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Ottawa, 20 February 1991
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Taxation Order CRTC: 1991-2
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In re: Telephone Set Compatibility with Hearing Aids - Telecom Decision CRTC 89-7 and Telecom Costs Order CRTC 89-5
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Sarah E. Pepall, for the Advocacy Resource Centre for the Handicapped (ARCH), on behalf of the Canadian Hearing Society, the Canadian Hard of Hearing Association, the Canadian Association for the Deaf, the Canadian Coordinating Council on Deafness, the Canadian Hearing Impaired Youth Association, and several hearing impaired individuals.
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Susan Simpson, for Northwestel Inc. (Northwestel).
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Peter J. Knowlton, for Bell Canada (Bell).
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No one for British Columbia Telephone Company (B.C. Tel).
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TAXATION OF COSTS OF ARCH
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Taxing Officer: Allan Rosenzveig
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Agent taxateur : Me Allan Rosenzveig This order constitutes the taxation of costs awarded to ARCH in the case of Telephone Set Compatibility with Hearing Aids, Telecom Decision CRTC 89-7. Costs were awarded to ARCH by Telecom Costs Order CRTC 89-5 (Costs Order 89-5), in accordance with subsection 44(1) of the CRTC Telecommunications Rules of Procedure (the Rules). This order specified that costs were to be paid to ARCH by Bell, B.C. Tel and Northwestel, in proportion to their respective operating revenues derived from telecommunications activities, that is eighty, nineteen and one per cent, respectively.
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ARCH submitted a Bill of Costs in the amount of $65,072.96, consisting of $61,201.46 in fees and $3,871.50 in disbursements. Following my request for particulars, ARCH filed a revised Bill of Costs and supporting material in the amount of $71,643.50, consisting of $67,772.00 in fees and $3,871.50 in disbursements.
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Northwestel and Bell filed comments following receipt of the revised material. B.C. Tel did not file comments. ARCH filed a reply.
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In the course of the taxation, which proceeded by way of written submissions, the following issues were raised and discussed.
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Timing and Scope of Work
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I invited the parties to address the question of to what extent, if any, costs should be allowed for work done prior to the commencement of the revenue requirement proceeding in which ARCH had intervened, in June of 1988, requesting that the Commission require that telephones to be attached to the public switched telephone network of the federally regulated telephone companies be hearing aid compatible. The Commission initiated a separate written proceeding to consider ARCH's request.
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In response, ARCH suggested that the work performed prior to filing its intervention with the Commission was essential. ARCH referred to meetings with the clients, soliciting and interviewing witnesses, and discussions with experts, Bell representatives and interveners in previous B.C. Tel proceedings. ARCH pointed out that if this work had not been done prior to its having filed additional material on 18 October 1988, it would have had to have been done after that date.
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Noting that the claim advanced by ARCH for 124.1 hours of legal research during the period from 1985 to 1988 represented work that had commenced more than three years prior to the filing of ARCH's intervention, Bell suggested that the Commission may not have the authority to allow such costs, in light of section 76 of the National Telecommunications Powers and Procedures Act (NTPPA), which authorizes the awarding and taxing of "costs of and incidental to any proceeding before the Commission". In Bell's submission, the costs claimed for legal research during 1985, 1986 and 1987 were not incurred as part of or incidental to a Commission proceeding.
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Bell also disputed the amounts claimed for interviewing and preparing potential witnesses who, in fact, never filed evidence. In the absence of further information, Bell suggested that it would be inappropriate to allow any part of the $42,935 claimed in fees for intervening twenty witnesses, ten of whom were not used.
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Northwestel submitted that an appropriate starting point for identifying which costs should be recoverable is the point in time at which ARCH commenced work with the intention of pursuing an application before the Commission. Accordingly, it suggested that only those costs incurred following 7 March 1988 should be allowed, since ARCH had initially sought the introduction of legislation and this was the date on which the Commission initiated the B.C. Tel revenue requirement proceeding in which ARCH intervened.
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In reply, ARCH submitted that the date on which work was commenced on the case should be irrelevant. It underlined the importance of the issue of hearing aid compatible telephones to the hearing impaired community and the resulting need for careful preparation. While ARCH implicitly acknowledged that in the early stages of the file, it was considering several alternative courses of action, ARCH submitted that an application to the CRTC was one of the very first options canvassed. ARCH further submitted that preparatory research work fell within the language of section 76 of the NTPPA. It did not comment expressly on Northwestel's suggestion of a cut-off date.
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With regard to Bell's concerns regarding amounts billed for witness preparation, ARCH suggested that Bell has misconstrued the purpose of interviewing witnesses. ARCH pointed out that it would be a strange case if counsel used every witness interviewed to give evidence, and noted that the information provided by the interviewed witnesses had assisted ARCH in the proceeding.
