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Ottawa, 5 April 1988
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Taxation Order CRTC: 1988-1
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In re: Bell Canada - 1988 Revenue Requirement, Rate Rebalancing and Revenue Settlement Issues
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Janet Yale and David McKendry, for Consumers' Association of Canada (CAC)Peter J. Knowlton for Bell Canada (Bell)
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TAXATION OF COSTS OF CAC
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Taxing Officer: Allan Rosenzveig
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This order constitutes the taxation of costs awarded to CAC in the case of Bell Canada - 1988 Revenue Requirement, Rate Rebalancing and Revenue Settlement Issues, announced in CRTC Telecom Public Notices 1987-15 and 1987-28. Costs were awarded to CAC by Telecom Costs Order CRTC 88-3, dated 11 February 1988, in accordance with subsection 44(1) of the CRTC Telecommunications Rules of Procedure.
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CAC submitted a Bill of Costs in the amount of $156,303.83, consisting of $70,955.00 in fees and $115,848.83 in disbursements, less $30,500.00 received from the Department of Consumer and Corporate Affairs with regard to the rate rebalancing aspect of the proceeding. The taxation proceeded by way of written submissions. Bell did not object to any of the items claimed in CAC's Bill of Costs, except disbursements related to the expert witness fees for Drs. Lawrence I. Gould and Myron J. Gordon.
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Disbursements - Expert Witness Fees for Drs. Gould and Gordon
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Bell objected to the amount claimed ($900.00 per day) for CAC's witnesses. The company pointed out that Dr. Gould's services had been taxed at $600.00 per day in 1983 and $700.00 per day in 1985. Also, that in Taxation Order 1986-6, dated 30 December 1986, the amounts claimed for the services of Drs. Gould and Gordon were found to be somewhat excessive and, under the circumstances, a rate of $750.00 per day was found to be warranted. As $750.00 per day was found to be an appropriate rate for the 1986 proceeding and inflation during the subsequent period was in the 4% to 5% range, Bell saw no reason for the taxing officer in this case to accept a 20% increase in the per diem rate as requested by CAC.
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With respect to CAC's request for a response to interrogatory Bell(CAC)8Sept87-319RR88 (CAC 319), which requested Bell to provide the fees, including any per diem rates, for the testimony of expert witnesses on behalf of Bell in this proceeding, the company stated that it does not consider that this information "can be relevant to the determination of whether a 20% year-over-year increase is acceptable". Bell also suggested that the functions and activities performed by Bell's financial witnesses are not directly comparable to the services provided by Drs. Gould and Gordon. For example, the company noted that its witnesses were responsible for the preparation of many detailed interrogatory responses. Advising that its witnesses did not charge for their services on the basis of a per diem rate, Bell suggested that while an hourly rate is used in some cases, it is unlikely that the two are directly comparable since one would have to make certain assumptions as to the number of billable hours in a working day.
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However, Bell did provide a statement of the fees paid or to be paid by the company for the services rendered by its financial witnesses in connection with the revenue requirement aspect of the proceeding, including the manner in which those fees were calculated. This information was provided in accordance with the Commission ruling at the pre-hearing conference, as evidenced by pages 220 and 221 of the transcript.
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In reply, CAC noted that the rates and amounts billed to it by Drs. Gould and Gordon are the actual costs incurred by it. In this regard, CAC advised that it does not adjust its payment to the witnesses in order to reflect the amounts allowed in the taxation process. CAC also advised that at the time they retain Drs. Gould and Gordon, CAC satisfies itself that their rates are fair in relation to the costs of obtaining similar services from other experts.
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According to CAC, the information provided by Bell about the rates paid to the company's financial witnesses shows that the rates paid by CAC are reasonable. CAC emphasized that such information about Bell's witness fees had not previously been available to CAC and taxing officers. Based on this, CAC argued that the rates allowed for its witnesses in previous proceedings must be re-evaluated in light of the new information about the rates for the company's experts who provided testimony on the same subject in the same proceeding.
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CAC pointed out that the daily rate charged by Drs. Gould and Gordon was $900.00, calculated on the basis of 8 hours per day. CAC noted that the rate charged Bell by Foster Associates Inc. for Dr. S.F. Sherwin was $125.00 U.S. per hour which, when converted to Canadian funds for an 8 hour day, would result in a daily rate of $1,256.00. Accordingly, CAC calculated that Bell paid Dr. Sherwin 39% more per day than CAC paid Drs. Gould and Gordon. CAC also suggested that the fees which it incurred are well below the market fees for similar services, on the basis that the total fees paid by Bell for Dr. Roger A. Morin, Mr. Robert E. Bellamy, Mr. R.H. Hanson and Dr. Sherwin are 55%, 131%, 94% and 57%, respectively, greater than those incurred by CAC for Drs. Gould and Gordon.
