A-120-95
Eli Lilly and Company and Eli Lilly Canada Inc. (Appellants) (Applicants)
v.
Novopharm Limited and The Minister of National Health and Welfare (Respondents) (Respondents)
Indexed as: Eli Lilly and Co.v. Novopharm Ltd. (C.A.)
Court of Appeal, Strayer J.A."Toronto, December 3; Ottawa, December 15, 1998.
Practice — Costs — Fixing costs following S.C.C. decision allowing appeal from F.C.A. —with costs to appellant (Novopharm) throughout— — Jurisdiction in F.C.A. to entertain motion for lump sum in lieu of taxation — Any discretionary power granted by r. 400 (giving Federal Court full discretionary power over amount, allocation of costs) whose exercise not inconsistent with award of costs by S.C.C. can be exercised in giving effect to award of costs in Federal Court by S.C.C. on appeal — No justification for enhanced costs — Jurisdiction in present F.C.A. judge, under r. 3, to hear present motion, but, normally, applying Supreme Court Act, s. 51 and r. 403(3), F.C.A. judge who signed judgment reversed on appeal by S.C.C. appropriate judge to hear motion for direction herein — In future, preferable motions under r. 403 include request they be brought before judge who signed judgment —or such other judge as Chief Justice may direct—.
Practice — Variation of time — Motion for extension of time granted partly as new Rules came into effect shortly before motion for special directions as to costs filed — However, allowing some flexibility because of newness of Rules must be practice of short duration.
This was originally an application for judicial review seeking a writ of prohibition to prevent the Minister of National Health and Welfare from issuing a notice of compliance to Novopharm Limited for nezatidine. The Trial Division decision dismissing the motion was overturned by the Court of Appeal but was restored by the Supreme Court of Canada "with costs to the appellant [Novopharm] throughout". In the present motion, Novopharm was asking the Court to fix the costs in the Court of Appeal in the amount of $20,000 for fees plus GST and $2,519.53 for disbursements. The first issue was whether the Court had jurisdiction to award a lump sum. The second was the delay by Novopharm in bringing the motion. The third was the merits of the motion for enhanced costs.
Held, the motion should be dismissed.
"With costs to the appellant throughout" herein meant that costs actually payable in respect of the proceedings in the Trial Division and in the Federal Court of Appeal were to be determined in accordance with the Federal Court Rules, 1998 . Rule 400 gives the Court "full discretionary power over the amount and allocation of costs", indicates several bases for exercising that discretion, and allows the Court to award a lump sum or to direct the assessment be performed under a specific column of Tariff B. Any discretionary power granted by the Federal Court Rules, 1998 whose exercise is not inconsistent with the award of costs by the Supreme Court can be exercised in giving effect to an award of costs in this Court by the Supreme Court on appeal.
The one-month delay in bringing the motion is not fatal and an extension should be granted. This was, in part, a special recognition of the fact that the new Rules, bringing changes to interlocutory motions of this nature, had come into effect on April 25, 1998, only a few months before the motion was filed. Allowing some flexibility because of the newness of the Rules must be a practice of short duration. Furthermore, there was no evidence that Eli Lilly had in any way been prejudiced by the delay.
There was no justification for the motion for enhanced costs. The material did not demonstrate either importance or complexity. No meaningful evidence as to the amount of work involved was provided. Finally, there was a lack of proper evidence to support the contention that costs should be increased because of the public interest in the matter as referred to in paragraph 400(3)(h) of the Rules. The "public interest" justification for increasing costs was not intended to aid parties who have primarily a commercial interest in pursuing litigation.
Cost were awarded to Novopharm in the amount of $7,419.53 representing fees and disbursements. Costs of this motion were to be paid by Novopharm as it almost certainly has gained nothing it would not have obtained in a normal taxation.
Subsection 403(3) requires that such a motion for directions be brought "before the judge or prothonotary who signed the judgment". Read in context, this must be taken to refer not to the Supreme Court judge who signed the judgment but to the Federal Court of Appeal judge who signed the judgment subsequently reversed by the Supreme Court. Section 51 of the Supreme Court Act provided that "all subsequent proceedings may be taken thereon as if the judgment had been given or pronounced [in that court]". The purpose is to have the costs in this Court dealt with by the judge most familiar with the conduct of the case here. The matter herein was referred to another judge of the Court by the Chief Justice. That judge had jurisdiction under rule 3 "so as to secure the just, most expeditious and least expensive determination" of the proceeding. In future, it would be preferable that such motions under rule 403 include a request that they be brought before the judge who signed the judgment "or such other judge as the Chief Justice may direct".
statutes and regulations judicially considered
Federal Court Rules, 1998, SOR/98-106, rr. 3, 4, 369, 400, 403, Tariff B, Column III.
