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Ottawa, 2 September 1988
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Taxation Order CRTC: 1988-2
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In re: Bell Canada - 1988 Revenue Requirement, Rate Rebalancing and Revenue Settlement Issues
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Glenn W. Bell and Andrew J. Roman for National Anti-Poverty Organization (NAPO)Peter J. Knowlton for Bell Canada (Bell)
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TAXATION OF COSTS OF NAPO
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Taxing Officer:
Allan Rosenzveig
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This order constitutes the taxation of costs awarded to NAPO 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.
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In response to NAPO's application for costs, Bell suggested that the Commission deny some of the costs of NAPO's counsel, Mr. Bell and Mr. Roman; all the costs of one NAPO witness, Dr. Buckalew; and all or a large part of the costs of NAPO's other witnesses, Drs. Booth and Berkowitz.
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Costs were awarded to NAPO by Telecom Costs Order CRTC 88-6
(Costs Order 88-6), dated 11 February 1988, in accordance with subsection 44(1) of the CRTC Telecommunications Rules of Procedure . In that Order, the Commission specifically determined that while the participation of Mr. Bell warrants only a partial (50%) award of costs, that of Mr. Roman and Drs. Buckalew, Booth and Berkowitz warrants a full award of costs.
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NAPO submitted a Bill of Costs in the amount of: (a) $173,746.09, consisting of $89,877.50 in fees and $83,868.59 in disbursements; and (b) U.S. $38,116.86 in fees and disbursements. The taxation proceeded by way of written submissions.
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In its Answer, Bell raised the following issues regarding the amounts claimed with respect to counsel fees: the number of billable hours claimed by Mr. Roman; the combined fee charged by NAPO's two counsel; the hourly fee claimed by Mr. Bell; and the rate billed for time spent travelling. In the course of the taxation, at my request Bell and NAPO also addressed the issue of the extent, if any, to which I should allow counsel fees with respect to travel time not spent preparing. The company also raised issues with respect to which persons are entitled to costs under Costs Order 1988-6, the fees claimed for NAPO's expert witnesses, and the total amount claimed by NAPO.
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Counsel Fees
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With repect to the counsel fees of Mr. Roman, Bell suggested that the preparation time claimed by Mr. Roman was excessive and should be reduced. In this regard, the company noted the substantial increase in billable hours claimed in this proceeding as compared to the previous one. The company pointed out that while Mr. Roman spent a considerable amount of time preparing for cross-examination and preparing and reviewing the evidence of NAPO's expert witnesses, he only cross-examined one witness in addition to participating in the cross-examination of the rate rebalancing panel. Characterizing Mr. Roman's participation during the hearing as "rather modest", Bell suggested that the number of hours expended by him in preparation was out of line with that billed by other counsel in this and other proceedings. According to the company, much of Mr. Roman's cross-examination and the evidence presented by one of NAPO's witnesses related generally to collateral issues, and Mr. Roman's substantial expenditure of time did not seem to be in keeping with the quality of the evidence tendered by that witness. The company also referred to the norm of two days preparation per day of hearing adopted by taxation officers in the past.
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Bell also suggested that the combined daily fees for attendance of NAPO's two counsel was over $2,400, and that either the rate per hour or the hours expended result in a total charge which was excessive when contrasted with counsel for other parties and when the results achieved by NAPO and NAPO's limited participation on relevant matters is taken into consideration.
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The company questioned the hourly rate of $120 claimed for Mr. Bell. According to the company, if the Commission's partial award of costs for Mr. Bell is to have any practical effect, the taxation of his fees should begin with a reasonable estimate of the "going rate" for his services. The company suggested that a rate in the range of $60 per hour would be more appropriate for counsel with Mr. Bell's knowledge and experience in telecommunications regulation. In this regard, the company noted that the hourly rate of $120 leads to a per diem charge in the range of $1,000 to $1,200, and that the junior counsel fees for Consumers' Association of Canada (CAC) and NAPO were taxed in the range of $500 to $560 per day in Taxation Orders 1986-6 and 1987-1, respectively.
