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Ottawa, 22 April 1991
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Telecom Costs Order CRTC 91-4
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In re: Unitel Communications Inc. & B.C. Rail Telecommunications/Lightel Inc. - Applications to Provide Public Long Distance Voice Telephone Services and Related Resale and Sharing Issues: Applications for Interim Costs
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On 12 February 1991 the Commission received an application for interim costs in the above-captioned proceeding from the British Columbia Old Age Pensioners' Organization, the Council of Senior Citizen's Organizations, West End Seniors' Network, Senior Citizens' Association, Federated Anti-Poverty Groups of B.C. and Local 217 IWA Seniors (BCOAPO et al). A similar application by the National Anti-Poverty Organization and Rural Dignity Canada (NAPO/RDC) was received on 13 February 1991.
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By letter dated 22 February 1991, the Commission wrote to BCOAPO et al and NAPO/RDC requesting further submissions regarding the jurisdiction of the Commission to make awards of interim costs; the nature of the awards sought and the process by which they should be administered; the possibility that a final costs award may be less than the interim award that preceded it; and finally, which parties to the main proceeding should be respondents to the interim costs application.
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The Commission directed BCOAPO et al and NAPO/RDC to serve these further submissions on Unitel Communications Inc. (Unitel), B.C.Rail Telecommunications/Lightel Inc. (BCRL) and each of the respondents to the main proceeding: Bell Canada (Bell), British Columbia Telephone Company (B.C. Tel), Newfoundland Telephone Company Limited (Newfoundland Tel), The New Brunswick Telephone Company Limited (NBTel), Maritime Telegraph and Telephone Company Limited (MT&T) and The Island Telephone Company Limited (Island Tel). These parties filed responses and both BCOAPO et al and NAPO/RDC filed replies.
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Jurisdiction
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The Commission has not received an application for interim costs since In re: Bell Canada and British Columbia Telephone Company - Rate Rebalancing and Revenue Settlement Issues, Telecom Costs Order CRTC 87-5, 3 September 1987, (Costs Order 87-5), in which the Commission denied an application by the Lower Mainland Alliance of Information and Referral Services (LMAIRS) for interim costs, on the basis that the Commission was without jurisdiction to make such an award.
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In their applications, both BCOAPO et al and NAPO/RDC submitted that the Commission does possess the necessary authority to make interim awards of costs, noting that the decision on which the Commission's holding in Costs Order 87-5 was based on, Bell Canada v. CRTC, [1988] 1 FC 296 (C.A.), was overturned by the Supreme Court of Canada in Bell Canada v. Canada (CRTC), [1989] 1 SCR 1722.
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In its 22 February 1991 letter to the applicants, the Commission noted that there are several cases, dealing with the authority of administrative tribunals to make costs awards prior to the completion of a proceeding, that suggest that administrative tribunals do not possess the power to make certain types of awards in advance of the conclusion of a proceeding, absent clear statutory language to the contrary. These decisions include Regional Municipality of Hamilton-Wentworth v. Hamilton-Wentworth Save the Valley Committee (1985), 51 OR (2d) 23 (Div.Ct.), Manitoba Society of Seniors Inc. v. Greater Winnipeg Gas Co. (1982), 18 Man. R. (2d) 440, and Re Ontario Energy Board (1985), 51 OR (2d) 333 (Div.Ct.).
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In each of these decisions, the court in question considered a statutory power to award costs that was virtually identical to s.76 of the National Telecommunications Powers and Procedures Act (NTPPA), the provision from which the Commission derives its authority to make awards of costs.
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In its 22 February 1991 letter, the Commission invited the applicants for interim costs to comment on these cases, taking into consideration the Commission's statutory mandate and its Rules of Procedure.
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Both BCOAPO et al and NAPO/RDC prefaced their submissions by objecting to the Commission's decision to solicit and consider submissions on the jurisdictional question so close to the beginning of the public hearing in the main proceeding. Both applicants criticized the Commission for not conducting this review sooner and submitted that without a timely decision, they might not be able to participate effectively in the central hearing.
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The Commission notes that the proceeding in which interim awards of costs are sought commenced in August of 1990, some six months before either BCOAPO et al or NAPO/RDC applied for interim costs. In the fall of 1990, counsel for both applicants contacted Commission staff and advised of their intention to file applications for interim costs; however, BCOAPO et al and NAPO/RDC did not actually make application to the Commission until mid-February of 1991 -- 2 months before the commencement of the public hearing. The Commission notes that applications for costs cannot be dealt with without providing the respondents to the applications with the opportunity to make submissions. Moreover, in the present case, it was necessary for the Commission to request additional information from BCOAPO et al and NAPO/RDC, due to deficiencies in the initial applications for interim costs. In the circumstances, the Commission is of the view that the applicants' objections are inappropriate.
