T-1695-95
BETWEEN:
MERCK FROSST CANADA INC.
- and-
MERCK & CO., INC.
Applicants,
AND:
THE MINISTER OF NATIONAL HEALTH AND WELFARE
- and -
APOTEX INC.
Respondents.
REASONS FOR ORDER
ROTHSTEIN J.:
The issue in this most difficult costs proceeding is the amount of Merck's solicitor-client costs. Merck's total claim exclusive of these costs proceedings is $160,058 consisting of $130,250 fees and $29,808 disbursements. Apotex says these costs are excessive for two reasons: over-allocation and unreasonableness.
Counsel for Merck maintained one time and disbursements docket with respect to lovostatin which was the product involved in these Patented Medicines (Notice of Compliance) Regulations (SOR/93-133) proceedings and in proceedings in court file T-1305-93. The solicitor-client costs undertaken to be paid by Apotex and awarded by the Court was with respect to this court file only, requiring counsel for Merck to allocate from global entries pertaining to this file (T-1695-95) and court file T-1305-93, those amounts attributable only to file T-1695-95. Apotex says that there has been an over-allocation of $23,503 fees and $7,452 disbursements for a total over-allocation of $30,955 to this file (T-1695-95). As to reasonableness, Apotex says, broadly, that excessive amounts of time were expended, too many lawyers were involved, and senior lawyers did certain work that more junior lawyers or other personnel could have done.
On the issue of allocation, Merck says that Apotex's proposed reduction is in the order of forty to forty-five percent of the amounts it allocated and that this is excessive. Counsel for Merck conceded that the material discloses some over-allocations but proposes that any reduction not exceed ten percent. However, Merck has not responded to the very specific, entry by entry explanations of Apotex as to why there has been over-allocation. In the absence of responsive submissions, I accept Apotex's reallocation of fees. However, Apotex has not provided any specifics with respect to alleged over-allocation of disbursements and I am not prepared to reduce disbursements in the amount requested by Apotex. Having regard to the submission of counsel for Merck, I would reduce disbursements only by ten percent.
As to reasonableness, Apotex has not convinced me that the properly allocated solicitor-client costs submitted by Merck are unreasonable. In coming to this conclusion I have had regard to the comments of Henry J. in Apotex v. Egis Pharmaceuticals (1991), 37 C.P.R. (3d) 335 (Ont. Ct. (Gen. Div.)).
The matter of these costs has been the subject of an excessive number of decisions in this file and I do not intend to elaborate here in detail. However, I will briefly say that the issue of solicitor-client costs arose because Apotex, in its own interest, as part of its argument of persuading the Court to dismiss the prohibition application in this case, offered to pay Merck's solicitor-client costs without reservation. Apotex then brought further proceedings to attempt to minimize its obligation. In the decision of June 10, 1997, I found that Apotex's position in these proceedings constituted "artful casuistry".
Apotex now argues that Merck's costs are unreasonable on the basis of hindsight. It seeks to make comparisons with the amount of its own solicitor-client costs. As I have said before, it challenges the number of lawyers involved, and the appropriateness of certain lawyers doing certain types of work.
The reasonableness of costs must be viewed at the time they are incurred. Apotex says, for example, that Merck need not have proceeded with preparing an application record. However, when this work was done, Merck was expecting that the prohibition application would be determined on its merits and the Court had indicated that this file would proceed without delay. In hindsight, this work served no useful purpose but that could not be known when it was done and it was not premature at the time.
Where additional lawyers were involved the time generally was minimal. It is not unreasonable to consult with colleagues when major litigation is proceeding, especially when serious difficulties are being encountered.
A law firm is generally expected to assign lawyers to do work appropriate for their level of experience and expertise. However, there may be exceptions where, for example, although the work is quite pedestrian, the consequences of any error could be devastating, e.g. missing a filing deadline and thereby losing patent protection. While one might question an occasional entry, there is no indication of systematic over-lawyering.
While I do not disregard Apotex's solicitor-client fees, I place little weight on them. Merck had the burden of proof. The product involved was an important one to Merck. I do not know the details of the relationship between Apotex and Merck and their respective counsel and the instructions given. While it is obvious Merck took its position in this case with the utmost seriousness, I do not know whether Apotex approached the merits with the same degree of rigour, especially in view of the fact that this prohibition application arose out of a second notice of allegation issued by Apotex with respect to lovostatin. I find the guidance provided by Apotex's solicitor-client costs minimal.
Upon a review of the material before me, I conclude that the work done by counsel for Merck was not unreasonable and I would not reduce Merck's costs on this account.
With respect to the costs of these proceedings, Apotex has satisfied me that much unnecessary time and expense has been incurred solely by reason of Merck's counsel not disclosing, at an early stage, its consolidated lovostatin docket, and the requirement to allocate. It is clear that this information was withheld. While I do not find fault with a consolidated docket, when indemnity of solicitor-client costs is the issue and allocation is necessary, counsel for Merck should have disclosed the necessity to allocate to Apotex at a very early stage, particularly since Apotex's inquiries must have made it clear that this was an issue. I am satisfied that had Merck's counsel done so, much of the difficulty and costs that have now arisen could have been avoided. Having regard to the allocation problem, I think this is a case in which costs of these proceedings should be awarded to Apotex in the sum of $15,000 inclusive of disbursements.
From the material before me, it appears the parties together have incurred costs of well over $50,000 with respect to these costs proceedings alone. From the time when solicitor-client costs were first undertaken to be paid by Apotex and were awarded by the Court, the Court has strongly encouraged the parties to settle the matter. In these cases under the Regulations the parties may not be expected to settle the fundamental issue of whether a prohibition application should be granted or refused. However, costs are another matter. I infer from the material before me that Apotex has been more flexible and reasonable than Merck. Spending a dollar to make or save fifty cents is a very poor investment strategy. The use of a little more reasonableness by Merck would have been a better one.
Merck is entitled to solicitor-client fees of $106,747 plus disbursements of $26,827 for a total of $133,574.
Apotex is entitled to costs of this costs proceeding in the sum of $15,000 inclusive of disbursements.
"Marshall E. Rothstein"
J U D G E
CALGARY, ALBERTA
OCTOBER 29, 1997
T-1695-95
BETWEEN:
MERCK FROSST CANADA INC.
- and-
MERCK & CO., INC.
Applicants,
AND:
THE MINISTER OF NATIONAL HEALTH AND
WELFARE
- and -
APOTEX INC.
Respondents.
========================
REASONS FOR ORDER
========================
FEDERAL COURT OF CANADA
TRIAL DIVISION
COURT FILE NO.: T-1695-95
STYLE OF CAUSE: MERCK FROSST CANADA INC.
- and -
MERCK & CO. INC.
Applicants,
AND
THE MINISTER OF NATIONAL
HEALTH AND WELFARE
- and -
APOTEX INC.
Respondents.
PLACE OF HEARING: Ottawa, Ontario
REASONS FOR ORDER OF THE HONOURABLE MR. JUSTICE
ROTHSTEIN
DATED October 29, 1997
APPEARANCES:
Mr. Nelson Landry and
Ms. Judith Robinson for the Applicants
Mr. Andrew Brodkin
and Ms. Mya Rimon for the Respondent - Apotex
Mr. Rick Woyiwada for the Respondent - Dept. of Justice
SOLICITORS OF RECORD:
Ogilvy Renault
Montreal, Quebec for the Applicants
Goodman, Phillips & Vineberg
Toronto, Ontario for the Respondent Apotex
George Thomson
Deputy Attorney General
of Canada
Ottawa, Ontario for the Minister of National Health
& Welfare