COURT FILE NO.: CV-14-514915
DATE: 20211025
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
APOTEX INC.
Plaintiff
- and -
PFIZER IRELAND PHARMACEUTICALS, PFIZER INC., PFIZER EXPORT COMPANY, PFIZER GLOBAL SUPPLY, PFIZER OVERSEAS LLC, PFIZER PGM AND PFIZER CANADA ULC
Defendants
AND BETWEEN:
PFIZER CANADA ULC AND PFIZER PRODUCTS INC.
Plaintiffs by Counterclaim
- and -
APOTEX INC.
Defendant by Counterclaim
Harry. B. Radomski, Nando De Luca and Jerry Topolski, lawyers for the Plaintiff
Orestes Pasparakis, Daniel Daniele, David Yi and Morgan Westgate, lawyers for the Defendants
Orestes Pasparakis, Daniel Daniele, David Yi and Morgan Westgate, lawyers for the Plaintiffs by Counterclaim
Harry. B. Radomski, Nando De Luca and Jerry Topolski, lawyers for the Defendant by Counterclaim
HEARD: Written Submissions
COSTS ENDORSEMENT
DIAMOND J.:
[1] At the conclusion of my Reasons for Decision released on September 27, 2021, I set a fixed schedule for the exchange and filing of written costs submissions in the event the costs of the defendants’ motion for summary judgment could not be resolved between the parties.
[2] No resolution was achieved. I have now received and reviewed the costs submissions of the parties.
[3] To begin, the defendants were wholly successful on their motion for summary judgment and this action and counterclaim have been dismissed. I see no reason to depart from the standard rule that costs should follow the event. As such, the defendants are entitled to their costs of the motion and the action.
[4] The issues to be determined by this Court are scale and quantum. The defendants seek payment of their costs of the action on a substantial indemnity basis in the all-inclusive amount of $2,177,384.22, or in the alternative payment of their costs of the action on a partial indemnity basis in the all-inclusive amount of $1,721,708.29.
[5] The plaintiff submits that the defendants should not awarded their costs on a substantial indemnity basis, and the defendants’ costs should be fixed in an amount no more than $150,000.00. In the alternative, the plaintiff requests that the defendants’ costs be fixed in an amount of no more than $350,000.00 being 50% of what Justice Schabas awarded to the defendants in the decision of Apotex Inc. v. Eli Lilly Canada Inc. 2021 ONSC 3111 (the “Zyprexa decision”).
[6] Dealing first with the scale of costs, the defendants argue that the elevated scale of substantial indemnity costs is warranted and appropriate due the plaintiff having made unfounded and disparaging allegations in this proceeding against the defendants that they (i) intentionally “gamed” the system in procuring the 446 Patent, (ii) intentionally sought to “maintain an illegal monopoly” rather than to compete, (iii) acted unlawfully and criminally, and (iv) appropriated to themselves exclusive sales of sildenafil that were mala in se (ie. inherently evil).
[7] The plaintiff submits that for the reasons found by Justice Schabas in the Zyprexa decision, there is no basis for a substantial indemnity costs award in this case. It is thus necessary to review why Justice Schabas (narrowly in my view) came to the conclusion that costs on a substantial indemnity basis were not appropriate. In the Zyprexa decision, Justice Schabas found as follows:
“Item (d) is more complicated. Allegations of fraud and conspiracy made without foundation and pursued in litigation often justify an elevated award. In this case Apotex made three such allegations: (a) that the Lilly defendants conspired against Apotex to, among other things, procure an invalid patent; (b) that Lilly’s 113 Patent should be declared invalid under the Patent Act’s fraud provision (s. 53(1)); and (c) that Lilly made false and misleading statements disparaging of Apotex contrary to the Trademarks Act.
None of these allegations had any foundation in the evidence. Apotex could point to no unlawful acts or actions of Lilly which supported the claim that Lilly had conspired to injure Apotex, or that Lilly had made, knowingly or unknowingly, any false or misleading statements in obtaining and enforcing the 113 Patent, or that it had committed any acts whatsoever that could be characterized as deliberate, or even inadvertent, wrongdoing. As stated by Quigley J. in Apotex v. Abbott, 2013 ONSC 2958, another case in which Apotex sought relief over and above that provided for in the PM(NOC) Regulations, at para. 23, “baseless allegations of wrongful conduct plainly cross the line into counter-productive conduct that warrants a costs sanction.”
Put against this is Apotex’s argument that the monopolies claim was “novel,” as had been noted in other decisions that considered whether to strike similar causes of action. However, as I point out in my Reasons, on closer analysis the claim under the Monopolies Acts had been made and dismissed in England in Peck v. Hindes (1898), 15 RPC 113 (Q.B.D.).
Nevertheless, in the unique circumstances of this case I am not satisfied that Apotex’s conduct rises to a level that can be called “reprehensible, scandalous, or outrageous” such that an elevated award is warranted: see, e.g., Krieser v. Garber, 2020 ONCA 699 at para. 137. Apotex has been raising the legal issues that were addressed in this case for some time, and they needed to be resolved. While Apotex pleaded serious wrongdoing, its claim was essentially based on a legal argument that the Patent Act and the PM(NOC) Regulations are not exhaustive in providing remedies in the context of disputes over patented medicines.”
