Merck & Co. Inc. v. Apotex Inc.

Merck & Co. Inc. v. Apotex Inc.
Court (s) Database
Federal Court Decisions
Date
2007-10-09
Neutral citation
2007 FC 1035
File numbers
T-884-03
Decision Content
Date: 20071009
Docket: T-884-03
Citation: 2007 FC 1035
BETWEEN:
MERCK & CO., INC. and
MERCK FROSST CANADA & CO.
Applicants
and
APOTEX INC. and THE MINISTER OF HEALTH
Respondents
REASONS FOR ORDER
GIBSON J.
INTRODUCTION
[1] These reasons follow the hearing at Toronto on the 10th of September, 2007 of a motion under Rule 414 of the Federal Courts Rules,[1] (the “Rules”) for a review of the award of costs on the underlying application in respect of a Notice of Allegation from the Respondent Apotex Inc. (“Apotex”) to Merck Frosst Canada & Co. pursuant to the Patented
Medicines (Notice of Compliance) Regulations[2]. In these reasons, the Applicants are
referred to collectively as “Merck”.
[2] Rule 414 reads as follows:
414. A party who is dissatisfied with an assessment of an assessment officer who is not a judge may, within 10 days after the assessment, serve and file a notice of motion to request that a judge of the Federal Court review the award of costs.
414.La partie qui n’est pas d’accord avec la taxation d’un officier taxateur, autre qu’un juge, peut demander à un juge de la Cour fédérale de la réviser en signifiant et déposant une requête à cet effet dans les 10 jours suivant la taxation.
BACKGROUND
[3] The underlying application was heard by my colleague Justice Mosley over three (3) days in April of 2005. Justice Mosley dismissed the application with costs in favour of the Respondent Apotex. In his reasons[3], Justice Mosley wrote with respect to costs:
Apotex submits that while Merck was entitled to initiate its application, the fact that three jurisdictions have already considered the matter is relevant to the question of costs, particularly after the decision of the U.S. Circuit Court of Appeal came down in January of this year. Apotex suggests this should justify an increase in the scale from column three to column five as most of the preparation for the hearing took place following that decision. I do not agree that this should be a relevant consideration or that there is any reason to grant an increase in the scale. A cost award in this court should not depend on the outcome of foreign proceedings.
Apotex is entitled to its costs, to be calculated on the ordinary scale. There will be no order as to costs either in favour of or against the respondent Minister of Health.
For obvious reasons, the Minister of Health took no part in this review.
[4] Under cover of an affidavit of Andrew Brodkin, a partner at the firm Goodmans LLP, solicitors for Apotex, sworn the 7th of March, 2006, Apotex served and filed a Bill of Costs for fees and disbursements totalling $831,900.50. Mr. Brodkin attested:
At bar, the parties were litigating over Apotex’s access to the Canadian market in respect of its alendronate product. At the pertinent time, annual sales of alendronate generated approximately $130,000,000.00 a year in Canada.
Accordingly, given the extraordinary amount at issues, [sic] the costs incurred by Apotex in responding to the proceedings were reasonable, and further, are costs that Merck ought reasonably to have expected Apotex to incur in order to adequately respond to these matters.
Before the Court, counsel for Merck urged that market size, and therefore the economics underlying the litigation, is simply not a relevant consideration on a costs assessment. I disagree. Rule 400(3) provides that, in exercising its discretion as to costs, the Court may consider a wide range of enumerated factors including “any other matter that it considers relevant.” I regard market size as such a factor that should reasonably have led the Applicants herein to expect the underlying application to be pursued by Apotex with determination, leading to the incurring of substantial costs.
[5] The costs application was heard by assessment officer G.C. Robinson (the “assessment officer”) over a period of two (2) days. On the 22nd of March, 2007, he issued a Certificate of Assessment assessing and allowing Apotex’ costs in the amount of $605,575.78 “…for assessable services and disbursements which includes applicable GST, payable by the Merck Applicants to the Apotex Respondent.” In support of his Certificate of Assessment, Officer Robinson issued extensive reasons.
[6] It is the assessment officer’s award of costs that is here under review at the initiative of Merck. The grounds for review cited by Merck in its Notice of Motion are extensive and summarize the argument presented before the Court on the hearing of this review. They are set out in full in Annex I to these reasons.
