October 4, 2004, E.C.B. Nos. 17/97/250 and 07/98/250

 
REASONS FOR DECISION

1.  APPLICATION

[1]  The claimants Keith Maddocks and Maddocks Farms Ltd. apply to the board for a review of their bills of costs and a final award of costs under section 45 of the Expropriation Act, R.S.B.C. 1996, c. 125 (the "Act") and the Tariff of Costs Regulation, B.C. Reg. 189/99 (the "Tariff"). The costs at issue arise out of the expropriation by the respondent City of Surrey (the "City") on May 7, 1997 of a statutory right of way for drainage purposes over portions of three contiguous parcels of land. The land is owned by Keith Maddocks and at the date of taking was being farmed by Maddocks Farms Ltd.

[2]  The costs claimed are in respect of legal, appraisal and other professional services provided to the claimants over a seven year period beginning in January 1996. They include the costs of a ten day compensation hearing before the board as well as the costs of this application heard over a three day period in Surrey, British Columbia.

[3]  The actual amounts invoiced to the claimants for fees, disbursements, taxes and interest up to the end of the compensation hearing total over $251,000. This figure does not take into account the additional costs associated with preparation for and attendance at this final cost hearing. However, the claimants are not seeking full payment of their invoiced costs. For one thing both claimants are GST registrants and do not claim reimbursement from the respondent of any GST paid. For another, several bills of costs are based on the amounts prescribed in the Tariff, not on actual costs incurred. The parties disagree as to whether certain professional services properly fall under the Tariff and also as to whether it is appropriate in this instance to present multiple bills of costs in Tariff format. Because of the disagreement, the claimants have advanced some of their claims in the alternative. By my calculation, the total costs claimed range between approximately $164,000 and $192,000 not including the costs of this review. To date the City has made payments to the claimants on account of their costs totalling slightly under $40,000.

2.  BACKGROUND

[4]  The background facts relevant to this cost claim are fully set out in the board's compensation decision reported as Maddocks v. Surrey (City) (2001), 73 L.C.R. 161, and need only be briefly summarized here.

[5]  At the date of taking the Maddocks family had owned and operated a vegetable farm on the subject property for more than four decades. Keith Maddocks was the fee simple owner of the land and a co-owner of Maddocks Farms Ltd., which leased the land and carried on the farming operations. The vegetable farm encompassed all three contiguous parcels comprising the subject property. Two of the three parcels were zoned for agricultural use while the third parcel had a split zoning — part industrial and part agricultural.

[6]  The City's project for which a statutory right of way over part of the claimants' property was expropriated involved the construction of a drainage canal to deal with increased flooding and drainage problems on lands in the vicinity. Among other things the project required the closing off of two existing road access points to the subject property. The City replaced these with two new accesses. The claimants were advised early in 1996 that the works would be proceeding that summer but the project did not in fact get under way until 1997.

[7]  In early February 1997, the City served expropriation notices on the claimants. On May 6, 1997, it made advance payments on account of compensation of $386,950 to Keith Maddocks and $156,582 to Maddocks Farms Ltd. The following day it completed the expropriation by filing vesting notices in the land title office.

[8]  On March 2, 1998, the claimants filed separate applications for determination of compensation in the prescribed Form A. In the proceedings which culminated in a hearing before the board, Keith Maddocks sought compensation totalling $1,869,490 for the market value of the interest in land taken and for reduction in value to the remainder. Maddocks Farms Ltd. sought compensation totalling $247,549 — $144,771 for loss of future farm earnings and $102,778 for accelerated depreciation of machinery and improvements. There were some additional claims for compensation for lost income and disturbance damages but these were not pursued at the hearing.

[9]  On November 5, 1999, the City increased its advance payment to Keith Maddocks to $600,200. However, in late February, 2000, shortly before the compensation hearing took place, the City made a sharp downward revision in its own estimate of the compensation payable to each of the claimants. It now alleged that the subject property had enjoyed no legal access prior to the taking and that Keith Maddocks therefore received a special benefit after the taking from the new accesses which the City constructed to his property. According to the City, he had been overpaid by $123,926, the cost of these works of accommodation. Based upon a revised income analysis, the City also now alleged that Maddocks Farm Ltd. had been overpaid by $85,392.

[10]  At paragraph 17 of its decision, the board made the following observations on the chronology of events leading up to the compensation hearing:

The matter was set for hearing on November 15, 1999 but adjourned at the City's request. A new hearing date of March 6, 2000 was subsequently agreed. On February 29, 2000 the City amended its replies to the claims. In the 30 day period prior to the hearing, the respondent City filed several reports or report amendments in support of its claims of overpayment. These reports dealt with the City's assertion of special benefits and recalculated the previous estimate of business losses. The issue of access was raised in the reports filed within the 30 day period. This had not previously been identified as a concern by the respondent. The claimant was allowed to file an amended Form A just prior to the start of the hearing and additional reports during the course of the hearing.

[11]  The board heard evidence over nine days between March 6 and 16, 2000 and reconvened for a day of final submissions on March 28, 2000. The compensation decision was released on April 2, 2001.

[12]  The board awarded compensation to Keith Maddocks for the market value of the land taken and loss in value to the remainder totalling $792,650 — $192,450 more than the advance payments — together with interest and costs. It rejected the City's allegations of no legal access before the taking and special benefit afterwards. Because Keith Maddocks was awarded more than 115% of the amount paid in advance by the City, the board found that he was absolutely entitled to his costs pursuant to section 45(4) of the Act.

[13]  The board awarded compensation to Maddocks Farms Ltd. of $139,952 for loss of farm income but found no basis for the claim for accelerated depreciation. In the result, the amount awarded was $16,630 less than the advance payment and the board certified this overpayment as a debt due by Maddocks Farms Ltd. to the City. Because the award to Maddocks Farms Ltd. was less than 115% of the amount paid in advance by the City, the board had discretion to reduce the costs recoverable by this claimant pursuant to section 45(5) of the Act. However, the board held that it was necessary and reasonable in the circumstances for Maddocks Farms Ltd. to have incurred costs to maintain its claim through to a compensation hearing and made no reduction.

[14]  Insofar as the Tariff was concerned, the board considered that both the legal and real estate appraisal costs of Keith Maddocks should be assessed at Scale 3, the highest scale available, which is for matters of more than ordinary difficulty or importance. The board found that the legal costs of Maddocks Farms Ltd. should be assessed at Scale 2, which is for matters of ordinary difficulty or importance, while it considered the costs associated with the company's claim for farm business loss to be outside the Tariff.

3.  THE COST REVIEW

3.1  The Cost Claims

[15]  The costs fall into three categories: legal costs, real estate appraisal costs, and other consultant costs. This last category includes the costs of a highways access consultant, a professional engineer with expertise in subdivision planning, and a former chair of the provincial Agricultural Land Commission with expertise in agricultural land use issues. The claimants also incurred costs to obtain the non-expert testimony of an employee of British Columbia Hydro who had been involved in negotiating an access agreement for the subject lands with the Maddocks family many years before the taking. One of the more controversial issues at the cost hearing was the proper characterization of the costs incurred by the claimants' principal real estate appraiser. The initial question was whether, in addition to his appraisal tasks, he had also performed consulting work for the claimants in other qualified expert capacities. If so, the next question was whether the costs of that work should be compensated separately outside the appraisal Tariff.

[16]  The claimants' presentation of their cost claims, although well organized on its face, left a great deal to be desired in terms of accuracy and completeness. Several bills of costs contained errors, omissions or duplications which led to considerable confusion at the hearing. Claimants' counsel attempted to reconcile some of the discrepancies in a spreadsheet summary but this exhibit also proved inaccurate. Having been granted leave to do so, the claimants revised and resubmitted some of their bills of costs after the conclusion of the cost hearing but, upon scrutiny, even these are found to contain errors. The City has argued that errors and discrepancies should lead to disallowances in the final award of costs. Be that as it may, the first task as I see it is to attempt to reconstruct from the evidence as accurate a picture as possible of the claims under review.

[17]  In calculating the amounts claimed under each of the above-noted categories, I have excluded GST. I have also left for separate consideration later in these reasons the costs of this final cost review which include claims for witness fees. With those exclusions taken into account, I calculate that the legal costs claimed total $67,735.76. The appraisal costs claimed total $82,724.51 if calculated on the basis that all of the principal appraiser's work in the period after the Tariff came into force falls within the Tariff. If calculated on the alternative basis that only part of his later work falls under the Tariff, then the appraisal costs claimed instead amount to $64,207.54 while the costs claimed for consulting services he provided that are outside the Tariff amount to $48,506.97. The costs claimed with respect to the services provided by the other consultants total $12,016.69.

3.2  The Issues

[18]  The City has raised numerous objections to these costs claims. Out of those objections the following main issues arise for determination:

• Have the claimants satisfied the onus of proving that their costs were necessary and reasonable within the meaning of section 45 of the Act? Subsumed within this issue are the questions of whether the invoices and bills of costs contain or are supported by sufficient particulars, whether they reflect any unnecessary duplication of work and whether overall they meet the test of reasonableness. Also at issue is whether the rates charged for professional fees and for certain disbursement items are reasonable.
• With particular regard to the Tariff, is it appropriate in this instance for the claimants to have submitted multiple bills of costs, including separate bills for each of the two claimants and for each parcel of land? Or, as the respondent argues, should there instead have been a single bill of legal costs and a single bill of real estate appraisal costs in the names of both claimants?
• Did any part of the services provided by the claimants' real estate appraiser after the coming into force of the Tariff fall outside the scope of appraisal work or should it all be billed under the real estate appraisal Tariff?

3.3  Considerations under Section 45(10)

[19]  In determining final costs, I am required under section 45(10) of the Act to take the following considerations into account:

[20]  It will be convenient in this case to take the foregoing factors into account in the course of reviewing the claimants' various cost claims.

4.  LEGAL COSTS

[21]  In the early stages of their involvement with the City over the proposed drainage project beginning in or about January 1996, the claimants utilized the legal services of their corporate solicitor. After the taking, another law firm briefly took over conduct of the file. However, no accounts for services rendered by either of them have been presented for review. In or about June 1997, the claimants retained the law firm of Campbell Froh May & Rice to act for them in this matter. The lawyer principally involved in the file, Ralph A. May, often represents farmers and farming interests and is also well experienced in the expropriation field. Mr. May appeared for the claimants at the compensation hearing and at this final cost hearing where, additionally, he gave evidence concerning his conduct of the case.

4.1.  Pre-Tariff Legal Costs

4.1.1  The Claimants' Claims

[22]  Prior to the introduction of the Tariff, the legal costs payable were the claimants' "actual reasonable" costs as set out in section 45(7)(a) of the Act. The law firm rendered four accounts to the claimants in the pre-Tariff period. These accounts do not allocate legal work as between the two claimants. In each instance they are addressed to "Maddocks Farms Ltd. c/o Mr. Keith Maddocks". The fourth account dated November 30, 1999 was reissued in early 2002 to include only those costs incurred prior to when the Tariff came into force on June 28, 1999. The four accounts, showing the breakdown as between fees, disbursements, GST and PST, are as follows:

[23]  When GST is subtracted from the total, the legal costs claimed in the pre-Tariff period amount to $20,853.95. The claimants acknowledge that the City made an advance payment of costs on December 10, 1997. The amount is misstated in the spreadsheet summary prepared by the claimants' law firm and entered as an exhibit at the cost hearing, but I conclude from other evidence that the City paid in full at that time the first legal account rendered for $8,271.35.

[24]  The law firm recorded a total of 102.1 hours on the claimants' file in the pre-Tariff period. Particulars of the legal work are shown in the accounts rendered which are also accompanied by time sheets. An articled student billed some 26.5 hours at $65 per hour to research the law and prepare a legal memorandum on right of way takings. A legal secretary billed 0.2 hours at the rate of $60 per hour. All of the remaining time was that of Mr. May. He billed 67.2 hours at $215 per hour in the first three accounts and a further 8.2 hours at $225 per hour in the fourth account.

