BETWEEN:
and
THE WELLCOME FOUNDATION LIMITED
and GLAXOSMITHKLINE INC.
Defendants
REASONS FOR ORDERS
[1] These reasons follow the hearing on the 21st of February, 2007, at Toronto, of two motions in appeal from two Orders of Prothonotary Milczynski dated the 30th of August, 2006.
[2] One of the motions in appeal, (the “first motion”), was brought by the Plaintiff Apotex Inc. (“Apotex”) and seeks to set aside the Order of Prothonotary Milczynski in which she ordered the Plaintiff to provide answers to certain questions posed on examination for discovery of Apotex’ nominee and follow-up written interrogatories. The first Order and the questions at issue are attached as Schedule “A” to these reasons.
[3] The second motion in appeal (the “second motion”) was brought by the Wellcome Foundation Limited and GlaxoSmithKline Inc. (the “Defendants”) and seeks to set aside the Order of Prothonotary Milczynski requiring the Defendants to provide answers to certain questions posed to their nominee on examinations for discovery. The Order at issue on the second motion and the related questions are attached as Schedule “B” to these reasons.
[4] Prothonotary Milczynski provided no reasons for the Orders at issue.
BACKGROUND
[5] This action was commenced by Statement of Claim dated the 20th of September, 2001. Apotex seeks various forms of relief in respect of the harm allegedly caused to it by reason of the Defendants’ unsuccessful prosecution of two applications under the Patented Medicines (Notice of Compliance) Regulations[1] seeking to prohibit the Minister of Health from issuing a Notice or Notices of Compliance to Apotex in respect of the drug acyclovir.
[6] Section 8 of the Patented Medicines (Notice of Compliance) Regulations specifically provides for relief by way of damages or profits in respect of harm suffered by reason of any delay in the issuance of a Notice of Compliance caused by the commencement of an application for prohibition under those Regulations. In the claim, at paragraph 47, Apotex has asserted that, by reason of the Regulations and the Defendants’ commencement of the prohibition proceedings, it was prevented from obtaining a Notice of Compliance from mid-February, 1996 to August 21, 1997. In the result, Apotex asserts that it suffered damages flowing from, among other things, lost sales revenues for its acyclovir tablets.
[7] The Defendants have defended this action on the basis that Apotex has no cause of action either under section 8 of the Patented Medicines (Notice of Compliance) Regulations, or in equity and hence, no damages are owing. Alternatively the Defendants allege, even if Apotex has a cause of action under section 8 of the Regulations, either Apotex suffered no damage or its damages were not caused by the Defendants, but resulted instead from Apotex’ own trade practices and its entry into an already confounded market.
[8] The Defendants filed their Statement of Defence on the 8th of March, 2002 and amended their defence on the 17th of April, 2003.
[9] Apotex filed its reply on the 22nd of March, 2002 and its Amended Reply on the 6th of May, 2003.
[10] Apotex’s representative, Dr. Bernard Sherman, was examined for discovery on the 5th of July, 2005. On the 24th of August, 2005, the Defendants brought a motion seeking an Order compelling Dr. Sherman to answer questions that were refused on his examination.
[11] The Defendants’ motion above referred to was heard on the 27th of October, 2005, and, on the 10th of November, 2005, Prothonotary Lafrenière ordered that Apotex answer two (2) questions which had been refused. That same day, counsel for Apotex provided the answers to the questions ordered by Prothonotary Lafrenière to be answered. Following the provision of those answers, the parties agreed that the second round of Dr. Sherman’s examination dealing with the answers given, and questions arising therefrom, would be continued by way of written interrogatories. On March 30, 2006, the Defendants delivered a set of written interrogatories to counsel for Apotex. On the 30th of May, 2006 Apotex delivered its responses to the written interrogatories. In responding, Apotex refused to answer a number of the purported follow-up questions posed by the Defendants as Apotex considered those questions to be irrelevant or otherwise improper for reasons given. The Defendants’ motion before Prothonotary Milczynski leading to the Order that is the subject of motion number one, now before the Court, followed.
[12] The Defendants’ representative on examinations for discovery was examined as part of the first round of examinations on the 3rd of May, 2005. Answers to undertakings arising from that examination, and answers to questions ordered to be answered, were provided by the Defendants on the 11th of August, 2005, the 10th of November, 2005 and the 1st of December, 2005. A second examination of the Defendants’ representative took place on the 30th of January, 2006 and answers to undertakings arising from that examination, and answers to questions ordered to be answered, were provided by the Defendants on the 31st of May, 2006.
