|
March 27, 2001, E.C.B. Control No.
34/91/204 (72 L.C.R. 257)
| Between: |
Reon
Management Services Inc.
Claimant |
| And: |
Her
Majesty the Queen in Right of the Province of British Columbia
Respondent |
| Before: |
Robert
W. Shorthouse, Chair |
| Appearances: |
Lisa
D. McBain, Counsel for the Claimant
Fran Crowhurst, Counsel for the Respondent |
REASONS FOR DECISION
1. APPLICATION
[1] This is an application brought by the claimant,
Reon Management Services Inc., for a review of the claimant's
bills of costs and a final award of costs pursuant to
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")
under the Act. The costs at issue arise out of the expropriation
of a portion of the claimant's lands by the respondent,
Her Majesty the Queen in right of the Province of British
Columbia, in August, 1990. The costs claimed are in
respect of legal, appraisal and other professional services
provided to the claimant between September, 1987 and
April, 2000, to which are added the costs of this application.
The costs before me on this final review, as I calculate
them, total $119,172.32, of which $42,484.21 are costs
claimed under the Tariff. As of the time of the review,
the respondent had made payments on account of the claimant's
costs totalling $21,015.46.
2. BACKGROUND
2.1 The Claimant
[2] The claimant, Reon Management Services Inc., is
a British Columbia company incorporated about 1975 and
headquartered in Kamloops. Together with related companies,
including a company known as Leonie Estates Inc. ("Leonie"),
the claimant is engaged in the land development business,
having been involved in as many as 20 development projects.
The principal and sole shareholder of the claimant is
Robert E. Simpson, a chartered accountant by background
who, since 1981, has been employed by the claimant as
its manager in guiding development projects from the
initial stages of property research and purchase, through
rezoning or upgrading, project organization and implementation,
and financing and accounting, to the final stage of
marketing, which is normally handled through real estate
agents.
[3] Mr. Simpson was also one of the three principals
of Leonie which, in 1983, acquired through trade a roughly
10 acre parcel of property, ultimately the subject of
the expropriation proceedings from which the present
cost claim arises. In 1987 Leonie entered into an agreement
with Barbara Cook ("Cook") to convey an undivided
one half interest in the property. The stated intention
of the agreement was to subdivide the property into
two separate parcels with Cook obtaining title to the
easterly portion of the property and Leonie retaining
title to the westerly portion. As indicated from land
title registration documents which were attached to
the report of the claimant's real estate appraiser,
entered in evidence at this cost hearing, the claimant
became the successor in title to the undivided one half
interest in the property owned by Leonie at the beginning
of 1988. At the time of expropriation in August, 1990,
the claimant and Cook each held an undivided one half
interest in the property with registered rights of first
refusal to purchase the interest of the other.
2.2 The Subject Property
[4] The property before the taking was a 9.93 acre
parcel of land legally described as Parcel Identifier:
009-406-883, Lot 42, Section 17, Township 21, Range
17 West of the 6th Meridian, Kamloops Division, Yale
District, Plan 529 ("Lot 42"). It was located
in Rayleigh, a suburb incorporated during the 1970s
within the City of Kamloops, and situated approximately
seven miles north of the City's core. Lot 42 was slightly
east of what used to known as the North Thompson Highway
but, later became better known as the Yellowhead Highway
No. 5. Most of the development in the Rayleigh community
was residential in nature and was located on the west
side of the highway, whereas the lands on the east side
were mostly either vacant or developed as residential
acreage uses. There was a single family residence located
on Lot 42 at the time of expropriation.
[5] The claimant's pleadings as well as the evidence
of Mr. Simpson and others at the cost hearing indicate
that the intention of the owners from the time of purchase
in 1983 was to rezone the westerly portion of Lot 42
to commercial uses, including a neighbourhood pub and
a convenience store, and the easterly portion for single
family residential development. Leonie made several
applications to the City of Kamloops to rezone Lot 42
for these purposes between 1984 and 1987, one of which
advanced as far as third reading. The agreement between
Leonie and Cook in 1987 contemplated a subdivision of
the land between the parties, with Cook ultimately taking
title to the easterly portion and Leonie (subsequently,
the claimant Reon Management Services Inc.) taking title
to the westerly portion. According to the claimant's
pleadings, the westerly portion, earmarked for commercial
development, was to consist of 5.36 acres.
2.3 The Expropriation
[6] The development in respect of which the expropriation
was made was the widening and improvement of the Yellowhead
Highway through Rayleigh in 1989 and 1990. Several other
properties either adjacent or in close proximity to
Lot 42 were also affected by the highway development.
It is relevant to note that the board held compensation
hearings and issued decisions during the early 1990s
in response to applications brought by two other nearby
owners whose lands the respondent had acquired: see
British Columbia Corp. of Seventh-Day Adventist Church
v. British Columbia (Ministry of Transportation and
Highways) (1991), 45 L.C.R. 121, and Devick v.
British Columbia (Minister of Transportation and Highways)
(1994), 52 L.C.R. 212. The claimant in Devick appealed
from the board's compensation decision to the British
Columbia Court of Appeal which, in allowing the appeal
(see 63 L.C.R. 193), also summarized the purpose and
scope of the highway development as follows, at p. 195:
The compulsory acquisition of the appellant's land
took place to allow the Yellowhead Highway, which
had been a standard two-lane highway, to be expanded
into a four-lane divided highway with limited access.
The new highway, which has a right-of-way about 450
feet in width, runs to the east of the old highway
which is now a frontal road. The Department [later
the "Ministry"] of Highways had drawn up
plans for such a project in the early 1970s but did
not proceed with it until 1989.
[7] The expropriation of Lot 42 involved the taking
of what has variously been described as either 0.44
or 0.46 acres of land, all from the westerly portion
of the property to which the claimant in its pleadings
asserted sole and beneficial ownership. The respondent
issued a certificate of approval of expropriation on
July 11, 1990. The respondent also pleaded that it made
an advance payment of $3,000 on August 1, 1990, based
upon an appraisal report which the respondent commissioned
and served. However, evidently the cheque issued by
the respondent, which was made payable jointly to the
claimant and to Cook, was never negotiated. Vesting
occurred on August 3, 1990.
2.4 The Compensation Proceedings
[8] On July 11, 1991, the claimant filed with the board
an application for determination of compensation (the
"Form A"). The Form A asserted claims for
loss of the land taken in the amount of $27,600, injurious
affection to the remaining lands in the amount of $264,600,
personal and business losses resulting from lost opportunity
to establish a neighbourhood pub on the land in the
amount of either $100,000 or $150,000, interest and
costs.
[9] A key element of the claimant's claim was the assertion
that there had been a substantial decrease in the value
of the westerly portion of Lot 42 resulting from the
development in respect of which the expropriation was
made within the meaning of what is now section 33 of
the Act. The allegation of "project influence"
was founded on the claimant's contention that the highway
project was anticipated and planned for by the respondent
since at least 1980. In anticipation of the project,
the claimant alleged, the respondent had since 1980
used its powers to preclude all development, including
all rezonings and all subdivisions within a one mile
strip adjacent to and lying east of the old North Thompson
Highway, by prohibiting access, influencing the City's
approving officer when considering the granting of subdivision
approval, and refusing to approve zoning bylaws.
[10] Specifically, according to the claimant, the respondent
had refused to approve the zoning bylaw for rezoning
the western portion of Lot 42 to commercial uses to
which the City had given three readings in December,
1985, had persuaded the approving officer for the City
of Kamloops that approval for subdividing Lot 42 should
not be given unless land required for the highway project
was dedicated by the owner, and had refused to permit
any development on Lot 42 unless and until the owner
dedicated lands for highway purposes.
[11] On August 8, 1991, the respondent filed a reply
to the application for determination of compensation
(the "Form B"). The Form B was in the nature
of a brief blanket denial of all of the claimant's claims
for compensation. Based upon the appraisal report which
the respondent had served on the claimant together with
the notice of advance payment, the respondent asserted
that the claimant was in full receipt of the compensation
to which it was entitled under the Act.
[12] The evidence indicates that the claimant began
to marshall its case shortly thereafter through the
processes of discovery of documents and examination
for discovery and by engaging experts to prepare reports,
including a real estate appraiser by the name of David
C. Cavazzi.
[13] On March 11, 1992, the claimant filed a certificate
of readiness and applied to the board for a hearing
date. At that time the claimant also indicated that
it would be suitable and convenient for its case to
be heard together with that of the adjoining owner,
who was Shirley Eleanor Devick. Although the claimant
in its certificate indicated that all parties were in
agreement on such a course, the claimant in July, 1992
filed a notice of motion for an order that the two proceedings
be heard together. The order was granted following a
contested teleconference hearing on August 21, 1992
(reported at 48 L.C.R. 70). A three week compensation
hearing before the board was eventually scheduled for
March, 1993.
[14] At some point shortly before the scheduled compensation
hearing was to begin, it appears the claimant sought
and obtained an adjournment of the hearing of its claim.
The claim of Shirley Eleanor Devick alone was heard
by the board during the months of March and April, 1993.
During the cost hearing, claimant's counsel on the compensation
claim, Reinhard Burke, testified that a decision had
been reached that it would not be in the claimant's
interest to proceed to hearing together with the Devick
claim.
[15] Except for some discussions around advance costs,
there was little or no activity on the claimant's case
from that time until early 1998. Mr. Burke at the cost
hearing explained that the claimant had decided to await
the outcome, first, of the board's determination on
compensation issues in the Devick matter, and second,
of the Court of Appeal's judgment on appeal from the
board's decision. The Court of Appeal rendered its judgment
on February 23, 1998. In effect, it appears that judgment
breathed new life into the claimant's case and the claimant
then set in motion once again the processes leading
to a compensation hearing. I will have more to say concerning
the board's earlier compensation decisions and the appellate
judgment later in these reasons in the context of discussing
the number and complexity of the issues which the claimant
says it faced.
[16] In June, 1998, the claimant applied to set a new
date for the hearing of its compensation claim. The
hearing was scheduled for seven days beginning on February
18, 1999, but was twice adjourned by consent and finally
fixed for a nine day period to commence on April 10,
2000 in Kamloops. The parties filed certificates of
readiness with the board during February, 2000.
[17] On March 13, 2000, the claimant filed a notice
of motion with the board seeking a determination as
to whether the board had jurisdiction to adjudicate
the claimant's compensation claim in light of the judgment
of the British Columbia Court of Appeal in Ocean
Port Hotel Ltd. v. British Columbia (Liquor Control,
General Manager) (1999), 174 D.L.R. (4th) 498. That
judgment set aside a decision of the Liquor Appeal Board
on the ground that the Board violated the requirement
for institutional independence because its members lacked
security of tenure. I heard this application in Victoria
on March 31, 2000, at which time the claimant argued
that the board also lacked security of tenure and was
bound by the decision in Ocean Port. In an oral
decision rendered on April 6, 2000 (reported at 70 L.C.R.
14), I held that, notwithstanding the Ocean Port
decision, the board enjoyed the requisite security of
tenure and had jurisdiction to adjudicate the claimant's
compensation claim. Therefore, the hearing scheduled
to begin on April 10, 2000 could proceed.
[18] On March 29, 2000, the respondent applied to the
board for an order that it be permitted to file an amended
Form B. I heard this motion by teleconference on April
4, 2000, and granted the application on certain conditions.
A further brief teleconference was convened on April
7, 2000 to settle the order which I had made.
[19] While final preparations were under way for the
compensation hearing, the parties began negotiations
aimed at settling the compensation claim. The negotiations
culminated in an offer to settle made by the claimant
on April 6, 2000, which the respondent accepted in a
letter of same date. On April 7, 2000, the board was
advised by counsel that the matter had been settled,
except for costs, and promptly cancelled its booking
arrangements for the compensation hearing in Kamloops
and adjourned the hearing.
[20] However, there were interpretive differences between
the parties over one of the terms of the purported settlement
which required the respondent to pay interest on the
agreed amount of compensation pursuant to section 46
of the Act. The respondent took the position that it
was only required to pay interest under subsection 46(1)
while the claimant said the respondent was required
to pay interest under both subsections 46(1) and (4).
[21] On April 11, 2000, the respondent applied to the
board for an order that the claimant's compensation
claim had, in effect, been settled on the basis of its
interpretation of the term of the agreement with respect
to payment of interest. I heard the respondent's motion
in Kamloops on April 18, 2000, and issued my decision
on the question of settlement on June 2, 2000 (reported
at 70 L.C.R. 29). I held that the parties had reached
a binding settlement of the claimant's claim for compensation,
except for costs, through the initial exchange of correspondence
between counsel on April 6, 2000, and that the settlement
proceeded on a clear and unambiguous requirement for
the respondent to pay interest to the claimant under
both subsections 46(1) and (4).
