Judgments

A-108-03

2003 FCA 488

Merck & Co., Inc., Merck Frosst Canada & Co., Syngenta Limited, AstraZeneca UK Limited and AstraZeneca Canada Inc. (Appellants) (Plaintiffs)

v.

Apotex Inc. (Respondent) (Defendant)

Indexed as: Merck & Co., Inc. v. Apotex Inc. (F.C.A.)

Federal Court of Appeal, Richard C.J., Décary and Létourneau JJ.A.--Ottawa, December 4 and 22, 2003.

Practice -- Pleadings -- Amendments -- Appeal from F.C.T.D. decision denying appeal from prothonotary's order granting leave to file further amended statement of defence and counterclaim in patent infringement action -- Defendant now says new, material facts came to light due to plaintiffs' documentary productions, discoveries -- Plaintiffs' drug said to be compound not disclosed, claimed in patent -- Affidavit in support, by defendant's co-counsel, not asserting defendant had been unaware of difference -- Appeal allowed -- Review, exposition of law on standard of review of prothonotaries' discretionary orders -- Amendments would represent dramatic departure from defendant's position until now, would require expert evidence not contemplated at discovery -- Defendant (respondent) wrong to say prima facie right to amendment if new defence is triable -- F.C.A. test in Canderel Ltd. v. Canada refined in Andersen Consulting v. Canada -- But that judgment not holding withdrawal of admissions procedure so relaxed that any withdrawal permitted -- Heavier burden on party seeking amendment if substantial admissions withdrawn -- Still, judicial pronouncements made in particular context not to be generalized -- Comes down to fairness, common sense, so that justice done -- F.C.A. judgments in Visx Inc. v. Nidek Co., Enoch Band of Stony Plain Indians v. Canada explained -- That other side not arguing prejudice not decisive of issue -- Interests of justice may militate against amendment even if prejudice not argued -- Deficiencies of counsel's affidavit discussed -- Amendment would have been refused herein even had triable issue been demonstrated -- Radical departure from defendant's previous position over 10 years' litigation -- Would repudiate admissions in pleadings, at discovery -- Cast doubt on process whereby defendant secured notice of compliance -- Would question construction of patent after protracted litigation, following completion of discoveries -- Would render trial lengthier, more complex -- Affidavit lacking credibility, without value -- Co-counsel not in position to make scientific statements regarding patent, what defendant knew before his involvement with file -- Court troubled by absence of affiant qualified to attest to what defendant knew, why patent should be construed as defendant now proposes -- Adverse inference drawn -- Not a case of counsel's negligence; even if it were, courts no longer able to show indulgence possible in more leisured age -- This was attempt to derail litigation by adding defence not reflecting true questions in controversy.

Judges and Courts -- Prothonotaries -- Standard of review of discretionary orders by prothonotaries -- Test established by F.C.A. in Canada v. Aqua-Gem Investments Ltd. slightly reformulated -- Use of word "vital" in Aqua-Gem significant: not Parliament's intention proceedings before prothonotary just "rest stop" on way to motions judge -- Still, Court not to avoid de novo review of vital question due to propensity to defer to prothonotaries in procedural matters -- Amendments adding new defence are vital to final issue and F.C.T.D. Judge erred in finding de novo review inappropriate -- Rule in Sawridge Band, that Court ought interfere with case management decisions in only clearest case of misuse of judicial discretion, inapplicable where discretion to be exercised de novo or where order dealt with new matter in respect of which case management prothonotary had no special knowledge -- These officers often asked to decide motions on issues exceeding expertise gained in particular case.

Patents -- Practice -- Appeal from F.C.T.D. decision affirming prothonotary's order granting defendant in drug patent infringement action leave to file amended statement of defence, counterclaim -- Defence: drug sold by defendant came from inventory acquired before patent issued -- Admitted that otherwise guilty of infringement -- In seeking to amend, defendant saying new information came to light due to plaintiffs' documentary productions, discoveries -- Now asserting compound not that disclosed, claimed in patent -- Review, exposition of law on standard of review of discretionary orders of prothonotaries -- Proposed amendments represent departure from defendant's previous position -- Construction of patent, drug's chemical composition never before at issue -- New defence going to heart of patent claim -- Review, exposition of law as to amendment of pleadings -- Affidavit in support, by co-counsel, purporting to explain chemistry of patent, matter outside counsel's expertise -- Amendment would cast doubt on integrity of process whereby defendant secured NOC, which requires bioequivalence -- Would make trial lengthier, more complex -- Affidavit lacking credibility, of no value -- Adverse inference drawn from defendant's failure to put forward affiant able to attest to knowledge defendant had, explain why patent to be construed as suggested by defendant.

This was an appeal from the decision of a Trial Division Judge dismissing an appeal from a Prothonotary's order granting Apotex, the defendant and respondent herein, leave to file yet another amended statement of defence and counterclaim. The only amendments appellants took issue with were those concerning the chemical compound lisinopril dihydrate.

In these infringement proceedings brought by Merck, Apotex did not deny that its apo-lisinopril is bioequivalent to lisinopril, which is protected by letters patent. Its defence was that the compound sold as apo-lisinopril came from an inventory of lisinopril acquired by Apotex before Merck's patent was issued or through a third party authorized to sell it under a compulsory licence. Apotex admitted that, but for Patent Act, section 56, its sale of apo-lisinopril would infringe Merck's patent.

In 1993 Apotex sent Zeneca Pharma Inc. (the previous patent owner) a notice of allegation regarding lisinopril tablets. Apotex alleged that no claim for the medicine itself or for its use would be infringed on the basis that it had inventory of lisinopril acquired before patent 350 was issued and intended to sell tablets made from its inventory. Zeneca then sought an order prohibiting the Minister from issuing an NOC. The Judge noted counsels' agreement that the quantity of lisinopril acquired by Apotex had only been enough to get it through less than half the period remaining under the `350 patent, which does not expire until 2007. The Judge granted a prohibition order but that order was set aside by the Federal Court of Appeal which reasoned that even though the pre-patent inventory might run out during the life of the patent, it had to be assumed that section 56 would be observed, so that only the pre-patent inventory would be sold. An NOC should not be denied, thus preventing sale of a drug otherwise not infringing a patent, on the ground that the law might, in future, be broken.

Later on, Merck sued Apotex for infringement and its statement of claim has been amended four times, none pertaining to Merck's allegations here at issue.

Defendant's case was that, in late 1989 and early 1990, it acquired from Delmar Chemicals Inc. bulk lisinopril which had been manufactured prior to 1990 (prior to issuance of the 350 patent) and then bought a further quantity from the same supplier which had also been made pre-patent. Apotex argued that, since Delmar had a right, under section 56, to sell, defendant, as purchaser, was entitled to sell this additional pre- patent lisinopril. Defendant pleaded that, plaintiffs being aware that this pre-patent lisinopril was exempt from infringement, the action was frivolous, vexatious and abusive of the Court's process. Apotex further pleaded that Delmar was a licensee under the 350 patent and had manufactured bulk lisinopril before its compulsory licence was extinguished by the Patent Act Amendment Act, 1992.

Apotex wished to again amend its statement of defence and counterclaim because material facts had come to light due to Merck's documentary productions and discoveries. It was revealed that the active compound in Merck's product, while commonly known as lisinopril, is in reality lisinopril dihydrate, a compound neither disclosed nor claimed in the 350 patent. But the affidavit in support of defendant's motion, by its co-counsel, Ivor Hughes (who advises lead counsel Radomski on technical and scientific matters), nowhere asserts that Apotex had been unaware of the now alleged difference between lisinopril and lisinopril dihydrate. Upon examination, lawyer Hughes admitted that he and Radomski just took the documents they thought would make their point and acknowledged his awareness of the confusion between lisinopril and dihydrate. In an Apotex product monograph of 1996 it was written that lisinopril was the common name while dihydrate was the chemical name.

Held (Richard C.J. dissenting), the appeal should be allowed.

Per Décary J.A. (Létourneau J.A. concurring): The standard of review of discretionary orders by prothonotaries was set out by MacGuigan J.A. in Canada v. Aqua-Gem Investments Ltd.: they ought not be disturbed unless clearly wrong as based upon a wrong principle or misapprehension of facts or raise questions vital to the final issue of the case, in which case a judge should exercise his discretion de novo. The Judge added that whether a question was vital to the final issue of the case was to be determined without regard to the actual answer given by the prothonotary. In using the words "raise questions vital to the final issue of the case" rather than "are vital to the final issue of the case", emphasis was put on the subject of the orders, not on their effect. To avoid the confusion that has sometimes arisen from the wording used by MacGuigan J.A., the test should be slightly reformulated to read: discretionary orders of prothonotaries ought not be disturbed unless (a) the questions raised are vital to the final issue of the case, or (b) the orders are clearly wrong as based upon wrong principle or misapprehension of facts.

