DATE: 20011002 DOCKET: C30923
COURT OF APPEAL FOR ONTARIO
MORDEN, AUSTIN and BORINS JJ.A.
B E T W E E N :
APOTEX INC. Plaintiff/Appellant by Cross-Appeal
Kevin D. Sherkin and John I.G. Melia for the Global Drug Ltd.
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GLOBAL DRUG LTD. and GAIL GLOBE IMPORTS LIMITED Defendants/Respondents by Cross-Appeal
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GLOBAL DRUG LTD. Plaintiff by Counterclaim/Appellant
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APOTEX INC. Defendant by Counterclaim/Respondent
Harry B. Radomski for the respondent
Heard: August 13 and 15, 2001
On appeal from the judgment of Justice Clair B. Marchand dated October 20, 1998.
BY THE COURT:
[1] The appeal and the cross-appeal have been thoroughly argued on each side and we have determined that both should be dismissed. We shall state our reasons briefly.
[2] On the appeal two issues were raised. The first is that the trial judge erred in dismissing Global Drug Ltd.’s motion to amend its damage claim in the counterclaim. We accept Global’s submission that the trial judge’s reasons are sparse and that he did not expressly mention the prejudice required by rule 26.01. We are satisfied, however, on the history of the development of the counterclaim and, particularly, the fact that the experts’ reports had been exchanged and trial evidence on the question of damages on each side (in the form of commission evidence) had been given before the motion was made, that the proper conclusion would be that the defendant by counterclaim would be inevitably prejudiced by the amendment. We do not give effect to this ground of appeal.
[3] The second issue on appeal relates to Global’s claim for damages flowing from Apotex’s breach of contract. It sought damages for loss of profits and, in the alternative, sought compensation for expenditures incurred in part performance of the contract. Global failed in its claim for loss of profits and has not appealed from this result. The trial judge quantified Global’s expenditures in the amount of $109,255. However, he awarded Global nominal damages of $1 because, in his view, Apotex had proved that the contract, if performed, would have resulted in a loss to Global, i.e., its expenses would have exceeded the benefits to it under the contract. In this regard, we read “defendant” in the statement “the defendant has established” on page 36 of the trial judge’s reasons as referring to the defendant by counterclaim. This is the most sensible reading in the overall context.
[4] As indicated, in the circumstances of this case, to avoid compensating Global for the expenditures that it had incurred in part performance of the contract, Apotex was required to prove that even if it had not breached the contract and the contract had been fully performed, Global inevitably would have suffered a loss on the contract. Although, perhaps, self-evident, it is Global’s position that it incurred the expenditures on the faith of the contract, expecting that Apotex would perform its obligations under the contract which, as the trial judge found, it failed to do.
[5] In this case, the contract was in its initial stages and, Global had not reached the point where it was in receipt of any revenue as the marketing of Apotex’s products had not commenced. Given that Apotex breached the contract in its early stages, Global contends that it was not possible for Apotex to prove that it would have been unprofitable even if it had been fully performed and that the evidence did not support the trial judge’s finding to this effect.
[6] In our view, on the facts of this case it is not logical to separate Global’s claim for damages for loss of profits from its claim for compensation for its expenditures in part performance of the contract. It failed to recover damages for loss of profits because, as the trial judge found, it had been unable to prove what, if any, profits it would have earned had the contract been fully performed. The trial judge found that it was clear from the provisions of the contract that the expenditures were to be borne by Global, which was to be reimbursed for its expenses out of the profits earned on its sale of the Apotex products. Global presented a theory of how it would have profited had the contract been performed which was rejected by the trial judge, largely on the basis of expert evidence presented by Apotex. It seems obvious that there was evidence that supported the trial judge’s findings, which presumably explains why Global did not appeal from the rejection of its claim for anticipated loss of profits.
[7] The trial judge found on the evidence that Global’s expenses would have exceeded its benefits under the contract if it had been fully performed. This is essentially the same finding which the trial judge reached in dismissing Global’s claim for loss of profits. In other words, the fact that Global failed to establish any reasonably anticipated profits is consistent with his analysis and finding that Global was not entitled to recover its expenditures.
[8] Global’s effort to try to separate the two claims and argue that Apotex had not satisfied its onus to prove that Global’s expenditures would exceed its anticipated revenue, in our view, lacks merit. In determining whether Apotex had satisfied its onus the trial judge was entitled to consider all the evidence. He was not limited to considering the evidence directly associated with Global’s claim for compensation for its expenditures.
[9] On the cross-appeal, the first issue raised is that the trial judge erred in not finding that Global was in breach of the August 4, 1987 agreement and that its breach entitled Apotex to terminate the contract. The basic issue respecting legal responsibility for the termination of the contract is largely one of fact. The trial judge reviewed the relevant evidence in his reasons and concluded that “in breach of its contractual relationship, the plaintiff [Apotex] had entered into different arrangements in Israel for the registration and marketing of its products and that it suited their convenience better to terminate their agreement with the defendant” and that “the reasons for termination raised in the [plaintiff’s] letter are manufactured and do not reflect the true reasons why the plaintiff wished to terminate its relationship with the defendant at the time in question, namely, its intentions to deal directly with Meditrend and bypass its contractual relationship with the defendant.”
[10] We think that the trial judge’s conclusions in this respect are reasonably based on the evidence. Further, we think that it is implicit in his reasons that he found that, in all the circumstances, including lack of complaint by it, Apotex could not reasonably assert that registration had not been effected within a reasonable time.
[11] Apotex’s other issues on the cross-appeal relate to costs. First, on the material before us, it is our view that the trial judge correctly applied the relevant provisions in rule 49.10 in the order that he made. Second, we do not think that it was open to Apotex to submit that, on the counterclaim, Gail Bocknek put forward the named defendant Global Drug Ltd. as “a man of straw” as a basis for an order making Gail Bocknek personally liable for the costs. Global was the party to the contract in question, was properly made a defendant in the action, and was the proper plaintiff by counterclaim against Apotex.
Disposition
[12] For these reasons, the appeal and the cross-appeal are each dismissed, without costs.
“J.W. Morden J.A.”
“A.M. Austin J.A.”
“S. Borins J.A.”
Released: October 2, 2001