|
|
|
Ottawa, 12 April 1989
|
|
Taxation Order CRTC: 1989-3
|
|
In Re: British Columbia Telephone Company - Revenue Requirement for the Years 1988-1989, Telecom Decision CRTC 88-2, CRTC Telecom Public Notice 1988-20 and Telecom Costs Order CRTC 88-10
|
|
Richard J. Gathercole, for the B.C. Old Age Pensioners' Organization, the Council of Senior Citizens' Association, the West End Seniors' Network, the Senior Citizens' Association, the Federated Anti-Poverty Groups of B.C. and Local 1-217 IWA Seniors (BCOAPO et al)
|
|
Peter W. Butler, for British Columbia Telephone Company (B.C. Tel)
|
|
TAXATION OF COSTS OF BCOAPO ET AL
|
|
Taxing Officer: Lorne Abugov
|
This order constitutes the taxation of costs awarded to BCOAPO et al in the case of British Columbia Telephone Company - Revenue Requirement for the Years 1988 and 1989, announced in Telecom Decision CRTC 88-21, dated 19 December 1988. Costs were awarded to BCOAPO et al by Telecom Costs Order CRTC 88-10, dated 1 November 1988, in accordance with subsection 44(1) of the CRTC Telecommunications Rules of Procedure.
|
|
BCOAPO et al submitted a Bill of Costs in the amount of $47,682.64, consisting of $40,937.50 of fees for counsel, $6,125 of consultant fees and $620.14 in disbursements. In the course of the taxation, which proceeded by way of written submissions, the following issues were raised and discussed.
|
|
Counsel Fees
|
|
B.C. Tel did not object to the amount of time claimed for attendance at the review meeting by counsel for BCOAPO et al, but did question the time claimed by counsel for preparation, as well as the quantum of the counsel fee requested, namely $175 per hour for preparation and $1,000 per day for attendance.
|
|
With regard to time claimed for preparation, B.C. Tel suggested that counsel should be allowed 125 hours rather than the 152.5 hours submitted in the Bill of Costs, an amount which the company regarded as excessive taking into account the results and the assistance provided to counsel by BCOAPO et al's consultant Peter Anderson.
|
|
In reply, BCOAPO et al stated that its claim for counsel preparation time, taking Mr. Anderson's assistance into account, was very similar to the preparation time expended on behalf of the same clients and approved in full by the taxing officer in connection with the previous B.C. Tel rate hearing, held in 1985. BCOAPO et al noted that, with respect to the current proceeding, the relation of preparation time claimed to attendance time at the hearing was substantially below the 2:1 ratio followed as a general guideline in previous taxations. BCOAPO et al submitted that more preparation time was required than usual for the pre-hearing conference in view of the numerous claims of confidentiality advanced by B.C. Tel, many of which were objected to by BCOAPO et al and rejected, in the large majority of cases, by the Commission.
|
I note that in Taxation Order 1985-4, dated 20 September 1985, the claim of 167.5 hours for preparation submitted by Mr. Gathercole in connection with the 1985 B.C. Tel rate hearing encompassed the company's 1984 construction program review, in addition to the central hearing, the pre-hearing conference and a 1984 interim rate increase application. I find that the 152.5 hours claimed for preparation by counsel in this case is reasonable, in that the scope of the current proceeding, absent a construction program review, is narrower than the 1985 rate case. In reaching this conclusion, I have taken into consideration the amount of preparation time claimed by Mr. Gathercole in past B.C. Tel construction program review proceedings. I note also that the claim of 152.5 hours for preparation by BCOAPO et al counsel is within the Commission's established guideline, and, in any event, B.C. Tel has offered little evidence in support of the lower number of hours for preparation time suggested in their comment.
|
With regard to the quantum of the counsel fee requested, B.C. Tel questioned BCOAPO et al's statement that the rates of $175 per hour for preparation and $1,000 per day for attendance claimed in this proceeding are consistent with those counsel rates approved in Taxation Orders 1988-4 and 1988-6, namely, $170 per hour for preparation and $950 per day for attendance. B.C. Tel pointed out that, when considered on a percentage basis, the counsel rates currently sought by BCOAPO et al represent increases of 2.9% and 5.3% respectively over those allowed in the 1988 taxation orders.