As to the test to be applied by this Court on appeal from the decision of a Trial Division Judge, the Supreme Court held recently in Z.I. Pompey Industrie v. ECU-Line N.V. that it can interfere only if the Judge "had no grounds to interfere with the prothonotory's decision or, in the event such grounds existed, if [the judge's decision] was arrived at on a wrong basis or was plainly wrong".

Appellants' initial argument was that the Judge erred in finding that the proposed amendments were not vital to the issue of the case and accordingly not exercising his discretion de novo. Use of the word "vital" in Aqua-Gem was significant. It was not the intention of Parliament that proceedings before a prothonotary be nothing more than a "rest stop" along the procedural route to a motions judge. It should not be too hastily concluded that a question, however important, is vital. Still, the Court must not shy away from reviewing de novo a vital question on account of the natural propensity to defer to prothonotaries in procedural matters. Whether an amendment is routine or vital is to be determined on a case-by-case basis. Amendments that advance additional claims or causes of action have been held vital for Aqua-Gem test purposes. Apotex argued that its proposed amendments would not raise a new defence but merely set out an alternative factual basis for an existing non-infringement defence, but appellants countered that they would be vital as they would withdraw an admission and thus would have an important impact on the final issue of the case. These amendments would represent a dramatic departure from the position until now advanced by Apotex in its pleadings. Construction of the patent and the chemical composition of lisinopril had never been at issue. These proposed amendments would thus add a totally new defence going to the heart of the 350 patent claim. It would call for expert evidence not contemplated at discovery. Since they were vital to the final issue in the case, the Judge below erred in finding that a de novo review would be inappropriate. This Court had, therefore, to exercise de novo the discretion which the Applications Judge failed to exercise.

The Court could not agree with respondent's submission, that there is a prima facie right to an amendment so long as the new cause of action or defence is a triable one. In Canderel Ltd. v. Canada, this Court said that the general rule is that an amendment should be allowed at any stage, in order that the real questions in controversy may be determined, provided that this would not cause injustice not compensable by costs and provided that it would serve the interests of justice. With respect to amendments purporting to withdraw admissions, this Court refined the Canderel test by its reasons in Andersen Consulting v. Canada which stated that the procedure for withdrawing admissions should not be made so complex and stringent that virtually no admission will be made by defendants. But the Court should not be taken as having held that the procedure ought be so relaxed that virtually any withdrawal of an admission will be permitted. The burden upon the amending party is heavier if the amendment sought would withdraw substantial admissions and bring about a radical change in the nature of the questions in controversy. That said, the circumstances surrounding each proposed amendment are different and judicial pronouncements made in a given context should not be generalized. What it comes down to is a consideration of simple fairness and common sense so that justice may be done.

The arguments advanced by respondent reflected an attitude which would appear to be gaining strength, that the addition of a new defence in any way or fashion is permissible if reasonable and that in such case the burden falls upon the opposing side to demonstrate that the amendment should not be allowed. This attitude was said to be justified by this Court's judgments in Visx Inc. v. Nidek Co. and Enoch Band of Stony Plain Indians v. Canada but those decisions have been misconstrued and applied out of context. Certainly, if a proposed amendment could be struck under rule 221, it should not be permitted. And, of course, if the proposed new cause of action or defence is not a triable one, there would be no point in allowing the amendment in. Where there is no substance, the judge does not even get to the Canderel or Andersen test.

Another argument was that the Court should apply the rule in Sawridge Band v. Canada, [2002] 2 F.C. 346, in which Rothstein J.A. indicated that the Court should interfere with case management decisions in only "the clearest case of misuse of judicial discretion". That rule is, of course, inapplicable where the discretion has to be exercised de novo. And, in Apotex, Strayer J.A. declined to dilute the right to have appropriate questions answered upon discovery to expedite the process and enhance the case management system. Again, the rule in Sawridge has no application where the order dealt with a new matter in respect of which the case management prothonotary had no special knowledge. It often happens that case management prothonataries and judges are asked to decide motions on issues that far exceed the expertise they have gained in that particular case.

Nor is the lack of an allegation of prejudice by the other side decisive. Factors such as the interests of justice may militate against allowing the amendment even if prejudice is not expressly alleged. Furthermore, prejudice may be apparent on the face of the record.

As to a triable issue herein, it was doubtful that alleged facts were properly before the Court and could be taken as proven for purposes of the motion to amend. Counsel's affidavit alleged a recent discovery, not by Apotex itself, but by counsel together with an explanation of scientific matters related to the chemistry of the patent, something falling outside co-counsel's personal knowledge and expertise. It was closer to arguments of fact and law than to allegations of fact. Apotex had not even met the low threshold test of demonstrating that the new defence was a reasonable one.

But even had a triable issue been demonstrated, the amendments still would have been denied. They represented a radical departure from the position taken by Apotex during 10 years' litigation in this Court. Further, it repudiated admissions contained in the pleadings and also made at discovery. It even cast a shadow on the integrity of the process whereby Apotex secured its NOC, a process which required the demonstration of "bioequivalence". Again, the amendment would, for the first time, question the construction of the patent after six years of litigation and following completion of discoveries. Most likely, it would render the trial lengthier and more complex.

Co-counsel's affidavit was lacking in credibility and of no value. The Court frowns upon affidavits deposed to by counsel, in relation to contentious issues of substance. Counsel herein was not an expert in a position to make scientific statements about the patent. He did not know what Apotex knew in the years before he became involved with this file. The absence of an affiant who could attest to the knowledge Apotex in fact had and also the absence of an expert affiant who could explain why the 350 patent should be construed in the manner suggested by Apotex was troubling. From that omission, an adverse inference should be drawn. A qualified Apotex representative would have acknowledged, upon examination, that Apotex knew so long ago as 1996 what it now says it learned only in 2001 at discovery.

There was also a matter of the public interest here at issue. Apotex had obtained an NOC on the basis of bioequivalence, thereby representing to both the public and the medical profession that it was lisinopril that was being prescribed under another name. The Court would require a better explanation than that brought forward by respondent for this rewriting of history.

The interests of justice in the circumstances, favoured the denial of this amendment which would raise a radically new defence. This was not a case of negligent conduct of litigation by counsel but, even if it were, courts can no longer afford to display the indulgence with respect to the negligent conduct of litigation that was possible in a more leisured age. Rather, this was an attempt to derail litigation by seeking to add a defence which failed to reflect the true questions in controversy.

Per Richard C.J. (dissenting): That portion of the majority opinion concerning the test in Aqua-Gem and affidavits by counsel dealing with technical matters was agreed with.

But the disposition of this appeal had to be disagreed with. It could not be said that the proposed amendments would not establish a triable defence. In so saying, it was the substance of the amendments rather than the fact that the affidavit was deposed to by counsel that was of importance. Furthermore, both the case law and the Rules of this Court serve as authority for the proposition that there is a broad scope for allowing amendments, including the withdrawal of admissions. According to rule 3, the Rules are to be interpreted such as to secure the just, most expeditious and least expensive determination of every proceeding on its merits.

Appellants did not allege prejudice were these amendments to be permitted. Nor did they even seek compensation by an award of costs. Allowing these amendments would serve the interests of justice by allowing this matter to be determined on its merits and this appeal should be dismissed with costs to respondent.

statutes and regulations judicially

considered

Federal Court Rules, C.R.C., c. 663, RR. 419, 420.

Federal Court Rules, 1998, SOR/98-106, rr. 3, 75, 82, 221.

Patent Act, R.S.C., 1985, c. P-4, s. 56 (as am. by S.C. 1993, c. 44, ss. 194, 199).