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In carrying out this taxation, I am bound both by section 76 of the NTPPA, which requires that costs be incurred as part of or be incidental to a Commission proceeding, and by subsection 44(6)(b) of the CRTC Telecommunications Rules of Procedure, which provides that costs awarded shall not exceed those necessarily and reasonably incurred by the intervener in connection with its intervention. In reviewing ARCH's Bill of Costs, I note that research was conducted regarding such matters as American law and the Free Trade Agreement, issues which I consider to be only peripherally relevant to ARCH's eventual intervention. I also note that ARCH has claimed for time spent in researching whether ARCH's eventual intervention would be best pursued before the Human Rights Commission or the Federal Court, rather than before the Commission. In my view, it is not clear that costs associated with such research were incurred as part of or were incidental to a Commission proceeding, and that they were necessarily and reasonably incurred by ARCH in connection with the eventual proceeding before the Commission.
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I agree with ARCH that it is not unreasonable to claim costs in relation to potential witnesses for which evidence is not ultimately filed, and am therefore prepared to consider the time spent preparing witnesses in determining the final amount to be taxed.
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I am not prepared to accept Northwestel's suggestion of using 7 March 1988 as a cut-off date, since it is almost certain that some work, relevant to the proceeding, was undertaken in advance of the decision to which Northwestel referred.
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In the absence of a detailed breakdown of how many hours were spent by whom on each of the research points listed in part a) of the Bill of Costs, I must necessarily be somewhat arbitrary in determining what portion of the amounts claimed under that part was reasonably or necessarily incurred and was in relation to this proceeding. In exercising my discretion as Taxation Officer, I am prepared to consider two-thirds of this time in calculating the amount to be allowed for this taxation.
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Counsel Fees
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In its comments, Bell submitted that, in general, the amounts claimed in the Bill of Costs were excessive with regard to both the nature and extent of the proceeding and the standards and guidelines applied by the Commission in previous Taxation Orders.
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a) Hours billed
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Bell compared the amounts claimed by ARCH to the amounts taxed for interveners in several recent Commission proceedings, including several general rate cases. In Bell's submission, these proceedings examined issues of greater complexity than those before the Commission in the present case. The company noted that the rate cases in question were major public proceedings requiring daily attendance by counsel, cross-examination of witnesses, submissions relating to confidentiality and other procedural matters and oral argument, in addition to the interrogatory process and written evidence that were also employed in the present proceeding. Bell pointed out the fact that despite these differences between the rate cases and the present proceeding, the amounts taxed for counsel fees in the rate cases were comparable to, and in some cases less than, the fees claimed by ARCH.
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By way of reply, ARCH submitted that its position was not analogous to that of a public interest intervener in a rate case, since it was the instigator of the present proceeding and was not merely responding to a telephone company application. Also, ARCH pointed out that it had initially applied to intervene in a rate case, but the Commission had elected to deal with ARCH's application in a separate, written proceeding. In ARCH's submission, it should not be penalized for the Commission's procedural decision.
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ARCH further submitted that the amounts claimed were not excessive having regard to the nature and extent of the proceeding in question. It suggested that the issues involved were complex, perhaps more so than in a rate case, and included several constitutional and jurisdictional considerations. ARCH submitted that it was an error to assume that a proceeding conducted purely through written submissions involves less work than a public hearing.
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ARCH also argued that its costs were atypical due to the nature of its client group. It pointed out that its client group was diverse in nature, including members resident in all parts of the country. ARCH also relied on the fact that communication with its clients was difficult, since many suffer from hearing impairments and were unable to use the telephone. Finally, ARCH submitted that its client group was generally unable to respond to many of the technical, legal and factual aspects of the proceeding, thereby necessitating a more extensive role for counsel than is typical for the telephone companies and many public interest interveners.
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I agree with the submission of ARCH that it should not be penalized for the Commission's decision to initiate a separate proceeding. I am also mindful of the fact that ARCH would have experienced some difficulty in communicating with its client group.
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I accept the submission of ARCH that its client group lacks the technical sophistication of the telephone companies and many interveners who appear frequently before the Commission, but cannot accept the notion that this fact necessarily requires counsel to play a role as expansive as that reflected in the Bill of Costs submitted here. Surely legal counsel is not the best source of technical information and expertise, nor the most cost-effective. In my view, technical consultants could have been retained by ARCH, resulting in a substantial cost saving.