[22] The claimant had filed an application for a final
review of its bills of costs at the hearing convened
in Kamloops on April 18, 2000, but I adjourned the hearing
of this motion to a later date. Ultimately, the section
45 cost hearing in this matter was held in Kamloops
on August 14, 15 and 16, 2000.
3. THE COST REVIEW
3.1 Preliminary Issue
[23] At the outset of this cost hearing on August 14,
2000, the respondent advised that it was seeking leave
to appeal from the board's decision regarding settlement
to the British Columbia Court of Appeal on several grounds.
I was provided with a copy of the leave application,
in which the respondent set out that, if leave to appeal
was granted, the Court of Appeal would be moved for
an order setting aside the decision and declaring either
that the settlement between the parties was on the terms
agreed to by the respondent or that the parties did
not reach a settlement of the claim. I was advised that
the leave application was scheduled to be heard in September,
2000.
[24] In these circumstances the respondent suggested
that conducting a section 45 cost review in this matter
might be premature at least until it was known whether
leave to appeal would be granted. If leave were granted,
the ultimate result might be that the Court would find
no settlement had been reached and remit the matter
to the board for a compensation hearing. Further costs
would then be incurred. The respondent preferred that
the cost hearing be adjourned but, since the claimant
opposed any such adjournment, it suggested that this
review be characterized as an advance cost review pursuant
to section 48 of the Act. If the hearing proceeded as
a cost review under section 45, the respondent appeared
to suggest that the claimant might be precluded under
the principle of res judicata from bringing a
further application for a final award of costs.
[25] I note that the Court of Appeal has since heard
and granted the respondent's application for leave to
appeal on one of the three grounds advanced (reported
at 70 L.C.R. 201), namely, on what Saunders J.A. described
at p. 206 as "the hybrid issue of whether the parties
agreed that interest under both s. 46(1) and s. 46(4)
would be paid by the Province, and alternatively, whether
any settlement agreement was reached". I do not
know when the appeal is scheduled to be heard.
[26] The issue here bears a close resemblance to that
which arose in the section 45 cost hearing conducted
by the vice chair of the board, Sharon I. Walls, in
Ingham v. Creston (Town) (2000), 69 L.C.R. 263,
a case referred to by claimant's counsel on this application.
At the commencement of the cost review hearing in that
matter, the expropriating authority brought a preliminary
application asserting that the board did not have jurisdiction
under section 45 to hear the owners' claims for costs
at that time. On appeal from the board's compensation
decision, the Court of Appeal had set aside certain
of the awards made and remitted the matter back to the
board for a further compensation hearing which, at the
time of the cost review hearing, had yet to take place.
The expropriating authority referred to section 45(9)
of the Act which provides:
| 45 (9) |
If the board determines
the amount of compensation or damages to which
a person is entitled, the amount of costs must
be determined by the chair. |
The authority then took the position that the board
had not yet determined all of the compensation for the
owners and therefore the section 45 cost application
was premature.
[27] The vice chair dismissed the authority's application.
She held that, in regard to section 45(9), the board
had determined the amount of compensation. It was true
that the owners might need to bring a further application
under section 45(9) for an additional cost review. However,
the vice chair stated at p. 271:
There was no wording in section 45(9) requiring that
all items of compensation had to be finally determined
with all avenues of appeal exhausted before a section
45 hearing on costs could be heard.
[28] In the present instance, my authority for conducting
a final cost review falls under section 45(8) of the
Act which provides:
| 45 (8) |
If an expropriating
authority and a person referred to in subsection
(3) agree on the amount of compensation or damages,
but do not agree on the amount of costs to be
paid, the costs must be determined by the chair. |
[29] Until such time as the decision regarding settlement
is set aside on appeal, and no settlement is found to
have occurred, that decision governs the present proceeding
on costs. To paraphrase the vice chair's statement,
there is no wording in section 45(8) requiring that
all avenues of appeal with respect to whether the parties
agreed on compensation be exhausted before a section
45 hearing on costs can be heard. Notwithstanding the
board's frequent reference to section 45 cost hearings
as being final cost reviews in order to distinguish
them from advance cost reviews under section 48, there
is in fact nothing in the Act which precludes the board
from conducting more than one hearing in a matter under
section 45 in appropriate circumstances. If the present
appeal succeeds in the sense that the finding of settlement
is set aside and the claimant's compensation claims
are remitted to the board for hearing, it seems to me
that once the board has determined compensation, a further
section 45 cost hearing could if necessary be convened
under the authority of section 45(9).
[30] Accordingly, I am proceeding in this matter on
the basis that the costs at issue are to be determined
under the applicable provisions of section 45.
[31] To complete this aspect of the picture, I should
perhaps also note that the claimant, who initially took
the position that the board was without jurisdiction
to determine the question of settlement, has pending
before the Supreme Court of British Columbia an action
seeking, among other things, a declaration that a binding
settlement was achieved on April 6, 2000 on the terms
contained in the claimant's written offer of that date,
a declaration that interest payable on the settlement
includes interest pursuant to subsections 46(1) and
(4), and damages for breach of the settlement. I was
advised by claimant's counsel that the action is being
held in abeyance pending the outcome of the appeal.
3.2 The Cost Claims
[32] It will assist my discussion of the issues on
this cost review if I first briefly identify the components
of the claimant's costs which are under consideration.
The claimant's bills of costs as presented did not include
all of the costs which had been incurred but only those
which had not already been reimbursed by the respondent.
The respondent put in evidence other bills which it
had received and paid, not so much, it appears, in order
to have the details of those bills closely scrutinized
as to their necessity and reasonableness but rather
for the purpose of revealing areas of possible overlap
and duplication and perhaps inviting on my part some
consideration of the overall reasonableness of the amount
of costs being claimed.
[33] As I see it, the costs fall basically into three
categories: legal costs, real estate appraisal costs,
and what I would characterize as consultant costs. This
last category comprises the costs of a report prepared
by a professional engineer, the costs related to obtaining
professional advice on the likelihood of obtaining a
liquor licence in order to operate a neighbourhood pub,
and the costs of the claimant's principal, Mr. Simpson,
whose expertise is alleged to have greatly assisted
in advancing the claimant's claim for compensation.
[34] Before taking into account certain concessions
which were made by the claimant during the cost hearing
itself and one item which was settled, I note that the
legal costs at issue amounted to a total of $44,372.85,
in respect of which the respondent has paid to date
the sum of $15,517.10, the real estate appraisal costs
totalled $36,715.29, in respect of which the respondent
has paid the sum of $5,498.36, and the consultant costs
(of which by far the largest component are the costs
claimed for Mr. Simpson's time) totalled $38,084.18,
in respect of which the respondent has made no payment.
[35] During the cost hearing claimant's counsel acknowledged
that the claimant is a GST registrant entitled to claim
reimbursement of GST paid. Accordingly, the claimant
abandoned that portion of its cost claim relating to
GST charged on various accounts rendered to it. This
has the effect of reducing the amount of legal costs
at issue by $2,739.02, the real estate appraisal costs
by $2,335.54 and the consultant costs by $410.91.
3.3 The Costs Regime
[36] Section 45(3) of the Act provides that, with certain
exceptions which do not apply in the present instance,
an owner whose interest or estate in land is expropriated
is entitled to be paid costs necessarily incurred by
the owner for the purpose of asserting a claim for compensation
or damages. The costs payable under section 45(3) are
either "the actual reasonable legal, appraisal
and other costs" pursuant to section 45(7)(a) or,
where a tariff of costs has been prescribed pursuant
to section 45(7)(b), then "the amounts prescribed
in the tariff and not the costs referred to in paragraph
(a)." The Tariff came into force on June 28, 1999
and applies to legal and real estate appraisal costs
incurred on or after that date.
[37] Since this cost hearing concluded, the board has
rendered several decisions dealing with the impact of
the Tariff on a determination both of advance costs
under section 48 and final costs under section 45. A
number of the issues which were canvassed on this cost
review have been addressed in those prior decisions
and, where appropriate, I propose to foreshorten my
discussion here by reference to what has already been
said. Of particular relevance to this case, I would
suggest, is my recent decision in Gerald Charles
Budd v. Her Majesty the Queen in right of the Province
of British Columbia as represented by the Minister of
Transportation and Highways, unreported, January
31, 2001, E.C.B. No. 49/96/199. This is the first decision
of the board to consider the effect of the Tariff on
a determination of final costs, and it discusses at
some length many of the governing principles and interpretive
issues which raise questions of general application.
[38] One issue which has not yet arisen in any of the
board's decisions actually determining costs under the
Tariff, but is germane to the present matter, is the
question of how other costs incurred after the Tariff
came into force which are neither legal nor real estate
appraisal costs should be treated. I raise the question
on my own motion since it was not a contentious point
at the cost hearing but is nevertheless one which I
consider should, if possible, be put to rest. Some of
what I have categorized above as consultant costs were
in respect of services performed on the claimant's behalf
since June 28, 1999, and were not in the nature of legal
or real estate appraisal work.
[39] Section 3(1) of the Tariff provides:
| 3 (1) |
If costs are payable
under the Act, they must be assessed as follows: |
|
(a) legal costs
must be assessed under Schedule 1; |
|
(b) real estate
appraisal costs must be assessed under Schedule
2. |
There is no express provision in the Tariff dealing
with the costs of other professionals such as business
valuators, engineers, planners, consultants or, indeed,
with any other fee costs which an owner might necessarily
incur for the purpose of asserting a claim for compensation
or damages. I would, however, note that section 5(1)
of the Tariff makes the following provision:
| 5
(1) |
In addition to
the costs allowed on a review under the tariff,
the reviewer may allow a reasonable amount for
expenses and disbursements that were necessarily
and properly incurred in the conduct of the proceeding. |
[40] In C.R. All Trucks Ltd. v. British Columbia
(Minister of Transportation and Highways) (2000),
69 L.C.R. 197 (B.C.E.C.B.), counsel for the expropriated
owners argued that the Tariff was at odds with the principle
in compulsory taking statutes which is to provide compensation
that makes an owner "economically whole" and
that it therefore should not be applied for several
reasons. One reason alleged was that, when read with
section 45(7)(b) of the Act, the Tariff, in referring
only to legal and real estate appraisal costs, appeared
to eliminate the right of a claimant to be reimbursed
for those "other costs" incurred in asserting
its claim for compensation.
[41] In holding that the Tariff was applicable to the
particular claims before the board, the vice chair made
the following comments concerning payment of "other
costs", at p. 211:
Although I do not need to decide this point in this
application where only legal and appraisal costs are
under consideration, I will say that I do not agree
with the claimants' submission that the wording of
the Tariff and section 45(7)(b) necessarily precludes
payment of "other costs". The drafting of
the Tariff in relation to "other costs"
could have been more precise. However, when the Tariff
and sections 45 and 48 are read in a manner that seeks
to avoid conflict, I believe the proper construction
is that the Tariff replaces actual legal and
appraisal costs while "other costs" continue
to be billed and paid as before. This construction
is also consistent with a presumption of making the
claimant more economically whole. In order to make
this construction I do not need to specifically consider
whether "other costs" are billed as disbursements
on legal accounts or billed separately.
[42] I agree with the vice chair's comments and find
that, to the extent that consultant costs in this matter
as I have described them were "necessarily incurred"
pursuant to section 45(3), they fall to be considered
under the "actual reasonable" standard set
out in section 45(7)(a) both before and after the Tariff
came into force. In this instance, the consultant costs
at issue have been billed separately rather than being
incorporated in the legal bill of costs as disbursements.
As I understand it, the common practice in taxation
of costs under the tariff schedules established pursuant
to Rule 57 of the Supreme Court Rules is for the accounts
of experts to be included as disbursements within the
legal bills of costs presented for review. While there
is nothing to preclude such a practice in cost reviews
before the board, I am not of the opinion that such
a practice should be made mandatory here.
3.4 Considerations under Section 45(10)
[43] In determining final costs, I am required under
section 45(10) of the Act to take the following considerations
into account:
| (a) |
the
number and complexity of the issues; |
| (b) |
the
degree of success, taking into account |
|
(i) |
the determination
of the issues, and |
|
(ii) |
the difference
between the amount awarded and the advance payment
under section 20(1) and (12) or otherwise; |
| (c) |
the
manner in which the case was prepared and conducted. |
[44] Because the board has found that this matter settled
except for costs without the board being required to
determine compensation, it becomes more difficult to
assess costs in light of all the considerations set
out in section 45(10). The circumstances surrounding
the finding of a settlement also complicate the assessment.
