2014 FC, 2014 FC 1049

Date: 20141106 Docket: T-1395-07 Citation: 2014 FC 1049 BETWEEN: LUNDBECK CANADA INC. Applicant and THE MINISTER OF HEALTH AND COBALT PHARMACEUTICALS INC.

Respondents REASONS FOR ASSESSMENT OF COSTS JOHANNE PARENT, Assessment Officer [ 1 ] On February 12, 2009, the Court granted the Application by Lundbeck Canada Inc. [Lundbeck] pursuant to the Patented Medicines (Notice of Compliance) Regulations for an order in accordance with Section 6(1) thereof prohibiting the Minister of Health from issuing a Patented Medicines (Notice of Compliance) [PM (NOC)] to the Respondent Cobalt Pharmaceuticals Inc. [Cobalt] in respect of 5 mg., 10 mg., 15 mg. and 20 mg. escitalopram tablets until after the expiration of Canadian Patent No. 1,339,452.

The Court also dismissed Lundbeck’s interlocutory Motion to adduce new evidence, the whole with costs, save that no costs were ordered in favour or against the Minister of Health. [ 2 ] It is worthy to note that the PM (NOC) Application in this file was heard in conjunction with the applications in Court files T-372-07 ( Lundbeck Canada Inc. v The Minister of Health and Genpharm ULC ) and T-991-07 ( Lundbeck Canada Inc. v The Minister of Health and Apotex Inc. ).

The Court explains at paragraph 19 of the Reasons for Order ( 2009 FC 146 ) that although these applications were heard consecutively in December 2008; they were distinct and were never joined. In fact, Lundbeck obtained a protective order in each proceeding which had the effect of keeping the three files separate and distinct.

However, the Court further specified that considering the degree of commonality of the three files, only one set of Reasons was issued. [ 3 ] Upon receipt of the Bill of Costs, a conference call was held with counsel for Lundbeck and counsel for Cobalt to determine the timetable for the cross-examinations and exchange of written materials. Written directions ensued. Further to the cross-examination and the filing of the parties written representations, a Notice of Appointment was issued.

The hearing of the assessment of costs took place in Toronto, Ontario on June 4, 2014 with counsel for Lundbeck and Cobalt making representations. At hearing, counsel for Lundbeck filed a Re-Amended Bill of Costs, detailing a claim of $69,815.20 in assessable services and $182,601.65 in disbursements. At the beginning of the hearing, counsel for Lundbeck, referring to paragraphs 3 b),

c) and

e) of the Affidavit of Christian Leblanc sworn July 5, 2013 [the Leblanc Affidavit], further reviewed the amounts claimed. Despite these changes, the document attached to the Re- Amended Bill of Costs, to substantiate the disbursements claimed, showed a total of $284,142.63 with $120,245.63 for the experts and $163,897.00 for all other disbursements. On August 13, 2014, counsel for Lundbeck submitted a further amended document with regard to disbursements only, reflecting a total amount claimed of $182,596.48 ($119,410.45 in expert fees and $63,186.06 for all other disbursements). I.

Lundbeck’s arguments [ 4 ] The Leblanc Affidavit states that Lundbeck is a pharmaceutical company focusing on the treatment of disorders of the central nervous system and is the owner of Canadian Patent No. 1,339,452 entitled Enantiomers of Citalopram and Derivatives Thereof . It further specifies that Escitalopram is the S-enantiomer of the racemic drug citalopram, a product that accounts for a substantial share of Lundbeck’s revenue in Canada.

Further to receiving the Notice of Allegation from Cobalt in respect of escitalopram , Lundbeck filed an application for an order in accordance with Section 6(1) of the PM (NOC) Regulations. The evidence in support of the Application was composed of the Affidavits of Klaus B.

Bøgesø, Klaus Gundertofle, Christian K-Jensen, Stewart Montgomery, Brian Clark, Steven Davies, Marie Gagné and Peter Davies. [ 5 ] At the hearing of the assessment, counsel for Lundbeck argued that the amounts claimed are reasonable when the overall substance of the file, the intensity of the work required in a relative short timeframe and the difficulty of dividing the invoices, considering that the work on the three files was done concomitantly, are taken into consideration. [ 6 ] In fact, as each of the generic companies (Genpharm/Mylan, Apotex and Cobalt) contested the PM (NOC) Regulations applications, it is submitted that the end results was that Lundbeck had to pay legal fees and disbursements to make their case in the three files, not one over or before the other.

It was also submitted that the work required was intense for all team members on these proceedings as Lundbeck had much to lose. Counsel further asserted that although the Notice of Compliance procedure in this file was dealt with concomitantly with Court files T-372-07 and T-991-07 and that the expert witnesses were practically the same for each file, the Leblanc Affidavit specifies that adjustments had to be made as the expert witnesses had to consider a different angle for each file as the Respondents’ evidence was different from one to the other with regard to the particularities of each generic.

However, considering the nature of the protective orders in each file, the nature and extent of these adjustments cannot be disclosed.

It was also contended that in consideration of the fact that the files were all related and that the work of the experts was done simultaneously on all files, most of the cross-examinations on the three files took place during the same period of time (April to September 2008), having counsel travelling to different countries/cities to deal with the cross-examinations of the same expert witnesses, resulting in an overlap of the experts’ invoices, the travel costs for experts and counsel, etc.

In light of the above, counsel for Lundbeck explained that when it was not possible to confirm to which file the work invoiced on a particular file related, he split the invoice between the three files while considering the different allegations for each generic and taking into consideration that the experts worked on the three files concomitantly and prepared their invoices for the three files in a “holistic manner” . It was submitted that Cobalt cannot argue that the

evidence was identical and as a result request a discount for being the third file. With regard to the hearing of this Application, it is contended that while the hearing in the other two files each lasted five days, the hearing in this file only lasted three days in consideration of the Court having already heard some of the technical and scientific arguments in the two other files. [ 7 ] Counsel for Lundbeck further contended that they had attempted to negotiate the Bill of Costs with Cobalt, to no avail.

Counsel submitted that because Cobalt did not respond to their communication and costs negotiation settlement attempts, Lundbeck did not file its Bill of Costs until six months after the Supreme Court of Canada decision. It was further argued that Lundbeck’s conduct in filing their Bill of Costs when they did, did not unnecessarily lengthen the duration of the proceeding, or cause supplementary expenses and that paragraph 400(3)(

i) of the Rules refers to the main matter before the Court, not the costs assessment. Counsel for Lundbeck added that the different bills of costs previously sent to Cobalt’s counsel were submitted as drafts with the intent of negotiating a settlement. Those were privileged documents presented for negotiation and should not form part of Cobalt’s materials in this assessment of costs.

Counsel further stated that the bills of costs regarding the files involving Apotex and Genpharm/Mylan were settled and that these settlement negotiations were to remain confidential. [ 8 ] In discussing the complexity and amount of work required on this file, counsel for Lundbeck submitted that the upper end of Column III of Tariff B should be allowed throughout as it is justified by the numerous and particularly complex, legal and scientific questions requiring testimony from renowned experts. Paragraph 22 of the Leblanc’s Affidavit expands: 22. The evidence was complex and voluminous.

The issues involved included inter alia :

a) Whether the claims of the ‘452 patent, which cover escitalopram, methods for the preparation of escitalopram and pharmaceuticals composition containing escitilopram, are infringed or not;

b) Whether the patent is invalid because anticipated, obvious, insufficient, and ambiguous or whether the claims are broader than the invention;

c) In particular, whether the ingestion of citalopram inevitably results in escitilopram;

d) Whether the methods for resolving enantiomers, including chiral columns, diastereomeric salts, covalently bound diastereomers, diol cyclization as well as the twp reactions schemes described in the patent were well known and in common use at the relevant date;

e) Whether the prior art discloses the superior benefits of escitalopram;

f) Whether the ‘452 patent is a selection patent;

g) Whether

section 53 of the Patent Act has been breached. [ 9 ] Counsel argued that in the three files, the respondents alleged that the “escitalopram” patent at issue was a selection patent while Lundbeck asserted that it was not. As per the Leblanc Affidavit, the other arguments raised by the Notice of Allegation and responded to by Lundbeck in this matter revolved around the anticipation and obviousness of escitalopram, the ambiguity of the patent, the insufficiency of its disclosure and the anticipation of the molecule.

Lundbeck was successful before the Federal Court and the Federal Court of Appeal while Cobalt’s application for leave to appeal to the Supreme Court was denied. In light of the decision in Interactive Sports Technologies Inc. v Canada (Attorney General) , 2012 FCA 78 , counsel submitted that with no further directions from the Court, the assessment officer cannot depart from Column III of Tariff B.