GENERAL PRINCIPLES
[7] The standard of review on a review by the Court of an assessment by an assessment officer is well settled. In Belemare v. Canada (Attorney General)[4], Justice Desjardins, for the Court, wrote at paragraph 3:
The applicable standard of review [in a matter such as that here before the Court] is not in dispute. In Wilson v. Canada…Dawson J., stated it in the following way:
“The Court’s jurisdiction to intervene in the decision of an assessment officer does not allow the Court to substitute its own view on the facts for that of the assessment officer. As noted by Joyal, J., in Harbour Brick Co. v. Canada…, intervention is limited to cases where an error in principle has occurred, or to where the amount assessed can be shown to be so unreasonable that an error in principle must have been the cause.”
[emphasis in the original, citations omitted]
Thus, the standard of review to be applied to a decision of an assessment officer is twofold: first, whether the assessment officer committed an error in principle; and second, whether the amount assessed is so unreasonable that an error in principle must have been the cause.
[8] Counsel for Merck urged before the Court that, in reviewing disbursements for experts’ fees, which, on the facts of this matter, represent a very substantial portion of Apotex’ disbursements, a principle which he described as the “benchmark or band principle” can be derived from the authorities.
[9] In IBM Canada Ltd. v. Xerox of Canada Ltd.[5], the Court had before it affidavits from three (3) attorneys in the United States addressing essentially the same issue. The Court noted that an analysis of the deponents’ statements of account revealed a “…wide disparity between the hours spent in legal research and in the hourly rates charged in the research…”. Justice Urie, for the Federal Court of Canada, Appeal Division, wrote:
…The sole question thus remaining to be settled in this appeal is whether or not the District Administrator proceeded on a wrong principle in allowing the disbursements made for the affidavits to which reference has previously been made without regard to the wide differences in the amount of the fees paid or, put [in] another way to allow such disbursements simply because those were the amounts in fact paid, apparently without question, by the respondents.
In my opinion, the District Administrator erred in two ways. Firstly, while apparently accepting the essentiality of the affidavits, he did not examine the quality of the proof submitted to him in support of the submission that each disbursement itself was justified in the sense that it was one which could be chargeable to an adverse party as being reasonable, on a taxation of a party and party bill of costs. The nature of the proof submitted to him in this case falls substantially short of that which should be submitted to justify or explain the necessity for the considerable variations in expenditure of time and fees charged (in one case four lawyers were involved each with different billing rates).
Secondly, on the face of the inadequate proof here submitted it was clear that the legal problem with which each deponent was confronted was identical, the only differences being in the ascertainment of how the United States federal courts in each of several districts applied the same provisions of the United States Code. Notwithstanding this the taxing officer allowed widely different sums for their respective opinions. In my view, since there was a common denominator in the nature of the opinions sought, as a matter of principle there ought to be at least some relationship between the fees allowed in payment for them, if fairness is to be accorded the adverse party liable for the payment. …
[10] Counsel for Merck urged that this principle of application of a benchmark or band is directly applicable here, in particular with respect to Apotex’ expert Dr. Robert Langer, even though his expertise was different from that of other experts relied upon by Apotex.
[11] In Apotex Inc. v. Syntex Pharmaceuticals International Ltd. et al.[6], Justice Reed wrote at paragraphs 20 and 21 of her reasons:
…
In addition, while the amounts paid by the plaintiff to Drs. Robinson, De Luca and Carstensen were in the same “ball park”, Dr. Langer’s charges appear to be outrageous. Dr. Langer is pre-eminent in his field and he is an excellent witness – he presents his evidence with confidence and with great simplicity, without becoming obviously adversarial. He was the plaintiff’s main expert witness at the trial. At the same time, the costs for which a defendant will be required to indemnify an opposing party are the reasonable expenses of the litigation. If a party chooses to hire a “Cadillac” of experts, the unsuccessful opposing party will not be responsible to compensate for extravagance; …
I am not prepared to instruct the assessment officer in the manner the plaintiff seeks. In the context of the present case, four experts were excessive. Three could be justified (two as witnesses and one as an advisor). The fact that the defendants used only one expert witness is not significant. This could accord with a decision by the defendants not to defend the action vigorously at trial. It could result from difficulty finding experts to support the defendants’ position. Only reasonable and properly documented experts’ fees should be allowed. In addition, I consider an hourly or daily rate above that charged by Dr. Robinson to be excessive.
