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Ottawa, 7 October 1993
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Taxation Order CRTC: 1993-9
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In re: Newfoundland Telephone Company Limited - Revenue Requirements for 1992 and 1993, Telecom Decision CRTC 92-15 and Telecom Costs Order CRTC 93-7
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Gary King, Government of Newfoundland and Labrador Department of Justice, on behalf of the Office of the Consumer Advocate for the Province of Newfoundland and Labrador (the Consumer Advocate).
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Donald R. Tarrant for Newfoundland Telephone Company Limited (Newfoundland Tel).
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TAXATION OF COSTS OF THE CONSUMER ADVOCATE
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Taxing Officer: David Elder
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This order constitutes the taxation of costs awarded to the Consumer Advocate in the case of Newfoundland Telephone Company Limited - Revenue Requirements for 1992 and 1993, Telecom Decision CRTC 92-15, 28 August 1992 (Decision 92-15).
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Costs were awarded to the Consumer Advocate by Telecom Costs Order CRTC 93-7 (Costs Order 93-7), in accordance with subsection 44(1) of the CRTC Telecommunications Rules of Procedure. In that Order, the Commission determined that the Consumer Advocate was entitled to all of its costs for fees and disbursements of its financial witnesses and 75% of its other costs.
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The Consumer Advocate submitted a Bill of Costs in the amount of $62,546.55, consisting of $59,923.18 in fees and $2,623.37 in disbursements. The amounts claimed reflected the reduction in fees prescribed by Costs Order 93-7.
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For the purposes of this taxation, I will examine all costs incurred by the Consumer Advocate and make a determination as to those that were reasonably and necessarily incurred. Following this exercise, I will apply the reduction in fees prescribed by Costs Order 93-7.
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In the course of the taxation the following issues were raised and discussed:
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Counsel and Secretarial Fees
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With respect to counsel fees, the Consumer Advocate calculated the amount claimed by reference to the total salary paid to its in-house counsel during the period 1 April 1992 to 24 June 1992, the last day of the hearing in question. This amounts to 61 working days, at what is, in effect, a per diem rate of $183.47.
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Similarly, the Consumer Advocate claimed fees for secretarial assistance, calculated by reference to the total salary for the Consumer Advocate's full time secretary over the same period. In this case the effective per diem is $81.41.
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In its answer to the Bill of Costs submitted by the Consumer Advocate, Newfoundland Tel questioned the likelihood that the Consumer Advocate's counsel and secretary were wholly occupied by the rate proceeding in question for a continuous 61 day period, noting that the Consumer Advocate's mandate is to represent the interests of consumers in relation to services provided by all public utilities. The company further noted that the supporting documentation filed indicated that over half of the long distance telephone costs incurred during this period were attributable to other matters.
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Newfoundland Tel also submitted that the amount of time claimed for preparation was excessive and unreasonable in light of the length of the hearing. In this regard, the company noted that the amount of preparation time claimed was far in excess of the two to one guideline sometimes referred to by taxing officers in determining the amount of preparation time that could be considered to be reasonable and necessary.
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In reply, the Consumer Advocate noted that the fact that in-house counsel was used resulted in cost savings. The Consumer Advocate compared its intervention, which was conducted solely by its counsel and Drs. Booth and Berkowitz, with the multiple experts retained by the company and the number of senior company staff present throughout much of the hearing.
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I note that counsel for the Consumer Advocate submitted with the original costs application a sworn statement to the effect that the costs claimed relate only to its intervention before the Commission. In my view, this is a complete answer to the suggestion of the company that some of the time claimed represented work on other matters.
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At the same time, I find that the amount of preparation time claimed by the Consumer Advocate is excessive in view of the length and complexity of the hearing in question. In this regard, I note that the Commission sat on seven calendar days, although several of these were part days. This means that counsel for the Consumer Advocate is claiming 54 days preparation for what may generously be viewed as a seven day hearing. Assuming a relatively relaxed average seven hour day, this amounts to 378 hours of preparation time.
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By way of comparison, I note that in Taxation Order CRTC 1991-3, concerning the most recent revenue requirement proceeding for the Island Telephone Company Limited (Island Tel), 118 hours of preparation was deemed reasonable for an eight day hearing. I also note that in Taxation Order CRTC 1993-4, concerning the most recent revenue requirement proceeding for AGT Ltd., 198 hours of preparation were allowed for what was deemed to be an 11.5 day hearing.
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I note the company's reference to the two to one guideline employed by some taxing officers, but I also note that this is only a guideline, not to be slavishly adhered to. In my view, there is a theoretical minimum amount of preparation time required to intervene effectively in a rate hearing, regardless of what the length of the hearing may turn out to be. In this regard, I note that, although the number and complexity of the issues to be explored in most rate cases remains fairly constant, the length of the hearing can vary from case to case, due to such factors as the number of interveners and the extent of their participation. I note that in the present case, the oral hearing was fairly short, owing in part to the fact that there were only two interveners who participated in the oral hearing; if there had been more, the hearing may well have been longer, suggesting more preparation time, according to the guideline.
