Judgments

[2000] 4 F.C. 264

A-922-96

Apotex Inc. (Appellant) (Applicant)

v.

The Attorney General of Canada, The Minister of National Health and Welfare, Merck & Co., Inc. and Merck Frosst Canada Inc. (Respondents) (Respondents)

and

Eli Lilly Canada Inc., Pharmaceutical Manufacturers Association of Canada and Canadian Drug Manufacturers Association (Interveners) (Interveners)

Indexed as: Apotex Inc. v. Canada (Attorney General) (C.A.)

Court of Appeal, Décary, Sexton and Evans JJ.A.— Toronto, February 28, 29; Ottawa, May 12, 2000.

Patents — Validity of Patented Medicines (NOC) Regulations upheld as not ultra vires Patent Act, s. 55.2(4) — Latter provision to be construed broadly, not limited to those who have availed themselves of benefits conferred by Act, s. 55.2(1) or (2) in connection with particular medicine in dispute — Within Governor in Council’s authority conferred by Act, s. 55.2(4) to provide expressly Regulations apply to submissions made before they came into effect, but not yet decided by Minister.

Practice — Pleadings — Mootness, abuse of process — As Notice of Compliance (NOC) issued to Apotex for norfloxacin, request for order to issue NOC for same drug moot — Furthermore, as appellant had opportunity to challenge validity of Patented Medicines (NOC) Regulations in earlier prohibition proceedings with respect to same drug, Court could have applied res judicata and issue estoppel to refuse to permit Apotex to raise it herein — However, proceeding not dismissed as validity of Regulations remaining live issue (NOC issued on basis of single allegation), and declaration of legal status would still serve useful purpose — Furthermore, in view of uncertainty about Regulations when litigation started, obvious and continuing interest of Apotex in having validity of Regulations determined, and fact parties had prepared full argument on merits, Motions Judge properly exercised discretion not to dismiss proceeding on this ground without getting to merits.

Administrative law — Judicial review — Doctrine of legitimate expectations — Minister’s undertaking to consult Canadian Drug Manufacturers Association before Patented Medicines (Notice of Compliance) Regulations enacted at best personal undertaking of political nature not enforceable by Court; in any event, not binding on decision maker, i.e. Governor in Council.

Construction of statutes — Retroactivity — Application of Patented Medicines (NOC) Regulations to new drug submissions in pipeline when 1993 Regulations came into effect did not engage presumption against retroactivity — No vested right abrogated: in absence of clear legislative indication to contrary, no legal right to have application for statutory benefit determined in accordance with eligibility criteria in place when application made.

Apotex sought a compulsory licence for the generic form of Merck Frosst Canada’s patented drug norfloxacin, an antibiotic, under the system in effect before the Patented Medicines (Notice of Compliance) Regulations was enacted. In 1993, before Apotex could obtain the authorization to market the generic drug, the compulsory licence system was abolished. In the application for judicial review with which this appeal is concerned, Apotex sought an order directing the Minister of National Health and Welfare to issue a NOC for its version of norfloxacin and declaring that the Regulations were invalid because they were not authorized by subsection 55.2(4) of the Patent Act. The validity of the Regulations was also attacked on the ground that they were promulgated without prior consultation, in breach of a promise made by the Minister responsible for the statutory amendments that regulations would not be enacted until there had been consultation with the Canadian Drug Manufacturers Association (CDMA), a trade association representing primarily the interests of generic pharmaceutical manufacturers. This was an appeal from the Trial Division decision dismissing the application for judicial review.

Held, the appeal should be dismissed.

Per Décary J.A. (Sexton J.A. concurring): the reasons for judgment of Evans J.A. were agreed with except with respect to the issue of the breach of the undertaking to consult the CDMA before the enactment of regulations.

The Patent Act did not contain provisions stating that regulations proposed to be made pursuant to the Act must be published prior to their coming into force. Regulations made by the Governor in Council under section 55.2 of the Act were therefore subject to the general provisions of the Statutory Instruments Act and not required by law to be published prior to their coming into force. And unlike some of the other provisions of the Patent Act, section 55.2 imposed no duty to consult.

Assuming that the doctrine of legitimate expectations may apply to the regulation-making power of the Governor in Council, it would not apply in the circumstances of this case because the alleged undertaking is at best a personal undertaking of a political nature that is not enforceable in a court of law. In any event, even it the alleged undertaking could have bound the Minister and be enforceable by a court, it would not, in the circumstances, have bound the Governor in Council, the decision maker. Absent statutory authority or authority expressly delegated to a minister by the Governor in Council, a minister cannot bind the Governor in Council in the exercise of its regulation-making power.

Serious reservations were expressed as to the applicability of the doctrine of legitimate expectations to Cabinet in the exercise of its regulation-making power. In any event, Evans J.A.’s comments on this point were obiter dicta. The judiciary should be reluctant to move in and impose procedural restrictions of its own creation on the process leading to the making of regulations by the Governor in Council.

Per Evans J.A.: (1) Given the decision of the Supreme Court of Canada in Merck Frosst Canada Inc. v. Canada (Minister of National Health and Welfare), [1998] 2 S.C.R. 193, as a result of which Apotex was issued with a NOC for norfloxacin, the issue was moot. However, since the NOC was issued on the basis of a single allegation, the validity of the Regulations remained a live issue, and therefore the declaration of their legal status would still serve a useful purpose. Although Apotex had had an opportunity to challenge the validity of the NOC Regulations in the earlier prohibition proceeding brought by Merck Frosst with respect to norfloxacin, the Motions Judge properly exercised his discretion not to dismiss the proceeding on this ground without getting to the merits in view of the uncertainty about the Regulations when the litigation started, the obvious and continuing interest of Apotex in having the validity of the Regulations determined, and the fact that the parties had prepared full argument on the merits.

(2) Subsection 55.2(4) of the Patent Act was not limited to authorizing the making of Regulations that apply to persons who have taken advantage of subsection 55.2(1) or (2) in respect of new drug products that are the subject of prohibition proceeding. If Parliament had intended to limit the scope to the regulation-making power in that way, it would have used more precise, explicit language. The wording in the English and French versions support a broad interpretation. Furthermore, the nature and subjective definition of the purpose for which the power may be exercised supports a broad interpretation: “such regulations as the Governor in Council considers necessary for preventing the infringement of a patent”. For these reasons, and in accordance with the general directive of section 12 of the Interpretation Act (enactments deemed remedial), subsection 55.2(4) should be construed broadly.

(3) The Regulations, which purport to apply to NOC submissions that had been made, but not decided, when the Regulations came into effect, did not engage the presumption against retroactivity.

No vested right was thereby abrogated: in the absence of clear legislative indication to the contrary, no one has a legal right to have an application for a statutory benefit determined in accordance with the eligibility criteria in place when the application was made. Applicants for statutory rights normally have no more than a hope that the granting authority will render a favourable decision. As the applicant’s right herein was neither “accrued” nor “accruing”, the paragraph 44(c) of the Interpretation Act presumption against retroactive operation of the repeal of an enactment did not apply.

(4) The fact that the Minister of Consumer and Corporate Affairs did not consult the CDMA before regulations were enacted under subsection 55.2(4) of the Patent Act in spite of an undertaking to do so did not make the Regulations invalid.

It is settled law in Canada that the duty of fairness does not apply to the exercise of powers of a legislative nature, which would include the Regulations herein. However, it does not necessarily follow that subordinate legislation can lawfully be made in breach of a categorical and specific assurance of prior consultation given to an individual by a responsible minister of the Crown in the course of discharging departmental business. Nor does the law so provide.

In Reference re Canada Assistance Plan (B.C.), [1991] 2 S.C.R. 525, the Supreme Court specifically said that the doctrine of legitimate expectations has no application to the exercise of legislative powers as it would place a fetter on an essential feature of democracy. However, similar considerations do not apply to the exercise of delegated legislative powers which is not subject to the same level of scrutiny as primary legislation that must pass through the full legislative process. Moreover, the procedural rights created by the doctrine of legitimate expectations are always subject to proof that, in particular circumstances, the public interest requires that administrative action be taken promptly without complying with the promised procedures.

The legitimate expectations doctrine is not simply a branch of the duty of fairness, in the sense that it serves the same purposes as the participatory rights conferred by the duty of fairness. Hence, there is no reason to limit its reach to the exercise of statutory powers to which the duty applies. In the absence of binding authority to the contrary, the doctrine of legitimate expectations applies in principle to delegated legislative powers so as to create participatory rights when none would otherwise arise, provided that honouring the expectation would not breach some other legal duty, or unduly delay the enactment of regulations for which there was a demonstrably urgent need.

On the facts of this case, the words used were capable of creating a legitimate expectation that the Minister would consult the CDMA before any regulations made under subsection 55.2(4) came into effect. However an undertaking given by a minister that there will be consultation prior to the enactment of regulations cannot give rise to a legitimate expectation when the Governor in Council, not the minister, has the statutory authority to make the regulations in question. While there was no evidence that the Governor in Council expressly delegated to the Minister of Consumer and Corporate Affairs the authority to impose procedural restrictions on the exercise of the Cabinet’s regulation-making power, when, as here, the promise of prior consultation is made by the minister with primary responsibility for developing regulations and bringing them before the Cabinet, it may be open to those to whom the promise was made to seek judicial review to prevent the minister from taking proposed regulations to Cabinet until the promised consultation has occurred.

However, when, as here, the Cabinet has already approved the regulations, their validity cannot be impugned because they were enacted in the absence of the consultation that the minister promised. Given the legal protection afforded by the law to the confidentiality of cabinet proceedings and the narrow grounds on which the courts review the exercise of powers by the Cabinet, it would be impermissible for a court to enquire into the state of knowledge possessed by members of the Cabinet about prior procedural assurances given by a minister in order to determine whether otherwise valid regulations were knowingly enacted in breach of a ministerial undertaking.

In any event, the extensive and effective consultation that occurred after 1993, and prior to the amendments of the Regulations in 1998 which ironed out many of the subsequently identified wrinkles, would make it inappropriate to declare invalid the original Regulations as amended.

STATUTES AND REGULATIONS JUDICIALLY CONSIDERED

Canada Assistance Plan, R.S.C. 1970, c. C-1, s. 8.

Canada Labour Code, R.S.C., 1985, c. L-2, s. 159(2) (as enacted by S.C. 1996, c. 12, s. 3).

Canada Shipping Act, R.S.C., 1985, c. S-9, s. 95(1) (as am. by R.S.C., 1985 (3rd Supp.), c. 6, s. 5).

Canadian Human Rights Act, R.S.C., 1985, c. H-6, s. 15(4) (as am. by S.C. 1998, c. 9, s. 10).

Civil Air Navigation Services Commercialization Act, S.C. 1996, c. 20, s. 12(2).

Constitution Act, 1867, 30 & 31 Vict., c. 3 (U.K.) (as am. by Canada Act 1982, 1982, c. 11 (U.K.), Schedule to the Constitution Act, 1982, Item 1) [R.S.C., 1985, Appendix II, No. 5], ss. 11, 12, 13.

Copyright Act, R.S.C., 1985, c. C-42, s. 66.6(2) (as enacted by R.S.C., 1985 (4th Supp.), c. 10, s. 12).

Hazardous Materials Information Review Act, R.S.C., 1985 (3rd Supp.), c. 24, Part III, s. 48(1).

Hazardous Products Act, R.S.C., 1985, c. H-3, s. 19 (as am. by R.S.C., 1985 (3rd Supp.), c. 24, s. 1).

