Docket No.: T-320-01
Neutral citation: 2001 FCT 636
Ottawa, Ontario, this 11th day of June, 2001
PRESENT: THE HONOURABLE MR. JUSTICE BLANCHARD
BETWEEN:
APOTEX INC.
Plaintiff
- and -
ELI LILLY AND COMPANY and ELI LILLY CANADA INC.
Defendants
REASONS FOR ORDER AND ORDER
[1] The motion by the defendant, Eli Lilly and Company ("Lilly U.S."), is for an order that Lilly U.S. be struck out of this proceeding on the grounds that it is not a proper party in that the statement of claim fails to disclose a reasonable cause of action against it, pursuant to Rule 221 of the Federal Court Rules, 1998, SOR/98-106.
[2] The motion by the defendant, Eli Lilly Canada Inc. ("Lilly Canada"), is for an order that the statement of claim, be struck in its entirety on the grounds that it discloses no reasonable cause of action. Alternatively, Lilly Canada seeks an order pursuant to paragraph 221(1)(a) of the Federal Court Rules, 1998 that the following paragraphs of the statement of claim be struck on the grounds that they disclose no reasonable action, namely:
(a) 1.(a)(v) - (vii);
(b) 1.(b) - (d);
(1) paragraph 38 (e), (d);
(d) paragraphs 40 - 46.
[3] Both of the above motions are brought pursuant to Rule 369 of the Federal Court Rules, 1998, as amended.
[4] The plaintiff, in the action, seeks to recover all losses suffered in respect of the drug nizatidine by reason of the commencement of a proceeding by the defendants under the Patented Medicines (Notice of Compliance), Regulations, hereinafter (the "Regulations"). In that proceeding the defendants sought an order prohibiting the Minister of National Health and Welfare from issuing a Notice of Compliance to Apotex in respect of the drug nizatidine until the expiry of certain patents owned by the defendants. On February 9, 1995 an order of prohibition issued out of this Court. Ultimately and three years after the application was commenced, Apotex was successful in the Supreme Court of Canada, and the application of prohibition was dismissed.
[5] The plaintiff, Apotex, claims that the lengthy delay occasioned by the commencement of the prohibition proceedings resulted in the plaintiff being prevented from launching its nizatidine product for over two and a half years and suffering substantial harm as a result.
[6] The plaintiff's action is wholly founded upon section 8 of the Regulations, the so-called remedial provisions, which came into force on March 12, 1998. The defendant, Lilly Canada, contends that the plaintiff's entire claim is ill founded in that it is seeking to have section 8 apply retroactively, where the regulation clearly does not apply retroactively; and that the claim is based on a regulation that was not in force until after the plaintiff received its NOC.
[7] In Canada (A.G.) v. Inuit Tapirisat of Can., the Supreme Court of Canada set the appropriate standard to be applied on motions to strike pleadings:
As I have said, all the facts pleaded in the statement of claim must be deemed to have been proven. On a motion such as this a court should, of course, dismiss the action or strike out any claim made by the plaintiff only in plain and obvious cases and where the court is satisfied that "the case is beyond doubt" ....[1]
[8] Further, it must be noted that the onus is clearly on the moving party to establish that there are appropriate grounds to strike the statement of claim. In their submissions, the defendants argue that there is no basis for the plaintiff's claim because there was no application pending on March 12, 1998 [date at which section 8 of the Regulations was amended]. Section 8 of the Regulations is not available to the plaintiff, therefore there is no reasonable cause of action and the statement of claim should be struck.
[9] Essentially, the defendant Lilly Canada bases its submissions on an analysis of the transition provision , subsection 9(6) of the Regulations and its application to the amendment to section 8 of the Regulations. Lilly Canada seeks to distinguish the use of the term "application" in that subsection from the term "appeal" as employed in the Federal Court Rules, 1998.
[10] The plaintiff contends that the defendant Lilly Canada is neither correct in law nor in fact, and advances its own theory in reply to that of Lilly Canada. Suffice it to say that the issues to be determined are sufficiently complex, and not clear and obvious, and should not be disposed of by a motions judge in a preliminary proceeding.
[11] I accept the plaintiff's position that the power of the Court to strike pleadings must be exercised with great care and only in cases where the plaintiff could not possibly succeed. Thus, the Court should only strike pleadings in the clearest of circumstances, where there is no arguable basis for including the matters to which objection has been taken.
[12] In reviewing the statement of claim, and applying the criterion established by the Supreme Court of Canada, I am not convinced that it is "plain and obvious" that the impugned pleadings fail to disclose a reasonable cause of action.