[13] Apotex brought a motion to compel answers to questions that were refused by the Defendants in connection with the second round of examinations for discovery, leading to the Order of Prothonotary Milczynski that is before the Court on appeal under motion number two.
STANDARD OF REVIEW
[14] In Apotex Inc. v. Pfizer Canada Inc., Pfizer Corporation and Her Majesty the Queen[2], my colleague Justice de Montigny wrote at paragraph 7 of his reasons:
There is no doubt that discretionary and interlocutory decisions of prothonotaries ought not to be disturbed and reviewed de novo unless the questions raised in the motion are vital to the final issues of the case, or the order is clearly wrong in the sense that the exercise of discretion by the Prothonotary was based upon a wrong principle or upon a misapprehension of the facts: Canada v. Aqua-Gem Investments Ltd., [1993] 2 F.C. 425, at p. 462-3 (F.C.A.); Merck & Co. v. Apotex Inc. v. Apotex Inc., (2003), 30 C.P.R. (4th) 40, at p. 53; Z.I. Pompey Industrie v. Ecu-Line N.V., [2003] 1 S.C.R. 450, at p. 461.
While Justice de Montigny’s decision was reversed on appeal[3], the Federal Court of Appeal took no issue with the foregoing quoted paragraph made in the context of reasons for decision arising in connection with an appeal from a decision of a prothonotary regarding answers refused or taken under advisement at examinations for discovery in an action, as here, under section 8 of the Patented Medicines (Notice of Compliance) Regulations.
[15] Counsel were in agreement that the appeals here before the Court arose out of discretionary and interlocutory decisions of a prothonotary and that the foregoing quoted paragraph accurately
summarizes the appropriate standard of review here, that is to say, the orders under review should not be interfered with unless the learned Prothonotary’s decisions of either of them were or was clearly wrong in the sense that the exercise of discretion by the Prothonotary was based upon a wrong principle or upon a misapprehension of the facts.
APPROPRIATE PRINICPLES OF LAW
[16] In Apotex Inc. v. Pfizer Canada Inc., Pfizer Corporation and Her Majesty the Queen, supra, Justice de Montigny succinctly summarized the principles of law applicable on the matter before him, and thus on this matter, and I can do no better than to adopt his summary. Once again, I am satisfied that the Federal Court of Appeal, in reversing Justice de Montigny, did not differ with his summary of the principles of law but rather differed with his application of those principles to the facts before him. In very brief reasons, essentially a single paragraph, in that matter, Justice Sharlow, for the Court, wrote:
We are all of the view that this appeal should be allowed, the order of the judge set aside, and the order of the prothonotary restored. We accept submissions of the appellant [Apotex Inc.] that the disputed questions are relevant to claims made in the pleadings, either to the allegation of common enterprise or to the computation of damages, assuming that damages may be measured by reference to the respondents’ profits.
[17] Justice de Montigny wrote at paragraphs [8] to [10] of his reasons:
[8] In the present case, Pfizer has argued that the Prothonotary erred by failing to apply the correct principles of law. More specifically, Pfizer submitted that the Prothonotary erred in law by failing to follow the principle that relevance must be determined by the pleadings. Since the Prothonotary has not given reasons for her order, I must assume that she has adopted Apotex’ [here Apotex on motion number one and the Defendants’ on motion number two] arguments and proceed to review her decision on that basis.
[9] There is no dispute between the parties that in order to assess the relevance of a question, one must look at the pleadings. The purpose of discovery, after all, is to secure admissions with a view to advance the case of the parties. As Martineau J. stated in Apotex Inc. v. Merck & Co. et al. (2004), 33 C.P.R.(4th) 387 (F.C.) (QL), at par. 15 (affirmed (2005), 38 C.P.R.(4th) 289 (F.C.A.)):
The purpose of discovery, whether oral or by production of documents, [and here, in part by responses to interrogatories], is to obtain admissions to facilitate proof of all the matters which are properly in issue between the parties. The question of whether a document "relates" to an issue in the case depends upon a reasonable interpretation of the pleadings. In this regard, the party demanding a document must demonstrate that the information in the document may, either directly or indirectly, advance its own case or damage the case of its opponent...