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More importantly, I find that overall, the amount of time claimed by ARCH - almost 500 hours of work by law students and counsel - far exceeds that which should be considered necessary or reasonable in connection with this proceeding. By way of comparison, and as an example, I refer to the proceeding which culminated in British Columbia Telephone Company - General Increase in Rates, Telecom Decision CRTC 85-8, in which the Western Institute for the Deaf (WID) dealt with issues relating to the provision by B.C. Tel of Message Relay Service. In my view, WID's role in that ground- breaking case is analogous to ARCH's role in the present case. WID's participation in that B.C. Tel proceeding - a lengthy and complex oral hearing - included the filing of evidence, interviewing and presentation of witnesses, cross-examination and presentation of final argument, yet the number of hours claimed on taxation by counsel for WID was approximately one-third of the amount claimed by ARCH in the present case.
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In the circumstances, I am prepared to allow two-thirds of the eligible hours claimed by ARCH in its Bill of Costs.
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b) Hourly rates
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Bell felt that the $100 rate billed in the present proceeding for junior counsel, Marilyn Ginsburg, was appropriate in light of other recent taxations. However, Bell also submitted that the hourly rates claimed for other counsel employed by ARCH were generally excessive when compared to the rates allowed by the Commission in previous taxation orders. Bell pointed out that in Taxation Order 1988-2, the Commission allowed a rate of $165/hr for counsel with 15 years at the bar. Bell submitted that senior counsel for ARCH should be allowed a rate no higher than this, with a maximum 6% allowance for inflation.
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ARCH denied that the hourly rates that it had claimed were unreasonable in the circumstances.
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In addition to the involvement of several articling students, and a junior lawyer on the legal staff of ARCH, ARCH has indicated that the following senior lawyers at the McMillan, Binch law firm worked on the proceeding in question: Simon Chester, John Kazanjian, Larry Taman, Douglas Barrett and Sarah Pepall. Since work occurred over a considerable period of time, the hourly rates billed for senior counsel have varied, depending on when the work was done.
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According to the biographical information provided by ARCH, Mr. Chester was a partner with McMillan, Binch, where he acted as Director of Research. Mr. Chester practiced business law specializing in publishing, public policy and international law issues, and was called to the bar in 1982. He also has a background in research and government. ARCH has billed between $200 and $210/hr for his services.
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Mr. Kazanjian was a partner in the firm and specialized in competition law (mergers and acquisitions) and international trade law. He was apparently called to the bar in 1976. ARCH has apparently claimed between $230 and $260/hr for Mr. Kazanjian's services.
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Mr. Taman, who was called to the bar in 1976, had a general civil and commercial litigation practice with a specialization in public law matters, particularly Charter litigation. Mr. Taman's hourly rate claimed by ARCH, was $200/hr.
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Mr. Barrett was also a partner with McMillan, Binch. He practiced in the area of Media, Entertainment and Communications Law and articled with the Commission. He was apparently called to the bar in 1977. Mr. Barrett's time has been billed at $200/hr.
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Ms. Pepall was admitted to the bar in 1978 and had a general civil and commercial litigation practice with an emphasis on financial institutions and estate litigation. Her hourly rates as claimed have varied between $175 and $235.
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The various articling students who worked on the ARCH file were billed out at hourly rates of between $35 and $50.
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In determining the reasonableness of hourly rates claimed for counsel, previous Commission taxation orders have made reference to a number of factors, including year of call to the bar, experience before regulatory tribunals (particularly the Commission itself), knowledge and experience regarding telecommunications and its regulation, and the hourly rate allowed for counsel in previous Commission taxations. In the present case, the determination of the appropriate hourly rates to be allowed is particularly difficult, due to two complicating factors: the increasing disparity in legal fees charged in various Canadian centres and the fee variations between public interest advocacy groups and private law firms. Due to these two factors, comparisons to previous taxation orders become less useful here.
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As mentioned, Bell has directed my attention to Taxation Order 1988-2, in which an hourly rate of $165.00 was allowed for experienced counsel, relating to a proceeding conducted only one year prior to the present one. I also note that, for his involvement in a proceeding heard at approximately the same time as ARCH's application was considered, counsel with 22 years at the bar was allowed an hourly rate of $180 in Taxation Order 1990-1. Clearly, the rates claimed by ARCH for senior counsel vary significantly from these benchmarks. However, ARCH has not provided me with much assistance in accounting for this disparity.
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Previous taxation orders have apparently not taken into account counsel's practice location in determining what hourly rates are reasonable. However, I am of the view that the disparity in market rates for lawyers in various cities has grown to a point where it would be inequitable not to recognize location-specific market rates in this proceeding. In selecting counsel to represent them in Commission proceedings, participants should be able to retain counsel without regard to such considerations as the disparity in regional market rates. It is worthy of note that counsel referred to in Taxation Order 1990-1 practised in the city of Vancouver, whereas counsel employed by ARCH are based in Toronto. While fee relationships obviously vary over time, particularly with significant changes in the economy, I am prepared to find that during the course of the present proceeding, the market rates for legal counsel were generally higher in Toronto than in Vancouver.
