Date: 19991012
Docket: T-431-94
BETWEEN:
GLAXO GROUP LIMITED and
GLAXO WELLCOME INC.
Plaintiffs
- and -
NOVOPHARM LIMITED
Defendant
REASONS FOR ORDERS AND ORDERS
EVANS J.:
| A. INTRODUCTION |
[1] These are my reasons for awards of costs made in connection with three separate motions that arose from an action for patent infringement instituted in 1994 by the plaintiffs, whom I shall refer to collectively as Glaxo, against several generic pharmaceutical manufacturers, including Novopharm. The patent in question is for ranitidine hydrochloride, Form 2.
[2] While legally distinct, the motions all have their origin in the refusal to answer some 3,000 questions that had been put to the named inventor and two representatives of Glaxo in the course of their examination for discovery. Most of the questions were "taken under advisement" by counsel for Glaxo, Mr. Gaikis, and subsequently refused. Other questions were objected to when asked, and the grounds of the objection were given as required by Rule 95 of the Federal Court Rules, 1998 . No explanation was given, nor is one required by the Rules, when a question was taken under advisement.
[3] In order to put into perspective the large number of questions refused, I should note that some 15,000 questions in all were put to the affiants by counsel for Novopharm. However, because it is often necessary for counsel to put to a witness several "lead up" questions, this overstates very considerably the number of substantive questions that were asked.
[4] On the other hand, when the examination for discovery occurred Novopharm"s pleadings were considerably more narrowly focussed than they subsequently became after significant amendments were made to them. Nonetheless, counsel for Glaxo was aware at the discovery that counsel for Novopharm viewed their defence to the action more broadly than was reflected in the pleadings as they then were, and could have anticipated that Novopharm would seek leave to amend, which it did successfully.
[5] Novopharm brought a motion to require Glaxo to answer the questions that had been refused and to produce the documents for which it had asked. This motion was argued over eight days before Mr. Peter A.K. Giles, the Associate Senior Prothonotary. By this time, Novopharm had amended its pleadings so as to broaden its defence.
[6] Mr. Giles ordered Glaxo to answer some 1,000 questions, and Glaxo agreed to answer another 700. Success on the motion was thus divided. Mr. Giles did not deal with some 200 other questions on the ground that he did not have sufficient time. He awarded costs against Glaxo in any event of the cause.
[7] Mr. Giles requested that the parties provide him with a draft order setting out the questions that he had required Glaxo to answer, those that he had decided need not be answered, and those that he required to be answered in a modified form. Counsel had grouped the questions into categories, although the number of questions involved and the fact that some related to more than one issue complicated the task.
[8] There was correspondence between counsel on the proposed draft, but agreement was not forthcoming. Accordingly, Novopharm brought a motion before Mr. Giles to settle the substance and form of the order. The order was not finally settled until approximately six months after the last day on which he had heard Novopharm"s motion to require production. Mr. Giles awarded costs in the cause to Novopharm for the motion to settle the order.
[9] Novopharm appealed Mr. Giles" order not to require the named inventor and Glaxo"s representatives to answer certain of the questions put to them during their examination for discovery. Novopharm also asked on this motion that answers be required to those questions that Mr. Giles had not had time to consider in the eight-day hearing.
[10] I heard this appeal motion over a period of four days; success was more or less evenly divided between the parties. I should add that it was only possible to dispose of this motion within the allotted time as a result of a welcome spirit of co-operation by counsel for the parties, Ms. Hitchman for Novopharm, and Mr. Wilcox for Glaxo, an attitude that had appeared utterly lacking at the examination for discovery.
[11] Glaxo did not appeal Mr. Giles" order requiring that 1,000 questions be answered. However, it did appeal against the award of costs that he made at the end of the motion in an order dated January 11, 1999. At the end of the hearing of the motion before me, in which Novopharm appealed Mr. Giles" refusal to require answers to certain questions, Novopharm asked for its costs on the appeal motion in any event of the cause.
[12] I also heard a motion by Novopharm appealing an order made by Mr. Giles dated June 18, 1999 in which he awarded costs in the cause on the motion brought by Novopharm to settle the substance and form of the order disposing of the motion to require production.
| B. ISSUES AND ANALYSIS |
[13] Although they share some common factual and legal background, I shall deal in turn with each of the three awards of costs in issue in these proceedings.
| 1. Order of January 11, 1999 |
[14] At the end of the eight-day hearing on Novopharm"s motion for answers, Mr. Giles ordered Glaxo to pay Novopharm"s costs in any event of the cause and awarded costs at a high level: costs of preparation of the motion to be assessed at 2x the top of column V, and costs of appearance per hour to be assessed at the top of column IV. This amounted in total to almost $28,000. Glaxo was also ordered to pay half the expense of re-attendance of the persons to be examined.