However, counsel inferred that the costs in this matter are justified at the upper end of Column III due to the fact that in another matter before this Court, involving Lundbeck and Apotex, regarding the validity of the escitalopram patent, the Court directed that costs were awarded at the upper end of Column IV. [ 10 ] With regard to the sufficiency of evidence that payments on the invoices were tendered, counsel argued that the evidence in the Leblanc Affidavit presents all the invoices and affirms that they have been paid.

It is contended that saying otherwise would be maintaining that Lundbeck did not pay its bills. Counsel for Lundbeck argued that “Tariff B requires that disbursements be supported by satisfactory evidence” and that all evidence does not need the proof of a receipt from the payee. As per F-C Research Institute Ltd. v Canada , 95 DTC 5583 (F-C Research) , Carlile v Canada , 97 DTC 5284 (Carlile) and Teledyne Industries v Lido Industries, (1981) 56 C.P.R. (2d) 93 ( Teledyne) , it was contended that the assessment officer can accept affidavit evidence that the amounts were incurred and paid.

Counsel further argued that the discretion of the assessment officer should concentrate on finding what is more or less probative: the fact that it is not specifically mentioned that an invoice has been paid does not mean that it has not been paid. Counsel submitted that the invoices are attached to the Leblanc Affidavit, the amounts are reasonable and have most likely been paid by Lundbeck. Counsel concluded that believing the contrary would lead to an absurd result.

The assessment officer does not need an absolute proof but a satisfactory proof to set in motion the necessary discretion to determine what was reasonable and necessary in the circumstances. Referring to the decision in Merck & Co. v Canada (Minister of Health), 2007 FC 312 (Merck) at paragraph 69, counsel for Lundbeck finally contended that as in that case, the assessment officer can allow disbursements even when the affidavit in support of the bill of costs does not contain specific details. II.

Cobalt’s arguments [ 11 ] In response, counsel for Cobalt corroborated that Cobalt was the third generic company to pursue a Notice of Compliance for escitalopram and that the hearing of this third PM (NOC) Application took place in December 2008 after the hearings in Court files T- 372-07 and T-991-07. During the assessment hearing, it was contended that, as a result of going last, an important part of the work done in Court files T-372-07 and T-991-07 reduced the work on this file with the most work having been done on the first file.

Counsel for Cobalt argued that there is insufficient documentation in the record making it “really difficult to find out what is a fair amount that Cobalt should pay given the lack of details” . However, she added that Cobalt should not be subsidizing Genpharm/Mylan or Apotex. It was argued that the fact that Lundbeck chose “what they called a holistic approach” with the work on the three files being completed at the same time and billed together, did not prevent Lundbeck from keeping adequate documentation separating the three files and that

Cobalt should not be penalized for Lundbeck’s way of proceeding. In Cobalt’s Responding Record and verbal arguments, it was submitted that the work on the three files was done simultaneously, that the cross-examinations on the three files took place around the same time in the summer and early fall of 2008, that the evidence of Lundbeck’s witnesses was substantially the same in each of the three files, and that “considerably less work was done on the Cobalt file when the documents are just looked at on their face”.

Counsel asserted that when questioned on the issue whether Lundbeck filed affidavits from the same fact and expert witnesses in the three files, Christian Leblanc, in cross-examination on his Affidavit, stated that he was “not sure if there was some slight differences” and that he would have to verify the other files, keeping in mind the protective orders issued by the Court. Counsel submitted that when asked if the evidence of the witnesses was substantially the same, Mr.

Leblanc added that it was “difficult to qualify, but I would say substantially the same but there were some adjustments to be made in each file” . Considering the language used in the cross-examination of Mr. Leblanc, counsel for Cobalt submitted that the evidence put by the witnesses was the same or very similar with only some adjustments needing to be made and that in consideration of the protective orders, Cobalt was not informed concerning the nature of these adjustments.

Counsel for Cobalt contended that considering the protective orders in place, it is Lundbeck’s burden to substantiate the quantum of costs and document the required information. [ 12 ] It is Cobalt’s position that costs should be reduced considering that Lundbeck does not deny that the evidence was substantially the same, cannot substantiate the amounts and, in light of the protective orders, cannot answer specific questions to clarify these issues. In response to the disbursements claimed, counsel for Cobalt referred in her Representations in Response to subsection 1(4) of Tariff B of the Rules.

At paragraph 122, she indicated: 122. In this case, counsel for Lundbeck admitted that it is claiming not those amounts that were paid or are payable by its client but amounts that it has picked and chose based on a mandate and its “client’s advice”. Counsel for Lundbeck further admitted that it has not provided a full record of the disbursements it claims. [ 13 ] Counsel for Cobalt argued per IBM Canada Ltd. v Xerox of Canada Ltd. , [1976] FCJ No. 124 that an assessment officer should not accept an affidavit at face value, but examine the quality of the proof submitted. Referring to the cross-examination of C.

Leblanc, she contended that with the exception of certain amounts, the proof that the disbursements claimed were actually paid or are payable is missing from Lundbeck’s evidence. She claimed that it is particularly important since, according to the Leblanc Affidavit, all work on the three files (Cobalt, Genpharm/Mylen and Apotex) was done simultaneously and “no attempt was made at the time to keep disbursements separate” .

Per Advance Magazine Publishers Inc. v Farleyco Marketing Inc. , [2010] FCJ No. 844 and Hoffman-La Roche Ltd. v Apotex Inc. [2013] FCJ No. 1370 , she argued that “the less evidence a party claiming costs provides, the more it is dependent on the assessment officer’s discretion, the exercise of which should be conservative, with a view to the sense of austerity which should pervade costs, to preclude prejudice to the payer of costs” .

Counsel for Cobalt specified that they do not dispute the jurisprudence that says that receipts need not be attached for every single item “if you have an affidavit from a lawyer who sets out the fact that amounts have been paid”. She further pointed out that the Leblanc Affidavit states that expenses have been incurred, but that there is no mention in the Affidavit that the client has been charged or that the amounts have been paid.

Counsel submitted that paragraph 3 of the Leblanc Affidavit states: “I attach the following exhibits to this affidavit in support of the amended bill of costs” and that this statement is followed by a list of the exhibits attaching receipts and invoices. She further contended that paragraph 3

g) and subsequent of the Affidavit mentions: “Receipts showing expenses incurred by counsel for Lundbeck…” While paragraph 3

m) and

n) specify “…expenses billed to Lundbeck…” She argued that exhibit 15 to the Affidavit introduces a report compiling all disbursements incurred by the law firm in the course of this matter and that further to a review of the individual listings, the report contains numerous claims that do not relate to Cobalt. Counsel argued that there is no evidence showing that these disbursements specifically relate to Cobalt and questioned whether the “matter” referred to in the Affidavit is a reference to the “escitalopram matter”.

She further contended that the breakdown of these numbers should have been done in the Leblanc Affidavit and not given by counsel during the cross-examination of Mr. Leblanc or during the assessment hearing. Counsel for Cobalt further argued that considering the lack of evidence and the amounts that Lundbeck have already recovered from Genpharm/Mylan and Apotex, Cobalt should not be prejudiced and have to pay costs incurred in the Genpharm/Mylan and Apotex matters.

She argued that to the extent that evidence is not provided that the specific costs and disbursements relate to Cobalt, they do not. [ 14 ] In response to the argument that Cobalt ignored Lundbeck’s settlement proposals on costs, counsel for Cobalt contended that there is no evidence on record of unreturned telephone calls and all written correspondences had been responded to, making it inappropriate for Lundbeck to infer that all other parties except Cobalt agreed to negotiate. Counsel added that Cobalt had no knowledge of the amount of costs demanded by, or paid to Lundbeck in the two other files.

On the persistence in advancing the Bill of Costs, Cobalt referred to the decision in Urbandale Realty Corp. v Canada , 2008 FCA 167 , at paragraph 21 . It was further argued in their Written Representations that Lundbeck’s counsel sent Cobalt different versions of their bills of costs on January 19, 2010, March 16, 2012, April 16, 2013 and July 5, 2013, reducing the costs claimed each time. From Cobalt’s standpoint, these documents were not confidential or without prejudice since they were not indicated as such or were not subject to an agreement of confidentiality between the parties.

Counsel concluded that at paragraph 150 of the Reasons for Order, the Court held that Lundbeck was entitled to one set of costs in each of the three applications, not specifying if they have to be equal and it is Cobalt’s position that the assessment officer, in accordance with Rule 400(1) and the decision in Shotclose v Stoney First Nation , 2011 FC 1051 , who has full discretionary powers to sort out the amounts claimed. III.