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In the circumstances, I am prepared to allow 20 days of preparation time, which I consider to be reasonable for the hearing in question. I will allow the effective per diem as claimed.
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With regard to the secretarial expenses claimed, I note that it has tended to be the practice of taxing officers to disallow such claims, since such costs have been viewed as being in the nature of overhead, and therefore deemed to be included in the rates charged for counsel. Most recently, secretarial expenses were disallowed in Taxation Order 1993-1.
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In my view, the assumption underlying this practice is not present in this case, since the Consumer Advocate has not claimed market rates for its counsel, only allocated salary costs, which clearly do not include the costs of secretarial assistance. In the circumstances, I will allow the same amount of time for the secretary as for preparation by counsel: 20 days.
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Expert Witness Fees
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Finally, the Consumer Advocate claimed fees for its expert financial witnesses, Drs. Booth and Berkowitz, in the amount of $47,804.79, consisting of 41 days of preparation at $1,000 per diem and two days of attendance at $1,800 per diem, plus disbursements.
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Newfoundland Tel submitted that the amounts claimed for the expert witnesses of the Consumer Advocate were excessive, in view of the experience of Drs. Booth and Berkowitz in such matters. The company also noted that Drs. Booth and Berkowitz claimed much less time for the preparation of the evidence they submitted in the proceedings which led to The Island Telephone Company Limited - Revenue Requirement for 1990 and 1991, Telecom Decision CRTC 90-29, 19 December 1990, and Maritime Telegraph and Telephone Company Limited - Revenue Requirement for 1990 and 1991, Telecom Decision CRTC 90-30, 20 December 1990. The company submitted that there was no indication that the Newfoundland Tel rate case was any more complicated than these proceedings.
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The company also took issue with the fact that the Consumer Advocate claimed two days for the attendance of its expert witnesses, when their appearance lasted only three and one-half hours. Newfoundland Tel also submitted that the $1,800 per diem claimed for attendance by Drs. Booth and Berkowitz was far in excess of what is reasonable.
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With regard to the fees claimed for its expert witnesses, the Consumer Advocate advised that it had received three quotations from experts in the field and selected the team that represented the best value for the money. The Consumer Advocate submitted that the evidence submitted in the MT&T and Island Tel rate cases had been substantially restructured and revised for submission in the present proceeding. It was further submitted that since both witnesses had to be present for an entire hearing day, it was not unreasonable to bill for the entire day's attendance.
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With respect to the hours claimed, I note that approximately two years had passed between the preparation of the evidence of Drs. Booth and Berkowitz in the MT&T and Island Tel proceedings to which the company referred, and the present case. I also note that the competitive environment has changed markedly since the time of the rate cases to which the company referred. In my view, both of these factors would have necessitated substantial revisions to the evidence submitted in 1990. In the circumstances, I find the 41 days claimed for preparation to be reasonable.
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As for the attendance time claimed, I note the company's submission that Drs. Booth and Berkowitz only testified for one half day, although they claimed a full day each. Consistent with the finding of the Taxing Officer in Taxation Order 1991-3 (which also concerned Drs. Booth and Berkowitz), I am of the view that it is inappropriate for subscribers to pay for the attendance of Drs. Booth and Berkowitz for an entire day when their attendance was only required for one half day. I will allow a single person-day for attendance.
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I note that the $1,000 per diem claimed for preparation represents an 11% increase over the $900 allowed some two years before in the MT&T and Island Tel proceedings. In view of the inflation rates during the intervening period, I consider this increase to be slightly high. In the circumstances, I will allow $975 per diem for preparation.
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Similarly, the $1,800 per diem claimed for attendance represents a 64% increase in the amounts allowed in Taxation Orders 1991-3 and 1991-4, which I consider to be excessive. I will allow $1,200.
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I will allow all disbursements as claimed.
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Costs as Taxed
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Pursuant to Costs Order 93-7, which limited the Consumer Advocate's award to its expert witness fees and disbursements, plus 75% of its other costs, I hereby tax the fees and disbursements as follows:
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Fees
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Jeffrey K. Brace
Preparation $ 3,669.40
Attendance 1,284.29
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Elizabeth Parsons
Preparation 1,628.20
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Disbursements
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Transcripts $ 930.00
Courier/Taxi 263.12
Travel 1,824.70
Telephone 68.99
Fax 50.00
Supplies 35.71
Photocopies 325.30
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Sub-total 10,079.71
75% of this amount 7,559.78
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Expert Fees and Disbursements
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Preparation $39,975.00
Attendance 1,200.00
Disbursements 3,204.79
Sub-total 44,379.79
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Total Fees and Disbursements 51,939.57
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David Elder
Legal Counsel
Canadian Radio-television and Telecommunications Commission
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