Merck & Co., Inc. v. Nu-Pharm Inc.

Merck & Co., Inc. v. Nu-Pharm Inc.
Court (s) Database
Federal Court Decisions
Date
2007-05-23
Neutral citation
2007 FC 537
File numbers
T-753-99
Decision Content
Date: 20070523
Docket: T-753-99
Citation: 2007 FC 537
Ottawa, Ontario, May 23, 2007
PRESENT: The Honourable Mr. Justice Beaudry
BETWEEN:
MERCK & CO., INC. and
MERCK FROSST CANADA & CO.
Plaintiffs
and
NU-PHARM INC., BERNARD SHERMAN
AND RICHARD BENYAK
Defendants
REASONS FOR ORDER AND ORDER
[1] These reasons follow the hearings on April 16, 17, 18 and 19, 2007, at Toronto, of seven motions, brought pursuant to Rule 35(2)(b), Federal Court Rules (the Rules), SOR/98-106, in appeal from four Orders of Prothonotary Aronovitch, as set out in the following sequence:
a) First Order (Making Inquiries Order) dated August 9, 2006, Appendix “I”;
b) Second Order (the August Refusals Order) dated August 9, 2006, Appendix “II”;
c) Third Order (the November Order) dated November 24, 2006 attached as Appendix “III” to these reasons; and
d) Fourth Order (the Sherman Order) dated August 9, 2006, attached as Appendix “IV” to these reasons.
[2] Originating from parties on both sides, the seven motions consist of a total of ten appeals of the four Orders by Prothonotary Aronovitch that deal with matters in dispute at the discovery stage of this longstanding patent infringement action, Appendix “V” attached to these reasons provides a chronology of the present motions.
[3] One of the motions in appeal (the first motion), was brought by the defendant Nu-Pharm Inc. (Nu-Pharm), on October 10, 2006 and seeks to set aside certain parts of two Orders dated August 9, 2006:
a) the Making Inquiries Order (Appeal #1), pursuant to which Nu-Pharm was ordered to make inquiries of various non-parties to this action; and
b) the August Refusals Order (Appeal #2), in which Nu-Pharm was ordered to answer certain questions refused on examination for discovery of its representative, Mr. Benyak.
[4] The second motion in appeal (the second motion), was brought by the Plaintiffs Merck & Co., Inc. and Merck Frosst Canada & Co. (Merck) on October 12, 2006 and seeks to set aside parts of two Orders dated August 9, 2006:
a) the Making Inquiries Order (Appeal #3), in which Prothonotary Aronovitch ruled that the Defendants, Nu-Pharm and Mr. Richard Benyak (Benyak) need not otherwise make inquires of certain third parties, including Apotex Inc. (including its Novex Pharma division), Brantford, Signa and Trillium; and
b) the August Refusals Order (Appeal #4), in which Prothonotary Aronovitch limited the nature and extent of inquiries that Nu-Pharm can make of non-parties including the above-mentioned third parties and certain former employees, including Van Doornik, Beyger, Culp and Saban. The August Refusals Order also gave effect to claims of solicitor/client privilege and ordered that Nu-Pharm and Benyak did not have to answer 17 additional questions proffered by Merck.
[5] The third motion in appeal (the third motion) was brought by Benyak on October 12, 2006 and seeks to set aside certain portions of both the Making Inquiries Order (Appeal #5), and the August Refusals Order (Appeal #6), for the same reasons sought by Nu-Pharm in its motion to set aside the impugned portions of both Orders, as noted above in the first motion.
[6] The fourth motion in appeal (the fourth motion) was brought by Merck on December 4, 2006 (Appeal #7), and seeks to set aside the November Order of Prothonotary Aronovitch, in which she ordered that Nu-Pharm and Benyak need not make any inquiries or requests for documents from Beyger, Culp, Van Doornik, Apotex, Novex Pharma, Delmar, Hems, BCI, Signa, Trillium or Saban beyond any previously ordered and stood down certain questions contained in Schedule “E” to the Order, where these questions involve inquiries of the aforementioned persons, until the results of the inquiries and requests previously ordered are known. In other words, the Defendants Nu-Pharm and Benyak, do not have to make further inquiries beyond those permitted under Rule 241 have been provided.
[7] The fifth motion in appeal (the fifth motion) was brought by Nu-Pharm, on December 4, 2006 (Appeal #8), and seeks to set aside parts of the November Order of Prothonotary Aronovitch, in which she ordered that Nu-Pharm and Benyak respond to certain questions. Nu-Pharm also seeks to set aside the awarding of costs to Merck, at the high end of Column V of Tariff B.