Interpretation Act, R.S.C., 1985, c. I-21, ss. 12, 35 “Governor in Council”, 44(c).

Interpretation Act (The), R.S.S. 1978, c. I-11, s. 23(1)(c).

Mackenzie Valley Resource Management Act, S.C. 1998, c. 25, ss. 90, 143, 150.

North American Free Trade Agreement Between the Government of Canada, the Government of the United Mexican States and the Government of the United States of America, December 17, 1992, [1994] Can. T.S. No. 2, Art. 1709(10).

Official Languages Act, R.S.C., 1985 (4th Supp.), c. 31, ss. 84, 86.

Patent Act, R.S.C., 1985, c. P-4, ss. 42 (as am. by R.S.C., 1985 (3rd Supp.), c. 33, s. 16), 55.2 (as enacted by S.C. 1993, c. 2, s. 4), 101(2) (as enacted idem, s. 7).

Patent Act Amendment Act, 1992, S.C. 1993, c. 2, ss. 4, 7, 11(1), 12(1).

Patented Medicines (Notice of Compliance) Regulations, SOR/93-133, ss. 2, 5(1) (as am. by SOR/98-166, s. 4), 6(1) (as am. idem, s. 5), (5) (as enacted, idem), 7(1) (as am. idem, s. 6).

Regulations Act, R.S.Q., c. R-18.1, ss. 8, 10, 12, 13.

Statutory Instruments Act, R.S.C., 1985, c. S-22.

CASES JUDICIALLY CONSIDERED

APPLIED:

Pulp, Paper and Woodworkers of Canada, Local 8 et al. v. Canada (Minister of Agriculture) et al. (1994), 174 N.R. 37 (F.C.A.); Scott v. College of Physicians and Surgeons of Saskatchewan (1992), 95 D.L.R. (4th) 706; [1993] 1 W.W.R. 533; 100 Sask. R. 291 (C.A.).

CONSIDERED:

Reference re Canada Assistance Plan (B.C.), [1991] 2 S.C.R. 525; (1991), 83 D.L.R. (4th) 297; [1991] 6 W.W.R. 1; 58 B.C.L.R. (2d) 1; 127 N.R. 161; Hutchins v. Canada (National Parole Board), [1993] 3 F.C. 505 (1993), 16 Admin. L.R. (2d) 236; 83 C.C.C. (3d) 563; 156 N.R. 205 (C.A.); Apotex Inc. v. Canada (Attorney General), [1994] 1 F.C. 742 (1993), 18 Admin. L.R. (2d) 122; 51 C.P.R. (3d) 339; 162 N.R. 177 (C.A.); affd [1994] 3 S.C.R. 1100; (1994), 176 N.R. 1; Old St. Boniface Residents Assn. Inc. v. Winnipeg (City), [1990] 3 S.C.R. 1170; (1990), 75 D.L.R. (4th) 385; [1991] 2 W.W.R. 145; 2 M.P.L.R. (2d) 217; 69 Man.R. (2d) 134; 46 Admin. L.R. 161; 116 N.R. 46; R v Secretary of State for Health, ex p US Tobacco International Inc, [1992] 1 All ER 212 (Q.B.D.).

REFERRED TO:

Merck Frosst Canada Inc. v. Canada (Minister of National Health and Welfare), [1998] 2 S.C.R. 193; (1998), 161 D.L.R. (4th) 47; 80 C.P.R. (3d) 368; Merck Frosst Canada Inc. v. Canada (Minister of National Health and Welfare) (1998), 80 C.P.R. (3d) 110; 144 F.T.R. 299 (F.C.T.D.); affd (1999), 86 C.P.R. (3d) 489; 236 N.R. 179 (F.C.A.); Merck Frosst Canada Inc. v. Canada (Minister of National Health and Welfare) (1998), 84 C.P.R. (3d) 492; 160 F.T.R. 161 (F.C.T.D.); Apotex Inc. v. Canada (Minister of National Health and Welfare) (1997), 153 D.L.R. (4th) 68; 76 C.P.R. (3d) 1; 219 N.R. 151 (F.C.A.); leave to appeal to S.C.C. refused, [1998] 1 S.C.R. viii; Deprenyl Research Ltd. v. Apotex Inc. (1994), 55 C.P.R. (3d) 171; 77 F.T.R. 62 (F.C.T.D.); affd (1995), 60 C.P.R. (3d) 501; 180 N.R. 323 (F.C.A.); Smith Kline and French Laboratories Limited v. Douglas Pharmaceuticals Limited, [1991] F.S.R. 522 (N.Z.C.A.); Roche Products, Inc. v. Bolar Pharmaceutical Co. Inc., 733 F.2d 858 (Fed. Cir. 1984); Hoffmann-LaRoche Ltd. v. Canada (Minister of National Health and Welfare) (1996), 67 C.P.R. (3d) 484; 109 F.T.R. 216 (F.C.T.D.); affd (1996), 70 C.P.R. (3d) 1; 70 C.P.R. (3d) 206; 205 N.R. 360 (F.C.A.); Director of Public Works v. Ho Po Sang, [1961] A.C. 901 (P.C.); Coughlan v. North and East Devon Health Authority, [1999] E.W.J. No. 3774 (C.A.) (QL); Lehndorff United Properties (Canada) Ltd. et al. v. Edmonton (City) (1993), 146 A.R. 37; 14 Alta. L.R. (3d) 67; 18 M.P.L.R. (2d) 146 (Q.B.); affd (1994), 157 A.R. 169; 23 Alta. L.R. (3d) 1; 23 M.P.L.R. (2d) 146 (C.A.); leave to appeal to S.C.C. refused, [1995] 2 S.C.R. vii; Bezaire v. Windsor Roman Catholic Separate School Board (1992), 9 O.R. (3d) 737; 94 D.L.R. (4th) 310; 8 Admin. L.R. (2d) 29; 57 O.A.C. 39 (Div. Ct.); Sunshine Coast Parents for French v. School District No. 46 (Sunshine Coast) (1990), 44 Admin. L.R. 252; 49 B.C.L.R. (2d) 252 (B.C.S.C.); Regina v. Liverpool Corpn. Ex parte Liverpool Taxi Fleet Operators’ Association, [1972] 2 Q.B. 299 (C.A.); Council of Civil Service Unions v. Minister for the Civil Service, [1985] A.C. 374 (H.L.); R. v. Lord Chancellor’s Department, ex parte Law Society, Crown Office List CO/991/93, June 22, 1993 (Q.B.D.); R. v. Brent London Borough Council, Ex p Gunning (1985), 84 L.G.R. 168 (Q.B.D.); Cardinal et al. v. Director of Kent Institution, [1985] 2 S.C.R. 643; (1985), 24 D.L.R. (4th) 44; [1986] 1 W.W.R. 577; 69 B.C.L.R. 255; 16 Admin. L.R. 233; 23 C.C.C. (3d) 118; 49 C.R. (3d) 35; 63 N.R. 353; Thorne’s Hardware Ltd. et al. v. The Queen et al., [1983] 1 S.C.R. 106; (1983), 143 D.L.R. (3d) 577; 46 N.R. 91; Attorney General of Canada v. Inuit Tapirisat of Canada et al., [1980] 2 S.C.R. 735; (1980), 115 D.L.R. (3d) 1; 33 N.R. 304; Canadian Assn. of Regulated Importers v. Canada (Attorney General), [1994] 2 F.C. 247 (1994), 17 Admin. L.R. (2d) 121; 164 N.R. 342 (C.A.); leave to appeal to S.C.C. refused, [1994] 2 S.C.R. vi; Carpenter Fishing Corp. v. Canada, [1998] 2 F.C. 548 (1997), 155 D.L.R. (4th) 572; 221 N.R. 372 (C.A.); leave to appeal to S.C.C. refused, [1998] 2 S.C.R. vi; Baker v. Canada (Minister of Citizenship and Immigration), [1999] 2 S.C.R. 817; (1999), 174 D.L.R. (4th) 193; 1 Imm. L.R. (3d) 1; 243 N.R. 22.

AUTHORS CITED

Joseph, Philip Austin. Constitutional and Administrative Law in New Zealand. Sydney, N.S.W.: Law Book Co., 1993.

Mullan, David. “Canada Assistance Plan — Denying Legitimate Expectation a Fair Start?” (1993), 7 Admin. L.R. (2d) 269

Mullan, David. “Confining the Reach of Legitimate Expectations: Case Comment: Sunshine Coast Parents for French v. School District No. 46 (Sunshine Coast)” (1991), 44 Admin. L.R. 245.

Small, Joan G. “Legitimate Expectations, Fairness and Delegated Legislation” (1995), 8 C.J.A.L.P. 129.

Wright, David. “Rethinking the Doctrine of Legitimate Expectations in Canadian Administrative Law” (1997), 35 Osgoode Hall L.J. 139.

APPEAL from a Trial Division decision (Apotex Inc. v. Canada (Attorney General), [1997] 1 F.C. 518 (1996), 71 C.P.R. (3d) 166; 123 F.T.R. 161) dismissing an application for judicial review wherein an order was sought directing the Minister of National Health and Welfare to issue a notice of compliance for the drug norfloxacin and for a declaration that the Patented Medicines (Notice of Compliance) Regulations are ultra vires the authority of the Governor in Council under subsection 55.2(4) of the Patent Act. Appeal dismissed.

APPEARANCES:

H. B. Radomski and David M. Scrimger for appellant.

Frederick B. Woyiwada for defendant Attorney General of Canada.

W. H. Richardson and Caroline Zayid for defendant Merck & Co. Inc.

Anthony G. Creber for defendants Eli Lilly Canada Inc. and Pharmaceutical Manufacturers Association of Canada.

Ronald G. Slaght and Timothy H. Gilbert for intervener Canadian Drug Manufacturers Association.

SOLICITORS OF RECORD:

Goodman Phillips & Vineberg, Toronto, for appellant.

Deputy Attorney General of Canada for defendant Attorney General of Canada.

McCarthy Tétrault, Toronto, for defendant Merck & Co. Inc.

Gowling, Strathy & Henderson, Ottawa, for defendants Eli Lilly Canada Inc. and Pharmaceutical Manufacturers Association of Canada.

Lenzcner Slaght Royce Smith Griffin, Toronto, for intervener Canadian Drug Manufacturers Association.

The following are the reasons for judgment rendered in English by

[1]        Décary J.A.: The facts and the issues have been described by my brother Evans and there is no need repeating them here. Like him, I have reached the conclusion that the appeal should be dismissed. I adopt his reasons with respect to the first three issues he has identified. I disagree, however, with his reasoning with regards to the fourth issue. The fourth issue is stated as follows:

Issue 4:  Are the Regulations invalid because they were made in breach of an undertaking by the Minister of Consumer and Corporate Affairs to the Canadian Drug Manufacturers Association that it would be consulted before regulations were enacted under subsection 55.2(4)?

[Answer: No.]

[2]        I will preface my analysis with a few words about the statutory context.

[3]        The Patent Act[1] (the Act), unlike many other statutes,[2] does not contain provisions stating that regulations proposed to be made pursuant to the Act must be published prior to their coming into force. Regulations made by the Governor in Council under section 55.2 [as enacted by S.C. 1993, c. 2, s. 4] of the Act are therefore subject to the general provisions of the Statutory Instruments Act.[3] They are not required by law to be published prior to their coming into force.