…
[citation omitted]
The Dr. Langer to whom Justice Reed refers is the same Dr. Langer who provided an expert affidavit on behalf of Apotex in this matter.
[12] The benchmark or band principle is again reflected in a recent decision of Madam Justice Snider in Laboratoires Servier v. Apotex Inc.[7] where she wrote at paragraphs 16 and 17 of her reasons:
…The Plaintiffs also questioned the expert fee for David Matthew (the UK expert).
In my view, the Defendants may have gone beyond a reasonable level in retaining their experts for these motions. The Defendants should, therefore, bear some of the costs of those experts. The expert fee paid to David Matthew was $97,907.58 CAD… . I agree with the Plaintiffs that this expert fee is disproportionately high in comparison to the expert fee paid to Aidan Hollis, Stephen Cole, Phillip Williams
and Des Threlfall. The Plaintiffs should not have to pay for the Defendants’ “Cadillac” expert. …
…
[emphasis added]
[13] For the foregoing conclusion, Justice Snider cites the quotation from Justice Reed above.
[14] I will return to the benchmark or band principle in what follows regarding Apotex’ claim for disbursements in respect of experts.
GROUNDS FOR REVIEW OF THE COSTS AWARD
[15] In what follows, I will, with some exceptions, follow the order of the items disputed by the Applicants, as quoted in Annex I to these reasons.
The Expert Disbursements
[16] Merck relied on the affidavits of two (2) experts in the hearing of the underlying application that took place before Justice Mosley. By contrast, Apotex relied on the affidavits of seven (7) experts although the expertise of one, and perhaps two, of the Apotex “experts” was questionable.[8]
[17] Justice Mosley commented on the expert evidence before him in the following paragraphs of his reasons:
[40] At the outset of the hearing of this application, Merck renewed a motion to strike Apotex affidavits. An initial motion to strike the Tassone, Weissburg and Mazess affidavits was decided by Prothonotary Lafrenière on June 21, 2004. He ruled that the relief sought was premature, in the absence of special circumstances, and that evidentiary determinations should be left to the applications judge. The motion was dismissed without prejudice to Merck to seek leave to file reply evidence. Leave to file reply evidence was granted in a further order by the Prothonotary on July 13, 2004 resulting in the filing of the Devlin affidavit described above.
[41] Merck filed a fresh motion on April 6, 2005 seeking to have struck, in addition to the three affidavits addressed in the June 2004 motion, the affidavits of Drs. Langer and Mayersohn. I gave an oral ruling on the motion before proceeding to hear the merits of the application.
[42] Merck argued that the impugned affidavit evidence should not be admitted primarily on the grounds that:
1. the Apotex affiants were not properly qualified to give opinion evidence in the several areas of knowledge to which they deposed.
2. The evidence given was not relevant to the determination of the issues that are before the court in this NOC proceeding.
[43] Applying the principles enunciated by the Supreme Court of Canada in R. v. Mohan… [1994] 2 S.C.R. 9 at para. 17, namely: (a) relevance; (b) necessity in assisting the trier of fact; (c) the absence of any exclusionary rule; and (d) a properly qualified expert, I concluded that the opinion evidence proffered by Apotex was admissible.
[44] Relevance is a threshold requirement for any evidence. Logically relevant evidence may be excluded if its probative value is overborne by its prejudicial effect, if the time required is not commensurate with its value or if it can influence the trier of fact out of proportion to its reliability (Mohan at para. 18).
[45] Expert evidence, to be necessary, must likely be outside the experience and knowledge of a judge or jury and must be assessed in light of its potential to distort the fact-finding process. Necessity should not be judged by too strict a standard. Expert evidence can be excluded if it falls afoul of an exclusionary rule of evidence separate and apart from the opinion rule itself, such as the hearsay rule (Mohan at paras. 21-23).
[46] There are no specific credentials that potential experts must have in order to be admitted as experts by the Court. Opinion evidence may be given by a witness "who is shown to have acquired special or peculiar knowledge through study or experience in respect of the matters on which he or she undertakes to testify" (Mohan at para. 27). This echoes statements by the court in R. v. Marquard,… [1993] 4 S.C.R. 223 at para. 35, citing R. v. Beland,… [1987] 2 S.C.R. 398 at para 16, holding that "[t]he only requirement…is that the expert witness possesses special knowledge and experience going beyond that of the trier of fact".