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Accordingly, CAC argued that the fees incurred by it on a daily basis and on a project basis are significantly less than those paid by Bell to its financial witnesses. CAC also suggested that Drs. Gould and Gordon did substantial work that the company's witnesses probably did not undertake, namely preparation of interrogatories, preparation of cross-examination, advice during the conduct of cross-examination, and preparation of final argument.
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CAC argued that the fees of Drs. Gould and Gordon should be taxed and allowed as incurred by CAC. CAC reiterated that its witnesses' rates and fees are well below the market rates and fees paid by Bell for testimony on the same matters during the same proceeding. According to CAC, the taxation process should take into account the information regarding the fees paid by Bell, which had not been disclosed in previous proceedings, so that CAC could recover the reasonable costs of its participation in the proceeding. Noting that Bell will recover all the fees of its expert witnesses from subscribers, CAC suggested that public interest groups would face an unfair and discriminatory burden in relation to Bell if they are not allowed to recover the reasonable fees (as measured by market rates and fees) of expert witnesses.
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Paragraph 44(6)(b) of the CRTC Telecommunications Rules of Procedure provides that costs awarded shall not exceed those necessarily and reasonably incurred by the intervener in connection with its intervention.
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I note CAC's statement that the rates and amounts billed to it by Drs. Gould and Gordon are the costs actually incurred by CAC.
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In objecting to the per diem fees incurred by CAC with respect to Drs. Gould and Gordon, Bell is in effect suggesting that CAC's actual costs should be reduced for taxation purposes to reflect the per diem fees allowed in Taxation Order 1986-6, regarding a previous Bell proceeding, with an adjustment for inflation. I note that in that proceeding, the taxation was performed without the benefit of knowledge of the rates paid by Bell to financial witnesses giving testimony for the company. In the absence of such information, the starting point for assessing the appropriate per diem rate for Dr. Gould was necessarily the rate taxed for him in previous rate proceedings before the Commission. With respect to Dr. Gordon, the taxing officer similarily took a previous taxation of CAC's costs as the starting point for considering what would be the appropriate rate.
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By contrast, in this proceeding, as required by the Commission in ruling on CAC 319, the intervener and the Commission have for the first time information regarding the fees paid by Bell to its financial witnesses in the same proceeding. I consider that such information is relevant in determining the appropriate fee for Drs. Gould and Gordon.
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I note that in the past, the fees of expert witnesses called by one party have sometimes been used as a reference point in assessing the fees to be allowed for expert witnesses called by another party. For example, in Taxation Order 1985-3, the taxing officer stated that he had had the benefit of the information, filed by British Columbia Telephone Company in confidence, as to the fees paid to the expert witnesses which it had called in that proceeding. In Taxation Order 1987-1, the taxing officer viewed the costs for Dr. Gould as a useful benchmark for assessing those of two witnesses who testified for the National Anti-Poverty Organization in that case. Similarly, the quantum of fees for counsel has sometimes been determined in reference to those allowed for other counsel, as was the case, for example, in Taxation Order 1987-3.
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I have taken into account the fees, and the manner of calculating the fees, paid by Bell to its financial witnesses in this case. In doing so, I have had regard to various factors, including their experience and ability, the nature of their participation and the complexity of the issues with which they dealt, in comparison with Drs. Gould and Gordon.
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On the basis of my consideration, I have concluded that the amount claimed with respect to the fees of Drs. Gould and Gordon, including the per diem rate of $900.00, does not exceed the fair market value of the services rendered, and is reasonable.
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Funding from Government or other sources
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Bell noted that CAC deducted the sum of $30,500.00 with respect to the rate rebalancing aspect of the proceeding, and submitted that CAC should also be required to indicate whether it had received any other funding from government or other sources targeted specifically to any aspect of this proceeding.
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CAC replied that it had received no funding from government or other sources for the purposes of this proceeding except as disclosed in the Bill of Costs and Affidavit of Disbursements.
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I am satisfied that CAC has indicated all appropriate deductions.
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Costs as Taxed
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I hereby tax the fees and disbursements as follows:
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Fees:
Counsel $55,090.00
Analyst 15,865.00
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Disbursements:
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Expert Witness Fees
and Disbursements,
Drs. Gould and Gordon 36,800.56
Expert Witness Fees
and Disbursements,
Mark N. Cooper 12,372.67
Expert Witness Fees
and Disbursements,
Donald A. Ford 18,854.59
Expert Witness Fees
and Disbursements,
Walter G. Bolter 29,294.42
Taxi Fares 294.60
Courier 1,256.94
Transcripts 9,274.00
Photocopying/Binding 6,083.20
Postage 132.28
Miscellaneous 876.91
Long Distance Calls 608.66
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LESS contribution provided by
the Department of Consumer
and Corporate Affairs $30,500.00
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Total Fees and
Disbursements $156,303.83
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Allan Rosenzveig
Counsel
Canadian Radio-television and Telecommunications Commission
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