COURT FILE NO.: 07-CV-344635PS1
DATE: 20130211
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: APOTEX INC. (Plaintiff/Responding Party) and HER MAJESTY THE QUEEN IN RIGHT OF CANADA, ATTORNEY GENERAL OF CANADA, MINISTER OF HEALTH, MR. ERIC ORMSBY and DR. CRAIG SIMON (Defendants/Moving Parties)
BEFORE: Frank J.
COUNSEL: Gina Scarcella, Counsel, for the Defendant/Moving Party, Attorney General of Canada
A. Brodkin and David Cohen, Counsel, for the Plaintiff/Responding Party
HEARD: January 25, 2013
ENDORSEMENT
[1] This motion is brought pursuant to rule 21.01(1)(b) and (3)(d) and rules 25.06(1) and 25.11 of the Rules of Civil Procedure, R.R.O. 1990, O-Reg 194 for an order striking portions of the fresh as amended statement of claim. In addition, the defendant seeks an order for particulars pursuant to Rule 25.10.
[2] The statement of claim was issued in November 2007. More than five years later, the parties are still at the pleadings stage of the proceedings. The claim has been amended twice, at least in part in response to the position of the defendants and, on consent, the action against all of the defendants other than the Attorney General of Canada has been dismissed without costs.
[3] The statement of claim, in its current form, is 422 paragraphs in length. It alleges that the plaintiff incurred damages as a result of the defendants' conduct in dealing with new drug submissions filed by the plaintiff under the Food and Drugs Act, R.S.C. 1985 C.F.-27 and the Food and Drug Regulations, C.R.C., c.870 and seeks recovery of those damages from the defendants.
Framework for the Rule 21 analysis
[4] In deciding whether the defendant is entitled to the relief he seeks pursuant to both Rule 21.01(1)(b) and 21.01(3)(d), I must:
(a) accept the pleaded allegations of fact as proven unless they are patently ridiculous or incapable of proof;
(b) read the pleading generously with allowance for inadequacies due to drafting deficiencies; and,
(c) consider only the statement of claim and the documents to which it specifically refers and relies on, along with any answers to a demand for particulars. (see Nash v. Ontario, 1995 2934 (ON CA), [1995] O.J. No. 4043 (C.A.) at para. 12)
[5] The test the defendant must meet is stringent. He must show that it is plain and obvious that the claim has no reasonable prospect of success: R. v. Imperial Tobacco Canada Ltd., 2011 SCC 42, [2011] 3 S.C.R. 45 at para. 17. As the court stated in Hunt v. Carey Canada Inc., 1990 90 (SCC), [1990] 2 S.C.R. 959, 74 D.LR. (4th) 321 at para.33"[n]either the length and complexity of the issues, the novelty of the cause of action, nor the potential for the defendant to present a strong defence should prevent the plaintiff from proceeding with his or her case".
Striking claims for breach of statutory duty, bad faith and unlawful discrimination
[6] The defendant seeks to have all allegations of breach of statutory duty struck from the claim on the basis of there being no independent cause of action in tort for breach of statutory duty.
[7] The plaintiff, in its factum, acknowledged that breach of statutory duty is not a cause of action, but submitted that its pleading does not assert it to be a cause of action. Rather, it pleads breach of statutory duty as an element of the tort of misfeasance in public office and as potential grounds for punitive damages. Consistent with this, as of the August 31, 2012 amendments to the statement of claim, 'breach of statutory duty' is no longer included in the prayer for relief at paragraph 1(a). This amendment, as well as the amendment removing 'bad faith' from the prayer for relief, was made following the delivery of the defendant's factum in this motion.
[8] At the hearing of the motion the defendant agreed, based on the plaintiff not advancing breach of statutory duty as a cause of action, that references to it can properly remain in the pleading. Counsel maintained that it had not been clear from the pleading alone, even with the amendment, that the references to breach of statutory duty as well as to bad faith – I refer to the bad faith pleading below - were included for the limited, permissible purpose. As I understand it, the plaintiff did not directly communicate its acceptance of the defendant's position regarding these claims until it delivered its factum, thereby arguably leaving some question as to its intention.
[9] The defendant, correctly, maintains that 'bad faith' is not an independent cause of action. As was the case with the references in the pleading to breach of statutory duty, the plaintiff acknowledges that 'bad faith' is not a cause of action, and consistent with this has removed reference to bad faith from paragraph 1(a) of the prayer for relief.
[10] The plaintiff states that the references to bad faith are for the purpose of supporting the allegation of misfeasance in public office and the claim for punitive damages. On that basis, the references are proper.