Patented Medicines (Notice of Compliance) Regulations, SOR/93-133, s. 5(1) (as am. by SOR/99-379, s. 2).

cases judicially considered

applied:

Z.I. Pompey Industrie v. ECU-Line N.V., [2003] 1 S.C.R. 450; (2003), 224 D.L.R. (4th) 577; 30 C.P.C. (5th) 1; Canderel Ltd. v. Canada, [1994] 1 F.C. 3; [1993] 2 C.T.C. 213; (1993), 93 DTC 5357; 157 N.R. 380 (C.A.); Ketteman v Hansel Properties Ltd, [1988] 1 All ER 38 (H.L.); Andersen Consulting v. Canada, [1998] 1 F.C. 605; (1997), 220 N.R. 35 (C.A.); Scottish & York Insurance Co. v. Canada (1999), 239 N.R. 131 (F.C.A.); Blatch v. Archer (1774), 1 Cowp. 63; 98 E.R. 969; R. v. Jolivet, [2000] 1 S.C.R. 751; (2000), 185 D.L.R. (4th) 626; 144 C.C.C. (3d) 97; 33 C.R. (5th) 1; 254 N.R. 1; Lubrizol Corp. v. Imperial Oil Ltd., [1996] 3 F.C. 40; (1996), 65 C.P.R. (3d) 167; 191 N.R. 244 (C.A.).

distinguished:

Sawridge Band v. Canada, [2002] 2 F.C. 346; (2001), 283 N.R. 107 (C.A.).

considered:

Canada v. Aqua-Gem Investments Ltd., [1993] 2 F.C. 425; [1993] 1 C.T.C. 186; (1993), 93 DTC 5080; 149 N.R. 273 (C.A.); Continental Bank Leasing Corp. v. Canada, [1993] 1 C.T.C. 2306; (1993), 93 DTC 298 (T.C.C.); Visx Inc. v. Nidek Co. (1996), 72 C.P.R. (3d) 19; 209 N.R. 342 (F.C.A.); Enoch Band of Stony Plain Indians v. Canada, [1994] 3 C.N.L.R. 41; (1993), 164 N.R. 301 (F.C.A.); Merck & Co. v. Apotex Inc., 2003 FCA 438; [2002] F.C.J. No. 1725 (C.A.) (QL).

referred to:

Zeneca Pharma Inc. v. Canada (Minister of National Health and Welfare) (1995), 61 C.P.R. (3d) 190; 96 F.T.R. 189 (F.C.T.D.); revd (1996), 140 D.L.R. (4th) 574; 69 C.P.R. (3d) 451; 206 N.R. 1 (F.C.A.); Evans v. Bartham, [1937] 2 All E.R. 646 (H.L.); Stoicevski v. Casement (1983), 43 O.R. (2d) 436; 43 C.P.C. 178 (C.A.); Trevor Nicholas Construction Co. v. Canada (Minister for Public Works), 2003 FCT 255; [2003] F.C.J. No. 357 (T.D.) (QL); affd 2003 FCA 428; [2003] F.C.J. No. 1706 (C.A.) (QL); Scannar Industries Inc. (Receiver of) v. Canada, [1994] 1 C.T.C. 215; (1993), 69 F.T.R. 319 (F.C.T.D.); affd [1994] 2 C.T.C. 185; (1994), 94 DTC 6505; 172 N.R. 313 (F.C.A.); Louis Bull Band v. Canada, 2003 FCT 732; [2003] F.C.J. No. 961(T.D.) (QL); Glisic v. Canada, [1988] 1 F.C. 731; (1987), 80 N.R. 39 (C.A.); Montana Band v. Canada, 2002 FCA 331; [2002] F.C.J. No. 1257 (C.A.) (QL); International Business Machines Corp. v. Printech Ribbons Inc., [1994] 1 F.C. 692; (1993), 52 C.P.R. (3d) 78; 69 F.T.R. 197 (T.D.); Charette v. Delta Controls, 2003 FCA 425; [2003] F.C.J. No. 1696 (C.A.) (QL); Camoplast Inc. v. Soucy International Inc., 2003 FCA 211; [2003] F.C.J. No. 743 (C.A.) (QL).

authors cited

Sgayias, David et al. Federal Court Practice 2003. Toronto: Carswell, 2002.

APPEAL from decision of Noël J. ((2003), 24 C.P.R. (4th) 240) affirming the decision of a Prothonotary granting leave to amend a statement of defence and counterclaim ((2002), 19 C.P.R. (4th) 354) in patent infringement proceedings. Appeal allowed.

appearances:

Gunars A. Gaikis and Nancy P. Pei for appellant (plaintiff) AstraZeneca Canada Inc.

Judith M. Robinson and Frédérique Amrouni for appellant (plaintiff) Merck & Co., Inc.

No one appearing for appellant (plaintiff) Syngenta Limited.

David M. Scrimger for respondent (defendant).

solicitors of record:

Smart & Biggar, Toronto, for appellant (plaintiff) AstraZeneca Canada Inc.

Ogilvy Renault, Montréal, for appellant (plaintiff) Merck & Co., Inc.

Goodmans LLP, Toronto, for respondent (defendant).

The following are the reasons for judgment rendered in English by

[1]Décary J.A.: At issue is the decision of an applications judge (reported at (2003), 24 C.P.R. (4th) 240 (F.C.T.D.)) to dismiss the appeal from an order of a prothonotary (reported at (2002), 19 C.P.R. (4th) 354 (F.C.T.D.)) that granted the respondent Apotex Inc. (Apotex) leave to file another amended statement of defence and counterclaim. The only amendments that the appellants take issue with in this appeal are those described by the Prothonotary as forming "the first category of amendments", i.e. those concerning the chemical compound known as lisinopril dihydrate.

Relevant facts and proceedings

[2]Prior to and since the commencement by Merck of these infringement proceedings, Apotex has never questioned the fact that the compound it sells under the name "apo-lisinopril" was bioequivalent to the compound named lisinopril which is protected by letters patent 1275350 (the 350 patent). Apotex' defence is not that apo-lisinopril is not lisinopril with another name, but that the compound sold under the name "apo-lisinopril" came from an inventory of lisinopril acquired by Apotex before the issue of the 350 patent or through a third party authorized to sell it under a compulsory licence. The construction of the 350 patent in that regard has never been an issue between the parties and it has always been acknowledged by Apotex that were it not for section 56 [as am. by S.C. 1993, c. 44, ss. 194, 199] of the Patent Act [R.S.C., 1985, c. P-4], the sale by it of apo-lisinopril would infringe Merck's patent.

[3]The origin of these proceedings goes back to 1993. By letter dated April 29, 1993, Apotex forwarded to ICI Pharma Canada (which is the previous owner of the patent and whose name had then become Zeneca Pharma Inc. (Zeneca)) a notice of allegation (the NOA) in respect of tablets of lisinopril. In its notice, Apotex alleged that no claim for the medicine itself and no claim for its use would be infringed on the basis that "Apotex has inventory of lisinopril acquired before the issuance of Patent 350 . . . and Apotex Inc. intends, upon the issuance of its Notice of Compliance [the NOC], to sell tablets made from their inventory. The Patent Act provides that the use of such inventory does not constitute infringement". (These facts are found in Zeneca Pharma Inc. v. Canada (Minister of National Health and Welfare) (1995), 61 C.P.R. (3d) 190 (F.C.T.D.), revd (1996), 140 D.L.R. (4th) 574 (F.C.A.), where the Trial Judge noted, at page 194, that "[t]he sole basis for the allegation made with respect to the 350 patent is that Apotex has an inventory of bulk lisinopril acquired before the issuance of the 350 patent and that Apotex intends, upon issuance of its NOC, to sell tablets made from this inventory".)

[4]On June 15, 1993, a proceeding was commenced by Zeneca for an order prohibiting the Minister of National Health and Welfare (the Minister) from issuing an NOC. The Trial Judge notes, at page 195, that "counsel for Apotex admitted that there would be infringement, absent the protection of s. 56 of the Patent Act". In his reasons, the Trial Judge also refers, at page 196, to the affidavit of Mr. Sherman, the President and Chief Executive Officer of Apotex, that "clearly established the date and quantity of the compound lisinopril acquired by it with supporting invoices". Both counsel also agreed than "that the quantity was sufficient to supply [Apotex] for less than half of the remaining period of the 350 patent" (at page 197). The 350 patent expires on October 16, 2007.

[5]The Trial Judge went on to prohibit the Minister from issuing an NOC to Apotex on the basis that it was clear that Apotex had an inventory which would last for only part of the life of the patent. The Federal Court of Appeal, at page 576 allowed the appeal, on the basis that:

. . . we are unable to deny to a party who files a notice of allegations based on non-infringement by virtue of section 56 the benefits of the Regulations simply because its supply of pre-patent inventory may run out during the life of the patent. It must be assumed that such party will observe the limits of its rights under section 56 to sell only pre-patent inventory. There is no reason why the Regulations as now framed should be used, through denial of a Notice of Compliance, to prevent a party from selling any quantity of a drug otherwise free from infringement just because there is a theoretical possibility that such party might use that Notice of Compliance to sell infringing material some time in the future.

