ARCHIVED -  Taxation Order CRTC 97-26

Taxation Order

Ottawa, 10 July 1997

Taxation Order CRTC 97-26

BC TEL - REVISIONS TO CRITERIA FOR THE PROVISION OF ONE-WAY EXTENDED AREA SERVICE

TAXATION OF BILL OF COSTS

In re: Price Cap Regulation and Related Issues - Telecom Decision CRTC 97-9 and Telecom Costs Order CRTC 97-4

Reference: 4754-108

1. Byron Williams for the Consumers' Association of Canada (Manitoba) and the Manitoba Society of Seniors (CAC/MSOS).

2. Roy Bruckshaw for MTS NetCom Inc. (MTS).

3. TAXATION OF COSTS OF CAC/MSOS

4. Taxing Officer: Karen Moore

5. This Order constitutes the taxation of costs awarded to CAC/MSOS in the proceeding leading to Telecom Decision CRTC 97-9.

6. In Telecom Costs Order CRTC 97-4, 25 February 1997 (Costs Order 97-4), final costs were awarded to CAC/MSOS in accordance with subsection 44(1) of the CRTC Telecommunications Rules of Procedure. MTS was determined to be the most appropriate respondent to CAC/MSOS' application, as CAC/MSOS' participation dealt almost exclusively with issues unique to MTS.

7. On 24 March 1997, CAC/MSOS submitted its Bill of Costs in the amount of $79,859.76, consisting of $11,103.76 in disbursements and $68,756.00 in fees. On 25 March 1997, CAC/MSOS submitted a revised Bill of Costs, in the amount of $78,458.76, in order to revise the fees claimed for Dr. Cooper. However, I note that there was an arithmetical error in the revised Bill of Costs, such that the revised total should have been $78,939.76.

Positions of Parties

8. In a letter dated 11 April 1997, MTS disputed various aspects of CAC/MSOS' claim. In particular, MTS disputes the claim for fees incurred for the services of Mr. Williams, totalling $30,016. MTS argues that Mr. Williams is a salaried employee of Legal Aid Manitoba, and that there is no receipt or other supporting material filed indicating that these fees were actually paid by CAC/MSOS. MTS submits that the Public Interest Law Centre (PILC) is a public service of Legal Aid Manitoba, which is funded by the Province of Manitoba, the federal government and other agencies. MTS argues that in the absence of proof that legal fees were actually paid by CAC/MSOS, the claim should be denied in its entirety.

9. MTS also submits that in the event that receipts are produced demonstrating that the legal fees were actually paid by CAC/MSOS, the claim should be reduced by at least 50 - 75 percent.

10. MTS also takes issue with the rate of $140 per hour claimed by Mr. Williams. MTS submits that should legal fees be allowed, the hourly rate should not exceed the lower of Mr. Williams' actual salary pro-rated, or the equivalent tariff offered by Legal Aid Manitoba.

11. MTS also disputes the fees claimed in connection with the services of Dr. Cooper. MTS submits that further clarification is required as to what amount has actually been paid by CAC/MSOS. MTS also suggests that the time claimed is excessive and duplicative.
11.

12. With respect to disbursements, MTS submits that receipts or other support is required to show that such disbursements were actually paid by CAC/MSOS. MTS suggests that in the absence of receipts or other supporting documentation, it is not possible to assess what amount of such disbursements, if any, was actually paid by the intervener as opposed to being absorbed, as either overhead or operating expenses of Legal Aid Manitoba, which is funded by government or other sources.

13. In its reply, dated 15 April 1997, CAC/MSOS addressed the following four central points raised by MTS: that there was no evidence that CAC/MSOS paid the legal fees, expert fees or disbursements; that Mr. Williams is a salaried employee of Legal Aid Manitoba and that the taxation process must take into account financial assistance from government; that Mr. Williams is not entitled to charge a fee equivalent to that charged by a lawyer in private practice; and that the amount billed by Mr. Williams and Dr. Cooper was excessive.

14. With respect to the first three points, CAC/MSOS suggests that MTS is attempting to recycle issues which have been considered and rejected pursuant to the Supreme Court of Canada's decision in Bell Canada v. Consumers' Association of Canada et al., [1986] 1 S.C.R. 190.

