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Ottawa, 8 March 1994
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Taxation Order CRTC: 1994-2
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In re: Bell Canada - Revenue Requirements for 1993 and 1994, Telecom Decision CRTC 93-12 and Telecom Costs Order CRTC 93-11
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Michael Janigan for the National Anti-Poverty Organization and the Consumers' Association of Canada (NAPO/CAC).
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Bernard A. Courtois for Bell Canada (Bell).
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TAXATION OF COSTS OF NAPO/CAC
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Taxing Officer: David Elder
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This order constitutes the taxation of costs awarded to NAPO/CAC in the case of Bell Canada - Revenue Requirements for 1993 and 1994, Telecom Decision CRTC 93-12 (Decision 93-12).
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Costs were awarded to NAPO/CAC by Telecom Costs Order CRTC 93-11 (Costs Order 93-11), in accordance with subsection 44(1) of the CRTC Telecommunications Rules of Procedure.
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NAPO/CAC submitted a Bill of Costs in the amount of $130,055.07 (although my addition shows the total to be $130,155.07), consisting of $114,381.73 in fees and $15,773.34 in disbursements. These amounts are inclusive of 3.5% GST, in recognition of the 50% GST rebate which I understand to be available in the circumstances of this case. The amount claimed also recognizes that pursuant to Costs Order 93-11, NAPO/CAC was awarded only 80% of the costs claimed for its expert financial witnesses, Drs. Booth and Berkowitz.
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In the course of the taxation, the following issues were raised and discussed:
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Counsel and Consultant Fees
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NAPO/CAC claimed, for senior counsel, 223.3 hours for preparation at an hourly rate of $165/hour and 11.5 days for attendance at the hearing at the rate of $1150 per diem. For junior counsel, NAPO/CAC claimed 2.8 hours at a rate of $110/hour for Ms. Lawson and 10 hours at $125/hour for Ms. Daly Todd.
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Bell objected to the attendance rate claimed by Mr. Janigan, noting that in Taxation Order 1993-7, counsel with 15 years at the bar was awarded $1075 per diem for attendance at a proceeding held shortly before the Bell rate case. Bell also noted that in Taxation Order 1993-3, counsel with 16 years at the bar (following 5 years with the Law Reform Commission) was awarded a per diem attendance rate of $1155.
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In response, NAPO/CAC indicated that Mr. Janigan was called to the bar in 1980 and has practised civil, labour and administrative litigation before a variety of tribunals and courts.
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In assessing the rates claimed by senior counsel, I consider that the differences between the notional rate levels associated with counsel with different lengths of experience at the bar should generally be smaller than is the case for junior counsel, since the incremental increases in knowledge and experience become less pronounced with each year of practice for senior counsel.
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Taking into account Mr. Janigan's experience and qualifications and the precedents referred to by Bell, I am prepared to allow a per diem rate of $1040. I will allow the hourly rate, $165, as claimed. I will discuss the preparation and attendance time claimed by Mr. Janigan below.
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With respect to the hourly rate claimed by Ms. Lawson, Bell noted that in Taxation Order 1993-5, she was awarded $100/hour, a $5 increase from Taxation Order 1993-4. Bell submitted that the $100 rate remains appropriate.
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In reply, NAPO/CAC noted that Ms. Lawson's rate was well within the range of rates billed by similarly experienced counsel in the Ottawa market and that she would likely be billing at a higher rate if she was employed by a private law firm.
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I note that Taxation Order 1993-5 related to a proceeding held in June of 1992, approximately one year prior to the Bell rate case. Between that time and the Bell rate case, Ms. Lawson was involved in an additional Commission proceeding. In my view a rate of $105/hour is appropriate, given the inflation rate for 1993.
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I will allow Ms. Lawson's hours as claimed. In doing so, I am mindful of the fact that .5 hours of the time claimed, to which the hourly preparation rate will be applied, actually represents time spent in attendance at the hearing. In this regard, I reject the submission of Bell that this half hour should have been billed as a fraction of a per diem attendance rate: in my view, it would be inappropriate to apply this mechanistic approach to such a brief attendance at a public hearing.
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I will allow the hours and fees for Ms. Daly Todd as claimed. In this regard, I note that Bell did not object and that the rate claimed is consistent with that awarded to Ms. Daly Todd in earlier proceedings. I also consider the ten preparation hours claimed to be reasonable.
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With respect to NAPO/CAC's consultant, Mr. Todd, NAPO/CAC has claimed 77.9 hours for preparation and 5 hours attendance at a rate of $165/hour.
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Bell objected to the rate, noting that in Taxation Order 1993-4, Mr. Todd was allowed an hourly rate of $150. Bell submitted that, given the rate of inflation in the intervening period, a rate of less than $160 was in order.
