Citation: 2007 FC 433
Vancouver, British Columbia, April 23, 2007
PRESENT: Roger R. Lafrenière, Esquire
Prothonotary
BETWEEN:
FOURNIER PHARMA INC. and
LABORATOIRES FOURNIER S.A.
Applicants
and
THE MINISTER OF HEALTH
and APOTEX INC.
Respondents
REASONS FOR ORDER AND ORDER
[1] The Applicants, Fournier Pharma Inc. and Laboratoires Fournier S.A. (hereinafter referred to in the singular as “Fournier”), commenced an application pursuant to section 6 of the Patented Medicines (Notice of Compliance) Regulations (the PMNOC Regulations). The proceeding was discontinued shortly after the Federal Court of Appeal dismissed Fournier’s appeal related to a motion for further productions from the Respondent, Apotex Inc. (“Apotex”). Eleven months after the Notice of Discontinuance was filed, Apotex brought the present motion in writing to recover its costs of the proceeding.
[2] The specific relief requested by Apotex is as follows:
1. An Order awarding Apotex its costs of this proceeding in the amount of $306,865.45, representing its solicitor and client fees and all disbursements;
2. In the alternative, an Order awarding Apotex its costs and all disbursements in the amount of $158,597.40, representing its costs in accordance with Tariff B, Column V, in the maximum allowable units;
3. In the further alternative, an Order awarding Apotex its costs and all of its disbursements in the amount of $146,299.40, representing its costs in accordance with Tariff B, Column III;
4. Costs of this motion.
[3] Fournier does not dispute that Apotex is entitled to its costs of the proceeding, but questions the propriety of the claim for solicitor and client costs, the sufficiency of the evidence adduced in support of the claim for disbursements, and the jurisdiction of this Court to revisit costs awarded by the Federal Court of Appeal.
[4] In short, Fournier submits that an entitlement to solicitor and client costs has simply not been made out by Apotex. It maintains as well that Apotex’s claim for disbursements must be rejected in its entirety on the grounds no evidence has been adduced to satisfy the Court the expenses were either reasonable or necessary for the application. As for the costs before the Court of Appeal, Apotex acknowledges in reply that the amounts contained in Item F of its Bill of Costs are not properly recoverable in the within motion, and has reduced its claim accordingly.
Issues to be Determined
[5] By way of preface, the relief requested on this motion can only apply to those costs that that have not yet been the subject of an order in this proceeding. For example, the protective order issued on August 5, 2003 states that there would be no costs of the motion. If Apotex was dissatisfied with the cost disposition, it could have appealed or requested reconsideration. It is no longer open to Apotex to seek to recover its costs related to that particular motion, let alone increased costs.
[6] In addition, the Order dated October 6, 2003 dismissing Fournier’s motion for production states that the costs of the motion are to be payable by Fournier in any event of the cause. Rule 407 provides that, unless the Court orders otherwise, party-and-party costs should be assessed in accordance with column III in Tariff B. While Rule 403 provides that a party may request that directions be given to an assessment officer respecting the awarding of costs, and while the Court may consider awarding increased costs where the issue was not thoroughly canvassed at the motion, Rule 403 also provides that such requests must be made by motion within 30 days after the order was made. It was therefore incumbent upon Apotex to either seek increased costs at the hearing of the motion, or request directions within the 30 day period provided under Rule 403. Apotex has offered no valid excuse for its delay in seeking directions. As a result, the costs relating to Fournier’s failed motion for production must and will be assessed at the ordinary scale. The same reasoning would apply to the costs of the appeal by Fournier, which was dismissed with costs by Mr. Justice Yvon Pinard on November 7, 2003.
[7] The issues to be determined on this motion can be summarized as follows: (1) whether Apotex is entitled to solicitor-client costs for its costs of this proceeding; (2) if not, whether Apotex is entitled to increased costs; and (3) whether the disbursements claimed by Apotex are reasonable and were properly incurred in connection with the proceeding.
Solicitor and Clients Costs
[8] Apotex submits that it should be allowed to recover its costs on a solicitor-client scale on four grounds: first, that Fournier persisted in prosecuting its application without merit; second, that Fournier brought frivolous appeals; third, that Fournier made baseless allegations of fraud; and fourth, that Fournier brought the application for a collateral and improper purpose. Fournier argues that the claim for solicitor-client costs must fail since the grounds Apotex relies upon fall far short of the “reprehensible, scandalous or outrageous conduct” that is required for an award of solicitor-client costs. I will deal with each ground raised by Apotex in turn.