[4]        The Patent Act, like many other statutes,[4] contains provisions requiring prior consultation before certain regulations are adopted. Subsection 101(2) [as enacted by S.C. 1993, c. 2, s. 7] provides that certain regulations pertaining to the pricing of a medicine can only be made by the Governor in Council

101. …

(2) … on the recommendation of the Minister, made after the Minister has consulted with the provincial ministers of the Crown responsible for health and with such representatives of consumer groups and representatives of the pharmaceutical industry as the Minister considers appropriate.

Parliament has therefore clearly imposed on a minister of the Crown, acting on behalf of the Governor in Council, a statutory duty to consult with certain persons in certain circumstances. No such duty is imposed under section 55.2 of the Act.

[5]        Some statutes, such as the Official Languages Act, require both prior consultation with respect to proposed regulations (section 84) and prior publication of the proposed regulations once the consultation has been done (section 86).

[6]        In other jurisdictions, such as in the province of Quebec, a statute sets out the general rule that every proposed regulation shall be pre-published “with a notice stating, in particular, the period within which no proposed regulation may be made or submitted for approval but within which interested persons may transmit their comments to a person designated in the notice”.[5] In the Quebec statute, provision is made for the making of regulations without pre-publication in special circumstances such as when the situation is urgent (section 12), in which case the reason justifying the absence of prior publication must be published with the regulation (section 13).

[7]        All this to say that Parliament has already turned its mind to the need for pre-consultation and pre-publication and that courts should examine each given case both in light of the statute at issue and in light of the general statutory framework.

[8]        Turning now to my analysis, I would summarize as follows the conclusions I have reached:

(1) Assuming, for the sake of discussion, that the doctrine of legitimate expectations may apply to the regulation-making power of the Governor in Council, it would not apply in the circumstances of this case:

(a) because the alleged undertaking is at best a personal undertaking of a political nature that is not enforceable in a court of law

(b) in any event, it is not an undertaking that binds the decision maker, i.e. the Governor in Council.

(2) My brother Evans having found that the alleged undertaking did not in the circumstances bind the Governor in Council, his comments on the application of the doctrine of legitimate expectations to the regulation-making power of the Governor in Council are obiter dicta with respect to which I need only say that I have serious reservations.

1(a)     The alleged undertaking is at best a personal undertaking of a political nature that is not enforceable in a court of law

[9]        The alleged undertaking was made on February 5, 1993 by the then recently appointed Minister of Consumer and Corporate Affairs, Mr. Pierre A. Vincent. The six-page letter addressed to Mr. Kay, the president of the Canadian Drug Manufacturers Association (the Association) begins as follows:[6]

Dear Mr. Kay:

On behalf of my predecessor, the Honourable Pierre Blais, I acknowledge receipt of your letters of November 16, 1992 and December 3, 1992, concerning Bill C-91. The office of the President of the Privy Council, the Minister of National Defence and the Leader of the House of Commons, have also written to us on your behalf.

I would like to reply to the questions and observations that you raise in these letters:

[10]      The Minister then goes on to address seven issues that had been raised by Mr. Kay. His comments on the last issue (issue No. 7), and his concluding words, are as follows:[7]

7.   “Patentees do not need the additional remedy of (sic) that will be conferred on them if the government proceeds to condition the regulatory approval of generic medicines on the patent status of their innovative counterparts”.

Finally, you have objected to an amendment to Bill C-91 giving the Governor in Council authority to prescribe regulations preventing applicants, who use an innovator’s patent to obtain regulatory approval to sell their products, from obtaining such approval when an innovative competitor holds a valid patent pertaining to the item. You suggest that a patentee’s right to pursue patent infringement actions in the courts is sufficient as innovators are entitled to pursue interlocutory relief and to be compensated in damages if an injunction is not granted and it turns out that there was infringement. You further suggest that regulations under this amendment will serve to keep generic competitors off the market when any allegation of patent infringement is made.

I agree that, as a general rule, judicial remedies are sufficient to address patent infringement. However, the Government, in allowing generic competitors to make use of an innovator’s patent to obtain regulatory approval, will remove a patent right that would have otherwise been available to a patentee to prevent a generic competitor from undertaking such activities. The amendment to which you refer must be read in this context. It is designed to enable the Government to mitigate any harm flowing from its decision to allow these activities that would otherwise constitute patent infringement.

Subsection 55.2(1) will ensure that a generic competitor is in a position to market its product immediately after the expiry of any relevant patents. It is not the Government’s intention to keep a generic competitor off the market unless there is a valid patent that will be infringed by sale of the generic product. Any regulations drafted pursuant to the newly added subsection 55.2(4) will reflect this intention. Rest assured that you will be consulted before any such regulations are established.

I appreciate your bringing your views to our attention.

Yours sincerely,

Pierre A. Vincent

cc.  The Honourable Kim Campbell, P.C., Q.C., M.P.

Minister of National Defence

and Minister of Veterans Affairs

The Right Honourable Joe Clark, P.C., M.P.

President of the Queen’s Privy Council

or Canada and Minister Responsible for

Constitutional Affairs

The Honourable Harvie Andre, P.C., M.P.

Government House Leader and Minister of State

to Assist the Prime Minister and Minister

Responsible for the Canada Post

[Emphasis added.]

[11]      In my respectful view, the alleged undertaking, underlined supra, is nothing more in its full context than a brief assurance made in passing by a minister wearing his political hat. One would expect a true undertaking by a minister of the Crown to be salient, to include some specifics as to the form and timetable of the consultation and to be given to all interested persons in some official form. I find nothing of the sort in these casual words found at the end of the last paragraph of a lengthy letter. The words used by the Minister may, in retrospect, have been imprudent but the Association was naive if it believed that such a comment would be enforceable against the Minister in a court of law.

[12]      Furthermore, I am not so sure that the Association was that naive. Subsequent events tend, to the contrary, to confirm that the “undertaking argument” was a mere afterthought.

[13]      Neither the originating notice of motion dated October 14, 1993 by Apotex Inc. (Apotex), a member of the Association whose president in an affidavit filed in support of the motion describes himself as acting on behalf of the Association, nor the application for leave to intervene filed in July 21, 1994 by the Association refer to the February 5, 1993 letter containing the alleged undertaking by the Minister.

[14]      It further appears from the proceedings and affidavits filed in the Trial Division that the argument originally raised by Apotex and by the Association was with respect to the lack of consultation, not with respect to the breaking of a ministerial undertaking. It was only at the hearing before Mr. Justice MacKay, in 1996, that reference was made to the alleged undertaking of the Minister.[8]

[15]      Had the alleged undertaking contained in the February 5, 1993 letter the importance the Association now claims it has, one would have expected the Association to raise it much earlier in the process.

[16]      The short answer, therefore, to the Association’s submissions is that the alleged undertaking is not, and was never perceived by the Association to be, an undertaking enforceable in a court of law.

1(b)     The alleged undertaking is not an undertaking that binds the decision maker, i.e. the Governor in Council

[17]      In any event, even if the alleged undertaking was such as to bind the Minister and be enforceable in a court of law, it would not, in the circumstances, have bound the Governor in Council who is, after all, the decision maker.

[18]      A minister can make an undertaking having some legal consequences only with respect to a decision which is his, and his alone to make.[9] Absent statutory authority such as that found in subsection 101(2) of the Act or, arguably, absent authority expressly delegated to a minister by the Governor in Council, a minister cannot bind the Governor in Council in the exercise of its regulation-making power. It may be useful to recall that the Governor in Council, as defined by section 35 of the Interpretation Act,[10] is “the Governor General of Canada acting by and with the advice of […] the Queen’s Privy Council for Canada”, an obvious reference to sections 11, 12 and 13 of the Constitution Act, 1867.[11]

[19]      Given the absence of evidence that the Governor in Council expressly delegated to the Minister “the authority to impose procedural restrictions on the exercise of the Cabinet’s regulation-making power”, to use the words of my brother Evans at paragraph 133 of his reasons, it follows, in my respectful view, that even if the alleged undertaking by the Minister were found to attract judicial attention, it could not be invoked in the case at bar against the Governor in Council.

[20]      The ultimate finding made by my colleague, that the Minister did not bind the Cabinet in the circumstances, makes his intermediate finding with respect to the application of the doctrine of legitimate expectations obiter dictum.

(2)       Obiter dicta

[21]      While I would not normally feel the need to comment on what has ended up being obiter, the issue has been so throughly canvassed by my colleague that I must at least state that I have serious reservations as to the applicability of the doctrine of legitimate expectations to Cabinet in the exercise of its regulation-making power and that I would have been inclined to reach the same conclusion as that reached by Mr. Justice MacKay in the Trial Division.

[22]      As I have shown earlier, the need for prior consultation and for prior publication is something that has not escaped Parliament’s attention. Some may be of the view that what is now an exception in federal statutes should be raised to the status of a legal requirement applicable to all regulations, but that decision should in my opinion rest with Parliament. I would be reluctant to have the judiciary move in and impose procedural restrictions of its own creation on the process leading to the making of regulations by the Governor in Council.

[23]      When courts enter the realm of general public policy and are asked as in this case to hold Cabinet to an undertaking such that its discretion to make regulations would be fettered, they should be reminded of the comments made by Sopinka J. in Reference re Canada Assistance Plan (B.C.),[12] on the application of the doctrine of legitimate expectations to the exercise of legislative powers.

[24]      I appreciate that Sopinka J. was not dealing in that case with regulations made by the Governor in Council, but it seems to me that it would also be an extraordinary remedy to strike down regulations made by the Governor in Council solely because of the failure of a minister of the Crown to fulfill a promise of consultation given on behalf of Cabinet. I need not, however, reach a firm conclusion as the issue, in my view, does not arise in this case.

[25]      I note that in all the decisions relied upon by my colleague the regulations at issue were made either by a minister in his capacity as a minister, by a municipal authority or by a school board. No precedent was cited that related to regulations made by the Governor in Council.

[26]      In the end, I would dismiss the appeal with costs in favour of the Attorney General of Canada and Merck Frosst Canada Inc. and against Apotex Inc. and the Canadian Drug Manufacturers Association.

Sexton J.A.: I agree.

* * *

The following are the reasons for judgment rendered in English by

Evans J.A.:

A.        INTRODUCTION

[27]      In this appeal Apotex Inc. maintains that the learned Motions Judge erred in law when he dismissed Apotex’ contention that the Patented Medicines (Notice of Compliance) Regulations, SOR/93-133 were invalid because they were not authorized by subsection 55.2(4) of the Patent Act, R.S.C., 1985, c. P-4, as amended by the Patent Act Amendment Act, 1992, S.C. 1993, c. 2, section 4.

[28]      These Regulations are an important part of the major reform of patent law as it affects pharmaceutical products that came into effect in 1993. For the first time the law linked the protection of the rights of patent holders to the system of regulatory approval for new drugs by the Minister. The Regulations thus handed to the “brand-name” companies an important new weapon in their battles with generic drug manufacturers.

[29]      Previously, regulatory approval was issued in the form of a Notice of Compliance [NOC] as soon as the Minister of National Health and Welfare was satisfied that a new drug was safe and effective. However, the 1993 Regulations enabled a “brand-name” company that held a patent which might be infringed by a new generic drug to institute proceedings to prohibit the Minister from issuing an NOC for the new drug during the life of the patent. Meanwhile, from the date that a company applies for an order of prohibition the Regulations impose an automatic stay of 30 months (reduced to 24 months in 1998 [SOR/98-166]) restraining the Minister from issuing an NOC in respect of the generic drug pending the determination of the judicial review proceeding.