[6]It is common ground, and it is indeed admitted by Apotex in its statement of defence, that "Apo-Lisinopril is Apotex's brand name for a pharmaceutical composition for reducing hypertension comprising an effective amount of Lisinopril, and a pharmaceutically acceptable carrier" (A.B., at pages 146 and 70).

[7]Merck eventually brought an action for infringement against Apotex. The statement of claim was filed on December 19, 1996. Even though the statement of claim was amended four times since, none of the amendments pertained to Merck's allegations which are at issue in this appeal. I shall refer in these reasons to the allegations as set out in the last amended statement of claim, i.e. the one filed on August 22, 2000 (A.B., at page 143). I have indicated in brackets the corresponding paragraph in the original statement of claim.

[8]In its last amended statement of claim, Merck alleges that (A.B., at pages 145-146):

13. Lisinopril is N-a-(1(s)-carboxy-3-phenylpropyl)L-lysyl-L- proline dihydrate. [formerly 12]

14. Lisinopril is a compound described and claimed in claim 1 and claim 2 of the 350 patent. [formerly 13]

THE DEFENDANT'S ACTIVITIES

15. Apotex has obtained on 18 October 1996 a Notice of Compliance for APO-LISINOPRIL. [formerly 14]

16. APO-LISINOPRIL is Apotex's brand name for a pharmaceutical composition for reducing hypertension comprising an effective amount of Lisinopril, and a pharmaceutically acceptable carrier. [formerly 15]

17. Apotex has made or had made for it either in Canada or abroad, imported or had imported for it into Canada and used in Canada, Lisinopril and APO-LISINOPRIL. [formerly 16]

18. Apotex has offered for sale APO-LISINOPRIL in Canada. [formerly 17]

19. By early January 1997, Apotex had commenced the sale of lisinopril and APO-LISINOPRIL in Canada. [added prior to 2002, as a variation to former allegation 19]

20. Apotex continues to offer for sale and sells lisinopril and APO-LISINOPRIL in Canada in response to the demand for same. [added prior to 2002, as a variation to former allegation 20]

21. The aforesaid activities of Apotex have been without the licence or consent of the Plaintiffs, or any of them. [former 21]

22. By reason of the aforesaid activities, Apotex has infringed and will continue to infringe claims 1, 2 and 5 of the 350 patent. [former 22]

[9]In its statement of defence and counterclaim filed July 31, 1997 and up to its amended statement of defence and counterclaim filed November 17, 2000, Apotex admitted all of the allegations above except paragraphs 17, 20, 21 and 22. Apotex' defence with respect to the alleged infringement was, and has always been, the one alleged in paragraph 4 of its November 17, 2000 Statement (A.B., at pages 150, 161), i.e.:

To the extent that any of claims 1, 2 or 5 of . . . ("the 350 Patent") are valid, which is not admitted but expressly denied, [Apotex] pleads and relies upon section 56 of the Patent Act as it read at all material times.

The latest statement of defence and counterclaim continues as follows (A.B., at pages 161-163):

5. Section 56 provides that every person who, before the issuance of a patent has purchased, constructed or acquired any invention for which a patent is afterwards obtained, has the right to use and sell to others the specific article, machine, manufacture or composition of matter patented and so purchased, constructed or acquired, without being liable to the patentee or his legal representatives for so doing.

6. The 350 Patent was issued on October 16, 1990 for the invention, inter alia, of the chemical compound known as lisinopril.

7. Claims 1, 2 and 5 of the 350 Patent include within their scope the chemical compound known as lisinopril.

8. In December, 1989 and January, 1990, the Defendant purchased bulk lisinopril from Delmar Chemicals Inc. ("Delmar") that Delmar had manufactured prior to 1990, and hence, prior to the issuance of the 350 Patent ("pre-patent lisinopril").

9. The pre-patent lisinopril the Defendant purchased from Delmar was acquired by and delivered to the Defendant in December, 1989 and January, 1990, and hence, prior to the issuance of the 350 Patent.

10. By reason of the foregoing, section 56 applies to the Defendant's acquisition of the pre-patent lisinopril such that the Defendant has the right to use and sell same without any liability to the Plaintiffs for so doing.

11. In addition, the Defendant purchased a further quantity of lisinopril from Delmar that Delmar had manufactured prior to the issuance of the 350 Patent ("additional pre-patent lisinopril"). By virtue of section 56, Delmar was free to sell, at any time after its manufacture, the additional pre-patent lisinopril without any liability to the Plaintiffs for so doing.

12. Since Delmar had the right to use and sell the additional pre-patent lisinopril without any liability to the Plaintiffs for so doing, the Defendant as purchaser is also free to use and sell the additional pre-patent lisinopril without any liability to the Plaintiffs for so doing.

13. The Defendant states that the Plaintiffs are aware that the pre-patent lisinopril the Defendant has acquired is exempt from infringement, and that, in offering for sale and selling same, the Defendant is not infringing any of the claims of the 350 Patent, or alternatively, is immune from liability for any infringement of such claims. Accordingly, the within action is frivolous, vexatious and abusive of this Court's process.

14. Furthermore, pursuant to Compulsory Licence No. 52324-39(4)-1000 (the "Compulsory Licence") issued by the Commissioner of Patents in accordance with subsection 39(4) of the Patent Act as it read at all material times, Delmar was a licensee under the 350 patent. The Compulsory Licence permitted Delmar, inter alia, to make, use or sell the invention disclosed in the 350 patent for medicine or for the preparation or production of medicine. More particularly, the Compulsory Licence permitted Delmar to make and sell the compound lisinopril in bulk form.

15. Prior to the extinguishment of its Compulsory Licence pursuant to the Patent Act Amendment Act, 1992 (the "Amendment Act"), Delmar manufactured and sold quantities of bulk lisinopril in accordance with the terms of the Compulsory Licence ("licensed lisinopril").

16. The Defendant has purchased quantities of the licensed lisinopril.

17. Pursuant to subsection 12(2) of the Patent Act Amendment Act, 1992, no action for the infringement of a patent lies in respect of any act done before the commencement day of the Amendment Act pursuant to a compulsory licence granted on or after December 20, 1991. The commencement day of the Amendment Act, was February 14, 1993.

18. Accordingly, since the licensed lisinopril Apotex had acquired was made and sold pursuant to the Compulsory Licence prior to February 14, 1993, the Defendant is able to use and sell the licensed lisinopril so acquired free of infringement.

[10]In its amended reply and defence to counterclaim, filed March 31, 2001, Merck admitted the allegations in paragraphs 6 and 7, and the first sentence in paragraph 11 of the latest statement of defence and counterclaim and denied or ignored the rest.

[11]Discoveries were held from August 2001 to March 2002 (A.B., at pages 63, 64) and expert witnesses were called upon to testify. In the course of the discovery process, Mr. Radomski, counsel for Apotex, admitted that Apotex' lisinopril was covered or within the scope of claims 1, 2 and 5 of the 350 patent and that the only issue, apart from invalidity, was whether or not Apotex had acquired lisinopril as permitted by section 56 of the Act (A.B., at pages 209, 210).

[12]On April 22, 2002, Apotex filed the impugned motion to amend its statement of defence and counterclaim (A.B., page 58). It explains, at page 64 ff., that:

31. Apotex now seeks to amend its Amended Defence to refine and clarify its existing allegations in relation to the issues of invalidity and non-infringement disclosed in the pleadings. Apotex' proposed amendments are based on material facts that have recently come to light as a result of [Merck's] documentary productions and discoveries. These proposed amendments are necessary to ensure that all matters in dispute can be effectively and adequately resolved.

. . .

33. In particular, during the course of discoveries, it first became apparent to Apotex that while colloquially, in the marketplace, the active compound in Merck's drug product is known as lisinopril, that active compound is, in reality, lisinopril dihydrate, a compound which is not disclosed or claimed by the 350 Patent.

. . .

39. The facts upon which the foregoing categories of proposed amendments are based have only recently come to light as a consequence of certain new documentary disclosures by [Merck] and the recent discoveries of [Merck's] representatives.

[13]For all practical purposes, "the amendments under appeal essentially plead that the compound lisinopril dihydrate is not included within the scope of the 350 Patent and that Apotex' use and sale of pharmaceutical formulations containing lisinopril dihydrate consequently do not infringe the 350 patent . . . . These amendments also clarify that the chemical compound contained in Apotex' "lisinopril" drug products is actually lisinopril dihydrate, and not lisinopril" (Apotex' factum, paragraph 6).