[25]  During the first months of his involvement beginning in June 1997, Mr. May's time on the file was largely spent reviewing expropriation documents, identifying the issues in the case, meeting with the real estate appraiser, the agricultural land consultant and the clients both on and off site, and communicating with opposing counsel and with representatives of the Agricultural Land Commission. During the final months of 1997 and the early months of 1998, his work became more intensively focused on real estate appraisal issues. He communicated frequently with the claimants' appraiser and reviewed his draft reports as well as the report of the City's appraisal expert. It was also during this period that he drafted and filed the Form A claims of both Keith Maddocks and Maddocks Farms Ltd. For the remainder of 1998 Mr. May's legal work consisted largely of follow-up correspondence and telephone communications with his clients, the appraiser, opposing counsel and the board. Almost no legal work was recorded on the file from early November 1998 through late June 1999, at which point the Tariff took effect.

4.1.2  The City's Objections

[26]  The City has raised several objections to the foregoing fee accounts. First, it says, despite repeated demands for additional particulars, insufficient details have been provided to assess their reasonableness. For example, numerous entries for telephone calls or meetings fail to disclose the precise subject matter while entries are frequently lumped together under a single date without any exact breakdown of how much time was devoted to particular tasks. Second, the City submits that in global terms the total number of hours spent at such an early stage of the proceedings is unreasonable and is indicative of work being done in an overly expansive and inefficient manner. Third, the City contends that Mr. May's fee rate is too high. It says the rate exceeds what the board has previously allowed during the same period for very senior counsel with more experience in the expropriation field.

[27]  The City cites as germane to my determination the board's advance cost decision in Hruschak v. Vernon (City) (1991), 46 L.C.R. 230. In that case the legal fees of successive law firms were reduced by between 30 per cent and 50 per cent as a result of the lawyers involved being found to have spent far more time on the file than was necessary as well as having duplicated their efforts. The former chair, J.H. Heinrich, Q.C., observed at p. 236:

Their combined hours indicate in my opinion that they have done necessary work in an overly time-consuming manner. As stated by the taxing officer in Lenjo Enterprises Ltd. v. Municipality of Metropolitan Toronto (1977), 12 L.C.R. 13 ( Ont. S.C.) at p. 14:

… I have been driven … to the conclusion that … many solicitors acting for claimants seem to have conducted themselves in an expansive manner such as to suggest an acute awareness that their clients will not be required to pay their bills.

And in Gustafson v. The Queen in right of Alberta(1987), 38 L.C.R. 180 at p. 183, the Alberta Land Compensation Board stated:

… this board has consistently held that where a high hourly rate is claimed the lawyer charging such rate must bring to the case a high standard of experience, expertise and efficiency in conducting the case.

[28]  Among the disbursements itemized in the pre-Tariff accounts, the City has taken issue with the rates applied to photocopies and facsimiles and has questioned a charge for office supplies which it says should be treated as part of office overhead.

4.1.3  Analysis and Conclusions

[29]  There is some substance to the City's assertion that these four legal accounts lack explanatory detail to show in every instance that the work undertaken was necessary and reasonable. However, any material deficiency in the account descriptions was supplied by Mr. May during his evidence-in-chief and cross-examination. Although unable from memory to describe the precise subject matter of every short telephone call, he was able to identify the significance to the case of each person whose name appeared in the accounts and to outline with some particularity the nature of the work undertaken during each billing period. The accounts and billing worksheets together with the oral evidence provide sufficient particulars to enable me to conclude that the legal services provided in the pre-Tariff period meet the basic test of having been necessarily incurred.

[30]  The more difficult question is whether all of the pre-Tariff legal work was reasonably performed or whether it was done in an overly expansive and time-consuming manner. In assessing this aspect of the case, I have borne in mind that Mr. May was co-ordinating the preparation of two distinct although inter-related claims. The first claim, that of Keith Maddocks, arose from his ownership of the three parcels of land involved in the partial taking. It concerned the alleged effect of the taking of the statutory right of way on the highest and best use of the parcels for both agricultural and non-agricultural purposes, the market value of the portions taken, and the loss in market value of the remaining land. The second claim, that of Maddocks Farms Ltd., arose from the company's farming operations and involved projections of farm business losses, claims for accelerated depreciation and other alleged disturbance damages.

[31]  By late June 1999, some four and a half months before the compensation hearing was initially scheduled to begin, progress on the claims remained at a preliminary stage with discoveries still to be completed and reports finalized. In these circumstances the 75.4 hours billed by Mr. May to prosecute both claims to that point appear ample but they do not strike me as excessive. They are, by way of comparison, only moderately greater than the number of hours I considered globally reasonable in my cost decision in Bill's Frontier Restaurant Ltd. v. British Columbia (Minister of Transportation and Highways) (1996), 58 L.C.R. 204 for the initial stage of consultation and review culminating in the filing of pleadings. That case, which I found to be of average or slightly greater than average complexity, also involved a business loss component. Similar to the present case, it eventually resulted in a nine day compensation hearing.

[32]  Neither do I consider overly expansive in the circumstances the 26.5 hours recorded by the articled student to research and write a memorandum of law. I accept Mr. May's explanation that the assignment required the student to consider fully in light of decided cases whether the right of way expropriated by the City should be treated as a complete taking of the land directly affected or whether the claimants retained some residual uses on that land. As it turned out, both sides eventually accepted that the statutory right of way taken left the claimants with no residual practical use and was equal to 100 per cent of the fee value. I consider the articled student's billing rate of $65 per hour to be appropriate and allow the fee charge as presented.

[33]  I am, however, of the view that some reduction is warranted to Mr. May's fee billing rates of $215 to $225 per hour in the period from June 1997 to June 1999. These rates exceed what the board has previously allowed in the same time frame for the most senior lawyers specializing in expropriation practice. I accept that Mr. May, having been called to the bar in 1975, is a senior practitioner. He testified that over the years on average between 10 per cent and 15 per cent of his practice was in the field of expropriation law but that, during some years, expropriation cases accounted for as much as 60 per cent of his practice. Having regard to previous cost awards, I consider that a reasonable fee rate to allow for Mr. May's legal services to the claimants during the pre-Tariff period in question is $200 per hour.

[34]  In the absence of any evidence on point, I am not satisfied that the 0.2 hours billed at the rate of $60 per hour by a legal secretary in the firm should be recoverable as a fee charge rather than being absorbed in the normal way by the law firm as office overhead.

[35]  With regard to disbursements, I similarly consider that a $30 charge levied for office supplies should be disallowed since the cost forms part of overhead. As for photocopies and facsimiles the evidence on point is not entirely clear but it appears to me that both were being charged out at $0.30 per page. Counsel for the City made reference to the advance cost decision of the former vice chair, Sharon I. Walls, in 415528 B.C. Ltd. v. Greater Vancouver Sewerage and Drainage District (2001), 75 L.C.R. 217, as indicative of what the board in recent decisions has approved. There the vice chair allowed photocopies at $0.15 per page and facsimiles at $0.20 per page. While the rate allowed for photocopies in 415528 B.C. Ltd. is consistent with other board decisions, the rate allowed for facsimiles is not. More commonly, facsimiles have been allowed at $0.35 per page and, in a few instances, for outgoing faxes at $0.50 per page. In this instance I would allow the facsimile charges as billed. However, a downward adjustment should be made to reflect photocopying charges at $0.15 per page. Additionally, correction of an error in transposing photocopying charges from the worksheet onto the account dated October 17, 1997 results in a further small reduction. With the foregoing adjustments the disbursements allowed total $1,322.78.

[36]  Accordingly, the pre-Tariff legal costs of Keith Maddocks and Maddocks Farms Ltd. are allowed in the total sum of $19,301.46 comprising $16,802.50 in fees, $1,322.78 in disbursements and $1,176.18 in PST.

4.2  Post-Tariff Legal Costs

4.2.1  Basis of Cost Recovery

[37]  All legal costs incurred by the claimants in this matter from and including June 28, 1999 are to be assessed under Schedule 1 of the Tariff in accordance with section 45(7)(b) of the Act. Schedule 1 contains 23 items of description in respect of which legal costs incurred that are "proper or reasonably necessary to conduct the proceeding" within the meaning of section 3(2) of the Tariff may be claimed. Many of these items provide for a fixed number of units and in some cases the fixed number may be claimed more than once, for example, for each day of attendance at the hearing of a compensation claim. However, if an item in the Tariff provides for an amount of units for each day but the time spent during the day is less than 2 ½ hours, only half the amount is allowed for that day. Similarly, an upward adjustment is to be made for long days of more than 5 hours' duration. Other items of description provide for a range between minimum and maximum units according to the time that should ordinarily have been spent on the tasks involved. The effect is to impose an upper limit on the number of units that can be claimed for all legal work falling within that description over the course of the proceedings. In the present matter, excluding the costs of preparation for and attendance at this final cost hearing, the claimants have claimed legal costs under 13 of the 23 items of description.

[38]  Section 3(3) of the Tariff provides that the board may, when it makes an adjudication of compensation following a hearing, fix the scale under which the costs will be assessed. In this instance the hearing panel of the board in its compensation decision stated at paragraph 264: "Due to the number and complexity of the issues involved in Keith Maddocks' claim, we consider Scale 3 to be appropriate for legal costs". The panel further stated at paragraph 268: "We find that the claim for Maddocks Farms Ltd. represents a matter of ordinary difficulty and importance and thus we find costs on Scale 2 are suitable for legal costs." For the purpose of determining legal costs, the value allowed on an assessment is $180 for each unit at Scale 3 and $140 for each unit at Scale 2.

4.2.2  The Bills of Legal Costs

[39]  Initially, the claimants prepared a single bill of legal costs in Tariff format and forwarded it to the City for review under cover of a letter dated March 15, 2002. The bill claimed a total of 209 units under various items of description, all at Scale 3, for a total of $37,620 plus disbursements and taxes.

[40]  The City objected to the claimants' use of Scale 3 throughout. Since the board in its compensation decision had said the legal costs of Keith Maddocks were to be assessed at Scale 3 and those of Maddocks Farms Ltd. at Scale 2, the City took the position in its letter response that half the total number of units should be multiplied by $180 and the remaining half by $140. At the same time the City signalled its agreement to some of the unit allocations made by the claimants but challenged others.

[41]  The parties attended a case management teleconference with the board on April 24, 2002 during which the City agreed to pay those costs under the Tariff to which it had earlier indicated its consent. Under cover of a letter dated May 6, 2002, the City enclosed a payment on account of legal costs in the sum of $25,040. The payment was based on 156.5 units and was calculated by multiplying 78.25 units at Scale 2 and 78.25 units at Scale 3.

[42]  During the fall of 2002, as the final cost hearing approached, the claimants revised their presentation of legal costs under the Tariff. In place of a single bill they now put forward multiple bills of legal costs. One bill was for Maddocks Farms Ltd. It claimed 36 units at Scale 2 for a total of $5,040 plus taxes. There were four bills for Keith Maddocks – one bill each for two of the parcels of land that he owns and two bills for his third parcel which has both an agriculturally zoned and an industrially zoned component. A summary bill of legal costs combining the four individual bills was also provided. It claimed 202 units at Scale 3 for a total of $36,360 plus taxes. Only minor amendments which did not affect the overall units claimed were made to these legal bills during the cost hearing itself.

[43]  The decision to prepare separate bills of costs in Tariff format for Keith Maddocks and Maddocks Farms Ltd. likely resulted in part at least from the City's initial insistence upon that approach. Anthony Capuccinello, the Assistant City Solicitor and co-counsel in this case, wrote to Mr. May on April 29, 2002 requesting replacement accounts in the name of each claimant. He stated:

"Not only is this allocation of costs between the Claimants necessary to determine the reasonableness of the accounts in respect of each claim, but it will also ensure that the City does not participate in any arrangement which will improperly benefit Maddocks Farms Ltd. from a tax perspective."

[44]  The origin of the decision to prepare separate bills of legal costs for each of the three parcels of land owned by Keith Maddocks, including two bills for the parcel which had split zoning, is more obscure. Mr. May in his testimony at the cost hearing suggested this approach was adopted in accordance with a direction given by the board during the case management conference on April 24, 2002. However, having reviewed the reporting letter to counsel which followed, I am unable to discern any such direction. The rationale for multiple bills of costs becomes clearer in the context of the real estate appraisal work done since the claimants contend that, in effect, separate appraisals were required for each highest and best use. It seems likely that the same multiple bill approach was ultimately applied to the legal work largely for the sake of consistency.

[45]  Apart from preparation for and attendance at this final cost review, the relevant items of description under Schedule 1, the fixed number of units or range between minimum and maximum units permitted for each item, and the units claimed respectively by Keith Maddocks ("KM") and Maddocks Farms Ltd. ("MFL") in their final amended bills of legal costs, are as follows:

4.2.3  Multiple Bills

[46]  The first question to be considered is whether Keith Maddocks and Maddocks Farms Ltd. are entitled to render separate bills of legal costs under the Tariff and, further, whether Keith Maddocks himself is entitled to submit separate bills apportioned according to the number of highest and best uses on the three parcels of land that he owns.