[30]      In view of the courts’ reluctance to grant interlocutory injunctions in patent infringement actions, it is not surprising that this statutory scheme has been described as “a draconian regime”: Merck Frosst Canada Inc. v. Canada (Minister of National Health and Welfare), [1998] 2 S.C.R. 193, at page 214.

[31]      In the application for judicial review with which this appeal is concerned Apotex seeks an order directing the Minister of National Health and Welfare to issue an NOC for its version of norfloxacin, an antibiotic, and declaring that the Regulations are invalid. Apotex maintains that, properly construed, subsection 55.2(4) of the Patent Act authorizes the making of regulations that link patent protection and regulatory approval in a significantly narrower range of situations than those currently included in the Regulations.

[32]      The validity of the Regulations is also attacked on the ground that they were promulgated without prior consultation, in breach of a promise made by the Minister responsible for the statutory amendments that regulations would not be enacted until there had been consultation with the Canadian Drug Manufacturers Association, a trade association representing primarily the interests of generic pharmaceutical manufacturers.

B.        THE LEGISLATIVE FRAMEWORK

[33]      Although the statutory scheme from which this litigation arises is complex, it is only necessary to set out here those provisions that are of most direct relevance to the issues in dispute in this appeal.

Patent Act, R.S.C., 1985, c. P-4 [sections 42 (as am. by R.S.C., 1985 (3rd Supp), c. 33, s. 16), 55.2 (as enacted by S.C. 1993, c. 2, s. 4)].

42. Every patent granted under this Act … shall, subject to this Act, grant to the patentee and the patentee’s legal representatives for the term of the patent, from the granting of the patent, the exclusive right, privilege and liberty of making, constructing and using the invention and selling it to others to be used, …

…

55.2 (1) It is not an infringement of a patent for any person to make, construct, use or sell the patented invention solely for uses reasonably related to the development and submission of information required under any law of Canada, a province or a country other than Canada that regulates the manufacture, construction, use or sale of any product.

(2) It is not an infringement of a patent for any person who makes, constructs, uses or sells a patented invention in accordance with subsection (1) to make, construct or use the invention, during the applicable period provided for by the regulations, for the manufacture and storage of articles intended for sale after the date on which the term of the patent expires.

(3) The Governor in Council may make regulations for the purposes of subsection (2), but any period provided for by the regulations must terminate immediately preceding the date on which the term of the patent expires.

(4) The Governor in Council may make such regulations as the Governor in Council considers necessary for preventing the infringement of a patent by any person who makes, constructs, uses or sells a patented invention in accordance with subsection (1) or (2) including, without limiting the generality of the foregoing, regulations

…

(e) generally governing the issue of a notice, certificate, permit or other document referred to in paragraph (a) in circumstances where the issue of that notice, certificate, permit or other document might result directly or indirectly in the infringement of a patent.

(5) In the event of any inconsistency or conflict between

(a) this section or any regulations made under this section, and

(b) any Act of Parliament or any regulations made thereunder,

this section or the regulations made under this section shall prevail to the extent of the inconsistency or conflict.

Patented Medicines (Notice of Compliance) Regulations, SOR/93-133 [sections 5(1) (as am. by SOR/98-166, s. 4), 6(1) (as am. idem, s. 5), (5) (as enacted idem), 7(1) (as am. idem, s. 6)].

5. (1) Where a person files or has filed a submission for a notice of compliance in respect of a drug and wishes to compare that drug with, or make reference to, another drug that has been marketed in Canada pursuant to a notice of compliance issued to a first person and in respect of which a patent list has been submitted, the person shall, in the submission, with respect to each patent on the register in respect of the other drug,

(a) state that the person accepts that the notice of compliance will not issue until the patent expires; or

(b) allege that

(i) the statement made by the first person pursuant to paragraph 4(2)(c) is false,

(ii) the patent has expired,

(iii) the patent is not valid, or

(iv) no claim for the medicine itself and no claim for the use of the medicine would be infringed by the making, constructing, using or selling by that person of the drug for which the submission for the notice of compliance is filed.

…

6. (1) A first person may, within 45 days after being served with a notice of an allegation pursuant to paragraph 5(3)(b) or (c), apply to a court for an order prohibiting the Minister from issuing a notice of compliance until after the expiration of a patent that is the subject of the allegation.

…

(5) In a proceeding in respect of an application under subsection (1), the court may, on the motion of a second person, dismiss the application

(a) if the court is satisfied that the patents at issue are not eligible for inclusion on the register or are irrelevant to the dosage form, strength and route of administration of the drug for which the second person has filed a submission for a notice of compliance; or

(b) on the ground that the application is redundant, scandalous, frivolous or vexatious or is otherwise an abuse of process.

…

7. (1) The Minister shall not issue a notice of compliance to a second person before the latest of

…

(e) subject to subsections (2), (3) and (4), the expiration of 24 months after the receipt of proof of the making of any application under subsection 6(1), and

[34]      While not immediately germane to the particular issues raised here, it is important to note that section 55.2 and the implementing Regulations were, in a sense, ancillary to the principal reform made to the Patent Act by the Patent Act Amendment Act, 1992. This was the abolition of the compulsory licence under which, subject to the payment of a royalty, generic drug manufacturers had been able to market in Canada a competing drug that infringed another’s patent.

[35]      The effect of the 1992 Act was thus to restore the rights of those holding patents in pharmaceutical products to their position before the introduction of compulsory licensing in 1923 and to bring them back into the mainstream of patent law as it applies to other inventions. Compulsory licences were abolished in Canada in order to comply with Article 1709(10) of the North American Free Trade Agreement [North American Free Trade Agreement Between the Government of Canada, the Government of the United Mexican States and the Government of the United States of America, December 17, 1992, [1994] Can. T.S. No. 2].

[36]      However, in order to ensure that a generic company is in a position to have its infringing drug on the market the moment that the patent on the brand-name expires, subsections 55.2(1) and (2) authorize activities that would otherwise constitute an infringement of the patent. Subsection (1) permits use of the patented invention by a “second person” to demonstrate in its new drug submission for an NOC that its drug is equivalent to the patented medicine. Subsection (2) allows a “second person” to stockpile its otherwise infringing product for sale immediately after the expiry of the patent.

[37]      Although not relevant to the disposition of this appeal, I note that in a recent ruling the World Trade Organisation has upheld the “regulatory work-up” exemption in subsection (1), but not the “stockpiling” exemption in subsection (2): Canada-Patent Protection of Pharmaceutical Products (Complaint by the European Communities) (2000) W.T.O. Doc. WT/DS114/R (Panel Report).

[38]      Subsection 55.2(4) is something of a quid pro quo for the concessions contained in subsections (1) and (2), in the sense that it authorizes the Governor in Council to make regulations to protect patent holders against competition from infringing pharmaceutical products before the patent expires by linking patent rights to the issue of an NOC.

[39]      Before the Motions Judge, whose decision is reported as Apotex v. Canada (Attorney General), [1997] 1 F.C. 518(T.D.), Apotex relied on several grounds for alleging that the Regulations were invalid. At the hearing of the appeal, however, the issues were reduced to four, and it is to these that I now turn.

C.        ISSUES AND ANALYSIS

Issue 1:     Should the appeal be dismissed for mootness or abuse of process?

[40]      The respondents argued as a preliminary point that the appeal should be dismissed as moot because, as a result of a decision by the Supreme Court of Canada in favour of Apotex (Merck Frosst Canada Inc. v. Canada (Minister of National Health and Welfare), [1998] 2 S.C.R. 193), the Minister issued it with an NOC for norfloxacin. Accordingly, the request for an order directing the Minister to issue an NOC would seem redundant. Moreover, since the attack on the validity of the Regulations provided the basis for the order sought to direct the Minister to issue the NOC, the request for declaratory relief, too, had been overtaken by events. Further, it was argued, it was not appropriate to consider aspects of the validity of the Regulations beyond those raised by the facts of this case.

[41]      The decision of the Trial Division under appeal in the instant case was rendered before the litigation referred to above had been decided by the Supreme Court of Canada. Counsel for Apotex conceded, in effect, that the request for an order directing the Minister to issue an NOC was now moot. However, the validity of the Regulations remains a live issue, and therefore a declaration of their legal status would still serve a useful purpose. As a major generic drug manufacturer and marketer, Apotex has an interest in the validity of the Regulations that is not confined to this particular case.

[42]      In addition, while Apotex had indeed secured an NOC authorizing it to market norfloxacin, this regulatory approval only applies to the particular allegation on which Apotex had successfully answered the prohibition proceeding brought by Merck Frosst. This was that Apotex was not infringing the norfloxacin patent, of which Merck Frosst was an exclusive sub-licensee, because Apotex had purchased norfloxacin in bulk from a supplier who had manufactured it under a compulsory licence from Merck Frosst.

[43]      However, when Apotex has exhausted this source it will need another NOC to permit it to market norfloxacin, and battle is likely to be rejoined on whether there is another ground on which Apotex may successfully allege that it is not infringing Merck Frosst’s norfloxacin patent. Indeed, this Court has already upheld a decision of a Trial Division judge who concluded that an allegation of a non-infringing process for producing norfloxacin was unfounded because the process relied on was not substantially different from Merck Frosst’s: Merck Frosst Canada Inc. v. Canada (Minister of National Health and Welfare) (1998), 80 C.P.R. (3d) 110 (F.C.T.D.); affd (1999), 86 C.P.R. (3d) 489 (F.C.A.). At least one other decision respecting an allegation of a different non-infringing process for manufacturing norfloxacin is apparently on its way to this Court: Merck Frosst Canada Inc. v. Canada (Minister of National Health and Welfare) (1998), 84 C.P.R. (3d) 492 (F.C.T.D.).

[44]      Despite the costs, both public and private, inevitably associated with proceedings instituted seriatim, it is settled law in this Court that a “second person” may make a series of distinct allegations of non-infringement and thereby force the patent holder to institute a new prohibition proceeding to counter each one: Apotex Inc. v. Canada (Minister of National Health and Welfare) (1997), 153 D.L.R. (4th) 68 (F.C.A.); leave to appeal refused, [1998] 1 S.C.R. viii. In order to prevent abuse of the process of the Court, this should only be permitted when the subsequent allegation is based on new facts, such as the later discovery of another process for making the medicine that does not infringe the patent.

[45]      The Motions Judge considered a different abuse of process argument. This was to the effect that this proceeding was an abuse of the process of the Court because Apotex had had an opportunity to challenge the validity of the NOC Regulations in the earlier prohibition proceeding brought by Merck Frosst with respect to norfloxacin, in which Apotex eventually succeeded in the Supreme Court of Canada: see Merck Frosst Canada Inc. v. Canada (Minister of National Heath and Welfare), supra.

[46]      The learned Motions Judge was of the view that Apotex could have raised the validity of the Regulations in that proceeding and that, since res judicata and issue estoppel apply in principle to prohibition proceedings brought under the NOC Regulations, the Court could refuse to permit Apotex to raise it in the present proceeding. However, in view of the uncertainty about the Regulations when the litigation was started, the obvious and continuing interest of Apotex in having the validity of the Regulations determined, and the fact that the parties had prepared full argument on the merits, the Motions Judge exercised his discretion not to dismiss the proceeding on this ground without getting to the merits.

[47]      I am not persuaded that the Motions Judge erred in the exercise of his discretion to hear and determine the application for judicial review in so far as it seeks a declaration that the Regulations are ultra vires, despite Apotex’ failure to challenge the validity of the Regulations in the previous prohibition proceedings dealing with the same medicine.