[11] The propriety of the allegation of unlawful discrimination remains in dispute. The plaintiff argues that while courts have determined that discrimination is not an actionable wrong, the cases in which they have done so are distinguishable. As a result, the claim as advanced by the plaintiff is novel and therefore is a claim that should not be foreclosed on a pleadings motion.
[12] In my view, it is plain and obvious that the plaintiff's claim of discrimination cannot succeed. The plaintiff argues that the seminal decision of Seneca College of Applied Arts and Technology v. Bhadauria, 1981 29 (SCC), [1981] 2 S.C.R. 181 deals only with claims for discrimination founded directly on a breach of the Ontario Human Rights Code, R.S.O. 1990, c. H.19 or that invoke public policy expressed in the Code and therefore leaves open the possibility of some other form of discrimination amounting to an actionable wrong. However, the plaintiff was unable to enunciate what form that wrong might take in relation to it.
[13] Freedom from discrimination is not a free-standing right in the common law. Neither the Charter of Rights and Freedoms, guaranteeing equality under s. 15, nor the Human Rights Code provides protection from all forms of discrimination. The fact that an act may be unfair does not necessarily make it discriminatory or a civil wrong. Corporations possess none of the traits that we, as a society, have determined are to be safeguarded from discrimination. It has no race, gender, or sexual orientation, by way of example. Indeed, the plaintiff has not alleged that it is being discriminated against because of any specific trait.
[14] The plaintiff alleges discrimination based on the defendant dealing differently with it than with other corporations in applying the regulatory scheme for drug approval. The true nature of this claim is the pleaded claim of misfeasance.
[15] Where a reasonable prospect of success exists, the matter should be allowed to proceed to trial: R. v. Imperial Tobacco Canada at para. 17. But, there is no reasonable prospect of the claim of discrimination succeeding. As a result, the claim insofar as it is based on discrimination is struck. Specifically, the words 'unlawful discrimination' are to be struck from paragraph 1(a).
[16] The remaining references to discrimination throughout the pleading are to remain, as supporting the claim for misfeasance in public office. (see Scott v. North Perth (Municipality), [2009] O.J. No. 50 (S.C.) at para. 7; Odhavji Estate v. Woodhouse, 2003 SCC 69, [2003] S.C.J. No. 74 at para. 22-23)
Striking claims on the basis of res judicata and failure to disclose a reasonable cause of action
[17] The fresh as amended claim is based on the defendant's handling of the plaintiff's applications with respect to eleven drug products. The defendant submits that the claims with respect to four of those products should be struck on the basis of, in the case of one of the products, the claim having been determined in another proceeding and, in the case of the other products, the issue being identical to the claim already determined in regards to the first product.
Apo-ASA
[18] The defendant bases this position on the Federal Court of Appeal decision in Apotex v. Minister of Health and Attorney General of Canada, 2011 FCA 86, [2011] F.C.J. No.334 a judicial review brought by the plaintiff as a result of the Minister's refusal to grant a Notice of Compliance ("NOC") to the plaintiff for its Apo-ASA product. The refusal was based on the plaintiff's alleged failure to demonstrate its product to be bioequivalent to the brand product within the prescribed guidelines. In its application, the plaintiff asserted that, in the circumstances, it was not required to meet guideline thresholds for bioequivalence and therefore should have been granted approval. The court rejected this argument and held that bioequivalence must be demonstrated in an Abbreviated New Drug Submission even where safety and efficacy are established, as was the case in the Apo-ASA submission.
[19] In this action, the plaintiff makes the very same allegation with respect to Apo-ASA that was rejected by the Federal Court of Appeal: the refusal to grant a NOC was not a position that could have been taken in good faith. The plaintiff claims that it has suffered damages as a result of the improper position that was taken by the Minister.
[20] If the defendant can establish that:
(a) the same question has been decided in a prior proceeding;
(b) the judicial decision which is said to create the estoppel was final; and,
(c) the parties to the judicial decision or their privies were the same persons as the parties to the proceedings in which the estoppel is raised or their privies,
the pleading with respect to Apo-ASA will be struck. (see Toronto (City) v. C.U.P.E., Local 79, 2003 SCC 64, [2003] 3 S.C.R. 77 at para. 23)
[21] It is not plain and obvious, in my view, when considering the pleading as a whole, that the claim with respect to Apo-ASA will fail based on the same question having been decided by the Federal Court of Appeal.