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However, regional market rates alone cannot account for the hourly rates claimed by ARCH, rates which apparently are much higher than the Commission has ever had to consider. In Taxation Order 1988-2, referred to above, counsel practised in Toronto. Even allowing for an inflation factor, there remains a great disparity between the rate allowed by the Taxing Officer there and those claimed by ARCH. In examining the validity of this disparity, I am also prepared to recognize a distinction between the hourly rates globally charged by counsel affiliated with public interest organizations and those globally charged by counsel associated with private law firms.
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In this context, I note that counsel in Taxation Order 1988-2 was employed by the Public Interest Advocacy Centre (PIAC) on behalf of the National Anti-Poverty Organization (NAPO) and counsel in Taxation Order 1990-1 was employed by BCOAPO, which can be characterized as public interest groups intended to advance the causes of the disadvantaged and the impecunious. I take notice of the fact that the hourly rates charged by counsel associated with such groups tend to be less than those charged by private firms.
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I am not convinced that the rates claimed by ARCH for senior counsel in the present case are appropriate.
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None of the senior lawyers retained by ARCH, with the exception of Mr. Barrett, appears to have been previously involved, even peripherally, in telecommunications regulation, and even Mr. Barrett's practice has been focused mainly on broadcasting and entertainment law.
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While I am not of the view that counsel appearing before the Commission must be experienced in such matters, I do believe that the rates claimed should recognize counsel's expertise in the area of regulated industries - particularly telecommunications - relative to the rates allowed for their more experienced peers. While the rates charged by counsel for ARCH may be appropriate when involved with matters that fall within their respective areas of expertise, I am of the view that they are inappropriate when counsel embark on projects outside of their area of specialty. Based on the foregoing, in making the final calculation of costs payable, I have decided to apply a 20% discount rate to the hourly rates for ARCH's counsel, with the exception of Ms. Ginsburg and the articling students, with whom I will deal separately.
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As mentioned above, ARCH has claimed a rate of $100/hr for Ms. Ginsburg. I am in agreement with Bell's submission that this is a reasonable amount for time charged by junior counsel and is in line with rates allowed for junior counsel in recent taxations, such as Taxation Order 1988-2 and Taxation Order 1989-4. Similarly, I find that the rates billed for articling students are reasonable and consistent with recent taxations, and am therefore prepared to allow the rates claimed.
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Disbursements
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In its Bill of Costs, ARCH claimed the amount of $1,300.10 for photocopying, based upon a rate of $0.25 per page. In its comments, Bell objected to this rate, alleging that it was in excess of that allowed in past taxation orders. ARCH disputed Bell's assertion that a charge of $0.25 per page for photocopying was inappropriate.
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While similar or greater amounts claimed for duplication have been allowed in previous taxation orders, these costs have been incurred in general rate cases. Once again, to use the B.C. Tel rate case in which ARCH originally sought to intervene as a starting point, I note that in that proceeding duplication costs were allowed to BCOAPO in the amount of $344.85 and to CAC in the amount of $1,051.25.
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In the circumstances, I am of the view that a reasonable amount for photocopies in this proceeding is $1,000.00. In arriving at this amount, I am mindful of the fact that ARCH would have incurrred duplication expenses, which it should be entitled to recover, relating to its intervention in the B.C. Tel proceeding.
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Bell also objected to a claim for $832.00, apparently based on a $4.00 correspondence fee charged by McMillan, Binch every time a letter is sent or received. ARCH submitted that the charge is appropriate and is commonly allowed in taxations in certain Ontario courts.
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I consider costs related to the correspondence charge to be in the nature of overhead. In the result, I am not prepared to allow this amount.
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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:
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Counsel $37,004.33
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Disbursements:
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Duplicating 1,000.00
Quic Law Research 272.46
Courier/Delivery Charges 746.20
Long Distance Calls 247.87
Travelling Expenses 933.41
Binding 89.88
General Disbursements/ARCH 281.58
$ 3,571.40
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Total Fees and Disbursements $40,575.73
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As specified in Costs Order 89-5, this amount is to be paid to ARCH by Bell, B.C. Tel and Northwestel, in proportion to their respective operating revenues derived from telecommunications activities. As specified therein, payments are to be made in the following proportions: Bell, 80%; B.C. Tel, 19%; Northwestel, 1%.
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Allan Rosenzveig
General Counsel
Canadian Radio-television and Telecommunications Commission
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