T-2806-96
MONTRÉAL, QUEBEC, THE 18th DAY OF SEPTEMBER 1997
PRESENT: RICHARD MORNEAU, PROTHONOTARY
BETWEEN:
HOFFMANN-LA ROCHE LIMITED and
SYNTEX PHARMACEUTICALS
INTERNATIONAL LIMITED,
Applicants,
AND
THE MINISTER OF NATIONAL HEALTH
AND WELFARE and
RHODIAPHARM INC.,
Respondents.
ORDER
This motion is dismissed, the whole without costs.
Richard Morneau
Prothonotary
Certified true translation
Stephen Balogh
T-2806-96
BETWEEN:
HOFFMANN-LA ROCHE LIMITED and
SYNTEX PHARMACEUTICALS
INTERNATIONAL LIMITED,
Applicants,
AND
THE MINISTER OF NATIONAL HEALTH
AND WELFARE and
RHODIAPHARM INC.,
Respondents.
REASONS FOR ORDER
RICHARD MORNEAU,
PROTHONOTARY:
Introduction
The main issue in the case at bar is whether the respondent Rhodiapharm Inc. (Rhodiapharm) has, by its motion under Rule 1618 of the Federal Court Rules (the Rules), convinced this Court that it should be awarded costs on a solicitor and client basis, forthwith or via taxation, on the ground that the applicants (Roche) filed and then withdrew their application for judicial review in circumstances amounting to special reasons within the meaning of Rule 1618.1
More specifically, Rhodiapharm would have us find that Roche clearly filed an application for judicial review (the application) in the knowledge that the application was entirely frivolous and vexatious in fact and in law, and that its sole purpose in so doing was to cause Rhodiapharm to incur unnecessary legal fees, which are assessed at almost $10,000.
I will begin by saying that I am one of those who believe that where one party files an application for the sole purpose of causing economic injury to another party, the applicant should be ordered to pay costs in accordance with the tariff, and even on a solicitor and client basis, should he or she subsequently discontinue2 the application.3
It remains to be seen whether it is plain and obvious4 that such a finding can be made in the case at bar.
Facts
In terms of the calendar, Rhodiapharm served notices of allegation on Roche concerning nine patents on November 11, 1996 pursuant to the Patented Medicines (Notice of Compliance) Regulations (SOR/93-133) (the Regulations).
On December 20, 1996, Roche filed its application to prevent Rhodiapharm from obtaining a notice of compliance from the Minister of National Health and Welfare (the Minister) respecting suppositories containing Naproxen that Rhodiapharm wished to market.
On January 22, 1997, counsel for Rhodiapharm notified counsel for Roche that no evidence would be produced in response to the evidence filed by Roche.
Roche filed its application record under Rule 1606 on March 7, 1997.
After a number of discussions between the Court and counsel for the parties, in respect of which I cannot based on the evidence presented to me place clear blame on counsel for Roche for any delay, the Court, by order, set June 19, 1997 as the date for hearing the merits of the application.
On June 6, 1997, Roche notified Rhodiapharm that it would be prepared to withdraw its application on certain conditions.
Counsel representing Rhodiapharm in this matter saw this letter only on returning to the office on June 16, 1997.
On June 16, 1997, Roche notified this Court that it was withdrawing its application unilaterally.
That same day, Rhodiapharm notified the Court that it wished to reserve the right to seek an order for costs on a solicitor and client basis in light of the circumstances of the instant case.
On June 17, 1997, the Honourable Mr. Justice Dubé granted Roche leave to withdraw its application without prejudice to Rhodiapharm's right to apply for taxation of its costs under Rule 1618; this motion ensued.
Analysis
In light of the above, what can Roche be criticized for doing?
To begin, there are principles or objective facts that permit me to make no negative findings against that party.
First, Roche waited until the end of the 45-day limit provided for in the Regulations before filing its application, which is a possibility open to it under a statutory instrument, so this is in and of itself a neutral fact.
The same is true of the fact that Roche filed its application record under Rule 1606 at the end of the period provided for in that Rule. Under Rule 1614, the Court may reduce the Rule 1606 time limit. Rhodiapharm could have had recourse to this Rule had it believed that Roche should not have the full Rule 1606 time limit, which was extended by more than a month due to the Christmas holidays.
Second, it should be noted - and I assume that counsel for Rhodiapharm agrees with this - that the discontinuance of an application does not in and of itself constitute an aggravating or special circumstance. The combined effect of Rules 1616 and 1618 is surely to permit a party in good faith to withdraw his or her application without having to attend a hearing on the merits.
- Pharmacia
Returning to the notices of allegations (the notices) sent by Rhodiapharm, counsel for Rhodiapharm submits that they clearly reveal a lack of debatable issues of fact or law to be decided, since all the real issues had already been decided by the Appeal Division of this Court.