15. I agree with CAC/MSOS that MTS' arguments in this regard are without merit.

16. In Bell Canada, Bell Canada contended, with respect to counsel fees awarded to CAC, that because of CAC's government funding and its retainer arrangement with its counsel it was not put to any additional expense by its counsel's participation in the rate hearing. With respect to the costs awarded to National Anti-Poverty Organization (NAPO et al.), Bell Canada contended that the costs had not been incurred by NAPO et al., but by Public Interest Advocacy Centre, to which NAPO et al. had no obligation of payment or reimbursement.

17. The Commission upheld the taxing officer's decision to allow the costs on the ground that they fell within the criteria adopted by the Commission in the exercise of its discretion to award costs to interveners in rate hearings in order to encourage informed public participation. The Federal Court of Appeal held that the Commission had not erred in law.

18. The Supreme Court of Canada upheld the Commission's decision, and Le Dain J. commented as follows for the Court, at pp. 207-8:

18. ...I am of the opinion that the word "costs" must carry the general connotation of being for the purpose of indemnification or compensation. In view, however, of the nature of the proceedings before the Commission and the financial arrangements of public interest interveners, the discretion conferred on the Commission by s. 73 [of the National Transportation Act] must, in my opinion, include the right to take a broad view of the application of the principle of indemnification or compensation. The Commission therefore should not be bound by the strict view of whether expense has been actually incurred that is applicable in the courts. It should, for example, be able to fix the expense which may be reasonably attributed to a particular participation by a public interest intervener as being deemed to have been incurred, whether or not as a result of the particular means by which the intervention has been financed there has been any actual out-of-pocket expense.

19. CAC/MSOS has established in its reply that neither PILC nor CAC/MSOS has received government or other funding specifically allocated for the purpose of participating in this or any other Commission telecommunications proceedings. CAC/MSOS has also established in its reply that Mr. Williams is not a civil servant, but is employed by PILC on a contract basis. In light of the Bell Canada decision, I am of the view that MTS is incorrect in its assertion that, absent any evidence that the legal fees, the expert fees and the disbursements were actually paid for by CAC/MSOS, these claims should be dismissed in their entirety. Further, in my view, MTS has failed to establish that there is government assistance which needs to be deducted in this case.

Fees

a) Counsel Fees

20. CAC/MSOS claimed a total of $30,016.00 in fees for its legal counsel, Mr. Williams, consisting of 204.4 hours of preparation time, as well as 10 hours for attendance at the oral hearing, at an hourly rate of $140.

21. MTS has disputed this rate, but as discussed above, CAC/MSOS has established in its reply that Mr. Williams is not a salaried employee of a government-funded agency. In my view, it is not appropriate in the circumstances to discount the rate charged by counsel simply because the work is "not-for-profit". As CAC/MSOS points out, the hourly legal fees must cover not only the lawyer's salary, but also overhead costs like office space and support staff. The rate claimed by CAC/MSOS reflects the rate set out in the Commission's Legal Directorate's Guidelines for the Taxation of Costs (the Guidelines) for counsel of Mr. Williams' experience. Moreover, I consider this rate to be appropriate in the circumstances and will allow it as claimed.

b) Consultant Fees

22. CAC/MSOS claimed a total of $18,048.00 for its consultants Mr. Todd and Dr. Cooper. This amount represents a claim for Mr. Todd of 20.8 hours of preparation time at an hourly rate of $160, and a claim for Dr. Cooper at the same hourly rate for 92 hours of preparation time. The rates claimed for Mr. Todd and Dr. Cooper are in accordance with the rates specified in the Guidelines. I consider these rates to be appropriate in the circumstances and I will allow them as claimed.

c) Analyst Fees

23. CAC/MSOS claimed a total of $9,317.00 for its analysts Ms. Gibbons and Mr. Ackman. This amount represents a claim for Ms. Gibbons of 19.3 hours of preparation time at a rate of $50 per hour, and a claim for Mr. Ackman of 69.6 hours of preparation time at a rate of $120 per hour. The rate claimed for Ms. Gibbons is less than the rate suggested in the Guidelines for an analyst of her experience, that is, $80 per hour. I find the rate claimed to be reasonable in the circumstances and will allow it. The rate claimed for Mr. Ackman reflects the rate set out in the Guidelines for an analyst of his experience. I consider this rate to be appropriate in the circumstances and will allow it.

d) Expert Witness Fees

24. CAC/MSOS has claimed a total of $10,455.00 in fees for its expert witnesses Mr. Todd and Dr. Cooper. This amount represents a claim for Mr. Todd of 23.5 hours of preparation time at an hourly rate of $170, and a claim for Dr. Cooper at the same hourly rate for 38 hours of preparation time. The rate claimed for Mr. Todd and Dr. Cooper is consistent with the rate specified in the Guidelines. I consider this rate to be appropriate in the circumstances and I will allow it as claimed.