However, the statutory factors remain relevant and their
consideration by a reviewer of final costs is mandatory.
3.4.1 The Number and Complexity of the Issues
[45] There was considerable evidence at the cost hearing
to support a finding that the issues surrounding this
claim were numerous and of at least average, if not
somewhat greater than average, complexity. Mr. Burke
testified that, if the matter had proceeded to a compensation
hearing in April, 2000, there would have been five principal
issues to be determined, each fraught with legal and
appraisal difficulties.
[46] First, what was the extent of the claimant's interest
in Lot 42 at the date of expropriation, given that the
subject property at the time had not yet been subdivided
so as to give the claimant sole registered ownership
over the westerly portion as contemplated by earlier
agreements?
[47] Second, what was the highest and best use of the
westerly portion of Lot 42? It was, of course, the claimant's
contention that the highest and best use of that portion
was for commercial development as evidenced, in part,
by the applications made for rezoning. The challenge
here, Mr. Burke stated, was to properly instruct an
appraiser in circumstances where, at the date of expropriation,
the westerly portion remained bare land, had not been
rezoned, and was not serviced. Such circumstances would
provide fuel for argument by the respondent that commercial
development of the westerly portion was improbable for
various reasons, including the difficulty of obtaining
the necessary services and the unlikelihood of obtaining
a liquor licence to operate a neighbourhood pub. There
was therefore a need for much review of the evidence
and how it affected highest and best use as well as
the need to obtain opinion evidence showing the feasibility
of proposed commercial ventures, particularly the neighbourhood
pub in respect of which the claimant had made a separate
compensation claim for loss of opportunity.
[48] Third, what was the market value of the westerly
portion of Lot 42 before the taking? Fourth, given that
all of the land expropriated by the respondent was from
the westerly portion, what was the highest and best
use of the remainder of that portion after the taking?
And fifth, was the market value of the remainder of
the westerly portion of Lot 42 reduced?
[49] Except for the first question, which raises a
somewhat unusual legal issue, the questions to be determined
on their face do not distinguish this case from most
other partial takings of land. However, it is the allegation
of "project influence" in the years leading
up to the expropriation which adds a further layer of
complexity both in terms of the evidence to be adduced
and the law to be applied or distinguished.
[50] Mr. Burke explained that he would have been endeavouring
to prove under section 33 of the Act that steps taken
by the respondent in contemplation of its highway development
had negatively impacted the market value of the westerly
portion of Lot 42 and no account should be taken of
the resulting decline in value. In so doing, he was
faced with having to overcome earlier compensation decisions
by the board in the Church case and the Devick
case.
[51] Both of these cases, as I noted earlier, involved
the acquisition by the respondent for its highway development
of properties on the same side of the highway as Lot
42 and they either adjoined or nearly adjoined Lot 42.
Mr. Burke was counsel for the owner in the Church
case which was decided by the board in April, 1991.
The Devick case was decided by the board in April,
1994.
[52] In the Church case the owner's appraisers
had valued the property in question on the order of
approximately $30,000 per acre on the basis that its
highest and best use was for potential commercial use
while the authority's appraiser valued it at approximately
$9,000 per acre on the basis that it highest and best
use was for residential purposes. The owner argued project
influence. Evidence concerning Lot 42 figured prominently
in the hearing. The board found that there was no evidence
of a decrease in value of the Church property resulting
from the prospect of highway development and determined
a final value on the order of $10,000 per acre.
[53] In the Devick case, which involved several
separate parcels of land, the owner's appraiser had
also valued the property in question on the basis that
its highest and best use was potential commercial use,
leading to a value conclusion on the order of between
$28,000 and $30,000 per acre. The authority's appraiser
opined that its highest and best use was residential,
from which he derived a value of approximately $9,000
per acre. The board considered that the principal issue
before it was the development potential of the property
east of the highway in the absence of the taking by
the authority. Again the question of project influence
was raised and evidence concerning the unsuccessful
efforts to rezone the neighbouring Lot 42 was considered.
Mr. Simpson, the claimant's principal, testified on
these matters at the Devick hearing. At p. 219 of the
reported decision (52 L.C.R.), the board in Devick
said in part as follows:
Prior to the first taking there were three applications
to rezone the lower bench land east of the highway.
None of these applications was ultimately successful.
If the failure to obtain rezoning can be traced to
the respondent, and was based solely on the respondent's
intention to realign and reconstruct the highway,
then the failure of the application must be disregarded....If,
on the other hand, failure of the rezoning application
is based on other facts, and would have been denied
in any event, then there is no change in value due
to the taking....
After consideration of the matter, the board concluded
that that the owner in Devick had not met the
onus necessary to persuade it that, in the absence of
the prospect of highway realignment, any of the various
applications for rezoning to commercial uses would have
been granted. The board determined the highest and best
use of the owner's lands to be as a holding property,
and fixed the market value on that basis as between
$11,500 and $12,000 per acre.
[54] Faced with these findings, which were clearly
unhelpful to the claimant's case, the claimant was content
to sit it out at least until the appeal from the board's
decision in Devick was heard and decided by the
Court of Appeal. The Court, in its reasons for judgment
rendered February 23, 1998, was critical of the board's
treatment of the evidence on the issue of project influence
and also considered that the board, in requiring the
owner to establish that the failure to obtain rezoning
was "based solely" on the expropriating authority's
intentions, had probably imposed an excessively onerous
burden. The Court concluded at p. 202 (63 L.C.R.) that,
if the board had not fallen into error by disregarding
oral evidence adduced by the owner as to whether there
had been project influence, improperly drawing an inference
against the owner for failing to provide expert planning
evidence, and requiring the owner to prove that the
failure to obtain rezoning was "based solely"
on the authority's intention to realign and reconstruct
the highway, "the Board would have found that the
petitioner had discharged the onus of establishing that
at the time of the taking a reasonable expectation of
rezoning existed." The Court of Appeal then proceeded
to make its own determination as to the highest and
best use of the Devick property, which it found as having
commercial potential, and fixed a value on the property
which equates to approximately $18,200 per acre.
[55] Although, as Mr. Burke explained, the appellate
decision in Devick cleared the way for the claimant
to advance its compensation claims before the board,
other difficulties remained. Terry Kerslake, the appraiser
retained by the claimant in February, 1999 to value
the westerly portion of Lot 42, estimated a market value
of approximately $40,000 per acre based on his conclusion
that highest and best use was for commercial use. Meanwhile,
the respondent's appraiser, Danny Grant, who concluded
that the highest and best use was as a holding property
for residential development, estimated values ranging
between $5,000 and $11,600 per acre. The parties were
therefore far apart on the valuation question. Moreover,
Mr. Grant later revised his estimate in light of amendments
to section 44 of the Act which now required that both
general and special benefits to an owner be taken into
account in determining the amount of compensation payable.
Evidently, he considered that applying the amended statutory
provision to the circumstances of this case effectively
negated the payment of compensation on account of market
value.
[56] Claimant's counsel on this cost application, Lisa
D. McBain, also alluded to other issues which had arisen
in the course of the proceeding and which she said necessarily
added to the complexities involved. These included the
jurisdictional question raised in light of the Ocean
Port decision, the procedural questions surrounding
the respondent's rather last minute application to amend
its Form B and the claimant's corresponding request
to conduct further examinations for discovery, and the
whole question of settlement.
3.4.2 The Degree of Success
[57] When measuring the degree of success by the determination
of the issues, no conclusion can, of course, be drawn
as to the five central issues identified by the claimant
on its compensation claim since the matter settled without
any of those issues being determined on their merits.
Subject to the outcome of the appeal, the claimant did
succeed in persuading the board that a settlement of
all its claims, except for costs, proceeded on the claimant's
interpretation of the terms of settlement. The claimant
did not succeed on its jurisdictional challenge to the
board's institutional independence. The contested application
on the respondent's entitlement to amend its Form B
resulted in the respondent being permitted to do so
on certain conditions which included the claimant's
right to conduct a further limited examination for discovery
of one of the respondent's representatives. On the determination
of this motion, I would suggest the results were therefore
somewhat mixed.
[58] Where a settlement of an expropriated owner's
claims has taken place, the board in the past on final
cost reviews has frequently looked at the amount of
the settlement compared with the amount of the advance
payment, and sometimes with the amount of the claim
advanced, in order to make an assessment of the degree
of success.
[59] A particular difficulty on this assessment arises
from the constraints which, in finding that a settlement
had been concluded, I placed upon my decision in light
of the prospect of an appeal. I said at pp. 32-3 (70
L.C.R.):
At the hearing of this application, I was made privy
to all of the correspondence and other communications
which flowed between counsel setting out in detail
the proposed terms of the various offers to settle
and the responses to those offers. For that reason,
I indicated my intention to disqualify myself for
the future from adjudicating the claimant's compensation
claim if it were determined that the claim had not
been settled and the parties thereafter proceeded
to a hearing. I also do not intend to set out the
monetary terms of any of the offers, including the
claimant's offer of April 6, 2000, which purportedly
resulted in a setttlement of the claim, since disclosing
such details here could arguably prejudice the fair
hearing of any subsequent compensation proceeding.
[60] Although I disqualified myself from adjudicating
the claimant's compensation claim, the parties agreed
that it was appropriate for me to conduct this section
45 cost hearing. However, the concern which I expressed
around disclosure of the monetary terms of settlement
continues with the settlement question now before the
Court of Appeal. This handicaps somewhat my ability
to discuss openly the degree of success achieved by
the claimant.
[61] The settlement in this matter proceeded on the
basis that the claimant had not received by way of an
advance payment any compensation for the taking to that
point. From that perspective, and also bearing in mind
what I understand to have been the final estimate of
value loss reached by Mr. Grant, the respondent's appraiser,
the agreement reached to pay what I would characterize
as a substantial amount of compensation by way of settlement
must be construed as giving the claimant no small degree
of success.
3.4.3 Conduct of the Claimant's Case
[62] Having already made a number of observations concerning
the way in which this case was prepared and conducted,
including the claimant's rationale for proceeding over
the years in the way it did, any further assessment
of this factor can perhaps more usefully be undertaken
in the context of examining the particular costs at
issue.
4. THE LEGAL COSTS
[63] Throughout the proceedings in this matter, the
claimant retained Mr. Burke as its principal counsel.
Evidently the claimant's principal, Mr. Simpson, was
a long standing client. The first legal accounts presented
for review were rendered to the claimant in 1989 and
1991, when Mr. Burke was with the firm of Webber &
Company in Kamloops. The next five accounts were rendered
between 1992 and 1997 during which years Mr. Burke was
a partner in the Kamloops firm of Gillespie Renkema
Burke. Thereafter the three accounts rendered, dated
between September, 1998 and June, 1999, were from the
firm of Burke Frame, which is situated in Chase, B.C.
The firm of Burke Frame has continued to represent the
claimant in the period after June, 1999, when the Tariff
came into force, up to the time of and including this
section 45 hearing. To simplify matters, I will refer
to all of the accounts in question as emanating from
the "claimant's law firm".
[64] It is necessary for the purposes of this section
45 cost review to distinguish between those legal costs
incurred in the period before the the Tariff came into
force and those which were incurred thereafter.
4.1 Pre-Tariff Legal Costs
[65] The claimant's law firm rendered a total of 10
accounts for services rendered in the period between
September, 1987 and late June, 1999, eight of which
include fee charges. The dates of the accounts, showing
the breakdown as between fees, disbursements, GST and
PST, together with the amounts reimbursed by the respondent
in respect of the accounts, I calculate to be as follows:
| Date |
Fees |
Disbs. |
GST |
PST |
Total |
Paid |
June 1/89
Oct. 7/91
Jan. 31/92
Feb. 24/92
Jul. 29/92
Jan. 27/93
Jan. 21/97
Sep. 30/98
Jan. 28/99
Jun. 27/99 |
$ 510.00
0.00
8,740.00
0.00
3,062.25
2,760.00
73.99
705.00
1,365.00
502.50 |
$ 76.55
126.00
287.53
245.50
320.04
45.45
46.88
48.11
97.66
12.56 |
$ 0.00
0.00
631.05
17.18
236.76
196.39
8.46
52.72
102.39
36.06 |
$ 0.00
0.00
0.00
0.00
76.50
165.90
5.18
49.35
95.55
35.18 |
$ 586.55
126.00
9,658.58
262.68
3,695.55
3,167.74
134.51
855.18
1,660.60
586.30 |
$ 0.00
126.00
9,133.22
262.68
3,217.32
2,777.88
0.00
0.00
0.00
0.00 |
| TOTAL |
$17,718.74 |
$1,306.28 |
$1,281.01 |
$427.66 |
$20,733.69 |
$15,517.10 |
[66] In the period between September, 1987 and May,
1993, the claimant's law firm recorded a total of 81.15
hours on the file. Particulars of the legal work done
are shown in the first five fee accounts rendered, most
of which are accompanied by detailed time sheets.