[8] The sixth motion in appeal (the sixth motion) was brought by Benyak (Appeal #9) on December 4, 2006, who seeks to set aside that part of the November Order, which orders him to answer certain questions refused on his examination for discovery. In addition, Benyak seeks to reverse the award of costs to Merck in relation to the November Order.
[9] Finally, the seventh motion in appeal (the seventh motion) was brought by Merck (Appeal #10) on October 13, 2006, and seeks to set aside parts of the Sherman Order of Prothonotary Aronovitch dated August 9, 2006, wherein she ruled that Defendant Dr. Bernard Sherman (Sherman) does not have to make inquiries of corporations controlled by him and employees thereof.
I. BACKGROUND
[10] This action was commenced by Statement of Claim dated April 29, 1999. Merck alleges that in light of their non-arms length relationship with Apotex Inc. (Apotex), which was found to have infringed Merck’s exclusive patent interest in the Canadian Patent Number 1,275,349 (the ‘349 Patent), the defendants created an elaborate diversion scheme, in order to circumvent the permanent injunction rendered against Apotex by Justice W. Andrew MacKay in the 1994 decision of Merck & Co. v. Apotex Inc., [1994] F.C.J. No. 1898 (F.C.T.D.) (QL), and thereby brought to market the infringing product (Apo-Enalapril) under a new name, Nu-Enalapril. It is Merck’s position that Nu-Enalapril tablets are not only identical to Apo-Enalapril tablets, as indicated by Nu-Pharm in its materials filed with the Court (File No. T-2552-97), but it also infringes the claims in the ‘349 Patent because it is an enalapril or an enalapril maleate, the generic name of the chemical compounds that constitute the fundamental claims of the ‘349 Patent.
[11] In order to test and prove its theory of the case, Merck has sought through discoveries to fit together the various elements of the sodium-enalapril non-infringing scheme, which involves not only Apotex’s principal, the defendant Dr. Bernard Sherman, but also Nu-Pharm, Apotex’s sister company and its President Benyak, in both their personal and corporate capacities. To get to the bottom of the composition and manufacture of Nu-Enalapril, essential elements of the issue in action, Merck has sought to question not only the defendants but to have them make inquiries and produce documents from those such as former and present employees of Nu-Pharm, its suppliers and manufacturers, who also are intimately related to Apotex within the Sherman Group of companies.
[12] Merck wants to establish that Nu-Enalapril does indeed infringe the ‘349 Patent. It wants also to adduce evidence by way of discoveries to assemble the essential elements required to pierce the corporate veil behind which, Merck argues, Sherman, the directing mind of Apotex, uses Nu-Pharm as Apotex’s alter ego, a sham, in other words, to shield his sophisticated strategy of subterfuge to circumvent the permanent injunction granted by Justice MacKay in 1994.
[13] For their part, the defendants vigorously defend Merck’s claims of infringement on the basis that the subject claims in the ‘349 Patent are either invalid on the stated grounds, or do not encompass Nu-Pharm’s enalapril formulation as contained in Nu-Enalapril. Nu-Pharm also commenced a Counterclaim challenging the validity of the ‘349 Patent, seeking declaratory relief to in effect declare void the ‘349 Patent.
[14] On March 7, 2000, Merck won a contempt of Court application against Apotex for continuing to sell Apo-Enalapril in spite of the permanent injunction. In that decision, Merck & Co. v. Apotex Inc. (2000), 5 C.P.R. (4th) 1, Justice MacKay held as follows at paragraphs 40 and 41:
[40] In my opinion, it is beyond a reasonable doubt that both Apotex by its officers, and Dr. Sherman in his personal capacity, committed contempt by selling, and in Dr. Sherman's case by authorizing the selling, of Apo-Enalapril product after Dr. Sherman had read the Reasons for Judgment dated December 14, 1994, which indicated that as of that day the Court had resolved that Merck was entitled to a permanent injunction prohibiting Apotex by its officers, and others, from infringing upon the valid claims of Merck's patent.
[41] It is urged for Dr. Sherman that he not be found personally in contempt. Yet he was the "directing mind" of Apotex, it was his decision about the effect of the Reasons for Judgment on December 14 that led to sales of Apo- Enalapril on the following two days, just as it was his decision to stop sales finally on the 16th of December. He knew and had read the Reasons for Judgment and his decisions were the key to conduct of Apotex officers and staff. In my opinion he committed contempt, as did the corporate defendant.