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In submitting that the Commission did have jurisdiction to make interim awards of costs, both BCOAPO et al and NAPO/RDC relied largely on the Commission's power, derived from s.60(2) of the NTPPA, to make interim orders. The applicants noted that while the Ontario Energy Board and the Manitoba Public Utilities Board possess similar powers, no reference was made to these powers in the decisions noted above. The applicants also noted that the Commission's jurisdiction to make interim orders was confirmed in Bell v. CRTC, supra, and submitted that this power should apply equally to costs orders as to other types of orders.
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All but one of those that filed responses to the costs applications (the respondents) argued that the Commission was without jurisdiction to make awards of interim costs. While not addressing the jurisdictional question, Unitel indicated that it had no objection to an interim costs award being made.
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Generally, the respondents did not dispute either the Commission's power to make interim orders or its power to make awards of costs; however, they submitted that the power to make interim orders could not have the effect of extending the power to award "costs" beyond the normal legal sense of that word. Several of the respondents noted that despite the fact that the tribunals that were the subjects of the Manitoba Seniors case and the Save the Valley case had possessed similar powers to make interim orders, the courts in those cases ruled that those tribunals could not make awards of interim costs
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In addition, several of the respondent telephone companies argued that the Commission is without jurisdiction to make awards of interim costs in the present case, since sections 44 and 45 of the CRTC Telecommunications Rules of Procedures (the Rules) apply only to general rate cases. On a literal reading of the Rules, this is indeed the case, however the Commission also reserves the power, pursuant to s.28, to dispense with, vary or supplement any of the provisions of the Rules. The Commission has in the past awarded costs in proceedings other than general rate cases, such as adversarial proceedings, issue proceedings and Construction Program Reviews. Most recently, in In re: Telephone Set Compatibility with Hearing Aids, Telecom Costs Order CRTC 89-5, 27 June 1989, the Commission awarded costs in a non-rate case context, and indicated that costs awards should not be restricted to proceedings likely to affect rates specifically. The Commission is of the view that the present case is a proper one in which to consider applications for costs, whether on an interim or final basis.
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The Commission notes that, contrary to the suggestions of some of the respondents, the courts in the Save the Valley and Manitoba Seniors cases did not consider the powers of the tribunals in question to make interim orders. In the result, these cases cannot be seen as standing for the proposition that a power to make interim orders, read together with a power to make costs orders, cannot support an award of interim costs.
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The Commission also interprets the decisions of the courts in the Save the Valley and Manitoba Seniors cases as rejecting awards of intervener funding, rather than interim awards of costs per se. Intervener funding refers to monies provided to interveners before the commencement of a proceeding in order to facilitate the participation of the intervener in question. Such awards are based primarily on financial need and not on merit.
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The Commission is of the view that an interim costs award which pays an intervener's expenses only after they have been incurred is more akin to court costs than to intervener funding.
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The Commission is of the view that an interim costs award made pursuant to the Rules is a merit-based award, as are costs awards made by the civil courts. In order to be eligible for an interim award of costs in a Commission proceeding, applicants must meet the criteria set out in s.45(1) of the Rules, including the demonstration of an ability to contribute to a better understanding of the issues by the Commission. In addition, pursuant to s.45(4), any interim costs award is reviewed following the conclusion of the proceeding, with reference to the intervener's performance over the entire proceeding. At that time, in the event that the intervener's performance is found not to have met the criteria set out in s.44(1) of the Rules, the Commission may make adjustments to the interim order and the intervener may be required to pay back all or part of the monies that it has received.
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The Commission notes that, while a similar post-proceeding revisitation scheme was part of the stated case for the court in the OEB case, there was no discussion of this mechanism in the judgement. It should also be noted that the Ontario Energy Board does not possess a general power to make interim orders, of the type found in the NTPPA. The Commission is therefore of the view that this decision does not provide an impediment to the Commission's jurisdiction to make interim awards of costs.
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In all the circumstances, the Commission considers that it does have jurisdiction to make awards of interim costs.
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The Present Applications
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The Commission is satisfied that both applicants meet the criteria for eligibility found in paragraphs (a), (c) and (d) of s.45(1) of the Rules.