[67] The first fee account dated June 1, 1989 detailed
meetings between Mr. Burke and Mr. Simpson between September
and November, 1987 in regard to the rezoning application
for Lot 42 which was before the City of Kamloops. The
time recorded was 3.4 hours.
[68] The second fee account dated January 31, 1992
itemized work performed between September, 1990 and
January, 1992, which included putting in place a retainer
agreement, preparing and filing the claimant's Form
A and reviewing the respondent's Form B, preparing and
exchanging lists of documents, preparing for and attending
at examinations for discovery, communicating with counsel
on the Devick claim, instructing experts, and communicating
with both the client and the respondent. The time recorded
for this work was 43.7 hours.
[69] The third fee account dated July 29, 1992 covered
work in the period between February and July, 1992,
during which the claimant's law firm was engaged in
meetings and discussions with the client, with the appraiser,
Mr. Cavazzi, with a consultant on the liquor licensing
question, Dennis Coates, Q.C., and with counsel for
both the respondent and Devick. It was also during this
period that the claimant brought a notice of motion
to have its claims heard together with that of Devick.
The time recorded in this period totalled 16.95 hours,
which included 2.85 hours of student's time involved
in preparing documents for review by Mr. Cavazzi.
[70] The fourth fee account dated January 27, 1993
included legal services provided between November, 1992
and January, 1993. Most of the detailed entries concern
communications with Mr. Cavazzi and discussion of his
report, communications with the client, and with respondent's
counsel and agents, and the subject of advance costs.
The time recorded was 13.8 hours.
[71] The fifth fee account is dated January 21, 1997,
but covers legal work in the period between March and
May, 1993. This included attending before the board
with respect to adjournment of the hearing of the claimant's
compensation claim, some further communications with
the appraiser, and reviewing costs and preparing for
an advance cost hearing which, so far as I can discern,
did not take place. The detailed time sheets record
a total of 3.3 hours in this period; however, the fee
account rendered was only for $73.99.
[72] For reasons which I have already set out, there
followed a lengthy hiatus between May, 1993 and April,
1998 during which no legal work was performed. However,
from the end of April, 1998 until late June, 1999, the
claimant's law firm recorded a further 17.15 hours on
the file. Particulars of the work performed are shown
in the three remaining fee accounts rendered together
with back up time sheets. All of the legal work billed
in this period was provided by Jeffrey Frame, the more
junior lawyer in the firm.
[73] The sixth fee account dated September 30, 1998
covered legal services from April 30, 1998 to September
30, 1998, during which period Mr. Frame reviewed and
organized the file, communicated with the respondent
and with the board in regard to having the compensation
claim set down for hearing, and communicated as well
with Mr. Cavazzi, the appraiser who had done work on
the claim some years earlier. The time recorded was
4.7 hours.
[74] The seventh fee account dated January 28, 1999
detailed legal work performed from October, 1998, through
January 1999. A great deal of the time spent in this
period had to do with reviewing expert reports and meeting
or otherwise communicating with the claimant's new appraiser,
Mr. Kerslake. There were also meetings and communications
with Devick's counsel, evidently in connection with
the recent appellate decision, as well as with Mr. Coates,
and continuing contact with respondent's counsel and
the board. A total of 9.1 hours was recorded in this
period.
[75] The final fee account rendered in the pre-Tariff
period is dated June 27, 1999 and contains entries between
February, 1999 and June 24, 1999, which are concerned
with meetings or other communications with the client
and the appraiser, and some work on costs. The time
recorded for this work was 3.35 hours.
[76] At the cost hearing Mr. Burke provided a profile
summary of his experience in the practice of law generally
and in the field of expropriation law particularly.
Having been called to the British Columbia bar in 1972,
he thereafter practised in Kamloops until March, 1998
when he established his own firm in nearby Chase. Since
the late 1970s he has been intensively involved in expropriation
matters. His profile summary sets out that between 1983
and 1993 he acted for hundreds of expropriated owners
and was involved with every major highway project and
other public projects within the City of Kamloops and
the surrounding area. In the 1990s, he continued to
practice in the field of expropriation and to assert
large and complex claims before both the board and private
arbitrators. He testified that, with one possible exception,
no other lawyer in British Columbia has been involved
for as long and as often as he has in the field.
[77] In rendering his first legal account presently
under review in June 1989, Mr. Burke charged his time
at $150 per hour. Thereafter, in each of the three subsequent
fee accounts covering legal services provided in the
period between September, 1990 and January, 1993, he
consistently charged his time at $200 per hour. The
fifth fee account appears to be something of an anomaly.
[78] Mr. Burke also testified concerning the experience
and fee rate charged by Mr. Frame. Mr. Frame began assisting
him in 1992 while a summer student out of law school.
It was at that time that he recorded 2.85 hours of billable
time, reflected in the third fee account, which the
firm charged out at $85 per hour. Mr. Frame subsequently
articled with the claimant's law firm and was called
to the British Columbia bar in May, 1994. Therefore,
at the time Mr. Frame became intensively involved in
the claimant's case in the spring of 1998, he was approximately
a four year call. However, according to Mr. Burke, his
year of call did not accurately reflect the depth of
experience which Mr. Frame had already amassed in working
on expropriation matters. Mr. Burke further made the
point that he personally had refrained from billing
the file during the 1998-'99 period to avoid any concerns
around duplication. Mr. Frame billed all of his time
on the three fee accounts rendered during this period
at the rate of $150 per hour, which Mr. Burke said was
the minimum charge out rate at the claimant's law firm
at the time.
[79] The respondent raised relatively few concerns
with respect to the fee accounts detailed above. Its
objections were confined to the first fee account dated
June 1, 1989, to the time docketed in the second
fee account for what was described as preparing a "new
contingency agreement", and to the hourly rates
charged by Mr. Burke in the 1990-'93 period and by his
student, Mr. Frame, in the summer of 1992. There was
also a question as to whether any interest ought to
be allowed for late or deficient payment of these accounts
by the respondent, but I propose to defer consideration
of that question until later in these reasons.
[80] The respondent argues that the first fee account
should be disallowed since it refers to legal work performed
in 1987 with respect to the application by Leonie for
rezoning, three years before the expropriation, which
had nothing to do with advancing a compensation claim.
The claimant maintains that the City's refusal to rezone
Lot 42 at the time was based upon advice received from
the respondent concerning its proposed highway widening
project, and that the claimant sought and obtained Mr.
Burke's advice about the legality of such refusal.
[81] This claim for costs is, of course, consistent
with the claimant's theory of project influence. In
the absence of a compensation hearing, that theory has
not been tested in this case. Section 45(3) provides
that an expropriated owner is entitled to be paid "costs
necessarily incurred" for asserting a claim for
compensation or damages and section 45(7)(a) provides
that the costs payable in this instance are the "actual
reasonable" legal costs. The question is whether
it was necessary and reasonable under the costs provisions
of the Act for the claimant in 1987, which had not yet
acquired an interest in Lot 42, to secure legal advice
concerning rezoning some two years before the respondent
first publicly indicated that the highway would be realigned
and widened, three years before the expropriation occurred,
and nearly four years before the claimant filed its
Form A application with the board.
[82] The board early in its jurisprudence under the
Act recognized that a portion of the cost of preparing
and evaluating a claim in almost all instances precedes
the formal expropriation process. In Creative Stretch
Fabrics Ltd. v. Pitt Meadows (District) (1991),
46 L.C.R. 111, on an application for advance payment
of costs, the then chair of the board, J.H. Heinrich,
Q.C., stated as follows at p. 118:
In my view, receipt by an owner of a letter from
a public body with the power to expropriate land containing
an overture that part of all of the owner's land is
required for a public project is indicative of a bona
fide intention to acquire the owner's land to
fulfil the authority's public mandate. I am of the
opinion that at that moment in time, that is, from
the time an owner receives a bona fide indication
that the public authority intends to acquire his land,
by letter or otherwise, he is entitled to seek professional
advice, the reasonable costs of which are recoverable
once an expropriation notice has been served in the
event the parties have been unable to reach agreement
that payment of such costs shall be for the account
of the expropriating authority.
[83] In the present instance, I have no such evidence
of an indication by the respondent at the relevant time,
and I must conclude that the legal costs as reflected
in the first fee account presented for review are too
remote in all of the circumstances to require reimbursement
by the respondent. Accordingly, I disallow in its entirety
the claimant's cost claim in respect of that account,
comprising fees of $510.00 and disbursements of $76.55.
[84] As to the second area of contention, the respondent
refers to an entry in the time dockets indicating that
Mr. Burke had met with Mr. Simpson for 1.5 hours on
March 28, 1991 to prepare what is described as a "new
contingency agreement". There is also an entry
for 2.6 hours on May 17, 1991 indicating that Mr. Burke
and Mr. Simpson had met on the question of a "fee
contract". In the second fee account rendered,
these entries are described respectively as "to
meeting with you and preparing retainer agreement"
and "to preparing to meet with you, to meeting
with you, to revising retainer agreement". These
entries are somewhat puzzling in light of Mr. Burke's
evidence, on cross-examination, that there never was
a contingency agreement, that he also had no copy of
any retainer agreement, and that he believed no such
agreement was ever signed.
[85] I have some difficulty in accepting that 4.1 hours
of time should be allowed for meetings related to agreements
which Mr. Burke has testified were never concluded.
I accept his evidence that no contingency agreement
was put in place, and I suggest it is a reasonable inference
to draw that Mr. Burke must therefore have proceeded
on the file on some other at least verbal understanding
with Mr. Simpson as to the nature and scope of his retainer.
Given the state of the evidence, I consider it reasonable
to allow only 1.0 hour for this item. This has the effect
of reducing Mr. Burke's total recoverable time on the
second, third and fourth fee accounts to 68.5 hours.
[86] This leaves for consideration the respondent's
third objection which is to some of the hourly rates
charged by the claimant's law firm. When making advance
payments on account of costs during the early 1990s,
the respondent first made deductions from each of the
fee accounts it reimbursed. In a letter dated February
15, 1993 to the claimant's law firm, the respondent
for the first time advised that these deductions had
been based on the advice of respondent's counsel that
Mr. Burke's hourly rate as senior counsel should be
adjusted from $200 to $175, and that of the student
from $85 to $55. At this cost hearing, the respondent
maintained that those downwardly revised rates were
consistent with what the board in the past had allowed
for senior counsel and for student time during the relevant
period.
[87] In support of its submission, the respondent cited
the board's final cost decision in Branscombe v.
British Columbia (Minister of Transportation and Highways)
(1994), 54 L.C.R. 1. Mr. Burke acted as claimants' counsel
in the Branscombe compensation proceeding. It
is not entirely clear from the cost decision what period
was covered by the legal accounts presented for review.
However, the board in its compensation decision found
that the acquisition of the property in question occurred
in May, 1991 (see 51 L.C.R. 241) and the compensation
hearing took place, it appears, in late 1992. Therefore,
the time periods appear roughly to correspond with those
under consideration here. Mr. Burke in Branscombe
charged his time at $175 per hour. The time of articled
students involved with the file was charged at $85 per
hour and, in one instance, at $110 per hour. The former
chair of the board, Jeanne M. Harvey, stated at p. 5
of her reported cost decision:
I am satisfied, having regard both to the previous
decisions of the board and hourly rate being charged
by senior counsel on the file at $175, that the reasonable
hourly rate to be billed for student hours necessarily
incurred is $60.
[88] Claimant's counsel on this cost application referred
to the final cost decision of a former vice chair of
the board, Fiona M. St. Clair, in Summit Enterprises
Ltd. v. Kamloops (City) (1995), 57 L.C.R. 24. Mr.
Burke was also counsel for the claimant on this case
and his fee charges between October, 1992 and November,
1994 were presented, and allowed, at the rate of $185
per hour. Those of a student involved on the file in
1992 were presented at $85 per hour and allowed at $60
per hour. The vice chair relied on evidence provided
from a market survey for legal services as to what was
reasonable at the relevant time.
[89] The one clear observation that I draw from these
two cost decisions is that neither supports an hourly
fee charge of $200 for senior counsel in the relevant
period from September, 1990 to January, 1993. Bearing
in mind that the preponderance of the legal work performed
by Mr. Burke in terms of hours spent occurred prior
to February, 1992, I am satisfied that it would be reasonable
to allow his fee charge for the 68.5 hours I have allowed
in the second, third, and fourth fee accounts at the
rate of $180 per hour. In the fifth fee account rendered
more than three and a half years after the work was
performed, there is only a nominal fee charge amounting
to $73.99, which I allow as presented.