[10] In Hayden Manufacturing Co. v. Canplas Industries Ltd. (1998), 83 C.P.R. (3d) 19 (F.C.), this Court stated that there must be limitations placed on discovery given the resources of the courts and concern over costs, congestion and delay. The Court referred to the earlier case of Reading & Bates Construction Co. v. Baker Energy Resources Corp. (1988), 25 F.T.R. 226 (F.C.) and identified six principles which place limitations on the scope of discovery. It is worth setting out these principles as presented by Prothonotary Hargrave in Hayden, above:
1. The documents to which parties are entitled are those which are relevant. Relevance is a matter of law, not discretion. The test to apply, in determining relevance, is whether information obtained may directly or indirectly advance one party's case, or damage that of the other party.
2. Questions which are too general, or which seek an opinion, or are outside the scope of a proceeding, need not be answered.
3. Discovery is confined to matters relevant to the facts which have been pleaded, rather than to facts which a party proposes to prove and thus relevance, in the context of discovery, limits questions to those that may prove or disprove allegations of fact which have not been admitted.
4. A court should not compel answers which, although perhaps relevant, are not likely to advance the party's legal position.
5. Before requiring an answer to a discovery question, the court should weigh the probability of the usefulness of the answer against the time, trouble, expense and difficulty which might be involved in obtaining it: "One must look at what is reasonable and fair under the circumstances..." (loc. cit.)
6. Fishing expeditions undertaken through far-reaching, vague or irrelevant questions are to be discouraged.
APPLICATION OF THE FOREGOING PRINCIPLES TO THE POSITIONS OF THE PARTIES, AGAINST THE APPROPRIATE STANDARD OF REVIEW
Motion in Appeal Number One
[18] Counsel for Apotex urged that, since the learned Prothonotary provided no reasons for her decision in Order number one, there is simply no basis upon which this Court can discern how she applied the foregoing principles of law and that thus, no deference should be accorded to her decision. Bearing in mind the foregoing, counsel urged that the learned Prothonotary allowed follow-up questions in respect of matters which are not pleaded and to which the answer, if given, could not assist the Defendants in establishing any fact in issue and more particularly, that it is impossible for this Court to discern what, if any, unadmitted facts in the pleadings could or might be proved or disproved by the answers ordered to be provided. Further, counsel urged, the Defendants have, by the questions ordered to be answered, been permitted to pose follow-up questions on a second round of examination where those questions arise out of the initial round of questioning and could reasonably have been asked as follow-up questions on the first round of discovery. Counsel urges that the Order in question encourages a “never ending process that knows no boundaries”[4].
[19] I disagree. By reference to the words of Justice Sharlow in her very brief reasons on the appeal in Apotex Inc. v. Pfizer Canada Inc. et al, supra, I am satisfied that the questions at issue on the first motion in appeal are relevant to claims made in the pleadings, in particular the Amended Statement of Defence, in that they go to allegations of common enterprise and thus to the computation of damages, particularly having regard to vague answers provided by Apotex’ representative on the first round of discoveries that were not amenable to detailed follow-up questions in the context of that round or, if followed up, would likely only have led to greater confusion on the issue of common enterprise and thus on the issue of computation of damages. Put another way, I am satisfied that the questions ordered to be answered, when answered, are likely to advance the Defendants’ position or to contribute towards settlement. The questions do not amount to a fishing expedition undertaken through far-reaching, vague or irrelevant questions.
Motion in Appeal Number Two
[20] Counsel for the Defendants urges that the questions directed to be answered by the Order under appeal in motion in appeal number two go beyond the scope of the pleadings. In particular, as they relate to allegations of control, counsel urges that those allegations, by the pleadings, are strictly related to the direct relationship between the Defendants and do not relate to other enterprises that might be part of a “common enterprise” designed to conceal, or having the effect of concealing, information relevant to damages. Counsel further urges that the questions at issue are vague, far-reaching, go beyond the issue of transfer-pricing and, as such, even if relevant, amount to a “fishing expedition” that could in no way advance Apotex’ legal position.
[21] Once again, by reference to the words of Justice Sharlow above referred to, I cannot agree. I am satisfied that the disputed questions are relevant to claims made in the pleadings in that they relate to common enterprise and to transfer pricing and thus the computation of damages. While the questions at issue are indeed far-reaching, I am satisfied that they at least when answered, may prove or disprove allegations of fact which have not been admitted and that they are thus likely to advance the legal positions of the parties, thus contributing to the trial process herein or to settlement. Weighing the probability of the usefulness of answers to the questions at issue against the time, trouble, expense and difficulty that might be involved in obtaining answers, I am satisfied that the weighing process favours upholding the questions. The questions do not amount to a “fishing expedition” outside the bounds of permitted discovery.