[9] The fact that a party’s claim has little merit or is weak is not a basis for awarding solicitor-client costs: see Roberts v. Canada, (1999) 247 N.R. 350 (FCA). With respect to the merits of the application, I am not satisfied that the proceeding brought by Fournier was bereft of any possibility of success. Fournier’s contention that the notice of allegation provided no information with respect to the composition of Apotex’s tablets or its method of manufacture was factually correct, and its complaint regarding the sufficiency of the notice of allegation was not wholly unfounded. It is somewhat telling that Apotex proceeded to file extensive affidavit evidence from three deponents, including one expert, in response to Fournier’s evidence. If the application was so clearly without merit, Apotex should have moved immediately to dismiss the proceeding as being frivolous or vexatious, or otherwise an abuse of process, as it was entitled to do under section 6(5) of the Regulations.
[10] As for the alleged lack of merit of Fournier’s motion for production and subsequent appeals, such arguments, including submissions for increased costs, ought to have been made to the prothonotary, judge, or the panel of the Court hearing the particular motion or appeal. In any event, the fact that a party did not succeed on a motion for production does not serve to establish that the application itself is without foundation.
[11] Apotex also maintains that Fournier advanced serious allegations that are baseless, as well as unfounded allegations of fraud, such as implying that Apotex was deliberately misleading by providing incomplete and inaccurate formulation documents. In my view, Apotex’s professed indignation and outrage is misplaced. Taking issue with the correctness or veracity of statements in a notice of allegation, or the credibility of a deponent, is not, in itself, improper in the context of litigation. In any event, I do not agree with Apotex’s characterization of Fournier’s evidence.
[12] Finally, Apotex has failed to establish that Fournier brought the application for the collateral and improper purpose of prohibiting Apotex’s entry into the market for a time sufficient to permit Fournier to list another fenofibrate patent on the Patent Registry. The evidence is undisputed that the application for the second patent was filed by Fournier some six months prior to Apotex delivering the Notice of Allegation at issue in the application. There is no evidence however, other than speculation by Apotex’s counsel, that Fournier brought this application for the purpose of frustrating Apotex’s entry into the market. In any event, a motion for costs is not a substitute for Apotex’s remedy under s. 8(1) of the Regulations to bring an action for damages for delayed market entry.
[13] I am mindful that subsection 6(9) of the PMNOC Regulations provides that the court may make any order in respect of costs, including on a solicitor and client basis, for proceedings brought under subsection (1). It remains that that the Federal Court of Appeal has repeatedly stated that solicitor-client costs are to be awarded only in exceptional circumstances. Such circumstances have not been established in this case.
Increased Costs
[14] Fournier submits that Apotex should be limited to its reasonable costs assessed under column III of Tariff B, particularly in light of its delay in seeking costs. Although the Federal Courts Rules provide a number of deadlines for taking steps in a proceeding, there is no provision directing that a taxation of costs must be requested within a particular time. Preferably, an assessment of costs should be requested within weeks, as opposed to months, of the conclusion of a proceeding. While I agree with Fournier that a party could be estopped from claiming its costs for undue delay, I am not satisfied that the delay in this case was excessively long, or that Fournier was prejudiced as a result of the delay. In the circumstances, I am not prepared to discount Apotex’s claim for costs on the grounds of delay.
[15] Rule 400(1) requires the Court to consider a number of factors when assessing costs. As explained above, I am not satisfied that the allegations of improper conduct on the part of Fournier are founded. Further, the court should be encouraging parties to discontinue or abandon unmeritorious proceedings, and not penalizing them by imposing a substantial award of costs for acting responsibly.
[16] However, Apotex must be viewed as completely successful in defending the application since the proceeding was discontinued unconditionally. Moreover, the application was an intellectual property proceeding brought pursuant to the PMNOC Regulations, requiring a substantial amount of work by counsel for both parties, and involving relatively complex facts and expert evidence. I am therefore satisfied that costs should be awarded in excess of Column III of Tariff B, based roughly on Column V of Tariff B.
Disbursements
[17] With respect to disbursements, Fournier maintains that Apotex has not put forward any evidence to establish that the expenses were reasonable and necessary for this application. It therefore urges that the claim for disbursements be disallowed in its entirety.