Decision [ 15 ] Upon my reading of paragraph 6 of the Reasons for Order in this Court file ( 2009 FC 146 ), the main issues before the Court were the validity of the patent and whether or not the Minister should be prohibited from issuing a Notice of Compliance to Cobalt, or the other respondents. These proceedings did not serve to determine the issue of infringement. Relying on the factors set in rule 400(3) of the Federal Courts Rules, counsel for Cobalt argues that this litigation was not complex, a repeat of the litigations with regards to the two other generic companies involved with escitalopram.

On the other hand, counsel for Lundbeck claims that the three files were important and involved complex PM (NOC) proceedings that raised complex legal and factual issues and that this file was of significant importance, hence the claim at the upper-end of Column III for all taxable services. Both parties agree that the assessment officer may consider the factors set at Rule 400(3) of the Federal Courts Rules to assess costs. The Court granted Lundbeck’s PM (NOC)

Applications with costs on each file.

Lundbeck having not moved the Court for specific directions to the assessment officer (Rule 403), the assessment officer in assessing Lundbeck’s costs can only exercise her discretion using the number of units imposed under Column III of the Table to Tariff B while referring to Rule 409 which allows the assessment officer to consider the factors listed at Rule 400(3). [ 16 ] The premise behind Lundbeck’s argument for claiming the maximum number of units for each service demanded under Tariff B is that they were completely successful in the conduct of the litigations before the Federal Court and the Federal Court of Appeal.

Reading the Courts’ decisions in both Courts as well as the documents on file and counsel’s arguments, there is no doubt that this matter was extremely important to all parties involved and raised some complex scientific issues. However, I am of the opinion that, although the validity of the Patent was attacked on several fronts, this was not the most complex of patent cases.

On the other hand, upon reviewing the file, along with the cross-examinations, it is obvious that this matter required a significant amount of work but it did not exceed that of an average patent proceeding. [ 17 ] Counsel for Cobalt raised the issue of apportionment of liability (Rule 403(d)) insisting that the amount of work required and relevant to the Cobalt file was diminished when one considers that Cobalt was the third of three consecutive PM(NOC) cases prepared and argued with respect to escitalopram.

On that issue, Lundbeck’s arguments and the evidence (Affidavit of Christian Leblanc) were not successful in convincing me that the work performed in the Cobalt file was a great deal different from the work in the Apotex and Genpharm/Mylan cases. Counsel for Cobalt further argued that some or all of the costs claimed against Cobalt in the Bill of Costs have already been covered by Apotex and Genpharm/Mylan. She contended, referring to the cross-examination of C.

Leblanc and Lundbeck’s arguments regarding the “slight differences” between the expert witnesses’ reports in the three files, that the privilege attached to the costs settlements between Lundbeck and Apotex, and Genpharm/Mylan should be waived from the Protective Orders issued on these files to prevent Lundbeck from being overcompensated ( Dos Santos v Sun Life Assurance Co. of Canada , 2005 BCCA 4 at paras. 37 & 39 ( Dos Santos) ).

Counsel for Lundbeck argued the legitimacy of the Protective Order on file, adding further in his Written Representations that “settlement agreements are privileged and thus are neither admissible as evidence nor relevant to the present matter and, consequently, no adverse inference can be drawn by the assessment officer in that respect”. [ 18 ] I am mindful that settlement agreements are usually covered by solicitor-client privilege.

In addition, the Protective Orders signed by the Court in Court files T-1395-07, T-372-07 and T-991-07 along with my reading of paragraph 24 of the Protective Order in this Court file, lead me to understand that the Order remains in effect as it reads that the “provisions of this Order shall continue after the final disposition of these proceedings and this Court shall retain jurisdiction to deal with any issues relating to this Order, including without limitation, its enforcement” .

The Court further adds at paragraph 25: The terms and conditions of the use of Confidential Information and the maintenance of the confidentiality thereof during any hearing of this proceeding shall be matters in the discretion of the Court seized of this matter. [ 19 ] Considering the wording of the Protective Orders found in the three files, I am of the view that the exception to costs settlement negotiations “privilege” in this Court file as well as in T-372-07 and T-991-07 would have needed to be recognized by the Court as the assessment officer, not being a Court member, is powerless regarding the disclosure of any of the information regarding these files.

Referring back to the decision in Dos Santos (supra) and the exception to the “blanket privilege” regarding settlement, I recognize that full disclosure on settlement negotiations could have been relevant. However, I am not convinced, had the Court been moved to subtract the settlement negotiations from the realm of the Protective Orders in Court files T-372-07 and T-991-07, that it was absolutely necessary in the circumstances of this case. [ 20 ] Determining the reasonableness of the services and disbursements claimed in Lundbeck’s Bill of Costs will involve the exercise of a substantial degree of discretion.

In Merck & Co. v Apotex Inc. , 2008 FCA 371 , the Federal Court of Appeal plainly pointed out the considerable discretion vested with assessment officers: [14] In view of the limited material available to assessment officers, determining what expenses are “reasonable” is often likely to do no more than rough justice between the parties and inevitably involves the exercise of a substantial degree of discretion on the part of assessment officers.

Like officers in other recent cases, the Assessment Officer in this complex case, involving very large sums of money, gave full reasons on the basis of a careful consideration of the evidence before him and the general principles of the applicable law. [ 21 ] In this matter, I am mindful that some duplication in the provision of legal services involving the Genpharm/Mylan and Apotex files was certainly inevitable. During his cross-examination on Affidavit, C.

Leblanc, when questioned about the substantial similarity of the witnesses evidence on the three files, stated at page 14 that it was “difficult to qualify, but I would say substantially the same but there was some adjustments to be made in each file”. Although, I share Cobalt’s concern regarding repetitive work and possible duplication from one matter to the other, I am of the opinion that Lundbeck’s counsel could not assume the experts’ work and positions on each matter and of the specifics that could be transplanted from one file to the other.

The Court in the Reasons for Order suggests that substantial case preparation was required for all three matters and while the Court addresses similar findings in his assessment of Canadian Patent No. 1,339,452 not being a selective patent, it also dealt with allegations and other issues, justified or not, that were not common to each.

Considering that the applications on these files were served and filed a few months apart from each other while the hearings proceeded a few weeks apart, I agree with counsel for Lundbeck that in consideration of the short and very similar timeframe of these proceedings, it is almost impossible to know which of the three files were dealt with first, second or third and to which extent it should be considered a factor to take into consideration as I clearly do not think that one generic company should assume the burden for the two others.

This being said, the allegations argued in each PM (NOC) applications were not put in evidence before me and considering the timeframe of the three files, I am satisfied that the cross-examinations and the hearing related to the Cobalt file progressing within the same timeframe or a few weeks after the Genpharm/Mylan and Apotex matters did necessitate a thorough preparation on behalf of counsel for Lundbeck. Therefore, the issue of the allocation of the costs claimed with regards to the three files will explicitly be dealt with when assessing the specific services and disbursements on this matter.

The Court awarded separate costs on each file and absent clear evidence; references to the other files in this costs assessment should be limited to circumstances when the services noticeably overlapped. [ 22 ] As far as the matter of costs is concerned, I do not believe that Lundbeck’s conduct in this Court file resulted in unnecessarily

lengthening the proceedings. At the outset, the Federal Courts Act or Rules do not set any timeframe for the filing of a party’s bill of costs. Further, I do not believe that for Lundbeck to have waited for the Supreme Court of Canada decision on the leave to appeal from the Federal Court of Appeal decision constitutes the type of conduct that unnecessarily lengthened the proceedings. The filing of Lundbeck’s initial Bill of Costs four years after the Federal Court decision but months after the Supreme Court of Canada decision on the leave to appeal is not what I would consider a long delay.

Further, I find no ill conduct in the manner Lundbeck proposed the opposing party amended bills of costs all through the process. I rather see that as a negotiation tactic between counsel and I do not think that in the case at bar, it severally impaired the process or unnecessarily lengthen the process.

Therefore, Lundbeck’s decision to proceed with their Bill of Costs four and a half years after the Federal Court issued its decision should not have any impact on the costs assessment. [ 23 ] In assessing disbursements, the assessment officer’s role is to determine if costs were incurred, and once this has been established, whether the costs were reasonable and necessary.

