A‑182‑05
2005 FCA 424
Syntex Pharmaceuticals International Limited and Hoffmann‑La Roche Limited (Appellants) (Defendants)
v.
Her Majesty the Queen in Right of Canada as represented by the Attorney General of Canada (Respondent) (Third Party)
and
Apotex Inc. (Respondent) (Plaintiff)
Indexed as: Apotex Inc. v. Syntex Pharmaceuticals International Ltd. (F.C.A.)
Federal Court of Appeal, Décary, Sexton and Evans JJ.A.—Toronto, December 12, 2005.
Patents — Practice — Appeal from Federal Court order striking out third party notice issued by appellants joining Crown as third party in action for damages by respondent Apotex — Court issuing order prohibiting Minister from issuing notice of compliance (NOC) to Apotex — Patent owned by appellants found invalid, prohibition order lifted — Apotex suing appellants for damages under Patented Medicines (Notice of Compliance) Regulations, s. 8 for damages by way of profits lost due to delay of four years in issuance of NOC — S. 8 not providing for claim against Crown; complete code for recovery of damages by second person against first person — Appellants not properly pleading valid cause of action for negligence — Leave granted to appellants to amend third party notice so as to plead valid cause of action in negligence — Appeal allowed only to add provision to Federal Court order permitting appellants to file amended Third Party notice.
Crown — Torts — Appellants filing third party notice against Crown for damages suffered by respondent Apotex during two‑week delay between issuance of judgment invalidating appellants’ patent, time when NOC issued — Federal Court striking out third party notice as Patented Medicines (Notice of Compliance) Regulations not providing for liability of Crown for breach of statutory duty — Federal Court holding no cause of action known as negligent breach of statute — But proof of statutory breach causing damages can constitute evidence of common law negligence — In third party notice, appellants not alleging negligence, particulars thereof that would satisfy ordinary rules of pleading — Plea of negligence with sufficient particulars necessary — Third party notice could not stand in present form — Leave given to appellants to amend third party notice so as to plead valid cause of action in negligence.
statutes and regulations judicially
considered
Crown Liability and Proceedings Act, R.S.C., 1985, c. C‑50, ss. 1 (as am. by S.C. 1990, c. 8, s. 21), 3 (as am. by S.C. 2001, c. 4, s. 36).
Patented Medicines (Notice of Compliance) Regulations, SOR/93‑133, ss. 6 (as am. by SOR/98‑166, s. 5; 99‑379, s. 3), 8 (as am. by SOR/98‑166, s. 8).
cases judicially considered
considered:
Apotex Inc. v. Syntex Pharmaceuticals International Ltd., [2005] 3 F.C.R. 302; (2005), 39 C.P.R. (4th) 22; 268 F.T.R. 246; 2005 FC 121; Odhavji Estate v. Woodhouse, [2003] 3 S.C.R. 263; (2003), 233 D.L.R. (4th) 193; 11 Admin. L.R. (4th) 45; 19 C.C.L.T. (3d) 163; 312 N.R. 305; 180 O.A.C. 201; 2003 SCC 69; R. in right of Canada v. Saskatchewan Wheat Pool, [1983] 1 S.C.R. 205; (1983), 153 D.L.R. (3d) 9; [1983] 3 W.W.R. 97; 23 CCLT 121; 45 N.R. 425.
APPEAL from Federal Court order ([2005] 4 F.C.R. 177; (2005), 39 C.P.R. (4th) 33; 2005 FC 480) striking out a third party notice issued by the appellants joining the Crown as a third party in an action for damages by Apotex Inc. against the appellants. Appeal allowed only to add a provision to the Federal Court order.
appearances:
Y. Lynn Ing and Nancy P. Pei for appellants (defendants).
F.B. Woyiwada for respondent (third party).
No one appearing for respondent (plaintiff).
solicitors of record:
Smart & Biggar, Toronto, for appellants (defendants).
Deputy Attorney General of Canada for respondent (third party).
The following are the reasons for judgment of the Court delivered orally in English by
[1]Sexton J.A.: The appellants appeal the order of the Federal Court that struck out a third party notice issued by the appellants joining Her Majesty the Queen (HMQ) as a third party in an action for damages by Apotex against the appellants [[2005] 4 F.C.R. 177].
[2]The appellants had initiated a prohibition proceeding under section 6 [as am. by SOR/98-166, s. 5; 99-379, s. 3] of the Patented Medicines (Notice of Compliance) Regulations [SOR/93-133] (Regulations ) with respect to a patent owned by the appellants. In that proceeding, the court issued an order prohibiting the Minister from issuing a notice of compliance (NOC) to Apotex.
[3]In a separate action, Apotex sued the appellants alleging the patent to be invalid and was successful. Approximately two weeks after the judgment was pronounced which declared the patent to be invalid, the Court lifted the prohibition order on consent of the parties.
[4]The Minister then issued an NOC. The two‑week delay in issuing the NOC was said by HMQ to result from the fact that the Minister had been reluctant to issue the NOC until the prohibition order was actually lifted by the Court.
[5]Apotex subsequently commenced an action under section 8 [as am. by SOR/98-166, s. 8] of the Regulations against the appellants for damages it suffered by way of profits lost because of the delay of some four years in the issuance of its NOC, which delay was occasioned by the prohibition order which the appellants had obtained.
[6]The appellants, in turn, claimed over against HMQ in their third party notice for any damages proven by Apotex to have been suffered during the two‑week delay between the issuance of the judgment invalidating the patent and the time when the NOC was issued.