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In reply, NAPO/CAC noted that Mr. Todd's billing rate remained flat at $150 for the years 1990 through 1992. Commencing in 1993, he began to charge $165, a rate which NAPO/CAC submitted was reasonable, and one that has apparently been accepted by other boards.
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I note that in Taxation Order 1993-11, Mr. Todd was allowed $155/hour for his participation in a proceeding in the fall of 1992. In my view this rate is also appropriate in the present case.
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Bell generally objected to the amount of time claimed by NAPO/CAC, both on individual and global bases, submitting that each individual had significantly exceeded the infamous 2 to 1 guideline sometimes employed by taxation officers to assess the reasonableness of preparation time claimed by reference to the length of the hearing. Bell submitted that the total number of hours claimed (313.5) should be reduced to approximately 175 hours.
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In reply, NAPO/CAC noted that the proceeding in question considered many issues not present in a typical revenue requirement case, including the Bell Sygma and Worldlinx proposals, the Community Calling Plan and the 9-1-1 PERS proposal. NAPO/CAC also noted that in Taxation Orders 1988-1 and 1988-2, the Commission allowed, for the participation of each of two interveners in the 1988 Bell rate case, in excess of what is being claimed in the present case. NAPO/CAC submitted that it had helped to reduce the time claimed by consolidating what might otherwise have been two separate interventions. Finally, NAPO/CAC argued that the 2 to 1 approach had several flaws, including the built-in incentive to increase hearing time and the overall arbitrariness of the approach.
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I find it necessary to comment on the comparibility of this taxation to the amounts allowed in the taxation orders stemming from the 1988 Bell rate case, to which NAPO/CAC referred. Firstly, I note that the 1988 rate case to which NAPO/CAC has made comparisons was itself an atypical rate proceeding, involving consideration of significant issues such as rate rebalancing and revenue settlement. I also note that the 1988 proceeding was over one week longer than the 1993 proceeding. Finally, I note that Taxation Orders 1988-1 and 1988-2 assessed only aggregated claims for attendance and preparation time. In the result, I find these earlier taxation orders to be of only marginal assistance in the case at hand.
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I agree with NAPO/CAC that the 1993 Bell proceeding dealt with many more issues than a typical rate case. Having taken into consideration the global amount of time claimed by NAPO/CAC (including the amounts allowed above for Ms. Lawson and Ms. Daly Todd), the extent of its participation at the hearing, the scope and complexity of the issues addressed and the amounts allowed for the last Bell rate case, I am prepared to allow the global amount of 290 hours for preparation (excluding the claim for Drs. Booth and Berkowitz). In so doing, I am mindful of the fact that counsel who have the assistance of a consultant and/or experts should require fewer preparation hours than counsel who are not so assisted. In the result, I will allow 205.1 hours for Mr. Janigan and 72.1 hours for Mr. Todd. I will allow the amounts claimed for attendance.
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Expert Witnesses
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For its expert financial witnesses, Drs. Booth and Berkowitz, NAPO/CAC claimed the amount of $44,120, which, in accordance with Costs Order 93-11, represents 80% of the total amount billed, $55,150. This latter amount represents a claim for 46.5 days for preparation and attendance at the hearing, at a per diem rate of $1100, and two days for testifying, at a rate of $2000 per diem.
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Bell Canada objected to both the rates and hours claimed for Drs. Booth and Berkowitz. The Company noted that they were awarded rates of $975 per diem for preparation and $1200 per day for attendance in Taxation Order 1993-9, which resulted from a rate proceeding less than one year prior to the 1993 Bell proceeding. In the company's submission the rates allowed should not exceed $1000 for preparation and $1250 for attendance.
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In reply, NAPO/CAC submitted that the rates charged by Drs. Booth and Berkowitz in this case are consistent with those claimed for preparation before other regulatory boards. It also submitted that the increased rate for testifying reflected the more intensive nature of the work.
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In light of the amount of time separating the Bell rate case and the proceeding that was the subject of Taxation Order 1993-9 and the inflation rate during this period, I consider that a slight increase in the fees allowed for Drs. Booth and Berkowitz is appropriate. In the circumstances, I will allow $995 per diem for preparation and $1225 per diem for testifying.
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With respect to the amount of time claimed by Drs. Booth and Berkowitz, Bell noted that in Taxation Order 1993-10, the Taxing Officer recognized that "there will be a consistency between the evidence filed by an expert from one rate case to the next" and accordingly reduced the amount of time allowed for preparation in light of the amount of time allowed in earlier, recent proceedings for similar evidence. The company implied that the amounts claimed here should similarly be reduced. In addition, noting that the Taxing Officer in Taxation Order 1993-9 allowed Drs. Booth and Berkowitz only a single person-day for attendance since their presence was only required for one half day, Bell submitted that Drs. Booth and Berkowitz should be allowed only one day for testifying in the present case.