[15] On July 13, 2001, Merck was granted leave by Prothonotary Aronovitch to commence a Third Party Action naming Apotex Pharmaceuticals Holdings Inc. (APHI) and Apotex, as Third Parties by Counterclaim. In its Reply and Defence to Counterclaim, Merck pleaded that Nu-Pharm’s Counterclaim was an abuse of process, since Nu-Pharm’s right to seek a declaration of invalidity was barred on the grounds of res judicata and issue estoppel. Nu-Pharm subsequently discontinued its Counterclaim (Discontinuance dated August 27, 2001).
[16] On November 19, 2001, Merck moved for an Order that the Third Party Claim against APHI and Apotex continue, despite the discontinuance of Nu-Pharm’s Counterclaim. In the alternative, Merck sought an Order adding APHI and Apotex as defendants to the within action, or an Order that would result in APHI and Apotex being named as defendants to a new action to be consolidated with the within action. On February 18, 2002, Prothonotary Aronovitch denied Merck’s motion.
[17] In its Amended Amended Fresh as Amended Reply (Reply) dated December 31, 2002, Merck specifically denied that any of the claims in the ‘349 Patent were invalid, and stated that Nu-Pharm and the individual defendants were bound by the permanent injunction issued against Apotex by Justice MacKay in 1994.
[18] By Order dated June 24, 2002, Prothonotary Aronovitch found that Sherman controls the Apotex group of companies, and ordered Sherman to deliver further and better affidavits of documents listing all documents in their power, possession and control, including in the case of Sherman, those in the power, possession and control of the “Apotex group of companies” and produce such documents, unexpurgated, in respect of the following, subject to any claims of privilege. This list of relevant categories of documents to be produced within the power, possession and control of those companies pursuant to Rule 225(a), included documents related to the composition, formulation and active medicinal ingredient in Apo-Enalapril tablets.
[19] At the hearings of the Plaintiffs’ Compliance Motion held March 22-23, 2006, the Court was advised that Sherman has made inquiries within the Apotex group of companies and has produced documents within the power, possession and control of the Apotex group of companies in response to discovery questions, including the admission that the active pharmaceutical ingredient (API) in the allegedly infringing Nu-Enalapril is “enalapril maleate.” However, Prothonotary Aronovitch held in her Fourth Order that Sherman equivocated as to the rest of the contents of the Nu-Enalapril tablets, information that is relevant and needed to be answered.
[20] Consequently, Merck brought a motion for an order compelling the defendant, Sherman to answer outstanding undertakings given on his examination for discovery held on April 27-30 and May 3-5, 2004; to answer questions refused on said examination for discovery; and to re-attend on discovery to answer further questions, including questions arising out of the answers provided and documents produced in respect of his undertakings and responses to outstanding questions. Merck also sought costs.
[21] In addition, Merck brought similar motions for orders compelling the defendants Nu-Pharm and Benyak to answer the undertakings given on the examination for discovery of Benyak, in his corporate and individual capacity, held on April 6, 13, 14, 15 and 16, June 11, August, 24, 25, and 26, 2004 and March 4, 2005; to answer discovery questions refused by Benyak; to answer discovery questions asked by way of written interrogatory; to re-attend on discovery to answer further questions, including questions arising out of the answers provided and documents produced in respect of the above matters; and an order granting Merck its costs of the motion.
[22] The above referenced motions were heard in part, in Toronto, over the course of eight hearing days held April 11, June 5, 6, 12, 13, October 18, 19, and 20, 2006. Among others, Prothonotary Aronovitch rendered three Orders on August 9, 2006 and a fourth on November 24, 2006. They form the object of the present ten appeals.
II. PERTINENT LEGISLATION
[23] The guiding principles of the Rules of Discovery are delineated in Rule 3, which provides as follows:
General principle
3. These Rules shall be interpreted and applied so as to secure the just, most expeditious and least expensive determination of every proceeding on its merits.
Principe général
3. Les présentes règles sont interprétées et appliquées de façon à permettre d’apporter une solution au litige qui soit juste et la plus expéditive et économique possible.
[24] Rules 233 and 238(1) make provision for the production of any document from and examination of a non party to the action respectively, as described below:
Production from non-party with leave
233. (1) On motion, the Court may order the production of any document that is in the possession of a person who is not a party to the action, if the document is relevant and its production could be compelled at trial.
Personal service on non-party
(2) Notice of a motion for an order under subsection (1) shall be personally served on the person who is in possession of the document.
Preparation of certified copy
(3) The Court may, in an order under subsection (1), give directions for the preparation of a certified copy of the document to be used instead of the original.
Examination of non-parties with leave
238. (1) A party to an action may bring a motion for leave to examine for discovery any person not a party to the action, other than an expert witness for a party, who might have information on an issue in the action.