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In its comments, Bell also noted that the time spent travelling by Mr. Roman and Mr. Bell - 14 and 8 hours respectively - had been billed at counsel's normal hourly rate. The company pointed out that in Taxation Order 1987-1, the taxing officer indicated that the hourly rate would be applied to travel time only to the extent the time was used for preparation, and that in the absence of a statement of the number of hours spent preparing while travelling, the time spent travelling would be taxed in the same proportion that had applied in Taxation Order 1985-3. On this basis, Bell suggested that the travel time claimed should be taxed at 36% of counsel's hourly rates.
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In reply, NAPO argued that all travel time should be fully compensable, regardless of whether any of it was spent preparing. NAPO pointed out that counsel is "on duty" throughout the entire travel time in the sense that it is spent away from other business. According to NAPO, it is standard practice for courts to allow compensation for travel time not spent preparing. Moreover, it would be unfair to disallow any of NAPO's claim for travel time without knowing the extent to which Bell's outside counsel and expert witnesses are paid for such time.
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In response to my invitation to the parties to address the general issue as to the extent, if any, to which I should allow counsel fees for time spent travelling while not preparing, Bell advised that it had been prepared to assume that a reasonable proportion of the 22 hours submitted by NAPO for travel was in fact used for preparation and therefore had suggested the adoption of the approach taken in Taxation Order 1987-1. However, the company pointed out that in NAPO's reply comments the latter had advanced the theory of "opportunity cost" and had directly put in issue the question of whether all time spent travelling should be taxed at market rates, even where counsel did not spend the time productively in preparing for the hearing. According to the company, it is unreasonable to assume that counsel should be paid market rates for time spent travelling unless counsel can demonstrate that a realistic opportunity has been foregone to bill other clients at similar market rates. In this regard, Bell noted that NAPO's counsel cannot allege that every hour spent travelling to and from Bell rate cases is a lost hour of billing at market rates, as its counsel acts on a fixed retainer basis and appears elsewhere where counsel's time is not billed at market rates.
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With respect to NAPO's suggestion that courts allow compensation for travel time not spent in actual preparation, Bell provided a copy of the 1988 Tariff of Solicitor's Fees and Disbursements in the Supreme Court and District Court of Ontario, and noted that taxing officers in Ontario do not allow for travel time in assessing solicitors' fees. The company indicated that it understood that a similar situation applies in the Province of Québec.
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In addition, Bell suggested that the opportunity costs associated with travel time outside normal business hours may be considered in a different light than the opportunity costs of travel time during hours normally spent at the office. With regard to NAPO's query as to whether Bell pays its outside counsel and expert witnesses for travel time, the company noted that its outside counsel is located in Ottawa and its outside expert witnesses are paid either on a fixed retainer basis or bill their time at an hourly rate for preparation and attendance at the hearing only.
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Accordingly, the company submitted that to the extent that NAPO was alleging that travel time was actually used for preparation but cannot provide any details of this breakdown, only 36% of the amounts claimed should be allowed. If on the other hand, NAPO was alleging that none of the time was spent in preparation but should be allowed at market rates, the company submitted that travel time should be taxed at a lesser amount which is reasonable in light of the particular circumstances which may apply in the particular case.
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In reply, NAPO suggested that the travel time claimed was reasonably required for the purpose of the intervention, that it was a benefit to the subscribers and they, through the company, should bear the costs. While acknowledging that a theme in previous taxation orders is that compensation for travel time should be based on whether the time was spent preparing, NAPO noted that no rationale was stated in Taxation Order 1987-1 for adopting the approach that travel time is compensable only to the extent it is used for preparation. According to NAPO, in Taxation Order 1985-3 the question was not directly raised.