[7]HMQ sought to strike out the third party notice but was unsuccessful before the Prothonotary [[2005] 3 F.C.R. 302] who held that although no claim over against the Crown could be made by the appellants pursuant to section 8 of the Regulations, nevertheless the third party notice should not be struck out because, although the pleas in the third party notice were deficient, they might be sufficient to support an action for negligent breach of statute.
[8]An appeal to the Federal Court was allowed and the third party notice was struck out with the Court holding that:
a. Section 8 of the Regulations provides a complete code of recovery against a first person and there is no provision in the Regulations regarding liability of the Crown for any breach of statutory duty.
b. There is no cause of action known as negligent breach of statute.
[9]We agree with the Prothonotary and with the Federal Court that section 8 of the Regulations does not provide for any claim against the Crown and that it is a complete code for the recovery of damages by a second person against a first person. We do not, however, wish to be taken as expressing any view as to the correctness of the statement of the Federal Court [at paragraph 25] that “any liability by the defendants ends on the day the patent was declared invalid.”
Section 8, Patented Medicines (Notice of Compliance) Regulations
8. (1) If an application made under subsection 6(1) is withdrawn or discontinued by the first person or is dismissed by the court hearing the application or if an order preventing the Minister from issuing a notice of compliance, made pursuant to that subsection, is reversed on appeal, the first person is liable to the second person for any loss suffered during the period
(a) beginning on the date, as certified by the Minister, on which a notice of compliance would have been issued in the absence of these Regulations, unless the court is satisfied on the evidence that another date is more appropriate; and
(b) ending on the date of the withdrawal, the discontinuance, the dismissal or the reversal.
(2) A second person may, by action against a first person, apply to the court for an order requiring the first person to compensate the second person for the loss referred to in subsection (1).
(3) The court may make an order under this section without regard to whether the first person has commenced an action for the infringement of a patent that is the subject matter of the application.
(4) The court may make such order for relief by way of damages or profits as the circumstances require in respect of any loss referred to in subsection (1).
(5) In assessing the amount of compensation the court shall take into account all matters that it considers relevant to the assessment of the amount, including any conduct of the first or second person which contributed to delay the disposition of the application under subsection 6(1).
[10]However, we are concerned with the Federal Court decision as to the second point. In our view, while strictly speaking it might be said there is no such tort as negligent breach of a statute, there nevertheless can be a claim in negligence against the Crown and proof of a statutory breach that causes damages may be evidence of such negligence. The Federal Court failed to address this.
[11]In Odhavji Estate v. Woodhouse, [2003] 3 S.C.R. 263, at paragraph 31, the Supreme Court of Canada held that the failure of a public officer to perform a statutory duty can give rise to a tort.
I wish to stress that this conclusion is not inconsistent with R. v. Saskatchewan Wheat Pool…, in which the Court established that the nominate tort of statutory breach does not exist. Saskatchewan Wheat Pool states only that it is insufficient that the defendant has breached the statute. It does not, however, establish that the breach of a statute cannot give rise to liability if the constituent elements of tortuous responsibility have been satisfied. Put a different way, the mere fact that the alleged misconduct also constitutes a breach of statute is insufficient to exempt the officer from civil liability. Just as a public officer who breaches a statute be liable for negligence, so too might a public officer who breaches a statute be liable for misfeasance in a public office.
[12]Furthermore, according to the Supreme Court of Canada, proof of statutory breach that causes damages can constitute evidence of common law negligence. R. in right of Canada v. Saskatchewan Wheat Pool, [1983] 1 S.C.R. 205, at page 227.
[13]Also, section 3 [as am. by S.C. 2001, c. 4, s. 36] of the Crown Liability and Proceedings Act [R.S.C., 1985, c. C-50, s. 1 (as am. by S.C. 1990, c. 8, s. 21)] provides for vicarious liability of the Crown for torts committed by its servants.
3. The Crown is liable for the damages for which, if it were a person, it would be liable
(a) in the Province of Quebec, in respect of
(i) the damage caused by the fault of a servant of the Crown, or
(ii) the damage resulting from the act of a thing in the custody of or owned by the Crown or by the fault of the Crown as custodian or owner; and
(b) in any other province, in respect of
(i) a tort committed by a servant of the Crown, or
(ii) a breach of duty attaching to the ownership, occupation, possession or control of property.
[14]The problem in the present case is that the appellants have not properly pleaded a valid cause of action for negligence. In its third party notice, the appellants have not alleged any negligence, let alone any particulars of the negligence that would satisfy the ordinary rules of pleading.
[15]A plea of negligence with sufficient particulars thereof is, in our view, necessary. In commenting on what is necessary to constitute the tort, Dickson J. [as he then was] in R. in right of Canada v. Saskatchewan Wheat Pool, at pages 226‑227 said:
Statutory breach, and not negligence, is pleaded. The case has been presented exclusively on the basis of breach of statutory duty. The Board has not proved what Lord Atkin referred to as statutory negligence, i.e. an intentional or negligent failure to comply with a statutory duty. There is no evidence at trial of any negligence or failure to take care on the part of the Pool.
[16]As the pleading of any negligence on the part of the respondent is totally lacking in the third party notice it cannot stand in its present form. Whether the appellants are able to make the requisite pleading of negligence, we are unable to say, although counsel for the plaintiffs was unable to outline to the Court any such adequate pleading. It must be left to the appellants to attempt to amend the third party notice so as to plead a valid cause of action in negligence if they are so inclined, and with some reluctance we give them leave to do so.
[17]The appeal will therefore be allowed but only so as to add a provision to the order of the Federal Court. That provision would read:
Without prejudice to the appellants’ right to file an amended Third Party Notice alleging a valid cause of action in negligence.
[18]There should be no order as to costs.