Patented Medicines (Notice of Compliance) Regulations, SOR/93-133.
Supreme Court Act, R.S.C., 1985, c. S-26, s. 51.
cases judicially considered
disagreed with:
MacMillan Bloedel (Saskatchewan) Ltd. v. Consolboard Inc. (1981), 124 D.L.R. (3d) 342; 58 C.P.R. (2d) 100; 37 N.R. 296 (F.C.A.).
distinguished:
Smerchanski v. Minister of National Revenue, [1979] 1 F.C. 801; [1977] C.T.C. 283; (1977), 77 DTC 5198; 16 N.R. 38 (C.A.); Crabbe v. Minister of Transport, [1973] F.C. 1091 (C.A.).
referred to:
Eli Lilly and Co. v. Novopharm Ltd. (1995), 60 C.P.R. (3d) 181; 91 F.T.R. 161 (F.C.T.D.); revd by (1996), 67 C.P.R. (3d) 377; 197 N.R. 291 (F.C.A.); revd by [1998] 2 S.C.R. 129; (1998), 161 D.L.R. (4th) 1; 80 C.P.R. (3d) 321; Eli Lilly and Co. v. Apotex Inc. (1996), 66 C.P.R. (3d) 329; 195 N.R. 378 (F.C.A.); Consolboard Inc. v. MacMillan Bloedel (Sask.) Ltd., [1981] 1 S.C.R. 504; (1981), 122 D.L.R. (3d) 203; 56 C.P.R. (2d) 146; 35 N.R. 390; revg MacMillan Bloedel (Saskatchewan) Ltd. v. Consolboard Inc. (1979), 41 C.P.R. (2d) 94; 35 N.R. 420 (F.C.A.); Smerchanski v. Minister of National Revenue, [1974] 1 F.C. 554; (1974), 45 D.L.R. (3d) 254; [1974] CTC 241; 74 DTC 6197; 2 N.R. 197 (C.A.); affd by [1977] 2 S.C.R. 23; [1976] CTC 488; (1976), 76 DTC 6247; 9 N.R. 459.
MOTION under rule 403 of the Federal Court Rules, 1998, requesting costs on a lump sum basis rather than their assessment at taxation, following a Supreme Court of Canada decision allowing an appeal "with costs to appellant throughout". Costs were awarded in accordance with the Tariff. Motion dismissed with costs.
appearances:
Anthony George Creber for appellants (applicants).
Mark S. Mitchell for respondents (respondents).
solicitors of record:
Gowling, Strathy & Henderson, Ottawa, for appellants (applicants).
Lang Michener, Toronto, for respondents (respondents).
The following are the reasons for order rendered in English by
Strayer J.A.: This is a motion brought before me under rule 403 [of the Federal Court Rules, 1998, SOR/98-106] requesting that I fix the costs in an appeal to this Court which was heard on April 24, 1996.
On September 15, 1993, Eli Lilly and Company and Eli Lilly Canada Inc. (Lilly) commenced a judicial review proceeding in the Trial Division under the Patented Medicines (Notice of Compliance) Regulations [SOR/93-133] for prohibition to prevent the Minister of National Health and Welfare from issuing a notice of compliance to Novopharm Limited (Novopharm) for nezatidine. The motion for prohibition was dismissed by the Trial Division on February 9, 1995 [(1995), 60 C.P.R. (3d) 181]. An appeal to this Court was allowed [(1996), 67 C.P.R. (3d) 377] on the basis that a sublicence had been issued in breach of Novopharm's compulsory licence to sell the drug and therefore the compulsory licence was nullified. This Court had made the same finding in respect of essentially the same agreement some twenty-three days earlier in the appeal of Eli Lilly and Co. v. Apotex Inc.1 Leave to appeal was granted in both cases by the Supreme Court of Canada and they were heard together. On July 9, 1998 the Supreme Court allowed both appeals "with costs to the appellant throughout" [[1998] 2 S.C.R. 129]. In the present motion Novopharm asks me to fix costs in the Court of Appeal in the amount of $20,000 for fees plus GST and $2,519.53 for disbursements. It is not in dispute that in the absence of special directions from the Court, fees would be taxed under Column III of Tariff B and, depending on the number of units assigned by the assessment officer to each step, would total in the range of $2,700 to $4,900, in place of which Novopharm seeks a direct lump sum of $20,000. The amount of disbursements claimed, $2,519.53, is not in dispute at this point and indeed the respondent concedes that if costs are to be assessed in accordance with Tariff B, Column III they should be assessed in the amount of $7,419.53 including fees of $4,900 plus the undisputed disbursements.