|
B.C. Tel also noted that the rate structure between preparation time and hearing time which the Commission has applied to BCOAPO et al in recent taxations has become inconsistent with the regime adopted by the Consumers' Association of Canada (CAC) and approved in Taxation Orders 1988-3 and 1988-5. In contrast with the CAC approach, whereby preparation time of the CAC's counsel and financial analyst have been charged at a lower rate than hearing time, recent taxations of BCOAPO et al reflect an approach whereby preparation time, calculated on the basis of a seven hour day, is charged at a higher per diem rate than attendance time. For example, the company noted that the preparation rate of $170 per hour allowed in Taxation Orders 1988-4 and 1988-6 translated to a daily rate of $1,190, which exceeded the approved daily rate of $950 for attendance by $240. The comparable figures for this proceeding, substituting the new rates requested in BCOAPO et al's Bill of Costs, are $1,225 per day for preparation and $1,000 per day for attendance at the hearing, representing a differential of $225.
|
|
In order to resolve the inconsistency between the rate relationships allowed for CAC and BCOAPO et al, the company suggested that it would be appropriate to reduce the rate charged by BCOAPO et al counsel for preparation time to an equivalent of $850 per day (or $121.50 per hour), resulting in a reduction in the magnitude of total counsel fees from $26,687.50 claimed in the Bill of Costs to $18,530.
|
In reply, BCOAPO et al reiterated its statement that rates requested for counsel are consistent with those allowed in Taxation Orders 1988-4 and 1988-6 in connection with a review meeting and a hearing, respectively, both of which took place in 1987, since the requested rates are only slightly increased from those approved in the two prior taxation orders.
|
|
With regard to B.C. Tel's argument that the rate claimed for counsel preparation time should be reduced in order to render the rate structure of BCOAPO et al and CAC consistent, BCOAPO et al disputed the company's apparent suggestion that, of the two approaches, CAC's approach is the appropriate one. BCOAPO et al noted that its approach has been consistently followed and approved by taxation officers since at least 1982. According to BCOAPO et al, it is fair and appropriate to charge a higher rate for preparation time than attendance time since the former is totally expended in actual direct preparation, whereas the latter may include time during which counsel is in attendance at the hearing but involved merely in listening to another party's cross-examination rather than engaged in actual direct participation.
|
I would point out that in previous taxation orders, the quantum of fees for counsel has sometimes been determined in relation to those allowed for other counsel. In Mr. Gathercole's case, the taxing officer, in Taxation Order 1987-3, allowed a $160 per hour preparation rate, having regard to the preparation rate approved in Taxation Order 1987-1 for counsel to the National Anti-Poverty Organization in the same proceeding, and taking into account the number of years that the respective counsel had been called to the bar. Naturally, Mr. Gathercole's hourly fee for preparation time has increased over time since then, reflecting inflation and added experience. Under these circumstances, I can see no merit to B.C. Tel's suggestion that Mr. Gathercole's preparation rate be reduced to $850 per day, or $121.50 per hour, almost $40 per hour less than the rate allowed for him in Taxation Order 1987-3.
|
Rather, I have decided that the appropriate starting point for determining the quantum of fees to be awarded to BCOAPO et al in respect of counsel preparation and attendance time for this proceeding should be the costs awarded in Taxation Orders 1988-4 and 1988-6, with increments for inflation and added experience. In those cases, the taxing officers allowed amounts of $170 per hour for preparation and $950 per day for attendance. In this Bill of Costs, BCOAPO et al has claimed for preparation and attendance time rates of $175 per hour and $1,000 per day, respectively. In percentage terms, BCOAPO et al has requested increases of 2.9% and 5.2%, again respectively, over the rates allowed in Taxation Orders 1988-4 and 1988-6. I do not regard the increases claimed for preparation and attendance to be excessive, whether taken in their own right or viewed in the context of the most recent BCOAPO et al taxations, including Taxation Order 1987-3, which have allowed increases of comparable or greater magnitude, especially with respect to rates for preparation time.