[90] Mr. Frame's time as a student in 1992, amounting
to 2.85 hours, I would allow at the rate of $60 per
hour, consistent with previous board decisions. The
respondent raised no objection to Mr. Frame's fee rate
of $150 per hour for the 17.15 hours of time spent during
the period from April, 1998 to June, 1999. Given the
evidence before me as to the experience he had acquired
in expropriation matters by that date, I consider his
rate to be reasonable and therefore allow his fee charges
as presented.
[91] At the outset of the section 45 cost hearing,
claimant's counsel conceded that the cost of photocopies
in the legal accounts rendered should be allowed at
$0.15 per page and the cost of facsimiles at $0.35 per
page rather than the rates reflected in those accounts.
The respondent agreed to those rates and took no objection
to any of the other items of disbursement in the pre-Tariff
legal accounts under review. I have disallowed the first
account dated June 1, 1989 in its entirety. This includes
$76.55 in billed disbursements. Based upon my review
of the backup detail which accompanied the disbursement
claims on the remaining nine accounts, I calculate that
the adjustments for photocopying and facsimile charges
have the effect of further reducing the disbursements
by a sum of $406.80. The remainder of the disbursements
I allow as presented.
[92] Accordingly, I have determined that legal costs
in the pre-Tariff period should be allowed in the amount
of $15,147.49 for fees and $822.93 for disbursements.
The claimant having acknowledged that it is a GST registrant,
no GST is payable on these amounts. PST is chargeable
on a portion of the fee costs incurred, and I calculate
the amount on a pro rata basis to be $365.66.
4.2 Post-Tariff Legal Costs
[93] The claimant's law firm provided to the respondent
and filed for the purposes of this cost hearing an amended
legal bill of costs in tariff format dated August 8,
2000. The amended bill relates, in the first instance,
to various items of description of legal work performed
on the claimant's behalf from the time the Tariff came
into force on June 28, 1999 up to and including this
section 45 cost review. Schedule 1 of the Tariff lists
23 items of description of legal costs which may be
recoverable. The claimant's amended bill includes entries
for 12 of the items. I propose to deal with these items
before turning briefly to consider the claimant's claims,
also set out in the amended bill, for disbursements
and applicable taxes.
[94] In light of what the board has already said in
prior cost decisions about the statutory and regulatory
regime which governs an assessment of costs under the
Tariff, including the Budd decision to which
I referred earlier, it is unnecessary for me to review
in detail all of the provisions of the Tariff as they
apply to this matter. However, before reproducing in
Tariff format the items of description under which legal
costs are said to have been incurred, I should perhaps
make some reference to the units which are set out.
[95] For some items of description the Tariff prescribes
a fixed number of units and for others it provides for
minimum and maximum numbers of units. Where a range
of units is indicated, the reviewer has the discretion
under section 4(6) to allow a number within that range,
having regard to how much time "should ordinarily
have been spent" on the particular matter. Also,
if an item in the tariff provides for a fixed number
of units for each day but the time spent during the
day is less than 2 1/2 hours, only half the number of
units is allowed for that day. Similarly, if fixed units
for preparation for an attendance are provided but the
time spent on the attendance is less than 2 1/2 hours,
only half the number of units for preparation is allowed.
There is also provision for increasing the number of
units allowed by half where the time spent during the
day exceeds 5 hours.
[96] The twelve items of description, together with
the minimum and maximum or fixed numbers of units allowed
and the units actually claimed in the claimant's amended
legal bill of costs, are as follows:
| Item |
Description |
Fixed |
Min. |
Max. |
Claimed |
| 1 |
Correspondence,
conferences, instructions, investigations or negotiations
by a claimant relating to a claim, whether before
or after commencement, for which provision is
not made elsewhere in this tariff |
|
1 |
20 |
15 |
| 4 |
Instructing expert
witness if witness prepares a report, for each
expert (maximum of 3 witnesses, without leave) |
|
1 |
5 |
10 |
| 5 |
Every process for
commencing and prosecuting a claim before the
board |
|
1 |
10 |
5 |
| 10 |
Preparation for
examination of a person coming under Item 11 for
each day of attendance
(a) by party conducting examination |
3 |
|
|
3 |
| 12 |
Preparation for
an application referred to in Item 13, for each
day of hearing, if the hearing has commenced
(b) opposed (3 motions) |
3 |
|
|
7.5 |
| 13 |
Interlocutory application
or other application for which provision is not
made elsewhere in this tariff, for each day
(b) if opposed (3 motions) |
5 |
|
|
12.5 |
| 14 |
Preparation for
attendance referred to in Item 15, for each day
of attendance |
2 |
|
|
6 |
| 15 |
Attendance before
board to settle an order or to assess costs, for
each day |
4 |
|
|
12 |
| 18 |
Preparation for
hearing, if claim set down, for each day of hearing,
to a maximum of 30 units |
5 |
|
|
30 |
| 21 |
Process for setting
claim down for hearing |
1 |
|
|
1 |
| 22 |
Negotiations, mediation
and process for settlement, discontinuance, or
dismissal by consent of any claim if settled,
discontinued, or dismissed by consent as a result
of the negotiations, for each day to a maximum
of 60 units |
15 |
|
|
30 |
| 23 |
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, for each day of travel by the solicitor |
2 |
|
|
6 |
[97] The number of units claimed totals 138. The parties
were in agreement that the appropriate scale at which
legal costs under the Tariff should be assessed is scale
2. Under section 4(1), scale 2 is "for matters
of ordinary difficulty or importance" and, under
section 4(4), the value allowed on an assessment of
legal costs under scale 2 is $140 for each unit. Accordingly,
the amended legal bill of costs of the claimant in respect
of the units claimed is for the sum of $19,320.00.
[98] The most contentious issue which arose from the
claimant's presentation of its amended legal bill of
costs was the respondent's request, during cross-examination
of Mr. Burke, that details of the actual legal accounts
rendered to the claimant in the post-Tariff period be
disclosed at the hearing. This request flowed from the
respondent's submissions that, pursuant to section 45(3)
of the Act which continues to apply to costs assessed
under the Tariff, a claimant is only entitled in the
first instance to be paid costs "necessarily incurred",
and that the word "incurred" requires proof
that actual accounts have been rendered. The threshold
requirement to prove the existence of actual accounts
on a final cost review before the board, the respondent
argued, is different from what is required on a taxation
of party and party costs in the Supreme Court under
Rule 57 of the Rules of Court, where there is no express
requirement for the costs at issue to have been incurred.
Furthermore, in the respondent's submission, the account
details offer probative evidence, particularly in the
absence of timesheets, as to whether the work reflected
in the items of description in the bill of costs was
actually performed and was, pursuant to section 3(2)
of the Tariff, "proper or reasonably necessary
to conduct the proceeding". Finally, the respondent
suggested that disclosure of the account details was
necessary to demonstrate that the amount being claimed
under the bill of costs in tariff format did not exceed
the amounts actually billed to the claimant since otherwise
the claimant or its professional advisors would be receiving
a windfall under the Tariff.
[99] The claimant objected to disclosure of actual
account details, or indeed as to whether accounts had
been rendered, as irrelevant to a determination of costs
under the Tariff. In the claimant's submission, the
"actual reasonable" standard which formerly
governed an assessment of costs under section 45(7)(a)
of the Act has been displaced by the "amounts prescribed
in the tariff" under section 45(7)(b). Viva
voce evidence from Mr. Burke had already been adduced
by the claimant in the course of the cost hearing as
to the nature and extent of the legal work performed
in the post-Tariff period and as to its necessity and
reasonableness. This, the claimant argued, was sufficient
to allow me to assess legal costs under Schedule 1 of
the Tariff. Even if those costs happened to exceed the
amounts actually billed to the client, they were still
recoverable if they met the criteria of the Tariff.
Furthermore, in the claimant's submission, the legal
accounts in question were protected by solicitor and
client privilege.
[100] When I heard these submissions in the course
of the cost hearing, it was unclear to me whether the
word "incurred" in section 45(3) of the Act,
which also appears in section 2 of the Tariff, required
evidence of the actual accounts. In order to ensure
that all relevant and admissible evidence was before
me, I ruled that Mr. Burke should disclose details of
the amounts billed by the claimant's law firm to the
claimant at least for the purpose of verifying that
particular costs had been "incurred". I held
that, in the context of a cost review, evidence bearing
on whether legal costs had been incurred was not a matter
that continued to be protected by solicitor-client privilege.
[101] Mr. Burke then disclosed the amounts which had
been billed to the claimant for fees, disbursements,
and applicable taxes in two accounts dated March, 29,
2000 and April 28, 2000, respectively. For the first
of those accounts he also provided details of the hours
billed by each of the lawyers involved and their hourly
rates. Somewhat ironically, I note that a closer examination
of the client ledger included in an affidavit provided
by the claimant's law firm at the cost hearing had already
revealed the amounts billed in those two accounts. In
my view it is sufficient simply to observe that the
actual legal costs billed to the claimant in those accounts
significantly exceeds the amount claimed in the amended
legal bill of costs.
[102] The role which "actual" costs play
in a section 45 cost review under the Tariff has since
been examined at length in the Budd decision.
As to the meaning of "incurred", I referred
in Budd to a slightly earlier cost decision in Dennis
Gow Chu and Shew Ha Chu (Estate) v. The Board of School
Trustees of School District No. 36 (Surrey), unreported,
January 9, 2001, E.C.B. No. 25/99/195. This decision
followed an advance cost review which I conducted pursuant
to section 48 of the Act. I found that, since the costs
at issue were the amounts prescribed under the Tariff
rather than the actual costs, the rendering of accounts
to the owners took on far less relevance at an advance
cost review than previously had been the case. At para.
46 of the Chu decision, I stated:
It seems to me that advance costs may be said to
have been "incurred" by an owner for the
purposes of the tariff regulation when legal and appraisal
services falling within the items of description in
the tariff schedules have been provided to the owner.
Sufficient details of the work itemized in a bill
of costs are required so that they can be properly
assessed on an interim basis under the tariff schedules.
[103] In Budd I found this statement to be similarly
applicable on a final cost review under section 45.
At para. 42 of that decision, I then went on to state
in part as follows:
In my view, the new costs regime does not contemplate
as a standard practice the comparison of actual costs
with tariffed costs for the same work in order to
establish an upper limit on cost recovery based on
accounts rendered to the owner (...) Rather, where
the tariff regulation applies, the legal and appraisal
costs to be considered are those in respect of steps
taken in the proceedings set out in a tariffed bill
of costs which have been proven to be "proper
or reasonably necessary" and for which amounts
have been prescribed under the tariff.
[104] I will have occasion to return to this question
later when considering the amended real estate appraisal
bill of costs.
[105] A second issue concerning the amended legal bill
of costs arose out of Mr. Burke's testimony that, in
setting out the number of units claimed for particular
items of description where a range is provided under
Schedule 1 of the Tariff, he had not attempted to to
take into account or make any apportionment for work
of the same or similar description already billed for
in the pre-Tariff period. His explanation for not doing
so was that, unlike under the Supreme Court Rules, the
Tariff is silent on transitional provisions or apportionment
and so he could find nothing in the way of guidelines
to assist.
[106] In the Chu case, the question was posed
whether the units to be allowed under the Tariff should
reflect pre-Tariff work. I observed as follows at para.
61:
The tariff regulation contains no transitional provision
specifying how costs which an owner has incurred for
legal and appraisal services performed in the pre-tariff
period, and which the expropriating authority has
already reimbursed, should be factored into the number
of units allowed for such services under the tariff.
However, common sense would suggest that the owner
or his or her professional advisors should not receive
a windfall from the introduction of the tariff in
the sense of being compensated twice for the same
work.
In that case, evidence of time spent on both pre-Tariff
and post-Tariff legal work of the same or similar description
was taken into account in fixing the appropriate number
of units allowable under the tariff so as to avoid duplication
in an advance award of costs. In Budd it was
noted that a similar exercise would assist in arriving
at the appropriate allocation on a final cost review.
[107] Bearing in mind these operative principles, it
is clear that downward adjustment is required to some
of the units reflected in the amended legal bill of
costs of the claimant. A comparison of time spent on
particular items before and after the Tariff came into
force is not possible in the absence of detailed timesheets
for the post-Tariff period. The provision of time records
would be of assistance. However, the assessment of appropriate
units under the Tariff is, in any case, not predicated
on the basis of time actually spent but rather on the
more objective standard of the amount of time which
"should ordinarily have been spent".