[48]      For reasons similar to those given by the Motions Judge on the abuse of process point, I would not dismiss the request for a declaration of invalidity as moot. However, this does not necessarily mean that the Court will be prepared to determine the validity of the Regulations in the abstract, rather than on the basis of the facts of this case.

Issue 2:  Does subsection 55.2(4) only authorize the making of regulations that apply to a person who has taken advantage of subsection 55.2(1) or (2) in respect of the new drug product that is the subject of the prohibition proceeding?

[49]      Apotex made its new drug submission (NDS) for norfloxacin in 1989, well before the statutory abolition of compulsory licences by the 1992 Act and the statutory linkage of patent protection with the issue of NOCs. It contended that its NDS could not validly be brought within the scope of the Regulations. It is true that subsection 5(1) [prior to the 1998 amendment] of the Regulations states that they apply to “a person files or, before the coming into force of these Regulations, has filed a submission for a notice of compliance” [emphasis added]. However, in the submission of Apotex, Parliament did not authorize this.

[50]      Apotex argues that the underlined words in subsection 5(1) are invalid because they purport to give the Regulations retroactive effect. In the absence of an express or necessarily implied grant of statutory power to this effect, it is normally presumed that Parliament does not intend a regulation-making power to be exercised retroactively. This argument is considered separately as Issue 3.

[51]      In addition, Apotex challenges the validity of the Regulations on a broader basis. It will be convenient at this point to set out again the part of the provision on which Apotex relies for this argument:

55.2 …

(4) The Governor in Council may make such regulations as the Governor in Council considers necessary for preventing the infringement of a patent by any person who makes, constructs, uses or sells a patented invention in accordance with subsection (1) or (2) including, without limiting the generality of the foregoing, regulations

[52]      Apotex argues that this provision expressly imposes two limitations on the Governor in Council’s regulation-making power. First, regulations can only be made to the extent that the Governor in Council considers them necessary for preventing the infringement of a patent. However, in view of the subjective terms in which this power is granted, counsel for Apotex wisely abandoned his previous argument that, since the Regulations covered situations in which there may have been no breach of a patent, they were not “necessary for preventing the infringement of a patent”. I would only note at this point that the broad, subjective nature of the power delegated by subsection 55.2(4) may have a more general relevance in determining the validity of the Regulations.

[53]      Second, such regulations can only be applied to a “second person” who has used a patented invention “in accordance with subsection (1) or (2)”. This means, according to counsel, that since Apotex has not availed itself of either subsection, because it made its NDS before subsection 55.2 was enacted, the Regulations cannot apply to the submission for an NOC for norfloxacin that is under consideration here. Further, since Apotex had a licence to use the patented product, it did not need the benefit of subsection 55.2(1) in any event.

[54]      Hence, the argument goes, subsection 5(1) of the Regulations is invalid in so far as it purports to extend the Regulations to a submission filed, but not decided, before the Regulations came into effect, or to apply them to second persons who for other reasons have not availed themselves of the benefit of subsection 55.2(1) or (2).

[55]      In addition to the plain meaning of subsection 55.2(4), counsel for Apotex relies on the Regulatory Impact Analysis Statement issued with the Regulations as evidence of the legislative intent underlying the scheme. It says that regulations are needed to ensure that generic drug companies do not abuse the authorization by subsections (1) and (2) of what would otherwise have been a patent infringement: using the patented invention as a comparator for the purpose of obtaining an NOC and stockpiling, and then starting to sell an infringing product prior to the expiry of the patent.

[56]      Hence, if the “second person” has not availed itself of subsection (1) or (2), it will not have gained an advantage which it could abuse, and thus it is outside the mischief at which subsection 55.2(4) is aimed. If the “brand-name” company believes that a generic product infringes its patent, it is open to it to institute an action for infringement.

[57]      Moreover, counsel submitted, the purpose of the Patent Act Amendment Act, 1992 was to abolish compulsory licences for infringing pharmaceutical products, including those already granted after December 20, 1991 (subsection 12(1)) and, with some exceptions, to place patent holders for these products in much the same position as other patentees. If a generic manufacturer can produce and market a patented medicine without infringing the patent (for example, by discovering a non-infringing process when the patent is for the product manufactured by a particular process, or by obtaining a licence from the patentee), it is free to do so, provided that it obtained an NOC as a result of satisfying the Minister that its product is safe and effective.

[58]      However, in recognition of the special features and importance of the pharmaceutical industry, the Patent Act Amendment Act, 1992 in some ways limits the rights of pharmaceutical patent holders. For example, compulsory licences granted prior to December 20, 1991 remain valid (subsection 11(1)), and the Patented Medicines Review Board was given additional powers over the prices charged for patented medicines (section 7).

[59]      Subsections 55.2(1) and (2) are the modifications to the statutory restoration of patent holders’ rights relevant to this appeal. They are designed to ensure that patentees do not enjoy a de facto monopoly beyond the life of the patent by virtue of the length of time that it would take for a generic to obtain an NOC if it could not start its “regulatory work-up”, or its manufacture and stockpiling of the product, until the patent had expired. Hence, it was argued, in order to ensure minimal deviation from the Act’s central purpose, subsection 55.2(4) should be interpreted to authorize regulations that enhance the rights of patentees only in situations where a “second person” has taken advantage of the relaxation of patentees’ rights contained in subsections (1) and (2).

[60]      This narrow interpretation of the scope of subsection 55.2(4) is said to be justified because there is nothing in the overall scheme of the Act to indicate that it was the intention of Parliament to afford patentees of pharmaceutical products a degree of protection, such as that conferred by the Regulations, that goes well beyond that enjoyed by patentees of other products who must rely on the normal legal remedies available in the courts for preventing, or seeking compensation for, patent infringement.

[61]      The learned Motions Judge rejected this argument, preferring an interpretation of subsection 55.2(4) in which the words, “any person who makes, constructs, uses or sells a patented invention in accordance with subsection (1) or (2)” are interpreted as “describing the general class of persons to whom regulations may be made applicable”, not the activity in which a second person has engaged with respect to the particular product that is the subject of the proceeding. Hence, he concluded (supra, at page 550):

… regulations under subsection 55.2(4) may be adopted, with reference to all applicants for an NOC who did not have a vested right to a licence at the time the amending Act was adopted, whether or not they had already applied.

[62]      Any other interpretation, he held, would lead to the anomaly of giving a compulsory licence to Apotex and others whose applications for an NOC were in the pipeline when the new statutory regime came into effect, even though the provisions creating such licences were repealed when the Patent Act Amendment Act, 1992 came into force and compulsory licences granted before that date, but after December 20, 1991, were invalidated.

[63]      Counsel seized on this part of the Motions Judge’s reasons as indicative of a confusion between an NOC and a compulsory licence. Counsel pointed out that, before 1993 a “second person” who produced a pharmaceutical product by a non-infringing process did not require a compulsory licence, and thus would not have to have paid a royalty to the patent holder on the sales. It would be consistent with the new regime, it was argued, that NOC applications in the pipeline be examined by the Minister for safety and effectiveness, and an NOC issued if they satisfied these criteria. If, when the product was marketed, a “first person” believed that its patent was thereby infringed it could institute an action for patent infringement in the normal manner.

[64]      Despite the argument seductively advanced on behalf of Apotex by Mr. Radomski, I am unable to accept it. The text of subsection 55.2(4) is linguistically capable of bearing either of the meanings that were posited in argument. However, if Parliament had intended to limit the scope of the regulation-making power to those who had taken advantage of subsection (1) or (2), it would have been more natural if the subsection had referred to “any person who has made, constructed, used or sold a patented invention in accordance with subsection (1) or (2)”. The use of the present tense is more apt to describe a generic drug manufacturer at large, rather than one who has done any of the listed things on a particular occasion.

[65]      While I recognize that the words chosen are a singularly odd way of expressing this idea, I find some comfort in the French version of subsection 55.2(4) which does not use the word “person”, and uses the expression “au sens des paragraphes (1) ou (2)”, instead of “en conformité avec les paragraphes (1) ou (2)” meaning “in accordance with”.

[66]      Since the words of the statutory text do not point ineluctably to one conclusion, does the statutory context resolve the ambiguity? In my opinion, the nature and subjective definition of the purpose for which the power may be exercised supports a broad interpretation: “such regulations as the Governor in Council considers necessary for preventing the infringement of a patent”.

[67]      Thus, the Governor in Council could well consider that any second person, who was seeking an NOC for a new medicine that was on a first person’s patent list, might be tempted, if the NOC were granted, to market its product prior to the expiry of the patent, and leave the first person to resort to whatever rights it was able to establish in a patent action. Given the reluctance of the courts to grant interlocutory injunctions in patent cases, and the length of time that it typically takes for a keenly contested patent matter to get to trial, the second person, armed with an NOC, would be able, in effect, to help itself to a de facto compulsory licence. The “royalty” payable would be the figure at which the dispute was settled, or the sum that a court ultimately awarded by way of damages or an accounting of profits following a finding of infringement.

[68]      It would certainly have been consistent with the abolition of the compulsory licence for Parliament to have conferred a regulation-making power that was wide enough to prevent this kind of abuse. Viewed in this light, it would seem immaterial to the legislative intent whether or not the second person had taken advantage of the relaxation in patent law effected by subsection (1) or (2) with respect to a particular drug.

[69]      Counsel for Apotex argued that this interpretation offends the scheme of the 1992 Act because, if accepted, it would create new rights for patentees, rather than simply restoring rights removed by the previous compulsory licensing provisions. However, it is more accurate to say that the Act creates only a new remedy for protecting the existing rights of patentees from infringement, namely enforcement proceedings for marketing a medicine without an NOC.

[70]      Of course, there will be situations in which the second person is able to establish, in either a prohibition proceeding or a private patent action, that its product is made by a non-infringing process or that the first person’s patent is invalid. Meanwhile, the second person will have been denied an NOC and kept out of the market. Again, it may be asked, how is this result consistent with the stated legislative aim of protecting patentees from infringement?

[71]      The answer, surely, is that whether a second person is infringing may not be self-evident, but will require proof, which may be highly technical or inconclusive, or the determination of difficult legal questions about the construction or validity of the patent. An NOC is withheld from all second persons, even those who ultimately succeed in defeating the first person’s claim, in order to protect patentees against those who, if granted an NOC, might be tempted to infringe. Moreover, since the time taken to process an NOC application means that the 24 months’ statutory stay will often have expired by the time that the process is complete, the regime may be less draconian in operation than it may seem on paper.

[72]      For these reasons, and in accordance with the general directive of section 12 of the Interpretation Act, R.S.C., 1985 c. I-21, I have concluded that subsection 55.2(4) should be construed broadly, so that its application is not limited to those who have availed themselves of the benefits conferred by subsection (1) or (2) in connection with the particular medicine in dispute.

[73]      I recognize that the Regulatory Impact Analysis Statement supports the more limited interpretation advanced on behalf of Apotex, as does a letter of February 5, 1993 from the Minister of Consumer and Corporate Affairs to the Canadian Drug Manufacturers Association (CDMA), in which the Minister said of subsection 55.2(4):

It is designed to enable the Government to mitigate any harm flowing from its decision to allow those activities that would otherwise constitute a patent infringement.

[74]      However, I see no reason to regard these as necessarily more reliable guides to Parliament’s intention than the fact that, in enacting the Regulations, the Governor in Council obviously took a broader view of the legislative power delegated by subsection 55.2(4) than that indicated by these documents.

