Pharmascience Inc. v. Canada (Minister Of Health)

Pharmascience Inc. v. Canada (Minister Of Health) Court (s) Database Federal Court of Appeal Decisions Date 2003-09-15 Neutral citation 2003 FCA 333 File numbers A-696-02 Notes Reported Decision Decision Content Date: 20030915 Docket: A-696-02 Citation: 2003 FCA 333 CORAM: ROTHSTEIN J.A. SEXTON J.A. SHARLOW J.A. BETWEEN: PHARMASCIENCE INC. Appellant (Moving party) and THE MINISTER OF HEALTH Respondent (Respondent) and ABBOTT LABORATORIES and ABBOTT LABORATORIES LIMITED Respondents (Respondents) Heard at Ottawa, Ontario on September 3, 2003. Judgment delivered at Ottawa, Ontario on September 15, 2003. REASONS FOR JUDGMENT BY: SHARLOW J.A. CONCURRED IN BY: ROTHSTEIN J.A. SEXTON J.A. Date: 20030915 Docket: A-696-02 Citation: 2003 FCA 333 CORAM: ROTHSTEIN J.A. SEXTON J.A. SHARLOW J.A. BETWEEN: PHARMASCIENCE INC. Appellant (Moving party) and THE MINISTER OF HEALTH Respondent (Respondent) and ABBOTT LABORATORIES and ABBOTT LABORATORIES LIMITED Respondents (Respondents) REASONS FOR JUDGMENT SHARLOW J.A. [1] This is an appeal of two orders of the Federal Court. The first order, dated October 25, 2002, required the appellant Pharmascience Inc. to produce certain documents to the respondents Abbott Laboratories and Abbott Laboratories Ltd. (collectively, "Abbott"). The second order, dated December 13, 2002, dismissed a motion by Pharmascience for an extension of time to appeal the October 25 order. [2] The December 13 order also dismissed a motion by Pharmascience for reconsideration and correction, under Rule 397 of the Federal Court Rules, 1998, SOR/98-106, of the October 25 order. The dismissal of the Rule 397 motion has not been appealed. [3] Unless the December 13 order is reversed, Pharmascience is out of time to appeal the October 25 order. Therefore, it is appropriate to deal first with the appeal of the order dismissing the motion for an extension of time to appeal the October 25 order. [4] The October 25 order is an interlocutory judgment. Pursuant to subsection 27(2) of the Federal Court Act, R.S.C. 1985, c. F-27 (as it read at the relevant time), an appeal of an interlocutory judgment must be brought by filing a notice of appeal within ten days or such further time as the Trial Division may allow. [5] The decision to grant or refuse an extension of time to commence an appeal is discretionary. An appeal of such a decision cannot succeed unless the decision is based on a wrong principle, or sufficient weight has not been given to all relevant considerations: The Queen v. Reza, [1994] 2 S.C.R. 394. [6] In deciding whether or not to grant an extension of time to commence an appeal, the basic test is whether the interests of justice favour granting the extension. The factors to be considered are conveniently summarized in Karon Resources Inc. v. Canada (1993), 71 F.T.R. 232, [1994] 1 C.T.C. 307 (F.C.T.D.): (1) whether there is an arguable case on appeal, (2) whether there are special circumstances that justify the delay in commencing the appeal, (3) whether there was a continuing intention to appeal, (4) whether the delay has been excessive, and (5) whether the respondent will be prejudiced if the extension of time is granted. The weight to be given to each of these factors will vary with the circumstances. [7] The judge did not give written reasons for dismissing the motion for an extension of time, but in the order itself she indicates that she was presented with no evidence to satisfy the conditions in Karon Resources, and also that the filing of a timely reconsideration application under Rule 397 does not by itself justify a delay in filing a notice of appeal: Sivakumar v. Canada (Minister of Citizenship and Immigration) (1998), 150 F.T.R. 299 (T.D.). [8] It is argued for Pharmascience that the judge erred in relying on Karon Resources to dismiss the motion for an extension of time, because Pharmascience, unlike the would-be appellant in Karon Resources, filed an application for an extension of time with the Rule 397 reconsideration motion, within 10 days of the order sought to be reconsidered or appealed. [9] I infer from the order that the judge properly relied on Karon Resources only as authority for the relevant legal principles. In that context, the judge was correct to say that in an application for an extension of time, it is incumbent on the applicant to provide evidence as to each of the relevant factors. [10] It is reasonable to conclude from the record that Pharmascience had an arguable case on appeal, that it had a continuing intention to appeal, and that its delay was not excessive. That much is apparent on the face of the motion filed by Pharmascience. I can discern from the record no evidence as to whether the respondent Abbott is prejudiced by the delay in commencing the appeal. [11] However, it seems to me that the factor weighing most heavily against the motion for an extension of time is whether the delay in commencing the appeal was justified. It appears that the only proposed explanation was that Pharmascience