Section 1(4) of Tariff B states that “No disbursements, others than fees paid to the Registry, shall be assessed or allowed under this Tariff unless it is reasonable and it is established by affidavit or by the solicitor appearing on the assessment that the disbursement was made or is payable to the party.” This rule is unambiguous: only the fact that disbursements were made or are payable can be established by way of affidavit or by solicitors appearing, not their reasonableness.

It is once the assessment officer is satisfied that the costs were incurred, that can be determined their reasonableness and necessity. [ 24 ] As pointed out at the beginning of these Reasons and by counsel for Cobalt in her representations, the amounts claimed in Lundbeck’s original and re-amended Bills of Costs vary substantially. With regard to disbursements, counsel further pointed out in her Written Representations: 16. In the Amended Bill of Costs dated July 5, 2013 and the Leblanc Affidavit, counsel for Lundbeck set out the amounts it claims for disbursements as 14 separate Items.

However, on cross-examination, counsel for Lundbeck acknowledged that in many instances, the amounts claimed in its Amended Bill of Costs do not match the amounts documented in the Exhibits to the Leblanc Affidavit. Counsel for Lundbeck indicated that in instances where it has not provided any documentary evidence in support of a claimed amount, it is not, in fact, claiming that amount. It can also be read from the transcript of the examination of Christian Leblanc on his Affidavit at pages 20-21: Mrs. Heather E.A. Watts Q.

Ok, and we just talked about briefly before, some of the documents in this list are included in the affidavit and some aren’t. A. Uh-huh. Q. So am I correct in assuming that the total that you get at the end, where you said it’s 285, I believe. 281. Me Hilal Elayoubi 231 Mrs. Heather E.A. Watts Q. $235,601.79. And then the amount you’re claiming is less than that, $194,705. A. $194,705.92, it’s gonna change with the corrections that Me Elayoubi did. Q. Sure A. …but roughly yes. Q.

Ok, so am I right in assuming that in this chart, where there’s a document that’s not attached in the affidavit that’s a document the amount for which you’re not including in the total? A. Yes And at pages 67-68: Mrs. Heather E.A. Watts Q. Ok, and I think I asked you this before but I just want to be sure of the answer. So to the extent that there are documents listed in here that are not included in the affidavit, those are amounts that you’re not claiming, is that correct?

So for example, where we see the fourth entry down to B, Alain Leclerc, that document does not appear in any of the exhibits, so is that an amount that’s not being claimed? A. Yes Q. That’s correct? A. Yes, that’s correct. [ 25 ] The prima facie evidence of the disbursements incurred in this matter as presented in the Leblanc Affidavit was challenged by counsel for Cobalt during the cross-examination of Mr. Leblanc held on December 17, 2013. The lack of sufficient and accurate details as pointed out by counsel for Cobalt makes it more complicated to secure the absolute proof sought out.

In support of their contention regarding quality and insufficiency of the evidence, counsel for Cobalt referred to IBM Canada Ltd. v Xerox of Canada Ltd. , [ 1976]

F.C.J. No. 124 , Advance Magazine Publishers Inc. v Farleyco Marketing Inc., 2010 FCA 143 and Hoffman-La Roche Ltd. v Apotex Inc. , 2013 FC 1265 . [ 26 ] In reply, counsel for Lundbeck referred to F-C Research (supra) , Carlile (supra) and Teledyne (supra) .

The assessment officer concerned with the lack of sufficiency of evidence to justify the expenditures stated in F-C Research : 12 In my opinion, the simple delineation of expenditures generally described in a Bill and supported only by the scant statement that they were reasonable and necessary fails to provide sufficient information upon which a taxing officer can discharge the responsibility of being satisfied that the costs claimed were essential to the conduct of the proceedings, that they were prudently incurred, or that the quantity or rate applied, as the case may be, was reasonable in the circumstances.

In arriving at that conclusion, I am guided as well by the principles established by this Court in Alladin Industries Inc. v. Canadian Thermos Products Ltd. [1973] F.C. 942 , 12 C.P.R. (2d) 24 (T.D.) ; Red Owl Foods (Alta.) Ltd. v. Red Owl Stores Inc. (1971) 12 C.P.R. (2d) 266 (Fed. T.D.) ; Teledyne Industries v. Lido Industries (1981) 56 C.P.R. (2d) 93 ; and Diversified Products Corporation v. Tye-Sil Corporation Limited, Court file no. T-1565-85, unreported, November 22, 1990, the Honourable Mr.

Justice Teitelbaum, from which decisions I derive that, firstly, it would be improper not to question disbursements, even, I would add, in the absence of any apparent opposition on the part of other interested parties. Secondly, disbursements must be supported by evidence which satisfactorily demonstrates that the costs claimed meet the twofold test of reasonableness and necessity.

The Defendants have fallen well short of that challenge in the present taxation and the disbursements claimed under Tariff B 3 must therefore be disallowed. [ 27 ] In Carlile , the assessment officer notes that work had clearly been done but the assignment of appropriate quantum for indemnification was made difficult, if not impossible considering the lack of proper proof explaining all the entries.

He further added: Taxing Officers are often faced with less than exhaustive proof and must be careful, while ensuring that unsuccessful litigants are not burdened with unnecessary or unreasonable costs, to not penalize successful litigants by denial of indemnification when it is apparent that real costs were indeed incurred. This presumes a subjective role for the Taxing Officer in the process of taxation. My Reasons dated November 2, 1994, in T-1422-90: Youssef Hanna Dableh v. Ontario Hydro cite, [1994] F.C.J. No. 1810 , at page 4, a series of Reasons for Taxation shaping the approach to taxation of costs.

Dableh was appealed but the appeal was dismissed with Reasons by the Associate Chief Justice dated April 7, 1995, [1995] F.C.J. No. 551 . I have considered disbursements in these Bills of Costs in a manner consistent with these various decisions. Further, Phipson on Evidence, Fourteenth Edition (London: Sweet & Maxwell, 1990) at page 78, paragraph 4-38 states that the "standard of proof required in civil cases is generally expressed as proof on the balance of probabilities". Accordingly, the onset of taxation should not generate a leap upwards to some absolute threshold.

If the proof is less than absolute for the full amount claimed and the Taxing Officer, faced with uncontradicted evidence, albeit scanty, that real dollars were indeed expended to drive the litigation, the Taxing Officer has not properly discharged a quasi-judicial function by taxing at zero dollars as the only alternative to the full amount. Litigation such as this does not unfold solely due to the charitable donations of disinterested third persons. On a balance of probabilities, a result of zero dollars at taxation would be absurd.

Of note the comment about the standard of proof and the subjective role of the assessment officer in making sure that the claiming party is appropriately reimbursed for the expenses incurred while the opposing party is not burdened with inappropriate expenses. [ 28 ] The Court decision in Teledyne confirms the authority of the assessment officer while further stating that not all expenditures need to be supported by a receipt: 23 In the taxation of a party-and-party bill of costs acceptance without inquiry of the propriety of a disbursement is wrong in principle and should be reviewed: vide IBM v.

Xerox, supra at p. 186. Of course, all disbursements, even when properly expended, should be proved to the satisfaction of the Taxing Officer. But it does not follow that all items of expenditure should rigorously be supported by a receipt from the payee. There are other ways to prove that a bill has been paid. In my view, the prothonotary was perfectly right in allowing those costs as they were obviously incurred, and properly so, in connection with the various examinations for discovery.

The entire amount is therefore taxable. [ 29 ] In Abbott Laboratories v Canada, 2008 FC 693 (Abbott-2), the assessment officer summarized the position faced by assessment officers in circumstances like this one: However, that is not to suggest that litigants can get by without any evidence by relying on the discretion and experience of the assessment officer.

The proof here was less than absolute, but I think there is sufficient material in the respective records of the Federal Court and the Federal Court of Appeal for me to gauge the effort and associated costs required to reasonably and adequately litigate Apotex’s position. A lack of details makes it difficult to confirm whether the most efficient approach was indeed used or that there were no errors in instructions, as for example occurred in Halford, requiring remedial work.

A paucity of evidence for the circumstances underlying each expenditure make it difficult for the respondent on the assessment of costs and the assessment officer to be satisfied that each expenditure was incurred further to reasonable necessity. The less that evidence is available, the more that the assessing party is bound up in the assessment officer’s discretion, the exercise of which should be conservative, with a view to the sense of austerity which should pervade costs, to preclude prejudice to the payer of costs.

However, real expenditures are needed to advance litigation: a result of zero dollars at assessment would be absurd . [ 30 ] I am mindful that the demands of this scale of litigation can interfere with a precise monitoring of costs and disbursements and that Lundbeck’s counsel in trying to keep track of the invoices did not always take the necessary steps to substantiate the disbursements incurred in relation to Cobalt. Nevertheless, counsel for Lundbeck had the responsibility for proof.

