DATE: 20050916
DOCKET: C42177
C42169
COURT OF APPEAL FOR ONTARIO
LABROSSE, SHARPE and ROULEAU JJ.A.
B E T W E E N :
MINISTER OF HEALTH AND LONG-TERM CARE (ONTARIO), LIEUTENANT GOVERNOR IN COUNCIL and ATTORNEY GENERAL OF ONTARIO
Dennis W. Brown Q.C., John Zarudny, James Kendik for the Minister
Earl A. Cherniak Q.C. and David D. Conklin for Genpharm
Appellants (Respondents)
- and -
Harry Radomski and Joseph Cosentino for Apotex Inc.
APOTEX INC.
COBALT PHARMACEUTICALS
PHARMASCIENCE INC.
RHOXALPHARMA INC.
Carol Hitchman for RhoxalPharma Inc. and PharmaScience Inc.
Lawrence Thacker and Dena Varah
Respondents (Applicants)
For Cobalt Pharmaceuticals Inc.
-and-
GENPAHARM INC
Appellant (Intervenor)
Heard: September 12 and 13, 2005
On appeal from the judgment of Justice John G.J. O'Driscoll of the Superior Court of Justice, sitting as a judge of the Divisional Court, dated April 27, 2004.
BY THE COURT:
[1] The appellant Genpharm Inc. and the respondents Apotex Inc., Cobalt Pharmaceuticals Inc., Pharmascience Inc., and Rhoxalpharma Inc. are manufacturers and distributors of pharmaceutical products. This appeal arises from a contest among these five generic drug companies to become the first to have a new generic drug, citalopram, listed on the Ontario Drug Benefit Formulary/Comparative Drug Index (the “Formulary”). The winner of this race would reap substantial benefits.
[2] When it appeared that Genpharm had won the race, the respondents applied for judicial review, challenging the fairness of the process. Although not named as a party or served with the application, Genpharm appeared and was granted intervenor status.
[3] The application judge granted judicial review, nullified Genpharm’s apparent success in being the first to be listed, and set in motion a process whereby the products of all five manufacturers were simultaneously listed.
[4] Genpharm and The Minister of Health and Long-Term Care (Ontario), Lieutenant Governor in Council and Attorney General of Ontario (the “Minister”) both appeal the decision of O’Driscoll J., sitting as a single judge of the Divisional Court pursuant to subsection 6(2) of the Judicial Review Procedure Act, R.S.O. 1990, c.J.1, quashing the extension of a cut-off date for completion of drug submissions regarding an update to the Formulary.
FACTS
[5] Before a generic drug is listed on the Formulary, its manufacturer must apply to the Minister under the Drug Interchangeability and Dispensing Fee Act R.S.O. 1990 c. P. 23 (DIDFA) to have the drug approved as “interchangeable” with a named drug. In the application, the drug company must show that the drug has been approved for sale in Canada by the federal government by including with the application a “Notice of Compliance” issued by federal authorities to the effect that the drug is safe. Until recently, the Formulary took the form of a regulation enacted by the Lieutenant Governor in Council.
[6] At the time the five drug companies were working to have their brand of citalopram listed on the Formulary, the Minister announced a November 30, 2003 deadline (the “cut-off date”) for the drug companies to file any applications for approval under the DIDFA. That deadline was geared to an expected Cabinet meeting. None of the parties had filed a complete application by that deadline. When the date for the expected Cabinet meeting shifted, the Minister extended the deadline to December 31, 2003, without notice to anyone outside the Ministry. By that deadline, Genpharm had received its Notice of Compliance and had filed its application for approval. The only outstanding matter in Genpharm’s application was confirmation of the price it would charge for the drug. None of the respondents had received their Notices of Compliance by the extended deadline. After the extended deadline, Genpharm confirmed the price and the Minister forwarded Genpharm’s application to the Cabinet for approval. Approval was given and Genpharm’s product was listed in the Formulary to come into effect on April 6, 2004.