[22] The plaintiff pleads that subsequent to the decision of the Federal Court of Appeal, the Minister granted the plaintiff the previously refused NOC. The plaintiff pleads that the Minister did so without receiving any further bioequivalence data and accordingly, either demonstration of bioequivalence was not a requirement or the plaintiff must have met the requirements for bioequivalence all along. The plaintiff bases its claim on this subsequent granting of the NOC. That is not a claim that was made or could have been made before the Federal Court in the action on which the defendant relies.
[23] The plaintiff also claims with respect to Apo-ASA that in issuing the NOC, the Minister refused to include a 'Canadian Reference Product', with resulting damages to the plaintiff. This, also, is not a claim that was or could have been asserted before the Federal Court of Appeal.
[24] Further supporting the conclusion that the claim with respect to Apo-ASA should not be struck is the distinction between judicial review and claims for damages. The Supreme Court, in Canada (A.G.) v. TeleZone Inc., 2010 SCC 62, [2010] 3 S.C.R. 585, at para. 24, acknowledged that there are substantive differences between public law and private law principles with the result that "a government decision that is perfectly valid may nevertheless give rise to liability in contract...or tort." (TeleZone at para. 28)
[25] The plaintiff's claim with respect to Apo-ASA is framed in tort. The plaintiff's application with respect to that product in the Federal Court of Appeal was with respect to the validity of the administrative decision regarding its approval. Though both proceedings involve the issue of bioequivalence, as the court stated in TeleZone at para. 30, the two present distinct and separate justiciable issues.
[26] The defendant argues that TeleZone has no application to this case as the issue in TeleZone was whether the plaintiff could proceed with its civil action without first applying for judicial review in the Federal Court. In my view, however, the principles enunciated in TeleZone are not limited to those circumstances.
[27] The decision in Rasanen v. Rosemount Instruments Ltd., 1994 608 (ON CA), [1994] O.J. No. 200 (C.A.), a Court of Appeal decision predating TeleZone, does not assist the defendant. That case involved the re-litigation of a decision by an administrative tribunal, the purpose of which was to provide an alternative to the judicial process (Rasanen at para. 35) and did not engage the issues distinguishing judicial review from civil actions.
[28] The defendant is not entitled to have the claim with respect to Apo-ASA struck on this motion.
Apo-Lansoprazole, Apo-Pantoprazole and Apo-Omeprazole
[29] The defendant relies on the same Federal Court of Appeal decision, Apotex v. Minister of Health and Attorney General of Canada, 2011 FCA 86, [2011] F.C.J. No. 334 for its position that the claims with respect Apo-Lansoprazole, Apo-Pantoprazole and Apo-Omeprazole should be struck. The defendant submits that the claims with respect to these drugs are based on the same issues that were before the Federal Court of Appeal and therefore the pleadings relating to those drugs are frivolous or vexatious or otherwise an abuse of process.
[30] However, the circumstances with respect to these products were different from those of Apo-ASA. These products, unlike Apo-ASA, had initially been approved by the Minister. The claim with respect to Apo-Lansoprazole and Apo-Pantoprazole are based on the Minister having subsequently revoked his approval and then "re-approved" the submission though the plaintiff had not provided any additional bioequivalence data. The claim with respect to Apo-Omeproazole is based on the Minister revoking the approval.
[31] I am not satisfied, based on the facts alleged, that there is sufficient connection between the claim with respect to these drugs and the decision on which the defendant relies to make it plain and obvious that the claims must fail because they are frivolous or vexatious or otherwise an abuse of process. In any event, I would not strike the pleadings with respect to these products based on the reasoning in TeleZone, referred to above.
[32] Although not in its factum, the defendant in oral argument and in its amended notice of motion advanced an additional basis for the striking of the pleadings with respect to these three products and additionally, Apo-Olanzapine. The defendant submits that the claims with respect to these products are, in the case of Apo-Omeproazole, res judicata, and in the case of the other products, frivolous or vexatious or an abuse of process as a result of the Federal Court of Appeal decision in Apotex v. Minister of Health et. al., 2012 FCA 322, [2012] F.C.J. No. 1659. That case was a judicial review application of the Minister's treatment of the plaintiff's submission for a NOC for Apo-Omeprazole.
[33] In this decision, the Federal Court of Appeal upheld the lower court finding that the plaintiff's application was brought out of time, that the test for extension could not be met and that the plaintiff did not have a vested right in a NOC.
[34] The defendant submits that the pleadings in this action with respect to these four drugs, though they do not include the words 'vested rights' are substantively the same as what was pleaded in the Federal Court of Appeal application. The issue of vested rights having been determined against the plaintiff by the Federal Court of Appeal, the plaintiff cannot relitigate that issue in this action.
