IN THE SUPREME COURT OF BRITISH COLUMBIA

Date: 20051212
Docket: L042543
Registry: Vancouver

Between:

Keith Maddocks and Maddocks Farms Ltd.

Appellants

And

City of Surrey

Respondent

Before: The Honourable Mr. Justice Bauman

Reasons for Judgment

[1]  This is an appeal by the landowners from a decision on costs made by the Chair of the Expropriation Compensation Board following an expropriation compensation proceeding.

[2]  The decision is dated 4 October 2004.

[3]  The Expropriation Compensation Board (the "Board") has since been disbanded. The learned Chair of the Board, Robert W. Shorthouse, made his decision after a three day hearing dealing only with the issue of costs in early January 2003.

[4]  An appeal from that decision lies to this court under s. 45(12) of the Expropriation Act, R.S.B.C. 1996, c. 125.

[5]  The standard of review on such an appeal has been settled by the Court of Appeal's decision in Neill v. British Columbia (Minister of Transportation and Highways) (1996), 15 B.C.L.R. (3d) 325 (at ¶ 24 and 25):

24 I am therefore respectfully of the view that the learned chambers judge was correct in saying that the appellant would have to show a palpable or overriding error on questions of fact, or fundamental error in principle, before he would be justified in interfering with the decision of the Chair on a question of costs.

25 I am also of the view, however, that the learned chambers judge went too far when he said that he would defer to the Chair's "special knowledge and expertise in the field of expropriation matters and procedure". As I have suggested, a level of curial deference may be called for with respect to appeals of the Board's orders as permitted by s. 27 of the Act. The same is not true however, of appeals on issues of costs under s. 44(13). There, the Supreme Court of British Columbia is as well able as the Chair to decide what is reasonable. It should interfere, however, only where a factual or legal decision is clearly shown to be incorrect.

[6]  Under the legislation before the court in Neill, the costs payable to a claimant were set by s. 45(7)(a) as:

(a) the actual reasonable legal, appraisal and other costs, or

(b) if the Lieutenant Governor in Council prescribes a tariff of costs, the amounts prescribed in the tariff and not the costs referred to in paragraph (a).

[7]  Neill holds that a decision on "reasonable costs" is essentially a question of fact.

[8]  Since Neill, the Lieutenant Governor in Council has promulgated the Tariff of Costs Regulation, B.C. Reg. 189/99, which came into force in June 1999. This was pursuant to s. 47(7)(b).

[9]  As to costs claimed after that date, under s. 3(1) of the Regulation, they must be assessed, if legal costs, under Schedule 1 to the Regulation and if real estate appraisal costs, under Schedule 2 to the Regulation. Under s. 3(2) of the Regulation (as it read before certain amendments in B.C. Regulation 97/2005:

(2) When making an assessment of costs ... the reviewer must allow those costs under the tariff that were proper or reasonably necessary to conduct the proceeding.

[10]  In the case at bar, costs were assessed under both s-ss. (a) and (b) of s. 45(7), but it is only the Chair's decision with respect to the assessment under the tariff that is impugned before me.

[11]  I conclude that Neill still applies to the determination under s. 3(2) of the Regulation, as to what is "proper or reasonably necessary to conduct the proceeding." That, like the decision as to what constitutes "reasonable costs" under s. 45(7)(a), is essentially a question of fact.

[12]  I turn to discuss the background.

[13]  The City of Surrey expropriated a statutory right of way across the farming operation of Maddocks Farms Ltd. That operation spanned three separate parcels of land owned by the appellant, Keith Maddocks. One of these parcels had a dual zoning under Surrey's relevant land use regulations.

[14]  Both appellants were represented throughout the compensation proceedings by one counsel, Mr. Ralph May. On their behalf, he filed two separate Form A Applications for Determination of Compensation, one on behalf of Keith Maddocks, as owner of the affected lands, and one on behalf of Maddocks Farms Ltd.

[15]  the compensation hearing, the claimants tendered one comprehensive appraisal report prepared by Danny R. Grant. By its terms, it estimated the "Market Value of the part to be taken and resulting damages to the property and business losses ..." to be $1,498,000.

[16]  the compensation decision was published, the appellants, in respect of costs subject to assessment under the 1999 tariff, prepared and submitted a single bill of legal costs in tariff format.

[17]  However, as the costs hearing approached, the appellants revised their presentation of legal costs under the tariff. In place of the single bill, they tendered five bills of costs, one in respect of Maddocks Farms Ltd. and four in respect of Keith Maddocks. These latter four included one bill of costs in respect of each of two of the parcels and two bills of costs in respect of the third property which enjoyed the dual zoning.

[18]  Similarly, in respect of appraisal costs for the claim of Keith Maddocks, the appellants filed four bills of appraisal costs, one bill for each of the two parcels, and two bills in respect of the third parcel which was subject to the dual zoning.