Attendance Time

25. CAC/MSOS has claimed 10 hours of attendance time for Mr. Williams. I consider this claim to be reasonable in the circumstances, and will allow it.

Preparation Time

26. CAC/MSOS has claimed a total of 467.6 hours of preparation time for its counsel, experts, consultants and analysts. While MTS has expressed various concerns regarding sub-components of the time claimed, it is more useful and appropriate, in my view, to focus first on whether the total claim is reasonable in the circumstances. This approach is consistent with past Taxation Orders. After determining the reasonableness of the global figure, I will briefly address certain concerns raised by MTS.

27. In determining whether the preparation time claimed is reasonable and necessary, I consider an appropriate benchmark for comparison to be the proceedings that led to Implementation of Regulatory Framework - Splitting of the Rate Base and Related Issues, Telecom Decision CRTC 95-21, 31 October 1995 (Split Rate Base proceeding), in which CAC/MSOS was allowed 498.59 hours of preparation for its counsel and one expert. This proceeding was similar in scope to the proceeding leading to the Split Rate Base proceeding, and the nature and extent of CAC/MSOS' participation in each were similar. The taxing officer in the Split Rate Base proceeding did note that the claim therein might seem excessive at first blush, but took into account the relative inexperience of counsel at that time. In both proceedings, CAC/MSOS did not address in argument the full range of issues considered, but rather, focused to a large degree only on issues relating to the regulation of MTS. While the scope of CAC/MSOS' participation in both proceedings was relatively narrow, the depth of the evidence filed, of the interrogatories, of the cross-examination, and of the oral and written arguments was considerable.

28. In this case, the 467.6 hours of preparation time seem reasonable. While it is true that counsel is now more experienced, I note that the claim in the Split Rate Base proceeding was only for counsel and one expert. In this case, the claim is for counsel, two analysts, and two consultants/experts, and is nearly 31 hours lower. In its reply, CAC/MSOS forcefully demonstrated the depth of its participation in the proceeding, and the extent to which considerable preparation time was required in order to challenge the arguments and evidence of MTS, including, for example, voluminous U.S. studies and regulatory precedents. Notwithstanding MTS' assertion to the contrary, I find that the issues relating to MTS upon which CAC/MSOS focused were significant and substantial, particularly as MTS was the sole Stentor company seeking, inter alia, a small company productivity offset as well as special treatment for exogenous factors such as MTS' "Services for the Future" program and its then-pending privatization.

29. CAC/MSOS also noted in reply that a proceeding of this magnitude clearly requires a substantial investment of time by counsel, even when a relatively narrow set of issues is the focus. I agree with CAC/MSOS' assertion that in order to develop its final position, not only was it important to consider MTS' specific proposals, but also to gain a comprehension of the overall context.

30. In my view, CAC/MSOS has demonstrated that the costs incurred with respect to preparation time were reasonable and necessary in the circumstances.

31. While the global claim for preparation time is reasonable and necessary in my view, I also wish to consider MTS' concern with respect to duplication of effort.

32. MTS has suggested that much of Mr. Williams' activity duplicated activities undertaken by CAC/MSOS' experts and consultants. CAC/MSOS, however, has satisfied me through its reply that there was no such duplication. As CAC/MSOS observes, counsel is responsible for the material that is presented on his or her client's behalf, and has an obligation to ensure that it is accurate and tested. Accordingly, it was necessary for Mr. Williams to develop, review and test Mr. Todd's and Dr. Cooper's evidence. Finally, with respect to the development and preparation of final argument, CAC/MSOS notes in its reply that Mr. Williams received the assistance of Mr. Ackman, Mr. Todd and Dr. Cooper in their areas of expertise as well as in the overall theory of the case. I find that such assistance is appropriate, and was not duplicative in the circumstances.
32.

33. MTS also submitted that Dr. Cooper's claim of 40 hours for review of the file is unreasonable and inappropriate in the circumstances. MTS suggests that this claim is an obvious duplication of service, given that Dr. Cooper also claimed 76 hours as time spent reviewing the file on behalf of CAC, Fédération nationale des associations de consomateurs du Québec and NAPO. MTS submits that this claim should be denied in its entirety or at least reduced by 75 percent. MTS also questions the 28 hours claimed by Dr. Cooper for assisting in cross-examination, given the alleged simplicity of the issues, and the fact that Dr. Cooper was not present during the cross-examination of Dr. Taylor.