Production d’un document en la possession d’un tiers
233. (1) La Cour peut, sur requête, ordonner qu’un document en la possession d’une personne qui n’est pas une partie à l’action soit produit s’il est pertinent et si sa production pourrait être exigée lors de l’instruction.
Signification à personne
(2) L’avis d’une requête présentée pour obtenir l’ordonnance visée au paragraphe (1) est signifié à personne à la personne qui a le document en sa possession.
Préparation d’une copie certifiée conforme
(3) La Cour peut, dans l’ordonnance visée au paragraphe (1), donner des directives au sujet de la préparation d’une copie certifiée conforme du document pour qu’elle tienne lieu d’original.
Interrogatoire d’un tiers
238. (1) Une partie à une action peut, par voie de requête, demander l’autorisation de procéder à l’interrogatoire préalable d’une personne qui n’est pas une partie, autre qu’un témoin expert d’une partie, qui pourrait posséder des renseignements sur une question litigieuse soulevée dans l’action.
[25] The scope and procedures for examinations for discovery in matters before the Federal Courts are set out in Rules 240 to 244 of the Rules, which provide as follows:
Scope of examination
240. A person being examined for discovery shall answer, to the best of the person's knowledge, information and belief, any question that
(a) is relevant to any unadmitted allegation of fact in a pleading filed by the party being examined or by the examining party; or
(b) concerns the name or address of any person, other than an expert witness, who might reasonably be expected to have knowledge relating to a matter in question in the action.
Obligation to inform self
241. Subject to paragraph 242(1)(d), a person who is to be examined for discovery, other than a person examined under rule 238, shall, before the examination, become informed by making inquiries of any present or former officer, servant, agent or employee of the party, including any who are outside Canada, who might be expected to have knowledge relating to any matter in question in the action.
Objections permitted
242. (1) A person may object to a question asked in an examination for discovery on the ground that
(a) the answer is privileged;
(b) the question is not relevant to any unadmitted allegation of fact in a pleading filed by the party being examined or by the examining party;
(c) the question is unreasonable or unnecessary; or
(d) it would be unduly onerous to require the person to make the inquiries referred to in rule 241.
Objections not permitted
(2) A person other than a person examined under rule 238 may not object to a question asked in an examination for discovery on the ground that
(a) the answer would be evidence or hearsay;
(b) the question constitutes cross-examination.
Limit on examination
243. On motion, the Court may limit an examination for discovery that it considers to be oppressive, vexatious or unnecessary.
Examined party to be better informed
244. (1) Where a person being examined for discovery, other than a person examined under rule 238, is unable to answer a question, the examining party may require the person to become better informed and may conclude the examination, subject to obtaining answers to any remaining questions.
Further answers
(2) A person being examined who is required to become better informed shall provide the information sought by the examining party by submitting to a continuation of the oral examination for discovery in respect of the information or, where the parties agree, by providing the information in writing.
Information deemed part of examination
(3) Information provided under subsection (2) is deemed to be part of the examination for discovery.
Étendue de l’interrogatoire
240. La personne soumise à un interrogatoire préalable répond, au mieux de sa connaissance et de sa croyance, à toute question qui :
a) soit se rapporte à un fait allégué et non admis dans un acte de procédure déposé par la partie soumise à l’interrogatoire préalable ou par la partie qui interroge;
b) soit concerne le nom ou l’adresse d’une personne, autre qu’un témoin expert, dont il est raisonnable de croire qu’elle a une connaissance d’une question en litige dans l’action.
L’obligation de se renseigner
241. Sous réserve de l’alinéa 242(1)d), la personne soumise à un interrogatoire préalable, autre que celle interrogée aux termes de la règle 238, se renseigne, avant celui-ci, auprès des dirigeants, fonctionnaires, agents ou employés actuels ou antérieurs de la partie, y compris ceux qui se trouvent à l’extérieur du Canada, dont il est raisonnable de croire qu’ils pourraient détenir des renseignements au sujet de toute question en litige dans l’action.
Objection permise
242. (1) Une personne peut soulever une objection au sujet de toute question posée lors d’un interrogatoire préalable au motif que, selon le cas :
a) la réponse est protégée par un privilège de non-divulgation;
b) la question ne se rapporte pas à un fait allégué et non admis dans un acte de procédure déposé par la partie soumise à l’interrogatoire ou par la partie qui l’interroge;
c) la question est déraisonnable ou inutile;
d) il serait trop onéreux de se renseigner auprès d’une personne visée à la règle 241.
Objection interdite
(2) À l’exception d’une personne interrogée aux termes de la règle 238, nul ne peut s’opposer à une question posée lors d’un interrogatoire préalable au motif que, selon le cas :
a) la réponse constituerait un élément de preuve ou du ouï-dire;
b) la question constitue un contre-interrogatoire.