[75]      Although this suffices to dispose of Apotex’ main contention on the validity of the Regulations, I should also deal with another line of argument that was debated at some length at the hearing. This concerns the relationships between subsections 55.2(1) and (2) of the Act on the one hand, and subsection 5(1) of the Regulations on the other. The question is whether the persons caught by subsection 5(1) must by definition also have availed themselves of subsection (1) or (2). If so, the Regulations will still be valid, even if subsection 55.2(4) is construed as narrowly as Apotex argues that it should be.

[76]      Subsection 5(1) provides that the Regulations apply to persons who have filed a submission for an NOC and wish “to compare that drug with, or make reference to, another drug that has been marketed in Canada pursuant to a notice of compliance issued to a first person in respect of which a patent list has been submitted” [emphasis added]. On the other hand, subsection 55.2(1) refers to a person who has used the “patented invention” [emphasis added] for the purpose of obtaining regulatory approval for that person’s new medicine.

[77]      Counsel for Apotex argued that, contrary to the assumption on which subsection 5(1) of the Regulations seems to have been drafted, a person could use a drug for comparison or reference purposes without thereby necessarily making use of a “patented invention” within the meaning of subsection 55.2(1). He submitted that this would be true, for example, in the case of a “product by process” patent, since to compare two drugs in order to obtain an NOC would not involve use of the “patented invention”, which was not simply the drug, but the drug as made by a particular process. The process by which the medicine is manufactured is irrelevant to the comparative exercise undertaken to establish the equivalence of the medicines for the purpose of demonstrating safety and effectiveness.

[78]      I cannot accept this argument. In Deprenyl Research Ltd. v. Apotex Inc. (1994), 55 C.P.R. (3d) 171 (F.C.T.D.); affd (1995), 60 C.P.R. (3d) 501 (F.C.A.), it was held that a claim for a particular process for producing a product, or a “pure process” claim, was not covered by the NOC Regulations because it was not a “claim for the medicine itself” within the meaning of section 2. However, the Regulations do include patents that contain a claim for a medicine when made by a particular process, or “a process dependant claim”.

[79]      Accordingly, since the product is always included in the patent’s claim, whenever a generic manufacturer submits an abbreviated new drug submission and compares its product with a product on a first person’s patent list, it is using “a patented invention” (assuming, of course, that the patent is subsequently held to be valid), whether it is the subject of a “process dependant patent” or a “product only” patent.

[80]      Although initially made prior to the introduction of the Regulations, Apotex’ submission for an NOC for its noxfloxacin, including the comparative analysis, remained before the Minister after March 1993, until July when the licence arrangement came into effect. This, together with Apotex’ possession for regulatory purposes of a sample of the patented product, constituted use of a patented invention within the meaning of subsection 55.2(1): see Smith Kline and French Laboratories Limited v. Douglas Pharmaceuticals Limited, [1991] F.S.R. 522 (N.Z.C.A.); Roche Products, Inc. v. Bolar Pharmaceutical Co. Inc., 733 F.2d 858 (Fed. Cir. 1984); Hoffmann-La Roche Ltd. v. Canada (Minister of National Health and Welfare) (1996), 67 C.P.R. (3d) 484 (F.C.T.D.), at page 489; affd (1996), 70 C.P.R. (3d) 1 and 206 (F.C.A.).

[81]      For these reasons Apotex has not established that the NOC Regulations are in a substantive sense ultra vires subsection 55.2(4).

Issue 3:  In the absence of an express statutory power authorizing the Governor in Council to enact regulations with retroactive effect, are the Regulations invalid in so far as they purport to apply to NOC submissions that had been made, but not decided, when the Regulations came into effect?

[82]      In my view, the application of the Regulations to new drug submissions that were in the pipeline when the 1993 Regulations came into effect did not engage the presumption against retroactivity. No vested right was thereby abrogated: in the absence of a clear legislative indication to the contrary, no one has a legal right to have an application for a statutory benefit determined in accordance with the eligibility criteria in place when the application was made. Applicants for statutory rights normally have no more than a hope that the granting authority will render a favourable decision (see, for example, Director of Public Works v. Ho Po Sang, [1961] A.C. 901 (P.C.)), although a refusal of an application may be set aside if not in accordance with the law in force when the decision was made.

[83]      By virtue of the Interpretation Act, R.S.C., 1985, c. I-21, paragraph 44(c), the presumption against retroactive operation of the repeal of an enactment protects rights that are both “accrued” and “accruing”. If Apotex’ application to the Minister did not constitute an accrued right to an NOC on the basis of statutory criteria in place when the application was made, was its right “accruing” within the meaning of paragraph 44(c), and thus presumptively not subject to the regulation-making power conferred on the Governor in Council by subsection 55.2(4) of the Patent Act?

[84]      Writing a separate concurring opinion in Scott v. College of Physicians and Surgeons of Saskatchewan (1992), 95 D.L.R. (4th) 706 (Sask. C.A.), Cameron J.A. held (at page 719) that the identical provision in paragraph 23(1)(c) of The Interpretation Act, R.S.S. 1978, c. I-11 protected only rights that would inevitably arise in due course, and not those that may

… ripen into an acquired or accrued right or obligation at a future time. As will be readily apparent, the implications of that in relation to the effectiveness of repeal are simply too wide to be acceptable.

[85]      A similar point was made in Hutchins v. Canada (National Parole Board), [1993] 3 F.C. 505 (F.C.A.), leave to appeal refused [1994] 1 S.C.R. vii, where the Court held that the right of a prisoner to a hearing under a repealed provision in the statute was not “accruing” at the time of the repeal, even though the applicant had taken all the steps that he could take to institute the proceeding prior to the repeal.

[86]      On the other hand, Apotex Inc. v. Canada (Attorney General), [1994] 1 F.C. 742 (C.A.); affd [1994] 3 S.C.R. 1100, provides an example of an “accruing” right within the scope of the presumption. In that case, the Minister had completed the regulatory approval process when the 1993 Regulations came into effect, so that all that remained was the formal step of issuing the NOC. In other words, at the time of the repeal, the grant of an NOC did not depend on a determination by the Minister, but followed inevitably from the approval of the application.

[87]      It was therefore within the authority for the Governor in Council conferred by subsection 55.2(4) to provide expressly in the Regulations that they apply to submissions made before they came into effect, but not yet decided by the Minister. Accordingly, it was not unlawful for the Minister to refuse to issue an NOC to Apotex for the medicine norfloxacin, even though the submission was made before the grant of regulatory approval was linked to patent protection.

Issue 4:  Are the Regulations invalid because they were made in breach of an undertaking by the Minister of Consumer and Corporate Affairs to the Canadian Drug Manufacturers Association that it would be consulted before regulations were enacted under subsection 55.2(4)?

(i)         Factual background

[88]      In July 1992 the CDMA was advised by a senior official in National Health and Welfare that regulatory approval of new drugs through the issue of a Notice of Compliance would be linked to the protection of the rights of existing patent holders although, as then drafted, Bill C-91 contained nothing to this effect.

[89]      In the following month, the Association responded to record its opposition to any such scheme. These sentiments were repeated in November during the public hearings while Bill C-91 was in Committee stage. Meanwhile, the Pharmaceutical Manufacturers Association of Canada, a not-for-profit corporation representing primarily “brand-name” pharmaceutical companies, urged before the Committee that such a linkage be established through regulations.

[90]      In December 1992, the CDMA met with officials from the Department of Consumer and Corporate Affairs which had the carriage of the amendments to the Patent Act. The officials advised the Association that an amendment to Bill C-91 was to be introduced which would authorize the Governor in Council to enact regulations linking the previously separate issues of possible patent infringement and the grant of regulatory approval by the Minister of National Health and Welfare for new drugs.

[91]      Despite the strong objection of the CDMA, which it communicated in letters to the Minister of Consumer and Corporate Affairs, and to the Minister of Industry, Science and Technology Canada, Bill C-91 was amended at third reading to add what became subsection 55.2(4) of the Patent Act. This authorized the making of regulations of the kind to which the CDMA had objected.

[92]      After the passage of the Bill in the House of Commons, including this enabling provision, industry representatives made further submissions in January 1993 before the Senate Committee that was considering it. Meetings were also held at this time between the CDMA and a Deputy Minister of National Health and Welfare at which it was said that the Government intended to consult with the industry before enacting implementing regulations.

[93]      In a letter dated February 5, 1993 written to Mr. Kay, the Chair of the CDMA, the new Minister of Consumer and Corporate Affairs, Mr. Vincent, reiterated the reasons for the amendment to Bill C-91 to which the CDMA had objected. He explained that the rationale for the proposed regulations was the need to minimize harm to patent holders that might otherwise result from the provisions permitting generic drug companies to use the patented product to obtain an NOC and to stockpile the product pending the expiry of the patent. The letter ended with the following sentence: “Rest assured that you will be consulted before any such regulations are established.”

[94]      On February 15, 1993, Bill C-91 came into force as the Patent Act Amendment Act, 1992, with the exception of section 55.2, which includes the controversial provision enabling the making of regulations. This section came into force on March 12, 1993, along with the Patented Medicines (Notice of Compliance) Regulations that created the statutory scheme implementing the linkage of the protection of patent rights and the issue of an NOC. Despite the assurance contained in the Minister’s letter of February 5, 1993, the CDMA was not consulted on the content of the Regulations prior to their enactment.

[95]      The Regulatory Impact Analysis Statement issued with the Regulations stated that, while the principal stakeholders had been consulted on the principle of Bill C-91, “given the importance of quickly giving effect to the new statute” there had been no consultation on the text of the Regulations prior to their coming into force. Under the Federal Regulatory Plan early notice of regulations is normally given so that those interested may comment on them before they are promulgated. However, since these Regulations were new, the Government undertook to consult on their operation and to refine them if and as necessary.

[96]      Over the next few years there were extensive consultations with industry members and their representative associations. As a result of the experience obtained from the operation of the Regulations and, no doubt, from the consultations, extensive amendments were made to the Regulations, which came into force in 1998 as the Regulations Amending the Patented Medicines, (Notice of Compliance) Regulations, SOR/98-166.

[97]      Among other things, the amendments which, for the most part, favoured generic drug manufacturers, reduced from 30 months to 24 months the automatic stay on the grant of an NOC that comes into effect when a proceeding for a prohibition is instituted: subsection 6(2) of the 1998 Regulations, amending paragraph 7(1)(e) of the 1993 Regulations. The statutorily imposed stay is the aspect of the Regulations that generic drug manufacturers believe to be perhaps most damaging to their interests.

[98]      While of a relatively technical nature, these amendments cumulatively may have mitigated the adverse impact that the statutory linkage of patent protection and regulatory approval had on generic manufacturers. Nonetheless, the essential principle and general design of the scheme remained in place.

(ii)        Subordinate legislation and legitimate expectations

[99]      There is an easy answer to the question of whether the 1993 Regulations are invalid because they were enacted without the consultation that the CDMA had been promised by the Minister. It is that, in the absence of any statutory requirement of consultation prior to the promulgation of regulations, the duty of fairness is the only legal source for a legal obligation to consult.

[100]   However, the duty of fairness does not apply to the exercise of powers of a legislative nature (Attorney General of Canada v. Inuit Tapirisat of Canada et al., [1980] 2 S.C.R. 735), including regulations that apply to a particular industry (Canadian Assn. of Regulated Importers v. Canada (Attorney General), [1994] 2 F.C. 247 (C.A.), leave to appeal refused [1994] 2 S.C.R. vi; Carpenter Fishing Corp. v. Canada, [1998] 2 F.C. 548 (C.A.), leave to appeal refused [1998] 2 S.C.R. vi). Accordingly, there was no legal obligation to consult with the CDMA prior to the enactment of the 1993 Regulations.

