for the motion to strike on an application for
judicial review is that the Application would be “bereft of success.”
[14]
As
a result, I conclude that the Motions Judge erred by commencing his analysis
with a preliminary determination on the question of standing. The Motions
Judge failed to explicitly exercise his discretion to make a preliminary
determination of standing, as permitted in Finlay v. Canada (Minister of
Finance), [1986] 2 S.C.R. 607, 33 D.L.R. (4th) 321 at paragraph
16 and Sierra Club, supra, at paragraph 26. If a judge does not exercise
her discretion to consider a preliminary question of law at the outset, then all
legal issues considered in a motion to strike must be subsumed within the legal
test for a motion to strike. Thus, absent a clear exercise of judicial
discretion, it is not correct to make a final decision on standing and then
decide on the motion. Rather, the legal standard to grant a motion to strike
must inform all legal questions.
Analysis
1) What is the standard
of review?
[15]
The respondents correctly point out that the
decision to grant or refuse a motion to strike is a discretionary one. When the
lower court judge has made a discretionary decision, it will usually be
afforded deference by the appellate court. However, the latter will be entitled
to substitute the lower court judge’s discretion for its own if the appellate
court clearly determines that the lower court judge has given insufficient
weight to relevant factors or proceeded on a wrong principle of law: Elders
Grain Co. v. Ralph Misener (The), 2005 FCA 139 at paragraph 13. This Court
may also overturn a discretionary decision of a lower court where it is
satisfied that the judge has seriously misapprehended the facts, or where an
obvious injustice would otherwise result: Mayne Pharma (Canada) Inc. v.
Aventis Pharma Inc., 2005 FCA 50, 38 C.P.R. (4th) 1 at paragraph
9.
2) What is the
test for allowing a Motion to Strike?
[16]
A
motion to strike an application for judicial review is a judicial tool which
should be used in very exceptional cases and should only succeed if the
application for judicial review is so clearly improper as to be bereft of any
chance of success: David Bull Laboratories (Canada) Inc. v. Pharmacia Inc.
[1995] 1 F.C. 588 (C.A.); Bouchard v. Canada (Minister of National Defence)
(1999) 187 D.L.R. (4th) 314, 255 N.R. 183 (F.C.A.) at paragraph 12; Syntex
(U.S.A.) L.L.C. v. Canada (Minister of Health) 2002 FCA 289, 292 N.R. 147,
20 C.P.R. (4th) 29 at paragraph 5; Scheuneman v. Canada (Attorney
General) 2003 FCA 194 at paragraph 7. In the context of an action (as
opposed to an application), the test for a motion to strike, as laid out by the
Supreme Court of Canada for summary judgment in Hunt v. Carey Canada Inc.
[1990] 2 S.C.R. 959, 74 D.L.R. (4th) 321 is whether it is “plain and
obvious” that the pleadings disclose no reasonable cause of action. Without
commenting on the appropriateness of applying a test for striking out an action
to a motion to strike out an application, the language used in the Hunt v.
Carey test is useful in framing the legal issues to be decided in this
case.
3) Was it plain and
obvious that Apotex was not “directly affected” by the New Regulations?
[17]
Subsection
18.1(1) of the Federal Courts Act, R.S.C. 1985, c. F-7, limits the right
of judicial review to individuals “directly affected” by the matter:
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An application for
judicial review may be made by the Attorney General of Canada or by anyone
directly affected by the matter in respect of which relief is sought.
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Une demande de contrôle
judiciaire peut être présentée par le procureur général du Canada ou par
quiconque est directement touché par l’objet de la demande.
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[18]
The
Motions Judge concluded that, at the instant moment, Apotex was not directly
affected by the New Regulations. He stated at paragraph 21 of his Reasons:
The Data
Protection Regulations specify particular limitations on certain manufacturers
that seek a notice of compliance for a new drug. Until the situation arises in
which a manufacturer has sought a notice of compliance and the Minister has
acted on it, or refused to act on it, pursuant to the Data Protection Regulations,
the “matter” will have no direct effect, and no party will be directly
affected. Until then, neither the issue nor the Applicant is properly before
the Court.
[19]
This
assertion ignores both the wording of the New Data Protection Regulations as
well as the context of Apotex’s Application. It is unclear how Apotex could
possibly seek a Notice of Compliance in the first place. In order to obtain a
Notice of Compliance, the NOC Regulations require Apotex to file, inter alia,
a New Drug Submission (“NDS”) or ANDS. However, the New Data Protection
Regulations prohibit Apotex from filing an NDS or ANDS until six years after
the date of the first NOC issued to the innovator’s drug. Moreover, there is
no Ministerial discretion as to whether the Minister can issue a NOC. The
Regulations provide that the Minister “shall not issue” an NOC within the eight
year period after the innovator’s NOC has issued.
[20]
In
the words of the appellant, “…Apotex is currently subject to a direct
legislative prohibition” (emphasis in original). Moreover, a generic drug
manufacturer, including Apotex, may be less inclined to develop generic drugs
if it knows that the Minister will not carry out a comparison study because of
the new Regulations. This has impacts that exist in the present, and are not
hypothetical. It was not plain and obvious that the prohibition did not affect
Apotex’s legal and commercial interests; I fail to comprehend how the Motions
Judge concluded otherwise.
[21]
Moreover,
it should be pointed out that this is a vires challenge. It is unclear
why there is a need of a factual context in the first place. Vires
challenges often necessarily occur in a factual vacuum. In this case, the
challenge is concerned with the enactment of regulations pursuant to an enabling
provision. The factual scenario envisioned by the Motions Judge would in no
way assist in the adjudication of such questions as the power to enact
regulations, or any federalism arguments with respect to the enabling
provision.
[22]
Without
deciding this issue on the merits, it seems to us that Apotex has a very strong
argument with respect to being “directly affected” by the New Data Protection
Regulations, and hence it is not plain and obvious that the Application for
Judicial Review is bereft of success.
4) Was it plain
and obvious that Apotex was not entitled to public interest standing?
[23]
Seeing
that this appeal can be disposed on the conclusion that it was clearly not
plain and obvious that Apotex was not directly affected by the New Data
Protection Regulations, I need not address this issue.
Conclusion
[24]
In
conclusion, it was not plain and obvious that Apotex was not directly affected
by the New Data Protection Regulations. I would note that in their Memorandum
of Fact and Law, Apotex did not request that in allowing the appeal the issue
of standing should be decided as a preliminary question. Rather, Apotex only
wanted a reinstatement of its Application. I would thus allow the appeal, and
remit the matter to be decided by the Judge ultimately hearing the Application,
without prejudice to the respondents taking the same points when the
application for judicial review is heard on the merits. The appellant shall
have its costs in this Court and in the Court below.
"J.
Edgar Sexton"
"I
agree
Marc Noël J.A."
"I
agree
Johanne Trudel J.A."
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