34. CAC/MSOS stated in reply that considerable time was legitimately required for Dr. Cooper to review the file on behalf of CAC/MSOS, as MTS raised a series of arguments seeking special treatment distinct from the Stentor proposal. In particular, MTS relied on the results of proceedings in the U.S. made on behalf of small companies, and it was accordingly necessary for Dr. Cooper to review thousands of pages of testimony and regulatory findings in relation to these proceedings. With respect to Dr.Cooper's assistance with the cross-examination of Dr. Taylor, CAC/MSOS submitted in reply that while Dr. Cooper was not present during the actual cross-examination, his assistance to Mr. Williams in preparing for the cross-examination was significant, and included extensive discussions and analysis of complex economic concepts.

35. In my view, given the unique nature of the position taken by MTS, the time claimed for Dr. Cooper's review of the file on behalf of CAC/MSOS was reasonable and necessary in the circumstances. Further, I am satisfied that the claim for 28 hours to assist the cross-examination was also reasonable in the circumstances.

36. Accordingly, I will allow the 467.6 hours of preparation time claimed by CAC/MSOS.

Disbursements

37. In its Bill of Costs, CAC/MSOS has claimed disbursements of $11,103.76.

38. MTS has submitted that "CAC/MSOS and the Public Interest Advocacy Centre [sic] are all entitled to a rebate in connection with the Goods and Services Tax (GST)", and that the GST rebate was not accounted for in the costs claimed for various disbursements.

39. The affidavit of disbursements did not address whether PILC is eligible for a GST rebate. However, CAC/MSOS confirmed in its reply that PILC is GST exempt and does not pay GST, and that PILC is not eligible to seek GST rebates even in the case where expenses have been incurred on its behalf by others. Accordingly, it is not necessary to account for a GST rebate in this case. CAC/MSOS advised in its reply that the tax disbursements claimed for accommodation and air travel were with regard to Ontario and Manitoba provincial taxes, and that GST was paid with regard to the telephone calls of Mr. Todd, in the amount of $33.31.

40. As noted above, MTS submitted that absent receipts or other support to show that the disbursements were actually paid by CAC/MSOS, the claim should be denied. It should be noted that invoices and receipts in support of the disbursement claims set out below were submitted with the Bill of Costs. However, MTS' position is that this evidence does not demonstrate what amount of such disbursements, if any, was actually paid by the intervener, as opposed to being absorbed as overhead or operating expenses of Legal Aid Manitoba, which is funded by government or other sources. As discussed at the outset, however, it is my view that such arguments have been foreclosed by the decision of the Supreme Court of Canada in the Bell Canada decision, supra.

41. CAC/MSOS has claimed costs for in-house photocopies, postage, computer diskettes, long distance (phone/fax), courier, transcripts, air travel, parking, taxis, accommodation and research materials.

42. I have reviewed the receipts submitted in support of each of these claims. Given such factors as the depth of the evidence and submissions filed by CAC/MSOS, and the length of the oral hearing, I am of the view that the amounts claimed were reasonably and necessarily incurred, and should be allowed.

Costs as Taxed

43. I hereby tax the fees and disbursements of CAC/MSOS, inclusive of Provincial Sales Tax, where applicable, and GST with respect to Mr. Todd's telephone calls, as follows:

Counsel

Mr. Williams $30,016.00

Consultants

Mr. Todd $3,328.00

Dr. Cooper $14,720.00

Analysts

Ms. Gibbons $965.00

Mr. Ackman $8,352.00

Expert Witnesses

Mr. Todd $3,995.00

Dr. Cooper $6,460.00

Disbursements

In-house photocopies $1,780.80

Long-distance (Phone/Fax) $1,040.59

Courier $2,937.92

Postage $37.23

Transcripts $1,951.50

Air travel $1,621.56

Parking $3.25

Intra-city taxi $177.08

Accommodation $523.95

Diskettes $47.00

Research Materials $694.88

Meals $288.00

Total Disbursements $11,103.76

Total Fees and
Disbursements Owing $78,939.76

44. As noted above, this amount is to be paid to CAC/MSOS by MTS pursuant to Costs Order 97-4.

Karen Moore
Legal Counsel
Canadian Radio-television and
Telecommunications Commission

This document is available in alternative format upon request.

TAX97-26_0