considered it more efficient to file its Rule 397 motion first, because if that motion had succeeded no appeal would be needed. [12] The difficulty with the strategy adopted by Pharmascience is the jurisprudence of the Federal Court that an outstanding Rule 397 motion generally is not a sufficient justification for delaying the commencement of an appeal. I agree with the following comments from paragraph 4 of Sivakumar (cited above): The defendants appear to have thought that they could seek reconsideration first and would appeal only if they were unsuccessful. They say that duplication of proceedings should be avoided and that it would be wasteful of resources to take both reconsideration and appeal proceedings concurrently. This argument is premised, incorrectly in my view, on the proposition that reconsideration and appeal are interchangeable forms of relief. They are not. Reconsideration deals with inadvertent mistakes or omissions. An appeal involves acceptance of the lower court judgment as is but disagreement with its conclusion. Litigants must decide which recourse to seek. Where they are in doubt, it is likely that reconsideration will not be the appropriate recourse. In any event, a notice of appeal should be filed in a timely manner. Except in the most unusual circumstances, the filing of a reconsideration application does not justify a delay in filing a notice of appeal. [13] It is argued for Pharmascience that there is a conflict in the Federal Court jurisprudence on this point, and that according to Montague Industries Inc. v. Canmec Ltée, [2001] F.C.J. No. 217 (T.D.), where an order appears on its face to disclose an error that may be corrected under Rule 397, a party must proceed under that rule rather than by an appeal. I do not agree with that interpretation of the Montague case. Montague was an appeal from the order of a prothonotary. One of the grounds of appeal was that the prothonotary had not dealt with one of the many motions. The judge on appeal concluded from the record that this was most likely an accidental omission. On that basis, he exercised his discretion to decline to deal with the appeal on that point until an attempt had been made to correct the order under Rule 397, and he granted an extension of time to permit the filing of a Rule 397 motion. He did not say, or imply, that an appellant must not or should not appeal an order without first making a Rule 397 motion. [14] Pharmascience also argued that there is jurisprudence from this Court indicating that a Rule 397 motion will not be entertained while an appeal is outstanding. No such jurisprudence was cited in the written material submitted by Pharmascience. At the hearing, however, reference was made to Étienne v. Canada (1993), 164 N.R. 318 (F.C.A.). That case dealt with former Rule 1733, the predecessor to Rule 399, not Rule 397. Rule 399 permits an order to be set aside or varied because of a matter that arises or is discovered after the making of the order, or where the order was obtained by fraud. In Étienne, this Court held that it was inappropriate for a trial judge to deal with an application under former Rule 1733 in respect of his own judgment while there was an appeal outstanding. [15] The situation presented in Étienne must be distinguished from an application under Rule 397 which, properly used, will ensure that an order correctly reflects the intention of the judge making it and deals with all of the issues that should have been dealt with. In my view, a motion for correction under Rule 397 should be dealt with despite any outstanding appeal. In that regard, I agree with Rouleau J. who said this in Metaxas v. Galaxias (1988), 24 F.T.R. 241 (T.D.): ... in my view, where an Order of this Court does not reflect the intent of the written reasons therefor due to an oversight or omission, it is in the interests of justice that the Order be amended to reflect the decision of the presiding judge. [16] There are cases (not from this Court) in which the contrary view is expressed. For example, in Merck Frosst Canada Inc. v. Canada (Minister of Health), [2001] F.C.J. No. 15 (T.D.), a judge concluded that he had no jurisdiction to deal with a Rule 397 motion once an appeal was filed, even though the motion was well founded and he would have corrected his order if he had the requisite jurisdiction. It is not clear whether the Metaxas case was cited to him. In any event, it is my view that the judge could have dealt with the Rule 397 motion in the circumstances of that case. If he had granted the motion, as he was apparently inclined to do, the appeal might have been rendered moot, in which case it could have been discontinued. [17] It is argued for Pharmascience that it is wasteful to require an appeal to be filed in circumstances where an order may be subject to correction under Rule 397. It is true that if a party simultaneously follows both routes, some resources might be wasted. However, such duplication should occur only rarely, in circumstances where a party believes an order is wrong but is honestly