Date: 19990929
Docket: T-2300-97
BETWEEN:
APOTEX INC.
Applicant
- and -
MINISTER OF NATIONAL HEALTH AND WELFARE
Respondent
REASONS FOR ORDER
REED J.:
[1] The applicant seeks solicitor - client costs on the discontinuance of the within
application. Such costs are sought because the Minister caused, unnecessarily, the bringing of the application, and also caused the applicant significant financial damage by refusing to issue a Notice of Compliance/("NOC") in a timely fashion.
[2] In August 1995, Apotex filed an application with the Minister seeking an NOC for its ofloxacin tablets. This led to an application by Ortho-McNeil (Inc.) ("Ortho") for an order of prohibition preventing the issuance of the NOC, see file T-2115-95. After disclosure of the process of synthesis for ofloxacin that Apotex planned to use, Ortho agreed that that process did not infringe its patent (Canadian patent 1, 167, 840). A settlement of T-2115-95 was signed on April 18, 1997. It reads in part:
| WHEREAS Apotex Inc. forwarded a notice of allegation to Ortho-McNeil Inc. dated August 22, 1995 which contained an allegation of non-infringement; |
| AND WHEREAS a specific process for manufacturing ofloxaoin was disclosed by Apotex Inc. in the affidavits of Bernard Sherman dated November 1, 1995, Robert Allan McClelland dated November 1, 1995 and James B. Hendrickson dated November 1, 1995 all filed in the proceeding, Court File No. T-2115-95; |
| AND WHEREAS the Applicants Ortho-McNeil Inc. and Daiichi Seiyaku Co., Ltd. have received confirmation from the Minister of National Health and Welfare ("Minister") by letters dated September 4 and September 12, 1996 that this is the only process for manufacturing ofloxacin in Apotex" New Drug Submission; |
| AND WHEREAS Ortho-McNeil Inc, and Daiichi Seiyaku Co, Ltd. are prepared to accept that the allegation is justified with respect to the disclosed process for manufacturing ofloxacin but to no other process; |
| AND WHEREAS the parties wish to settle the proceeding, Court File No. T-2115-95: |
| NOW THEREFORE, each of the parties by their solicitors, agree to settle this proceeding on the following terms: |
| 1. The Applicants, Ortho-McNeil Inc. and Daiichi Seiyaku Co., Ltd., hereby withdraw the present proceeding in reliance of [sic] the undertakings of Apotex Inc. and the Minster given below. |
| 2. Apotex Inc. undertakes that it will not make a change to its manufacturing process for oflocacin without notifying the Applicants and the Minister in writing within 10 days of making any such change. |
| 3. Apotex Inc. consents to the Applicants" withdrawal of this present application on the terms set out herein. |
| 4. The Minister undertakes to notify the Applicants in writing within 10 days if the Minister becomes aware of any change to Apotex Inc."s process for manufacturing ofloxacin. |
[3] A Court order issued on April 29, 1997. It reads:
| 1. The Applicants are hereby permitted to withdraw and hereby do withdraw this proceeding in reliance on the undertakings of Apotex Inc. referred to and given in the Terms of Settlement. Furthermore, the Minister is hereby directed that he is not prohibited by virtue of the Patented Medicines (Notice of Compliance) Regulations from issuing a notice of compliance to Apotex for its version ofoloxacin, so long as it is based on the process which was disclosed by Apotex in this proceeding and no other. |
[4] Apotex satisfied all the Minister"s enquiries for the issuance of an NOC by June 11, 1997, but the Minister refused to issue an NOC. He took the position that Apotex"s replacement of methanol with ethanol as a solvent in the isolation and purification of the molecule was a change to the process that had been the subject of the Court order.
[5] A letter dated September 29, 1997, was sent by Mr. Michols, on behalf of the Minister, stating that "the replacement of the methanol with ethanol... is a change to the process reported initially in the New Drug Submission and, to our understanding, [to] the process presented to the Court." The letter concluded that "the Minister is bound by the Court Order of April 29, 1997 and is prohibited from issuing a Notice of Compliance."
[6] Apotex responded to this by letters dated October 2nd, 10th and 20th, 1997. These letters state that the change from methanol to ethanol relates to the process of isolation and purification, after the synthesis of the ofloxacin molecule, and is entirely irrelevant to the patent, the issue of infringement, or the process that was before the Court in T-2115-95 (the Minister was party to the T-2115-95 litigation). The letters assert that the Minister"s delay in issuing an NOC to Apotex had already cost Apotex great financial damage because it had missed inclusion in the provincial formularies; Apotex offered to change back to methanol. (The Minister apparently considered the latter change would take an additional 90 days to evaluate, although the use of that solvent had been evaluated previously.)