|
|
However, in this instance, the appropriateness of the rates claimed must be examined from a further perspective, namely, their relationship to those of CAC. This is the case because B.C. Tel has directly called into question the issue of whether preparation time may be charged at a higher rate than attendance time. Citing recent taxations of CAC and BCOAPO et al, the company has contended, in effect, that taxing officers have applied inconsistent approaches to the two interveners, allowing higher per diem attendance rates for CAC and higher preparation rates, calculated on a seven hour working day basis, for BCOAPO et al. To resolve the inconsistency, B.C. Tel has suggested a reduction in the daily preparation rate claimed by BCOAPO et al counsel from $1,225 ($175 per hour) to $850 ($121.50 per hour).
|
To begin with, I note that prior to Taxation Order 1987-3, dated 21 April 1987, in no case did counsel fees allowed for Mr. Gathercole reflect a higher rate for preparation, calculated on a daily basis, than for attendance. This is consistent with the principles expressed in the decision of the taxing officer, contained in a letter dated 4 November 1983, pursuant to Telecom Costs Order CRTC 83-2, that while the Commission's objectives in awarding costs to interveners, described in Telecom Decision CRTC 78-4, would be furthered by narrowing the gap between awards for preparation time and attendance at a hearing, the Commission's practice of awarding a somewhat lower rate per diem for preparation remained appropriate.
|
It would appear that these principles were adhered to by taxation officers, in respect of counsel fees, without exception until Taxation Orders 1987-1 and 1987-3 were rendered. In the former case, the taxation officer allowed a rate for counsel of $150 per hour for both preparation and attendance time; in the latter case, one in which Mr. Gathercole's counsel fees were under consideration, a higher rate was allowed for preparation, $160 per hour ($1,120 per day), than for attendance, $900 per day. I note that, in the case of Taxation Order 1987-1, Bell Canada objected to the $150 rate claimed, however, it did so on grounds other than a failure to conform to the Commission's practice of awarding lower rates per diem for preparation than for attendance. On the other hand, in Taxation Order 1987-3, the taxation officer allowed a higher per diem rate for preparation than attendance, despite B.C. Tel's objections that the amounts claimed were contrary to the Commission's established practice of allowing higher attendance than preparation rates.
|
|
Having reviewed previous relevant taxations and the submissions of B.C. Tel and BCOAPO et al on this issue, I accept B.C. Tel's point that, during the recent past, the approach to calculating counsel fees adopted by CAC, on the one hand, and BCOAPO et al, on the other hand, and allowed in both cases by taxation officers, have differed insofar as the relation between preparation and attendance rates is concerned. I am unable to find, however, that the existence of two differing approaches to the method of calculating counsel fees is necessarily inappropriate and, as B.C. Tel has argued, in need of resolution.
|
I note BCOAPO et al's submission that a higher rate for preparation time than attendance is fair and appropriate since some time at a hearing, unlike preparation time, may involve little or no activity on counsel's part, such as time spent listening to another party's cross-examination, as opposed to actual direct participation. In my opinion, a taxing officer would be justified in allowing counsel a higher preparation rate than attendance rate where, for example, the proceeding in question involved multiple interveners and a lengthy public hearing and related to a subject matter sufficiently complex or innovative as to warrant detailed preparatory work. In other circumstances, allowing a higher rate for preparation than attendance time may simply be a reflection of the fact that the attendance rate claimed by counsel was lower than the rate the taxation officer might otherwise have allowed had a higher rate been requested in the first place. This appears to have been the case in Taxation Order 1987-3 where the taxation officer, having found Mr. Gathercole's $160 hourly preparation rate in that proceeding to be reasonable based upon his then 15 years of experience, concluded that a per diem attendance rate of $900 was clearly not excessive. In the present case, I am satisfied that either of the circumstances described above could apply as the basis for allowing a higher preparation than attendance rate for Mr. Gathercole.