Droit de limiter l’interrogatoire
243. La Cour peut, sur requête, limiter les interrogatoires préalables qu’elle estime abusifs, vexatoires ou inutiles.
Obligation de mieux se renseigner
244. (1) Lorsqu’une partie soumet une personne, autre que celle visée à la règle 238, à un interrogatoire préalable et que celle-ci est incapable de répondre à une question, elle peut exiger que la personne se renseigne davantage et peut mettre fin à l’interrogatoire préalable à la condition d’obtenir les réponses aux questions qu’il lui reste à poser.
Renseignements additionnels
(2) La personne contrainte de mieux se renseigner fournit les renseignements demandés par la partie en se soumettant à nouveau à l’interrogatoire préalable oral ou, avec le consentement des parties, en fournissant les renseignements par écrit.
Effet des renseignements donnés
(3) Les renseignements donnés aux termes du paragraphe (2) sont réputés faire partie de l’interrogatoire préalable.
[26] The discretionary powers of the Courts with respect to the awarding of costs between parties are set out in Rule 400. The relevant passages are provided below:
Discretionary powers of Court
400. (1) The Court shall have full discretionary power over the amount and allocation of costs and the determination of by whom they are to be paid.
[. . .]
Factors in awarding costs
(3) In exercising its discretion under subsection (1), the Court may consider
(a) the result of the proceeding;
(b) the amounts claimed and the amounts recovered;
(c) the importance and complexity of the issues;
(d) the apportionment of liability;
(e) any written offer to settle;
(f) any offer to contribute made under rule 421;
(g) the amount of work;
(h) whether the public interest in having the proceeding litigated justifies a particular award of costs;
(i) any conduct of a party that tended to shorten or unnecessarily lengthen the duration of the proceeding;
(j) the failure by a party to admit anything that should have been admitted or to serve a request to admit;
(k) whether any step in the proceeding was
(i) improper, vexatious or unnecessary, or
(ii) taken through negligence, mistake or excessive caution;
(l) whether more than one set of costs should be allowed, where two or more parties were represented by different solicitors or were represented by the same solicitor but separated their defence unnecessarily;
(m) whether two or more parties, represented by the same solicitor, initiated separate proceedings unnecessarily;
(n) whether a party who was successful in an action exaggerated a claim, including a counterclaim or third party claim, to avoid the operation of rules 292 to 299; and
(o) any other matter that it considers relevant.
Tariff B
(4) The Court may fix all or part of any costs by reference to Tariff B and may award a lump sum in lieu of, or in addition to, any assessed costs.
Directions re assessment
(5) Where the Court orders that costs be assessed in accordance with Tariff B, the Court may direct that the assessment be performed under a specific column or combination of columns of the table to that Tariff.
Further discretion of Court
(6) Notwithstanding any other provision of these Rules, the Court may
(a) award or refuse costs in respect of a particular issue or step in a proceeding;
(b) award assessed costs or a percentage of assessed costs up to and including a specified step in a proceeding;
(c) award all or part of costs on a solicitor-and-client basis; or
(d) award costs against a successful party.
Award and payment of costs
(7) Costs shall be awarded to the party who is entitled to receive the costs and not to the party's solicitor, but they may be paid to the party's solicitor in trust.
Pouvoir discrétionnaire de la Cour
400. (1) La Cour a le pouvoir discrétionnaire de déterminer le montant des dépens, de les répartir et de désigner les personnes qui doivent les payer.
[. . .]
Facteurs à prendre en compte
(3) Dans l’exercice de son pouvoir discrétionnaire en application du paragraphe (1), la Cour peut tenir compte de l’un ou l’autre des facteurs suivants :
a) le résultat de l’instance;
b) les sommes réclamées et les sommes recouvrées;
c) l’importance et la complexité des questions en litige;
d) le partage de la responsabilité;
e) toute offre écrite de règlement;
f) toute offre de contribution faite en vertu de la règle 421;
g) la charge de travail;
h) le fait que l’intérêt public dans la résolution judiciaire de l’instance justifie une adjudication particulière des dépens;
i) la conduite d’une partie qui a eu pour effet d’abréger ou de prolonger inutilement la durée de l’instance;
j) le défaut de la part d’une partie de signifier une demande visée à la règle 255 ou de reconnaître ce qui aurait dû être admis;
k) la question de savoir si une mesure prise au cours de l’instance, selon le cas :
(i) était inappropriée, vexatoire ou inutile,
(ii) a été entreprise de manière négligente, par erreur ou avec trop de circonspection;
l) la question de savoir si plus d’un mémoire de dépens devrait être accordé lorsque deux ou plusieurs parties sont représentées par différents avocats ou lorsque, étant représentées par le même avocat, elles ont scindé inutilement leur défense;
m) la question de savoir si deux ou plusieurs parties représentées par le même avocat ont engagé inutilement des instances distinctes;
n) la question de savoir si la partie qui a eu gain de cause dans une action a exagéré le montant de sa réclamation, notamment celle indiquée dans la demande reconventionnelle ou la mise en cause, pour éviter l’application des règles 292 à 299;
o) toute autre question qu’elle juge pertinente.