Jurisdiction
The first issue which I must deal with is one of jurisdiction. The respondent [in this motion, Eli Lilly] contends that once the Supreme Court has made an award of costs in this Court, this Court has no jurisdiction to award a lump sum. The judgment of the Supreme Court must be taken to be an award of costs as taxed without the possibility of any lump sum being ordered in lieu of assessed costs pursuant to subsection 400(4) of the Rules. In support of this proposition, the respondent [Eli Lilly] relies on a 1981 decision of Ryan J. of this Court in MacMillan Bloedel (Saskatchewan) Ltd. v. Consolboard Inc.2
With respect I am unable to adopt the reasoning of Ryan J. In that case Consolboard had won on appeal in the Supreme Court [[1981] 1 S.C.R. 504] from a judgment of this Court [(1979), 41 C.P.R. (2d) 94] and the Supreme Court held that Consolboard was entitled to costs in the Federal Court of Appeal. Consolboard sought an order for special directions and for a lump sum in respect of its costs. In refusing to order a lump sum Ryan J. treated such a request as one "to substitute the award of a fixed or lump sum for the costs awarded by the Supreme Court judgment". He relied on a decision of Jackett C.J. in Smerchanski v. Minister of National Revenu .3 In my respectful view, the Smerchanski case cannot be taken to support that proposition. In the first place the motion before Jackett C.J. was to fix costs in an appeal where the Federal Court of Appeal had dismissed an appeal "with costs" [[1974] 1 F.C. 554] and where the Supreme Court of Canada had dismissed an appeal from that decision [[1977] 2 S.C.R. 23]. As far as one can ascertain, there was no special mention of taxation of costs in the judgment of either the Federal Court of Appeal or the Supreme Court. Nevertheless, Jackett C.J. relied on an earlier decision of the Federal Court of Appeal in Crabbe v. Minister of Transport4 where the Court had held that if it "gives judgment for costs to be taxed, it cannot subsequently substitute a lump sum unless by way of reconsideration of the judgment" in the limited circumstances where reconsideration is permitted. In neither MacMillan Bloedel nor Smerchanski was there a previous order for costs "to be taxed".
Without purporting to decide what should be the result where a successful party seeks a lump sum pursuant to a Supreme Court judgment which specifically refers to "costs to be taxed", I believe the present situation is quite distinguishable. In the present case, the Supreme Court allowed the appeal of Novopharm, set aside the judgment of this Court, and restored the judgment of the Trial Division "with costs to the appellant throughout". I can only understand that to mean that costs actually payable in respect of the proceedings in the Trial Division and in the Federal Court of Appeal are to be determined in accordance with the Rules of the Federal Court, 1998 . Rule 400 gives the Court "full discretionary power over the amount and allocation of costs", indicates several bases for exercising that discretion, and allows the Court to award a lump sum or to direct that assessment be performed under a specific column of Tariff B. Clearly there are some discretionary powers under rule 400 which cannot be exercised in the face of an award of costs ordained by the Supreme Court. For example, this Court could not, in the face of such a direction, refuse costs or award them instead to the unsuccessful party. But, in my view, any discretionary power granted by the Federal Court Rules, 1998 whose exercise is not inconsistent with the award of costs by the Supreme Court can be exercised in giving effect to an award of costs in this Court by the Supreme Court on appeal.
I have therefore concluded that I have jurisdiction to entertain this motion.
Delay in bringing motion
The next issue which I must address is the delay by Novopharm in bringing this motion. The Supreme Court decision granting costs to it was issued on July 7, 1998 and, pursuant to section 51 of the Supreme Court Act5 such judgment must be treated as if it had been given or pronounced in this Court. By rule 403 a motion for special directions as to costs must be made within 30 days of judgment. This motion was not filed until September 14, 1998, over two months after the Supreme Court of Canada decision. Counsel for Novopharm say in effect that they did not appreciate that to launch such a motion as a motion in writing under rule 369 they would have to present their motion record with the notice of motion. Although they tried to submit a notice of motion by itself on August 6, 1998, this was rejected by the Registry and they then had to assemble the material for a record which was not completed until September. They have asked for an extension and I will give one. In part this is a special recognition that new Rules of the Court had come into effect on April 25, 1998 pursuant to which there was a change requiring a motion record on an interlocutory motion of this nature. It will, I hope, be recognized that allowing some flexibility because of the newness of the Rules must be a practice of short duration. Apart from that, however, there is no evidence that Eli Lilly has in any way been prejudiced by this delay and the necessary extension will therefore be given.