It can be seen from the evidence that counsel for Rhodiapharm reached this conclusion quite early, on first seeing the application. He apparently concluded on the basis of Pharmacia, supra, that he could not file a motion to strike out Roche's application and that Rhodiapharm accordingly had no choice but to let time run and resign itself to contesting the application on the merits.
In my view, counsel has interpreted Strayer J.A.'s holding in Pharmacia, supra, too narrowly. If he were certain of the above conclusion, he could have contested Roche's application shortly after it was served on him and, in so doing, have stopped the running of time; furthermore, the first 45 days of this period resulted from the Regulations.
In Pharmacia, Strayer J.A. made the following clarification at the end of his analysis (at pages 54-55):
| This is not to say that there is no jurisdiction in this court either inherent or through rule 5 by analogy to other rules, to dismiss in summary manner a notice of motion which is so clearly improper as to be bereft of any possibility of success. (See e.g. Cyanamid Agricultural de Puerto Rico Inc. v. Commissioner of Patents (1983), 74 C.P.R. (2d) 133 (F.C.T.D.); and the discussion in Vancouver Island Peace Society et al. v. Canada (Minister of National Defence) et al., [1994] 1 F.C. 102; 64 F.T.R. 127, at 120-121 F.C. (T.D.)). Such cases must be very exceptional and cannot include cases such as the present where there is simply a debatable issue as to the adequacy of the allegation in the notice of motion. |
(Emphasis added)
Furthermore, if a party is right in mounting a preliminary challenge to an application, I doubt that the Court - even were it to dismiss the preliminary motion - would necessarily order the party that brought the motion to strike to pay costs on a solicitor and client basis. As a rule, such an order is made where the Court detects improper conduct by the parties or their counsel. The existence of exceptions cannot alter this rule. In my view, the fear expressed by Rhodiapharm in this respect is unwarranted.
However, these comments must not be regarded as a liberal view in favour of presenting motions to strike out motions. It must be ensured at the outset that the case in question is indeed exceptional within the meaning of Pharmacia.
- Factual arguments
I am not convinced after reading the notices Rhodiapharm served on the Minister and on Roche that Rhodiapharm's position was on the face of it not debatable.
According to Rhodiapharm, its notices show that, to the exclusion of all other products, Rhodiapharm intended to market only suppositories containing Naproxen, a medicine in respect of which Roche had submitted a number of patent lists to the Minister pursuant to the Regulations. According to Rhodiapharm, Roche's patents for suppositories contained only claims to processes and intermediates.
I agree with Rhodiapharm that these patents, four of them in particular - namely, for the purposes of these reasons, patents 660, 717, 627 and 338 - would not be covered by the Regulations, as was established by this Court in Deprenyl Research Ltd. v. Apotex Inc. (1995), 60 C.P.R. (3d) 501 (F.C.A.), Eli Lilly and Co. v. Apotex Inc. (1996), 68 C.P.R. (3d) 126 (F.C.A.), and Hoffmann-La Roche Ltd. v. Canada (Minister of National Health and Welfare) (1996), 70 C.P.R. (3d) 1.5
In reality, however, the evidence presented to me reveals that the notices, and the service thereof on Roche and on the minister in two subsequent mailings, could have suggested to Roche that they would lead to a debate extending beyond the patents listed by Roche for its suppositories, which appeared not to be covered by the Regulations as a result of the aforementioned decisions of the Appeal Division of this Court.
The testimony of the representative of Rhodiapharm, and her cross-examination, show that the covering letter for the first mailing of the notices, unlike that for the second mailing one month later,6 did not expressly refer to suppositories in its subject heading. Did the notices concern products other than suppositories?
Confusion on this point could have been given credence by Roche as a result of the notices, some of which refer, inter alia, to tablets produced by Roche. As for patent 338, some spaces were not filled in, although they had been filled in for the other patents.
While it must be acknowledged that this confusion could not have been of capital importance to Roche when it filed its application, since the application does not expressly refer to it, there was nevertheless another fact before Roche at that time which could have suggested more strongly that at least one of the notices might concern the tablets produced by Roche. One notice referred to patent 1,204,671 (patent 671), which is not listed by Roche in respect of suppositories. It also appears that this patent is not to be regarded as one containing claims to processes and intermediates.7 Thus, a notice referring to patent 671 was in theory not covered by the earlier debate in the Federal Court of Appeal.
Due to the inclusion of patent 671 in the patent list mentioned in its application to this Court, it is in light of the facts set out above impossible to dismiss with certainty the argument that Roche legitimately had this in mind and wished the Court to consider it before the Minister proceeded further with the approval process. In March 1997, Roche returned to this argument in filing its memorandum.