[47] As Sopinka, Lederman and Bryant state in The Law of Evidence in Canada (1992) at 536-7,
The admissibility of [expert] evidence does not depend upon the means by which that skill was acquired. As long as the court is satisfied that the witness is sufficiently experienced in the subject matter at issue, the court will not be concerned with whether his or her skill was derived from specific studies or by practical training, although that may affect the weight to be given to the evidence.
[48] With respect to Drs. Langer and Mayersohn, Merck did not object to these affidavits when it brought its earlier motion. It contends that the weakness of their qualifications relevant to the issues in this proceeding only became apparent on cross-examination. Merck now objects to the reception of their evidence as they are not medical doctors and argues that the issues upon which they were asked to provide expert opinions, as characterized by Merck, relate solely to the medical fields of gastroenterology and endocrinology.
[49] I do not agree with Merck's contention that these two witnesses were asked to comment on matters beyond their expertise. Dr. Langer's relevant and very impressive qualifications are as an expert with respect to pharmaceutical technology involving the formulation of drugs, including bisphosphonate drugs. His opinion is tendered with respect to formulation issues and thus does not exceed his expertise in pharmaceutics.
[50] Dr. Mayersohn's qualifications are as an expert in pharmacokinetics, biopharmaceutics and pharmaceutics. His testimony about the equivalence of 70 and 80 mg of alendronate due to the low bioavailability of the drug was never questioned on cross-examination. Apotex objected to Merck questioning this evidence in oral argument as contravening the rule in Browne v. Dunn (1893), 6 R. 67 (H.L.). I was satisfied the evidence was highly relevant, uncontradicted and admissible.
[51] Dr. Mazess's affidavit primarily describes events surrounding the publication of his views on alendronate in the newsletter Lunar News produced by the corporation he had founded to manufacture and distribute bone densitometry equipment used in the diagnosis and treatment of skeletal disease. Merck objects to Dr. Mazess's being permitted to comment on the evidence of Drs. Papapoulos and Fennerty as he is not a physician. It also objects to the relevance of his testimony about meetings and correspondence between Dr. Mazess and Merck representatives concerning dosing regimens for bisphosphonates. Finally, it submits that his writings in Lunar News speak for themselves and he should not be explaining their meaning.
[52] Dr. Mazess, through his academic and business careers, has gained considerable knowledge about bone diseases, particularly osteoporosis. While he is not qualified to treat patients, that does not preclude him, in my view, from commenting on treatment regimes for bone disorders. It is apparent from the record that his utterances in the Lunar News carried considerable weight in the pharmaceutical and clinical worlds. Drs Papapoulos and Fennerty comment at length on his writings in their evidence. There was ample reason, in my view, to think that Dr. Mazess' comments on their evidence would be helpful in determining the issues in this matter.
[53] With regard to Dr. Mazess' evidence about correspondence and meetings with Merck staff, I was satisfied that it was relevant and admissible. Merck is correct that, as possible prior art references, his writings in Lunar News must speak for themselves. However, I was also satisfied that he could properly give evidence as to the background and context of those writings. Accordingly, his evidence was admissible subject to argument about its weight.
[54] The Weissburg affidavit does not contain expert opinion evidence but rather describes events and hearsay statements made by others. Apotex relies upon those statements not for their truth but for the fact they were made. As determined by the Supreme Court of Canada in R. v. Khan,… [1990] 2 S.C.R. 531 and subsequently applied to civil cases by a number of courts, hearsay is not inadmissible if found to be credible and reliable:… I allowed this evidence for the limited purpose of establishing that certain events occurred and statements were made and not for the truth of the contents of those statements.
[55] Attached to the Tassone affidavit are copies of documents filed by the defendant in the U.S. District Court proceedings. Apotex' object in submitting this material was, in part, to refute Drs. Papapoulos' and Fennerty's evidence that the prior art references included in the NOA would not have been relied upon to demonstrate the safety of high doses of alendronate in osteoporosis patients. Included in the Tassone material is Merck's submission to the United States Federal Drug Administration ("FDA") for approval of the 70 mg dosage of FOSAMAX®, which indicates that Merck relied upon the same prior art references to show that a dose of that size would be safe and effective.