[108] During final submissions, respondent's counsel,
Fran Crowhurst, acknowledged that the amended legal
bill was largely supportable but that there should be
reductions with respect to Item 1 (correspondence, etc.)
and Item 5 (process for commencing or prosecuting claim)
to account for overlap or duplication and with respect
to Item 15 (attendance to assess costs) since the section
45 review occupied, she said, somewhat less than 2 1/2
days. By her calculation, the total number of units
should be reduced by 12.
[109] I agree with the respondent that Item 1 should
be reduced by 5 units. It also seems to me that most
of the process involved in commencing and prosecuting
the claim, in particular the preparation of the Form
A, took place in the pre-Tariff period, although I would
allow 2 units in respect of the process associated with
interlocutory applications before the board. My record
of the time spent on this cost application indicates
that it fully occupied the first two hearing days and
more than 3 hours on the third hearing day. Accordingly,
I would make no reduction on that account.
[110] My review of the other items of description indicate
that they were proper or reasonably necessary to conduct
the proceeding. These include the units claimed to instruct
two expert witnesses (presumably the appraiser, Mr.
Kerslake, and the consulting engineer, Mr. Lewis), to
prepare for the further examination for discovery of
the approving officer, Mr. Puhallo, to prepare for and
attend on three interlocutory motions regarding jurisdiction,
amendment, and settlement respectively, to prepare for
a scheduled nine-day compensation hearing before the
board, and to negotiate a settlement.
[111] I therefore allow 130 units in the amended legal
bill of costs. At scale 2 as agreed, this amounts to
the sum of $18,200.00. For the reason already given
above, GST is not payable on this amount. However, PST
applies in the sum of $1,274.00.
[112] Section 5(1) of the Tariff provides that, in
addition to the costs allowed on a review, the reviewer
"may allow a reasonable amount for expenses and
disbursements that were necessarily and properly incurred
in the conduct of the proceeding." The disbursements
reflected in the amended legal bill of costs total $1,614.36.
They were supported by the affidavit of a legal secretary
in the claimant's law firm deposing as to the manner
in which disbursements are calculated and posted, with
substantial backup detail.
[113] The respondent raised no significant issues with
respect to disbursements. The only concerns, I believe,
are that the amended bill claims for office photocopies
(totalling 3,048 pages) at $0.20 per page and also claims
for GST. Given that the claimant at the cost hearing
abandoned any claim with respect to GST and also did
not dispute that photocopying costs should be recovered
at the rate of $0.15 per page, I would allow the disbursements
as presented after adjusting for those two items. The
adjustment for photocopying has the effect of reducing
the disbursements by $258.01 to a total of $1,356.35.
5. THE REAL ESTATE APPRAISAL COSTS
[114] At the cost hearing the claimant presented for
review the pre-Tariff account, dated July 7, 1999, of
the real estate appraisal firm Flynn Mirtle Moran, as
well as an amended real estate appraisal bill of costs,
dated August 8, 2000, in respect of work undertaken
by that firm since the Tariff came into force. Mr. Kerslake,
the real estate appraiser with the firm who was principally
involved on the file, testified at the hearing concerning
his background and role. His appraisal report, dated
March 7, 2000, was also placed in evidence.
[115] During his testimony, Mr. Burke explained that
Mr. Kerslake had been retained by the claimant to prepare
an appraisal report of the westerly portion of Lot 42
once the claimant had determined in the spring of 1998,
following the appellate judgment in Devick, to
pursue its compensation claim before the board, and
after being advised by Mr. Cavazzi, the claimant's previous
appraiser, that he was no longer prepared to be involved
in the case. He said the firm of Flynn Mirtle Moran
was a logical choice because of its familiarity with
the property in question. Mr. Flynn had earlier been
retained as one of the owner's appraisers in the Church
case. Mr. Kerslake was the only member of the firm willing
at that point to take on the assignment.
[116] Mr. Kerslake's background, as he testified and
as his curriculum vitae shows, has primarily been as
a real estate appraiser in the United Kingdom. Qualified
F.R.I.C.S. in 1977, he had over 18 years of experience
in fee appraisals there before relocating to Canada
and joining the firm of Flynn Mirtle Moran in 1996.
He was accredited AACI in late 1997. Mr. Kerslake testified
that, typically, he takes on more complex and time-intensive
assignments often involving litigation, including expropriation-related
matters. He described the level of difficulty of this
assignment as being somewhere between average and above
average. Because of its historical nature, involving
an expropriation in 1990 and the allegation of project
influence prior to that time, the assignment was necessarily
more time-consuming than might otherwise have been the
case. In setting out the terms of his retainer in a
letter to the claimant dated February 22, 1999, Mr.
Kerslake stated that "it is reasonable to assume
that the fees will not be less than $10,000 and are
probably going to be substantially higher."
5.1 Pre-Tariff Appraisal Costs
[117] The appraisal account dated July 7, 1999 and
rendered to the claimant reflects fees in the amount
of $11,062.50, disbursements of $500.00, and GST of
$809.38, for a total of $12,371.88. The fee amount is
calculated by multiplying 88.5 hours spent by Mr. Kerslake
from the time he was retained until the end of June,
1999, by his hourly fee charge of $125, which he suggested
was the industry standard for someone with his level
of qualifications and experience.
[118] Mr. Kerslake's time sheets, as I interpret them,
indicate that he recorded approximately 6.2 hours in
the period between December, 1998 and February, 1999
in initial meetings with the claimant's law firm and
the claimant's principal, including one on-site meeting
at the subject property, and in reviewing file materials
provided. During the month of April, 1999, the time
entries include detailed review of materials related
to Lot 42 as well as, it appears, the Devick property
(11.9 hours) and a meeting with Mr. Coates, the legal
consultant retained in connection with the liquor licence
question (1.5 hours). In May, 1999, Mr. Kerslake analyzed
his data on highest and best use (2.5 hours) and began
drafting the appraisal report. The drafting of the report,
which included time spent in researching comparable
sales in the before and after taking situations, continued
through June, 1999. Up to June 28, 1999, when the Tariff
came into force, he had recorded 47.4 additional hours
on these tasks.
[119] The time sheets related to the account rendered
on July 7, 1999 also include entries between June 28
and July 1, 1999, during which period Mr. Kerslake conducted
further research into the "after" sales comparables
and inspected both the subject property and the comparables.
The time recorded on these tasks as well as in preparing
the account totalled approximately 19.0 hours. It seems
clear that these items of description properly fall
within the post-Tariff period, and ought to be considered
within the context of the amended real estate appraisal
bill of costs. Accordingly, the true account for the
pre-Tariff period, governed by the "actual reasonable"
standard under section 45(7)(a), is for 69.5 hours at
$125 per hour, or the fee sum of $8,687.50.
[120] The respondent did not take issue with Mr. Kerslake's
hourly rate and accepted that his work was professionally
performed but did suggest that there should be an overall
reduction in the fee account of 20% for overlap and
duplication. This objection had nothing to do with my
observation that the account overlaps into the period
covered by the Tariff but related, instead, to the earlier
appraisal work done on the claimant's behalf by Mr.
Cavazzi.
[121] The respondent placed in evidence two accounts
rendered to the claimant by the firm of D.C. Cavazzi
& Associates Inc. in May and December, 1992, respectively.
They detail, among other things, meetings and communications
with Mr. Burke and Mr. Simpson in regard to the partial
expropriation of Lot 42, inspection and analysis of
the subject property, market research, review of discovery
evidence, analysis of highest and best use, and appraisal
report preparation. No appraisal report in draft or
final form was tendered in evidence. The two accounts
reflect a total of 39.6 hours of billable work at the
rate of $110 per hour. The accounts together total $4,357.50
in fees, $781.15 in disbursements, and $359.71 in GST
for a total amount of $5,498.36. The respondent provided
evidence that it had reimbursed these accounts in full.
[122] The respondent pointed out that the pre-Tariff
fee accounts of Mr. Cavazzi and Mr. Kerslake, taken
together, totalled $15,420.00, and suggested that such
an amount was excessive overall. Ms. Crowhurst also
referred to prior cost decisions of the board in Gerestein
v. Abbotsford (District) (1990), 43 L.C.R. 262,
and Bill's Frontier Restaurant Ltd. v. British Columbia
(Minister of Transportation and Highways) (1996),
58 L.C.R. 204, which found that the owners' changes
of law firms had resulted in duplication of time and
effort on the file for which the expropriating authority
should not be required to pay. Respondent's counsel
argued that these decisions were similarly applicable
to a change in appraisal firms.
[123] While a change mid-stream in an owner's professional
advisors must almost invariably result in some measure
of duplication, whether some corresponding downward
adjustment to the costs recoverable should be made is
a question which depends on the particular circumstances
of each case. There are other cost decisions where the
board has found that the change was unavoidable or the
result of extenuating circumstances and has declined
to make a reduction on that account: see, for example,
McKinnon v. School District No. 36 (Surrey) (1997),
61 L.C.R. 9 at p. 22, and Garnett v. British Columbia
(Minister of Transportation and Highways) (1997),
62 L.C.R. 32 at p. 44.
[124] In the present instance, Mr. Burke testified
(and the legal accounts from the period further demonstrate)
that Mr. Cavazzi was approached about resuming his appraisal
assignment after a hiatus of more than five years but
declined to do so. By that time, Mr. Burke said, Mr.
Cavazzi was acting as a consultant to expropriating
authorities and was refusing to act as an appraiser
on behalf of expropriated owners. It was imperative
that the claimant have an appraisal report prepared
for the compensation hearing, and there was therefore
no option but to seek that expertise elsewhere.
[125] I accept this explanation and consider that this
matter is clearly distinguishable from those cases where
an owner, for no express or apparent reason, elected
to change professional advisors, thereby incurring additional
costs which it would be unreasonable to expect the expropriating
authority to have to reimburse. Mr. Kerslake was asked
in cross-examination whether he had seen Mr. Cavazzi's
report to which he responded that he had been given
some parts of it, had reviewed the comparables contained
in it, but could not recall whether it had been beneficial
to his own work. It strikes me that any use made of
Mr. Cavazzi's work might logically have reduced the
time otherwise required by Mr. Kerslake to undertake
his own research. In all of the circumstances, I am
not prepared to make the reduction the respondent seeks
because it seems to me that any duplication which resulted
was beyond the control of the claimant and unavoidable.
Given the degree of complexity of the assignment, I
also do not consider the expenditure of time and effort
on pre-Tariff real estate appraisal work to have been
excessive.
[126] Therefore, I allow the pre-Tariff fee account
of Flynn Mirtle Moran in the amount of $8,687.50. The
respondent raised several concerns as to disbursements,
but since the $500.00 in disbursements billed in the
pre-Tariff account was evidently only a "projected"
estimate, I prefer to deal with all of the appraisal
disbursements when turning to consider the amended real
estate appraisal bill of costs in Tariff format. Since
the claimant is a GST registrant, GST in the amount
of $809.38 reflected in the pre-Tariff account is not
reimbursable by the respondent.
5.2 Post-Tariff Real Estate Appraisal Costs
[127] Schedule 2 of the Tariff lists 8 items of description
of real estate appraisal costs which may be recoverable,
including (like Schedule 1) either minimum and maximum
or fixed numbers of units. The claimant's amended real
estate appraisal bill of costs includes entries for
6 of these items, as follows:
| Item |
Description |
Fixed |
Min. |
Max. |
Claimed |
| 1 |
Correspondence,
conferences, instructions, or meetings with a
claimant and counsel relating to a claim, whether
before or after commencement, for which provision
is not made elsewhere in this tariff |
|
1 |
20 |
15 |
| 2 |
Inspect and research
subject property |
|
1 |
30 |
20 |
| 3 |
Market research,
including all necessary attendances |
|
1 |
20 |
15 |
| 4 |
Inspection of comparable
properties |
|
1 |
20 |
15 |
| 5 |
Analysis of data
and preparation of a report or reports |
|
1 |
60 |
50 |
| 6 |
Preparation for
hearing, if claim set down, for each day of necessary
attendance of appraiser, to a maximum of 30 units |
5 |
|
|
30 |
[128] The total number of units claimed amounts to
145. As with legal costs, the parties agreed that the
appropriate scale at which appraisal costs should be
assessed is scale 2. The value allowed on an assessment
of real estate appraisal costs under scale 2 is $100
for each unit. Therefore, the amended appraisal bill
of costs of the claimant in respect of the units claimed
is for the sum of $14,500.00.
[129] Like Mr. Burke, Mr. Kerslake in the course of
his cross-examination was asked by respondent's counsel
to disclose details of the actual accounts which he
rendered to the claimant in the post-Tariff period.
