ARCHIVED -  Taxation Order CRTC 98-9

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Taxation Order

Ottawa, 11 June 1998
Taxation Order CRTC 98-9
In re: Implementation of Price Cap Regulation and Related Issues - Telecom Decision CRTC 98-2 and Telecom Costs Order CRTC 98-7
Reference: 8085-RP0003/97
1. Mr. Byron Williams for the Consumers' Association of Canada (Manitoba) and the Manitoba Society of Seniors (CAC/MSOS).
2. Mr. Roy Bruckshaw for MTS Communications Inc. (MTS).
4. Taxing Officer: Geoff Batstone
5. This Order constitutes the taxation of costs awarded to CAC/MSOS in the proceeding leading to Implementation of Price Cap Regulation and Related Issues, Telecom Decision CRTC 98-2, 5 March 1998.
6. In Telecom Costs Order CRTC 98-7, In re: Implementation of Price Cap Regulation, 1997 Contribution Charges and Related Issues, Telecom Public Notice CRTC 97-11, 18 February 1998 (Costs Order 98-7), final costs were awarded to CAC/MSOS in accordance with subsection 44(1) of the CRTC Telecommunications Rules of Procedure. MTS was named as the sole respondent to CAC/MSOS' application, as CAC/MSOS' participation was confined to issues raised by MTS' application.
7. On 16 March 1998, CAC/MSOS submitted its Bill of Costs in the amount of $58,349.56, consisting of $8,356.56 in disbursements and $49,993.00 in fees.
8. Position of Parties
9. In a letter dated 2 April 1998, MTS disputed various aspects of CAC/MSOS' claim. MTS submitted that the number of hours, and the associated dollar amount, claimed by Mr. Williams is excessive, and should be adjusted downwards by at least one third. MTS submitted in this regard that (i) the hours claimed to review the file are excessive as they are greater than that claimed by CAC/MSOS' expert, Mr. Hugh Johnson, for the same activity, (ii) the time claimed for drafting and replying to interrogatories is excessive given the number and nature of the interrogatories asked and answered by CAC/MSOS, (iii) the time claimed for preparing evidence is excessive given that the evidence was prepared by Mr. Johnson, (iv) the amount claimed for drafting final and reply argument should be reduced given that Mr. Johnson and Mr. John Todd, one of CAC/MSOS' consultants, also participated in this activity, and (v) the claim of two hours for CAC/MSOS' application for costs is "highly irregular" and should be denied entirely.
10. In addition to the above, MTS submitted that CAC/MSOS' disbursement claim of $2,078.19 for research materials should also be denied, stating that it is not clear whether the expenses were necessarily and reasonably incurred.
11. Finally, MTS questioned whether all of CAC/MSOS' expenses were in need of reimbursement. MTS drew attention to an endorsement on the Statement of Accounts of Mr. Johnson to the effect that the goods and services purchased from Mr. Johnson were purchased with Crown Funds on behalf of the Government of Manitoba, and accordingly exempt from GST. MTS submitted that this statement raises the question of whether CAC/MSOS is receiving funds from other sources to underwrite its participation in this proceeding.
12. In its reply of 15 April 1998, CAC/MSOS noted that it was the only party to comment on MTS' shareholder entitlement, and that its participation on MTS specific issues was extensive. CAC/MSOS noted that the total number of hours claimed in this proceeding compares favourably with the amounts it claimed in the proceeding which resulted in Price Cap Regulation and Related Issues, Telecom Decision CRTC 97-9, 1 May 1997 (the Decision 97-9 proceeding), and in the proceeding which resulted in Implementation of Regulatory Framework - Splitting of the Rate Base and Related Issues, Telecom Decision CRTC 95-21, 31 October 1995. CAC/MSOS submitted that, given the complexity of the issues surrounding the shareholder entitlement, the time claimed is more than reasonable.
13. In response to specific MTS objections, CAC/MSOS noted, among other things, that (i) the time claimed by counsel for reviewing the file was necessary to inform the submission, evidence and argument of CAC/MSOS, (ii) the time spent in respect of interrogatories was appropriate given that there was no opportunity for cross-examination (and accordingly interrogatories assumed a greater importance), (iii) there was no duplication of effort in the preparation of evidence as legal counsel played a critical role in the testing and development of the evidence, and in providing relevant materials to CAC/MSOS' expert witness, (iv) CAC/MSOS' evidence was comprehensive, well focused and largely adopted by the Commission, (v) while CAC/MSOS participated fully in oral argument and filed extensive final and reply argument, the number of hours claimed in respect of argument in this case is at least 10 hours less than the amount approved in the Decision 97-9 proceeding, and (vi) the two hours for the costs and taxation process were expended to respond to the "frivolous and vexatious" arguments submitted by MTS in response to CAC/MSOS' costs application, and accordingly, are appropriate as a means to deter MTS from repeatedly raising issues that are well settled in fact and law.