[15] Counsel for Glaxo submitted that there were insufficient grounds to justify Mr. Giles" departure from the usual rule that the costs of an interlocutory motion are awarded in the cause: Thurston Hayes Developments Ltd. v. Horn Abbot Ltd. (1985), 5 C.P.R. (3d) 124, 126 (F.C.A.). He also pointed out that Novopharm had moved on every outstanding question but had enjoyed only partial success in its motion, that many of the questions had quite properly not been answered given the state of the pleadings when the examination for discovery took place, and that counsel for Novopharm had acquiesced in counsel for Glaxo"s taking questions under advisement by failing to object, and by continuing with the examination.
[16] Since the award of costs involves the exercise of discretion and does not raise a question vital to the final issue in the case, it is reviewable on appeal only if based on a wrong principle or upon a misapprehension of the facts (Canada v. Aqua-Gem Investments Ltd., [1993] 2 F.C. 425 (F.C.A.)), although since Mr. Giles gave no reasons for his exercise of discretion it is arguable that on appeal the award may be subjected to closer scrutiny. However, since I entirely agree with the Associate Senior Prothonotary"s award of costs in this case, the applicable standard of review is irrelevant. My reasons for this conclusion are as follows.
[17] First, I agree with Rothstein J. (as he then was) in AIC Ltd. v. Infinity Investment Counsel Ltd. (1998), 148 F.T.R. 240 (F.C.T.D.) that the authoritativeness of Thurston Hayes, supra has declined sharply, especially when, as here, the issues in dispute on the motion were not the same as those that would be resolved at trial. This is because "the law of costs was evolving and ... there was a rationale for awarding costs on a motion irrespective of the outcome at trial" (at page 242), and because Rule 401 of the Federal Court Rules, 1998 expressly confers jurisdiction on the Court to award costs on a motion without awaiting the outcome of the trial. I also agree with his observation that a costs award on a motion can be made in order to promote expeditiousness in the conduct of litigation.
[18] There can be no doubt that in taking under advisement and objecting to 3,000 questions the position taken on behalf of Glaxo at the examination has caused significant delays in getting this matter to trial, has imposed unnecessary expense on Novopharm and has consumed an undue quantity of scarce judicial resources.
[19] Second, for counsel to have taken so many questions under advisement in effect avoided the requirement in the Rules that a ground must be given for objecting to a question, and thus deprived counsel for Novopharm of the opportunity to reformulate the questions in order to meet the objection. The result, as counsel for Novopharm pointed out, has also been to drop into the lap of the Court the responsibility for deciding issues of relevance, appropriateness of breadth, and whether a question was more one of fact or opinion. These are issues that are more properly sorted out by counsel, at least initially, at the examination for discovery, than by the Court on a motion to require answers to questions.
[20] Nor do I think that it is appropriate for Glaxo to attempt to shift onto counsel for Novopharm responsibility for this litigation tactic by saying that she should have objected to the taking of questions under advisement. I note that at the examination counsel did object more than once, although it is also probably fair to say that her objection was directed more towards what she regarded as the generally obstructive attitude of counsel than to taking questions under advisement, rather than objecting to them. However, I accept Ms. Hitchman"s explanation that she fully expected that many of the questions taken under advisement would be answered once Mr. Gaikis had had an opportunity to inform himself more fully on them.
[21] Third, while some of Glaxo"s refusals may have been correct given the state of Novopharm"s pleadings at that time, they accounted for only some of the questions taken under advisement. It is clear from the motion record filed by Novopharm that Mr. Gaikis also took under advisement a number of questions that were quite simple and straightforward and that one would have expected to be answered as a matter of common professional courtesy. In addition, of course, Glaxo has been ordered to answer a substantial number of questions that it continued to refuse even after Novopharm"s pleadings had been amended.
[22] To turn to the law, rule 400(3) of the Federal Court Rules, 1998 lists the factors that may be taken into account in the exercise of the Court"s discretion to award costs. Of particular relevance to the facts of this case are paragraphs (b) (amount of work), (h) (conduct of a party that tended unnecessarily to lengthen a proceeding) and (k)(ii) (steps taken in the proceedings through excessive caution).
[23] Paragraph (o) also confers a residual discretion on the Court by authorizing it to take into account "any other matter that it considers relevant". I would put into this category conduct by a party that has had the effect of thwarting another party"s right to an effective examination, as, in my view, happened in this case.
[24] It is appropriate to use an award of costs to make it clear that the Court strongly disapproves of an unreasonable position taken on behalf of a party and wishes its disapproval to be understood in the profession so as to discourage its repetition in the future.
[25] Accordingly, I shall dismiss Glaxo"s motion appealing from Mr. Giles" award of costs in the order dated January 11, 1999.
| 2. Costs of the appeal |
[26] The second question concerns the order for costs that I should make in respect of Novopharm"s motion appealing Mr. Giles" refusal to require that certain questions put by Novopharm be answered, and asking me to determine whether questions not reached by Mr. Giles should also be answered.