|
|
In light of the foregoing, and having already concluded that the increases in the rates claimed by BCOAPO et al for preparation and attendance are not excessive, I will allow the amount requested for preparation by counsel, namely, $26,687.50, consisting of 152.5 hours of preparation taxed at $175 per hour. As for counsel's attendance at the hearing, I will allow the amount requested of $14,250, consisting of 14.25 days taxed at $1,000 per day.
|
|
CONSULTANT'S FEES
|
B.C. Tel objected to the rate of $250 per day claimed by BCOAPO et al for preparation and attendance at the hearing by the consultant, Mr. Anderson. B.C. Tel noted that Taxation Order 1985-4, issued in relation to the previous B.C. Tel rate proceeding, allowed rates for the legal assistant and the articling student of $27.50 per hour for preparation and $210 per day for attendance. It pointed out that the $27.50 per hour rate, unlike the rates claimed in the current Bill of Costs, translated into a lower per diem preparation rate, $192,50, than the per diem attendance rate of $210. The company also submitted that the percentage increases reflected in the $250 per diem rates, 29% for preparation and 19% for attendance, were excessive. Therefore, B.C. Tel submitted that the total amount claimed for the consultant's fee should be reduced from $6,125 to $5,000.
|
|
The company also objected to the consultant's charging of fees over a 1 1/2 hour lunch break on each of the 12 full days he attended at the hearing, representing a total charge of $642.78, calculated on the basis of an hourly rate of $35.71. B.C. Tel questioned whether each of these lunches was spent in conference with BCOAPO et al counsel on matters related to the rate case, and questioned further the reasonableness of expecting the company's subscribers to bear this expense.
|
In reply, BCOAPO et al argued that Mr. Anderson's rates were simply not comparable to those allowed for the legal assistant and the articling student in Taxation Order 1985-4. Unlike those two individuals, both of whom were actively involved for the first time in the 1985 B.C. Tel rate case, Mr. Anderson, according to BCOAPO et al, possesses a technical background, teaches communications law at Simon Fraser University, has appeared before the CRTC on many occasions and has considerable experience in telecommunications.
|
|
BCOAPO et al also disputed the company's submissions regarding lunch breaks charged by the consultant, noting that portions of the lunch breaks were spent conferring with counsel and conducting preparation work, as well as eating lunch. Moreover, during significant portions of the hearing, Mr. Anderson was engaged in preparation work outside of the hearing room which, if conducted before or after hearing hours, could have been legitimately billed as preparation time over and above the actual attendance time claimed. Therefore, according to BCOAPO et al, B.C. Tel subscribers benefited not merely from the work done by Mr. Anderson but also from his manner of billing.
|
|
I have taken into account the fees, and the manner of calculating the fees, paid to Mr. Anderson by BCOAPO et al in this proceeding. In the process, I have assessed a variety of factors, including Mr. Anderson's experience, the nature of his participation, the complexity of the issues with which he has dealt and the amount of preparation time he has claimed relative to that claimed by counsel for BCOAPO et al in this case. I have similarly examined the relationship between Mr. Anderson's preparation time in this proceeding and that claimed in respect of the legal assistant and the articled clerk who assisted Mr. Gathercole during the 1985 B.C. Tel rate case.
|
|
On the basis of my assessment, I have concluded that the per diem rate of $250 for attendance and preparation does not exceed the fair market value of the services rendered by Mr. Anderson and is reasonable taking account of inflation and having regard to his level of experience relative to that of the legal assistant and articled clerk involved during the 1985 proceeding.
|
|
I will turn now to the issue of the consultant's charge of a full hourly rate for a 1 1/2 hour lunch on each of the 12 full days of the hearing.
