Duty to Mitigate Should Consider Reasonableness of Party’s Actual Course of Conduct

On April 6, 2017, Canada’s Federal Court of Appeal (FCA) reversed the Federal Court’s (FC) finding that Apotex failed to mitigate its losses in its action against Health Canada for damages as a result of Health Canada’s misfeasance of public office and negligence (Apotex Inc v Canada (Minister of Health), 2017 FCA 73, rev’g in part 2014 FC 1087).

The FC held that Health Canada had committed the tort of misfeasance and was negligent in relation to Apotex’s applications for a Notice of Compliance (NOC) for its trazodone product. As a result, Apotex was entitled to damages for loss of sales and for the missed opportunity of being the first generic in the marketplace. However, the award was reduced because the FC determined that Apotex failed to mitigate its losses by refusing to comply with Health Canada’s requirement to test its new drug using a Canadian reference standard rather than a foreign equivalent. Apotex appealed on several grounds and Health Canada cross-appealed.

The FCA held that the FC erred in concluding that Apotex failed to mitigate its loss.  It noted that the court should not consider only one course of action the party should have taken; instead, the court should consider the reasonableness of the party’s actual course of conduct.  In this case, the FCA found that Apotex had taken reasonable steps to mitigate its losses, including repeated communication with Health Canada to address the issue. 

Summary By: Suzie Suliman