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In reply, NAPO/CAC noted that the amount of time claimed here for preparing testimony is consistent with that allowed in Taxation Order 1993-9. NAPO/CAC further noted that the 1993 Bell proceeding was the first case in 1993 for which testimony had been prepared by Drs. Booth and Berkowitz for the CRTC, and that accordingly a substantial amount of work was required to generate updated annual estimates as well as an impact statement concerning the impact of Telecom Decision CRTC 92-12.
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In assessing the reasonableness of the amount of time claimed for Drs. Booth and Berkowitz, I have taken into account that their involvement in the proceeding in question constituted their first appearance before the Commission in 1993. I have also taken into account the fact that the company called two cost of capital witnesses and two financial market witnesses, thereby increasing the amount of evidence to be reviewed, interrogatories to be prepared and critiques to be performed by Drs. Booth and Berkowitz. At the same time, I endorse the approach taken by the Taxing Officer in Taxation Order 1993-10, which recognizes the core similarities in rate of return evidence from one proceeding to another.
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With respect to time spent testifying, I note that while Drs. Booth and Berkowitz each spent approximately one half day - an afternoon - on the stand, they would have been unable to determine with any precision at what time they would be testifying, and accordingly their presence was required at the hearing in the morning. In the circumstances, I will allow one day for testifying (at the higher rate) and have included in my calculation of preparation/attendance time one day for attendance at the hearing on the morning in question.
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In reviewing the itemized account provided by Drs. Booth and Berkowitz, I consider that the amount of time claimed for certain tasks seems to be slightly overstated. In this regard, I consider that the time claimed for reviewing the testimony of company witnesses and preparing interrogatories, cross-examination, direct testimony and final argument to be excessive. In the circumstances, I will allow 38.5 days for preparation and attendance at the hearing.
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Disbursements
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Bell objected to a number of the disbursement claims made by NAPO/CAC, noting that not all claims were supported by receipts, and that some of the receipts provided did not contain enough information to determine whether the expense in question was reasonably and necessarily incurred. NAPO/CAC subsequently filed additional receipts.
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I have a number of concerns with the disbursements claimed. Firstly, I would submit that as far as it is possible, receipts should be provided for all expenses claimed. Where expenses are based on an allocation of a larger expense, such as an invoice representing services provided in connection with several different matters, it should be clear which items are assigned to the matter in question and why. Secondly, receipts should contain enough detail to allow an assessment of whether the expense in question was reasonably and necessarily incurred. For example, taxi receipts should indicate the date, time and pick-up and drop-off points; for restaurant receipts, an indication should be made as to who the meal was for, etc. Finally, all receipts (or copies thereof) must be legible.
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I am also concerned with meal expenses claimed by NAPO/CAC. In response to request for further information, NAPO/CAC indicated that the expenses in question were for meals eaten when consulting with an expert witness or when the schedule of the hearing necessitated such an expense. NAPO/CAC submitted that it was customary in private practice to bill for meal expenses that are directly associated with litigation proceedings, regardless of where those proceedings occur.
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As a general rule, I consider that meal expenses are only necessarily incurred by counsel or expert witnesses when they are away from home on business matters. I note that it has not been indicated who the diners were for each claim, but I assume that at least one of the parties for each meal, whether in Ottawa or Toronto, was resident in the city in question. In this regard, I note that Counsel for NAPO/CAC resides in the National Capital Region, while the consultant and expert witnesses reside in the Metro Toronto area. In the circumstances, I will allow half of the amount claimed, or $113.75. While not all expenses claimed appear to be supported by receipts, I am prepared to allow the remainder of the amounts claimed, since the amounts involved appear to be reasonable; however in future, I would suggest that, to the extent possible, all expenses be supported by receipts.
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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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Michael Janigan
Preparation: $ 33,841.50
Attendance: $ 11,960.00
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Phillipa Lawson
Preparation: $ 294.00
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Rosalie Daly Todd
Preparation: $ 1,250.00
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John Todd
Preparation: $ 11,175.50
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Drs. Booth and Berkowitz
Preparation: $ 38,307.50
Testifying: $ 1,225.00
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(less 20%) ($ 7,906.50)
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$ 31,626.00
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Sub-total $ 90,147.00
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Disbursements
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Consultants Expense (Econalysis) $ 790.22
Consultants Expense
M.K. Berkowitz & Assoc. 80% x 3024.26 = $ 2,419.41
Airfare $ 773.28
Meals $ 113.75
Ground Travel $ 545.78
Courier $ 156.47
Photocopies (outside) $ 34.77
Photocopies (inside) $ 514.00
Printing $ 1,201.65
Postage $ 123.93
Transcripts $ 8,380.50
Telephone $ 39.07
Fax $ 16.92
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Sub-total $ 15,109.75
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+ 3.5% GST $ 3,635.58
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Total Fees and Disbursements $ 108,892.33
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David Elder
Legal Counsel
Canadian Radio-television and Telecommunications Commission
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