14. With respect to disbursements, CAC/MSOS submitted that the expenditures for electronic research are justified as they substantially reduced the time and expense that would have been required to conduct a manual search.
15. Finally, with respect to MTS' argument concerning eligibility for costs, CAC/MSOS submitted that the utilization of the GST exemption does not detract from the fact that, as a condition of its retainer, the Public Interest Law Centre (PILC) (counsel to CAC/MSOS) is expected to pursue full cost recovery and pay back Legal Aid Manitoba for any costs incurred on its behalf. CAC/MSOS also referred to its statements in previous costs and taxation proceedings that no government funding is allocated to PILC for the purpose of participating in Commission proceedings.
16. Fees
17. a) Counsel Fees
18. CAC/MSOS claimed a total of $25,004.00 in fees for its legal counsel, Mr. Williams, consisting of 171.2 hours of preparation time and 7.4 hours of attendance at the oral hearing, at an hourly rate of $140.
19. The rate claimed by CAC/MSOS reflects the rate for counsel of Mr. Williams' experience set out in the version of the Commission's Legal Directorate's Guidelines for the Taxation of Costs (the Guidelines) which was in effect at the time these costs were incurred. I consider this rate to be appropriate and will allow it as claimed.
20. b) Consultant and Analyst Fees
21. CAC/MSOS claimed a total of $4,464.00 for its consultants and analysts Ms. Betsy Gibbons, Mr. John Todd and Mr. Greg Matwichuk. This amount represents a claim for Ms. Gibbons for 16 hours of preparation time at a rate of $50 per hour, a claim for Mr. Todd for 20.9 hours of preparation time at an hourly rate of $160, and a claim for Mr. Matwichuk for two hours at an hourly rate of $160. The rates claimed for Mr. Todd and Mr. Matwichuk are in accordance with the rates specified in the Guidelines. 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. In each case, I consider these rates to be appropriate and I will allow them as claimed.
22. c) Expert Witness Fees
23. CAC/MSOS has claimed a total of $20,525.00 in fees for its expert witness Mr. Johnson. This amount represents a claim for 30 hours of preparation time at an hourly rate of $160, as well as 92.5 hours of preparation time at an hourly rate of $170. I note, in this regard, that the Guidelines suggest a rate of $170 per hour for all preparation time claimed by expert witnesses. I consider the rates claimed to be appropriate and I will allow them as claimed.
24. Preparation and Attendance Time
25. CAC/MSOS has claimed a total of 340 hours of preparation and attendance time for its counsel, expert, consultants and analyst. While MTS has objected to several specific elements of CAC/MSOS' claim, I consider it useful to first examine the appropriateness of the total time claimed by CAC/MSOS in this proceeding. I note that this approach is consistent with past Taxation Orders, including Taxation Order CRTC 97-26, In re: Price Cap Regulation and Related Issues - Telecom Decision CRTC 97-9 and Telecom Costs Order CRTC 97-4 (Taxation Order 97-26), in which CAC/MSOS' costs in the Decision 97-9 proceeding were taxed.
26. In determining whether the time claimed is reasonable and necessary, I consider an appropriate benchmark for comparison to be the Decision 97-9 proceeding. In that case, CAC/MSOS claimed and was awarded 467.6 hours of preparation time and 10 hours of attendance time. While I note that there are a number of key differences between the two proceedings (including, for example, the fact that the Decision 97-9 proceeding had a 12 day oral hearing with cross-examination), I consider that CAC/MSOS' participation in the Decision 97-9 proceeding provides a useful starting point for assessing its participation in this proceeding.
27. CAC/MSOS' claim of 477.6 hours in the Decision 97-9 proceeding accounted for the participation of counsel, two analysts, and two consultants/experts. In this case, CAC/MSOS' claim of 370 hours represents the participation of counsel, two consultants, an analyst, and an expert witness. CAC/MSOS participated in each stage of both proceedings, filing evidence, posing and responding to interrogatories, and filing comments and reply comments. While the Decision 97-9 proceeding included a 12 day oral hearing during which counsel for CAC/MSOS participated in cross-examination, the oral phase of this proceeding was confined to a brief session for the presentation of final argument. In each proceeding, CAC/MSOS confined its participation to issues in relation to MTS, but participated actively and extensively in respect of those issues.
28. Taking into account all of the circumstances of this case, including the factors outlined above, I am of the view that the total time claimed by CAC/MSOS in this proceeding is reasonable and was necessarily incurred, and should be allowed. However, before leaving the subject of preparation and attendance time, I wish to deal with a number of arguments concerning specific claims which were raised by MTS.
