ARCHIVED - Taxation Order CRTC 2000-3

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	Taxation Order CRTC 2000-3
	Ottawa, 1 May 2000
	In re: MTS Communications Inc. – Mechanism to recover future income tax expense – Telecom Decision CRTC 99-2
	Reference: 8678-C12-02/98
1.	Byron Williams for the Consumers' Association of Canada (Manitoba) and the Manitoba Society of Seniors (CAC/MSOS).
	Taxation of costs of CAC/MSOS
	Taxing Officer: Geoff Batstone
2.	This order constitutes the taxation of costs awarded to CAC/MSOS in the proceeding leading to Telecom Decision CRTC 99-2, dated 4 March 1999.
3.	In Telecom Costs Order CRTC 99-4, dated 1 April 1999, costs were awarded to CAC/MSOS in accordance with section 44 of the CRTC Telecommunications Rules of Procedure, payable by MTS Communications Inc.
4.	In its Bill of Costs and Affidavit of Disbursements filed on 30 April 1999, CAC/MSOS claimed a total of $68,652.79 consisting of $67,118.00 in fees and $1,534.79 in disbursements. The amount claimed by CAC/MSOS for fees represents 434 hours of work: 184.9 hours by Mr. Williams; 1.1 hours by Mr. Peltz; 20.4 hours by Ms. Gibbons; 39.6 hours by Mr. Todd; and 188 hours by Mr. Johnson.
	MTS's comments
5.	By letter dated 18 May 1999, MTS took issue with the fees claimed for work performed by Mr. Williams, Mr. Johnson, and Mr. Todd, as well as that performed by Ms. Gibbons. Among other things, MTS argued the following:
	(i) the fees claimed by Mr. Williams and Mr. Johnson for activity prior to the issuance of Public Notice CRTC 98-12 on 29 May 1998 should be disallowed on the basis that MTS should not be liable for costs related to any activity conducted before the proceeding was initiated and the scope and issues were defined by the Commission;
	(ii) the time claimed by Mr. Williams, Mr. Johnson and Mr. Todd for the preparation of submissions, including comments, evidence, responses to interrogatories and argument, is excessive and unreasonable and should be reduced to reflect unnecessary duplication between the functions exercised by each of them;
	(iii) the claim of 27.1 hours ($3,794) by Mr. Williams for preparation for the hearing should be denied as the Commission held a public consultation, not a hearing, the purpose of which was to provide the public an opportunity to comment, not for parties to present oral argument. If these fees were on account of Mr. Williams' comments as counsel for CAC/MSOS at the public consultation, the fees should be denied as unnecessary. If they were for preparing CAC/MSOS's officers who appeared at the 7 November 1998 public consultation in their personal capacity, or other persons to appear before the Commission, such fees should be denied as a matter of policy; and
	(iv) lastly, the 20.4 hours ($1,224.00) claimed for Ms. Gibbons in respect of computer and internet research relating to retroactive/retrospective rate making should be denied as this was not an issue within the scope of this proceeding, and the research was conducted after evidence was filed by all parties.
	CAC/MSOS's reply
6.	By letter dated 1 June 1999, CAC/MSOS replied to the issues raised by MTS. CAC/MSOS's response included the following points:
	(i) the costs incurred prior to the issuance of PN 98-12 related to the review of MTS's initial letter of 31 March 1998 and CAC/MSOS's response. CAC/MSOS noted that (a) while PN 98-12 was not issued until 29 May 1998, the proceeding was effectively commenced by MTS's letter of 31 March 1998, and (b) if the time expended for examining MTS's proposal had not been done prior to 29 May 1998, it would have been done afterwards in any event. CAC/MSOS's response also raised the issue of giving Manitoba consumers an opportunity to participate by way of an oral hearing;
	(ii) CAC/MSOS submitted that there was no duplication of time and effort as CAC/MSOS's experts and counsel each provided their own expertise in areas such as regulatory accounting procedure and the price cap regime. CAC/MSOS submitted that Mr. Williams was responsible for testing the evidence and interrogatory responses of Mr. Johnson and Mr. Todd on behalf of CAC/MSOS and played a leading role in the development and articulation of CAC/MSOS interrogatories and case theory. CAC/MSOS noted that arguments similar to those raised by MTS were rejected by the Commission in Taxation Orders CRTC 97-26 and 98-9;
	(iii) with respect to time claimed for preparation for the hearing, CAC/MSOS submitted that in contrast with many proceedings, the oral submissions were not supplemental to but a starting point for the written arguments. To prepare for the oral submission and final argument, it was necessary to review MTS's submissions as well as the legal research on just and reasonable rates; and
	(iv) the research performed by Ms. Gibbons was necessary as the issue of whether it is just and reasonable to recover future costs from current customers was central to this proceeding.
	Hourly rates
7.	The hourly rates claimed for CAC/MSOS's counsel Mr. Williams and Mr. Peltz are $140 and $230 respectively. CAC/MSOS have claimed a rate of $60 per hour for Ms. Gibbons and $175 per hour for Mr. Todd, while rates of $160 and $175 per hour were claimed for Mr. Johnson.
8.	In each case, the rates claimed are either at or below the rates set out in the CRTC Legal Directorate's Guidelines for the Taxation of Costs. I consider the rates to be appropriate in the circumstances, and allow them as claimed.
	Time claimed
9.	CAC/MSOS claimed a total of 434 hours for the services of counsel, consultants, and an expert witness. As noted above, MTS has objected to this claim for a number of reasons. I have considered each of MTS's arguments, as well as CAC/MSOS's reply, and have concluded that the amount claimed is reasonable and was necessarily incurred. In the text which follows, I address MTS's arguments.
10.	As noted above, Mr. Williams and Mr. Johnson billed for time expended prior to the issuance of PN 98-12. Section 56 of the Telecommunications Act provides that the Commission may award costs "of and incidental to proceedings before it", while subsection 44(6) of the CRTC Telecommunications Rules of Procedure states that costs shall not exceed those incurred "in connection with" the intervention in question. In my view, the work performed prior to 29 May 1998 related directly to the substantive and procedural aspects of the proceeding which was subsequently initiated. I also agree that if this work had not been done in response to the 31 March 1999 letter, it would have had to be done later as part of the PN 98-12 proceeding.