[7] Apotex commenced the present proceedings on October 24, 1997, seeking an order requiring the Minister to issue an NOC. (A challenge to the September 29, 1997, decision had to be commenced within 30 days of its issuance in accordance with subsection 18.1(2) of the Federal Court Act.)
[8] The Minister filed no evidence in the present proceeding, nor were the applicants" affiants examined on their affidavits. The Minster"s responding argument was that the Court order of April 27, 1999, referred to two processes: the one contained in the affidavits of Messrs Sherman, McClelland and Hendrickson, and the other found in the applicants" New Drug Submission. He took the position that the Court order prevented the issuance of a process that differed from the contents of the New Drug Submission. The Minister agreed, however, that the affidavits of Messrs Sherman, McClelland and Hendrickson made no reference to the isolation and purification process. On February 3, 1998, the Minister issued an NOC to Apotex.
[9] Counsel for the respondent argues that it is only in the most egregious of cases that solicitor-client costs are awarded. He argues that there was no bad faith or fraudulent conduct here, and indeed, the conduct was not connected to the litigation itself. He argues that Federal Court Rule 402 governs. Pursuant to that Rule the Minister would be entitled to his costs upon Apotex" discontinuance of the within application.
[10] I do not propose to refer to the jurisprudence that has been cited to me, which states that solicitor-client costs are awarded when the Court wishes to show its disapproval of conduct that is offensive or contumelious. Rule 400(1) now provides that the Court "should have full discretionary power over the amount and the allocation of costs and the determination of by whom they are to be paid." In exercising that discretion the Court is authorised, by Rule 400(3), to consider "whether any step in the proceeding was... improper, vexatious or unnecessary, or ...taken through negligence, mistake or excessive caution."
[11] In the present case, the interpretation that the Minister seeks to put on the April 29, 1997, order is not a tenable one. The order refers to "the process which was disclosed by Apotex in this proceeding and no other." That process is the one disclosed in the affidavits of Messrs Sherman, McClelland and Hendrikson and to the process covered by the "840 patent. No other interpretation of this order makes sense in the context of the proceeding to which it relates. The fact that the New Drug Submission may refer to additional steps to those covered by the patent and the affidavits does not expand the scope of the order. Indeed, the contents of the New Drug Submission would be expected to be more expansive. Also, if Minister truly had doubts about the scope of the process in issue in the T-2115-95 proceeding, and was not able to satisfy himself about it by reviewing the relevant affidavits and the patent that were filed in the proceeding to which he was a party, he could have contacted either Ortho or Apotex and expressed his concerns before issuing the September 29, 1997, refusal letter. After he received Apotex"s October 2nd , 10th and 20th, 1997 letters, apparently, he still did not respond by giving the matter serious consideration, and then, took until February 3, 1998 before the mistake that had been made was acknowledged and corrected. In these circumstances, I think the applicant is entitled to full indemnity for costs involved in bringing the application. An order will issue in accordance with these reasons.
"B. Reed"
JUDGE
TORONTO, ONTARIO
September 29, 1999
| FEDERAL COURT OF CANADA |
Names of Counsel and Solicitors of Record
| COURT NO: T-2300-97 |
| STYLE OF CAUSE: APOTEX INC. |
| - and - |
| MINISTER OF NATIONAL HEALTH AND WELFARE |
| DATE OF HEARING: MONDAY, SEPTEMBER 27, 1999 |
| PLACE OF HEARING: TORONTO, ONTARIO |
| REASONS FOR ORDER BY: REED J. |
DATED: WEDNESDAY, SEPTEMBER 29, 1999
| APPEARANCES: Mr. Eric Engel |
For the Applicant
Mr. J. Sanderson Graham
For the Respondent
SOLICITORS OF RECORD: Goodman, Phillips & Vineberg
Barristers & Solicitors
250 Yonge Street
Suite 2500
Toronto, Ontario
M6B 2M6
| For the Applicant |
Morris Rosenberg
Deputy Attorney General of Canada
For the Respondent
FEDERAL COURT OF CANADA
Date:19990929
Docket: T-2300-97
Between:
| APOTEX INC. |
Applicant
- and -
| MINISTER OF NATIONAL HEALTH AND WELFARE |
Respondent
| REASONS FOR ORDER |