[35] However, the plaintiff is not claiming a substantive right – a vested interest - to the issuance of an NOC with respect to these products. The fact that the plaintiff has been found not to have a vested right to the issuance of an NOC does not prevent the failure to issue an NOC from being a consideration in determining the plaintiff's entitlement to damages in tort, breach of contract and punitive damages.
[36] It is not plain and obvious that the impugned pleadings must fail on the basis of res judicata and their being frivolous or vexatious or otherwise an abuse of process.
[37] The defendant relies on this 2010 Federal Court of Appeal decision, as well, to argue that the issue of the Minister's bona fides has been determined with respect to its consideration of the plaintiff's submissions with respect to Apo-Omeprazole, which findings are equally applicable to the claims with respect to these other products. But, the Federal Court of Appeal did not, as submitted by the defendant, consider whether the review of Apo-Omeprazole by the Minister was unfair and arbitrary. It considered the narrower issue of whether it was unfair and arbitrary for the Minister to prefer the negative results of a 2008 review of the plaintiff's submission over the positive results of 2002 review giving rise to a reasonable apprehension of bias. In was in this limited context that the court held that the plaintiff had not established an absence of bona fides.
Striking claims based on section 8 of the Patent Medicines (Notice of Compliance) Regulations
[38] The defendant disputes the plaintiff's claims for damages based on section 8 of the Patent Medicines (Notice of Compliance) Regulations, SOR/93-133, (the "Regulations") submitting that they fail to disclose a cause of action against the defendant or, alternatively lack sufficient particularity.
[39] A generic manufacturer seeking approval of the sale of a copy of a patented drug before the expiry of the innovator's patent can challenge the patent by way of a Notice of Allegation. The innovator may, in response, apply pursuant to section 6 of the Regulations for an order prohibiting the Minister from issuing an NOC until the expiry of the patent. This application automatically results in a stay that prohibits the Minister from granting an NOC to the generic manufacturer for up to 24 months.
[40] Section 8 of the Regulations provides a remedy for generic manufacturers that have been prevented from receiving a NOC as a result of this stay where the section 6 application by the innovator is subsequently withdrawn or discontinued or is dismissed by the court hearing it, or, where a prohibition order has been granted, is reversed on appeal. In such circumstances, section 8 provides for a claim for compensation from the innovator for the harm caused to the generic manufacturer by the delay in the issuance of the NOC that would have been issued but for the stay or prohibition order.
[41] The plaintiff claims that it has lost some or all of its section 8 claims against the innovator companies because of the actions of the defendant in improperly delaying the issuance of NOC's. It seeks to recover from the defendant the difference between the losses it recovered, if any, from the innovators and what it would have recovered from them but for the impugned acts of the defendant.
[42] The defendant submits that the plaintiff cannot advance this claim because the right to claim section 8 damages is governed exclusively by the Regulations and that the Minister is exempt from liability for those damages. The plaintiff takes no issue with this, but – correctly, in my view – states that this does not preclude its claim against the defendant because its claim is not brought under section 8, but rather for the loss of the benefit of section 8.
[43] The defendant's argument that the plaintiff would not have been entitled to section 8 damages because the preconditions to which I referred in paragraph 40, above, have not been met does not entitle the defendant to the striking of the claims. But, this argument relates to the issue of the plaintiff's ability to prove that it has suffered a loss. That is not an issue to be determined on a Rule 21 motion.
[44] Turning to the defendant's submission that the section 8 based claims lack sufficient particularity, I am of the view that it too is based on a misapprehension of the nature of the claim. The plaintiff is not seeking recovery from the defendant pursuant to section 8.
[45] The defendant sought particulars from the plaintiff with respect to this claim. The plaintiff responded to the demand for particulars of the allegations that the Minister's acts resulted in a loss of claims for damages that the plaintiff would otherwise have pursued pursuant to section 8 by confirming the section 8 foundation and setting out, generally, the period of the loss. The plaintiff responded to the demand for particulars of relevant section 8 proceedings brought by it by providing the court file numbers of those proceedings.
[46] The plaintiff has specified the products with respect to which it claims damages resulting from its inability to have full benefit of section 8, and has pleaded with respect to which products section 8 claims have been made. The defendant does not require additional particulars in order to plead in response.
[47] The defendant has not established a basis for striking the claims based on section 8 of the Regulation.