[18] Apotex relies heavily on the affidavit of Mr. H. B. Radomski in support of its submission for reimbursement of its disbursements. At paragraphs 43-45 of his affidavit, Mr. Radomski addresses the factual basis for the requested cost award.
Particulars of the fees and disbursements charged by our firm to Apotex are set out on a solicitor and client basis in a Bill of Costs attached hereto as exhibit “N” to my affidavit. The fees and disbursements charged to Apotex in connection with this matter were entirely reasonable, particularly given the seriousness of Fournier’s allegations and that the proceeding had very significant consequences for Apotex.
[19] Exhibit ‘N’ includes a table of disbursements, set out in one page with different categories of expenses in one column, and the amount claimed under each category in an adjoining column. There is no further breakdown of the disbursements and no explanation provided that might assist the court in determining the basis for the disbursements, or reasonableness of the expenses.
[20] By way of example, travel expenses totaling $4,863.00 are claimed, yet Apotex does not identify who was traveling, when the travel took place, the purpose of the travel, or even the mode of travel and the fare. Apotex also claims telephone charges of $805.14, photocopy charges of $4,554.05, and process service fees of $690.00, without providing any details or supporting documents explaining how the amounts were calculated.
[21] In addition, no explanation is provided to substantiate Apotex’s claim for its costs for “translation services” in the amount of $3,303.00, for “meetings” totaling $535.65, and for “prior art charges”, “computer time charges”, “search fee” and “QL Search” in the amount of $819.90. Mr. Radomski’s opinion that the disbursements were “entirely reasonable” is of no assistance, since it is the function of the Court to determine on the evidence whether the disbursements are reasonable and necessary.
[22] The absence of any detailed explanation or supporting documentation is particularly problematic as it relates to the amounts claimed for experts, which represent the lion’s share of the disbursements. No information is provided about the fees charged by the “expert witnesses”, other than the amount they were paid. In fact, Apotex claims the amount of $15,493.50 for a Eli Shefter, and yet this Mr. Shefter does not appear to have produced any affidavit in this proceeding, and his role in this proceeding is not disclosed. As for Gilbert Banker, although there is evidence that he signed a 33 page affidavit and was cross-examined, no explanation is provided as to why his services warranted the rather extravagant fee of $79, 291.72.
[23] The onus was on Apotex to establish, with proper evidence, that its disbursements were related to defending the proceeding and that they were reasonable in the circumstances. Apotex declined to comment in reply on the reasonableness of its disbursements, or to seek leave to adduce further evidence, despite the very direct and detailed challenge by Fournier. Apotex submits that costs obviously and properly incurred in connection with various stages of a proceeding should be accepted and should not require rigorous proof. Since the reasonableness of the amounts claimed is less than obvious, and the propriety of certain disbursements has not been established, I am not prepared to make an arbitrary award for disbursements.
Conclusion
[24] Rule 400 provides discretion for the Court, in appropriate cases, to fix costs in a lump sum in lieu of assessed costs. Recognizing that an award of costs is not an exact science, and taking into account the submissions of the parties, including their draft Bills of Costs, I would fix Apotex’s costs at $20,000, inclusive of GST. The claim for disbursements is denied in its entirety.
ORDER
THIS COURT ORDERS that
1. The Applicants shall pay to the Respondent, Apotex Inc., its costs of the proceeding in the fixed amount of $20,000, inclusive of GST, plus interest at the rate of 5% per annum from the date Apotex’s motion record was served on the Applicants.
2. There shall be no order as to costs of this motion.
“Roger R. Lafrenière”
Prothonotary
FEDERAL COURT
SOLICITORS OF RECORD
DOCKET: T-1800-02
STYLE OF CAUSE: FOURNIER PHARMA INC. et al. v.
THE MINISTER OF HEALTH et al.
MOTION IN WRITING WITHOUT PERSONAL APPEARANCE OF THE PARTIES
REASONS FOR ORDER: LAFRENIÈRE P.
WRITTEN REPRESENTATIONS BY:
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David M. Reive
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Andrew R. Brodkin
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SOLICITORS OF RECORD:
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Dimock Stratton LLP Toronto, Ontario
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Goodmans LLP Toronto, Ontario
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FOR THE RESPONDENT, APOTEX INC. |