[13] The moving party in this instance has chosen to ask this court to engage in a rather complex exercise of statutory interpretation, which it contends will lead to a conclusion that would justify the "draconian measure" of striking the plaintiff's statement of claim. I am of the view that the interpretation of section 8 and the determination of its objects is a complex matter of statutory interpretation and is better left for argument at trial where proper evidence may be adduced and should not be disposed of by a motions judge in a preliminary proceeding.
[14] The jurisprudence appears to be settled, that contentious legal issues of statutory interpretation will not be dealt with on motion to strike a pleading. Mr. Justice Lemieux in Pfizer Canada Inc. v. Apotex addressed the issue
In the context of issues relating to statutory interpretation, Reed J. in R. v. Amway, [1986] 2 F.C. 312 at 326 was of the view that where there exists a contentious legal issue of a statutory interpretation to be resolved, that issue, not being clear and obvious, should be left for argument at trial and should not be disposed of by a motions judge in a preliminary proceeding.
In Hunt v. Carey Canada Inc., [1990] 2 S.C.R. 959, Wilson J., for the Court, canvassed the applicable principles governing the determination of a motion to strike on the basis of no reasonable claim. She canvassed the origins of the provision now incorporated in rules of practice and considered its application in English and Canadian jurisprudence.
As I see it, Wilson J. endorsed the principle where arguments as to law and fact are intricate and complex, they should be dealt with at trial after all of the evidence is adduced because in such circumstances it is impossible to reach the conclusion that there is no cause of action in fact or law.[2]
[15] For the above reasons the motion of the defendant Lilly Canada for an order to strike the statement of claim in its entirety, and alternatively specific paragraphs as pleaded, will be dismissed.
[16] The defendant Lilly U.S., has brought a motion for an order to be struck out of this proceeding on the grounds that they are not a proper party in that the statement of claim fails to disclose a reasonable cause of action pursuant to Rule 221 of the Federal Court Rules, 1998.
[17] Defendant's counsel argues that section 8 of the Regulations, as amended, cannot apply to the defendant Lilly U.S. since section 8, by referring to a "first person", was only intended to apply to "the person who files or has filed a submission for a Notice of Compliance and has submitted a patent list". The plaintiff argues that this interpretation of section 8 of the Regulations is incorrect in that it ignores the purpose of section 8. Further, the plaintiff contends that Lilly U.S. exercised complete control over Lilly Canada, its wholly owned subsidiary, throughout the prohibition proceedings and in respect of the marketing and selling of nizatidine. Because of this common enterprise, the plaintiff contends that both Lilly Canada and Lilly U.S. can be identified as one company for the purposes of seeking rights against the parent and the subsidiary.
[18] Again, the contentious issues are of a complex nature better suited for determination at trial. The defendant Lilly U.S. has not convinced me "beyond doubt" that the claim against it will fail.
[19] For the above reasons, I find the defendant Lilly U.S. has failed to satisfy the burdensome test enunciated at Rule 221 of the Federal Court Rules, 1998. The motion by the defendant Lilly U.S. to be struck as party will be dismissed.
ORDER
THIS COURT ORDERS that:
1. The motion by the defendant Eli Lilly and Company ("Lilly U.S.") is dismissed.
2. The motion by the defendant Eli Lilly and Company ("Lilly Canada") is dismissed.
3. Costs are awarded to the plaintiff.
"Edmond P. Blanchard"
Judge
FEDERAL COURT OF CANADA
TRIAL DIVISION
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: T-320-01
STYLE OF CAUSE: APOTEX INC. v. ELI LILLY AND COMPANY ET AL.
PLACE OF HEARING: OTTAWA
DATE OF HEARING: APRIL 19, 2001
REASONS FOR ORDER AND ORDER OF BLANCHARD, J.
DATED: JUNE 11, 2001
APPEARANCES:
H.B. RADOMSKI
ANDREW BRODKIN FOR PLAINTIFF
ANTHONY CREBER FOR DEFENDANTS
SOLICITORS OF RECORD:
GOODMANS LLP
TORONTO FOR PLAINTIFF
GOWLING LAFLEUR HENDERSON LLP
OTTAWA FOR DEFENDANTS
[1] Canada (A.G.) V. Inuit Tapirisat of Can., [1980] 2 S.C.R. 735 at para. 740.
[2] [1999] F.C.J. No. 959 at paragraphs 33 to 35.