4.2.3.1  The Claimants' Position

[47]  Claimants' counsel argued at the cost hearing that it was proper to submit separate bills of legal costs for Keith Maddocks and Maddocks Farms Ltd. since the two claimants had filed separate and quite different kinds of claims. It was also necessary to do so, he said, because the board had applied different scales under the Tariff to each of those two claims. He cited the judgment of the Supreme Court of British Columbia in Evans v. Wilson (1978), 6 B.C.L.R. 294 in which it was held that, where different work was done for one or more persons who were plaintiffs or defendants, separate allowances of costs should be made for that item since each plaintiff had a separate cause of action.

[48]  Claimants' counsel also submitted that the unequal allocation of legal tasks between the two claimants was appropriate. Only 36 units in total were allocated to Maddocks Farms Ltd. whereas 202 units were allocated to Keith Maddocks. Mr. May contended that a comparatively small portion of the overall time spent was devoted to the tenant company's claims. For example, he noted, only a day or day and a half at most at the compensation hearing was occupied with evidence and argument on farm business losses. He cited the judgment in Safarik v. Safarik, [1996] B.C.J. No. 2440 (S.C.) in support of his method of allocation. In that case two actions, one of which was a partnership action, had been tried at the same time. On an appointment to settle an order as to costs, Harvey J. determined from a review of his trial notes that the time taken at the 67 day trial in relation to the partnership action had been minimal – in the range of one and a half to two days. Accordingly, he held that the factoring of the cost question should be on the basis of 2/67ths of the trial time allocated to the partnership action.

[49]  As for rendering separate bills of legal costs for each highest and best use on the three parcels of land owned by Keith Maddocks, claimants' counsel in his written submissions offered the following rationale and admonition:

"To do otherwise, would provide a serious penalty to the owner. If the Board were to determine that this was not appropriate, then all claimants in the future would commence several actions where there are several properties and several highest and best uses to allow a full recovery of the costs."

[50]  Mr. May submitted that the manner in which legal costs under the Tariff had been presented led to no unreasonable or excessive claims. He contended that under only one item of description did the total units claimed in the claimants' multiple bills of legal costs exceed the maximum number that would have been allowed for that item if a single bill of costs had been presented instead. He also noted that the total amounts claimed in the multiple bills of legal costs under the Tariff did not exceed, or even approximate, the claimants' actual costs.

4.2.3.2  The City's Position

[51]  At the final cost hearing counsel for the City argued that it was inappropriate to submit bills of legal costs for each claimant and for each property. Instead, Mr. Capuccinello maintained, a single bill in both names ought to have been presented.

[52]  Mr. Capuccinello noted that over the years of its involvement in the case the claimants' law firm had made no real distinction between Keith Maddocks and Maddocks Farms Ltd. for invoicing purposes. Mr. May, he said, had acknowledged during the cost hearing that the degree of overlap made it impractical to attempt to prepare separate invoices. Even under the Tariff a single bill of legal costs was the approach the claimants had initially taken.

[53]  Moreover, counsel for the City argued that it was disingenuous on the part of the claimants and an abuse of the board's process for claimants' counsel to treat the two claimants for costs purposes as separate entities and the three parcels of land as though they constituted individual claims. Keith Maddocks as landowner and Maddocks Farms Ltd. as the farm operator were, he observed, closely related parties. The board in its compensation decision had described the use of the three parcels as a single family farming operation.

[54]  In support of its position the City cited previous cost decisions of the board in Yue v. Surrey (City) (2000), 74 L.C.R. 64, and Ingham v. Creston (Town) (2001), 73 L.C.R. 129, both of which declined to treat a matter in which there was more than one claimant as warranting more than a single bill of legal costs. The City also referred to two cases cited in the Ingham decision in which it was held that, where the same lawyer did work in common for multiple plaintiffs, one bill of costs was to be shared between them: Ashby v. 2076 Holdings Ltd. (1990), 19 A.C.W.S. (3d) 1395 (B.C. Master) and Dical Investments Ltd. v. Morrison (1993), 13 C.P.C. (3d) 505 (Ont. Ct. Gen. Div.).

4.2.3.3  Analysis and Conclusions

[55]  The case authorities indicate that, where two or more claimants or plaintiffs are commonly represented, whether it is appropriate to render more than one bill of legal costs is largely a fact driven determination.

[56]  In Yue the joint owners of an expropriated property who were represented by the same solicitor had filed with the board a single undifferentiated claim for compensation. However, at an advance cost review under section 48 which I conducted, they presented separate and identical bills of costs in Tariff format each seeking the maximum number of units under various items of description. I held this approach to be inappropriate and stated at p. 65:

In my view, one legal bill of costs in tariff format and one real estate appraisal bill of costs presented in tariff format, is the appropriate way in which these matters should come before the Board on an interim cost review.

[57]  In Ingham, a final cost review under section 45, two claimants had also presented separate bills of costs but, as the former vice chair Sharon I. Walls observed at paragraph 38 of her decision, the context differed from that in Yue:

In this case I have two separate claims, with two separate applications for determination of compensation involving two separate properties. However, the claims are very similar and at the initial compensation hearing the claims were heard together with one counsel for all of the claimants.

[58]  The claimants in Ingham had argued that there was no provision for apportioning costs under the Tariff and each was therefore entitled to submit his or her own bill of costs. The vice chair rejected this argument. She referred to cases dealing with apportionment of costs in the courts even in the absence of express authority to do so under the rules. She commented at paragraph 39:

In any event, in my opinion, when work is done for claimants collectively, it is reasonable that they share in a Bill of Costs. The fact that the Tariff does not specifically spell out what is to happen when claimants with similar interests are represented by one solicitor or one appraiser is not a bar to the reviewer treating the claimants collectively or, in the alternative, allowing separate costs for certain items (or all items), depending on the evidence.

[59]  In the circumstances of Ingham, where neither claimant had any work done separately, the vice chair concluded that each was entitled to half of a single bill of costs.

[60]  In the present matter, where Keith Maddocks and Maddocks Farms Ltd. advanced distinct although inter-related claims for compensation, there is some justification for separate bills of legal costs with regard to at least certain items of work. However, it is also the case that the same law firm acted for both claimants and that Mr. May appeared on behalf of both throughout the compensation hearing. This argues in favour of not treating each claimant for costs purposes as though the work performed was entirely separate.

[61]  The claimants themselves appear to have recognized that it would be inappropriate for both of them to claim the maximum or fixed number of units available under most items of description in Schedule 1 of the Tariff and that instead an allocation of the units was required.

[62]  The claimants' manner of allocation in some respects seems curious. For example, Items 6 and 7 concerning document discovery are claimed entirely by Keith Maddocks while Items 10 and 11 concerning examination for discovery are claimed entirely by Maddocks Farms Ltd. These are items from which units within a range are to be selected according to the amount of time which should ordinarily have been spent on them. I would have thought each of the two discovery processes logically involved work on behalf of both claimants and that, accordingly, units under each of those processes would have been allocated between the two claimants. In any case, while this was not done, the approach taken has not resulted in overlap or duplication and the assessments, although on different scales, tend to balance each other out.

[63]  There is, however, a striking disparity between the allocation of 202 units to Keith Maddocks on the one hand and only 36 units to Maddocks Farms Ltd. on the other. This relative weighting clearly works to the claimants' overall advantage since the legal costs of Keith Maddocks are to be reimbursed on a higher scale than those of Maddocks Farms Ltd. The question is whether such an allocation is justified in the circumstances.

[64]  Counsel for the City did not expressly challenge Mr. May's contention at the cost hearing that far more time was spent on the Keith Maddocks claim than on that of Maddocks Farms Ltd. However, in his final written submissions Mr. Capuccinello adhered to the position that a single combined bill of legal costs was appropriate with half the total units assessed at Scale 3 and the other half assessed at Scale 2.

[65]  My review of the board's compensation decision and the actual legal accounts rendered lead me to conclude that Mr. May's allocation as between the two claimants is reasonable in the circumstances. His approach accords generally with that taken in the Safarik case. The claims of Maddocks Farms Ltd., on the one hand, involved a rather narrow range of issues and evidence around the claimant company's status as an "owner" for the purposes of the Act, its loss of future farm income, and the alleged accelerated depreciation of its improvements and equipment through loss in economies of scale. Only one expert from each side prepared a report and testified with respect to the business loss issues. The claims of Keith Maddocks, on the other hand, came to involve (particularly late in the proceedings) numerous issues and quite voluminous evidence around highest and best use and market valuation, including questions concerning non-agricultural development potential, future setback requirements, access and special benefit. Several expert and lay witnesses testified and most of the time at the compensation hearing seems to have been spent on their evidence. Accordingly, I accept the allocation under the legal Tariff made by the claimants in preference to that advanced by the City.

[66]  I am, however, unable to accept that there is justification for rendering separate bills of legal costs for each highest and best use on the three parcels of land owned by Keith Maddocks. Separate and distinct claims were not advanced for each individual parcel or each highest and best use. As the City notes, the subject property as a whole was found to be part of a single family farming operation. To the extent that the presence of several parcels and several highest and best uses complicated counsel's conduct of the case, the additional complexity is already reflected in the board's determination that Keith Maddocks' legal costs should be assessed at Scale 3. There is in my view no serious penalty to the owner such as claimants' counsel suggested would arise if multiple bills are not allowed.

[67]  For several items of description the total units claimed in Keith Maddocks' multiple bills of legal costs exceed the maximum permitted under a single bill of costs. Item 18 concerning hearing preparation allows for a fixed amount of 5 units per day up to a maximum of 30 units whereas each of the four bills of legal costs claims 12 units for hearing preparation resulting in a total claim of 48 units. Item 20 allows for between 1 and 10 units for written argument if requested or ordered by the board whereas each of the four bills claims 5 units for a total claim of 20 units. Item 21 allows 1 unit for setting down a compensation claim for hearing but two of the four bills each claim 1 unit. In my view the cost claims made under Items 18, 20 and 21 constitute an attempt to circumvent the Tariff and cannot be allowed as presented.

4.2.4  Allowable Units

[68]  The next question for determination concerns the number of units which should properly be allowed under each item of description in the legal bills of costs in light both of the work performed and of what I have already decided above. This determination is best approached on an item by item basis.

[69]  The first units claimed are under Items 6 and 7 concerning respectively the process for obtaining and the process for giving discovery and inspection of documents. Each provides for a minimum of 1 unit and a maximum of 10 units. At the cost hearing there was initial confusion caused by the fact that Keith Maddocks made no claim under these items but instead mistakenly claimed 15 units under Item 22 which has to do with negotiations, mediation and the process for settlement. The corrected claim, as I understood it, was for 10 units under Item 6 and 5 units under Item 7. As previously noted, Maddocks Farms Ltd. claimed no costs for document discovery.

[70]  The City indicated that it was prepared to accept the allocation of 5 units under Item 7 but took the position that 5 units was also appropriate for Item 6 since, it said, the mid-range represents the average amount of time that should ordinarily be spent on obtaining document discovery and there was nothing particularly unusual about the process in this case.

[71]  I note that there are very few references to document discovery in the actual legal accounts rendered. They occur during the summer of 1999 and do not indicate the expenditure of any great amount of time. I was provided with no other evidence by the claimants to show that the process should have been unusually arduous or time-consuming. I therefore consider it reasonable to allow the mid-point of 5 units for each of Items 6 and 7, both at Scale 3.

[72]  The next units claimed are under Items 10 and 11 concerning respectively the preparation for and attendance on the examination for discovery of Keith Maddocks. Presumably Mr. Maddocks was being examined in his capacity as the corporate representative of Maddocks Farms Ltd. since all the units are claimed by the company. Item 10 provides for 2 units for each day of preparation and Item 11 for 5 units for each day of attendance. Maddocks Farms initially claimed units on the basis that the examination for discovery occupied two days but, at the cost hearing, Mr. May conceded that less than 2 ½ hours was spent during the second day and only half the amount of units therefore applied for that day. Accordingly, I allow a total of 3 units for Item 10 and 7.5 units for Item 11, both at Scale 2.