[14]The motion to amend is supported solely by the affidavit of a co-counsel for Apotex, Mr. Ivor M. Hughes. Mr. Hughes recognizes at paragraph 1 of his affidavit (A.B., at page 100) that it is "as" co-counsel that he has knowledge of the matter to which he deposes. At paragraph 2 of the affidavit, he states that as co-counsel he advises and assists Mr. Radomski, who is lead counsel for Apotex, "as to technical, scientific and patent matters arising in the within action" (A.B., page 100). He then goes on to explain himself why it is that the marketed drug described as lisinopril is in fact lisinopril dihydrate and states that "[c]olloquially, the name `lisinopril' in the market has become associated with the dihydrate" (paragraph 15, page 105). At paragraph 19, he says "Apotex asserts that lisinopril dihydrate is not claimed or disclosed in the 350 patent" (A.B., page 106) and at paragraph 20, he says that "Apotex disagrees" with Merck's assertion in paragraphs 13 and 14 of the statement of claim that "lisinopril is . . . dihydrate and that lisinopril is a compound described in claim 1 and claim 2 of the 350 patent" (A.B., page 106). Reference is made in paragraphs 21 and 22, not to what Apotex has learned during the examination for discovery, but to what "counsel for Apotex" learned, confirmed or reviewed (A.B., page 107). Nowhere is it stated that Apotex itself did not know of the now alleged difference between lisinopril and lisinopril dihydrate until the discovery process.

[15]In his examination, Mr. Hughes admits that he "was asked to draft an affidavit because [he] was involved in the preparation of a considerable number of the proposed amendments" (A.B., page 242) and that he was not involved in the file until sometime in 1999 (A.B., page 246). He states that "they", being himself and Mr. Radomski, "just took the [documents] that we thought would make our point" (A.B., page 243). He states that he does not really say in his affidavit that "neither [he] nor Mr. Radomski had been aware of lisinopril dihydrate before the [examination for] discovery of Dr. Wyvratt" (A.B., page 249); he adds that "there is a bit of confusion [between "lisinopril" and "dihydrate"], and the bit of confusion was known to me" (A.B., page 250). He recognizes that in a product monograph prepared by Apotex in 1996 with respect to apo-lisinopril, reference is made to the fact that lisinopril is the "proper/common name" and dihydrate the "chemical name" (A.B., pages 253, 301).

[16]On May 2, 2002, Prothonotary Morneau granted the motion to amend. That decision was confirmed on February 13, 2003, by Noël J.

The standard of review

[17]This Court, in Canada v. Aqua-Gem Investments Ltd., [1993] 2 F.C. 425 (C.A.), set out the standard of review to be applied to discretionary orders of prothonotaries in the following terms (MacGuigan J.A., at pages 462-463):

Following in particular Lord Wright in Evans v. Bartlam, [1937] A.C. 473 (H.L.) at page 484, and Lacourcière J.A. in Stoicevski v. Casement (1983), 43 O.R. (2d) 436 (Div. Ct.), discretionary orders of prothonotaries ought not to be disturbed on appeal to a judge unless:

(a) they are clearly wrong, in the sense that the exercise of discretion by the prothonotary was based upon a wrong principle or upon a misapprehension of the facts, or

(b) they raise questions vital to the final issue of the case.

Where such discretionary orders are clearly wrong in that the prothonotary has fallen into error of law (a concept in which I include a discretion based upon a wrong principle or upon a misapprehension of the facts), or where they raise questions vital to the final issue of the case, a judge ought to exercise his own discretion de novo. [Footnote omitted.]

[18]MacGuigan J.A. went on, at pages 464-465, to explain that whether a question was vital to the final issue of the case was to be determined without regard to the actual answer given by the prothonotary:

It seems to me that a decision which can thus be either interlocutory or final depending on how it is decided, even if interlocutory because of the result, must nevertheless be considered vital to the final resolution of the case. Another way of putting the matter would be to say that for the test as to relevance to the final issue of the case, the issue to be decided should be looked to before the question is answered by the prothonotary, whereas that as to whether it is interlocutory or final (which is purely a pro forma matter) should be put after the prothonotary's decision. Any other approach, is seems to me, would reduce the more substantial question of "vital to the issue of the case" to the merely procedural issue of interlocutory or final, and preserve all interlocutory rulings from attack (except in relation to errors of law).

This is why, I suspect, he uses the words "they (being the orders) raise questions vital to the final issue of the case", rather than "they (being the orders) are vital to the final issue of the case". The emphasis is put on the subject of the orders, not on their effect. In a case such as the present one, the question to be asked is whether the proposed amendments are vital in themselves, whether they be allowed or not. If they are vital, the judge must exercise his or her discretion de novo.

[19]To avoid the confusion which we have seen from time to time arising from the wording used by MacGuigan J.A., I think it is appropriate to slightly reformulate the test for the standard of review. I will use the occasion to reverse the sequence of the propositions as originally set out, for the practical reason that a judge should logically determine first whether the questions are vital to the final issue: it is only when they are not that the judge effectively needs to engage in the process of determining whether the orders are clearly wrong. The test would now read: "Discretionary orders of prothonotaries ought not be disturbed on appeal to a judge unless: (a) the questions raised in the motion are vital to the final issue of the case, or (b) the orders are clearly wrong, in the sense that the exercise of discretion by the prothonotary was based upon a wrong principle or upon a misapprehension of the facts."

[20]With respect to the test to be applied by this Court on an appeal from a judge's decision, the Supreme Court of Canada, in Z.I. Pompey Industrie v. ECU-Line N.V., [2003] 1 S.C.R. 450, held at paragraph 18 that the Federal Court of Appeal may only interfere with the decision of the applications judge where the judge "had no grounds to interfere with the prothonotary's decision or, in the event such grounds existed, if [the judge's] decision was arrived at on a wrong basis or was plainly wrong".

Whether the proposed amendments are vital to the final issue of the case

[21]The first argument raised by the appellants is that the Judge erred in finding that the amendments sought were not vital to the issue of the case and in not, therefore, exercising de novo his discretion.

[22]The test of "vitality", if I am allowed this expression, which was developed in Aqua-Gem, is a stringent one. The use of the word "vital" is significant. It gives effect to the intention of Parliament, as so ably described by Isaac C.J. at pages 454 and 455 of his minority reasons in Aqua-Gem (I pause here to note that the learned Chief Justice's analysis of the role of the prothonotaries in the Federal Court remains basically unchallenged in the majority opinion written by MacGuigan J.A.):

. . . such a standard [of review] is consistent with the parliamentary intention embodied in section 12 of the [Federal Court] Act, that the office of prothonotary is intended to promote "the efficient performance of the work of the Court".

In my respectful view it cannot reasonably be said that a standard of review which subjects all impugned decisions of prothonotaries to hearings de novo regardless of the issues involved in the decision or whether they decide the substantive rights of the parties is consistent with the statutory objective. Such a standard conserves neither "judge power" nor "judge time". In every case, it would oblige the motions judge to re-hear the matter. Furthermore, it would reduce the office of a prothonotary to that of a preliminary "rest stop" along the procedural route to a motions judge. I do not think that Parliament could have intended this result.

[23]One should not, therefore, come too hastily to the conclusion that a question, however important it might be, is a vital one. Yet one should remain alert that a vital question not be reviewed de novo merely because of a natural propensity to defer to prothonotaries in procedural matters.

[24]In Aqua-Gem, at page 464, MacGuigan J.A. distinguished on the one hand between "routine matters of pleadings", words used by Lord Wright in Evans v. Bartham, [1937] 2 All E.R. 646 (H.L.), at page 653, and "a routine amendment to a pleading", words used by Lacourcière J.A. in Stoicevski v. Casement (1983), 43 O.R. (2d) 436 (C.A.), at page 438, and, on the other hand, between "questions vital to the final issue of the case, i.e., to its final resolution".