|
Having considered the submissions of BCOAPO et al and B.C. Tel, I am of the view that the principle enunciated in Taxation Orders 1988-2 and 1988-5, in respect of the recovery of costs for time spent travelling to and from a hearing, is equally applicable to the determination of whether, and to what extent, costs claimed with respect to lunch breaks should be allowed. In the two cases involving claims for travel time, the taxation officer disallowed travel time not spent preparing and, in Taxation Order 1988-2, concluded further that "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 "
|
|
In my opinion, the time spent over the lunch break of the hearing does not lend itself to a claim of attendance time, as it appears to have been billed by Mr. Anderson, since, simply stated, the hearing is not in session. Conversely, I consider that such time, or a portion thereof, can appropriately be the subject of a claim for preparation time at the same rate as other time spent in preparation. In this regard, BCOAPO et al has pointed out that portions of Mr. Anderson's lunch breaks were spent conducting preparation work, as well as eating. However, I note that such time may be spent in a variety of other ways, for example, conversing with counsel or other hearing participants over lunch on matters unrelated to the hearing, working for other clients, making telephone calls, reading newspapers, or simply doing nothing. I do not consider that subscribers should be required to subsidize such activities. I am not prepared to allow consultant fees for the hours spent over lunch breaks except to the extent that such time is used in actual preparation.
|
In Telecom Letter Decision CRTC 89-5, Appeal by the Consumers' association of Canada of Taxation Order 1988-5, dated 14 February 1989, the Commission identified two of various means by which a taxing officer can address the reasonableness of costs for travel time, in light of the principle expressed in Taxation Order 1988-5. A taxing officer could either ask an intervener to identify the number of travel hours actually spent on preparation and tax these at the rate used for other preparation time or, where there is evidence that a reasonable portion of the entire travel time was indeed allocated to preparation for the proceeding for which the costs are being taxed, a lower rate could be applied to this time. I see no reason why either of these approaches could not be applied to the time spent over lunch breaks by an intervenor during the course of a hearing.
|
|
In the present case, as noted, there is some evidence that a reasonable portion of this time was spent by Mr. Anderson preparing for the revenue requirement proceeding. However, BCOAPO et al does not claim that each of the lunch breaks involved preparation work by Mr. Anderson, nor does it provide any information as to the amount of time that the consultant was actually engaged in preparation over the lunch breaks. Therefore, with respect to the 18 hours claimed over the lunch breaks of the hearing by Mr. Anderson, and as a proxy for a more precise statement of such time spent preparing, I will allow a rate of $62.50 per day, or 25% of his allowed per diem preparation rate. As a result, I have reduced Mr. Anderson's claim by $482.09 to reflect the lower rate for the hours in question.
|
|
ADEQUACY OF BCOAPO ET AL'S AFFIDAVIT OF DISBURSEMENTS
|
|
B.C. Tel objected to the Affidavit of Disbursements submitted by BCOAPO et al, terming it inadequate and incomplete when contrasted with that filed by CAC in this proceeding. In particular, the company submitted that BCOAPO et al's affidavit provided no evidence that counsel actually expended the amount of time claimed. In reply, BCOAPO et al pointed out that the Affidavit of Disbursements in question is in the same form and contains the same information as those filed in past proceedings, and that neither B.C. Tel nor any taxation officer had ever previously obiected to the affidavit.
|
|
I have examined the Affidavit of Disbursements filed by BCOAPO et al in the current proceeding, and have contrasted it with the CAC Affidavit of Disbursements referred to me by B.C. Tel. I am satisfied that concerns similar to those expressed by B.C. Tel in this proceeding could be eliminated in future proceedings through the adoption by BCOAPO et al of a more detailed Affidavit of Disbursements, such as that employed by CAC.
|
|
DISBURSEMENTS
|
|
The company did not object to the amounts claimed by BCOAPO et al for disbursements, except for a miscellaneous expense claim of $81.10 for meals for intervener's counsel. BCOAPO et al, in its reply, indicated that the claim had been included inadvertently in its Bill of Costs. Other than this miscellaneous expense, I will allow the disbursements as claimed, namely $539.04.
|
|
COSTS AS TAXED
|
|
I hereby tax the fees and disbursements as follows:
Counsel $40,937.50
|
|
Consultant 5,642.91
|
|
Disbursements
|
|
Postage 7.34
Telephone 65.85
Photocopies 344.85
Courier 90.20
Miscellaneous Expenses 30.80
539.04
|
|
Total Fees and Disbursements 47,119.45
|
|
Lorne Abugov
Counsel
Canadian Radio-television and Telecommunications Commission
|
|
|
|