Date: 20010502
Docket: A-637-99
Neutral citation: 2001 FCA 137
CORAM: STONE J.A.
BETWEEN:
SYNTEX PHARMACEUTICALS INTERNATIONAL LIMITED and HOFFMAN-LA ROCHE LIMITED
Appellants
(Defendants)
- and -
APOTEX INC.
Respondent
(Plaintiff)
Heard at Ottawa, Ontario, Wednesday, May 2, 2001
Judgment delivered from the Bench at Ottawa, Wednesday, May 2, 2001
REASONS FOR JUDGMENT OF THE COURT BY: STONE J.A.
Date: 20010502
Docket: A-637-99
Neutral citation: 2001 FCA 137
CORAM: STONE J.A.
NOËL J.A.
EVANS J.A.
BETWEEN:
SYNTEX PHARMACEUTICALS INTERNATIONAL LIMITED and HOFFMAN-LA ROCHE LIMITED
Appellants
(Defendants)
- and -
APOTEX INC.
Respondent
(Plaintiff)
REASONS FOR JUDGMENT OF THE COURT
(Delivered from the Bench at Ottawa, on Wednesday, May 2, 2001)
[1] This is an appeal from an order of Reed J. dated September 23, 1999, directing the assessment officer to assess the respondent's costs at trial at the maximum end of columns V of the table to Tariff B, to allow counsel fees for two senior and one junior counsel, to allow double costs in accordance with Rule 420(1) of the Federal Court Rules, 1998 and to allow such disbursements as are indicated in her reasons for the order.
[2] The underlying action was brought by the respondent to impeach the appellants' patent on the basis of invalidity for obviousness and for a declaration of non-infringement. The appellants counterclaimed for infringement of the patent. The trial before Reed J. consumed 8 1\2 days of Court time. In the end, on April 23, 1999, she allowed the claim and dismissed the counterclaim, both with costs.
[3] It is common ground that the order below was discretionary in nature and as such it is not to be interfered with on appeal unless Reed J. failed to give sufficient weight to all relevant considerations or otherwise erred in law: Reza v. Canada, [1994] 2 S.C.R. 394. In our view, Reed J. enjoyed a singularly advantageous position as Motions Judge of having conducted the trial itself and, therefore, of being intimately familiar with the action from its outset. Accordingly, except for the award of double costs, we can find no basis for interfering with her exercise of discretion.
[4] Authority to award double costs is conferred by Rule 420(1), which reads:
420(1) Unless otherwise ordered by the Court, where a plaintiff makes a written offer to settle that is not revoked, and obtains a judgment as favourable or more favourable than the terms of the offer to settle, the plaintiff shall be entitled to party-and-party costs to the date of service of the offer and double such costs, excluding disbursements, after that date.
[5] Reed J. was of the view that an "offer to settle" within the meaning of the rule was made by the respondent in a letter of July 3, 1998, written "without prejudice" and addressed to the appellants' solicitors by the respondent's solicitors. After expressing the belief "that our client would be willing to settle this action", the respondent's solicitors wrote:
We are therefore prepared to recommend that Apotex discontinue the action on a without costs basis. The defendant will acknowledge that Apotex's formulation of an Naproxen SR tablets is not infringing and will consent to the Minister issuing Apotex its Notice of Compliance.
[6] The appellants found the "offer" to be unacceptable.
[7] Reed J. was of the view that the letter of July 3, 1998 constituted an "offer to settle" in the sense of Rule 420(1) in that it was treated as such by the appellants who, in rejecting it, referred to the letter of July 3, 1998 as containing an "offer".
[8] In our view, however, what Rule 420(1) requires is an "offer to settle" by a plaintiff, not something that might or might not be viewed as an offer to settle by the opposite party. The consequences under the rule of ill-advisedly rejecting an offer to settle are severe and, indeed, were intended to be severe so as to encourage settlement and put an end to litigation that is of dubious outcome. By the same token, in our view, an opposite party ought not to incur the risk of an award of double costs unless the "offer to settle" is such as is contemplated by the rule.
[9] In TWR Inc. v. Walbar of Canada Inc. (1992), 43 C.P.R. (3d) 449 (F.C.A.), in the course of giving directions to the assessment officer arising out of an appeal, Stone J.A. expressed the following views, at 456, with respect to the meaning of the phrase "offer of settlement made in writing" in former Rule 344(3)(g):
It seems to me that the rule requires a much more definite offer, that is, one which is normally capable of acceptance and which, if accepted, would bring the dispute between the parties to an end. The letter of July 17, 1979, is quite indefinite in that the amount Walbar was willing to pay for a licence was described as "a sum related to the estimated cost of litigating Canadian Patent 788,667", the patent in suit. Counsel for TRW described the letter of July 17, 1979, as amounting to no more than a proposal to negotiate a settlement rather than to a definite offer of settlement. I cannot disagree. I regard the letter as merely an attempt to sound out th opposite side on a possible basis for settlement. It cannot be viewed as an"offer of settlement" in the sense of the rule.
In our view, this reasoning applies with equal force to the provisions of Rule 420(1).
[10] If the generous costs advantage afforded by Rule 420(1) is to be available to a plaintiff, the offer to settle must be clear and unequivocal in the sense it leaves the opposite party to decide only whether to accept it or reject it. The letter of July 3, 1998 was nothing of the sort, but was merely an indication on the part of the respondent's solicitors that they were "prepared to recommend" a settlement to their client on the lines of the letter. Thus even a positive reaction by the appellants to the letter of July 3, 1998 would not necessarily have resulted in a settlement as it would have remained open to the respondent to either accept or reject their solicitors' recommendation. If the letter of July 3, 1998 had stated that the solicitors were "authorized by our client to make the following offer" and otherwise constituted a clear and unequivocal offer, it would have qualified as an "offer to settle" within the meaning of Rule 420(1).
[11] The appeal will be allowed in part and paragraph 2 at page 4 of the order of September 23, 1999 struck. In all other respects the said order will be affirmed. As success is divided, there will be no order as to costs.
"A.J. STONE"
J.A.