[25]When is an amendment a routine one as opposed to a vital one? It would be imprudent to attempt any kind of formal categorization. It is much preferable to determine the point on a case-by-case basis (see Trevor Nicholas Construction Co. v. Canada (Minister for Public Works), 2003 FCT 255; [2003] F.C.J. No. 357 (T.D.) (QL), per O'Keefe J. at paragraph 7, affd 2003 FCA 428; [2003] F.C.J. No. 1706 (C.A.) (QL)). I note that amendments that would advance additional claims or causes of action have consistently been found, in the Federal Court of Canada, to be vital for the purposes of the Aqua-Gem test (see Scannar Industries Inc. (Receiver of) v. Canada, [1994] 1 C.T.C. 215 (F.C.T.D.), Denault J., affd [1994] 2 C.T.C. 185 (F.C.A.); Trevor Nicholas Construction Co., supra; Louis Bull Band v. Canada, 2003 FCT 732; [2003] F.C.J. No. 961 (T.D.) (QL) (Snider J.)).

[26]In the case at bar, counsel for Apotex has opined that since the proposed amendments do not raise a new defence but simply set out an alternative factual basis for an existing non-infringement defence, they are routine amendments. Counsel for the appellants, on the other hand, invite the Court to determine that the proposed amendments were vital amendments as they are an attempt to withdraw an admission which would have had an important impact on the final issue of the case and to raise a new defence.

[27]The proposed amendments, in my view, represent a dramatic departure from the position until now advanced by Apotex in its pleadings. Its defence of non-infringement was essentially based on the fact that it had acquired lisinopril made prior to the issuance, on October 16, 1990, of the 350 patent and on the fact that it had acquired lisinopril made under a compulsory licence issued to its supplier, Delmar. Apotex' pleadings in these and other proceedings has always assumed that were it not for those facts, there would be infringement of the 350 patent. The construction of the patent and the chemical composition of lisinopril has never been an issue.

[28]The proposed amendments, clearly, would add a totally new defence to the statement of defence, a new defence that would go to the heart of the claim of the 350 patent and require expert evidence that could not have been contemplated by the appellants at the discovery stage in view of the admissions already made in the pleadings and in the proceedings. They are, in my view, vital to the final issue of the case. A de novo review of the decision of the Prothonotary was therefore warranted and the Applications Judge erred in finding that it was not. I must, therefore, exercise de novo the discretion the Applications Judge failed to exercise.

General principles with respect to amendments

[29]As I understand the arguments put forward by counsel for Apotex, there is a prima facie right to an amendment as long as the new cause of action or defence is a triable one, the onus then being transferred to the opposing party. I do not agree.

[30]The general principles with respect to amendments of pleadings were summarized as follows in Canderel Ltd. v. Canada, [1994] 1 F.C. 3 (C.A.), at page 10:

. . . while it is impossible to enumerate all the factors that a judge must take into consideration in determining whether it is just, in a given case, to authorize an amendment, the general rule is that an amendment should be allowed at any stage of an action for the purpose of determining the real questions in controversy between the parties, provided, notably, that the allowance would not result in an injustice to the other party not capable of being compensated by an award of costs and that it would serve the interests of justice.

Among the numerous authorities relied upon in Canderel are those statements of Lord Griffiths in Ketteman v Hansel Properties Ltd, [1988] 1 All ER 38 (H.L.), at page 62:

Whether an amendment should be granted is a matter for the discretion of the trial judge and he should be guided in the exercise of the discretion by his assessment of where justice lies. Many and diverse factors will bear on the exercise of this discretion. I do not think it possible to enumerate them all or wise to attempt to do so. But justice cannot always be measured in terms of money and in my view a judge is entitled to weigh in the balance the strain the litigation imposes on litigants, particularly if they are personal litigants rather than business corporations, the anxieties occasioned by facing new issues, the raising of false hopes, and the legitimate expectation that the trial will determine the issues one way or the other. Furthermore, to allow an amendment before a trial begins is quite different from allowing it at the end of the trial to give an apparently unsuccessful defendant an opportunity to renew the fight on an entirely different defence.

Another factor that a judge must weigh in the balance is the pressure on the courts caused by the great increase in litigation and the consequent necessity that, in the interests of the whole community, legal business should be conducted efficiently. We can no longer afford to show the same indulgence towards the negligent conduct of litigation as was perhaps possible in a more leisured age. There will be cases in which justice will be better served by allowing the consequences of the negligence of the lawyers to fall on their own heads rather than by allowing an amendment at a very late stage of the proceedings.

and Bowman T.C.J. in Continental Bank Leasing Corp. v. Canada, [1993] 1 C.T.C. 2306 (T.C.C.), at page 2310:

. . . I prefer to put the matter on a broader basis: whether it is more consonant with the interests of justice that the withdrawal or amendment be permitted or that it be denied. The tests mentioned in cases in other courts are of course helpful but other factors should also be emphasized, including the timeliness of the motion to amend or withdraw, the extent to which the proposed amendments would delay the expeditious trial of the matter, the extent to which a position taken originally by one party has led another party to follow a course of action in the litigation which it would be difficult or impossible to alter and whether the amendments sought will facilitate the Court's consideration of the true substance of the dispute on its merits. No single factor predominates nor is its presence or absence necessarily determinative. All must be assigned their proper weight in the context of the particular case. Ultimately it boils down to a consideration of simple fairness, common sense and the interest that the courts have that justice be done.

[31]With respect, more specifically, to amendments purporting to withdraw admissions, this Court, in Andersen Consulting v. Canada, [1998] 1 F.C. 605 (C.A.), refined the Canderel test as follows, at paragraphs 13-14:

At the other end, the British Columbia courts have taken a more flexible approach and have not required as a condition essential to a withdrawal of an admission that the admission in the statement of defence be made inadvertently or hastily. Rather, they have adopted as a test that, in all the circumstances of the case, there be a triable issue which ought to be tried in the interests of justice and not be left to an admission of fact. Under such a test, inadvertence, error, hastiness, lack of knowledge of the facts, discovery of new facts, and timeliness of the motion to amend become factors to be taken into consideration in deciding whether or not the circumstances show that there is a triable issue which ought to be tried in the interests of justice.

We prefer the approach taken by the courts in British Columbia which gives the Court seized with a motion to amend pleadings, including an amendment withdrawing or purporting to withdraw an admission, the needed flexibility to ensure that triable issues are tried in the interests of justice without injustice to the litigants. [Footnotes omitted.]

[32]I fully agree with the proposition set out in paragraph 15, in Andersen, that:

We must ensure that the procedure to withdraw admissions is not made so complex and so stringent that virtually no admission will be made by the defendants.

But I do not read these words to say that the procedure should be made so simple and so relaxed that virtually any withdrawal of admissions will be allowed. There is a burden to be met by the amending party and, while the factors to be considered are essentially the same for all amendments, the burden should be heavier when the amendments at issue purport to withdraw substantial admissions and would result in a radical change in the nature of the questions in controversy.

[33]The nature, timing and circumstances vary from one amendment to the other and from one type of amendment to the other, and one must be careful not to generalize judicial pronouncements made in a given context. The prothonotary or judge seized with the motion to amend has the duty to consider all relevant factors. There is, for example, as noted by Lord Griffiths in Ketteman, at page 62, "a clear difference between allowing amendments to clarify the issues in dispute and those that permit a distinct defence to be raised for the first time". There is also a clear difference between allowing amendments at trial and allowing amendments before trial (see Glisic v. Canada, [1988] 1 F.C. 731 (C.A.), at page 740; Ketteman, supra). There is also a clear difference, I suggest, between allowing amendments that amount to the withdrawal of an admission and amendments that do not, and a clear difference between allowing amendments that amount to withdrawal of a substantial admission the result of which is to alter the cause of action and one that relates to a mere admission of fact.

[34]All this to say, to use the words of Bowman T.C.J. in Continental Bank Leasing, supra, page 2310:

All [amendments] must be assigned their proper weight in the context of the particular case. Ultimately it boils down to a consideration of simple fairness, common sense and the interest that the courts have that justice be done.

Flexibility and openness, which is the rule in motions to amend, should not be confused with complacency. The sooner an unwarranted amendment is out, the better it is for the judicial system.

[35]The submissions by counsel for Apotex reflect, in my view, an attitude which seems to be gaining strength, that adding a new defence in any way or fashion is permitted as long as the defence is a reasonable one, and that in such a case the burden is not on the amending party to demonstrate that the amendment should be allowed, but is on the opposing party to demonstrate that it should not.

[36]That attitude is alleged to be supported by the decisions of this Court in Visx Inc. v. Nidek Co. (1996), 72 C.P.R. (3d) 19 (F.C.A.) and in Enoch Band of Stony Plain Indians v. Canada, [1994] 3 C.N.L.R. 41(F.C.A.). This is simply not so. These decisions, in my humble opinion, have been misconstrued by the respondent and interpreted and applied out of context.