Like my predecessors, I consider zero dollars at taxation an absurd result when, as in this matter, it is obvious that expenses were incurred. However, assessing reasonableness becomes challenging when faced with evidence of the type before me given the entrenched and divergent views of counsel on the record.

The Leblanc Affidavit and exhibits attached could certainly have provided more specific and accurate information and in consideration of the authorities previously cited and the cross-examination and arguments before me, it does not necessarily establish an absolute right to indemnification of the amounts presented. Lundbeck made the choice in pursuing the PM (NOC) applications on the three files ( Cobalt, Genpharm/Mylen and Apotex) concomitantly or as it was referred to “in a holistic way” .

It is my view that Lundbeck’s choice to not consistently keep separate documentation for each file should not penalize Cobalt. However, in consideration

of the evidence presented regarding the expenditures claimed, it is obvious from the Court file and the parties’ arguments that several cross-examinations took place and although sometimes imprecise, invoices were submitted by Lundbeck to show work performed by experts in this matter. [ 31 ] In conformity with Section 1(4) of Tariff B, the assessment officer, upon assessing the disbursements claimed, must ensure once the expenses have been proven that they meet the threshold of necessity and reasonableness.

As set in Engine & Leasing Co. v Atlantic Towing Ltd ( 93 FTR 181 ), there is no automatic recovery for expert costs: I should observe at the outset that we are dealing with party-and-party costs. It is well established that parties cannot recover all their costs under that kind of award. Also, compensation of an expert witness during trial at the hourly rate allowed for preparation may be found to be too generous.

Further, there is no foundation for the notion that counsel may incur any expert witness costs for which, in the event of success, they will be fully compensated. [ 32 ] In the circumstances of this matter, I find the comments made in Abbott-2 (supra) to be useful: [70] I still hold to my view, often expressed further to my approach in Carlile (decided May 8, 1997) and the sentiment of Lord Justice Russell in Re Eastwood (deceased) , [1974] 3 All.E.R. 603 at 608, that assessment of costs is " rough justice , in the sense of being compounded of much sensible approximation," that discretion may be applied to sort out a reasonable result for costs equitable for both sides.

I think that my view is reinforced by the editorial comments (see: The Honourable James J. Carthy, W.A. Derry Millar & Jeffrey G.

Gowan, Ontario Annual Practice 2005-2006 (Aurora, Ont: Canada Law Book, 2005)) for Rules 57 and 58 to the effect that an assessment of costs is more of an art form than an application of rules and principles as a function of the general weight and feel of the file and issues, and of the judgment and experience of the assessment officer faced with the difficult task of balancing the effect of what could be several subjective and objective factors. [ 33 ] The Federal Court of Appeal also commented on the subject of "rough justice" in Merck & Co. v Apotex Inc. 2008 FCA 371 : 14 In view of the limited material available to assessment officers, determining what expenses are "reasonable" is often likely to do no more than rough justice between the parties and inevitably involves the exercise of a substantial degree of discretion on the part of assessment officers.

Like officers in other recent cases, the Assessment Officer in this complex case, involving very large sums of money, gave full reasons on the basis of a careful consideration of the evidence before him and the general principles of the applicable law. [ 34 ] The "rough justice" approach is not to suggest that parties need not provide sufficient evidence, and to only rely on the discretion and experience of the assessment officer.

I see the role of the assessment officer, while faced with less than exhaustive evidence, and as real disbursements were incurred, to ensure that the successful party is not denied reasonable indemnification while the unsuccessful litigant is not burdened with unreasonable costs. In the case at bar, counsel for Cobalt claimed that the Leblanc Affidavit did not establish that the amounts claimed as per invoices attached were duly billed to the client or paid. I agree with counsel’s argument.

However, section 1(4) of Tariff B establishes that: “No disbursements, others than fees paid to the Registry, shall be assessed or allowed under this Tariff unless it is reasonable and it is established by affidavit or by the solicitor appearing on the assessment that the disbursement was made or is payable to the party” and I am of the position that both the Leblanc Affidavit along with counsel’s written representations and arguments presented at the assessment hearing establish as per Section 1(4), that disbursements were incurred.

Keeping this in mind and the decision in Teledyne (supra) at paragraph 23 , I will therefore review all invoices submitted to ensure the appropriateness and reasonableness of the disbursements claimed . IV. Assessable Services [ 35 ] Under Item 1 of Tariff B of the Federal Courts Rules , Lundbeck claims fourteen units as assessable services for the preparation and filing of the Notice of Application and the Applicant’s Record. Item 1 of Tariff B reads: Preparation and filing of originating documents, other than a notice of appeal to the Federal Court of Appeal, and application records.

Préparation et dépôt des actes introductifs d’instance, autres que les avis d’appel, et des dossiers de demande [ 36 ] The practice is that item 1, aside from exceptional circumstances, is a global allowance allocated regardless of the amount of work involved for the preparation and filing of the originating document and the application record inclusive of the affidavits filed in support of the application ( see: Montréal (Ville) c Administration portuaire de Montréal, 2012 CF 221 , Dell Inc. v 9153-3141 Québec Inc., 2007 FC 1070 , Novopharm Ltd v AstraZeneca AB, 2006 FC 678 and Kassam v Queen, 2005 FCA 169 ).

Having not been made aware of any exceptional circumstances, seven units will be allowed for the preparation and filing of the originating document and the application record, inclusive of the affidavits. [ 37 ] The claim made under Item 5 for the preparation and filing of a contested Motion for leave to file a memorandum of fact and law of more than 30 pages will be allowed three units. On top of not being a very complex motion, it was similarly presented in Court file T-991-07 for which costs had also been awarded. For the attendance on that Motion (Item 6), the maximum number of units is claimed by Lundbeck.

Counsel for Cobalt claims that this motion was decided on the basis of written representations. The Abstracts of Hearing found in the Court Record in this Court file and Court file T-991-07 indicates that the Motion was presented before the Court on October 6, 2008. For one thing, I note that only the applicant was represented on that day while a letter from Cobalt’s counsel dated October 1, 2008 points out that Cobalt would not be represented at the hearing, asking for its Motion Record to be put before the Court.

In consideration of the above and the lesser complexity of that Motion, one unit multiplied by 0.5 hour will be allowed for the appearance of counsel on that Motion. [ 38 ] Seven units are claimed by Lundbeck under Item 5 for their Motion for leave to file further evidence. From my reading of the

Court Record, I note in the Order of February 12, 2009 that the Court dismissed Lundbeck’s interlocutory motion to adduce new evidence. Giving the fact that the Motion was dismissed and that the Court did not specifically indicate that the costs of that Motion were awarded to Lundbeck, said costs will not be allowed. [ 39 ] Under Item 7 (discovery of documents, including listing, affidavit and inspection), Lundbeck claims the maximum number of units for the discovery of documents annexed to the Notice of Allegation and for the preparation of the affidavits of Dr. Klaus Peter Bøgesø, Dr. Brian Clark, Peter J.

Davies, Dr. Stephen G. Davies, Dr. Marie Gagné, Dr. Klaus Gundertofte, Christian Kjerulf-Jensen and Dr. Stuart Montgomery. Referring to the decision in Abbott Laboratories Ltd. v Canada , 2009 FC 399 ( Abbott ), counsel for Cobalt alleges that the multiple claims for the preparation and filing of expert affidavits should be disallowed under the Tariff as it covers for the preparation of “all respondents’ records or materials” as one activity. The decision in Abbott refers to Item 2 of Tariff B with regard to the preparation and filing of the respondents’ materials.

In the case at bar, Lundbeck being the Applicant, Item 1 should apply to the preparation and filing of the application record, inclusive of the affidavits. Considering my reasoning above regarding Item 1 and the fact that the maximum number of units have already been allowed under this Item, the units claimed under Item 7 will not be allowed. Furthermore, Item 7 is found in Tariff B under sub-heading “C. Discovery and Examinations” that oversees the communication/discovery of documents as per Rules 222 and ss of the Federal Courts Rules.

I cannot find any proof of discovery of documents in this matter within the meaning of these Rules (see: Corporation Xprima.com c IXL Marketing Inc., 2011 CF 624 and Nesathurai v Canada, 2008 FC 1014 ) . [ 40 ] Under Item 8, Lundbeck has submitted seven claims at five units each for the preparation for cross-examinations on the affidavits of their witnesses and expert-witnesses, namely Christian Kjerulf-Jensen, Dr. Stuart Anthony Montgomery, Dr. Klaus Peter Bøgesø, Dr. Brian J. Clark, Dr. Klaus Gundertofte, Peter J. Davies and Dr. Stephen G. Davies .