Tarif B
(4) La Cour peut fixer tout ou partie des dépens en se reportant au tarif B et adjuger une somme globale au lieu ou en sus des dépens taxés.
Directives de la Cour
(5) Dans le cas où la Cour ordonne que les dépens soient taxés conformément au tarif B, elle peut donner des directives prescrivant que la taxation soit faite selon une colonne déterminée ou une combinaison de colonnes du tableau de ce tarif.
Autres pouvoirs discrétionnaires de la Cour
(6) Malgré toute autre disposition des présentes règles, la Cour peut :
a) adjuger ou refuser d’adjuger les dépens à l’égard d’une question litigieuse ou d’une procédure particulières;
b) adjuger l’ensemble ou un pourcentage des dépens taxés, jusqu’à une étape précise de l’instance;
c) adjuger tout ou partie des dépens sur une base avocat-client;
d) condamner aux dépens la partie qui obtient gain de cause.
Adjudication et paiement des dépens
(7) Les dépens sont adjugés à la partie qui y a droit et non à son avocat, mais ils peuvent être payés en fiducie à celui-ci.
[27] The Sherman Order raises the question of the obligations of an individual and any corporation that may be controlled directly or indirectly by the individual. Rule 225(a) outlines the options for an Order for disclosure. It states as follows:
Order for disclosure
225. On motion, the Court may order a party to disclose in an affidavit of documents all relevant documents that are in the possession, power or control of
(a) where the party is an individual, any corporation that is controlled directly or indirectly by the party; or
(b) where the party is a corporation,
(i) any corporation that is controlled directly or indirectly by the party,
(ii) any corporation or individual that directly or indirectly controls the party, or
(iii) any corporation that is controlled directly or indirectly by a person who also directly or indirectly controls the party.
Ordonnance de divulgation
225. La Cour peut, sur requête, ordonner à une partie de divulguer dans l’affidavit de documents l’existence de tout document pertinent qui est en la possession, sous l’autorité ou sous la garde de l’une ou l’autre des personnes suivantes :
a) si la partie est un particulier, toute personne morale qui est contrôlée directement ou indirectement par la partie;
b) si la partie est une personne morale :
(i) toute personne morale qui est contrôlée directement ou indirectement par la partie,
(ii) toute personne morale ou tout particulier qui contrôle directement ou indirectement la partie,
(iii) toute personne morale qui est contrôlée directement ou indirectement par une personne qui contrôle aussi la partie, directement ou indirectement.
[28] Interpretation of statutes including the Federal Courts Rules is guided by the provision in section 12 of the Interpretation Act :
Enactments deemed remedial
12. Every enactment is deemed remedial, and shall be given such fair, large and liberal construction and interpretation as best ensures the attainment of its objects.
Principe et interprétation
12. Tout texte est censé apporter une solution de droit et s’interprète de la manière la plus équitable et la plus large qui soit compatible avec la réalisation de son objet.
III. ANALYSIS
[29] These reasons follow the order in which the parties made their submissions, starting with the motions of Nu-Pharm brought on October 10, 2006. The motion by Merck against the August 9, 2006 Order with regard to the defendant Sherman is dealt with last.
A) THE MAKING OF INQUIRIES ORDER DATED AUGUST 9, 2006
[30] Upon motion of the Plaintiffs, Merck, to compel defendants Nu-Pharm and Benyak to answer the undertakings given and answer discovery questions refused on the examination for discovery of Benyak, in his corporate and individual capacity, Prothonotary Aronovitch ordered among other things that Nu-Pharm and Benyak will make inquiries of Joseph Beyger, Antony van Doornik and Dawn Culp, and will request of each of Apotex Inc. (including its Novex Pharma division), Brantford, Signa and Trillium that they produce to Nu-Pharm and Benyak relevant documents, whereby said requests are subject to reasonable limits, but Nu-Pharm and Benyak need not otherwise make inquiries of them. It is this aspect of the Making of Inquiries Order that attracted motions of appeal not only from Nu-Pharm and Benyak but also from Merck.