- Legal arguments
Concerning the legal arguments, it cannot be denied that by its application, Roche was reserving, which, moreover, it also did in its memorandum, the right to raise a legal argument intended to get away from the debate already resolved by the Court of Appeal. According to this argument, patents 717 and 660 contain claims that could be regarded as something other than claims to processes or intermediates. Roche's memorandum also discusses this argument.8
I therefore find that there were both factual and legal justifications for Roche's application of December 20, 1996. Rhodiapharm elected not to file evidence in response to Roche's application, and its arguments did not appear in the record until April 3, 1997, when it filed its memorandum. Rhodiapharm disclosed its arguments respecting patents 338, 671, 717 and 660 in its memorandum, stating, inter alia, that patent 671 is irrelevant, since Rhodiapharm is concerned only with suppositories.
As mentioned supra, Roche informed Rhodiapharm on June 6, 1997 that it was prepared to withdraw its application.9
What are the real reasons for Roche's decision not to attend the hearing on the merits but, rather, to seek the discontinuance of its application?
Roche filed no affidavit on this point. Its counsel told the Court that, satisfied from the procedural documents as a whole that Rhodiapharm was concerned only with suppositories, Roche had made a "business decision" to withdraw its application, since the suppository market represents a small part of its business.
Whether or not it was for this specific reason that Roche decided to discontinue its application, I find that it was justified in filing an application and, in the circumstances, waiting for Rhodiapharm's memorandum before reviewing its position and possibly deciding after such review that the legal arguments it intended to raise in its application, and in its memorandum, were not, when all was said and done, worth hearing on the merits.10
I am accordingly not convinced that costs should be awarded to Rhodiapharm on a solicitor and client basis, forthwith or via taxation, since I cannot find that it is plain and obvious that Roche filed and withdrew its application for frivolous and vexatious reasons. Thus, there are no special reasons, within the meaning of Rule 1618, in the case at bar.
This motion will therefore be dismissed, the whole without costs to any of the parties even though Roche has claimed costs on the motion.
Richard Morneau
Prothonotary
Montréal, Quebec
September 18, 1997
Certified true translation
Stephen Balogh
Federal Court of Canada
Court No. T-2806-96
BETWEEN
HOFFMANN-LA ROCHE LIMITED and
SYNTEX PHARMACEUTICALS
INTERNATIONAL LIMITED,
Applicants,
- and -
| THE MINISTER OF NATIONAL HEALTH AND WELFARE and |
RHODIAPHARM INC.,
Respondents.
REASONS FOR ORDER
FEDERAL COURT OF CANADA
NAMES OF COUNSEL AND SOLICITORS OF RECORD
COURT FILE NO.:
STYLE OF CAUSE:
T-2806-96
HOFFMANN-LA ROCHE LIMITED and
SYNTEX PHARMACEUTICALS
INTERNATIONAL LIMITED,
Applicants,
AND
THE MINISTER OF NATIONAL HEALTH AND WELFARE and
RHODIAPHARM INC.,
Respondents.
PLACE OF HEARING:Montréal, Quebec
DATE OF HEARING:September 8, 1997
REASONS FOR ORDER BY:Richard Morneau, Prothonotary
DATE OF REASONS FOR ORDER:September 18, 1997
APPEARANCES:
Gunars A. Gaikis for the applicants
François Grenier for the respondent Rhodiapharm Inc.
SOLICITORS OF RECORD:
Smart & Biggar for the applicants
Gunars A. Gaikis
Toronto, Ontario
Léger Robic Richard for the respondent Rhodiapharm Inc.
François Grenier
Montréal, Quebec
Deputy Attorney General of Canada for the respondent The Minister of
Robert Jaworski National Health and Welfare
Toronto, Ontario
__________________ 1 Rule 1618 reads as follows:
1618. No costs shall be payable in respect of an application for judicial review unless the Court, for special reasons, so orders.
2 Discontinuance under Rule 1616, which reads as follows:
1616. An applicant may withdraw its application for judicial review at any time
( a) on the filing of the consent of every party and intervenor; or
( b) with leave of the Court.
3 According to Bull (David) Laboratories (Canada) Inc. v. Pharmacia Inc. et al. (1994), 176 N.R. 48, at pages 52 et seq. (Pharmacia), this should also be true where the same finding is made in dismissing an application, regardless of whether the dismissal is on the merits or at a preliminary stage. We will return to that case infra.
4 In my view, this is the test to apply in the instant case, since Roche's application was not heard on the merits and since the application is being dealt with in the same way as if an application to strike had been made.
5 Roche concedes this point, although as will be seen infra , it submits that at law patents 717 and 660 contain claims that could conceivably not be characterized as claims to processes or intermediates.
6 A second mailing was necessary because there was a problem with the first mailing relating to proof of service.
7 See, to this effect, paragraph 21 of Roche's memorandum, filed on March 7, 1997.
8 See paragraph 23 of the said memorandum.
9 Roche cannot of course be criticized for the fact that Rhodiapharm did not learn of this position until June 16, 1997 due to its counsel's absence.
10 On June 26, 1997 the Supreme Court refused leave to appeal in Deprenyl Research Ltd. v. Apotex Inc. , supra, and Eli Lilly and Co. v. Apotex Inc., supra. Roche could not therefore have had this factor in mind.