[73]  Items 12 and 13 concern respectively the preparation for and attendance at the hearing of an interlocutory application. Depending upon whether the application is unopposed or opposed, Item 12 provides for either 2 or 3 units for each day of preparation and Item 13 for either 4 or 5 units for each day of attendance. Keith Maddocks has claimed 4 units for Item 12 and 8 units for Item 13. Maddocks Farms Ltd. has claimed 1 unit for Item 12 and 2 units for Item 13.

[74]  There were three occasions in the post-Tariff period on which interlocutory applications were heard. The City brought a motion for adjournment which was heard by teleconference on November 4, 1999 and occupied about 1 ½ hours. Both sides brought motions for particulars and discovery and the claimants brought a motion for advance payment of costs, all of which were heard in person in Victoria on February 11, 2000 and occupied almost a full day. The City brought a motion to amend its Form B reply to the claimants' Form A applications which was heard by teleconference on February 29, 2000 and which appears to have occupied somewhat less than 2 ½ hours.

[75]  The claimants' advance cost application is a special case with which I will deal momentarily. I am satisfied that all of the others were contested applications and that the matters heard on February 11, 2000 in addition to advance costs occupied at least 2 ½ hours. I therefore calculate that a total of 6 units could be claimed under Item 12 and 10 units could be claimed under Item 13. The units actually claimed by the claimants as noted above fall within these limits and are allowed as presented, that is to say, Keith Maddocks is allowed 4 units under Item 12 and 8 units under Item 13, both at Scale 3, and Maddocks Farms Ltd. is allowed 1 unit under Item 12 and 2 units under Item 13, both at Scale 2.

[76]  The City has objected to any units being awarded for the advance costs motion also heard in Victoria on February 11, 2000 on the grounds that the claimants were ill-prepared for that application and afterwards failed to comply with the board's directions, rendering the entire exercise a waste of time. I find it unnecessary to deal with the merits of this particular objection since the claimants have not in fact claimed any units with respect to the advance cost motion. Had they done so, the claim would have fallen under Items 14 and 15 which concern respectively the preparation for and attendance at cost hearings.

[77]  Items 16 and 17 concern respectively the preparation for and attendance at a pre-hearing conference. Item 16 provides for 2 units for each day of preparation and Keith Maddocks has claimed these 2 units. Item 17 provides for 3 units for each day of attendance but Keith Maddocks and Maddocks Farms Ltd. have each claimed 1 unit only. I was not informed as to when this pre-hearing conference actually occurred or how much time it occupied. The claim is certainly muddled and, in the circumstances, I consider it reasonable to limit the units on the basis that the conference occupied less than 2 ½ hours and that the claimants should share equally in the units available. Accordingly, I allow each claimant 0.5 units under Item 16 and 0.75 units under Item 17, with Keith Maddocks' units assessed at Scale 3 and those of Maddocks Farms Ltd. at Scale 2.

[78]  Item 18 concerns preparation for the compensation hearing and provides 5 units for each day of hearing to a maximum of 30 units. I have already observed that Keith Maddocks has claimed 12 units under each of his four bills of legal costs and that the resulting claim for 48 units is untenable. There were 10 days of hearings and Keith Maddocks is entitled to the fixed number of units for preparation for six of those days. Accordingly, I allow 30 units at Scale 3. Additionally, Maddocks Farms Ltd. has claimed 5 units for hearing preparation on the premise that separate and additional legal work was required on behalf of the claimant company but that little time was actually consumed in hearing the company's compensation claim. I accept the appropriateness of this allocation and allow the additional 5 units at Scale 2.

[79]  Item 19 provides for 10 units for each day of attendance at the hearing of the claim or an issue in the claim. Proceeding in the belief that the compensation hearing occupied 11 days in total, Keith Maddocks has claimed 100 units and Maddocks Farms Ltd. has claimed 10 units. In fact the hearing lasted a total of 10 days. There was no suggestion that any of these were short days or long days so as to require an adjustment pursuant to section 4(7) of the Tariff. I allow Keith Maddocks 90 units assessed at Scale 3 and Maddocks Farms Ltd. 10 units assessed at Scale 2.

[80]  As noted earlier, Item 20 provides a minimum of 1 unit and maximum of 10 units for written argument at the compensation hearing if requested or ordered by the board. Keith Maddocks' claim for 20 units in total based on his multiple bills of costs is unacceptable. Maddocks Farms Ltd. has also claimed 3 units for written argument. The City submits that the written argument in this case does not support an allocation greater than the average amount of time ordinarily spent on this item or 5 units. The claimants offered no evidence to show the extent of written argument and in these circumstances I see no reason to allow Keith Maddocks more than the mid-point of the range or 5 units at Scale 3 and Maddocks Farms Ltd. the 3 units claimed at Scale 2.

[81]  Under Item 21 only 1 unit is allowed with respect to the process for setting a claim down for hearing. In this instance Keith Maddocks has claimed 2 units and Maddocks Farms Ltd. has claimed none. I accept that two separate and distinct although inter-related claims were set down to be heard together. In my view each claimant is entitled to 1 unit assessed at Scale 3 and Scale 2 respectively.

[82]  Finally, Item 23 provides 2 units for each day of travel by a solicitor to attend any hearing, application, examination or other analogous proceeding if held more than 40 km. from the place where the solicitor carries on business. In this instance Keith Maddocks has claimed 2 units with respect to Mr. May's travel to Victoria to attend the interlocutory and advance cost hearings on February 11, 2000. The City has objected to an award under this item since in its submission the hearing was unnecessary and a waste of everyone's time. However, this argument was advanced only with regard to the cost hearing for which no cost claim has been made. In my view the remaining interlocutory matters dealt with on that date were sufficiently weighty and time-consuming to have justified a hearing in person rather than by teleconference. I allow the 2 units claimed for travel to the hearing at Scale 3.

[83]  From the foregoing review I have determined that, apart from the costs of this section 45 cost hearing, Keith Maddocks should be allowed in total 151.25 units and that Maddocks Farms Ltd. should be allowed in total 33.75 units under Schedule 1 of the Tariff with respect to their bills of legal costs. Assessed at $180 per unit, Keith Maddocks' legal costs in the post-Tariff period equate to $27,225.00 plus 7% PST of $1,905.75 and those of Maddocks Farms Ltd. equate to $4,725.00 plus PST of $330.75, for a combined total of $34,186.50.

4.2.5  Disbursements

[84]  It has proven necessary to untangle the claimants' presentation of their legal disbursements in several respects. First, the disbursements which were set out in their fourth pre-Tariff account dated November 30, 1999 are repeated in one of Keith Maddocks' bills of legal costs under the Tariff. I have already dealt with these disbursements. Second, the disbursements which do apply post-Tariff are not included in any of the bills of costs in Tariff format and must instead be extracted from where they appear in the actual legal account rendered to the claimants on April 27, 2000 after the compensation hearing concluded. Third, the itemized disbursements in the legal account include the costs of several experts and one lay witness. I prefer to consider these costs separate from the legal bills. When the foregoing adjustments are made, the post-Tariff disbursements at issue net of GST total $2,583.81.

[85]  The largest items claimed are for photocopying ($1,255.80), mileage between the law firm's offices in Richmond and the compensation hearing in Surrey ($492.46) and expenses incurred at the hotel where the hearing took place ($413.74). The City complained that the photocopying and mileage charges seemed excessive. I am not persuaded that the amount of photocopying was unreasonable for a case of this magnitude but I do consider that the charge of $0.25 per page needs to be adjusted downward and allowed at $0.15 per page. Mr. May testified that mileage was charged at the rate then applicable under the Supreme Court tariff and I accept the reasonableness of this charge in the circumstances. For the same reason previously stated, I disallow a charge of $30 for office supplies. In the result, disbursements are allowed in the sum of $2,051.46.

4.3  Summary of Legal Costs Awarded

[86]  My determination of the allowable legal costs in this matter totalling $55,989.42 is therefore as follows:

5.  REAL ESTATE APPRAISAL COSTS

[87]  The claimants retained the real estate appraisal firm of Interwest Property Services (1991) Ltd. ("Interwest") to act for them in this matter. Several appraisers and appraisal assistants were involved in the file but the main contributor was Danny R. Grant, a principal of the firm.

5.1  Scope of Services Provided

[88]  Mr. Grant's role in the claimants' case was multifarious. Following up the initial work by other appraisers in the firm, he completed a voluminous appraisal report on the effect of the City's partial taking of Keith Maddocks' property. As well, he prepared a smaller report, later somewhat enlarged, on the impact of the taking on the farming operations of Maddocks Farms Ltd. He also undertook considerable research and analysis in response to the multitude of expert reports on access, offset benefits, agricultural usage and land development which the City produced in the weeks immediately preceding the compensation hearing. Mr. Grant went on to give expert testimony with respect to his reports at the compensation hearing where he also assisted claimants' counsel in preparation for the cross-examination of experts retained by the City.

[89]  Almost every facet of Interwest's involvement and in particular that of Mr. Grant has raised controversy from a costs perspective, not least the magnitude of the costs billed. However, before dealing with the dollar amounts in detail, it would be useful to dispose of some threshold issues concerning the scope of the services provided and the manner in which they have been billed. Most of these issues have to do with whether or how the Tariff should be applied. First, given the complexity of the appraisal assignment on behalf of Keith Maddocks, was Interwest entitled for billing purposes to treat the matter as though four separate appraisals had been carried out? Second, was Interwest's work in estimating farm business losses for Maddocks Farms Ltd. outside the scope of real estate appraisal and therefore outside the Tariff and, if so, was Mr. Grant properly qualified to provide such expert evidence? Third, should the additional research and analysis Mr. Grant undertook in the weeks immediately preceding the compensation hearing be treated as falling outside his appraisal assignment and not be made subject to the Tariff? Finally, was his role in preparing counsel for cross-examination of the City's experts at the compensation hearing work for which there is no applicable item of description in the real estate appraisal Tariff and which may be billed additionally as non-Tariff work? These issues will be addressed in turn.

5.1.1  The Appraisal Report

[90]  The completed appraisal report dated October 4, 1999, which was entered as an exhibit at the cost hearing, is a major piece of work comprising approximately 170 pages of text with numerous addenda or appendices. A total of 40 comparable properties are reviewed. As previously noted, the assignment involved the appraisal of three separate parcels which led the claimants' appraiser to four specific highest and best use conclusions and unit values.

[91]  The board in its compensation decision took cognizance of the difficulty of the appraiser's task when fixing the scale of costs, stating at paragraph 265:

[265]  We also consider Scale 3 to be appropriate for appraisal costs due to the number of legal parcels and valuation issues involved.

[92]  At the cost hearing Mr. May for the claimants elaborated on the appraisal complexities in his written argument as follows:

"The larger parcel of 65 acres had a highest and best use of continued farming and was compared with parcels of similar size and use. The other agricultural parcel was 5 acres and could have been a rural homesite and was compared with other properties of the same highest and best use and size. The 29 acre parcel had split zoning. The portion taken was zoned industrial and out of the Agricultural Land Reserve and designated industrial in the official community plan. Therefore, it had a highest and best use of industrial development. 2.62 acres of approximately 9 acres were taken by the right of way. The remainder of that parcel was zoned agricultural and designated agricultural on the official community plan and was compared with properties of similar highest and best use in zoning."

It was because of these separate highest and best uses, Mr. May contended, that "it makes sense that they should be dealt with separately for tariff purposes."

[93]  The City sees the matter differently. It submits that the board's compensation decision, at paragraph 265 quoted above, effectively determined that the submission of multiple bills of real estate appraisal costs was not appropriate under the circumstances. It says the only avenue for the claimants to reverse that aspect of the decision was by way of appeal pursuant to section 28 of the Act.

[94]  Moreover, the City argues, the claimants are wrong to suggest that the board determined multiple highest and best uses for the various parcels or portions of parcels comprising the subject property. The highest and best use of all parcels, it says with reference to specific findings in the board's decision, was continued agricultural use. Even the industrially zoned portion of the parcel with split zoning was found to have a highest and best use of farming in the interim.

[95]  The City has suggested that the claimants' approach to appraisal costs, like its approach to legal costs, is a deliberate attempt to circumvent the intent of the Tariff and amounts to an abuse of the board's process.