In their representations, Cobalt suggests that two units should be allowed per request. Although I consider that the cross-examination of one’s own client does necessitate preparation and an active role on behalf of counsel, I am not convinced that the maximum number of units claimed is warranted. Three units will be allowed under Item 8 for each of Lundbeck’s affiants. [ 41 ] The maximum number of units is further claimed under Item 8 for the preparation of the cross-examinations of Cobalt’s expert witnesses Dr. Peter T. Kissinger, Dr. Roger Newton, Dr. Robert Cooke and Dr. Athanasios Stengos.

Counsel for Cobalt argues in her Written Representations that two units should be allowed per affiant. I disagree. The preparation for the cross-examinations of the opposing party’s expert witnesses requires more effort than the preparation of one’s own witness.

Being an expert in law does not make a lawyer an expert in science and in consideration of the relative complexity of the scientific arguments made, four units will be allowed for each of Cobalt’s affiants. [ 42 ] With respect to Item 9 (attendance on examination per hour), and consistent with my reasoning on Item 8, I allow one unit per hour for the cross-examinations of Lundbeck’s witnesses and expert-witnesses and two units for the cross-examinations of Cobalt’s expert witnesses when it is unambiguous that the cross-examinations were attended and/or conducted by counsel. [ 43 ] In the course of her arguments, counsel for Cobalt confirmed the number of hours the cross-examinations of Dr.

Stuart Anthony Montgomery, Dr. Brian J. Clark, Peter J. Davies, Dr. Stephen G. Davies and Dr. Roger Newton lasted, to be the same as the ones claimed in the Bill of Costs. The number of hours for those will be allowed as claimed. On the other hand, arguments were raised regarding the exact duration of the cross-examinations of Christian Kjerulf-Jensen, Dr. Klaus Peter Bøgesø, Dr. Klaus Guntertofte, Dr. Peter T. Kissinger, Dr. Robert Cooke and Dr. Athanasios Stengos.

Lundbeck claims in its Bill of Costs seven hours in duration for the cross-examination of Christian Kjerulf-Jensen on July 3, 2008 while Cobalt’s counsel in a chart attached to her representations suggests that it lasted five hours (9:30 to 14:30). The Leblanc Affidavit merely affirms that Christian Kjerulf-Jensen’s cross-examination took place in London, U.K. between July 4, 2008 and July 22, 2008. Additional information that could have helped clarify the exact duration is not made available in the materials submitted. With regards to the cross-examination of Dr.

Klaus Peter Bøgesø, Lundbeck claims in its Bill of Costs five hours on July 14, 2008 while Cobalt’s counsel specifies in her representations that the cross-examination took place on that day from 9:30 to 13:00. The Leblanc Affidavit affirms that Dr. Bøgesø was cross-examined by Cobalt in London, U.K. on July 14, 2008 with no further specifications. T he cross-examination of Dr. Klaus Guntertofte is claimed by Lundbeck in its Bill of Costs to have lasted seven hours on July 22, 2008 while Cobalt’s counsel specifies in her representations that the cross-examination took place on that day from 9:10 to 12:08.

The Leblanc Affidavit affirms that Dr. Guntertofte was cross-examined in London, U.K. on July 22, 2008 with no further precision concerning time. T he Leblanc Affidavit reports that the cross-examination of Dr. Peter T. Kissinger, claimed by Lundbeck in its Bill of Costs to have lasted seven hours, took place in Indianapolis, USA on June 11, 2008 with no further precision. Cobalt’s counsel in the chart attached to her representations states that the cross-examination took place on that day from 10:00 to 15:49. With regards to the cross-examination of Dr.

Robert Cooke, Lundbeck claims in its Bill of Costs seven hours on August 26, 2008 while Cobalt’s counsel specifies in her representations that the cross-examination took place on that day from 9:15 to 12:15. The Leblanc Affidavit affirms that Dr. Cooke was cross-examined in Toronto on August 26, 2008 with no further specifications. T he cross- examination of Dr. Athanasios Stengos is claimed by Lundbeck in its Bill of Costs to have lasted seven hours on October 8, 2008 while Cobalt’s counsel specifies in her representations that the cross-examination took place on that day from 9:44 to 13:22.

The Leblanc Affidavit affirms that Dr. Stengos was cross-examined in Toronto on October 8, 2008 with no further precision concerning time. [ 44 ] I note the discrepancies between the time frames provided in Lundbeck’s Bill of Costs and the chart attached to Cobalt’s representations regarding the duration of the cross-examinations of Christian Kjerulf-Jensen, Dr. Klaus Peter Bøgesø, Dr. Klaus Guntertofte, Dr. Peter T. Kissinger, Dr. Robert Cooke and Dr. Athanasios Stengos.

It is further noted that the Bill of Costs was not sworn in as an exhibit to the Leblanc Affidavit and that the duration of the above noted cross-examinations do not form part of his Affidavit. Similarly, the chart attached to Cobalt’s representations was not introduced in evidence via an affidavit but by the solicitor appearing on the assessment.

I see the role of the assessment officer, while faced with less than exhaustive proof, and as real services had been provided, to ensure that the successful party is not denied reasonable indemnification while the unsuccessful litigant is not burdened with unreasonable costs. However, parties need to provide sufficient evidence, and not only rely on the discretion and experience of the assessment officer to reach a reasonable conclusion. In the case at bar, consideration needs to be given to the fact that the information provided by both parties was not corroborated by affidavit.

Counsel for Cobalt submitted specifics regarding the duration of all cross-examinations in both her written representations and oral arguments, agreeing on five proposed durations by Lundbeck and disagreeing on six. The substantiations provided by counsel for Cobalt indeed undermine the credibility of the claims found in the Bill of Costs under Item 9. Gauging the credibility of the information before me, I note that the numbers provided in the Bill of Costs do not

originate from a disinterested third-party and that said data were rather determined within the law firm while the Leblanc Affidavit and representations made by Lundbeck’s counsel did not present the underlying needed information. I therefore consider that the document prepared by counsel for Cobalt coupled with her unchallenged representations before me establish and serve to prove the duration of the cross-examinations of Christian Kjerulf-Jensen, Dr. Klaus Peter Bøgesø, Dr. Klaus Guntertofte, Dr. Peter T. Kissinger, Dr. Robert Cooke and Dr. Athanasios Stengos.

In consideration of the above, the durations of the cross-examinations provided by Cobalt will serve to multiply the number of units previously awarded. [ 45 ] Lundbeck claims six units for the preparation for the pre-hearing conference (Item 10) held on November 3, 2008. In response, counsel for Cobalt contends that a total of three units should be allowed for the preparation with only one unit allowed towards this Court file as the teleconference encompassed three files: T-372-07, T-991-07 and T-1395-07.

From my reading of the Abstract of Hearing for that day, I note that the discussions between the parties and the Court were about the consolidation of the three files. In the Law of Costs (2nd edition, Volume 1, 44th rel. 2014 at par 209-5), Orkin points out that the Court may apportion costs against several parties, but the assessment officer should avoid doing so as far as possible. In Milliken & Co. v Interface Flooring Systems (Canada) Inc., 2003 FC 1258 , the assessment officer mentions at paragraph 10 that: “The Rules and Tariff do not use the term "apportionment", but I think that Rule 400(1) and 6(

a) likely and collectively allow for that concept”. He further notes at paragraph 33 that: “As noted above, the apportionment of costs as an approach in a bill of costs, to address work done relative to various awards of costs, is acceptable, but I must keep in mind that these awards were made independent of one another. That is, I am not necessarily bound to apply apportionment”. Taking into account the specifics of this matter, I consider that it is indicated that apportionment of costs be applied regarding the services covered under Items 10 and 11 of Tariff B.

Consequently, and having not been informed that the discussions of November 3, 2008 required significant preparation or were of a particular complexity, three units will be allowed and divided by three. As a result, one unit will be allowed under Item 10 in this Court file. Item 11 (attendance at conference) for the teleconference held on November 3, 2008 will be allowed two units divided by three, multiplied by its duration (0.5 hour) for a total of 0.33 unit/hour. [ 46 ] Five units are demanded under Item 13(

a) for counsel fee concerning preparation for trial. With no further arguments, counsel for Cobalt indicates in her representations that two units should be allowed. As discussed previously, Lundbeck’s counsel dealt at hearing with similar issues in two other files. However, I am of the opinion that they still had to prepare for the issues raised by Cobalt in this file, this within a very short timeframe from the other files and, although this was not the most complex of patent cases, they had to ready themselves for the hearing on December 16, 2008. Four units will therefore be allowed.