uncertain whether the error is a matter for appeal or for correction under Rule 397. It could be even more wasteful to establish a principle that a party may delay filing an appeal simply by making a motion for correction under Rule 397. [18] Pharmascience submits that this is a case of honest uncertainty as to the nature of the error in the October 25 order. Upon receiving the order, Pharmascience concluded that it was internally inconsistent and did not express the true intention of the judge. It was only after the disposition of the Rule 397 motion that Pharmascience learned that the judge did not accept that there was an inconsistency or that the order did not express her true intention. Counsel for Pharmascience argues that in these circumstances, it is unfair to Pharmascience to hold that its delay in commencing the appeal was not justified. [19] It is an open question whether an ambiguity or inconsistency in an order might constitute the kind of unusual circumstances contemplated in Sivakumar (cited above) that could justify a delay in filing an appeal until after the disposition of a Rule 397 motion. However, I do not consider it necessary to express an opinion on that point. I do not accept that the order is ambiguous, or that Pharmascience could reasonably have believed that it did not express the judge's true intention. [20] For the above reasons, the appeal of the December 13 order should be dismissed. [21] As that order dismissed the motion for an extension of time to appeal the October 25 order, Pharmascience is out of time to appeal the October 25 order. That is a sufficient basis upon which to dismiss the appeal of the October 25 order. However, for reasons that will become apparent, it seems to me appropriate to comment on the merits of the appeal. [22] The underlying proceeding in the Federal Court is an application by Abbott under the Patented Medicines (Notice of Compliance) Regulations, SOR 93-133, for an order prohibiting the Minister from issuing a notice of compliance to Pharmascience for a proposed generic version of clarithromycin. The application followed, as it must, the receipt by Abbott of a "notice of allegation" in which Pharmascience asserts that the process by which its drug would be manufactured would not infringe Abbott's Canadian Patent No. 2,261,732. That is a process patent in respect of a clarithromycin product manufactured and sold by Abbott. [23] Pharmascience has filed an abbreviated new drug submission in respect of its proposed drug, as it is required to do, pursuant to the Food and Drug Regulations, C.R.C. 1978, c. 870. Pharmascience intends to use the facilities of a third party drug manufacturer, Teva Pharmaceutical Industries Ltd., to produce its proposed drug. Certain particulars of the manufacturing process are found in a "master drug file" that Teva has filed with the Minister. The abbreviated new drug submission filed by Pharmascience incorporates that information by reference. Such cross-referencing is not expressly contemplated by the Food and Drug Regulations, but is permitted pursuant to the established administrative practice of the Minister. [24] In the course of the prohibition proceedings, Abbott made a motion pursuant to Regulation 6(7) of the Patented Medicines (Notice of Compliance) Regulations for an order for disclosure of certain parts of the Pharmascience abbreviated new drug submission, including information from Teva's master drug file that is incorporated by reference into the abbreviated new drug submission. [25] The relevant part of Regulation 6(7) reads as follows: 6(7) On the motion of a first person, the court may, at any time during a proceeding, (a) order a second person to produce any portion of the submission for a notice of compliance filed by the second person relevant to the disposition of the issues in the proceeding and may order that any change made to the portion during the proceeding be produced by the second person as it is made ... 6(7) Sur requête de la première personne, le tribunal peut, au cours de l'instance : a) ordonner à la seconde personne de produire les extraits pertinents de la demande d'avis de conformité qu'elle a déposée et lui enjoindre de produire sans délai tout changement apporté à ces extraits au cours de l'instance ... [26] It is undisputed that, in the context of this case, the words "submission for a notice of compliance filed by the second person" (la demande d'avis de conformité qu'elle a déposée) refer to the abbreviated new drug submission filed by Pharmascience in respect of its proposed clarithromycin product. [27] Pharmascience opposed the motion for disclosure in relation to the Teva information on the basis that Regulation 6(7), properly interpreted, permits only an order for disclosure of information physically contained in the abbreviated new drug submission filed by Pharmascience, which necessarily excludes information from material filed by Teva that is merely incorporated by reference into Pharmascience's abbreviated new drug submission. Pharmascience argued