[37]In Nidek, Isaac C.J. said, in an aside, that "[i]n determining whether an amendment to a defence should be allowed, it is often helpful for the Court to ask itself whether the amendment, if it was already part of the proposed pleadings, would be a plea capable of being struck out under Rule 419. If yes, the amendment should not be allowed" (at page 24) (my emphasis). Clearly, if an amendment could be struck out for showing no reasonable cause of action, it should not be allowed in whatever circumstances. But the Court does not say that if an amendment is not struck out under Rule 419 [Federal Court Rules, C.R.C., c. 663], which is now rule 221 [Federal Court Rules 1998, SOR/98-106], it should be favourably considered by the Court.

[38]In Enoch Band, this Court stated from the Bench that "[w]e have heard the appeals on the basic assumption that in these areas the Court will only strike pleadings or deny amendments in plain and obvious cases where the case is beyond doubt" (at page 42). The only issue was whether the new allegations were "irrelevant or unfounded" in the context of a fiduciary duty allegedly imposed on the Crown. The grounds invoked to oppose the amendments were therefore akin to those associated with motions to strike. No more, no less can be derived from this decision with respect to striking pleadings or denying amendments.

[39]Of course, where a new cause of action or defence is sought to be introduced by amendment, a preliminary issue to be considered is whether that cause of action or that defence is a triable one. For if it is not, there is no point in any event in allowing the amendment to go in. This examination goes to the substance of the amendment, not to its circumstances. Where there is no substance, i.e. where the new cause of action or the new defence is not triable, the judge does not even get to the Canderel or Andersen test, for none of the factors to be examined could cure the lack of substance of the proposed amendment. To say, therefore, that the fact that the new cause of action or defence is triable is a compelling, if not decisive, reason to allow the amendment is tantamount to saying that because a pre-requisite condition of the test to be applied has been met, the test has been met. The correct approach, it seems to me, is that followed by this Court in Andersen Consulting, at paragraph 17, where the Court concluded that:

. . . there is, in our view, no doubt that the proposed amend-ments relate to a triable issue that should be decided at trial . . . [My emphasis.]

[40]I also wish to speak to another argument raised by counsel for the respondent. Counsel invites the Court to apply the rule set out in Sawridge Band v. Canada, [2002] 2 F.C. 346 (C.A.), at paragraph 11, where Rothstein J.A. expressed the view that the Court should only interfere in decisions made by case management prothonotaries or judges "in the clearest case of misuse of judicial discretion" (see also Montana Band v. Canada, 2002 FCA 331; [2002] F.C.J. No. 1257 (C.A.) (QL); Merck & Co. v. Apotex Inc., 2003 FCA 438; [2002] F.C.J. No. 1725 (C.A.) (QL)).

[41]This rule, of course, only applies where deference is owed; it does not apply where the discretion has to be exercised de novo, for example, where, as here, the question is vital to the final issue of the case or where the case management prothonotary or judge has made an error of principle (see Apotex). Indeed, in Apotex, Strayer J.A. refused to dilute the legal right a party has to have relevant questions answered on examination for discovery for the sake of enhancing the case management system and of expediting the whole process. Furthermore, as noted by Snider J. in Louis Bull Band, supra, it is not all orders made by a case management judge or prothonotary which are made as "a result of an ongoing management function" (paragraph 16): where an order deals with "a new matter in respect of which [the case management prothonotary] had no special knowledge", the Sawridge rule does not apply. Indeed, case management prothonotaries and judges are often asked to decide motions which far exceed the case management expertise they have gained in a given case.

[42]Finally, contrary to what is argued by counsel, the absence of a specific allegation of prejudice by the opposing party is not decisive. As noted by Strayer J.A. in Scottish & York Insurance Co. v. Canada (1999), 239 N.R. 131 (F.C.A.), there is a "principle that, in the absence of prejudice to an opposing party, an amendment to pleadings should be allowed, if otherwise proper" (at paragraph 6) (my emphasis). Other factors, including that of the interests of justice, may well militate against allowing an amendment even where no prejudice is expressly alleged. Furthermore, some prejudice may appear on the face of the record without there being any need for the opposing party to expressly rely on it.

Whether there is a triable issue

[43]The new defence sought to be introduced by Apotex rests essentially on the construction of the 350 patent. For the purpose of deciding whether the defence is a reasonable one, the Court must accept the facts as alleged as proven and will only decide that there is no reasonable defence where it is plain and obvious that the pleadings disclose no reasonable defence.

[44]The facts at issue here are those alleged in an affidavit deposed to by a co-counsel for Apotex. To the extent that counsel is not qualified to make these assertions of fact,--I shall explain further on in these reasons why it is that counsel is not qualified--I doubt whether these alleged facts are effectively before the Court and can be taken as proven for the purposes of the motion to amend.

[45]The facts alleged in the affidavit are of two kinds: those that pertain to the recent discovery by Apotex of the difference between lisinopril and lisinopril dihydrate and those that pertain to the explanation of that difference. With respect to the first kind, it may be said at best that what is alleged, and in a shaky way at that, is the recent discovery by counsel for Apotex, not by Apotex itself. With respect to the second kind, the explanation relates to the chemical composition of the competing compounds and the scientific construction of the 350 patent, hardly things within the personal knowledge and expertise of the affiant as co-counsel. Considering that the construction of the 350 patent was never an issue between the parties, there appears to have been little, if any, testimony directed at that issue during the discovery process--counsel has referred us to none--and co-counsel's testimony in that regard is better described as argumentation of fact and law than as allegations of fact.

[46]We are dealing, here, with an attempt to withdraw an admission of infringement of a pharmaceutical patent. This is a serious matter. The burden is on Apotex to demonstrate that the new defence it seeks to introduce as a result of the withdrawal of the admission is a reasonable one. The demonstration, if we can call that a demonstration, does not meet the threshold test, as low as it admittedly is.

Whether the discretion should be exercised in favour of allowing the amendments

[47]Assuming, for the sake of discussion, that there is a triable issue, I still would not allow the proposed amendments. They represent, as already noted, a radical departure from the position held by Apotex during the past 10 years in proceedings before this Court. It repudiates admissions made in the pleadings of the present proceedings and during discovery as well as admissions made by counsel in the course of a previous proceeding closely associated with the present one. It casts a shadow on the integrity of the process through which Apotex obtained its NOC in 1996, a process which necessitated by subsection 5(1) of the Patented Medicines (Notice of Compliance) Regulations, [SOR/93-133 (as am. by SOR/99-379, s. 2)], a demonstration of "bioequivalence" in order to obtain the NOC and which permitted Apotex to market a product for the past seven years. It questions for the first time the construction of a patent upon which Apotex itself has relied to gain favour with this Court. It questions the construction of the patent six years after the commencement of the proceedings and once the discovery process has been completed, therefore rendering the trial more complex and presumably lengthier. All of this has been on the basis of allegations supported solely by an affidavit deposed by a counsel for Apotex. This is indeed a very unique situation which should be examined very carefully.

[48]I find the affidavit of co-counsel totally lacking in value and in credibility. This Court does not look favourably, if at all, to affidavits deposed by counsel when the affidavits refer to contentious issues of substance (see rule 82 of the Federal Court Rules, 1998, and cases listed in David Sgayias et al., Federal Court Practice 2003 (Toronto: Carswell, 2002), at page 387; International Business Machines Corp. v. Printech Ribbons Inc., [1994] 1 F.C. 692 (T.D.), Nadon J.). Counsel in the case at bar was not qualified as expert; he is in no position to make scientific statements and to delve into the scientific explanation of the patent as opposed to its legal construction. Nor is he in a position to comment on the "colloquiality" of the name lisinopril. Counsel was only involved in the file in late 1999; he does not know what Apotex knew in earlier years nor can he explain the sudden reversal in Apotex' position. Counsel refers to a series of documents filed during the discovery process without giving any indication as to their context and he does not refer to any testimony by expert witnesses that would support his understanding of these documents. In other words, counsel is in no position to make Apotex' case on its motion to amend.

[49]I am also troubled by the absence of an affiant who could speak on behalf of Apotex and attest to the actual knowledge Apotex had or had not earlier on, and by the absence of an expert affiant who could explain why the 350 patent should now be construed the way Apotex suggests it should be construed. To use the words of Lord Mansfield in Blatch v. Archer (1774), 1 Cowp. 63, at page 65; 98 E.R. 969, at page 970, which were quoted with approval by the Supreme Court of Canada in R. v. Jolivet, [2000] 1 S.C.R. 751, at paragraph 25:

It is certainly a maxim that all evidence is to be weighed according to the proof which it was in the power of one side to have produced, and in the power of the other to have contradicted.