[101]   Nor, according to this argument, could the Minister’s undertaking to consult attract a legal duty to do so. This is because the basis of such a duty could only be that it created a legitimate expectation of consultation and, since this doctrine is no more than an aspect of the duty of fairness, it can have no application to the exercise of a power to which the duty itself does not apply.

[102]   Indeed, in Reference re Canada Assistance Plan (B.C.), [1991] 2 S.C.R. 525, at pages 557-560, it was specifically said that the doctrine of legitimate expectations has no application to the exercise of legislative powers. In addition, in Old St. Boniface Residents Assn. Inc. v. Winnipeg (City), [1990] 3 S.C.R. 1170, at page 1204, the Court rejected a challenge to the validity of municipal bylaws that was based on an allegation that they were passed in breach of a legitimate expectation of prior consultation.

[103]   This was the ground on which the learned Motions Judge dismissed the legitimate expectation argument in the instant case. He buttressed it by noting that, in any event, the statutory power in question, namely the power to enact regulations, was conferred on the Governor in Council which itself gave no procedural undertaking to the CDMA and could not be bound by the one given by the Minister.

[104]   It is settled law in Canada that the duty of fairness does not apply to the exercise of powers of a legislative nature, which would include the Regulations impugned in this case. Although they applied to a relatively small and readily identifiable group, the Regulations are at the “legislative” end of the spectrum of powers ranging from the legislative, through the administrative, to the judicial. This is because they were made under a broad statutory discretion by the Governor in Council conferred by subsection 55.2(4): “The Governor in Council may make such regulations as the Governor in Council considers necessary” [emphasis added], and are of general application to all those engaged in the pharmaceutical industry.

[105]   However, it does not necessarily follow that subordinate legislation can lawfully be made in breach of a categorical and specific assurance of prior consultation given to an individual by a responsible minister of the Crown in the course of discharging departmental business. Nor, on closer examination, does the case law so provide.

[106]   While in the Canada Assistance Plan case, supra, the Supreme Court of Canada clearly reiterated (at page 558) the orthodox position that the duty of fairness does not apply to legislative powers so as to require prior notice before their exercise, that case does not, in my opinion, also support the view that the legitimate expectations doctrine is equally inapplicable.

[107]   The issue in that case relevant here concerned the legal effect of a breach of section 8 of the Canada Assistance Plan, R.S.C. 1970, c. C-1. This provided that the terms of the agreement entered into under the Plan would not be amended by the federal government except with the consent of the province, and could only be terminated by either party on the giving of twelve months’ notice of an intention to terminate.

[108]   The Court held that this provision did not impose a substantive fetter on the right of Parliament from time to time to pass such legislation within its constitutional powers as it thinks fit. The Court then considered whether this provision created a legitimate expectation of prior consultation before a unilateral amendment to the Plan was made, and whether the federal government acted unlawfully when it introduced legislation in Parliament to amend the funding formula without consulting the Province.

[109]   The Court dismissed the argument (at pages 559-560) on the ground that, to invoke the doctrine of legitimate expectations to create a procedural entitlement in this case would unduly limit the exercise by Parliament of its power to enact legislation in the normal manner and form on matters within its constitutional competence, and thus “place a fetter on this essential feature of democracy.”

[110]   Similar constitutional considerations do not apply to the exercise of delegated legislative powers which is not subject to the same level of scrutiny as primary legislation that must pass through the full legislative process. Moreover, the procedural rights created by the legitimate expectations doctrine are always subject to proof that, in particular circumstances, the public interest requires that administrative action be taken promptly without complying with the promised procedures.

[111]   The Old St. Boniface case, supra, might seem to be more on point because it concerned the enactment by a municipality of zoning bylaws which, like regulations, are a species of delegated legislation. However, in dismissing the argument that a promise by a committee Chair of further consultation created a legitimate expectation, the Court emphasized (at page 1204) the presence of a procedural code specifically created by the statute for the enactment of zoning bylaws. For the courts to add to this process through the doctrine of fairness, by way of the legitimate expectations doctrine, would be both unnecessary for achieving fairness and inconsistent with the statutory procedural scheme which was “an elaborate structure designed to enable all those affected not only to be consulted but to be heard.”

[112]   In contrast, there are no statutory provisions requiring consultation with those interested before regulations are enacted under the Patent Act. There is no reason, therefore, why, to borrow the words of Sopinka J. in Old St. Boniface, supra (at page 1204), the Court in this case should not, supply

… the omission where, based on the conduct of the public official, a party has been led to believe that his or her rights would not be affected without consultation.

[113]   Nor do I think that Baker v. Canada (Minister of Citizenship and Immigration), [1999] 2 S.C.R. 817 is opposed to the application of the legitimate expectations doctrine to delegated legislative powers so as to require prior consultation before they may be validly exercised. In that case L’Heureux-Dubé J. stated (at page 839, paragraph 26), that in Canada a legitimate expectation can increase the procedural content of the duty of fairness beyond that which it would otherwise have had. I infer from the context in which this statement was made that L’Heureux-Dubé J. simply intended to make it clear that in our law the doctrine does not give rise to substantive rights, contrary, for example, to the position recently taken in England by the Court of Appeal in the important case of Coughlan v. North and East Devon Health Authority, [1999] E.W.J. No. 3774 (C.A.) (QL).

[114]   Hence, I do not interpret L’Heureux-Dubé J. also to be saying that a representation that a person will have an opportunity to participate can never give rise to a legitimate expectation of participatory rights in respect of administrative action to which the duty of fairness would not otherwise apply. Indeed, later in the same paragraph (at page 840), L’Heureux-Dubé J. committed herself to the general proposition that the doctrine of legitimate expectations is based on the premise that it is generally unfair for decision makers to go back on a procedural undertaking. She did not limit this statement of principle to instances where the effect of applying the legitimate expectations doctrine is simply to enhance the content of the duty of fairness in a situation where it would otherwise have imposed some, but lesser, participatory rights.

[115]   Indeed, there are decisions holding that the doctrine of legitimate expectations may apply to a public authority that represents that it will follow a certain procedure before exercising a power to which the duty of fairness would probably not otherwise extend, including those of a policy or legislative nature. See, for example, Old St. Boniface Residents Assn. Inc. v. Winnipeg (City), supra; Lehndorff United Properties (Canada) Ltd. et al. v. Edmonton (City) (1993), 146 A.R. 37 (Q.B.) and cases cited therein, affd on other grounds (1994), 157 A.R. 169 (C.A.), leave to appeal refused [1995] 2 S.C.R. vii; Bezaire v. Windsor Roman Catholic Separate School Board (1992), 9 O.R. (3d) 737 (Div. Ct.).

[116]   However, not all decisions point in this direction: see, for example, Sunshine Coast Parents for French v. School District No. 46 (Sunshine Coast) (1990), 44 Admin. L.R. 252 (B.C.S.C.), which has been the subject of trenchant criticism: see David J. Mullan, “Confining the Reach of Legitimate Expectations: Case Comment: Sunshine Coast Parents for French v. School District No. 46 (Sunshine Coast)” (1991), 44 Admin. L.R. 245.

[117]   It is also of interest that other common law jurisdictions have been prepared to apply the legitimate expectations doctrine in its procedural sense to the exercise of rule-making powers, especially when, as here, the delegated legislation applies most immediately to a defined group, even though, like Canada, these jurisdictions do not normally apply the duty of fairness to legislative powers or policy-based decisions: see, for example, Regina v. Liverpool Corpn., Ex parte Liverpool Taxi Fleet Operators’ Association, [1972] 2 Q.B. 299 (C.A.); Council of Civil Service Unions v. Minister for the Civil Service, [1985] A.C. 374 (H.L.); R. v. Lord Chancellor’s Department, ex parte Law Society (Q.B.D. Crown Office List; June 22, 1993; CO/991/93); Philip A. Joseph, Constitutional and Administrative Law in New Zealand (Sydney, N.S.W.: Law Book Co., 1993), at pages 754-756.

[118]   There is also impressive support in the secondary literature for the proposition that the creation of a legitimate expectation of consultation should limit the general principle that the duty of fairness does not apply to the exercise of powers of a legislative nature: see, for example, David J. Mullan, “Canada Assistance Plan—Denying Legitimate Expectation a Fair Start?” (1993), 7 Admin. L.R. (2d) 269, and the particularly valuable analysis by Joan G. Small, “Legitimate Expectations, Fairness and Delegated Legislation” (1995), 8 C.J.A.L.P. 129.

[119]   A somewhat different view is advanced by David Wright, “Rethinking the Doctrine of Legitimate Expectations in Canadian Administrative Law” (1997), 35 Osgoode Hall L.J. 139, at pages 188-193, where the author argues that the essential problem with the common law in this area is its unnuanced refusal to extend the duty of fairness, so as to confer on those affected a general right to participate in the legislative process prior to the enactment of delegated legislation or the making of other policy-based decisions.

[120]   To impose a duty on rule makers to consult, or to engage in some other form of public participation only when a legitimate expectation of a procedural nature has been created as a result of the conduct of officials, Wright argues, is an oblique and incomplete solution to the more basic problem: the failure of the law to strengthen the democratic legitimacy of delegated legislation by imposing through the common law duty of fairness a process in which those interested are entitled to participate.

[121]   However, in my view the interests protected by the doctrine of legitimate expectations are not the same as those protected by a general duty to afford an opportunity to those affected to participate in the rule-making exercise. The bases of this latter duty are the democratic values of accountability, the claim of the governed to attempt to influence the content of the law to which they will be subject, and the belief that a better considered measure is likely to emerge from a consultative process. In contrast, holding government to a procedural undertaking that was solemnly given on its behalf to an individual is more a matter of individual justice.

[122]   When a legitimate expectation arises from an agency’s past practice, or non-statutory procedural guidelines, it serves to preclude procedural arbitrariness, not the actual expectation of the individual who may have been unaware of its existence. However, where the legitimate expectation arises from a promise or undertaking, categorically and specifically given to an individual or a defined group, the rationale for holding the government to it derives from the individual’s reliance interest or, in the absence of a detrimental reliance, from the individual’s right to expect that, in the absence of a compelling reason for not so doing, the government will act with basic decency by keeping promises that it makes to individuals.

[123]   The interests underlying the legitimate expectations doctrine are the non-discriminatory application in public administration of the procedural norms established by past practice or published guidelines, and the protection of the individual from an abuse of power through the breach of an undertaking. These are among the traditional core concerns of public law. They are also essential elements of good public administration. In these circumstances, consultation ceases to be a matter only of political process, and hence beyond the purview of the law, but enters the domain of judicial review.

[124]   Accordingly, in my view the legitimate expectations doctrine is not simply a branch of the duty of fairness, in the sense that it serves the same purposes as the participatory rights conferred by the duty of fairness. Hence, there is no reason to limit its reach to the exercise of statutory powers to which the duty applies.