…
[64] Expert evidence presented to the Court should be, and should be seen to be, the independent product of the expert, uninfluenced as to form or content by the exigencies of litigation: Whitehouse v. Jordan [1981] 1 All ER 267 (H.L.) at 276. I had little difficulty coming to the conclusion in reading the evidence in this case that where there was a conflict between the evidence of the Merck witnesses and the Apotex witnesses, I preferred the latter. While Dr. Papapoulos is eminently well qualified in his field, I found his evidence, as it was characterized by Justice Jacob in the UK proceedings, to be "rigid" and "extreme" when he was confronted on cross-examination with prior art references inconsistent with Merck's position. As for Dr. Fennerty, it was apparent from his truculence in answering questions on cross-examination that he had crossed the line between independence and advocacy. I accorded little weight to his evidence.
…
[110] As indicated above, I preferred the Apotex witnesses' evidence. …
[some citations omitted]
Thus, Justice Mosley found the expert evidence proffered by Apotex to be admissible and to be preferable to that of Merck’s expert witnesses in circumstances where there was a conflict between the two sides. Merck’s expert witnesses Compston, Mazess, Weissburg, Mayersohn and Markowitz, according to the material that was before the assessment officer and the Court, expended an average of sixty-three (63) hours to provide their evidence and were compensated at hourly rates between $354.00 and $781.00 for an average rate of $484.00. By contrast, Dr. Langer, together with his associate Dr. Lipp, claimed to have devoted over four hundred fifty (450) hours to the preparation of Dr. Langer’s expert affidavit and billed at the rate of $1,389.00 per hour for Dr. Langer and $266.24 for Dr. Lipp. Not surprisingly, counsel for Merck took particular exception to Apotex’ disbursement claim for Dr. Langer and his associate.
[18] In the Annex hereto, counsel for Merck comments in a general way on the award by the assessment officer in respect of expert disbursements in paragraph 8, subparagraphs 9(i) to (iii) and paragraph 15.
[19] In general, in both written submissions provided to the Court and counsel’s submissions at hearing before me, Merck alleges that witness fee disbursements claimed by Apotex are unsupported and are not reasonable. In summary, at paragraph 47 of counsel’s written submissions, the following appears:
In the present case, the Assessment Officer allowed Apotex to recover more than $410,000 for the fees of seven witnesses and one non-witness without properly considering the reasonableness of any of those disbursements. In addition, the Assessment Officer erroneously relied on the Apotex Counsel’s affidavit and failed to address the considerable overlap in the evidence filed by Apotex. As such, the Applicants submit that the Costs Award in respect of the witness fee disbursements should be set aside.
[emphasis in original]
[20] The assessment officer wrote at paragraph 65 of his reasons:
[65] The Apotex Respondent has claimed $26,217.14 for the expert fees of Juliet Compston, $16,612.42 for the expert fees of Richard Mazess, $37,214.62 for the expert fees of David Markowitz and $64,027.27 for the expert fees of Michael Mayersohn. I have corrected the invoice total for David Markowitz to $38,214.62 since it appears to me that the Apotex Respondent has made a simple addition error. The Merck Applicants have raised a concern that the invoice amounts for Michael Mayersohn do not match the total invoice amount the Apotex Respondent is claiming for this specific disbursement which, it submits, justifies a reduction of these specific expert fees. Within Tab 2 of the Affidavit of Andrew R. Brodkin, sworn March 7, 2006, I found a law firm invoice from Ivor M. Hughes dated June 9, 2004 which contained a disbursement amount of $23,772.20 in Canadian dollars for “Professional Fees (Michael Mayersohn).” As mentioned by the Apotex Respondent in paragraph 58 of its Reply Submissions, “the invoices provided by Apotex were those in its possession at the time that the supporting material could be delivered to the Applicants in respect of this assessment.” In my opinion, this is a reasonable explanation and I exercise my discretion and accepted [sic] these submissions of the Apotex Respondent. In addition, I have corrected and reduced the invoice total for to [sic] Michael Mayersohn to $63,997.27 since it appears to me that the Apotex Respondent has made an addition error when totalling all of the associated invoices.
[21] I will now turn to a consideration of the witness fee disbursements in respect of each of Apotex’ expert affiants.