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NAPO suggested that it would be neither fair nor practical to base compensation for travel time on a "preparation-time" approach. In this regard, NAPO pointed out that a high degree of productivity is unlikely while in travel status, and that interruptions make it difficult to keep an accurate record of preparation time.
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According to NAPO, a more reasonable approach is to assume that any counsel whose participation merits an award of costs would have been able to charge his or her regular fee for other work which would have been foregone while travelling. In this regard, NAPO advised that Mr. Roman had to forego some billings in a matter before the Ontario Energy Board. NAPO felt that it would be demeaning, and an invasion of counsel's and clients' privacy, to investigate the law practice of a particular counsel to find out what other business he or she had. Moreover, most counsel work in the evening, so travel time outside normal business hours should not be considered in a different light than other travel time.
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According to NAPO, the court tariff provided by Bell is unilluminating because it allows for discretion. Moreover, in practice, waiting time is frequently recognized as fully compensable and NAPO pointed out that both waiting time and travel time are incurred as part of counsel's duty to his or her client. Finally, NAPO suggested that it is reasonable to conclude that Bell's outside expert witnesses factor their travel time into their regular fee.
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In response to the company's submissions regarding the number of hours claimed for preparation by Mr. Roman, NAPO argued that the company was attacking the quality of its intervention. In this regard, NAPO suggested that the Commission had already decided that the quality of the intervention merits an award of costs, and that it is not the function of the taxing officer to make a ruling in that regard.
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NAPO specifically rejected the company's suggestions that the preparation time claimed by Mr. Roman is excessive and that the guideline of two days preparation for each day of hearing ought to be applied. According to NAPO, the amount of time spent by its counsel in cross-examination is not a reliable guide to the amount of time required to prepare. While NAPO must thoroughly prepare to cross-examine in all areas, counsel often found that the issues had already been covered by other counsel by the time NAPO's turn was reached. NAPO also submitted that the two-to-one ratio is not realistic for proceedings of the type involved in this case, which combined a review of revenue requirements with an application for rate rebalancing and which involved complex issues and voluminous, technically detailed interrogatories. NAPO noted that the time spent with regard to interrogatories reduces the amount of time required for cross-examination. According to NAPO, if the two-to-one ratio were applied in this case, it would discourage counsel that had spent time preparing for cross-examination from being efficient in cross-examination. NAPO also advised that the amount of time claimed for preparation by Mr. Roman was actually spent by him.
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NAPO also rejected the company's suggestion that the combined charges of NAPO's counsel are excessive. In this regard, NAPO argued that the results achieved by NAPO in this proceeding are not relevant at the taxation stage, the Commission having already decided that the quality of the intervention merits an award of costs.
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With regard to Bell's reference to the fee of counsel for CAC and others, NAPO suggested that the relevant standard is the "market rate" approach.
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With regard to the company's objection to the fact that on certain days NAPO's combined counsel fee exceeded $2,400, NAPO noted that this included preparation time as well as time spent at the hearing and that there were days when counsel had to work long hours. According to NAPO, it is not proper to lump together time spent by both counsel as if it were only one person's time. NAPO also pointed out that Bell kept three counsel in attendance at the hearing almost continuously.
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With regard to the company's suggestion that the hourly fee for Mr. Bell should be $60 rather than $120, NAPO referred to excerpts from Mr. Bell's curriculum vitae. NAPO also noted that in Taxation Order 1987-1, the taxing officer decided that a "market rate" approach is reasonable and concluded that $150 per hour represents a fair rate for the counsel there, who was called to the Bar in 1973. NAPO pointed out that Mr. Bell was called to the Bar in 1972. According to NAPO, the company's suggested hourly rate would result in Mr. Bell's time being taxed at only one quarter of the fair market rate, as any discount to be applied on account of Mr. Bell's lack of direct telecommunications experience had already been considered in the 50% reduction ordered by the Commission.
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The first issue I will deal with is counsel fees for time spent travelling.