[7] It is common ground that, had the Formulary come into effect on that date, Genpharm would have secured significant competitive advantages and monetary benefits from being the first manufacturer to have the drug listed on the Formulary.
THE APPLICATION FOR JUDICIAL REVIEW
[8] The respondents commenced urgent applications for judicial review, returnable April 2, 2004, arguing that the extension of the deadline had given Genpharm an unfair advantage. For reasons we fail to understand, Genpharm was not named as a party, nor was it served with the applications for judicial review, despite the fact that its interests were clearly implicated by the application for judicial review. However, a lawyer representing Genpharm was present in court on April 2. Counsel requested an adjournment to permit her client to review the application and, if advised, seek intervenor status. The application judge granted the adjournment to April 5 and made an interim order restraining the Minister from implementing the proposed April 6 Formulary until further order.
[9] On April 5, two counsel for Genpharm appeared and asked to be granted intervenor status. The request, not opposed by the respondents, was granted. Presumably on Genpharm’s instructions, counsel did not request a further adjournment but indicated that they were prepared to argue the matter on their client’s behalf. After a full day of argument, judgment was reserved. There was no alteration of the interim order of April 2 and accordingly it continued in effect until April 27 when the application judge released his judgment granting the application for judicial review.
[10] On April 6, counsel for Genpharm wrote to inform the application judge that he intended to bring a motion to set aside the April 2 order, to cross-examine the deponents of the affidavits filed in support of the application for judicial review, to adduce further evidence, and to reopen the hearing. Genpharm now took the position that it had not received proper notice or been given a proper opportunity to present its case. Counsel sent the motion to the application judge on April 8 requesting a hearing date. The application judge did not respond and Genpharm’s counsel wrote two further letters requesting a date for the hearing of the motion. Again, the application judge did not respond.
[11] In his April 27 reasons granting the application for judicial review, the application judge stated:
In my view, by any method of measurement, the words and actions of the [Minister] in moving the goal posts and the yardsticks during the course of the competition, and in doing so without notice to the competitors, produced a procedurally unfair contest.
As for the motion to reopen the hearing, hold cross-examinations and adduce further evidence, the application judge stated:
Because my decision has its roots in what Ministry officials advised, said and did both in and out of office of the Ministry… about the November 30, 2003 cut-off date, I saw no injustice or inequity in proceeding with the record as it existed on April 5, 2004
[12] The order for judicial review continued the interim order of April 2 enjoining the Minister from implementing the proposed April 6 Formulary and required the Minister to establish a new “drop-dead - cut-off date” for completion of submissions to allow all interested parties reasonable time to make their submissions. Genpharm served a motion for leave to appeal and a motion for a stay but did not proceed with the stay motion.
[13] The Minister complied with both the interim and final orders of the application judge, setting a new cut-off date. In July 2004, the citalopram products of all five companies were approved and put on the market.
MOOTNESS
[14] At the outset of oral argument, we indicated to counsel that before entertaining submissions on the substance of the appeal we wished to hear from them on the issue of mootness. After hearing submissions on that issue, we reserved our decision on mootness and heard Mr. Cherniak and Mr. Conklin on the merits of Genpharm’s appeal.
THE MINISTER’S APPEAL
[15] We have concluded that the Minister’s appeal should be dismissed as moot. The Minister’s appeal raises three issues: (1) whether the process regarding drug submissions is subject to judicial review; (2) whether the application judge erred in deciding that the Minister’s actions were patently unreasonable; and (3) whether, by ordering the Minister to set and adhere to a new cut-off date, the application judge wrongly interfered with internal government processes.