11.	In these circumstances, I am of the view that these costs are properly considered incidental to the PN 98-12 proceeding, and on that basis should not be disallowed. This is consistent with the approach adopted in Taxation Order CRTC 1993-1, where the Taxing Officer stated that expenses incurred prior to the commencement of proceedings may be allowed, provided that they relate to matters relevant to the intervention.
12.	I am also unable to agree that there was unnecessary duplication of effort between CAC/MSOS's counsel, expert and consultants. Preparing an intervention on behalf of a client in a proceeding as difficult as this one will necessarily involve the participation of more than one person. Where more than one person is required, I consider that each of the parties involved in the preparation of the intervention will have to be familiar to some extent with the record of the proceeding, and that consultation between them will, in most cases, be necessary. As I stated in Taxation Order CRTC 98-9, involving the same parties: "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."
13.	In my view, to take any other view would severely hamper an intervener's ability to present an informed and useful submission to the Commission. I note that the Taxing Officers in Taxation Orders 97-26 and 98-9 recognized that experts with knowledge in different fields bring a unique expertise to a proceeding and that an overlap does not necessarily amount to duplication of work. In my view, Mr. Williams, legal counsel, Mr. Todd, economist and engineer, and Mr. Johnson, accountant, each brought a unique expertise to CAC/MSOS's intervention, and there was no unnecessary duplication of work.
14.	With respect to MTS's objections to the amount of time claimed in respect of the public consultation, I am unable to agree that the fees should be denied on the basis that they were unnecessary, or that the purpose of the consultation was not to hear oral argument. I note, in this respect, that the public notice announcing the consultation did not restrict the scope of the submissions that could be made, or the nature of the persons that could make them. I note CAC/MSOS's position that the oral submission was the genesis of its written argument, and that it required substantial preparation. I agree that much of this time could have been claimed in respect of final argument, and consider it was reasonable and necessarily incurred.
15.	Finally, with respect to the claim for 20.4 hours for research on retroactive and retrospective rate making, I disagree with MTS's submission that this claim should be denied on the basis that it was not within the scope of the proceeding and was incurred after evidence was filed by all parties. In my view, concerns about retroactive and retrospective rate making were incidental to the issues raised in the proceeding. I also do not consider it improper to have undertaken this research after evidence was filed. In my view, research may be necessary right up until argument is filed in order to properly prepare one's case.
16.	In order to determine the reasonableness of the time claimed by the applicant's counsel, consultants and expert, I have considered the nature and scope of the proceeding, including the difficult nature of the issues under consideration, the extent of CAC/MSOS's participation, and the respective expertise and experience of the claimants.
17.	As noted in Costs Order 99-4, CAC/MSOS participated extensively in all stages of this proceeding, and were the only parties to seriously question MTS's position and to offer alternative arguments. CAC/MSOS's participation included, but was not limited to, the following: preparing evidence, posing and responding to a considerable number of complex interrogatories, posing and responding to requests for further responses to interrogatories, and preparing written argument and reply argument. There were numerous procedural issues which were raised and resolved throughout the course of the proceeding, and in which CAC/MSOS fully participated. While cross-examination was not allowed, CAC/MSOS prepared and attended the public consultation held on 7 November 1998.
18.	I am of the view that a significant amount of time would have been required to perform all of these tasks, and that each of these tasks was necessary to CAC/MSOS's participation. I also wish to note that the issues considered in this proceeding were, by their nature, very specialized and difficult. With all of the above in mind, I have examined each of the individual claims, as well as the total claim, and conclude that given the circumstances of this case, they are reasonable and necessarily incurred.
	Disbursements
19.	CAC/MSOS claimed a total of $1,534.79 for in-house photocopies, postage and courier services, long distance telephone calls and research expenses. MTS has not taken issue with any of these disbursements.
20.	I have reviewed the receipts in support of these claims. In the circumstances of this case, I consider that the amounts claimed were reasonably and necessarily incurred, and I will allow the disbursements as claimed.
	Costs as taxed
21.	I hereby tax the fees and disbursements of CAC/MSOS as follows:

	Counsel
	Mr. Williams Mr. Peltz	$25,886.00 $253.00
	Consultants
	Mr. Todd Ms. Gibbons	$6,930.00 $1,224.00
	Expert Witness
	Mr. Johnson	$32,825.00
	Disbursements
	In-house photocopies	$355.40
	Long-distance (phone/fax)	$525.86
	Courier/Postage	$92.32
	Transcripts	$322.50
	Research Expenses	$238.71
	Total disbursements	$1,534.79
	Total disbursements and fees owing	$68,652.79

	This amount is to be paid to CAC/MSOS forthwith by MTS pursuant to Telecom Costs Order 99-4.
	Secretary General
	This document is available in alternate format upon request and may also be viewed at the following Internet site: http://www.crtc.gc.ca

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ARCHIVED - Taxation Order CRTC 2000-3

This page has been archived on the Web