February 4, 2021
In Pharmascience Inc. v. Pfizer Canada ULC (2020 FC 1175), the Federal Court dismissed Pfizer Canada ULC’s (“Pfizer”) appeal of Prothonotary Aalto’s decision to deny Pfizer’s request for an order requiring Pharmascience Inc. (“Pharmascience”) to produce additional documents in accordance with its disclosure obligations. In doing so, the Court recognized the principle of proportionality in the application of the test for an order that a party produce a further and better affidavit of documents.
Pfizer’s request for an order requiring Pharmascience to produce additional documents arose in the context of litigation over Pharmascience’s entitlement to damages for lost sales of its pregabalin medication. Pharmascience alleges that it incurred lost sales of its pregabalin medication as a result of Pfizer having commenced a prohibition application, thereby delaying its market-entry.
Pfizer sought an order requiring Pharmascience to produce additional documents concerning the actual and forecasted rebates that Pharmascience would have granted to retailers of its pregabalin medication, as well as the production of source documents used in the preparation of the aforementioned rebate documents. Pfizer asserted that these documents were relevant given the significant impact rebates have on the calculation of damages.
Prothonotary Aalto dismissed Pfizer’s request, finding that Pfizer was not entitled to the production of the additional documents it sought. Pfizer appealed this decision.
The Federal Court Decision
On appeal, the Federal Court considered three issues.
First, the Court considered whether Prothonotary Aalto misstated the legal test to be applied on a motion for a further and better affidavit of documents. The test on such a motion requires a party to show that the documents being sought likely exist, that they may reasonably be expected to contain relevant evidence, and that they are in the power, possession or control of the other party. Pfizer argued that the Prothonotary had misstated the test by requiring Pfizer to prove the existence of the documents it sought. The Court disagreed, noting that Prothonotary Aalto’s comment that Pfizer had not put forward direct evidence of the existence of the documents it sought was a statement of fact rather than an expression of Pfizer’s burden.
The Court further held that Prothonotary Aalto did not misstate the applicable test when he considered principles of ‘proportionality’. The Court clarified that a Prothonotary is entitled to take into account the context and circumstances in which a party’s request for ordering further documents is made. On the facts of this case, Prothonotary Aalto was entitled to consider the nature and breadth of the documents Pfizer sought, the previous evidence-gathering processes of discovery and refusals motions, and the proximity in time between the motion and the pending trial.
It is also worth noting that Pfizer’s accountant testified that he did not need the documents sought in order to make the necessary calculations. Rather, he simply wished to see them in order to verify the calculations he had already made.
Second, the Court considered whether Prothonotary Aalto misapplied the test for ordering a further and better affidavit of documents. Pfizer submitted that Prothonotary Aalto failed to properly consider the importance of relevance as a factor in the application of the test. In support of this submission, Pfizer argued that, because the documents Pharmascience had previously produced were inadequate for verifying its rebate calculations, the additional documents sought were both necessary and relevant to the calculation of rebates, and therefore, damages. The Court, however, was satisfied that the Prothonotary was aware of both the nature and relevance of the documents sought by Pfizer.
The final issue considered by the Court was whether Prothonotary Aalto failed to recognize Pharmascience’s ongoing duty of disclosure. The Court held that there was no indication that Prothonotary Aalto overlooked Pharmascience’s disclosure obligations. Rather, Prothonotary Aalto recognized the ongoing disclosure requirements of the parties and even emphasized in his decision that Pharmascience has had an obligation, since the outset of the litigation, to produce whatever relevant documentation it had in its possession.
Authors: Nargis Fazli and Sam Galway