Merits
As for the merits of the motion for enhanced costs, I am not satisfied that any justification has been established. I will deal briefly with the alleged justifications which require some comment.
Novopharm argues that the importance and complexity of the issues justifies an increase in fees. The material does not demonstrate either importance or complexity. What was involved was the proper interpretation of a supply agreement of some three pages in length. The question was essentially one of law: did this amount to a sublicence in violation of the compulsory licence, or not? Novopharm argues that the matter is important because the decision by the Supreme Court will in its view bring an end to at least four other proceedings in which Novopharm is already involved with other parties. It does not appear to me to be warranted to load further costs on Eli Lilly because Novopharm will be spared further costs in other proceedings against other parties. If those other proceedings involve positions taken by its opponents which are now unsustainable, then Novopharm may seek its costs in those proceedings.
Novopharm also argues that the amount of work justifies enhanced costs. Unfortunately counsel for Novopharm provided no meaningful evidence as to the amount of work involved. All I have been given is the affidavit of an articling student in the office of counsel informing me that the actual bill rendered to their client for the appeal in this Court was for $37,910 as compared to a taxable amount of $4,900 or the specially directed lump sum of $20,000 which they now seek. This material does not indicate to me the number of hours spent on the file for purposes of the appeal or any other facts which would indicate an extraordinary amount of work. There are some brief allusions in Novopharm's written submissions to the amount of work that was necessary but these, of course, are not evidence.
Finally, Novopharm urges that costs be increased because of the "public interest in the matter as referred to in paragraph 400(3)(h ) of the Federal Court Rules [,1998]". The gravamen of this argument is that the public has been saved vast amounts of money by Novopharm establishing the right to distribute certain generic drugs. I have two comments on this proposition. First there is a lack of proper evidence to support the contention, the only so-called evidence being the affidavit of a Ms. Rembach which was not properly submitted as an affidavit in this case. It was simply submitted as an exhibit to the affidavit of the articling student referred to above. There could be no cross-examination on the affidavit, hence I can give it little or no weight when submitted in this fashion. Secondly I am not persuaded that the "public interest" justification for increasing costs was intended to aid parties who have primarily a commercial interest in pursuing litigation. There is no evidence that the public interest represented an important or any motivating factor in Novopharm defending in Court its rights to sell this drug, even though the public may well have benefited, through Novopharm's success, in being able to buy the drug at substantially lower costs as a result.
Disposition
As Novopharm has not satisfied me that there should be any order for enhanced costs, and as Eli Lilly concedes that normal costs calculated under Column III of Tariff B would amount to $4,900 plus disbursements (an amount which seems to be in excess of calculations in the affidavit filed by Novopharm), I will award costs to Novopharm in the amount of $7,419.53 representing fees and disbursements. Costs of this motion shall be paid by Novopharm as it almost certainly has gained nothing it would not have obtained in a normal taxation.
The appropriate judge
One final matter requires comment. Subsection 403(3) of the Rules requires that such a motion for directions be brought "before the judge or prothonotary who signed the judgment". Taken literally this would mean that this motion should have been placed before a Supreme Court judge. But read in context this must be taken to refer to the Federal Court of Appeal judge who signed the judgment subsequently reversed by the Supreme Court. According to section 51 of the Supreme Court Act , that Court's judgment is to be certified to the court of original jurisdiction:
51. . . . and all subsequent proceedings may be taken thereon as if the judgment had been given or pronounced [in that court].
The purpose of referring such a motion for directions to the judge who signed the judgment is to have the costs in this Court dealt with by the judge most familiar with the conduct of the case here.
I was not the judge who signed the Federal Court of Appeal judgment but the matter was referred to me by the Chief Justice. Counsel for Eli Lilly took no serious objection on this basis to my hearing the motion and I have concluded that I could do so under the power given me in rule 3 to apply the Rules "so as to secure the just, most expeditious and least expensive determination" of the proceeding. I believe, however, that in future it would be preferable that such motions under rule 403 include a request that they be brought before the judge who signed the judgment "or such other judge as the Chief Justice may direct". This would more clearly invoke the power of the Court under rule 4 to provide for determination by another judge where the original judge is for some reason unavailable, a matter not provided for in the Rules.
1 (1996), 66 C.P.R. (3d) 329 (F.C.A.).
2 (1981), 124 D.L.R. (3d) 342 (F.C.A.).
3 [1979] 1 F.C. 801 (C.A.).
4 [1973] F.C. 1091 (C.A.).
5 R.S.C., 1985, c. S-26.