In fact, because Mr. Kerslake testified before Mr. Burke,
the issue of relevancy of the actual accounts first
arose in the context of the appraiser's evidence. The
only point of distinction was that no objection was
founded on the basis of solicitor-client privilege.
In ruling that the amounts actually billed by the appraiser
should be disclosed, I said the following:
...I'm prepared to allow the question which the respondent
has posed for the purpose of verifying the costs which
are being claimed have actually been incurred. The
dollar amount which may result from responding to
that question is a matter which perhaps at this point
I will say simply goes to weight. At the end of the
process of my examination of the application of the
Tariff and the evidence required under it, if I decide
that that particular item of evidence is not relevant
to the determination that I have to make then I am,
I would suggest, quite capable of disabusing my mind
of that amount in terms of coming to a determination
as to what costs ought to be awarded under the Tariff
in this matter. (Proceedings, August 15, 2000, pp.
34-5).
[130] It is unnecessary for me to repeat what I have
already said, when reviewing the amended legal bill
of costs, about the role of actual costs. However, unlike
the amended legal bill, the amended real estate appraisal
bill of costs is, it turns out, for a fee amount substantially
greater than what the claimant was actually billed by
the appraiser. This raises more acutely the question
of whether tariffed costs can exceed actual costs in
a proceeding before the board. It is, of course, the
respondent's position that they cannot since otherwise
the result is a windfall to the claimant not contemplated
in either the statute or the regulation governing costs.
The respondent invited me to allow the number of units
under Schedule 2 at the scale 2 unit value of $100 which
would equal the fee amount actually billed by the appraiser
to the claimant.
[131] Claimant's counsel referred me to the case of
Azanza v. Alexander, [1996] B.C.J. No. 2828 (B.C.S.C.)
in support of the contention that tariffed costs may
exceed actual costs and, perhaps as well, for the proposition
that I do not have jurisdiction to consider the actual
costs when reviewing tariffed bills.
[132] On a review of the registrar's taxation of the
plaintiff's bill of costs in Azanza, the defendants
argued that they should not have to pay more in costs
than the plaintiff was required to pay her solicitors.
In rejecting that argument, Lowry J. referred to the
decision of the British Columbia Court of Appeal in
Skidmore v. Blackmore, [1995] 4 W.W.R. 524, which
found that a lay litigant was entitled to recover full
taxable costs regardless of the fact the litigant was
unrepresented. The learned judge then went on to say
at para. 3:
I can see no reason then why a litigant should be
deprived of any taxable costs merely because amounts
that are required to be paid to solicitors who prosecuted
the action for her are not as great as the taxable
costs.
The learned judge also questioned whether it was even
open to the registrar to entertain the defendant's contention.
He stated at para. 2:
Certainly a judge who presides at a trial can exercise
a broad discretion with respect to costs and, in some
circumstances, legal fees can be a consideration.
But where the court awards costs or where, as here,
the parties agree that the matter will be settled
with costs to be taxed, it seems to me that the Registrar
is restricted to simply applying the tariff for party
and party costs (inclusive of disbursements) and fixing
costs accordingly.
[133] While I suggested in Budd that the new
costs regime does not contemplate as a standard practice
the comparison of actual costs with tariffed costs,
I also do not consider that the ambit of the reviewer's
role under the Tariff is as circumscribed as a registrar's
would appear to be in light of Azanza. In Budd
I also expressed the view that reasonableness remains
a primary consideration for the reviewer of post-Tariff
legal and appraisal costs under section 45 and that
actual accounts rendered, while not a necessary component
of every final cost review, may nevertheless become
a relevant factor in deciding upon what costs are reasonable.
I agreed with the observation made by board member Julian
K. Greenwood who, in conducting an advance cost review
in Elsie Yuen Ching Chan v. The City of Vancouver,
unreported, E.C.B. No. 72/00/197, January 22, 2001,
said as follows at para. 14:
In a case under the Tariff, there may be a request
for a higher than usual scale or number of units,
and in such a case the reasonableness of the bill
of costs might become an issue. In such a case the
reviewer could well decide to ask for evidence of
actual expenses, but the purpose of this evidence
would be to assess reasonableness, rather than the
threshold right to compensation.
[134] In the present instance, Mr. Kerslake testified
that the work which he performed in the post-Tariff
period consisted of the following. First, he finished
his analysis of comparables in the "after"
situation and substantially completed the first draft
of his report during the summer of 1999. A virtually
complete draft was provided for review to the claimant's
law firm in October, 1999. Mr. Kerslake estimated that
the amount of time spent to finalize the first draft
after the end of June, 1999 was approximately two days.
[135] Second, Mr. Kerslake in discussions with the
client and the claimant's law firm was asked to make
certain assumptions regarding whether a liquor licence
would have been obtained to operate a neighbourhood
pub on the subject property. This resulted in some modifications
to the report and the production of a second draft which,
he estimated, required "a few hours" to complete.
[136] Third, the claimant's principal, Mr. Simpson,
brought to his attention some information concerning
a nearby property which had been purchased by the respondent
so as to enable Mr. Kerslake to properly assess the
property as a comparable. He said he then produced a
third draft including this new information, although
in the result it did not change his opinion of value.
[137] Finally, in the weeks preceding the compensation
hearing scheduled for April, 2000, Mr. Kerslake reviewed
Mr. Grant's appraisal report as well as a report prepared
for the respondent by a planning consultant, evidently
with a view to preparing rebuttal evidence, considered
his own report, made a further brief site visit, and
had further discussions with Mr. Burke and Mr. Simpson.
[138] Mr. Kerslake's report, as placed in evidence
in its board-ready state at this cost hearing, appears
to me to have been a very substantial piece of work,
well-organized, and with detailed analysis of, among
other things, a large number of comparables. However,
nearly 70 hours of time had already been spent in the
pre-Tariff period to reach the point where the first
draft was well along in preparation. In the absence
of time records except for the last few days of June,
1999, it becomes more difficult to assess how time-consuming
the additional tasks were or ought to have been, both
absolutely and in relation to the work already performed
in the pre-Tariff period. It is appropriate at least
to observe that Mr. Kerslake's actual fee accounts rendered
to his client suggest that between 60 and 65 additional
hours of time were probably spent from and including
June 28, 1999 on the matters that I have enumerated
above.
[139] The claimant's law firm was primarily responsible
for putting together the amended real estate appraisal
bill of costs. It is clear to me that, as with the amended
legal bill, no allocation was made between pre-Tariff
and post-Tariff work when setting out the number of
units claimed in the tariffed bill of costs. Therefore,
downward adjustments are required under several of the
items of description.
[140] Doing the best that I can with the evidence provided,
I consider that it would be appropriate to allow units
as follows. With respect to Item 1 (correspondence,
instructions, meetings etc.), I allow 10 units.
[141] Before the Tariff came into force, Mr. Kerslake
had already performed his analysis of the highest and
best use of the subject property. However, I accept
that a significant amount of additional time was necessarily
spent in inspecting and researching the subject property
at the end of June, 1999 and there was a small amount
of additional work on such matters thereafter. I allow
10 units with respect to Item 2.
[142] By the time the Tariff came into force, market
research on comparable sales in the "before"
situation appears to have been largely concluded but
there remained a considerable amount of research to
be done in the "after" situation. I allow
8 units with respect to Item 3.
[143] It is unclear how much time in total Mr. Kerslake
found necessary to inspect comparable properties (there
are 17 comparables noted in his report), but his time
records for the end of June, 1999 show that at least
some of these inspections occurred in the post-Tariff
period. I allow 10 units for Item 4.
[144] As noted earlier, the analysis and drafting of
the report was well under way in the pre-Tariff period.
According to Mr. Kerslake's evidence, it required a
further two days during the summer of 1999 essentially
to complete a first draft. Two further drafts followed,
but the nature of the revisions appear not to have been
extensive or particularly time-consuming. I allow 30
units with respect to Item 5.
[145] The amended real estate appraisal bill of costs
claims the full allowable 30 units for preparation for
the compensation hearing. It is true that the hearing
was set down for nine days and not adjourned on the
basis of a settlement having been reached until the
last business day before it was scheduled to commence.
However, while I accept that it was necessary for Mr.
Kerslake to prepare his testimony, both in regard to
his own report and in rebuttal of that of the respondent's
appraiser, Mr. Grant, I do not accept that his attendance
at the hearing would necessarily have been required
for six days in order to support six days of preparation
time. In the circumstances, I would allow 10 units with
respect to Item 6.
[146] In summary, I have allowed a total of 78 units
under the amended real estate appraisal bill of costs
of the claimant. At scale 2 this amounts to the sum
of $7,800.00 in fees. Because the claimant is a GST
registrant, GST is not recoverable from the respondent
on this amount. The amended appraisal bill of costs
as presented includes a claim for 7% PST. This is clearly
in error since PST is not charged on professional fee
accounts except those of lawyers.
[147] The appraisal account of Flynn Mirtle Moran dated
July 7, 1999 shows disbursements in the amount of $500.00.
However, it appears from other evidence provided that
this amount was in the nature of a retainer only for
"projected expenses" and that the total amount
of disbursements is set out in the amended real estate
appraisal bill of costs at $2,163.60. The largest items
are for secretarial services ($1,050.00), photocopies
($386.50), colour copies ($252.00) and land title office
charges ($261.50).
[148] The respondent submits that very little should
be allowed for disbursements since most of the items
are in the nature of office overhead which should properly
be subsumed within Mr. Kerslake's hourly fee charge,
and other items such as photocopying and colour copies
are charged at an excessive rate far beyond what the
board has previously allowed.
[149] In large part I agree with the respondent's submissions
in regard to the disbursements. The board has frequently
disallowed items of disbursements on the ground that
they should be treated as part of office overhead. Cases
on point cited by the respondent include the board's
cost decisions in 343146 B.C. Ltd. v. British Columbia
(Minister of Transportation and Highways) (1993),
50 L.C.R. 221, Cokato Dairy & Stock Farms Ltd.
v. Fernie (City) (1992), 48 L.C.R. 316, Hruschak
Estates v. Vernon (City) (1991), 46 L.C.R. 230,
and Jesperson's Brake & Muffler Ltd. v. Chilliwack
(District) (1993), 51 L.C.R. 62. In the present
instance, I am of the view that no amount should be
awarded on account of secretarial services, bindings,
camera, and what are described as "standard"
charges for maps and bylaws and for errors and omissions.
This has the effect of reducing recoverable disbursements
by the sum of $1,120.00.
[150] Photocopies in the disbursement account have
been charged at the rate of $0.55 per page, whereas
the board in the past has fixed $0.15 per page as the
appropriate rate. I would follow the board's past practice
in that respect here. Colour copies are charged at $1.50
per page. So far as I can discern, this item has not
before been considered by the board. However, I agree
with the respondent that the rate must include a profit
or overhead factor. I would allow such copies at the
rate of $0.50 per page. These two adjustments have the
effect of further reducing recoverable disbursements
by the sum of $449.20.
[151] The remaining disbursements I allow as presented.
Overall, the disbursements are therefore allowed in
the amount of $594.40.
6. CONSULTANT COSTS
6.1 The Engineering Consultant
[152] In the course of undertaking his research into
market comparables, Mr. Kerslake considered a parcel
of property in Rayleigh said to have similar characteristics
to Lot 42. Like the subject property, it was located
on the east side of the highway and had similar servicing.
A large portion of the parcel was acquired by the respondent
from the City of Kamloops for highway widening. In addition
to the monetary consideration paid for the land acquired,
the respondent provided to the City some additional
Crown land and, as well, carried out some site preparation
works on the property.
[153] The claimant engaged the engineering firm of
R.D. Lewis & Associates Ltd. to estimate the value
of the site preparation work in order for Mr. Kerslake
to factor this amount into the per acre market value
of the comparable. The engineering firm estimated the
1990 cost to excavate, haul and grade material at the
site and prepared a two page report dated February 21,
2000, containing its written conclusions together with
site contours. The value conclusion was incorporated
into Mr. Kerslake's analysis of the comparable at page
38 of his report. His report also indicates that the
engineering report is included as a schedule to his
own report; however, what is in fact attached is a letter
from R.D. Lewis & Associates Ltd. to Leonie Estates
Ltd. in 1985. The correct report was entered into evidence
at this cost hearing.
[154] For its consulting work, the engineering firm
rendered an invoice for $967.50 in fees, $172.67 in
disbursements, and $79.81 in GST for a total of $1,219.98.