I draw here an adverse inference from the omission, abstention or failure of Apotex to file affidavits of qualified persons which it was in its power to have filed. I find that had a qualified representative of Apotex filed an affidavit, he or she would have recognized, under examination, that Apotex knew as far back as at least 1996 what it now says it has learned in 2001 through the discovery process. I also find that had an expert filed an affidavit on behalf of Apotex, he or she would have recognized under examination that the construction of the 350 patent suggested by Mr. Hughes in his affidavit is not one that would have been advanced by an expert.

[50]There is also a matter of public interest which is at issue here. Since 1996, Apotex, on the basis of an NOC, demonstrated the bioequivalence of lisinopril and apo-lisinopril, and therefore, has been telling the Canadian public, particularly doctors, pharmacists and patients, that in prescribing, selling or consuming apo-lisinopril compounds, they were prescribing, selling or consuming effectively lisinopril under another name. Now, suddenly, in 2002, with the strike of a pen, is this no longer the case? More explanation than that provided to the Court in support of the motion would be needed to justify what appears to be a sudden rewriting of history.

[51]Counsel for the appellant has also argued, based on Canderel, at page 14, that even if the amendments were allowed, Apotex would still be faced with the fact that the admission made by its counsel during discovery can only be withdrawn with leave of the Court, a leave which was not sought here. That factor is present here but I do not give it great weight considering that the amendment is sought before trial and not, as was the case in Canderel, close to the end of the trial.

[52]I have reached the conclusion, paraphrasing the words of Bowman T.C.C.J. in Continental Bank Leasing (supra), that it is more consonent with the interests of justice that the withdrawal of admissions and the raising of a radically new defence be denied in the circumstances. This is not, it seems to me, a case of negligent conduct of litigation by counsel--even at that, one should be reminded of the words of Lord Griffiths in Ketteman (supra, at page 62) to the effect that courts "can no longer afford to show the same indulgence towards the negligent conduct of litigation as was perhaps possible in a more leisured age". This is a case, rather, of a party attempting to derail litigation which has been pursued for several years by adding a defence which, it knows very well, does not reflect the true questions in controversy.

[53]I wish to quote, in closing, the following remarks by Stone and Linden JJ.A. in Lubrizol Corp. v. Imperial Oil Ltd., [1996] 3 F.C. 40 (C.A.), at page 62:

It is a long-standing principle that the object of courts is to decide the rights of the parties in litigation and not to punish for mistakes made in the conduct of a case unless the circumstances are exceptional. That principle was expressed in the following way by Bowen L.J. in Cropper v. Smith ((1884), 26 Ch. D. 700 (C.A.), at p. 710):

Now, I think it is a well established principle that the object of Courts is to decide the rights of the parties, and not to punish them for mistakes they make in the conduct of their cases by deciding otherwise than in accordance with their rights. Speaking for myself, and in conformity with what I have heard laid down by the other division of the Court of Appeal and by myself as a member of it, I know of no kind of error or mistake which, if not fraudulent or intended to overreach, the Court ought not to correct, if it can be done without injustice to the other party. Courts do not exist for the sake of discipline, but for the sake of deciding matters in controversy . . . [My emphasis.]

The circumstances, here, are exceptional. I have not been persuaded that the admissions which Apotex now seeks to withdraw were made "in deciding otherwise than in accordance with their rights" and I have not been persuaded that the amendment they seek are made "for the sake of deciding matters in controversy".

[54]In the end, exercising de novo my discretion, I reach the conclusion that the proposed amendments raise questions which are vital to the final issue of the case, that they raise a new defence which the Court is not in a position, with the material before it, to find reasonable and, in any event and more importantly, that it is more consonant with the interests of justice that the amendments be denied.

[55]I would allow the appeal with costs here and in both instances below. I would set aside the orders of the Applications Judge and of the Prothonotary in so far as they deal with the first category of amendments and I would deny the amendments described in paragraph 32 of Apotex' notice of motion as falling into the first category, i.e. those concerning the chemical compound known as lisinopril dihydrate.

Létourneau J.A.: I agree.

* * *

The following are the reasons for judgment rendered in English by

[56]Richard C.J. (dissenting): I have had the benefit of reading the reasons of Mr. Justice Décary. I concur with his useful analysis and clarification of the Aqua-Gem test. Similarly, I share his concerns pertaining to affidavits deposed by counsel in support of motions on technical matters.

[57]Notwithstanding my agreement on these matters, I am unable to agree with Justice Décary's disposition of this appeal. For the following reasons, I would allow the amendments and dismiss the appeal.

[58]Reduced to their essentials, the amendments set out that lisinopril dihydrate is a different chemical compound from lisinopril, has different chemical properties than lisinopril, is not specifically claimed in the 350 patent, is neither disclosed nor described in the application or the specification for the 350 patent, and does not otherwise come within the scope of the 350 patent. The amendments in question thus raise an additional defence in these proceedings.

[59]As articulated by Justice Décary, a defence will be disallowed if it is not "triable". In reference to the information set out in the previous paragraph, it cannot be said that the amendments fail to establish a triable defence.

[60]In making this statement, I refer to the substance of the amendments themselves rather than to the fact that they were deposed in an affidavit by respondent's counsel. The respondent has pleaded the requisite material facts, which on this motion, the Court must accept as proven, to establish a defence of non-infringement.

[61]In determining that this amendment ought to be allowed, I am also influenced by the Rules and jurisprudence of this Court, which establish a broad scope for allowing amendments, including the withdrawal of admissions. Rule 75 of the Federal Court Rules, 1998 reads as follows:

75. (1) Subject to subsection (2) and rule 76, the Court may, on motion, at any time, allow a party to amend a document, on such terms as will protect the rights of all parties.

(2) No amendment shall be allowed under subsection (1) during or after a hearing unless

(a) the purpose is to make the document accord with the issues at the hearing;

(b) a new hearing is ordered; or

(c) the other parties are given an opportunity for any preparation necessary to meet any new or amended allegations.

[62]Whereas the predecessor to this rule, Rule 420, permitted amendments as necessary to "determine the real issue in controversy" between the parties, rule 75 does not specify any criteria for allowing an amendment. However, it should be read in conjunction with rule 3 which states that the Rules must be interpreted and applied so as to secure the just, most expeditious and least expensive determination of every proceeding on its merits.

[63]The jurisprudence reflects this liberal approach. In Andersen Consulting v. Canada, supra, it was held that a motion to amend pleadings, even if it might be construed as a withdrawal of admissions, should be dealt with under Rule 420, now rule 75. Andersen Consulting articulates the test as to when admissions in a pleading may be withdrawn. The Court must inquire whether, at paragraph 13:

. . . in all the circumstances of the case, there will be a triable issue which ought to be tried in the interests of justice and not left to an admission of fact. Under such a test, inadvertence, error, hastiness, lack of knowledge of the facts, discovery of new facts, and timeliness of the motion to amend become factors to be taken into consideration in deciding whether or not the circumstances show that there is a triable issue which ought to be tried in the interests of justice.

This principle was recently affirmed by Justice Rothstein in Charette v. Delta Controls, 2003 FCA 425; [2003] F.C.J. No. 1696 (C.A.) (QL).

[64]The relevant line of jurisprudence also cautions against allowing amendments to pleadings if the result would be injustice or prejudice to a party that is not capable of being cured with an appropriate award of costs (see e.g. Canderel Ltd. v. Canada, supra and Camoplast Inc. v. Soucy International Inc., 2003 FCA 211; [2003] F.C.J. No. 743 (C.A.) (QL)).

[65]In the current matter, however, the appellants have not alleged that they will suffer any prejudice as a result of the amendments, nor have they requested compensation by an award of costs. In fact, the order of Prothonotary Morneau protects against any prejudice, by including a provision that the respondent would not be entitled to further discovery with respect of any of the amendments it introduced. This will guard against unnecessary delays.

[66]Thus, there is no evidence that the appellants will be prejudiced by these amendments at this stage of the proceedings.

[67]Of equal importance, allowing these amendments serves the interests of justice by allowing this proceeding to be determined on its merits. The proposed amendments relate to a triable issue which should be determined by the trial judge; as such, it is in the interests of justice to allow these amendments.

[68]Accordingly, I would dismiss the appeal with costs to the respondent.