Striking pleading on the basis of rules 25.06(1) and 25.11
[48] The defendant pursues its motion to strike on the basis of improper pleading only with respect to paragraphs 32 through 39 of the statement of claim. It submits that those paragraphs contain evidence rather than the facts on which the defendant relies and consist of irrelevant and prejudicial allegations.
[49] The subject of these paragraphs is a product with respect to which there is no claim in this action. The pleading sets out the course taken by the plaintiff in seeking issuance of a NOC for the product and the defendant's responses. The plaintiff alleges that the defendant treated the plaintiff unfairly with respect to this submission.
[50] The defendant submits that these paragraphs are immaterial and are included in the claim only to prejudice and embarrass the defendant and that they further offend the rules of pleading by containing evidence and argument.
[51] I am sympathetic to any defendant facing a pleading of this length and complexity. I appreciate that the statement of claim cannot avoid being lengthy as it seeks damages arising out of the plaintiff's efforts at obtaining approval of eleven separate drug products; but, it would have been to the benefit of all, had the plaintiff chosen to draft a concise pleading and one that provides a clearer road map as to which facts relate to which causes of action. Still, it is not for a judge on a pleadings motion to redraft a pleading. Only to the extent that it clearly falls outside of what is mandated as proper, can it be struck.
[52] In my view, paragraphs 32 through 39 fall outside of what is proper as they contain evidence in support of the plaintiff's pleading in paragraph 31 that those responsible for approval decisions were, as far back as 1998, engaged in the same conduct that forms the basis of the claims in the action. I do not accept the plaintiff's submission that the impugned paragraphs are a necessary factual underpinning for the facts that follow. It would have been sufficient to name the product relied rather than detailing the course of the approval process as the plaintiff has done. This approach to the pleading has unnecessarily lengthened it.
[53] Paragraphs 32 through 39 offend the rules of pleading and should therefore be struck. The plaintiff is to have leave to amend to allow for the identification of the drug that provides the example of similar conduct.
Particulars
[54] On its face, the idea of seeking particulars with respect to a pleading that runs the length of this one appears paradoxical. But, it is not as surprising as one would expect that, in the face of 91 pages of pleadings, the defendant could still feel the need for particulars. This is, in my view, a product of the plaintiff's decision to organize the pleading as it has and to include as much factual detail as it has.
[55] On this motion, the defendant limited the particulars it seeks to the identification of which facts support which causes of action. The plaintiff's position is that this is something that the defendant does not need to know for the purposes of pleading to the claim. I must agree with the plaintiff. The plaintiff relies on the various causes of action together and in the alternative. The defendant's ability to plead to the statement of claim is not affected by how the allegations to which it must respond are characterized.
[56] The defendant is not entitled to the particulars sought.
The title of the proceeding
[57] I referred at the outset to the dismissal of this action against all of the defendants, other than the Attorney General of Canada. The defendant asks that the title of the proceeding be made to reflect this reality. The plaintiff submits that there is no reason to make this change and it is therefore improper; however, it did not object strenuously to the exercise of my discretion to make it.
[58] Having the title of the proceeding reflect the reality of the action is not only reasonable, but preferable. No prejudice to the plaintiff results from this. The request is granted.
Summary of Order
[59] The following is ordered:
(a) the words 'unlawful discrimination' are to be struck from paragraph 1(a) of the fresh as amended statement of claim;
(b) paragraphs 32 to 39 of the fresh as amended statement of claim are to be struck with leave to amend as set out in paragraph 53, above;
(c) the balance of the defendant's motion to strike portions of the statement of claim is dismissed;
(d) the defendant's motion for particulars is dismissed;
(e) The title of the proceeding shall be amended by crossing out all parties other than the Attorney General of Canada.
Costs
[60] I have both parties' costs outlines; however, I have not heard submissions from them with respect to costs. The similarities in the outlines are such as to suggest that the parties will be able to arrive at an agreement as to costs. The similarity reflects agreement between the parties as to what is reasonable for a motion such as this and what each might reasonably expect to pay if they were to lose the motion.
[61] The only issue, as I see it, is the extent to which the plaintiff's costs should be reduced to reflect the fact that it was not entirely successful in responding to the motion. Considering the relative significance of the aspects of the motion with respect to which the defendant was successful, both in terms of the time spent on written and oral submissions with respect to them and their significance to the action, in my view - without benefit of submissions, and therefore subject to change - is that the defendant was 25% successful.
[62] If the parties cannot agree on costs, they may contact me through my assistant to make arrangements for submissions to be made. I am to be advised within 15 days of the date of this endorsement as to whether costs submissions will be required.
Frank J.
Date: February 11, 2013