29. As noted above, MTS argued that several of the amounts claimed by counsel are excessive on the basis that counsel duplicated activities undertaken by CAC/MSOS' consultants or expert witness. I am of the view that MTS' argument is without merit, however.
30. In a proceeding such as this one, I consider it both appropriate and necessary that information reviewed or prepared on behalf of an intervener by an expert, consultant or analyst also be reviewed by the intervener's counsel to ensure that it is accurate and relevant to the case being presented. In addition, I also consider that the separate claims of counsel, Mr. Johnson and Mr. Todd in the categories to which MTS objects are reasonable and that, accordingly, there was no unnecessary duplication of effort as alleged by MTS. I wish to note that very similar arguments were raised by MTS in the context of the taxation of CAC/MSOS' costs in the Decision 97-9 proceeding, and were denied for substantially the same reasons in Taxation Order 97-26.
31. MTS also argued that excessive time was expended by counsel in preparing and responding to interrogatories. Once again, however, I am unable to agree with MTS' position. I consider that the 23.1 hours claimed by CAC/MSOS in respect of these activities is reasonable given the number and nature of the interrogatories which it posed, and the number and nature of the interrogatories to which it was required to respond. I note in passing that CAC/MSOS' was awarded 25.6 hours for the preparation of, and response to a similar number of interrogatories in the Decision 97-9 proceeding.
32. MTS has once again raised the issue of CAC/MSOS' eligibility for costs, although this issue has been raised by MTS on a number of occasions in the past and has been rejected in each case. In Taxation Order 97-26, the Taxing Officer concluded that CAC/MSOS had established that neither PILC nor CAC/MSOS had received government or other funding specifically allocated for the purposes of participating in this or other Commission proceedings. The Taxing Officer also concluded that MTS had failed to establish that there was government assistance which should be deducted from the costs which were awarded. In Costs Order 98-7, the Commission also rejected MTS' arguments to the effect that PILC receives funding from a number of sources, including government and the Manitoba Law Foundation.
33. As noted above, MTS submits that the GST endorsement raises questions as to whether CAC/MSOS receives funds from other sources and that any costs award should therefore be reduced. I am satisfied, on the basis of CAC/MSOS' statements in reply, that CAC/MSOS has not received funds specifically allocated to participation in this proceeding. Accordingly, I am of the view that MTS' argument must, once again, be rejected.
34. Finally, with respect to MTS' objection that CAC/MSOS' claim for costs incurred in relation to its application for costs is "highly irregular" and should be denied, I note that similar claims have been approved on numerous occasions in past Taxation Orders. In addition, I consider it appropriate to permit CAC/MSOS to recover its costs for time expended in replying, once again, to MTS' arguments concerning its eligibility for costs. I am of the view that the amount of time claimed is not unreasonable given the arguments raised.
35. In light of the above, I will allow the 340 hours of preparation and attendance time claimed by CAC/MSOS.
36. Disbursements
37. In its Bill of Costs, CAC/MSOS has claimed disbursements totalling $8,356.56 for in-house and other photocopies, postage, long distance (phone/fax), courier, transcripts, air travel, taxis, accommodation and research materials.
38. As noted above, MTS objected to CAC/MSOS' claim for research materials. I am satisfied with CAC/MSOS' explanation of the nature of this expense, and consider that the utilization of on-line services would have reduced the time and expense associated with this research. Accordingly, I am satisfied that this expense was reasonably and necessarily incurred and should be allowed.
39. I have reviewed the receipts submitted in support of each of CAC/MSOS' disbursement claims. Given such factors as the depth of the evidence and submissions filed by CAC/MSOS, the length of the proceeding, and the number of parties, I am of the view that the amounts claimed were reasonably and necessarily incurred, and should be allowed.
40. Costs as Taxed
41. I hereby tax the fees and disbursements of CAC/MSOS as follows:
Mr. Williams $25,004.00
Consultants and Analysts
Mr. Todd $3,344.00
Mr. Matwichuk $320.00
Ms. Gibbons $800.00
Expert Witness
Mr. Johnson $20,525.00
In-house photocopies $1,075.80
Other photocopies $50.50
Long-distance (Phone/Fax) $678.70
Courier $1,982.37
Postage $62.10
Transcripts $810.00
Air Travel $1,241.00
Intra-city taxi $105.50
Accommodation $176.40
Research Materials $2,078.19
Meals $96.00
Total Disbursements $8,356.56
Total Fees and
Disbursements Owing $58,349.56
42. This amount is to be paid to CAC/MSOS by MTS pursuant to Costs Order 98-7.
43. Geoff Batstone
Legal Counsel
Canadian Radio-television and
Telecommunications Commission
44. This document is available in alternative format upon request.
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