Under Item 13(b), Lundbeck claimed 15 units (3 units X 5 days) for the preparation for trial, per day in Court after the first day. Counsel for Cobalt contends that the hearing lasted three days, not five and therefore, one unit for each of the two days should be allowed. Under Column III of Tariff B, the range for this Item is 2-3 units.

As mentioned above, the hearing in this Court file lasted three days, not five and considering the reasoning in this paragraph and the fact that the hearing did not require the preparation of any witnesses, the two days preparation will be multiplied by two units. [ 47 ] In its Bill of Costs, Lundbeck claims under Item 14(a) (counsel fee per hour in Court) 63 units/hours while counsel for Cobalt contends that 42 units/hours should be allowed. Both parties agree on the number of hours in Court but disagree on the number of units.

The available range of units under this Item is fairly narrow (2-3) and considering the complexity of patent proceeding and the legal and scientific questions raised along with the required amount of work for counsel at hearing, allowing two units per hour does not seem appropriate. The sixty-three units claimed will be allowed. [ 48 ] Fifty-five units are claimed for travel by counsel to attend examinations in London, U.K., Indianapolis, U.S.A. Ottawa and Toronto (11 cross-examinations in total).

As discussed by counsel for Cobalt in her Written Representations, explicit directions from the Court must be provided for Item 24 to be recoverable. In accordance with the decisions in Abbott (supra) and Merck (supra) , the units claimed will not be allowed as the wording of Item 24 calls for explicit directions from the Court and the fact that I cannot locate in the Court file, nor was I referred to any direction regarding travel. [ 49 ] Regarding the claim made under Item 26 (assessment of costs), Cobalt’s counsel contends that two units should be allowed while Lundbeck claims the maximum number of units.

I hold a different view from counsel for Cobalt as I believe that the work performed by Lundbeck’s counsel on this assessment of costs warrants more than two units. Before presenting themselves for the hearing of the costs assessment, counsel filed the Bill of Costs, the Affidavit of Christian Leblanc, attended his cross-examination, as well as filed Written Representations in Reply along with a Book of Authorities.

Five units will therefore be allowed under Item 26. [ 50 ] The units claimed under Item 25 (services after judgement) and Item 27 (such other services as may be allowed by the assessment officer) for the requisition for hearing, are not contested, considered reasonable and will be allowed as claimed. V. Disbursements A. Expert Fees

(1) Stuart A. Montgomery [ 51 ] As per arguments at the hearing of the costs assessment, the Amended Bill of Costs shows a claim of $46,145.00 for the services of Professor Stewart A. Montgomery MD. This amount varies from the evidence in the Leblanc Affidavit where the amount of $61,307.04 is being claimed. [ 52 ] In response to this claim, counsel for Cobalt refers to the legal test for allowing expert fees as disbursements found at paragraph 81 of the decision in AlliedSignal Inc. v DuPont Canada Inc. , [ 1998] F.C.J. No. 625 :

(1) The hiring of an expert must, in the circumstances existing at the time, be prudent and reasonable representation of the client;

(2) The hiring of an expert must not constitute a blank cheque for an award;

(3) What reliance was placed on the expert's testimony by the trial judge? [53] Counsel for Cobalt contends in her Written Representations that the Court’s Reasons for Order of February 12, 2009 do notmake any reference to Stuart A. Montgomery while his fees and disbursements are the highest of all experts claimed by Lundbeck.Referring to Northeast Marine Services Ltd. v Atlantic Pilotage Authority, [1994] F.C.J. No. 1294 (Northeast Marine), she contends thatthe costs claimed should be reduced considering that no information as to hourly rate or number of hours worked were provided on theinvoices.

As per Janssen-Ortho Inc. v Novopharm Inc., 2006 FC 1333 (Janssen-Ortho), she argues that “expert fees for appearancesshould be charged at the lesser of fees actually charged and those daily fees of senior counsel, and that fees for preparation should becapped at one half that amount”. In light of that decision, she further submits that the Court “has observed that expert fees have becomeextravagant and thus while a party is free to engage a person for expert services and pay whatever fee is negotiated, that fee should notbecome simply allowable on an assessment”.

As per Apotex Inc. v Syntex Pharmaceuticals International Ltd., (FC),[1999] F.C.J. No. 1465 (Apotex) and Janssen-Ortho (supra), she contends that it is a long-standing principle that the losing party isrequired to indemnify the winning party only for the reasonable expenses of litigation.

Counsel for Cobalt argues that because nospecific evidence has been provided regarding Dr Montgomery, his hourly rate should be benchmarked to that of Lundbeck’s mostreasonable expert witness (Peter Davies) for a total amount payable of $2,400 considering the only hours documented that canunequivocally be linked to his preparing to give evidence or giving evidence in the Cobalt file are the hours worked on July 3 and 4,2008. [54] Regarding the invoices substantiating Dr Montgomery’s claim, counsel for Cobalt contends that Invoice No.1769 should bedisregarded as Lundbeck did not provide “payment request” documents as well as currency conversion or proof that it was ever chargedto Lundbeck or paid by its counsel as only appears on the invoice, an inscription dividing the total amount in three parts between threedifferent docket numbers.

She further contends that no evidence of actual payment made from a bank, like for the two other invoices, hasbeen submitted. On this subject, she argues that the documentation exists as it was submitted for some invoices while for others there isno proof that the invoices have ever been paid. With regard to that same invoice, it is claimed that there is no indication that it relates toCobalt as the work itemized on this invoice relates to Mylan and Apotex for work done between July and October 2007 and thatLundbeck did not serve and file its evidence in the Cobalt file until October 2007.

From Cobalt’s point of view, it is submitted that if DrMontgomery worked on the three files between July and October and in consideration of the filing of his affidavits in the two othermatters, “he would have done the lion’s share of his work between July and September, when the first two affidavits were filed”. It isfurther contended that the claim of $46,145 is a simple addition of one third of two invoices (Nos. 1769 and 1851) and 40% of InvoiceNo.1860.

With regards to the disbursements charged by Dr Montgomery, counsel claims that they should be disallowed considering thathe was only cross-examined once, in London where he resides and that nothing concerning the Cobalt file took place in Toronto,Montreal or Paris and that the other witnesses mentioned on the invoices were testifying either in the Mylan or Apotex files.

On thesubject of the other files involved, counsel for Cobalt argues in her Written Representations that Lundbeck did not take intoconsideration the fact that by the time Dr Montgomery swore his affidavit and appeared for cross-examination in the Cobalt file, “he wasdoing so for the third time and recycling all of the same points he had already made in the Mylan and Apotex files”. It is further claimedthat Lundbeck did not provide any evidence on the proportion of the fees and disbursements that have already been recovered fromApotex or Mylan.

It is Cobalt’s position that only portions of invoices Nos. 1851 and 1860 should be considered as they specificallyrelate to Cobalt. Regarding the travel expenses claimed i.e. trains, taxis, airfare etc., it is contended that there is no information on theinvoices specifying to which file or to which meeting they relate to and nothing can be taken from the invoices that relate specifically toCobalt or whether they have already been recovered from Apotex of Mylan. It is submitted that Lundbeck should have properlydocumented the three files expenses and requested from Dr Montgomery more detailed invoices.

Regarding Invoice No. 1860 and theissue whether amounts expended by a witness in order to assist counsel with opposing cross-examinations are recoverable, counsel forCobalt relies on two cases to submit that these amounts are not recoverable (Aerlinte Eireann Teoranta v Canada, [1993] F.C.J.

No.1462 at paragraph 22 and Janssen-Ortho (supra) at paragraph 25. [55] In reply, counsel for Lundbeck contends in his Written Representations that as per Fournier Pharma Inc. v Canada (Ministerof Health), 2009 FC 1004 and Pfizer Canada Inc. v Canada (Minister of Health), 2010 FC 1238 (Pfizer), the work of experts in PM(NOC) proceedings is fully recoverable with regard to their assistance to counsel in case preparation in addition to the work on theirreports and oral testimony, as long as such work remains necessary and reasonable in the circumstances.