i) Standard of Review
[31] Where a decision of a Prothonotary is discretionary, the standard of review to be applied by the Federal Court judge is set out by the Federal Court of Appeal in Canada v. Aqua-Gem Investments Ltd., [1993] 2 F.C. 425 at 462-65 (C.A.). This standard of review was approved by the Supreme Court of Canada in Z.I. Pompey Industrie v. ECU-Line N.V., [2003] 1. S.C.R. 450 at paragraph 18, and later slightly modified by the Federal Court of Appeal and slightly reformulated by Justice Robert Décary in Merck & Co. v. Apotex Inc., 2003 FCA 488, [2004] 2 F.C.R. 459 (F.C.A.) at paragraph 19:
19. […] Discretionary orders of Prothonotaries ought not be disturbed on appeal to a judge unless:
a) the questions raised in the motion are vital to the final issue of the case, or
b) the orders are clearly wrong, in the sense that the exercise of discretion by the prothonotary was based upon a wrong principle or upon a misapprehension of the facts.
[32] See also Merck & Co. v. Apotex Inc., 2003 FCA 438, [2003] F.C.J. No. 1725 (F.C.A.) (QL) where Justice Barry L. Strayer held as follows at paragraph 9:
9. It is common ground that when a motions judge hears an appeal from a prothonotary, assuming that no questions vital to the final issue of the case are involved, the reviewing judge can only exercise his or her own discretion in place of the prothonotary's if he or she concludes that the exercise of discretion by the prothonotary "was based upon a wrong principle or upon a misapprehension of facts ...". (Canada v. Aqua-Gem Investments Ltd. [1993] 2 F.C. 425 at para. 95) F.C.A. In the present case the question for this Court is whether the prothonotary's decision was based upon a wrong principle. If so, the learned motions judge should have set it aside and exercised his own discretion.
[33] I adopt the formulation of my colleague Justice Frederick E. Gibson in Apotex Inc. v. Wellcome Foundation Ltd., 2007 FC 236, [2007] F.C.J. No. 344 (F.C.) (QL), who dealt with multiple motions on appeal of multiple orders as is the case here. He said at paragraph 15:
[…] the orders under review should not be interfered with unless the learned Prothonotary's decisions of either of them were or was clearly wrong in the sense that the exercise of discretion by the Prothonotary was based upon a wrong principle or upon a misapprehension of the facts.
[34] So too, I shall not interfere with discretionary decisions of Prothonotary Aronovitch unless her decisions are clearly wrong in the sense that the exercise of her discretion was based on a wrong principle or upon a misapprehension of the facts.
ii) The Nu-Pharm Appeal of the Making of Inquiries Order
[35] In its motion on appeal from parts of the Making of Inquiries Order, Nu-Pharm submits that the Prothonotary erred in determining that Nu-Pharm should be required to make inquiries of non-parties to the action or of former employees in respect of their activities subsequent to their employment at Nu-Pharm. Furthermore, Nu-Pharm has not appealed those rulings in the Making Inquiries Order that require Nu-Pharm to make inquiries of its former employees, Mr. Doornik, Mr. Beyger and Ms. Culp, that relate solely to their activities while they were employed by Nu-Pharm. Consequently, Merck improperly seeks to have Nu-Pharm make inquiries of persons (individuals and corporations) who are not parties to the action and over whom it has neither power nor control, including the following:
(a) Apotex (and “anyone at Apotex”);
(b) Signa, which Nu-Pharm never had a relationship with “[p]rior to working with Signa on Nu-Enalapril”, and which Merck acknowledges is at least one “generation removed from” Mr. Benyak (and thus, Nu-Pharm):
2944 Q. […] I want to know the details of the substance involved.
MR. RADOMSKI: But you'll get that from Signa.
MR. EDMONDS: Maybe I won't, maybe I will. Signa suppliers are another generation removed from Mr. Benyak.
MR. RADOMSKI: Sorry, Signa?
MR. EDMONDS: Signa suppliers is an entire another generation removed from Mr. Benyak.
Benyak Transcript, April 15, 2004 pp. 677, 686-7, Q. 2907, 2944
(c) Novex Pharma (a division of Apotex) (“Novex”);
Benyak Transcript, April 6, 2004, p. 21, Q. 66 and p. 85, Q. 326
(d) A number of former employees of Nu-Pharm, who not only left Nu-Pharm to go to Novex (a non-party to the proceeding), but have also since left Novex; or who are, for the reasons stated, otherwise unavailable to Nu-Pharm:
(i) Mr. Beyer: He is no longer employed with Novex Pharma, much less Nu-Pharm. Neither Mr. Benyak nor, to his knowledge, anyone at Nu-Pharm, have any contact information for Mr. Beyger.