[19]  this was the proper approach to the costs assessment was the central issue before the Chair on the costs hearing.

[20]  As I have said, the learned Chair published his decision on 4 October 2004. It is an extremely thorough judgment which exhaustively details the positions of the parties, the applicable law and policies and the Chair's conclusions on the specific issues. It spans 189 closely typed paragraphs over 32 pages.

[21]  The Chair reached these conclusions in respect of the contentious issues on this appeal:

(i) each claimant was entitled to tender a single bill of legal costs; Keith Maddocks could not tender multiple bills;

(ii) similarly, Keith Maddocks could tender for assessment only a single bill of appraisal costs;

(iii) the appraiser's work on behalf of the claimants responding to Surrey's allegations that the property did not enjoy legal access, was compensable under the tariff and not as a separate head of non-tariff costs; and (iv) the appraiser's work preparing counsel for cross-examination of the city's experts was compensable under the tariff and was not a separate head of costs.

[22]  The appellants do not dispute the Chair's actual assessment of costs under the tariff; they rather raise the four issues of principle which I have just summarized.

[23]  Accordingly, in the language of the standard of review, I am concerned not so much with "palpable and overriding error," as I am with the question whether the Chair in respect of his conclusions on these issues made a "fundamental error in principle."

[24]  I will deal with the Chair's reasoning in respect of each of the contentious issues.

(i) Separate Legal Bills

[25]  Notwithstanding that the claimants were represented by a single counsel, the Chair did allow each to file a separate legal bill of costs. In doing so, the Chair distinguished at least two cost decisions of the Board: Yue v. Surrey (City) (2000), 74 L.C.R. 64 and Ingham v. Creston (Town) (2001), 73 L.C.R. 129, where in each case the Board declined to treat a matter in which there was more than one claimant as warranting more than a single bill of costs.

[26]  In his discussion, the learned Chair then turned to the novel suggestion that Keith Maddocks should be entitled to present four bills of legal costs. (at ¶ 66 and 67):

[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.

[27]  There is no fundamental error in principle shown in this aspect of the decision. Indeed, none is suggested in the appellant's Memorandum of Argument. (The issue of separate legal bills of costs is not addressed there.)

(ii) Separate Appraisal Bills

[28]  The Chair discussed this issue at ¶ 96 to 98 of his reasons:

[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.

[29]  The appellants say this:

vi. The Appellants submit that the Chair's determination runs counter to the principle of economic reinstatement and would encourage multiple proceedings wherever multiple parcels or highest and best uses are present to ensure adequate compensation in costs. The undoubted effect of this decision will be for the expropriation bar to present each claim separately or risk under-compensation for claimants, a concern which the Chair himself gave voice to by recognizing the inadequacy of the tariff in the context of complex valuations (paragraph. 97). Significantly, there is no corresponding risk of over- compensation to claimants given that separate services were rendered in respect of each parcel and in turn each highest and best use. It should further be noted that both Maddocks and MFL initiated separate proceedings before the ECB. As noted at paragraph. 8 of the reasons the bases for the two claims, though stemming from the same expropriation, are fundamentally different.

[30]  This proceeding arose out of a single act of expropriation. It affected a singler integrated farming operation. The appraisal report, while it covered the three properties and dealt with issues distinct to each, was a single report.

[31]  There is no possibility that this proceeding could ever have properly been brought as multiple proceedings in respect of each "highest and best use" as suggested here. That, indeed, would have been a fundamental error in principle.

[32]  The learned Chair properly recognized that the claims of the appellants were distinct, but he would go no further. To do as the appellants urge, would be indeed, to borrow an expression from another case in a different context, litigating in slices.

(iii) Appraiser's Work on the Access Issuer

[33]  The Chair's disposition of this issue is found at ¶ 115 and 116 of his reasons:

[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.

[34]  I cannot discern any fundamental error in principle here.

[35]  The appellants argue that the work undertaken by their appraiser on this issue was outside the scope of his original retainer. That may be, as the Chair himself recognized. But that misses the point. As the Chair notes, the work comes within the tariff item for appraisal work and to ignore that fact, and subject it to a non- tariff assessment, would be to "thwart the intent of the tariff".

[36]  In my respectful view, the Chair is correct in his treatment of this issue. He is directed by s. 3(1) of the Tariff Regulation to assess real estate appraisal costs under Schedule 2. In these circumstances, the appellants' submission that they "are entitled to full indemnity for their efforts in responding to the Respondents at the last minute," cannot prevail.

(iv) Preparation for Cross-examination

[37]  The Chair's disposition of this item is found at ¶ 117 and 119 of his reasons:

[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.

...

[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.

[38]  The discussion under issue (iii) is apposite here. No fundamental error in principle has been made out.

[39]  It follows that the appeal is dismissed. The respondent is entitled to its costs of the appeal on scale 3.

"Bauman J."