[125]   On the other hand, as with the duty of fairness, a breach will lead to the imposition of procedural duties, generally of a participatory nature, on the person or body empowered to take some administrative action, rather than requiring a particular substantive outcome to the exercise of power. Indeed, when in Baker v. Canada (Minister of Citizenship and Immigration), supra, at page 839, paragraph 26, the Supreme Court of Canada recently located the legitimate expectations doctrine within the duty of fairness it was in response to an argument that a person may have a legitimate expectation of receiving a substantive, and not merely a procedural benefit. And, in the Canada Assistance Plan case, supra, the Court’s concern was to preserve the sovereignty of Parliament from the imposition of novel manner and form requirements on the enactment of legislation. However, in Old St. Boniface Residents Assn. Inc. v. Winnipeg (City), supra, where no contrast was made with substantive rights, it was said only that, as developed in the English cases, the legitimate expectations doctrine was an extension of the duty of fairness.

[126]   Therefore, in the absence of binding authority to the contrary, I conclude that the doctrine of legitimate expectations applies in principle to delegated legislative powers so as to create participatory rights when none would otherwise arise, provided that honouring the expectation would not breach some other legal duty, or unduly delay the enactment of regulations for which there was a demonstrably urgent need (see R. v. Lord Chancellor’s Department, ex parte Law Society (Q.B.D. Crown Office List; June 22, 1993; CO/991/93)).

[127]   A court may set aside, or declare invalid, subordinate legislation made in breach of a legal duty to consult: R v Secretary of State for Health, ex p US Tobacco International Inc, [1992] 1 All ER 212 (Q.B.D.), at page 225. For this purpose it should not matter whether the duty arose from statute or by virtue of a promise that created a legitimate expectation of consultation. It remains to consider whether a legitimate expectation arose on the facts of this case and, if it did, whether the Regulations were enacted in breach of it.

(iii)       Did a legitimate expectation arise on these facts?

[128]   Whether a promise by a public official or body that consultation will precede administrative action gives rise to a legitimate expectation that attracts a legal obligation to consult depends on the surrounding facts. The question has both factual and normative aspects: would a reasonable person think that the promise was serious, and should a reasonable person be entitled so to think?

[129]   On the facts of this case, I have no doubt that the words used were capable of creating a legitimate expectation that the Minister would consult the CDMA before any regulations made under subsection 55.2(4) came into effect. This is because of the specific and categorical nature of the assurance of consultation, given in a letter written by the Minister responsible for the development of regulations in response to the concerns expressed by the Association in the course of discussions about the course on which the Government appeared set.

[130]   I do not think that it is necessary for the Minister to have gone further in the letter by, for example, proposing a timetable for the consultation process. I note that in the Liverpool Taxi case, supra, a legitimate expectation was held to have been created when the town clerk wrote to the solicitors of the taxi owners’ association that, before a decision was taken to increase the number of licences available, “you have my assurance that interested parties would be fully consulted.” A similar assurance was given orally by the chair of the relevant committee of the municipal council.

[131]   In my opinion, Canadians would expect, and are entitled to expect, that a clear and unequivocal undertaking of consultation, given in writing to an individual or an association by a minister of the Crown, will be honoured, in the absence of some compelling reason for not so doing.

[132]   There is, however, another aspect of the legitimacy of the expectation to be addressed: can an undertaking given by a minister that there will be consultation prior to the enactment of regulations give rise to a legitimate expectation when the Governor in Council, not the minister, has the statutory authority to make the regulations in question?

[133]   Not surprisingly, there is no evidence that the Governor in Council expressly delegated to the Minister of Consumer and Corporate Affairs the authority to impose procedural restrictions on the exercise of the Cabinet’s regulation-making power. Nonetheless, when the promise of prior consultation is made by the minister with primary responsibility for developing regulations and bringing them before Cabinet, a citizen may reasonably assume that in so doing the minister is acting within his or her authority, whether express or implied. Accordingly, it may be open to those to whom the promise was made to seek judicial review to prevent the minister from taking proposed regulations to Cabinet until the promised consultation has occurred.

[134]   In this case, however, the Cabinet has already approved the regulations, and the question is whether their validity can be impugned because they were enacted in the absence of the consultation that the minister promised. In my view, it cannot. If the Cabinet enacts regulations in ignorance of an undertaking of consultation given by a minister, it would not seem to me to have abused its statutory power. And, given the legal protection afforded by the law to the confidentiality of cabinet proceedings and the narrow grounds on which the courts review the exercise of powers by the Cabinet, it would be impermissible for a court to enquire into the state of knowledge possessed by members of the Cabinet about prior procedural assurances given by a minister in order to determine whether otherwise valid regulations were knowingly enacted in breach of a ministerial undertaking.

[135]   Hence, in my view, the Minister’s assurance did not create in the CDMA a legitimate expectation of consultation that, if breached, would invalidate Regulations enacted by the Cabinet without the promised consultation. This is sufficient to dispose of the challenge to the validity of the NOC Regulations based on the legitimate expectations doctrine. However, I should also consider another argument advanced before us, namely, that any duty to consult attracted by the Minister’s undertaking was in fact discharged.

(iv)       Was there sufficient consultation?

[136]   An undertaking to consult prior to the enactment of delegated legislation cannot be discharged without affording the individual to whom it was given a reasonable opportunity to attempt to influence its content, especially on matters of a secondary policy or technical nature. In order to honour such an undertaking the process of consultation should generally include the disclosure of the text of the proposed regulations, together with an explanatory statement, and sufficient time for this material to be studied and a response prepared: see, for instance, R. v. Brent London Borough Council, Ex p Gunning (1985), 84 L.G.R. 168 (Q.B.D.).

[137]   None of these elements of consultation was present in this case prior to the publication of the 1993 Regulations. However, there had been consultations between the Government and the CDMA and others on Bill C-91, including the regulation-making provision which was added only at third reading. At this point it was made clear to the CDMA that the Government intended to provide by regulations for the linkage of patent protection and the issue of NOCs.

[138]   The CDMA is a sophisticated combatant in the high-stakes battles that the “generic” and “brand-name” branches of the pharmaceutical industry have waged for years, with both political and legal weaponry, over regulatory approval for new drugs and patent rights. Although the 1992 Act and the implementing Regulations undoubtedly represented a serious setback for the generic drug manufacturers, the CDMA cannot plausibly claim that the essential scheme of the 1993 Regulations came as a complete surprise.

[139]   Indeed, after the addition to Bill C-91 of what became subsection 55.2(4) of the amended Patent Act, the PMAC, to the knowledge of the CDMA, continued to press the Government to put in place regulations that would ensure that an NOC could not be issued to a generic manufacturer in circumstances that might enable it to market a drug that infringed a patent held by a “brand-name” company. However, despite the political know-how of the CDMA, it is plausible to believe that it ceased to make further representations of its own after it received the Minister’s assurance of consultation. It might, for example, have been using the time to organize for the forthcoming consultations that it had been led to believe would take place.

[140]   Even for a body with the knowledge, resources and experience that it is reasonable to attribute to the CDMA, there is a very big difference, especially given the technical complexity of the scheme, between being able to anticipate the general content of regulations likely to be enacted to implement known government policy, and having time to study and comment on the text of the proposed regulations and their stated rationale. Indeed, subsequent events suggest that, if consultation had occurred as promised by the Minister, it might have enabled the CDMA to persuade the Government to modify some features of the proposed regulations before their enactment by Cabinet.

[141]   Accordingly, standing alone the consultation that took place before the Minister gave his assurance, and in the absence of a published text of proposed regulations, would not be sufficient to mitigate the abuse of power inherent in the failure to honour the undertaking of prior consultation.

[142]   However, after the Regulations came into effect in March 1993 the CDMA, along with other members of the pharmaceutical industry, met and communicated often and at great length with the relevant ministers and their senior officials about the Regulations. And, as I have already noted, the 1993 Regulations were significantly modified in 1998.

[143]   In these circumstances, it was submitted, any failure to consult on the text of the 1993 Regulations before they were enacted was effectively “cured”. The Minister’s promise had been so substantially performed that it would be inappropriate for the Court to invalidate complex regulations that seek to strike a balance between two sets of conflicting interests: on the one hand, the commercial interests of the “brand-name” companies in protecting their proprietary rights and of the “generic” companies in competing in the market and, on the other, the public’s interests in better drugs and cheaper drugs.

[144]   It goes without saying that, as a general rule, consultation will generally be more effective if it occurs well before administrative action is finalized than if it occurs after the die is cast for all practical purposes, save, perhaps, for relatively minor adjustments. Indeed, in other administrative contexts it is rare that a duty to conduct a hearing before a decision is made will be satisfied by an after-the-fact hearing by the same body. However, in our case it can be inferred from the context, including the addition of subsection 55.2(4), that the consultation promised related to the implementing details of the scheme and not to the principle of linking patent protection and regulatory approval.

[145]   In my opinion, the extensive and effective consultations that occurred after 1993, and prior to the amendments of the Regulations in 1998, would make it inappropriate to declare invalid the original Regulations as amended. I am not satisfied that the procedures eventually afforded to the CDMA were so inadequate that the failure to provide an opportunity to consult at the promised time would warrant the invalidation of the Regulations as an abuse of power, especially given the CDMA’s involvement in the process before the enactment of Bill C-91, and its understanding of the issues.

[146]   It is certainly possible to argue that, if the consultations had occurred when promised, many of the subsequently identified wrinkles in the 1993 Regulations would have been ironed out much earlier. On the other hand, it is also possible that the Government was only prepared to modify the 1993 Regulations in light of several years of experience with the new scheme. Hence, whether the amendments made in 1998 following consultation with the CDMA and others would have been made earlier if the consultations had taken place as promised is a matter of mere speculation.

[147]   Of course, courts do not normally determine whether a breach of the duty of fairness occurred or, if it did, whether it should result in the quashing of the decision or order concerned, by asking whether the result would have been different if the decision maker had meticulously observed the procedural proprieties: Cardinal et al. v. Director of Kent Institution, [1985] 2 S.C.R. 643.

[148]   However, given the narrow grounds on which the courts have normally subjected regulations to judicial review (Thorne’s Hardware Ltd. et al. v. The Queen et al., [1983] 1 S.C.R. 106) and the realities of the political context of the consultative process, the consultations that occurred after the Regulations came into force in 1993 effectively drew the sting of the abuse of power that occurred when the Minister breached his solemn undertaking to consult prior to the enactment of the 1993 Regulations.

(v)        Standing

[149]   Although the point was not raised by the parties, I had some concerns about whether it was open for an intervener, the CDMA, to rely on a ground of review that was probably not available to the applicant: normally only those to whom a promise was made may rely on it as the basis for relief in an application for judicial review. And, since the CDMA is an intervener in, and not a party to, the application for judicial review, it is difficult to see how relief could be granted to the applicant, Apotex, on the basis of a defeat of the CDMA’s legitimate expectation of consultation.

[150]   In view of my earlier conclusion that the Minister’s undertaking could not invalidate the Regulations enacted by the Governor in Council, it is not necessary for me to provide a definitive answer to this question. However, the fact that the CDMA was given leave to intervene in the application does not preclude the Court, after hearing the application on its merits, from deciding that the intervener’s point, though meritorious in principle, does not warrant judicial intervention because it is not one on which the applicant could rely.

[151]   On the other hand, since the applicant, Apotex, is the largest generic drug manufacturer in Canada and hence, as a member of the association, can be expected to play a major role in the affairs of the CDMA, it would be unduly formalistic to draw such a sharp distinction between Apotex, the applicant, and the industry association, the intervener, that a breach of an undertaking given to the latter could not be the basis for granting a declaration of invalidity to the former, one of its members.

D.        CONCLUSION

[152]   For these reasons I would dismiss the appeal on the terms set out in paragraph 26 of the reasons of my colleague, Décary J.A.

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