Dr. David Weissburg
[22] In his reasons in support of his assessment of costs, the assessment officer wrote at paragraphs 63 and 64:
[63] The Apotex Respondent has claimed $28,236.46 for the expert fees of Dr. David Weissburg. I repeat some of the Merck Applicants’ concerns raised above in paragraph [16] that the Affidavit of David Weissburg, sworn May 12, 2004, was only five pages in length. The Merck Applicants also refer to the Reasons for Order and Order dated May 26, 2005 in this proceeding which noted that the “affidavit does not contain expert opinion but rather describes events and hearsay statements made by others.” In addition, the Merck Applicants submit that the Dr. Weissburg invoices do not contain many details regarding the “consulting time” spent by this specific expert. The Merck Applicants submit in paragraph 89 of its [sic] Written Submissions of the Applicants that this “type” of “bald statement” is insufficient evidence to justify costs for expert fees” and refers [sic] to AlliedSignal, supra, at paragraph 47 which states:
[47]…It is the requirement that sufficient or reasonable proof be lead to satisfy the Taxing Officer that expenses were incurred. It all becomes then a question of degree of evidence. A [bald] statement of the kind singled out by Mr. Justice Teitelbaum in the Diversified case and also found in the F-C Research Institute case, would not be sufficient to satisfy a Taxing Officer. Likewise, absolute and detailed evidence is not an indispensable requirement for an award to be made. As my colleague Stinson, Taxing Officer, said on numerous occasions the more thorough and complete the evidence is, the less the result will be bound up into the Taxing Officer’s discretion, but that does not mean a Taxing Officer is refrained from resorting to his discretion to make an award in the absence of cogent evidence.
[64] As determined in paragraph [18] above, the Federal Court allowed the Affidavit of David Weissburg to be filed for limited purposes notwithstanding the fact that the Merck Applicants filed motions to have this and several other Apotex Respondent’s affidavits struck from the file. The invoices from David Weissburg contained in Exhibit C to the Affidavit of Andrew R. Brodkin, sworn on March 7, 2006, indicate a number of time periods (i.e.:-“14FEB04 - 31MAY04”), specific hours for each time period that David Weissburg claimed he had worked on this proceeding and, also included, were a number of expenses [sic] amounts within these invoices. Although the invoices do not contain “absolute and detailed evidence” as described above in AlliedSignal, supra, outlined in this paragraph, I am satisfied that the Apotex Respondent incurred these expenses. For these reasons and relying on the sentiment expressed in Dableh, supra, outlined above in paragraph [62], I exercise my discretion and allow the $28,236.46 plus associated GST for this disbursement.
The reference in the foregoing quotation to “AlliedSignal” is to AlliedSignal Inc. v. Dupont Canada Inc. et al.[9]. The reference to “Dableh” is to Dableh v. Ontario Hydro[10].
[23] Despite the urgings of counsel for Merck that the assessment officer erred in principle in allowing this disbursement by failing to properly consider the reasonableness of this expense and by allowing Apotex to recover this disbursement in the absence of proper evidence of reasonableness, I reach a different conclusion. The assessment officer’s determination to allow the disbursement in respect of the claim by Dr. Weissburg accords with the principles governing the exercise of his discretion and certainly was not so unreasonable “…that an error in principle must have been the cause.”
Dr. Michael Mayersohn
[24] For ease of reference, I repeat here Justice Mosley’s comments at paragraph 50 of his reasons:
[50] Dr. Mayersohn's qualifications are as an expert in pharmacokinetics, biopharmaceutics and pharmaceutics. His testimony about the equivalence of 70 and 80 mg of alendronate due to the low bioavailability of the drug was never questioned on cross-examination. Apotex objected to Merck questioning this evidence in oral argument as contravening the rule in Browne v. Dunn… . I was satisfied the evidence was highly relevant, uncontradicted and admissible.
[citation omitted, emphasis]
[25] Counsel for Merck urged that the assessment officer erred in principle in accepting the disbursement claim in respect of Dr. Mayersohn which, he alleged, was partially
unsupported by invoices. The assessment officer responded to this concern on behalf of Merck by noting that he had uncovered an invoice, not previously identified, that is referred to in the quotation in paragraph 20 above. While the invoice discovered does not amount to a complete response to counsel’s submission, it is a very substantial response and it is entirely possible that the difference remaining might be attributable to conversion rates between Canadian and U.S. currencies.
[26] I am satisfied that the assessment officer made no error of principle or erred in the assessment of the disbursement in respect of Dr. Mayersohn such that the assessment is so unreasonable that an error in principle must have been the cause.