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Paragraph 45(1)(b) of the Rules requires an applicant to demonstrate to the satisfaction of the Commission that it can contribute to a better understanding of the issues by the Commission. In determining whether an applicant has met this criterion, the Commission considers that reference should be made to both the applicant's performance to date in the proceeding in which an award of interim costs is sought, and to the applicant's past performance in Commission proceedings. At this juncture, the Commission notes that there is little before the Commission on which to base an assessment of the performance of the applicants to date, since neither party has filed evidence nor conducted cross-examination, although both applicants have filed a limited number of interrogatories.
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With regard to past performance in Commission proceedings, the Commission notes that the performance of BCOAPO et al has been consistently satisfactory over the years and that this intervener has always received its full costs. Mr. R. Gathercole, BCOAPO et al's counsel in the present case, has acted as counsel for BCOAPO et al throughout this period. The Commission accordingly finds that BCOAPO et al has demonstrated that it can contribute to a better understanding of the issues.
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On the other hand, the performance of NAPO/RDC has been somewhat uneven in recent years; in fact, in their last five costs applications, the Commission has not awarded either NAPO or RDC a full award of costs. Throughout this period, both NAPO and RDC were represented by their present counsel, the Public Interest Advocacy Centre (PIAC). In the circumstances, the Commission finds that NAPO/RDC has not demonstrated that it can contribute to a better understanding of the issues by the Commission to the extent that a full award of costs is warranted. However, the Commission is of the view that the case for a partial award of interim costs has been made out. In the circumstances, the Commission has determined that an award of 75% of the expenses incurred by the intervener is appropriate. The Commission emphasizes that NAPO/RDC's interim award is subject to revision following the conclusion of the main proceeding, and may be reduced or increased at that time based on the performance of the intervener.
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In their applications, BCOAPO et al and NAPO/RDC proposed an interim costs award process in which the Commission would first determine eligibility for an award of interim costs by reference to s.45(1) of the Rules. Assuming that the applicant met the criteria, the Commission would make an award of interim costs in favour of the applicant. As the applicant incurred expenses, it would forward its invoices, etc. to the respondents for payment. The respondents would pay the expenses that they considered reasonable, leaving the determination of the reasonableness of the remainder to a taxation process. The application of BCOAPO et al contemplated that such determinations would be made during the taxation process that follows a final award of costs, while NAPO/RDC proposed that it should have the option of having any objections to the reasonableness of expense claims dealt with on an expedited basis by a designated taxation officer.
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The Commission is generally in agreement with this proposal, but reminds the applicants that any award of interim costs is subject to adjustment following the conclusion of the proceeding, at which point recipients of interim awards of costs are required by s.45(4) of the Rules to submit an application for a final award of costs. If costs are awarded on a final basis, a taxation process follows. In the Commission's view, it would be premature to consider the reasonableness and necessity of the expenses incurred by the applicants before the final costs awards have been made. Accordingly, the awards of interim costs will not be subject to such advance consideration.
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The Commission directs that any invoices submitted for payment be accompanied by an affidavit of disbursements. In the interests of minimizing the administrative burden to the parties involved, the Commission also directs that such expense claims may only be made at fixed intervals.
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The Commission notes that BCOAPO et al has only requested its costs of participation in the central hearing, being travel and accommodation expenses and transcript costs. NAPO/RDC, on the other hand, has requested its disbursements and counsel fees from the date of its application for interim costs forward. In its answer to the applications, Unitel has submitted that interim costs should be fixed at a level that is no more than necessary to ensure that the applicant can meet the immediate costs of participation, proposing that any award should be limited to disbursements, with no advance payments for professional fees. The Commission considers that in the present case, it would not be appropriate to include counsel and other fees within the scope of an award of interim costs. Accordingly, the Commission has decided that the interim awards of costs will be limited to disbursements, such as expenses for accommodation, transportation and photocopies.
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Respondents
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In their applications, both BCOAPO et al and NAPO/RDC submitted that the applicants in the main proceeding, Unitel and BCRL, should be primarily responsible for payment of any costs awards. In addition, NAPO/RDC suggested that Bell Canada may also be an appropriate respondent to its costs application. BCOAPO et al suggested that B.C. Tel may be an appropriate respondent to its application.
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In their answers to the costs applications, Bell, B.C. Tel, Island Tel, MT&T and Newfoundland Tel submitted that only Unitel and BCRL, as the applicants to the main proceeding, should be required to contribute to any costs awarded. NBTel submitted that, in view of the information supplied by the applicants as to the proposed scope of their interventions, NBTel should not be a respondent to the costs applications. BCRL suggested that only the regulated carriers should be liable for any costs awarded, since only they can recover from subscribers through the rate process (in contrast to the unregulated telecommunications suppliers, who would have to recoup any such payments from their shareholders). Unitel suggested that all parties to the main proceeding should share in paying any costs awarded.
