Executive Summary: Key Legal and Evidentiary Issues

• Scope of pretrial discovery and the limits of objections under article 228(3) C.p.c. in interrogatories on undertakings.
• Application of the concepts of pertinence and proportionality to requests for information about non-pharmaceutical-grade products and post-2016 manufacturing changes.
• Use and boundaries of similar-fact evidence where alleged defects may affect different grades of the same chemical product.
• Extent to which a defendant can resist disclosure of internal testing methodologies and third-party audits on grounds of confidentiality, commercial sensitivity and relevance.
• Requirements for successfully invoking litigation privilege over post-recall internal tests and communications, including proof that documents were created primarily for anticipated litigation.
• Consequences of a “mixed result” on objections, leading to orders to answer most undertakings but with no costs awarded at this interlocutory stage.

Background and facts of the dispute

PF Consumer Healthcare Canada ULC, successor to Pfizer for present purposes, sues Danisco Canada Inc. and Danisco France SAS in the Superior Court of Quebec for more than CAD 15 million in damages. The claim is grounded in alleged latent defects (vices cachés) and breach of contract relating to a substance called pharmaceutical-grade xanthan gum supplied by Danisco to Pfizer. This xanthan gum was incorporated into certain over-the-counter medicines. The plaintiff alleges that a defect in the xanthan gum, specifically the presence of cellulase activity (an enzyme), caused problems in the finished pharmaceutical products after a manufacturing process change in 2012. The defendants contest both the existence of a defect and its causal link to the issues reported by Pfizer. The litigation also arises in the context of a product recall initiated by Pfizer on 12 February 2016 and publicized by Health Canada, after Pfizer observed viscosity loss in long-term stability tests of the finished product. The problems came to the attention of Danisco in November 2015, after which Pfizer and Danisco engaged in an investigative process that included Danisco commissioning tests on certain lots of the pharmaceutical-grade xanthan gum and reporting on whether those lots might be linked to the stability issues observed in Pfizer’s finished medicines.

Procedural posture and nature of the judgment

The judgment is not a decision on liability or damages, but an interlocutory ruling on five objections raised by the defendants during the examination of their representative, Olivier Zoppe, on undertakings demanded by the plaintiff’s counsel. Under Quebec civil procedure, the general rule is that a witness at an examination on discovery must answer even under objection, with the trial judge later ruling on admissibility at the hearing. Only where an objection involves fundamental rights or an important legitimate interest, or where the question is clearly abusive, irrelevant or disproportionate, will the judge decide the objection at the pretrial stage and exempt the witness from answering. In this context, the defendants argued that several information requests were irrelevant, excessively broad, commercially sensitive or protected by litigation privilege. The plaintiff maintained that the information sought was relevant and useful to the issues in dispute, including the alleged defect, the management of process changes and the reliability of testing.

Applicable legal framework for objections and discovery

The court begins by recalling that at the exploratory phase of litigation, relevance is interpreted broadly and liberally. A question or document is considered relevant if it relates to the dispute, is useful and capable of advancing the debate. At the same time, the judge must balance two objectives: efficiency of the justice system and the search for truth. This balance is reflected in the principles of proportionality and sound case management, which require the parties to limit proceedings to what is necessary and to avoid excessive or unreasonable conduct. The judge notes that exceptions to the default rule—whereby objections are referred to the trial judge—arise only when questions are so clearly non-pertinent, onerous, dilatory or abusive that compelling an answer would amount to an abuse of rights, or when they intrude on important legitimate interests such as litigation privilege or trade secrets. The burden lies on the party raising the objection to show both that an important legitimate interest is at stake and that the objection must be decided immediately rather than deferred to the trial judge under article 228(3) C.p.c. Litigation privilege, in particular, is described as a “zone of confidentiality” protecting documents and communications created for the primary purpose of preparing for existing or anticipated litigation; it is an exception to full disclosure and must be strictly interpreted, with the party invoking it required to prove that its conditions are met.