(ii) Mr. van Doornik: When asked if Mr. van Doornik was “still at Novex Pharma”, Mr. Benyak stated, “I think he’s retired now. I haven’t talked to him in a long time so I don’t know”, and further advised that his current contact details were with Novex – Mr. Benyak would have to look up his home phone number in the phone book.
(iii) Ms. Culp: Formerly of Apotex, but no longer employed there.
(iv) Mr. Hems: Merck’s counsel advises that Mr. Hems was (at least formerly) with Apotex; Mr. Benyak testified that he does not know Mr. Hems.
(v) Ms. Knott: A former secretary to Mr. Benyak, who is no longer with him; Mr. Benyak testified that she is “out west”, and he has “no idea where she is.”
Benyak transcript, April 13, 2004 p. 241, Q. 1064; p. 280, Q. 1223; p. 281, Q. 1230-1232; p. 292, Q. 1279; p. 298, Q. 1323
Benyak transcript, April 15, 2004 p. 751, Q. 3248-3252
(e) Brantford Chemicals Inc.
Benyak transcript, April 15, 2004 p. 780, Q. 3399
(f) Trillium Health Care Manufacturing Inc., a supplier which manufactured Nu-Enalapril tablets for Nu-Pharm.
Benyak transcript, April 13, 2004, p. 250, Q. 1106-1107
[36] Finally, Nu-Pharm states that by her erroneous Order, Prothonotary Aronovitch allows Merck to do indirectly what it could do directly. Merck could itself obtain the information it currently seeks to have Nu-Pharm obtain from non-parties by: (i) seeking leave to join one or more parties to the action; (ii) beginning another action, and seeking leave to consolidate it with the within action; (iii) seeking leave to examine a non-party; or (iv) seeking an Order for production from a non-party. Consequently, Nu-Pharm submits that the Prothonotary erred in ruling that Nu-Pharm should be required to make the inquiries of non-parties to the action set out in Schedule “A” attached to the Order of August 9, 2006.
[37] For its part, Merck rejects the notion that Nu-Pharm should not be allowed to make inquiries of its former employees even with respect to their work after they left Nu-Pharm, since their work both for and on behalf of Nu-Pharm while they were employed at Novex Pharm, is particularly relevant to the broad pleadings, which allege that not only the former employees but also the corporations have worked in consort to circumvent the permanent Court injunction and persist in its infringement of the ‘349 Patent.
[38] After having held the impugned Making of Inquires Order to the light of the submissions of Merck and Nu-Pharm, I conclude that Prothonotary Aronovitch was called upon to make a discretionary decision. That decision was not wrong. Prothonotary Aronovitch did not base her assessment on a wrong principle nor did she fall prey to a misapprehension of the facts. In my view, she paid due respect to the facts in issue and was mindful of the close ongoing collaboration between certain of the Novex Pharm employees and their former employer Nu-Pharm, all the while working on behalf of Apotex. That is why I shall dismiss Nu-Pharm’s motion appealing the Making of Inquiries Order dated August 9, 2006.
iii) The Merck Appeal of the Making of Inquiries Order
[39] Merck appeals the Making Inquiries Order because in its view, the Prothonotary erred in law in failing to find that Apotex was Nu-Pharm’s agent when its employees were so acting. Also, Merck argues that the Prothonotary erred in law in failing to order further inquiries pursuant to Rule 244.
[40] In response, Nu-Pharm and Benyak assert that Prothonotary Aronovitch did not err by rejecting the request to order further inquiries pursuant to Rule 244 as the parties in question are non-parties who do not fall within the scope of individuals referred to in Rule 241. Moreover, Prothonotary Aronovitch did not establish that the former employees were agents of Nu-Pharm. She characterized them as follows:
In the particular circumstances of this case, I find as well that van Doornik and Beyger may be said to be akin to agents in respect of their areas of responsibility while at Novex Pharma. […]
[41] The respondents argue that there is a noted distinction between being something and being “akin” to being something. The two are not the same. Consequently, there is no foundation for Merck’s argument that Apotex, as Van Doornik’s, Beyger’s and Culp’s employer, was also an agent for Nu-Pharm.
[42] Finally, Nu-Pharm submits that there is no obligation on a party being examined to make inquiries of a corporate entity that is independent of the party being examined, even in a case where the third party is related to another defendant in the proceeding (see Intel Corp. v. 3395383 Canada Inc., [2004] F.C.J. No. 251 (F.C.) (QL) at paragraph 21).
[43] Similarly, with respect to the production of documents in the possession and control of non parties, the respondent Nu-Pharm asserts that a party being examined is not obliged to obtain documents from a non-party. The party seeking the documents