CONCLUSION
[22] Based upon the foregoing brief analysis, against the standard of review earlier enunciated, I cannot conclude that the Orders under review, or either of them, are or is clearly wrong in the sense that the exercise of discretion by the learned Prothonotary was based on a wrong principle or upon a misapprehension of the facts, facts better known to her in the intensive involvement that she and her colleague Prothonotary Lafrenière have had with the progress of this action to date, than they are known to this Judge after a relatively brief hearing of these motions. In the result, both motions in appeal will be dismissed.
[23] Both Apotex and the Defendants seek costs on both motions. Following the precedent set in the Orders of the learned Prothonotary that are here under appeal, costs on both orders flowing from the motions in appeal that are before the Court will be in the cause.
Ottawa, Ontario
March 1, 2007
QUESTIONS
I. B. Written Interrogatories refused as follow-up to the answer to Question No. 8
…
(c) If the “common parent” is a corporation, to provide the date and jurisdiction of incorporation of the “common parent”.
(d) If the “common parent” is a corporation, to advise whether the “common parent” is a private or public company.
(e) If the “common parent” is a corporation, to advise who the officers and directors of the “common parent” were between February 22, 1991 and August 21, 1997.
…
(h) To advise whether Apotex and Nu-Pharm were related companies in that they were each under the control of the “common parent” at that time that the arrangement referred to at paragraph 22 of the Statement of Claim was entered into.
(i) To confirm that, between February 22, 1991 and August 21, 1997, Apotex and Nu-Pharm were directly controlled by the “common parent”.
(j) To advise whether the “common parent” controlled the time and manner in which Medichem would apply for and obtain a compulsory license for acyclovir.
(k) If the “common parent” did not control the time and manner in which Medichem would apply for and obtain a compulsory license for acyclovir, to advise what, if any, role the “common parent” played in determining the time and manner in which Medichem would apply for and obtain a compulsory license for acyclovir.
(l) To advise whether the “common parent” controlled the time and manner in which Nu-Pharm would apply for and obtain a Notice of Compliance in respect of acyclovir.
(m) If the “common parent” did not control the time and manner in which Nu-Pharm would apply for and obtain a Notice of Compliance in respect of acyclovir, to advise what, if any, role the “common parent” played in determining the time and manner in which Nu-Pharm would apply for and obtain a Notice of Compliance in respect of acyclovir.
…
(p) To advise whether the “common parent” controlled the time, manner and jurisdictions in which Nu-Pharm would manufacture and sell Nu-acyclovir.
(q) If the “common parent” did not control the time, manner and jurisdictions in which Nu-Pharm would manufacture and sell Nu-acyclovir, to advise what, if any, role the “common parent” played in determining the time, manner and jurisdiction in which Nu-Pharm would manufacture and sell Nu-acyclovir.
(r) To advise whether the “common parent” controlled which of Apotex, Nu-Pharm or Medichem would apply for a compulsory license for acyclovir.
(s) If the “common parent” did not control which of Apotex, Nu-Pharm or Medichem would apply for a compulsory license for acyclovir, to advise what, if any role it played in determining which of Apotex, Nu-Pharm or Medichem would apply for a compulsory license for acyclovir.
(t) To advise whether the “common parent” controlled which of Apotex or Nu-Pharm would apply for an Abbreviated New Drug Submission for acyclovir.
(u) If the “common parent” did not control which of Apotex or Nu-Pharm would apply for an Abbreviated New Drug Submission for acyclovir, to advise what role, if any, the “common parent” played in determining which of Apotex, Nu-Pharm would apply for an Abbreviated New Drug Submission for acyclovir.
(v) To advise what role, if any, the “common parent” played in arriving at the arrangement referred to at paragraph 22 of the Statement of Claim.
…
II. B. Written Interrogatory refused as follow-up to the answer to Question No. 9
(a) To advise what provinces Nu-Pharm marketed and sold Nu-acyclovir commencing in April 1996.
FEDERAL COURT
SOLICITORS OF RECORD
DOCKET: T-1686-01
STYLE OF CAUSE: APOTEX INC.
Plaintiff
and
THE WELLCOM FOUNDATION LIMITED
And GLAXOSMITHKLINE INC.
Defendants
PLACE OF HEARING: Toronto, Ontario
DATE OF HEARING: February 21, 2007
APPEARANCES:
|
Jerry Topolski
|
|
|
Alison White Norvak |
SOLICITORS OF RECORD:
|
Goodmans LLP Toronto
|
|
|
Ogilvy Renault LLP Toronto |