[96]  Earlier in my reasons I stated that I was unable to accept that there was justification for rendering separate bills of legal costs for each highest and best use on the three parcels of land owned by Keith Maddocks. I would acknowledge that the claimants' underlying rationale for rendering separate bills is stronger when turning to consider the amount of work involved in the appraisal assignment. The adequacy of the Tariff to deal with complex valuations such as the present one raises an understandable concern. I do not view the billing approach taken as an abuse of process. However, the same considerations which I applied to legal costs under the Tariff ultimately apply here.

[97]  Separate and distinct claims were not advanced for each individual parcel or each highest and best use. The subject property as a whole was part of a single family farming operation. The appraisal assignment was certainly complicated by the presence of several parcels and several highest and best uses which, notwithstanding the City's submissions, were sufficiently distinct to require the analysis of different sets of comparables. However, as with the legal costs under the Tariff, the additional complexity is already reflected in the board's determination that Keith Maddocks' real estate appraisal costs should be assessed at Scale 3.

[98]  It is perhaps worth noting as well that, practically speaking, any disadvantage as to costs recovery which an owner might otherwise realize by the imposition of the real estate appraisal Tariff is somewhat reduced in the present case by the fact that a considerable portion of the work in preparation of the Interwest appraisal report had already been completed by the time the Tariff took effect. That earlier portion of the work falls to be considered under the "actual reasonable" cost standard.

5.1.2  The Farm Business Loss Report

[99]  Prior to completion of the real estate appraisal report for Keith Maddocks, Danny Grant of Interwest provided for Maddocks Farms Ltd. a farm business loss report dated January 29, 1998. Mr. Grant's report was, in part, a review of two reports earlier prepared for the City by Glen Lathrop of Arc Appraisals Ltd. estimating the loss suffered by the claimant company's farming business as a result of the taking. The Interwest report also undertook some separate investigation and analysis. Substantively the reports for the two sides were not that far apart in their estimates and, for a considerable time after receiving Mr. Lathrop's report, the claimants had anticipated being able to settle the farm loss claim. No further instructions were given to Mr. Grant at the time to complete a board ready report. However, in the days and weeks preceding the compensation hearing, Mr. Lathrop produced some further reports for the City, in each instance reducing his estimate of compensable loss, and Mr. Grant ultimately prepared a somewhat expanded report in reply dated March 8, 2000.

[100]  In the opening paragraphs of his March 8, 2000 report, Mr. Grant noted that it fell short of a complete analysis. He described it as an "appraisal report" which was "limited" and "summary". It was, he said, "subject to the Legal Descriptions, Highest and Best Use analysis, and Limiting Conditions and Assumptions contained in the Appraisal report regarding three Maddocks properties dated October 4, 1999." Although this description makes apparent an element of interdependence between the farm business loss report and the real estate appraisal, the claimants for Tariff purposes have treated the two as entirely distinct. They say the costs which they incurred for Mr. Grant's services in estimating farming losses are "other costs" rather than appraisal costs and should be assessed under the "actual reasonable" standard.

[101]  At the cost hearing the City questioned whether Mr. Grant's services in preparing the expanded reply report on farm business losses and testifying concerning his estimate of those losses at the compensation hearing, all of which occurred after the Tariff came into effect, should be treated as work falling outside the real estate appraisal Tariff. Mr. Capuccinello observed that real estate appraisers often derive estimates of business loss in their reports and Mr. Grant's work for Maddocks Farms Ltd. in this respect was no different. In response to my inquiry as to how Mr. Grant had been qualified at the compensation hearing, Mr. Capuccinello noted that the City had objected at the compensation hearing to qualifying Mr. Grant as an expert beyond his role as a real estate appraiser while Mr. May for the claimants said the qualification had been, as he put it, "fairly exhaustive".

[102]  I have reviewed the record of proceedings at the compensation hearing concerning Mr. Grant's qualifications. At the outset he was readily accepted by the City as an expert in real estate appraisal. He then gave evidence in support of being qualified separately as an expert to assess the impact of the works on the Maddocks' farming operation. He testified that, in addition to having extensive personal experience in farming and ranching, he held a university degree in agricultural business management and, for nearly 30 years, had been a member of the B.C. Institute of Agrologists. He also testified that he had prepared reports and given evidence in the past on the disruption caused to farming by partial takings. The City objected to qualifying Mr. Grant in the area of business valuation. At the conclusion of the qualification phase, the chair of the hearing panel said this:

"The panel is prepared to accept Mr. Grant as an expert qualified to give opinions with respect to appraisal issues and with respect to the impact of the works on the farming operations and the costs and expenses flowing therefrom with the note that that deals with the loss experienced by the claimants — whether we call it business loss or loss resulting from the impacts — we find him to be so qualified to give opinion evidence."

(Proceedings, March 8, 2000)

[103]  At paragraph 268 of its compensation decision the hearing panel, in addressing the costs of Maddocks Farms Ltd., also said as follows:

The Maddocks Farms Ltd. claim, being a claim for business loss, does not give rise to appraisal costs. With respect to costs for business valuation, although the question of other costs is yet to be finally determined since the introduction of the Tariff, it would appear to us that they remain to be assessed under sections 45(3) and 45(7)(a).

The hearing panel's suggestion in this passage that other costs such as those of business valuation, where found to have been necessarily incurred under section 45(3), would continue to be assessed under the actual reasonable standard in section 45(7)(a), has since been confirmed in the board's cost decision in Reon Management Services Inc. v. British Columbia (2001), 72 L.C.R. 257 at p. 272.

[104]  I am satisfied from the foregoing that Mr. Grant's work in estimating farm business losses for Maddocks Farms Ltd., although it was billed by his appraisal firm, falls outside the scope of the real estate appraisal Tariff and that Mr. Grant was properly qualified as an expert consultant outside the real estate appraisal field to provide the opinion evidence for which cost reimbursement is now sought.

5.1.3  Additional Research and Analysis

[105]  The next issue is whether the additional research and analysis on the issues of access and special benefits which were undertaken by Mr. Grant and his assistant at Interwest in the period immediately preceding the compensation hearing was also work falling outside the appraisal assignment and, accordingly, not subject to the real estate appraisal Tariff.

[106]  Earlier in these reasons I quoted from the board's compensation decision concerning the flurry of additional reports and report amendments dealing mainly with issues of access, special benefits, and business losses that the City filed in the 30 day period preceding the start of the compensation hearing. This new material was produced in support of the City's allegations that it had overpaid both Keith Maddocks and Maddocks Farms Ltd. through the advance payments that were made.

[107]  At the cost hearing Mr. May in his written submissions noted that, at the time the compensation hearing originally set for November 15, 1999 was adjourned, the City had already served five separate opinion reports on the claimants. However, after obtaining the adjournment, in the weeks immediately preceding the hearing re-set for March 6, 2000, the City served eight additional opinion reports. These included two reports by its real estate appraiser dealing with the issues of access to the subject property and offsets for special benefits and another two reports by its traffic expert also dealing with access issues.

[108]  According to Mr. May, the issues of access and special benefits had not been raised at all until these additional reports were served less than 30 days before the date of the adjourned hearing. Although the City was ultimately unsuccessful on all points raised in these new arguments, he said, it became necessary for the claimants by way of preparation for the hearing to conduct much additional research. This was particularly the case in regard to access. This work, Mr. May pointed out, was done long after the formal appraisal work of Mr. Grant and others at Interwest had been completed.

[109]  Mr. Grant, in a memo to Mr. May of November 21, 2001, summarized the extra work he said he had undertaken in these words:

"This work involved direct meetings or telephone conversations with B.C. Hydro, Clair Cote at B.C. Rail, at Southern B.C. Rail, former Land Agent for BC Hydro, Ken Howard, the Maddocks for their recollection of events, a complete search of the Southern BC rail line for historic deeds and rights of way and commissioning a report by Slade Dyer a former assistant approving office with regard to MoTH aspects of access. It required search for historic photos and records of predecessor railways in the area. It also required the acquisition and review of the Railway Safety Act as it pertained to public and private crossings of the Railway as outlined in the letters between Southern BC Rail and Surrey. It also involved securing and reviewing Maddock's personal files from lawyer Steve Dumont in Kamloops.

The total time involved in this aspect of the investigation cannot be determined precisely as it was combined with investigations on such matters as the offset benefits Surrey claimed."

[110]  The City disputes the claimants' assertion that legal access and special benefit were novel issues raised only late in the proceedings. There was, it notes, consideration of special benefits in Interwest's 1998 appraisal report. The issue of access, it says, was raised in the claimants' Form A in the sense that Keith Maddocks was seeking compensation from the City for loss of access. Accordingly, the City contends, the onus was on the claimants to establish that they had legal access in the first place.

[111]  The City also argues that access and special benefit are valuation issues which appraisers commonly address and that Mr. Grant under cross-examination had confirmed this to be the case. Mr. Capuccinello likened the type of investigation into access which a duly diligent appraiser should have undertaken in his or her initial report to the situation where an appraiser is called upon to value non-conforming uses and must first determine that the use is legally non-conforming. The City rejects the proposition that the appraiser was not required to address access at the outset because no issue around access had been raised in pleadings in the City's Form B reply. The appraiser's function, the City submits, is to provide an independent valuation and not one that is contingent upon what may or may not have been contained in the pleadings of the other side.

[112]  The City, in submitting that the Tariff should apply to any additional research and analysis undertaken by Mr. Grant, has also pointed to items of description in the real estate appraisal Tariff which appear to provide for the preparation of rebuttal reports and other research.

[113]  I have already noted that the board found as a fact that the issue of access was raised in the reports filed within the 30 day period before the compensation hearing began and had not previously been identified as a concern by the City. In my view, that finding is not subject to reconsideration on this cost review.

[114]  However, when addressing the costs aspect of this issue, the board at paragraph 266 of its compensation decision also said the following:

[266]  Counsel for the claimants submitted that the extra work done by Grant in regard to Surrey's claims of special benefits and no legal access to Highway #10 was not appraisal work and should not fall under the tariff. While access and benefit issues may be appraisal matters, in this case the work undertaken by Grant in this regard was not in connection with his appraisal report which had already been completed. Rather this work was undertaken at request of counsel to assist in preparation for what in essence was a response to the respondents counter claims for overpayment. Grant's time spent in this regard appears to the panel to fall outside his appraisal assignment but we leave the issue for further consideration by the chair at any review of the bill of costs that might be necessary. [Emphasis added.]

In the highlighted passage the board, while signalling its own view on how these costs might be treated, has referred the matter to me for reconsideration.

[115]  The investigative and analytical work performed by Mr. Grant and an assistant on access and special benefit issues was work that post-dated the completion of the Interwest appraisal report and in that sense I agree with the board that it fell outside the scope of the appraisal assignment. I am also not persuaded by the City's submission that the Interwest appraisers were obligated to undertake thoroughgoing analyses of these matters and express expert opinions on them when until very late in the day the matters had not been put in contention. However, to treat this somewhat time-consuming work, which is acknowledged to be work within the scope of what real estate appraisers do, as though it were not real estate appraisal work at all for cost purposes would be to make a distinction which, in my respectful view, would thwart the intent of the Tariff.

[116]  I am satisfied that the additional work on access and special benefits fits within Item 5 of the real estate appraisal Tariff, the description for which reads: "Analysis of data and preparation of a report or reports". Item 5 permits up to 60 units depending upon the amount of time which should ordinarily have been spent. In my view there will be sufficient room left even after taking into account time spent on the completion of the appraisal report to be able to reflect time spent on this additional research and analysis.

5.1.4  Preparation for Cross-Examination

[117]  A final issue concerning the applicability of the Tariff to Mr. Grant's work in this matter has to do with his role in helping to prepare counsel for the cross-examination of the City's experts at the compensation hearing. This work, according to Mr. May's submissions, included reviewing separate comparables in respect of each of the four different highest and best uses referred to in the appraisal report prepared for the City by Dale Hooker of Hooker Carmichael Property Consultants Ltd.

[118]  The claimants submit that the real estate appraisal Tariff makes no provision for the services of an appraiser in assisting counsel with cross-examination outside the hearing room. Because this work is not expressly covered under the Tariff, the claimants argue, it is work the costs of which should be assessed separately on the actual reasonable standard.