[27] Ms. Hitchman urged me to make an award of costs in favour of Novopharm similar to that made by Mr. Giles on the original motion for production, an award that I have upheld. Her argument in essence was that this appeal flowed directly from counsel"s inappropriately taking under advisement or objecting to an egregiously large number of questions at the examination for discovery, questions that were subsequently refused. Accordingly, the factors that had led Mr. Giles to make his costs award, she submitted, are equally applicable to the appeal motion
[28] I do not entirely agree with this submission. First, I must take into account the conduct of Mr. Wilcox who appeared at the hearing of the appeal motion as counsel for Glaxo. His willingness to agree that a number of questions would be answered considerably shortened the list of questions that I would otherwise have had to address, and thus reduced the length of the hearing. However, I would also note that counsel for both parties seemed prepared to relax the positions that they had adopted only after a lecture from the Bench.
[29] Second, Glaxo successfully resisted Novopharm"s attempt to require answers to all the questions that had been refused, as it had before Mr. Giles. I concluded, as had Mr. Giles, that a significant number of Novopharm"s questions were irrelevant or only marginally relevant to unadmitted facts in the pleadings, were too broad, or asked for an expression of opinion rather than a statement of fact.
[30] On the other hand, it is equally clear that if counsel for Glaxo had exercised with more discretion the right to refuse answers, or had objected and given a reason, rather than taking questions under advisement, the examination would not have been hindered and a four-day hearing of a motion appealing an order of the Associate Senior Prothonotary would have been unnecessary.
[31] Balancing these competing considerations I have concluded that the conduct of counsel for Glaxo at the examination so added to the length and expense of these proceedings, and hindered Novopharm"s right to an effective examination for discovery that an award of party and party costs in any event of the cause is fully justified in respect of the appeal motion as well. However, in light of the mitigating factors that I have mentioned costs should not be assessed at a higher level.
| 3. Order of June 18, 1999 |
[32] Novopharm appealed the order of Mr. Giles awarding costs in the cause in connection with Novopharm"s motion to settle the substance and form of the order that he had made on the motion to require production. Counsel argued that an award of costs in any event of the cause was justified since the necessity for such a complex order that contained 5 schedules, was thirty pages long, and required a motion to obtain a settlement of its terms, was entirely the result of the number of questions not answered at the examination. Moreover, the motion was heard orally at the instance of Glaxo
[33] I recognize that the nature of an order dealing with more than 2,000 questions required considerable work by counsel for Novopharm who prepared the first draft. However, counsel for Glaxo also actively participated in preparing the draft.
[34] No doubt in making this order Mr. Giles took into account his previous award of costs and decided that it was sufficiently onerous in view of Glaxo"s conduct. In all the circumstances I am satisfied that Mr. Giles did not err in exercising his discretion to award costs in the cause.
| C. ORDERS |
| 1. Glaxo"s appeal from the order dated January 11, 1999 awarding costs to Novopharm is dismissed. |
| 2. Costs are awarded to Novopharm in any event of the cause in respect of its motion appealing the order of Mr. Giles disposing of Novopharm"s motion to require questions to be answered. |
| 3. Novopharm"s appeal from Mr. Giles" order dated June 18, 1999 awarding costs in the cause is dismissed. |
"John M. Evans"
J.F.C.C.
TORONTO, ONTARIO
October 12, 1999
FEDERAL COURT OF CANADA
Names of Counsel and Solicitors of Record
| COURT NO: T-431-94 |
| STYLE OF CAUSE: GLAXO GROUP LIMITED and |
GLAXO WELLCOME INC.
| - and - |
| NOVOPHARM LIMITED |
| DATE OF HEARING: MONDAY - THURSDAY, OCTOBER 4-7, 1999 |
| PLACE OF HEARING: TORONTO, ONTARIO |
REASONS FOR ORDERS AND
| ORDERS BY: EVANS J. |
DATED: TUESDAY, OCTOBER 12, 1999
APPEARANCES: Ms. N. Pei
Mr. P. Wilcox
For the Plaintiffs
Ms. C. Hitchman
Ms. Furlanetto
For the Defendant
SOLICITORS OF RECORD: Smart & Biggar
| Barristers & Solicitors |
| 438 University Avenue |
| Suite 1500 |
Toronto, Ontario
| M5G 2K8 |
| For the Plaintiffs |
Hitchman & Sprigings
Barristers & Solicitors
80 Richmond Street West
Suite 1200
Toronto, Ontario
M5H 2A4
For the Defendant
FEDERAL COURT OF CANADA
Date: 19991012
Docket: T-431-94
Between:
| GLAXO GROUP LIMITED and |
| GLAXO WELLCOME INC. |
Plaintiffs
| - and - |
NOVOPHARM LIMITED
Defendant
REASONS FOR ORDERS
AND ORDERS