Professor Compston, Dr. Mazess and Dr. Markowitz
[27] The assessment officer allowed Apotex to recover disbursements of $26,217.14 in respect of Professor Compston, $16,612.42 in respect of Dr. Mazess and $38,214.62 in respect of Dr. Markowitz. He concluded at paragraph 67 of his reasons:
…
Although the Merck Applicants have raised a number of novel arguments regarding the lack of reasonableness of the Apotex Respondent’s expert fees, I have given them little weight. I have preferred to rely on the fact that the Federal Court has allowed specific evidence of the Apotex Respondent to be filed and its stated reliance on that evidence as outlined within paragraph 64 [earlier quoted here] of the Reasons for Order and Order dated May 26, 2005 in this proceeding… .
[28] Once again I conclude that the assessment officer’s determinations in this regard were entirely open to him in the exercise of his discretion.
Franco A. Tassone
[29] Mr. Tassone and his role are described in paragraph 37 of Justice Mosley’s reasons as:
…an employee of Parcels Inc., the copy service for the United States District Court for the District of Delaware. He was asked to obtain copies of publicly available documents from the U.S. trial in Merck & Co., Inc. v. Teva Pharmaceuticals USA, Inc., supra and attached them to his affidavit.
As such, it is hard to conclude that he qualified as an expert.
[30] The assessment officer wrote at paragraph 51 of his reasons:
The Apotex Respondent has claimed $3,501.53 in its Bill of Costs associated with the expert fees of Franco Tassone in addition to the assessable counsel fees which I determined and allowed in paragraphs [13] to [15] above. The Merck Applicants submit in paragraph 100 of its [sic] Written Submissions that “expert fees are not recoverable where the trial judge finds the report to be “unnecessary or the contents useless.” In support of this submission, the Merck Applicants refer to John A. Carruthers v. The Queen,… which states:
…In cases in which experts are called by both parties and they give conflicting opinions, the Court has to choose the opinion of one of the experts as preferable to the other, unless the Court chooses to reject both opinions and substitute its own based on the evidence, but the fact that one expert’s report is rejected, or not accepted in full, would not justify non-payment of his fees for the preparation of same, unless the Court finds that the requisitioning of such a report was entirely unnecessary or the contents useless. …
Since the Federal Court ruled that most of the evidence attached to the Affidavit of Frank Tassone was “unnecessary” and that “most of it was inadmissible,” it is my opinion that the Apotex Respondent should not be entitled to claim these expert fees in their entirety. For these reasons and considering the proposition expressed in Grace M. Carlile, supra, that “a result of zero dollars would be absurd”, I exercise my discretion and allow a reduced amount of $500.00 for the associated expert fees of Frank Tassone.
[citation omitted]
[31] The assessment officer himself noted in paragraph [12] of his reasons that, at paragraphs [60] and [61] of his reasons, Justice Mosley found that it was improper for Apotex to use the Tassone affidavit to submit evidence, that Apotex made no real effort to explain how most of the material annexed to that affidavit would be relevant and admissible and that it was unnecessary and excessive to “dump” the U.S. Trial evidence into the record by the use of the Tassone affidavit. He ruled that most of the material under cover of the Tassone affidavit was inadmissible and he strongly discouraged “any repetition of this practice”.
[32] In light of Justice Mosley’s comments I consider the assessment officer’s reliance on Carlile v. Canada (Minister of National Revenue)[11] in this context, a decision of a fellow assessment officer, to be ill-founded and the resulting amount allowed for the disbursement to Mr. Tassone to be so unreasonable that an error in principle must have been the cause. In the result, I would reduce the assessed costs by $500.00 to nil on this account.
Dr. Robert S. Langer and his associate Dr. Michael Lipp
[33] Dr. Lipp was unknown to Justice Mosley and his role in support of Dr. Langer was equally unknown to Justice Mosley and indeed to counsel for Merck until Apotex’ Bill of Costs was delivered. He filed no expert affidavit. Inevitably, he was not cross-examined.
[34] As earlier noted in these reasons, the claimed hours by Dr. Langer toward the preparation of his affidavit far exceeded the claimed hours of any other of Apotex’ experts and were exceeded only by the claimed hours of his associate Dr. Lipp. Further, Dr.
Langer’s claimed an hourly rate that far exceeded that of any other of Apotex’ experts while, by contrast, Dr. Lipp’s claimed rate was lower than any of the rates of those who themselves filed expert affidavits.