[8] In my view, the Zyprexa decision was an exercise in judicial discretion to decline awarding a higher scale of costs due to, inter alia, that proceeding being the first “monopolies claim” to be determined on its merits by the Court. Justice Schabas found the case before him to be unique in the sense that while the plaintiff had made unproven allegations of fraud and conspiracy, those allegations were central to the factual and legal theories supporting the first “monopolies claim” to result in a merits-based decision.
[9] In my view, the same cannot be said for this proceeding. The allegations of intentional misconduct advanced by the plaintiff against the defendants were just as serious, if not arguably more so, than those in the Zyprexa decision. Rather than reassessing its position responding to the plaintiff’s motion for summary judgment, the plaintiff instead “doubled down” on its efforts and highlighted those allegations in an attempt to both distinguish the Zyprexa decision and convince this Court that it should not be followed. Such strategies come with inherent risk, especially when carried out in the face of Justice Schabas’ findings.
[10] The plaintiff cannot now ask for the same or lesser result than it was afforded in the Zyprexa decision when it chose to pursue allegations of intentional misconduct yet again to their ultimate conclusion (ie. a trial in the event the motion for summary judgment was dismissed). I agree with the defendants that the plaintiff’s actions amount to the type of wanton and reprehensible conduct that warrants a costs sanction on an elevated scale. For those reasons, costs of this proceeding should be payable by the plaintiff to the defendants on a substantial indemnity basis.
[11] This leaves the issue of quantum. The plaintiff sought hundreds of millions of dollars from the defendants in this proceeding, and there was much at stake for both parties. However, I do agree with the plaintiff that the amounts sought to be recovered by the defendants should be reduced due to (a) some of the time spent by the parties related to the defendants’ counterclaim which was dismissed, and (b) the amount of time spent by counsel to the plaintiff appears excessive considering that this matter did not proceed to trial, and the hearing for the defendants’ motion for summary judgment lasted one day.
[12] I have reviewed the plaintiffs’ Costs Outline. The dockets set out there are indeed excessive and repetitive in several areas. Substantial indemnity fees of over $63,000.00 were incurred before the drafting of a Statement of Defence. Over $52,000.00 in time was billed to prepare the twenty page Statement of Defence. The defendants incurred over $663,000.00 in fees associated with the discovery process (documentary, oral and post-examination undertakings and refusals).
[13] Counsel for the defendants began preparing for trial and incurred nearly $149,000.00 in time for that step, but when the strategy pivoted to a motion for summary judgment (which is premised upon being a more affordable and efficient approach), the legal fees associated with preparing and attending the motion rose to over $582,000.00.
[14] Of note, a series of interlocutory motions and appeals were argued in 2015-2016, and while the defendants incurred substantial indemnity fees of nearly $116,000.00, the Court ordered costs of those interlocutory steps in the total amount of approximately $45,000.00, less than half of what the defendants incurred.
[15] As held by Justice Schabas in the Zyprexa decision:
“Here, the two parties know that they will each incur huge legal costs in this type of litigation, and costs awards between them should reflect that knowledge and their circumstances. In this way, cost awards may have some of the effect on these parties that they are intended to have on other, less well-resourced, litigants. This includes a significant measure of indemnification, deterring claims which have a limited chance of success, and ensuring that litigation in our publicly-funded courts is ‘conducted in an efficient and just manner,’ which may further access to justice.”
[16] In addition to the factors set out in Rule 57.01 of the Rules of Civil Procedure, as mandated by the Court of Appeal for Ontario in Boucher v. Public Accountants Council (Ontario) 2004 CanLII 14579 (ONCA), I remain mindful of my obligation to consider what is “fair and reasonable” in fixing costs with a view to balancing compensation of the more successful party with the overall goal of fostering access to justice.
[17] Having regard to the results achieved and the reasonable expectations of and positions taken by the parties, in my view a fair and reasonable result is an order requiring the plaintiff to pay the defendants their substantial indemnity costs of the motion in the all-inclusive amount of $900,000.00 forthwith.
[18] Order accordingly.
Diamond J.
Released: October 25, 2021
COURT FILE NO.: CV-14-514915
DATE: 20211025
ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
APOTEX INC.
Plaintiff
– and –
PFIZER IRELAND PHARMACEUTICALS, PFIZER INC., PFIZER EXPORT COMPANY, PFIZER GLOBAL SUPPLY, PFIZER OVERSEAS LLC, PFIZER PGM AND PFIZER CANADA ULC
Defendants
AND BETWEEN:
PFIZER CANADA ULC AND PFIZER PRODUCTS INC.
Plaintiffs by Counterclaim
-and-
APOTEX INC.
Defendant by Counterclaim
COSTS ENDORSEMENT
Mr. Justice Diamond
Released: October 25, 2021