[16] As already indicated, in July 2004, the Minister published a new Formulary which included the products of all five drug companies. Both the interim decision and final decision of the application judge have been complied with and have no continuing application. In our view, even if the Minister were successful on the appeal, the result could not now have any practical effect on the rights of the parties. All the parties have now complied with the requirements for having their drugs listed. If the order for judicial review were now set aside, they would still all be entitled to be listed in the Formulary. Allowing the appeal would achieve nothing. As the issue cannot now be revisited and a decision of this court will not have the effect of resolving some controversy which affects or may affect the rights of the parties, the Minister’s appeal is moot: see Borowski v. Canada (Attorney General), 1989 123 (SCC), [1989] 1 S.C.R. 342 at 353.
[17] Nor are there outstanding issues of law that should be resolved at this time. Until recently, the approval process for generic drugs in Ontario under the DIDFA was very complicated. A generic drug application was reviewed by several levels of bureaucracy as well as two Cabinet committees. Internal deadlines for drug approvals were set by Ministry officials, but as this case indicates, these deadlines would change as Cabinet priorities shifted. Often the deadlines were not publicized, and in fact were sometimes considered to be confidential.
[18] In June 2004, the Minister issued new guidelines for drug submissions which are now published on its website, intended to provide “more transparency” and to provide “more guidance” for generic manufacturers. Moreover, the decision process has been greatly simplified and the decision is now made by the Minister instead of Cabinet, removing any question as to the availability of judicial review. Accordingly, deciding this appeal would be of little assistance to the Minister or to future applicants seeking generic drug approval in resolving legal issues.
[19] The Minister’s appeal would have no practical effect on the rights of the parties and, as the legal landscape has changed, there are no outstanding issues that we should resolve. Accordingly, we decline to entertain the Minister’s appeal on the ground that it is moot.
GENPHARM’S APPEAL
[20] In addition to the issues raised by the Minister, Genpharm submits that the application judge denied it natural justice by refusing to entertain the motion to reopen the case.
[21] In support of its submission that the appeal is not moot, Genpharm argues that, should it be successful in this appeal, it will have a viable cause of action against the respondents. In its factum, that action was identified as one for damages based on intentional interference with economic interests and abuse of process. In oral argument, reference was also made to an action in conspiracy. If the order of the application judge stands, Genpharm is concerned that the respondents will be able to argue that such action is a collateral attack on the order. Therefore, argues Genpharm, there remains a live dispute between the parties and this appeal is not moot.
[22] In our view, Genpharm’s appeal is moot. Further, we are not persuaded that we should exercise our discretion to entertain the appeal.
[23] First, with respect to the proposed claim in conspiracy, Mr. Radomski, speaking after consultation with and on behalf of all respondents’ counsel, conceded that the respondents would not raise the doctrine of collateral attack as a defence against a properly pleaded claim of conspiracy.
[24] Second, with respect to the claim for intentional interference with economic relations and abuse of process, Genpharm has simply not provided us with a sufficient basis to assess whether its intended action has any prospect of success.
[25] To be successful in such a claim, Genpharm would have to overcome several substantial hurdles. In their factums, the respondents relied on past jurisprudence to argue that a claim for intentional interference with economic relations or abuse of process could not succeed in law. Genpharm provided us with no answer to those submissions. The grounds for this proposed action remain sketchy at best. Although more than eighteen months have passed, Genpharm has not commenced any action, nor were we provided with a draft statement of claim that would enable us to assess the viability of such a claim.
[26] The ingredients for an action for abuse of process are well established. In Metrick v. Deeb (2003), 2003 804 (ON CA), 172 O.A.C. 229, this court adopted the test from Fleming on Torts 4th ed, (1971) at 548:
The essential elements of abuse of process are: first, a collateral and improper purpose, such as extortion, and secondly, a definite act or threat, in furtherance of a purpose not legitimate in the use of the process. Some such overt conduct is essential, because there is clearly no liability when the defendant merely employs regular legal process to its proper conclusion, albeit with bad intentions.
[27] Did the actions of the respondents, aimed at the fairness of the process that led to the proposed April 6 Formulary, have a “collateral or improper purpose”? The respondents were certainly trying to advance their own economic interests at the expense of the interests of Genpharm, but that is hardly unusual in this type of litigation.