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Unfortunately, both costs applicants were somewhat vague in their applications as to the scope of their participation in the main proceeding. However, the Commission notes that, in addition to the applications of Unitel and BCRL for public long distance voice competition, the main proceeding will consider a number of other issues, including the possible liberalization of the present resale and sharing rules in Ontario, Quebec and British Columbia and the possible extension of these rules to the Atlantic Provinces. Moreover, the Commission is of the view that the long distance voice competition issues to be canvassed in the main proceeding are certainly of vital interest to the telephone companies' subscribers, and that all telephone subscribers will benefit from a full and frank discussion of the issues by a diverse range of participants. The Commission finds that the participation of organizations representing low income, elderly and rural-dwelling Canadians contributes to this process and is therefore in the public interest.
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Accordingly, the Commission is of the view that Unitel, BCRL and all of the telephone company respondents to the main proceeding should contribute to the interim costs awards made herein.
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The Commission considers that the vast majority of the main proceeding will be devoted to consideration of the applications of Unitel and BCRL. In the circumstances, the Commission directs that Unitel and BCRL be responsible for 60% of the costs awarded. The telephone company respondents to the main proceeding will be responsible for the remaining 40% of the costs awarded.
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Unitel and BCRL are directed to contribute to their 60% share of the interim costs award in proportion to their operating revenues from telecommunications activities. Unitel's share will be calculated by reference to the operating revenues reported in its 1990 financial statements. With regard to BCRL, the Commission notes that though the BCRL application was styled as a joint application by B.C. Rail Telecommunications (B.C. Rail) and Lightel Inc. (Lightel), the applicant has indicated in its supplementary interrogatory responses that the application is being jointly pursued by B.C. Rail, Lightel and Call-Net Telecommunications Limited (Call-Net). BCRL has stated that these three parties are joint venture partners and will share equally the costs of the application. The Commission has directed BCRL to formalize this joint venture arrangement through incorporation and execution of a joint venture agreement. The Commission also notes that all three companies are significantly involved in the pursuance of the application and will be significantly involved in the operation of the proposed service. In the circumstances, the Commission has determined that it is appropriate for BCRL's share of the interim costs awards to be calculated by reference to the combined operating revenues from telecommunications activities for B.C. Rail, Lightel and Call-Net.
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Similarly, the telephone company respondents are directed to contribute to their 40% share of the interim costs award in proportion to their operating revenues from telecommunications activities, as reported in each company's most recent audited financial statements.
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Order
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The Commission hereby grants the applications of BCOAPO et al and NAPO/RDC for awards of interim costs on the following terms:
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1. The awards are limited to disbursements, other than those relating to fees, incurred inconnection with the interventions of the applicants.
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2. BCOAPO et al is awarded a maximum of $75,700 for the purpose of obtaining transcripts of themain proceeding.
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3. NAPO/RDC is awarded a maximum of $ 56,775 for the purpose of obtaining transcripts of themain proceeding.
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4. BCOAPO et al is awarded a maximum of $11,500 for other disbursements, excluding fees,incurred during the public hearing.
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5. NAPO/RDC is awarded a maximum of $8,625 for other disbursements, excluding fees, incurredfrom 13 February 1991 onward.
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6. NAPO/RDC is directed to submit its account for expenses incurred from 13 February 1991 tothe date of this order to each of the respondents to the applications for interim costs and to theCommission. Accounts are to be accompanied by an affidavit of disbursements and supportingdocumentation. Thereafter, periodic accounts are to be submitted by both applicants no morethan once per calendar month.
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7. Upon receipt of the accounts, each of the respondents is directed to pay to the applicants aportion of the amounts claimed. Payment is to be made forthwith, in the following proportions,with reference to the maximum amounts set out above:
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Contribution to Interim Awards of Costs (%)
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Unitel 51.8BCRL 8.260.0%
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Bell 29.0B.C. Tel 6.8Island Tel 0.2MT&T 1.7NBTel 1.3Newfoundland Tel 1.0
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40.0%
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8. BCOAPO et al and NAPO/RDC are required to file applications for final costs, along with theadditional documentation required by s.45(4) of the Rules, within 60 days of the last day of thehearing.
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Allan J. DarlingSecretary General
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