that any other interpretation should be rejected because it would lead to an absurdity, the absurdity being that Pharmascience could be ordered to produce information that it might not have and might not be able to get. The judge rejected that argument, agreeing with Abbott that subsection 6(7) permits an order for disclosure of information from a drug master file that is cross-referenced or incorporated by reference into the abbreviated new drug submission filed by Pharmascience because, as a matter of law, cross-referenced information is part of what the second person has "filed" as part of its abbreviated new drug submission. [28] It is argued for Abbott that this appeal should not be entertained because it is moot. Counsel for Abbott advised the Court in its memorandum of fact and law, and again at the hearing, that Pharmascience had in fact complied with the order under appeal. [29] I agree that the appeal is moot, but in my view this is a case in which the appeal should be dealt with despite its mootness. I reach that conclusion for three reasons. First, the appeal has been well and fully argued. Second, there is some risk that the order may have certain collateral consequences in the prohibition proceedings. Third, and most importantly, the debate as to the scope of Regulation 6(7) that arose in this case has arisen in numerous other prohibition proceedings cases in the Federal Court, and interlocutory appeals in such proceedings are often impracticable because of time constraints. I turn now to the merits of the appeal. [30] I agree with the interpretation of Regulation 6(7) adopted by the judge. Details about the manufacturing process are an essential part of an abbreviated new drug submission. But for the administrative practice referred to above, Pharmascience would have been compelled to physically include the Teva information in its abbreviated new drug submission. The fact that the Minister permits suppliers like Teva to submit material separately and confidentially, and then permits generic manufacturers like Pharmascience to cross-reference the confidential material without necessarily having read it, has no legal significance under the Food and Drug Regulations. Information that is cross-referenced in that fashion is an integral part of the abbreviated new drug submission, whether or not the generic manufacturer has actual knowledge of the information. [31] Having said that, I agree with Pharmascience to a certain extent. If it is established by credible evidence that a generic manufacturer has filed an abbreviated new drug submission that includes cross-referenced third party information that the generic manufacturer does not have, that it has tried and failed to obtain, and that it has no legal right to obtain, it would be an error of law for a judge to order production of the cross-referenced information. That would not be because the information is outside the scope of Regulation 6(7), but because a party cannot be ordered to do something that it cannot do. However, even if there is such evidence, it would be open to a judge to order the generic manufacturer to use its best efforts to obtain the information, and to insist on a credible explanation if those best efforts fail. The absence of the third party information may or may not affect the outcome of the prohibition proceedings, depending on the facts of the case and the other evidence adduced. [32] In this case, there was no evidence before the judge that Pharmascience did not have the Teva information, or that Pharmascience had tried and failed to obtain the Teva information, or that it had no legal right to obtain the information. On the contrary, there was an affidavit from Dr. A.J. Liston, a chemist with many years experience as an official of Health Canada dealing with new drug submissions. He deposed that Pharmascience would have the Teva information or could get it from Teva. His affidavit was not contradicted, and he was not cross-examined. Faced with that record, the judge was clearly correct to order production of the Teva information that she considered relevant to the proceeding. [33] For these reasons, this appeal should be dismissed with costs. (s) "K. Sharlow" J.A. I agree "Marshall Rothstein" J.A. I agree "J. Edgar Sexton" J.A. FEDERAL COURT OF APPEAL NAMES OF COUNSEL AND SOLICITORS OF RECORD DOCKET: A-696-02 STYLE OF CAUSE: PHARMASCIENCE INC. v. THE MINISTER OF HEALTH ET AL PLACE OF HEARING: OTTAWA, ONTARIO DATE OF HEARING: SEPTEMBER 3, 2003 REASONS FOR JUDGMENT BY: SHARLOW J.A. CONCURRED IN BY: ROTHSTEIN J.A. SEXTON J.A. DATED: SEPTEMBER 15, 2003 APPEARANCES: Ms. Carol Hitchman Ms. Lilly Sormaz FOR THE APPELLANT Mr. Andrew J. Reddon FOR ABBOTT LABORATORIES AND Mr. Steven G. Mason ABBOTT LABORATORIES LIMITED No one appearing FOR THE MINISTER OF HEALTH SOLICITORS OF RECORD: Hitchman & Sprigings Toronto, Ontario FOR THE APPELLANT McCarthy Tétrault LLP FOR ABBOTT LABORATORIES AND Toronto, Ontario ABBOTT LABORATORIES LIMITED Morris Rosenberg Deputy Attorney General of Canada FOR THE MINISTER OF HEALTH