On that point, counsel furtherreferred during the assessment hearing to paragraph 29 of Biovail Corporation v Canada (Minister of National Health and Welfare) et al.2007 FC 767 and Adir v Apotex Inc., 2008 FC 1070, para. 21 (Adir). As per MK Plastics Corp. v Plasticair Inc., 2007 FC 1029 (MKPlastics) and Sanofi-Aventis Canada Inc. v Pharmascience Inc., 2008 FC 782 (Sanofi-Aventis).

It was further argued that “the test fordisbursements for experts is not function of hindsight, but whether at the time the expenses were incurred, it was prudent and reasonableboth in terms of leading and responding to expert evidence, and providing technical assistance for counsel’s preparation and conduct”.With regard to the Court’s rejection or silence regarding the evidence of an expert witness, it is contended that there should be noautomatic reduction of the account as per Canada v Meyer, [1988] F.C.J. No. 482 and Carruthers v Canada, [1982] F.C.J.

No. 235.Counsel for Lundbeck in his Written Representations contends that Dr Montgomery resides in the UK and that the affidavit he swore isrelated to the treatment of depression, its diagnosis, the mode of action of various antidepressants, particularly escitalopram and itssuperiority compared to other drugs. It is argued that whether escitalopram was superior to citalopram was initially raised by Cobalt withregard to the validity of the selection patent. In the eventuality that the Court would have concluded that the Canadian Patent No.1,339,452 was a selection patent, it is argued by Lundbeck that Dr.

Montgomery’s expert evidence would have served to prove thesuperiority of escitalopram. Despite the fact that the Court concluded that the No. 1,339,452 Patent was not a selection patent and did notaddress Dr. Montgomery’s affidavit in his decision, it is argued that it was prudent and reasonable to incur expenses for his services atthe time the expenses were made. It is further mentioned in counsel’s representations that Dr Montgomery was cross-examined byCobalt in London, UK, on July 4, 2008 and assisted counsel in reviewing prior art documents, the affidavits filed by Cobalt, particularlyDr.

Robert Cooke’s for whom he attended cross-examination in Toronto on August 26, 2008. At hearing, counsel argued that theinvoices were already reduced from $61,307 to $46,145 to be a fraction of his total claim and to only reimburse $2,400 would beunreasonable and not supported by the jurisprudence. It is further argued that the qualifications of Dr. Montgomery cannot be comparedto the expertise given by Peter Davies, a former examiner for the Canadian Patent Office.

Referring to the invoices submitted in supportof the disbursements, counsel for Lundbeck argues that Invoice No. 1769 as submitted constitutes sufficient proof that the amount of$5,235.19 CAN has been paid to Dr. Montgomery for work done until October 2007, which is the date his affidavit was filed. Referringto Invoice No. 1851, counsel contends that it was reasonable to divide it in three equal parts as it clearly refers to Dr. Montgomerydealing with the Cobalt file on July 3 and 4, for a third of the time invoiced. With regard to Dr. Montgomery dealing with the Cobalt

matter in Toronto, it is submitted that Dr. Montgomery was needed in Toronto during the cross-examination of Dr. Cooke on August 26,2008. Regarding Invoice No.1860, counsel for Lundbeck submits that four of the ten days invoiced have been charged to this file as theyconcern the preparation of Dr. Cooke’s cross-examination that took place in Toronto August 24 to 27, 2008. [56] As argued by counsel for Lundbeck at the hearing of the assessment and considering that it was not proven otherwise, I haveno reason to doubt that Dr. Montgomery is a worldwide expert in clinical psychiatry.

The pertinence of his affidavit was tied to theCourt’s conclusion regarding the Canadian Patent No. 1,339,452, being a selection patent or not. Contrary to the decision in NortheastMarine (supra), in which it was stated that the lack of precise information made it impossible for the client to know what he was payingfor, I consider that the work performed by Dr. Montgomery was unambiguous and costs cannot be reduced on this argument alone.Furthermore, considering the Court’s findings, I understand that it was necessary for Lundbeck to prepare Dr. Montgomery’s expertise atthe time it did.

Over the years, the jurisprudence on assessment of costs made clear that the reasonableness and necessity for the need ofan expert cannot be determined with the benefit of hindsight (Sanofi-Aventis (supra) and MK Plastics (supra)). In light of the evidencebefore me, I am satisfied that it was reasonable for Lundbeck to have filed the affidavit of Dr. Montgomery. I appreciate that Dr.Montgomery filed affidavits in Court files T-1395-07, T-372-07 and T-991-07 and billed Lundbeck’s counsel making no clear distinctionbetween each file.

Looking over the invoices to support the reimbursement of his expenses, I further note that the invoices submitted fallshort of giving specifications regarding the number of hours worked along with specifics regarding the work performed but for sweepingstatements such as: “review of documents meetings re affidavit signatures July-October 2007”. However, taking into consideration theglobal amounts claimed for Dr. Montgomery’s work, minus the expenses along with his consultancy honorarium as per Invoice No.1769(£1500 per day), I can determine a probable number of hours worked along with the hourly rate.

On that subject, counsel for Cobaltsuggests that Dr. Montgomery’s hourly rate be benchmarked to Lundbeck’s most reasonable expert witness, Mr. Peter Davies($200/hour). I do not believe that experts’ fees can be benchmarked to the “most reasonable” or most inexpensive expert witness on file.Experts on a matter are not all called to testify on the same issues and can compare with difficulty. From the uncontested evidence, I notethat Dr. Montgomery is a worldwide expert in clinical psychiatry while Mr.

Peter Davies, as per the Court’s Reasons for Order atparagraph 147 “spent 37 years with the Canadian Patent Office culminating in his appointment as Chairman of the Patent Appeal Board”.In consideration of their entirely different fields of expertise, comparing their work and fees does not help in assessing the reasonablenessof Dr. Montgomery’s fees. I am therefore not ready to reduce his costs on that basis. To assess experts fees in this Court file, acomparison of experts with similar backgrounds along with the fees allowed for their expert testimony in different Court cases wouldhave been of assistance.

From the evidence on file, I further note that the hourly rate for Dr. Stephen Davies, the second most expensiveexpert called by Lundbeck to be £300 per hour. Dr. Davies, as per the Court’s Reasons for Order is among other things the Chairman ofChemistry at the University of Oxford. As I am not referred to hourly rates for work of other experts with similar backgrounds, I am leftto draw a parallel between these experts’ rates. Counsel for Cobalt also suggested as per Janssen-Ortho (supra), that Dr.

Montgomery’shourly rate should not be simply allowed but specifically capped to senior counsel’s fees attending at trial.

This approach consisting ofnot paying experts a higher rate than the senior counsel on file has been applied once in Janssen-Ortho and although it might be quitetempting, the variation in legal fees across the country needs to be considered as this approach may be seen as disproportionatelybenefiting parties represented by counsel in larger municipalities and it should be applied with careful consideration. [57] In Apotex (supra), the Court stated that “the costs for which a defendant will be required to indemnify a losing party are thereasonable expenses of the litigation” and in Allied Signal Inc. v Dupont Canada Inc., (FC), 81 CPR (3d) 129) andJanssen-Ortho (supra), the Court added that “It might be reasonable for a party to put forward the best expert but unreasonable to passalong all the costs to the unsuccessful party”.

On account of these decisions, I will now attempt to review each invoice. Invoice No.1769refers to the “review of documents meetings re affidavit signatures July – October 2007”. Dr. Montgomery’s affidavit was filed in thisCourt file in October 2007 while as per representations; he filed affidavits in the two other files in July and September 2007. Asmentioned earlier in these Reasons, the Court did not apportion costs between the three files and there was no request for directions tothe assessment officer submitted to the Court on either file.

On apportionment of costs among similar proceedings addressing the samepharmaceutical, the Court in Eli Lilly Canada Inc. v Novopharm, 2006 FC 781 held that experts cannot charge twice for the same workand costs cannot be recovered several times in each different file. In the case at bar, it is not in evidence before me that Lundbeck hascharged multiple times for the work of Dr. Montgomery or that costs have already been recovered fully in the two other files.

Aconclusion of the sort would lead me to put in doubt the evidence and representations presented by counsel for Lundbeck and the affiantLeblanc, both solicitors and officers of the Court (Section 11(3) of the Federal Courts Act). As per Cobalt’s arguments and Leblanc’scross-examination, I am prepared to infer that the affidavits filed in each file might have been quite similar especially when one considersthat the three matters before the Court were so akin that the Court decided to hear them concomitantly and deliver his decision on thethree files in one set of Reasons for Order.

However, having not been referred to the affidavits in the two other files but considering themanner in which the files proceeded, I accept that the costs of the work performed on the affidavits filed by the expert Montgomery afew months apart form each other in e

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