[35] The assessment officer wrote at some length in his reasons regarding the claim for expert fees for Drs. Langer and Lipp. The relevant paragraphs from the assessment officer’s reasons, paragraphs 52 to 62, are set out in full in Annex II to these reasons. It is of note that while the assessment officer notes “…the Merck Applicants’ concerns with regard to the number of hours both Dr. Langer and Dr. Lipp spent on preparing one expert affidavit…”, the assessment officer essentially does not address this issue. While he reduces Dr, Langer’s hourly rate based on the “benchmark or band principle” and on a benchmark other than that advocated by the Applicants, he provides no equivalent analysis and reduction, or reason for rejecting a reduction, in relation to the number of hours devoted to research and development of Dr. Langer’s affidavit. The exception to what I have just noted is contained in paragraph [55] of the assessment officer’s reasons quoted in Annex II where he rejects the Applicants’ proposed reduction of the Langer and Lipp fees to $19,600.00 on the basis that he is “…uncomfortable with this suggestion for the simple reason that the proposal seems to be a very arbitrary method of determining the expert fees…”.
[36] With great respect, I conclude that the arbitrary rejection by the assessment officer of a reduction in the number of hours devoted to the production of Dr. Langer’s expert affidavit by Dr. Langer himself and Dr. Lipp constitutes an error in principle or an element of his assessment that “…is so unreasonable that an error in principle must have been the cause”.
[37] Substituting my discretion for that of the assessment officer, and applying the “benchmark or band principle” to the number of hours claimed in respect of Drs. Langer and Lipp at the hourly rates adopted by the assessment officer, and adopting the benchmark or band proposed by Merck, I conclude that the adjusted disbursement allowed by the assessment officer in respect of Drs. Langer and Lipp should be further reduced from $237,696.00 plus associated GST to $31,785.00. This represents an allocation of (thirty-one) 31 hours to Dr. Langer and thirty-two (32) hours to Dr. Lipp, the approximate ratio of their claimed hours, and representing a total of sixty-three (63) hours, which is the average number of hours claimed for Apotex’ other experts, at rates of $695.00 and $320.00 respectively, the rates adopted by the assessment officer. The net reduction of assessable disbursements by reason of this adjustment is, according to my calculations, $205,911.00.
[38] While other bases of adjustment with respect to the disbursement for fees of Drs. Langer and Lipp were urged on behalf of the Applicants, I am satisfied that no reviewable error is evident on the face of the reasons of the assessment officer that would justify further adjustment.
Prior Art Disbursements
[39] Counsel for Merck urged that the assessment officer erred in allowing Apotex to recover $7,205.51 in disbursements related to the collection of prior art. Merck urged that the assessment officer ignored Merck’s unchallenged evidence that this was an unreasonable duplication of costs.
[40] The assessment officer summarizes the Applicants’ submissions in this regard at paragraph [37] of his reasons and the Apotex response at paragraph [38] of those reasons. In paragraph [39], the assessment officer cites the wording of subsection 1(4) of Tariff B of the Federal Courts Rules and concludes in this regard at paragraph [40] of his reasons, as follows:
[40] In my opinion, it is almost trite to note that the terms and conditions of that settlement [settlement of an earlier proceeding in respect of the drug “Fosamax®”] have not been presented by either party in opposition to or in support of the Apotex Respondent’s Bill of Costs. As well, I note that the Apotex Respondent has complied with section 1(4) of Tariff B of the Federal Courts Rules and, as I outlined in the first sentence in this paragraph with regards to the terms and conditions of a previous settlement, the evidence was never put before me. For these reasons, I exercise my discretion and allow the $7,205.51 plus GST for this specific disbursement.
[41] I am satisfied that the assessment officer made no reviewable error in deciding as he did in this regard.
Travel Disbursements
[42] At paragraph 26 of his reasons, the assessment officer noted under the heading “Entitlement to Travel Disbursements”:
The Apotex Respondent has claimed $81,896.48 in various travel disbursements. The Merck Applicants have objected to this claim as unreasonable. It is my opinion that those same objections were part of their submissions in item 14 and item 24, which I have dealt with above within paragraphs [6] to [12] inclusive under the sub-headings of Entitlement to Counsel Fees for Second and Third Counsel and Entitlement to Counsel Fees for Travel. Basically, the Merck Applicants have submitted that a judicial d