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I note NAPO's suggestion that all travel time should be taxed at counsel's ordinary hourly rate, regardless of whether it was spent preparing in this proceeding. In Taxation Orders 1985-3 and 1987-1, the taxing officers specifically addressed this issue, and appear to have been prepared to allow the fees claimed for travel time only to the extent that the time was used for preparation. In Taxation Order 1985-3, the travel time was spent preparing, and it was allowed at the rate claimed. That rate happened to be 36% of the rate claimed for other time spent preparing. It is that ratio which was applied in Taxation Order 1987-1. On some other occasions, fees for travel have been allowed as submitted, without any reference to the issue.
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In my opinion, counsel fees for time spent preparing while travelling should be allowed at the same rate as other time spent in preparation, assuming, of course, that it was claimed at that rate.
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Having considered the submissions of NAPO and Bell, I find myself in agreement with the principle, which underlies Taxation Orders 1985-3 and 1987-1, that travel time not spent preparing should not be allowed. I note that such time may be spent working for other clients, reading magazines, asleep or simply doing nothing. I do not consider that subscribers should be required to subsidize such activities. I am not prepared to allow counsel fees for travel time except to the extent it is used in preparation. Accordingly, there being no indication that travel time was spent preparing, I am not allowing the 8 hours claimed for travel by Mr. Bell and the 14 hours claimed for travel by Mr. Roman.
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I will now turn to the issue of the hours claimed for preparation by Mr. Roman. I note that the guideline of two days preparation for each day of attendance is exactly that, a guideline, and consider that slavish adherence to it in all circumstances would be neither realistic nor appropriate. I also note NAPO's point that unlike the previous proceeding, this one involved rate rebalancing as well as revenue requirement issues. However, in the circumstances I consider the total number of billable hours claimed in respect of Mr. Roman - 381.3 hours in addition to travel time - to be excessive.
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The fee claimed by Mr. Roman, $175 per hour, was not directly challenged by the company. I note that an hourly rate of $150 was allowed for Mr. Roman in Taxation Order 1987-1, dated 19 January 1987. Given inflation and the additional experience of Mr. Roman in the intervening period, I am prepared to allow an hourly rate of $165.
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Accordingly, for Mr. Roman, I will allow for preparation and attendance $59,450, consisting of 360 hours taxed at S165 per hour.
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With respect to the $120 per hour rate claimed in respect of Mr. Bell, I note NAPO's argument that the rate claimed is appropriate based on the number of years that Mr. Bell has been a lawyer. However, I also note that years at the Bar is not the sole benchmark employed by taxing officers. Other criteria include knowledge and experience regarding telecommunications and its regulation. In the circumstances, I conclude that $100 per hour represents a fair rate for Mr. Bell.
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In accordance with Costs Order 88-6, only half the hours spent by Mr. Bell have been claimed. Excluding the 8 hours spent travelling, Mr. Bell claimed 168.5 hours for preparation and attendance. Accordingly, the 168.5 hours are taxed at $100 per hour, totalling $16,850.
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Having made the determinations set out above, I do not agree with the company that the combined fees charged by NAPO's two counsel is excessive.
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Persons Entitled to Costs
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Bell pointed out that in NAPO's oral submissions for an award of costs, the latter had not indicated that it was seeking costs for Dr. Halpern, Dr. Wilson, Mr. Marshall or Mr. Smellowsky, in respect of which $22,674.65 and U.S. $4,185 was subsequently included in NAPO's Bill of Costs. According to the company, the Commission could not have anticipated that costs were to be awarded for those individuals when it made Costs Order 88-6. Bell also argued that the specific wording of that Order, which named NAPO's counsel and expert witnesses, suggests that the Commission intended that the award of costs should be allowed only to those named therein. Accordingly, Bell submitted that the taxing officer should set aside the claims of costs for the other individuals as being beyond the scope of the direction provided in Costs Order 88-6.