Issues regarding similar-fact evidence and non-pharmaceutical grades

One contested area involved the plaintiff’s attempt to obtain information on complaints relating to Danisco’s xanthan gum products beyond the pharmaceutical-grade product sold to Pfizer. The plaintiff asked whether the defendants had received complaints from other clients about the “activity of enzymes” in xanthan gum following the 2012 manufacturing change, including in the food-grade version of the product. The defendants argued that complaints about non-pharmaceutical xanthan gum were irrelevant because the food-grade and pharmaceutical-grade products were subject to different quality-assurance regimes and standards; they maintained that extending discovery to such information would unjustifiably broaden the scope of the proceedings and risk introducing extraneous issues into the case. The plaintiff countered that, according to the witness, the manufacturing process for the different grades was essentially the same, apart from downstream quality control. The 2012 process change would therefore have applied to both grades, and any common problems might support a similar-fact evidence theory that the same defect affected multiple product lines. The judge expresses skepticism about the strength of the plaintiff’s similar-fact argument but finds that, at the discovery stage, the plaintiff has shown a sufficient link to the issues in dispute. The defendants, by contrast, failed to demonstrate that answering would engage a fundamental right or important legitimate interest justifying an immediate, final ruling. As a result, the court rejects the objection at this stage and leaves the ultimate relevance and admissibility of such information to be decided by the trial judge.

Contractual obligations to disclose manufacturing changes

A second cluster of objections concerned the contractual clause under which Danisco France undertook to disclose “major changes” (but not minor changes) to the manufacturing process of the xanthan gum supplied to Pfizer. The plaintiff sought a list of all major changes made since January 2012, with details, including for periods after 2016 and for product grades other than the pharmaceutical-grade gum at issue. The defendants had already provided information on changes to the pharmaceutical-grade product between 2012 and 2016, stating that no major changes occurred in that timeframe, but refused to provide information for later years or for other grades. The plaintiff argued that it needed this information to understand how Danisco interprets and applies the distinction between “major” and “minor” changes under the disclosure clause, particularly since Danisco denies that the 2012 modification, which was not communicated to Pfizer, qualified as a major change triggering a disclosure obligation. The court accepts that this request bears directly on the contractual interpretation of the change-notification clause and on the defendants’ course of conduct, and that limiting disclosure to pre-2016 changes would unduly restrict the plaintiff’s ability to test the defendants’ position. Again, the judge finds a sufficient link to the issues in dispute and no demonstrated basis to depart from the broad approach to relevance in discovery.

Testing methodologies and scientific evidence

The plaintiff also sought disclosure of Danisco’s internal methodology for testing cellulase levels in its “cellulase-free” xanthan gum, even though the pharmaceutical-grade xanthan gum supplied to Pfizer was not sold as cellulase-free and was not routinely tested for cellulase content. The request arose because, in 2016, at Pfizer’s request, Danisco commissioned tests for cellulase activity on certain lots of the pharmaceutical-grade xanthan gum delivered to Pfizer. Those tests detected cellulase activity, but the laboratory reported that the test method used—provided by Pfizer—was not a validated method and had not previously been used by Danisco to test the product. The plaintiff argued that understanding Danisco’s own validated testing methodology for cellulase-free xanthan gum would allow its expert to compare that method to the 2016 testing protocol and to assess whether the 2016 results could be considered reliable and probative. The court agrees that, given the plaintiff’s intention to rely on the 2016 test results and the scientific issues they raise, comparing methodologies is relevant and potentially important to the expert evidence. The defendants did not establish that disclosure of this methodological information would engage an important legitimate interest, such as trade secrets or a serious commercial risk, sufficient to override the general rule favoring full pretrial disclosure. Accordingly, the objection is rejected and the defendants are ordered to provide the requested information regarding the testing method for cellulase in cellulase-free xanthan gum.