[119]  On this point I again have to disagree with the position taken by the claimants. In reviewing the comparables used by the City's appraisal expert for the purpose of preparing for the expert's cross-examination, Mr. Grant was clearly performing a task which real estate appraisers retained in expropriation litigation customarily undertake to do. It fell within his appraisal assignment. The board has previously remarked on "the seemingly exhaustive nature of the items of description in respect of which legal and real estate appraisal costs are allowed under the tariff schedules". See Budd v. British Columbia (Minister of Transportation and Highways) (2001), 72 L.C.R. 114 at p. 133. An appraiser's expert fees for services performed which form part of his or her appraisal assignment would likely not be recoverable in cost proceedings before the board to the extent that they fell outside the ambit of the Tariff. However, in the present instance, I consider that Item 6 of the real estate appraisal Tariff covers the work performed by Mr. Grant in preparation for cross-examination. It provides for 5 units per day up to a maximum of 30 units for "preparation for hearing, if a claim is set down, for each day of necessary attendance of the appraiser". Accordingly, no separate assessment of this task outside the Tariff need be considered.

5.2  Pre-Tariff Appraisal Costs

5.2.1  The Claimants' Claims

[120]  In the period from January 1996 when Interwest first became involved until late June 1999 when the Tariff was introduced, the appraisal firm rendered three invoices to the claimants. These invoices, showing the breakdown as between fees, disbursements and GST, are as follows:

[121]  When GST is subtracted, the appraisal costs claimed in the pre-Tariff period amount to $39,608.62. The claimants acknowledge that the City made an advance payment for $5,091.87 (the full amount of the first invoice including GST) on January 20, 1997. However, the City made no advance payments with regard to the second or third invoices and, on October 5, 1999, Interwest rendered two further invoices for accrued interest totalling $14,179.09 on the unpaid accounts up to the time when the Tariff was brought into force.

[122]  Interwest recorded a total of 306.75 hours on the claimants' file over the span of approximately two years in the pre-Tariff period. The total includes both work on the appraisal assignment for Keith Maddocks and on farm business losses for Maddocks Farms Ltd. but the invoices themselves do not attempt to allocate the time spent or fees charged as between these two quite distinct tasks. Some time later Interwest restructured the three invoices to make that allocation. As I interpret the information, nearly 173 hours was spent on farm business loss in the pre-Tariff period while 134 hours was devoted to appraising the market value of the land taken and the reduction in value to the remainder. The fees charged with respect to business loss came to $24,927.50 while the fees with respect to the appraisal assignment were $13,870.00.

[123]  Danny Grant accounted for 150 of the hours billed during this period. The first 93 hours were at the rate of $170 per hour and the remaining 57 hours at the rate of $200 per hour. The great majority of his time spent during these years – all except some 28.5 hours – was on farming and business loss matters but he made no distinction in his hourly rate between services provided as a real estate appraiser on the one hand and an agrologist on the other. As Mr. Grant described it, a substantial portion of the time billed was for consultation regarding the Agricultural Land Reserve and potential design improvements to mitigate the impact of the partial taking on the Maddocks farm. A particular focus of attention became the business loss estimate prepared for the City by Mr. Lathrop. Mr. Grant analyzed the financial statements of the claimant company, inspected and reviewed the farm improvements and farm operations and, through the assistance of his son, Steven Grant, compiled a machinery and equipment inventory. The end result was the preparation of a 12 page single spaced draft report dated January 29, 1998 which estimated the total loss of farm income as well as the total accelerated depreciation or loss in value of machinery equipment and improvements.

[124]  Steven Grant, who holds no formal valuation credentials but had worked under his father's guidance at Interwest for several years while completing his professional education, billed a total of 68 hours in connection with the farm business loss assignment. He took measurements, prepared drawings and did computer costings of the building improvements on the farm. He also worked alongside members of the Maddocks family to produce the complete equipment inventory which, together with the building inventory and valuations, the senior Mr. Grant considered necessary to estimate business loss.

[125]  Most of the real estate appraisal work in this period was undertaken by two other appraisers at Interwest. Fred Mussett carried out or managed all of the primary comparable research and prepared most of the first draft of the appraisal. Mr. Grant testified that the original intention was for Mr. Mussett, an AACI with substantial appraisal experience, to do the entire valuation but he left the employ of Interwest in June of 1999. He billed a total of 57.25 hours at the rate of $110 per hour. Charles Chan was involved in record data collection and sales research under the guidance of Mr. Mussett. He had worked for Interwest for several years prior to being involved in this file and obtained his AACI designation in the late 1990s. However, all of the 31.5 hours he recorded on the file in this period were billed at the modest rate of $60 per hour.

5.2.2  The City's Objections

[126]  The City has raised numerous objections to the pre-Tariff appraisal invoices some of which mirror the complaints levelled earlier at the legal accounts. With respect to the fees charged the invoices and back up data are said to be insufficiently particularized to be able to assess the reasonableness of the work done. The City cites section 48 cost decisions of the board in which the failure to particularize has led to both criticism and disallowances: Kliman v. School District No. 63 (Saanich) (1992), 48 L.C.R. 204; Roadmaster Auto Centre Ltd. v. Burnaby (City) (1994), 54 L..C.R. 148; and Cjeka v. Cariboo Regional District (1995), 56 L.C.R. 122. No adequate explanation is said to have been offered to justify the number of persons at Interwest working on the same file and in the view of the City unnecessary duplication of work seems to have resulted. Moreover, the City contends, the global amount of fees charged in this early stage of the proceedings strongly suggests that the work was done in an overly expansive and time-consuming manner.

[127]  A prime focus of the City's objection is on the amount of fees charged by Danny Grant. Mr. Grant's hourly rate of up to $200 per hour is said to be excessive given the limits of his expert qualifications and is higher than what the board has previously allowed for experts. Some of the farm business loss work for which he has billed in this period, the City says, duplicates that which was performed by Mr. Runka, an expert in agricultural land use issues whom the claimants retained in 1997, so that compensating Mr. Grant's efforts in the same period would amount to double recovery.

[128]  The City also complains about disbursements which it says are properly part of office overhead or which are charged out at excessive rates. Finally, the City resists any award in respect of interest on the unpaid Interwest invoices.

5.2.3  Analysis and Conclusions

[129]  There are some legitimate concerns around the fees charged for services provided by Interwest in the pre-Tariff period but I am satisfied from my review that they are not as far-reaching as the City suggests.

[130]  The rendering of "appraisal" fee accounts totalling nearly $39,000 some two years before the compensation hearing took place has to raise questions around global reasonableness. However, one fact which is obscured by the manner in which the appraisal firm rendered its accounts, and which only a close analysis of the costs data reveals, is that a great deal of the work in this period was on the claim for farm losses – a matter which lay outside the appraisal assignment. As I have already noted, this work accounted for nearly $25,000 of the total fees billed. Meanwhile, the expenditure of about $14,000 in fees in connection with what by any reasonable standard must be judged a complex real estate appraisal assignment seems less astonishing. Mr. Grant testified at the cost hearing that work on the appraisal had reached about the 70th percentile of completion by the time the last of the three pre-Tariff invoices had been issued in February 1998. I have concluded from my review of the actual accounts that no further appraisal services were provided or at least billed in the period from early 1998 until September 1999 and that all appraisal work thereafter fell to be assessed under the Tariff.

[131]  The client billing worksheets from which the invoices were prepared are less informative about the tasks performed that one would have wished. They contain a limited range of highly abbreviated descriptions and it is not therefore surprising that, even when eventually put in possession of them, the City had difficulty being able to assess the reasonableness of the accounts rendered. I have derived considerable benefit in making the necessary assessment from the testimony of Mr. Grant and his more detailed cost review memoranda.

[132]  I am satisfied from the explanations offered at the hearing that cost savings were effected by having most of the appraisal work at this stage performed by employees at Interwest whose hourly rates were substantially lower than those of Mr. Grant and entirely reasonable for professionals of their training and experience. I found little or no evidence of duplication of effort. Although the number of billed hours is large, in my view it is not unreasonable given the nature and scope of the appraisal assignment. It should also be noted at this point that Keith Maddocks, relying on the Interwest appraisal, enjoyed a sufficient measure of success at the compensation hearing on his claim for the market value of the land taken and for diminution in value of the remainder to entitle him to his costs.

[133]  I am less satisfied as to the reasonableness of the fees charged for services provided on the farm business loss claim. These are, of course, in the nature of consultant costs rather than appraisal costs but it will be convenient to deal with them at this juncture. First, I agree with the City that Mr. Grant's hourly fee rate when pegged at $200 is somewhat excessive. Mr. Grant is certainly a highly experienced appraiser, although his qualifications do not include having the AACI designation, and his training and experience in agricultural business matters likely add to the value of the services he is able to provide to clients like the Maddocks. He has been a frequent expert witness before the board and his fees have been considered in numerous cost reviews. However, his rate exceeds that which the board has previously allowed for experts in the relevant time frame and the circumstances here do not in my view warrant setting a new threshold. Second, while I do not accept on the basis of the evidence that some of Mr. Grant's work duplicates that of Mr. Runka, nevertheless the total hours billed for work on farm losses to produce what Mr. Grant himself characterized as an incomplete draft report also seem excessive. The time spent indicates to me that the tasks undertaken by both Mr. Grant and his son were performed in an overly expansive and time-consuming manner. Third, when taking into account as I must the degree of success ultimately achieved, I note that Maddocks Farms Ltd., although awarded its costs by the board, actually received less in compensation than it had been paid in advance. Its claim for accelerated depreciation of improvements and equipment was denied outright by the board.

[134]  Giving due consideration to all of the foregoing factors, I conclude that it would be reasonable to allow the fees charged by Interwest in the pre-Tariff period in the rounded total sum of $30,000 comprising $13,000 in respect of real estate appraisal work and $17,000 in respect of consultant work on farm business loss.

[135]  Interwest billed $811.12 for disbursements in the pre-Tariff period. The largest items were for maps and searches ($347.96), photographs ($170.21) and mileage ($188.80) charged out at $0.40 per kilometre. Given the nature and scope of the work, I do not consider any of these costs unreasonable. The City objected to Interwest's practice of charging out facsimiles at $0.50 per page. I would allow them at $0.35 per page. The total amount billed for faxes was only $11.50. Therefore, taking this very small adjustment into account, I allow disbursements in the amount of $807.67. Although undoubtedly some unspecified portion of these disbursements related to the work on farming losses, for convenience sake I will treat them all as falling under the appraisal assignment.

[136]  Interwest billed for interest totalling $14,179.09 on the appraisal firm's two unpaid invoices from the period in which each of them was rendered until the time when the Tariff came into effect. Interest was charged at the rate of 18% per annum. If the interest claim is allocated between the appraisal assignment and farm business loss assignment pro rata on the basis of fees charged for those respective tasks, then the amount of interest charged for unpaid appraisal work amounts to approximately $4,800 while the amount charged for unpaid work on farm business losses comes to about $9,380 The City submits that no interest should be payable because those invoices were found to be deficient in particulars when first presented for payment and particulars were not forthcoming after having been requested. The City entered as exhibits at the cost hearing two letters sent by its counsel to Mr. May in September 1997 and January 1998 pointing out that a detailed breakdown of services rendered would be required before payment could be requisitioned. While the documentation before the board indicates that the claimants continued to make requests for payment, it also shows that Interwest's client billing worksheets for these invoices were not made available to the City until November of 1999 at the earliest. An advance cost hearing involving these invoices among others proceeded before the board in February 2000 but did not conclude. The board has frequently made the point that an expropriating authority that wishes to contest certain items in bills of costs at a cost review should be prepared to advance to the expropriated owner an amount which it estimates is reasonable in the circumstances, failing which interest may accrue. In this instance, however, I do not think that the City was put in possession of sufficient information prior to the fall of 1999 to enable it to make any such assessment. Accordingly, I am not prepared to allow the claim for interest on these invoices.

5.3  Post-Tariff Appraisal Costs

5.3.1  The Bills of Costs

[137]  The bills of costs relating to services performed by Interwest from the time the Tariff came into effect in June 1999 until the compensation hearing concluded in March 2000 have been presented in multiple formats.

[138]  Interwest rendered accounts to the claimants on November 12, 1999 and on April 5, 2000 in the conventional billing format which showed time spent and hourly rate charged. The accounts of November 12, 1999 included four separate invoices. However, three of them were simply allocations of the time said to have been spent on various tasks concerning each of the three parcels of land owned by Keith Maddocks. The work involved inspecting the parcels after completion of the City's project, researching and analyzing comparable sales, analyzing damages to the remainder and development costs before and after the project, and preparing the appraisal report in final form and reviewing it with the claimants. The time billed by three appraisers and an assistant on these tasks amounted collectively to 122.5 hours. The fourth November invoice was for consultations, research and preparation of cross-examination and reply materials in relation to the reports prepared for the City by its experts in real estate appraisal, planning, engineering, and agricultural land use. This was largely the work of Danny Grant and his son, Steven Grant. The time billed between October 6 and November 12, 1999 on these tasks totalled 144.75 hours.