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In reply, NAPO noted that the costs in question relate to consultants. According to NAPO, Costs Order 88-6 makes it clear that NAPO's application met the requirements and criteria for costs, other than the partial award with regard to Mr. Bell. NAPO suggested that the specific mention of particular counsel and witnesses merely reflected the fact that one of NAPO's counsel was awarded only partial costs and that Bell had specifically objected to an award for NAPO's expert witnesses.
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As noted above, in response to NAPO's application for costs, the company had specifically argued that the Commission should deny some or all of the costs of the five specific persons named by the company. In the circumstances, I do not agree with the company's contention that the Commission intended that costs be allowed only with respect to those persons. Rather, I consider that the wording of Costs Order 88-6 merely reflects the Commission's response to the company's objection to a full award with regard to NAPO's counsel and expert witnesses.
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However, in response to my telephone call requesting further information, on 19 July 1988, Mr. Roman advised that as much as one-third of the time claimed in respect of Mr. Marshall was spent working with or for Mr. Bell in relation to the cross-examination conducted by Mr. Bell. I note that in Costs Order 88-6, the Commission awarded NAPO only one-half of the costs associated with Mr. Bell. In the circumstances, I am prepared to allow only one-half of Mr. Marshall's costs for that portion of that time he spent working with or for Mr. Bell. Accordingly, I have allowed $18,562.21 for the fees and costs of Mr. Marshall, which is five-sixths of the $22,274.65 claimed in respect of his time.
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I have allowed the full amount claimed with respect to Mr. Smellowsky and Drs. Halpern and Wilson.
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Fees for Expert Witnesses
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Bell objected to the amount claimed in respect of the participation of Drs. Booth and Berkowitz, namely $800 per day for preparation and $1,200 per day for testifying. In this regard, the company noted that in Taxation Order 1987-1, the taxing officer had concluded that the appropriate fee for Drs. Booth and Berkowitz was the same as that fixed for Dr. Gould in Taxation Order 1986-6 with respect to CAC's participation in the same hearing, namely $750 for preparation and attendance. According to the company, there was no reason to allow a substantial increase to the rate of $750 per day which was granted to Drs. Gould, Gordon, Booth and Berkowitz in the 1985, 1986 and 1987 Review of Revenue Requirements proceeding.
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According to the company, the total billing of U.S. $38,116.86 from J.W. Wilson and Associates, Inc., primarily for Dr. Buckalew's participation in this proceeding, seems excessive in light of the nature and quality of the evidence provided by him. The company also suggested that the hourly rate of U.S. $125 for Dr. Buckalew is excessive since his evidence was faulty and there was inadequate preparation. Noting that 26 hours of Dr. Buckalew's time was billed subsequent to his appearance before the Commission, the company concluded that much of this time would have been related to attempts to correct deficiencies in his testimony.
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With regard to the company's suggestion that the proper rate for Drs. Booth and Berkowitz should be that granted to Drs. Gould, Gordon, Booth and Berkowitz in the 1985, 1986 and 1987 Review of Revenue Requirements proceeding, NAPO submitted that the experience and ability of its expert witnesses warrants the amounts claimed, that is $800 per day for preparation and $1,200 per day of testimony. According to NAPO, the increase is $50 per day, which is less than the rate of inflation in the intervening period of time. NAPO also argued that the amount allowed ought not to be any less than that paid by Bell to Dr. Morin, and suggested that the latter's evidence was found by the Commission to be not very helpful.
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With respect to Bell's submission that the hourly rate claimed for Dr. Buckalew is excessive because the nature and quality of his evidence was deficient, NAPO suggested that Mr. Buckalew's rate is reasonable and that the Commission had already ruled on the merits of his testimony.
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In my opinion, Taxation Order 1987-1 provides a starting point for considering the appropriate hourly rates for Drs. Booth and Berkowitz. There, the taxing officer allowed $750 per day for Drs. Booth and Berkowitz, the same amount allowed for Drs. Gould and Gordon in that proceeding.