Limits on discovery of third-party audits and confidentiality concerns

In contrast, the court upholds the defendants’ objection to one request seeking disclosure of audits or audit results they may have received from third-party customers (other than regulatory bodies and Pfizer) concerning the manufacturing process. Danisco had already disclosed inspection or audit reports from regulators and its own internal test results on the product in early 2016, along with two audit reports conducted by Pfizer in 2014. It refused, however, to disclose audits or results received from other customers, who were competitors of the plaintiff and had provided such information under confidentiality arrangements. The plaintiff argued that these audits might show deficiencies or issues in Danisco’s management of manufacturing process changes. The court holds that, even with a broad and liberal approach to relevance, the plaintiff has not demonstrated how audits conducted by other private customers—who are not regulators and are not parties to the litigation—would be useful or likely to advance the debate. In the judge’s view, compelling production of such materials would be excessive, disproportionate and unreasonable, and would risk unjustified intrusion into Danisco’s contractual relationships with other clients. Since the plaintiff is not deprived of the core information needed for a fair trial—given that regulatory audits, Pfizer audits and Danisco’s own test results have already been disclosed—the court finds that this is an appropriate limit on discovery and sustains the objection without needing to resolve the separate argument based on confidentiality.

Litigation privilege and post-recall testing

The most complex objection related to litigation privilege over additional testing allegedly conducted by Danisco after 2 February 2016 concerning cellulase activity, and related correspondence, documentation and explanations for conducting or not conducting further tests. The defendants argued that any such subsequent testing was performed in anticipation of litigation with Pfizer following the recall decision, and that all related materials were protected by litigation privilege because they were created in reasonable contemplation of legal proceedings. The court recites the governing principles from the Supreme Court of Canada and the Quebec Court of Appeal: litigation privilege protects communications and documents created for the dominant or exclusive purpose of preparing for existing or reasonably anticipated litigation, but it does not extend to all investigative or business records merely created at a time when litigation is possible. The defendants relied mainly on submissions by counsel and on the timing of events, pointing to the public recall on 12 February 2016 and the unusual nature of cellulase testing on the pharmaceutical-grade product, which was not part of Danisco’s ordinary practices. They invited the court to infer that any further testing undertaken after the recall must have been for the central purpose of preparing for expected litigation. The judge finds that, while this argument has some appeal, inference alone is insufficient. The record contains no evidence—either from the witness or by sworn declaration—demonstrating that the tests and documents in question were created principally to assist in litigation rather than as part of a continuing technical investigation into product performance and quality issues. Given that testing before the recall was clearly undertaken in support of Pfizer’s investigation into the cause of the viscosity problems, and that no demand letter or formal claim from Pfizer was made until October 2018, the court is not prepared to assume that the purpose of further testing shifted automatically and exclusively to litigation preparation at the moment of the recall. With the burden resting squarely on the defendants to prove the conditions of privilege, the judge concludes that they have not met that burden. Litigation privilege, being a strict exception to the general rule of full disclosure and to the search for truth, must be narrowly applied; absent clear evidence, it cannot be invoked to block discovery.

Outcome and implications of the ruling

In its dispositive orders, the court rejects, at the pretrial stage, the defendants’ objections to undertakings numbered 32, 39 and 52, referring them to the trial judge under article 228(3) C.p.c. and ordering the defendants to deliver their responses within a reasonable time, and in any event by 20 August 2025. The objection to undertaking 53, based on litigation privilege, is also rejected; the defendants must therefore provide the information and documents concerning any additional cellulase-related testing carried out after early February 2016 and explain why further testing was or was not undertaken. Only the objection to undertaking 16 is upheld, relieving the defendants from disclosing audits or audit results provided by other private customers. The judge characterizes the overall result on the objections as “mixed” and therefore makes no order as to costs at this interlocutory stage, specifying that the ruling is “without costs of justice.” In practical terms, PF Consumer Healthcare Canada secures most of the information it sought at discovery, particularly on similar-fact issues, contractual change-notification practices, scientific testing methodologies and post-recall investigations, while the defendants preserve a limited zone of confidentiality around third-party customer audits. There is no determination on liability or quantum of damages in this judgment, and no monetary award or costs are granted; the successful party at this stage is therefore PF Consumer Healthcare Canada in substantive terms on the objections, but the total amount ordered in its favor is nil, as no damages or cost awards are made in this decision and any eventual monetary relief will depend on a future merits judgment, if any.