[139]  The account of April 5, 2000 included further review of the City's expert reports and addenda, additional research and analysis on access, special benefits and other newly raised issues, and preparation for and attendance at the compensation hearing. The time billed by three appraisers and an assistant at Interwest amounted to 240 hours.

[140]  It is illuminating in the present case to compare actual costs as billed to the clients with costs as arrived at under the Tariff. In setting out the actual figures, I have combined under the first account dated November 12, 1999 the costs shown in the separate invoices prepared for each of the three parcels of land owned by Keith Maddocks. I have shown separately the second account of the same date relating to consultations, research and preparation of cross-examination and reply materials. As reconfigured the invoices, showing the breakdown as between fees, disbursements and GST, are as follows:

[141]  The actual costs billed by Interwest in the post-Tariff period, net of GST, total $78,542.22. To isolate those fee costs that are real estate appraisal costs falling under various items of description in the Tariff, it is also necessary to extract the amount of fees that relate to the farm business loss claims of Maddocks Farms Ltd. and to consider these later under the separate heading of consultant costs. As best I can discern them, the fees charged for this work, including time spent in attendance at the compensation hearing on these claims, total $14,200.00. Therefore, the net costs which can properly be treated as actual appraisal costs billed in this period are $64,342.22.

[142]  However, all real estate appraisal costs incurred by the claimants from and including June 28, 1999 are to be assessed under Schedule 2 of the Tariff, not on the basis of actual costs. Schedule 2 contains eight items of description in respect of which appraisal costs incurred that are proper or reasonably necessary may be claimed.

[143]  The claimants have presented for review the Interwest costs for the period from September 1999, when work re-commenced on the claimants' files, until March 2000, when the compensation hearing completed, in accordance with Schedule 2 of the Tariff but under two alternative assumptions. Under the first assumption, only the work which went directly into preparation of the appraisal report dated October 4, 1999, preparation for the compensation hearing and attendance to testify at the compensation hearing in direct relation to the appraisal report was included. As previously discussed, other appraisal type work was instead treated as being outside the appraisal assignment to be assessed on the basis of the actual costs incurred rather than the Tariff. I have shown the 230 units claimed in this respect in the bill of costs reproduced below under the column headed "Appraisal". Under the second assumption all of the work performed, not only in finalizing the appraisal report and giving evidence concerning it at the compensation hearing, but also in conducting additional research and analysis and assisting in the preparation for cross-examination of the City's experts, was included. The claimants claimed 335 units in their bill of costs under this alternative assumption but I have corrected an arithmetical oversight concerning preparation for and attendance at the compensation hearing to show what I believe should be a claim for 350 units under the column headed "All Work".

[144]  Apart from preparation for and attendance at this final cost review, the relevant items of description under Schedule 2, the fixed units or range between minimum and maximum units permitted for each item, and the units claimed are as follows:

[145]  The board in its compensation decision held that real estate appraisal costs in this matter were to be assessed at Scale 3. For the purpose of determining appraisal costs, the value allowed on an assessment is $120 for each unit. Accordingly, the appraisal costs claimed in the post-Tariff period for the services provided by Interwest range from $27,600 plus disbursements for the more narrowly defined "Appraisal" work only to $42,000 plus disbursements for "All Work" undertaken by the appraisal firm on Keith Maddocks' behalf. The amended bills of costs in Tariff format presented for review by the claimants also erroneously include an amount for PST; PST is charged on lawyers' accounts but not on those of appraisers.

5.3.2  Allowable Units

[146]  Two determinations which I have already made are critical to the analysis which follows. The first is that the claimants are not entitled to treat the appraisal work performed in the post-Tariff period as though four separate appraisals – one for each highest and best use – had been carried out. The fact that this was a complicated appraisal assignment is already reflected in the finding that Scale 3, intended for matters of more than ordinary difficulty or importance, is to be applied. The fact that a great deal of time should ordinarily have been spent on the tasks that had to be performed is to be accommodated in fixing the number of units under those items of description in the Tariff where a range between minimum and maximum units is provided.

[147]  The second determination is that both the additional research and analysis made reasonably necessary by issues which the City raised late in the day and the time spent in preparation of counsel for cross-examination of the City's expert witnesses cannot properly be treated as somehow falling outside the Tariff. The extra work involved again can be reflected in some measure in fixing the number of units up to the maximum allowable. The immediate effect, however, is to eliminate from further consideration the first column labelled "Appraisal" only and to focus instead on the second column labelled "All Work".

[148]  I turn now to consider the number of units which should properly be allowed under each item of description in the appraisal bill of costs.

[149]  The first units claimed are under Item 3 which is for market research, including all necessary attendances. The maximum number of units permitted is 20 but the claimants, by claiming the maximum number for each of the four highest and best uses found, claimed 80 units. It must be borne in mind that, as is revealed in the client billing worksheets of the period, considerable market research already was billed in the pre-Tariff period and there is need for an allocation of units which reflects that fact so as to avoid double recovery. Since most of the work now claimed under this item of description in the Tariff appears to relate to additional research and analysis, I allow 10 units in respect of Item 3.

[150]  The next units claimed are under Item 4 which is for inspection of comparable properties. In this instance, while the maximum units permitted are again 20, the claimants have claimed 40. It appears to me that, although work was billed in the pre-Tariff period for research on comparables, much of the work under this item of description took place after the Tariff came into effect. I allow 15 units in this respect.

[151]  Item 5 which is for the analysis of data and preparation of a report or reports is a major item under the real estate appraisal Tariff permitting up to a maximum of 60 units. The claimants' claim for 140 units cannot, of course, be accepted. However, in light of the fact that finalization of the main appraisal report occurred only after the Tariff came into effect, and the further fact that the City's flurry of last minute reports caused Interwest to have to carry out much additional historical research and analysis of data for rebuttal purposes, I think it would be reasonable in these circumstances to allow the full 60 units under Item 5.

[152]  Items 6 and 7, which concern respectively the preparation for and attendance at the compensation hearing, permit 5 units (to a maximum of 30) and 10 units per day respectively. These items are, I believe, uncontentious inasmuch as it was the claimants' undisputed assertion that Mr. Grant's attendance was required at the compensation hearing for six of the 10 days. The claim is for 30 units for preparation and 60 units for attendance, and I allow them as claimed.

[153]  From the foregoing review I have determined that, apart from the costs of this section 45 cost hearing, Keith Maddocks should be allowed in total 175 units under Schedule 2 of the Tariff with respect to the real estate appraisal bill of costs. Assessed at $120 per unit, this equates to $21,000.

5.3.3  Disbursements

[154]  I have found the claim in respect of disbursements in the post-Tariff period utterly confusing. In the actual invoices billed to the claimants, Interwest lists disbursements totalling $1,853.47. However, in the bills of costs prepared in Tariff format, the list of disbursements totals $2,726.80. Moreover, there appears to be little concordance between the two lists in the disbursement items claimed. For example, charges for maps and searches including land title office charges amounting to $1,291.00 appear in the actual invoices but not in the tariffed bill of costs whereas photocopying charges of $1,335.15 appear in the tariffed bill but not at all in the actual invoices. I also have no way of differentiating between disbursements incurred in regard to the appraisal assignment for Keith Maddocks and those incurred in regard to the farm business loss work for Maddocks Farms Ltd. For convenience sake only, I will treat them all as falling within the appraisal assignment.

[155]  A reviewer of costs should not be left to guess at what list is the correct one or what items are actually being claimed. Ample opportunity was given at and after the cost hearing to provide clarification. I have no doubt that disbursements were incurred by Interwest for which reasonable reimbursement of the claimants at a cost review would be appropriate. In other cases the board has simply disallowed disbursement items which could not be properly verified. However, doing the best that I can in the circumstances, I conclude that it would be reasonable to make an award but limit recovery for disbursements in a lump sum amount of $1,800.00.

5.4  Summary of Appraisal Costs Awarded

[156]  I have determined that real estate appraisal costs in this matter are to be allowed in the total amount of $36,607.67 as follows:

The costs allowed under this heading do not include costs for services performed by Mr. Grant and others at Interwest in connection with the farm business loss claim.

6.  CONSULTANT COSTS

6.1  Interwest Farm Business Loss Accounts

[157]  Earlier in these reasons, when considering pre-Tariff appraisal costs billed by Interwest, I concluded that nearly $25,000 of the fees charged were for work on the farm business loss claim asserted by Maddocks Farms Ltd. I allowed $17,000 in regard to that work. A further claim for interest on two of the unpaid accounts, nearly $9,400 of which I felt should be allocated to the accounts related to farm business loss, was disallowed.

[158]  It remains to be determined how much should be allowed in regard to work on this claim in the post-Tariff period. From my review of the accounts rendered and the applicable client billing worksheets, I have calculated that the further claim at issue is for approximately $14,200. I have, of course, already determined that the services provided in this period are to be treated as consultant's costs which are not governed by the real estate appraisal Tariff but instead fall to be considered on the same actual reasonable standard as in the pre-Tariff period.

[159]  The applicable billings in this period were related to three main areas. First were the services provided by Mr. Grant by way of consultation, research and preparation of cross-examination in response to the two reports of the City's agricultural consultant, Mr. Schroeter, for which the claimants' agrologist charged 26 hours of his time at $200 per hour. Second were the services Mr. Grant provided in the nature of further research and the preparation of a somewhat expanded farm business loss report in response to the addenda reports for the City by Mr. Lathrop of Arc Appraisals Ltd. It appears that he charged approximately 15 hours in this regard. Third was the time spent in preparation for and attendance at the compensation hearing to give evidence on farm business losses. Mr. Grant in a memorandum advised Mr. May that he had spent at a maximum 40 hours in preparation for the hearing and 80 hours in attendance over eight days. Based on the evidence I have reviewed, I consider it would be reasonable to allocate 10 hours in preparation and 20 hours in attendance to the farm business loss claim.

[160]  Taking into account with regard to these post-Tariff costs many of the same concerns that figured in my determination of the pre-Tariff costs, i.e., Mr. Grant's hourly rate, the hours reasonably spent, and the degree of success achieved that, I have concluded that a reasonable amount to allow for this work is $11,000. Therefore, in total, consultant costs in connection with the farm business loss claim from start to finish are awarded in the sum of $28,000.

6.2  G.G. Runka Land Sense Ltd. Account

[161]  G. Gary Runka, P. Ag., is a former chair of the Agricultural Land Commission and President of G.G. Runka Land Sense Ltd., a company which offers expertise in environmental assessment, land use planning and resource management particularly in regard to agricultural land. He was retained by the claimants in June 1997 to assess the likely impact of the City's drainage project on their farm land, to seek the involvement of the Commission, and to assist Mr. Grant in his own assessments. Mr. Runka's involvement concluded in March 1998. He did not prepare a report or testify at the compensation hearing. His company's account rendered April 20, 1998 was for fees of $1,328.00 and disbursements of $75.48 for a total of $1,403.48 excluding GST.

[162]  The City fully reimbursed the claimants for this account a few months after it was rendered in the amount of $1,501.72 (which included an amount for GST) and raised no issue concerning it at the cost hearing other than to suggest that some of Mr. Grant's agrology-related accounts were for work already done by Mr. Runka. I have disposed of that suggestion above. I note that the fee account gives no indication of the time spent or the rate at which it was billed. However, the overall amount charged seems modest in relation to the itemized professional services provided and, in the absence of any objection, I allow it as claimed.

6.3  D.K. Bowins & Associates Inc. Accounts

[163]  Don K. Bowins, P.Eng., is the principal of D.K. Bowins & Associates Inc., a company which offers expertise in project management, development and civil engineering. He was retained in November 1999 at the request of Mr. Grant to prepare a report on the subdivision development potential of the industrially zoned portion of the parcel with split zoning. The report was commissioned after the claimants received copies of reports which had been prepared for the City by its engineering and planning experts. Mr. Bowins' initial report was dated February 2, 2000. When during the month of February 2000 the City's experts produced addendum reports, Mr. Bowins was asked to prepare a further response. His own brief addendum report in letter form was dated March 2, 2000. The two reports were put in evidence at the compensation hearing but Mr. Bowins did not testify concerning them.