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I note that in that proceeding, the taxation was prepared 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, a starting point for assessing the appropriate per diem rate for Drs. Gould and Gordon, and thereby indirectly for Drs. Booth and Berkowitz, was necessarily the rate taxed for Drs. Gould and Gordon in previous rate proceedings before the commission.
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By contrast, in this proceeding, as required by the Commission in ruling on Interrogatory Bell(CAC)8Sept87-319RR88, the Commission has for the first time information regarding the fees paid by Bell to its financial witnesses. In Taxation Order 1988-1, dated 5 April 1988, having considered the fees, and the manner of calculating the fees, paid by Bell to its financial witnesses in this proceeding, as well as other factors, the taxing officer found that the $900 per diem fee claimed by Drs. Gould and Gordon was reasonable and did not exceed the fair market value of the services rendered.
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I have had regard for various factors, including the experience and ability of Drs. Booth and Berkowitz, the nature of their participation and the complexity of the issues with which they dealt, in comparison with Drs. Gould and Gordon and Bell's financial witnesses in this case.
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On the basis of my consideration, I have concluded that the amounts claimed with respect to the preparation of Drs. Booth and Berkowitz, namely $800 per day, do not exceed the fair market value of the services rendered, and is reasonable. With regard to the amounts claimed for testifying, I consider that the $900 per day allowed in Taxation Order 1988-1 for Drs. Gould and Gordon is equally appropriate for Drs. Booth and Berkowitz in the same hearing. Accordingly, for the fees of Dr. Booth I allow the 24 days preparation at $800 per day and the one day testifying at $900 per day, totalling $20,100. With respect to the fees of Dr. Berkowitz, I allow the 21 days preparation at $800 per day and the one day attendance at $900 per day, for a total of $17,700.
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With respect to the hourly rate claimed for Dr. Buckalew, I have considered the nature of his evidence and his background and experience as indicated in the resume filed with the Commission. In the circumstances, I consider that an hourly rate of U.S. $100 would be appropriate. Accordingly, with respect to the fees for Dr. Buckalew, I allow the 257 hours at U.S. $100 per hour, for a total of U.S. $25,700. I also allow the amounts claimed for expenses.
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Total Fees and Disbursements
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Bell suggested that the total fees and disbursements, of approximately $220,000 for NAPO's participation in this proceeding are excessive, given the quality of the intervention and the degree to which the intervener contributed to a better understanding of the issues before the Commission. Accordingly, the company requested substantial reduction in the costs taxed to this intervener.
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In reply, NAPO suggested that the total fees and disbursement claimed by it are not out of line, as the proceeding combined a difficult and complex rate rebalancing case with a review of revenue requirements case. In this regard, NAPO noted that in the previous proceeding, which involved only a review of revenue requirements, NAPO had been awarded approximately $100,000.
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I have examined each component of the fees and disbursements claimed, and have not allowed that portion which I consider exceeds the costs necessarily and reasonably incurred by NAPO.
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Costs as Taxed
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I hereby tax the fees and disbursements as follows:
Fees
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Counsel, Andrew J. Roman $ 59,450.00
Counsel, Glenn W. Bell 16,850.00
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Disbursements
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Expert Witness Fees
and Disbursements,
Drs. Booth and Berkowitz $ 39,259.24
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Expert Witness Fees
and Disbursements,
Dr. Buckalew (including
J. Wilson N. Smellowsky) 31,751.86 (U.S.)
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Long Distance Calls 862.35
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Photocopying 4,676.32
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Transcripts 9,579.50
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Courier and Shipping 1,505.48
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Taxi Fares 762.70
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P. Halpern and L. Marshall 18,962.21
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Disbursements,
Messrs. Bell and Roman 4,008.35
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Total Fees and Disbursements $ 155,916.15 Cdn.
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$ 31,751.86 U.S.
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Allan Rosenzveig
Legal Counsel
Canadian Radio-television and Telecommunications Commission
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