[28] Another hurdle faced by Genpharm in bringing an action against the respondents is that the damages Genpharm suffered resulted directly from the order for judicial review. We were referred to no case, apart from claims on undertakings for damages on interlocutory injunctions, standing for the proposition that an action for damages occasioned by an erroneous order of a superior court, even orders made without proper notice, can succeed.
[29] Third, even if the proposed action for abuse of process or intentional interference with economic relations is viable, we have not been persuaded that it would necessarily be defeated by the doctrine of collateral attack. We were given no authority on the issue of collateral attack. We nevertheless note that the Supreme Court of Canada has held the doctrines of collateral attack and issue estoppel to be discretionary in nature, especially where a party can show that it was denied the right to a fair hearing: see Danyluk v. Ainsworth Technologies Inc., 2001 SCC 44, [2001] 2 S.C.R. 460 at para. 80.
[30] Fourth, Genpharm’s conduct is hardly consistent with the assertion that it has been the victim of a gross violation of natural justice. As we have noted, counsel appeared on April 2 and was granted an adjournment. On April 5, Genpharm was granted intervenor status, and confirmed that it was ready to proceed and to argue the appeal without asking for a further adjournment. The motion to reopen the case and introduce fresh evidence was brought after the conclusion of argument. Genpharm took no steps to appeal the interim order and did not proceed with its motion for a stay the final order, or ask for an expedited appeal.
[31] Fifth, as a practical matter, on the basis of the record before us it would be impossible for this court to resolve several contested issues of fact upon which Genpharm’s appeal turns. In particular, we refer to the evidence Genpharm sought to introduce after the hearing: (1) disputing assertions by the respondents, including a representation made to the application judge on April 2, that Genpharm knew of the application for judicial review, and (2) that even if the respondents had known of the revised deadline, that would have had no impact on the processing of their applications.
[32] If we were to accept Genpharm’s argument that it was improperly thwarted in presenting all the relevant facts and allow the appeal, it is difficult to see how we could avoid sending the case back for a fresh hearing. We would, in effect, be ordering the Divisional Court to rehear the application despite the fact that what has been done cannot now be undone. As the application for judicial review cannot now be unscrambled, it seems wrong to us to entertain an appeal that would lead us to order a rehearing and the consequent development of a new record, for the collateral purpose of allowing Genpharm to clear the ground for its proposed damages action.
[33] Taking all of these factors into account, we are satisfied that this appeal should be dismissed as moot. We are being asked to decide this appeal on the merits for the sole purpose of removing a possible impediment to a proposed action, the details of which remain sketchy and the underlying facts of which are undetermined. The respondents concede that they would not raise the doctrine of collateral attack in defence to a properly pleaded conspiracy action. As to the other contemplated claims, assuming they are viable and proceeded with and that the doctrine of collateral attack can be raised in defence to them, that doctrine is discretionary and allows for relief where a party can show the denial of a fair hearing.
[34] Accordingly, the appeal is dismissed as moot and we decline to consider it on the merits. The respondents are entitled to their costs. We do not agree that the costs should be assessed on the reduced basis of what might have been incurred had the matter been dealt with by way of a motion to quash. That argument aside, the parties agree that Apotex’s costs should be assessed on a partial indemnity basis at $40,000 inclusive of GST and disbursements, and Rhoxalpharma and Pharmascience’s costs should be assessed on a partial indemnity basis at $15,000 plus GST and disbursements. While we do not doubt the hours submitted by Mr. Thacker, we agree that in view of the fact that Apotex assumed the lead on this appeal, the appellants cannot reasonably be expected to pay his client, Cobalt Pharmaceuticals, more than $15,000 plus GST and disbursements, the amount agreed to be paid by Rhoxalpharma and Pharmascience.
“J-M. Labrosse J.A.”
“Robert J. Sharpe J.A.”
“Paul S. Rouleau J.A.”