[164]  The company rendered two invoices. The first, dated March 6, 2000, covered services performed during the months of December 1999 and January and February 2000. Mr. Bowins billed 46.75 hours at $120 per hour while a drafter with the company billed 4.5 hours at $55 per hour. The total charge came to $5,857.50 excluding GST. The second invoice, dated April 17, 2000, included time spent in completing the addendum report. For this work Mr. Bowins billed 2.75 hours at $120 per hour for a total of $330.00 excluding GST. There were no billed disbursements on either invoice. The fee accounts for which reimbursement is sought therefore totalled $6,187.50.

[165]  In a letter to Mr. May several weeks before the cost hearing took place, Mr. Capuccinello noted that insufficient particulars had been provided in the first Bowins account to assess its reasonableness. Backup material itemizing the tasks performed and the amount of time expended on them had been omitted. This deficiency was not remedied by the time the hearing occurred. Absent such evidence, the task of making an appropriate award of costs short of outright disallowance becomes complicated.

[166]  Fortunately for the claimants I have been able to access copies of the two Bowins reports which were entered in evidence at the compensation hearing. The first larger report reveals that a site visit was undertaken and that numerous reports, plans, bylaws and guidelines were reviewed. It also demonstrates work on access, flood proofing and environmental considerations, all of which were pertinent to subdivision feasibility, and indicates to me that significant time and effort went into site layout plans (in respect of which drafting work was required) and site servicing costs. The much shorter addendum report notes another site visit, review of further relevant documents, and modification of site layout plans.

[167]  The board in its compensation decision noted that Mr. Bowins in his second report appeared to reverse his opinion on an environmental setback question that had important implications for subdivision potential. However, any such inconsistency proved academic because the board in the end found that subdivision had not been shown to be the highest and best use of the industrially zoned portion of the property. As a result, it appears that little or none of Mr. Bowins' work proved to be of use to the board in its determination of loss in value. I do not, however, draw from this the conclusion that the work was unnecessarily or unreasonably incurred, particularly since it was the City in the first place that retained experts to opine on the subdivision question.

[168]  On the whole I remain troubled by the lack of detail provided to support consultant costs of this magnitude. Mr. Bowins' hourly rate of $120 seems reasonably in line with that of other professional engineers whose accounts have been before the board in the past but the expenditure of nearly 50 hours of billed professional time to produce the two reports I have reviewed seems somewhat excessive. In the circumstances I believe it would be reasonable to allow the Bowins fee accounts in total sum of $4,800.

6.4  Slade Dyer & Assoc. Account

[169]  Slade Dyer, the principal of Slade Dyer & Assoc., is a development consultant with experience in provincial regulatory and municipal planning and local government administration. His early background included three years as an assistant to the regional approving officer for the then Ministry of Transportation and Highways through which he became familiar with highway access issues. He was retained at the request of Mr. Grant in late February 2000 to undertake a review of access provisions, particularly from the subject lands to Highway No. 10, in light of planning and access reports for the City which suggested that the Maddocks property enjoyed no legal access prior to the taking. He prepared a report dated March 2, 2000 but, while it was prepared for the claimants, it was submitted into evidence by the City at the compensation hearing. Mr. Dyer was not called to testify. The board cited his report in its decision but appears to have relied on other evidence besides Mr. Dyer's rather tentative conclusions to find that the subject lands enjoyed legal access at the time of the taking.

[170]  For his professional services rendered between February 21 and March 17, 2000, Mr. Dyer billed 30.3 hours of his time at $120 per hour for a fee charge of $3,648.00 plus disbursements of $57.21. The total account excluding GST is therefore in the sum of $3,705.21. The account is well itemized as to items of work performed and time spent on various tasks.

[171]  Upon reviewing the account I am struck by the amount of time which Mr. Dyer appears to have spent on preliminary review especially of Mr. Bowins' file materials which leads me to wonder whether some duplication of effort might not have been involved. I also note that, although Mr. Dyer in his curriculum vitae indicates no formal qualifications, his hourly fee charge of $120 is the equivalent of the rate charged by Mr. Bowins, a professional engineer. However, the City raised no specific objections to this account, simply suggesting that some of Mr. Grant's accounts were for the same work performed by Mr. Dyer and should be reduced or disallowed for that reason. I am not convinced that this was the case. I will allow the account of Slade Dyer & Assocs. as presented in the amount of $3,705.21.

6.5  Ken Howard Witness Account

[172]  Ken Howard lives in Kamloops, British Columbia and works on a daily contract basis with British Columbia Hydro. In the late 1960s he was a property agent for B.C. Hydro when the utility (as the predecessor in interest to British Columbia Rail) expropriated land from the southern boundary of the Maddocks property to construct a railway line to the nearby Roberts Bank Port Development. The taking eliminated an existing access to the Maddocks farm property and, as part of the compensation package, B.C. Hydro undertook to provide alternate access to the property from Highway No. 10 across the railway tracks. Mr. Howard was involved in the negotiations and other work leading to the reinstatement of access. When the City late in the proceedings alleged that the Maddocks property had no legal access prior to the City's taking, the claimants called Mr. Howard to testify.

[173]  Although Mr. Howard testified as a lay witness rather than professional consultant at the compensation hearing, I have included his account for services here as a matter of convenience. The account is for $720.50 excluding GST. It comprises his travel and accommodation costs to attend the hearing on March 8, 2000 totalling $220.50 and a charge for missing one day of contract work at the equivalent daily rate of $500.00.

[174]  The City made no objection to this account when it was presented at the cost hearing and I am satisfied that it was a cost necessarily and reasonably incurred by the claimants in the circumstances to help prove the existence of legal access prior to the taking. I will allow Mr. Howard's account as presented.

7.  SUMMARY OF COST AWARD

[175]  The costs at issue were incurred in respect of the claims of both Keith Maddocks and Maddocks Farms Ltd. but, although separate considerations have been applied to those claims in determining the allowable costs, I was not asked and I have not attempted to apportion the cost award as between the two claimants. The overall amount of the claimants' cost claims varied depending upon different assumptions made as to the application of the Tariff. However, in restating the claims below, I have chosen what I consider to have been the optimum amounts claimed.

[176]  In the end result, exclusive of the costs of this final review, the claimants' claims for reimbursement of their costs by the City totalled $192,466.96 while the amount allowed totals $130,776.29. The detailed summary is as follows:

[177]  According to the evidence presented, the City has made the following advance payments of costs:

[178]  Accordingly, before consideration of the costs of this section 45 review, there remains due and owing to the claimants by the City on account of their costs the difference between the costs awarded of $130,776.29 and the costs paid in advance of $39,904.94 or the sum of $90,871.35.

8.  COSTS OF SECTION 45 REVIEW

[179]  As I indicated at the outset of these reasons, this final cost review took place in Surrey over a three day period in January 2003. Mr. May took on a dual role, appearing as counsel on behalf of the claimants and also giving sworn viva voce evidence concerning the legal and other costs incurred. Mr. Grant attended for one full day of the cost hearing to testify concerning Interwest's costs. The claimants have not provided an itemized bill but nevertheless seek recovery of Mr. May's and Mr. Grant's consequential costs of preparation and attendance. The board has generally refrained from fixing the costs of a cost review in the absence of a properly drawn bill of costs but, hopefully to save a further application, I will deal the matter here as best I can.

[180]  Item 15 under "Schedule 1 — Legal Costs" of the Tariff provides for 4 units for each day of attendance by legal counsel before the board to assess costs and Item 14 provides for 2 units for preparation for each day of attendance. Since this cost hearing occupied three full days, the claimants are claiming 6 units for Mr. May's preparation and 12 units for his attendance. The claimants made no submission with respect to what Tariff scale should be applied.

[181]  In contrast to the legal Tariff there are no items of description under "Schedule 2 — Real Estate Appraisal Costs" which expressly provide for an appraiser's involvement in a cost review. However, the claimants assert a claim for "witness fees" for Mr. Grant's preparation and attendance. Since Mr. May also testified in addition to acting as counsel, the claimants also seek witness fees for his preparation and attendance.

[182]  At the conclusion of the cost hearing I granted leave to the parties to provide further written submissions as to whether witness fees are payable by the City for this section 45 final cost review, particularly in light of my decision on this same question in Reon Management Services Inc. v. British Columbia (2002), 78 L.C.R. 216. In that case I held that there was in principle and on case authority an entitlement to reimbursement for witness fees necessarily incurred at a section 45 cost hearing provided the witness's attendance to give viva voce evidence was itself reasonably necessary. Among those who testified were the owner's lawyer and appraiser. I found that the evidence provided by both was of considerable assistance to me in determining legal, appraisal and other costs and that their attendance was therefore reasonably necessary in the circumstances of that cost review. Although the owner in Reon was seeking reimbursement of its witness fees on the "actual reasonable" standard under section 45(7)(a) of the Act, I held that the Tariff applied. While there was no express reference in the Tariff to witness fees, I considered that the lawyer's costs were recoverable under Item 18 of Schedule 1 for "preparation for hearing" and under Item 19 for "attendance at hearing of claim or of an issue in a claim". I also held that the appraiser's costs were similarly recoverable under Items 6 and 7 of Schedule 2 for preparation for a hearing and necessary attendance at the hearing.

[183]  In their written submissions the claimants argued that the Reon decision was determinative of the issue of witness fees at a section 45 final cost review. In the present instance, the claimants said, the attendance of both Mr. May and Mr. Grant as witnesses had been required by the City and both of the attendees were cross-examined at length by counsel for the City. Therefore, the claimants maintained, the Tariff costs for this cost hearing should include the time they spent as witnesses.

[184]  The City in its written submissions was far less categorical. "To the extent 'witness fees' are provided for in the tariff for lawyers and real estate appraisers," Mr. Capuccinello wrote, somewhat cryptically, "they are recoverable. Where, however, 'witness fees' are not expressly provided for in the tariff for lawyers and real estate appraisers, they are not recoverable."

[185]  In my view the only meaningful distinction between Reon and the present case with respect to the giving of viva voce evidence is that in Reon, the lawyer who appeared for the owner at the final cost review was not the same person who had represented the owner throughout the compensation proceedings and, in turn, attended as a witness. To compensate Mr. May as both legal counsel on the cost review and a witness at the same cost review would be to award double compensation. I consider that Mr. May's costs for preparation and attendance at this cost review should properly be assessed on the basis of his role as claimants' counsel. The legal Tariff applies and the claimants are entitled to 6 units for preparation and 12 units for attendance. Although this cost hearing ran for three days, has raised a number of novel issues especially around the application of the Tariff, and has resulted in a lengthy decision, it did not in my view constitute a matter of more than ordinary difficulty or importance. Therefore, the legal costs are to be assessed on Scale 2, where the value allowed on an assessment is $140 for each unit. This equates to $2,520 plus PST at 7.5% of $189 together with reasonable expenses and disbursements.

[186]  Mr. Grant's attendance at the cost hearing to give oral evidence concerning Interwest's accounts was of considerable assistance to me in the cost determinations regarding both real estate appraisal matters and farm business loss matters which I doubt could have been as adequately covered in a sworn affidavit. Moreover, his attendance to be cross-examined on the Interwest accounts was required by the City. The real estate appraisal Tariff applies and the claimants are entitled to 5 units for preparation and 10 units for attendance. Again, in my view, the assessment should be on Scale 2, where the value allowed on an assessment is $100 for each unit. This equates to $1,500 plus reasonable expenses and disbursements.

[187]  The mandatory factors under section 45(10) also come into play in assessing the costs of a cost review, namely, the number and complexity of the issues, the degree of success achieved, and the manner in which the case was prepared and conducted.

[188]  The number and complexity of the issues has already been taken into account by applying Scale 2 to the costs of this cost review. Success was divided in the determination of the issues but it is germane to note that the claimants did not succeed on perhaps the two most important ones: the presentation of multiple bills of costs and the attempt not to have the Tariff apply to a large portion of the appraisal work. Although there were substantial disallowances, the degree of success when judged by the difference between the costs awarded and the costs paid in advance has to be considered substantial. On the third factor, it will be recalled that the City took the position that there should be cost disallowances to take into account the many errors and discrepancies in the manner in which the claimants and their professional advisors prepared for and conducted their case at this review.

[189]  Having regard to the factors under section 45(10) overall, I consider that some small reduction should be made. I therefore allow 80% of the tariffed legal and appraisal costs of this review totalling $4,209, or the sum of $3,367.20 plus reasonable expenses and disbursements.