Robert D.H. Lewis, P.Eng., the principal of the firm
and its senior engineer, testified briefly at the cost
hearing concerning his many years of experience in projects
involving earthworks, the nature of this assignment,
and the basis upon which it had been billed. He recorded
4.5 hours of billable time at the rate of $85 per hour,
which he testified was the going rate in the industry
for a senior engineer of his experience. A design technologist
with the firm recorded a further 9.0 hours at the rate
of $60 per hour, and a bookkeeper recorded 1.0 hour
of billable time under the heading of "administration".
Most of the disbursements relate to the cost of attempting
to determine the quantity of excavation by using digital
modelling of available contours.
[155] The respondent submitted that these costs were
incurred to investigate the value of work done on a
site which had been the subject of a "non-arms
length" settlement between the respondent and the
City of Kamloops, that settlement details pertaining
to another property arguably are not relevant to the
determination of market value, and therefore it has
not been shown that these costs were necessarily or
reasonably incurred to advance the claimant's claim.
Furthermore, the respondent notes, Mr. Kerslake acknowledged
at the cost hearing that he did not change his own opinion
of value for the westerly portion of Lot 42 based upon
this additional evidence.
[156] Absent a determination by the board as to the
merits of the claimant's claim for compensation for
loss in market value in reliance on its appraiser's
estimate, I am not prepared to find that this consulting
work was unnecessary to the claimant's case. The invoice
is modest in amount and, for the most part, seems reasonable
for the sort of work performed. I do agree with the
respondent that the 1.0 hour charged for "administration",
amounting to $45.00, and the disbursement described
as a 5% "handling charge" in the amount of
$8.22, should be disallowed as items going to office
overhead. Otherwise, I allow this cost as presented
minus, of course, the charge for GST. Accordingly, the
cost for the engineering consultant is allowed in the
sum of $1,086.95.
6.2 The Consultants on Liquor Licensing
[157] The claimant tendered two invoices in relation
to a report on the likelihood at the time of expropriation
of obtaining a liquor licence to operate a neighbourhood
pub on the westerly portion of Lot 42. The first was
an account rendered by the law firm of Mair Jensen Blair,
dated April 7, 2000, totalling $5,364.20 in fees,
disbursements, and applicable taxes for the professional
services of one of its senior counsel, Dennis P. Coates,
Q.C. As I understand it, Mr. Coates has long been engaged
as counsel for clients on applications before the Liquor
Licensing and Control Board. The second invoice was
in the form of a letter from Hick & Associates Consulting
Ltd. to Mr. Coates, dated February 14, 2000, in which
the author, Bert Hick, indicates his agreement with
Mr. Coates' analysis and expresses a willingness to
assist him. He first requests a retainer in the amount
of $500.00.
[158] At the cost hearing I was advised that the respondent
had agreed to pay the account rendered by Mr. Coates
for the full amount of fees and disbursements amounting
to $4,730.00 as presented. It is unclear to me whether
this agreement also contemplates payment of PST on the
fee portion of the account. In any case, the agreement
obviates any need for me to review the account or to
make any definitive decision as to whether it should
be treated, as I have categorized it here, under the
heading of "consultant costs" falling outside
the Tariff or as a further item of legal costs falling
under Schedule 1.
[159] The only area of contention between the parties
is as to whether an award of costs should be made in
respect of the letter invoice from Mr. Hick. Mr. Burke
testified that Mr. Hick had formerly acted in the capacity
of a decision maker on liquor licence applications,
that in 1998 or 1999 he had become a private consultant
for persons seeking to obtain liquor licences, and that
he was prepared to testify on the claimant's behalf
at the compensation hearing. Mr. Simpson testified that
Mr. Coates had agreed to retain Mr. Hick and that the
claimant had, in fact, paid the requested $500 retainer.
The respondent submitted that the letter from Mr. Hick
bore none of the typical indicia of an account indicating
any breakdown as to work performed or disbursements
incurred. Furthermore, Mr. Hick had already agreed with
Mr. Coates' analysis of the question. The respondent
had already agreed to pay Mr. Coates' account, and any
costs claimed now with respect to Mr. Hick should be
disallowed as complete duplication.
[160] It seems to me that Mr. Hick, as a former decision
maker, might have been able to express an opinion as
to the likely outcome of the claimant's liquor licence
application from a somewhat different perspective than
that of Mr. Coates. In that sense, I do not necessarily
agree with the respondent's position that his services
would have been completely duplicative. However, I do
agree with the respondent that the request for a retainer
represents no satisfactory evidence of billable work
actually having been performed. All that can be said
is that Mr. Hick evidently read Mr. Coates' report and
communicated his agreement with it. While stating that
the claimant had paid the retainer, Mr. Simpson also
acknowledged that he did not know on what basis the
amount had been calculated. In these circumstances,
I am not satisfied that costs have been incurred for
which the respondent should be held responsible. I make
no award of costs in respect of the retainer request
from Mr. Hick.
6.3 Mr. Simpson's Account
[161] The last account for my consideration is that
of the claimant's principal, Mr. Simpson. It is a one
page statement headed "R.E. Simpson, Chartered
Accountant", undated, and addressed to the claimant.
It itemizes four areas in which Mr. Simpson says that
he acted, in effect, as a consultant to the claimant
for the purpose of asserting its claim for compensation
or damages. First, 20 hours are claimed for what was
originally described as "attending examination
for discovery" in October, 1991 but at the cost
hearing was amended to state "attending hearings
in the Devick case" in October, 1993. Second,
30 hours are claimed for "assistance and communications
with Flynn Mirtle Moran", which Mr. Simpson clarified
as also including 12 hours with the previous appraiser,
Mr. Cavazzi. Third, 160 hours are claimed for communications
with Mr. Burke. Fourth, 100 hours are claimed under
the heading "preparation for expropriation hearings."
In total the claim is for 310 hours of Mr. Simpson's
time, all of which is billed at the rate of $100 per
hour, resulting in a fee charge of $31,000.
[162] The thrust of the claimant's argument is that
Mr. Simpson's invoice is for time extraordinarily spent
by him in bringing the claimant's claim for compensation,
that the tasks which he carried out in that regard were
not those performed in the normal course of his employment
as manager for the claimant, and that they resulted
in his doing much of the leg-work for the claim which
otherwise would have had to be done by legal counsel
and the experts retained, thereby realizing efficiencies
overall. At the cost hearing, Mr. Burke, Mr. Lewis and
Mr. Kerslake in particular all attested to the considerable
help they had received from Mr. Simpson in the performance
of their tasks.
[163] As to his hourly rate, Mr. Simpson gave evidence
that the rate, if averaged over the years in question
between 1990 and 2000, is comparable to the industry
standard for chartered accountants with his level of
practice experience. It is also, he said, reasonable
considering what commissions the claimant would normally
pay to a real estate agent to complete the sale of a
project at the stage which had been reached when Lot
42 was expropriated. Mr. Simpson likened his role in
the expropriation compensation proceedings to having
a "listing" in which, over a 10 year period,
he endeavoured to arrive at a sale for a price which
would be satisfactory to the claimant.
[164] Claimant's counsel, in support of the position
that costs of this kind are recoverable, referred to
a number of decided cases from other jurisdictions:
Gulak et al. v. City of Winnipeg (1983), 29 L.C.R.
261 (Man. L.V.A.C.); Re: 377358 Ontario Ltd. and
Minister of Transportation and Communications (1986),
36 L.C.R. 326 (Ont. S.C.); and Smith v. The Queen
(No. 2) (1984), 31 L.C.R. 172 (Alta. LC.B.). Additionally,
claimant's counsel cited this board's advance cost decision
in Greatbanks v. British Columbia (Minister of Transportation
and Highways) (1998), 65 L.C.R. 20.
[165] The respondent submitted that Mr. Simpson's account
should be disallowed in its entirety on two alternative
grounds. First, the claim being advanced for costs was
in reality a claim for executive time. As such it would
normally fall to be considered as a disturbance damage
claim at a compensation hearing before the board but,
in this instance, the entire compensation claim including
any claim for disturbance damages was settled for a
fixed amount. It follows that a claim for executive
time would also be covered by the settlement.
[166] Second, in the alternative, if the claim is to
be treated as a consultant's costs, then Mr. Simpson's
account fails to meet even the minimal criteria required.
It is undated, it indicates no due date, and it was
conveniently submitted only on the eve of the cost hearing
to reflect services said to have been performed over
the previous 10 years. Under cross-examination, Mr.
Simpson produced a two page time record of hours spent
on various matters related to the expropriation claim
over those ten years from which he said he had drawn
his statement of account. However, he also acknowledged
that he had only recently prepared the time record from
a review of his files and had kept no proper time records
on an ongoing basis over the years. The respondent submitted
that this record, upon review, provided further indication
of the inaccuracy and unreliability of the account.
As to the proferred basis for the hourly rate charged,
the respondent pointed out that Mr. Simpson was neither
acting in the capacity of a chartered accountant nor
was he qualified as a real estate agent in performing
any of the tasks enumerated. In summary, the respondent
said, the account could not be considered as either
bona fides or arms' length. Respondent's counsel
referred to the board's cost decision in Cjeka v.
Cariboo Regional District (1995), 56 L.C.R. 122,
as authority for disallowing it on this basis.
[167] In my view this cost claim is fraught with considerable
difficulty. The first hurdle to be crossed is Mr. Simpson's
position as the principal and sole shareholder of the
claimant. As such it is to be expected that he would
be engaged, like almost every other expropriated owner,
in discussions with counsel and the experts in advancing
the claim.
[168] However, an owner's time spent on an expropriation
claim has rarely been found to be compensable as a cost
item. One exception noted by the claimant is Re 377358
Ontario Ltd., where the assessment officer in the
Supreme Court of Ontario found the figures for time
spent "vague in the extreme" but nevertheless
made an allowance for personal time spent by the claimant
in instructing a solicitor, on discovery and at hearing.
Another exception is the Smith case from Alberta.
There the owner, a farmer, had kept a detailed account,
by dates and time expended, of all time which he spent
in connection with the expropriation. The Board found
in the peculiar circumstances surrounding that case
that the account was reasonable and allowed the owner
his time at the rate of $20 per hour. Neither of these
decisions provides much in the way of discussion of
the threshold legal principles involved, and I do not
consider them to have binding force on my determination
in this matter.
[169] This board in the Greatbanks advance cost
decision allowed the reasonable expenses of a senior
officer of the claimant company for work done in preparing
a report that would not have been required in the normal
course of his employment and that was solely intended
for use in the compensation hearing. However, the board
went on to note that the owners in that case planned
to present the officer as an expert and concluded that
his billed services were not therefore in the same category
as executive time. There was no indication in the present
matter that Mr. Simpson would be tendered as an expert
witness.
[170] If the owner is in business or a profession,
the claim has usually been cast as one for lost executive
time, where the decided cases make clear that it is
first necessary to prove that the time spent on the
expropriation resulted in some actual loss to the business.
Mr. Burke was candid in his testimony that Mr. Simpson
approached him for advice on whether it would be appropriate
to charge the claimant for his time as a director and
shareholder and Mr. Burke advised him as to the state
of the law on executive time. As a result of the advice
received, Mr. Simpson evidently chose to submit a statement
of account to the claimant and to endeavour to have
it proven as a cost claim.
[171] The point of distinction which the claimant attempts
to make is that, because of Mr. Simpson's particular
background, which I have set out much earlier in these
reasons, he was extremely knowledgeable about the development
issues affecting the claimant's case, had a good appreciation
of legal issues, had been a key witness in the Church
and Devick cases, and was an invaluable source
of information particularly for the appraiser. It is
this extraordinary involvement which, in the claimant's
submission, supports a claim for costs for Mr. Simpson's
reasonable time. The claimant referred to factors considered
in the Gulak case before the Manitoba Land Value
Appraisal Commission in deciding whether time spent
by the owner on the expropriation could be compensated.
These included the nature of the owner's business, the
owner's involvement in that business, and the vitality
of the role of the owner in the preparation of the case,
including whether the owner is a key witness. However,
I would note that these comments were made in the context
of what amounted to a claim for executive time, and
the Commission first had to satisfy itself that the
owner's involvement had resulted in an actual loss.
[172] I accept that Mr. Simpson through his background
was able perhaps to provide more assistance to counsel
and the experts in the prosecution of the claim than
might ordinarily be the case with an owner or owner's
principal. However, I am unable to conclude that the
form of assistance was such as to constitute him, in
effect, as an independent consultant entitled to bill
his own company for services rendered and, in turn,
seek reimbursement for those services by the respondent.
Certainly the claimant was not in the position of an
unrepresented lay litigant. In my view, this claim properly
belongs under the heading of a disturbance damage in
the nature of executive time, and as such is foreclosed
from consideration on this cost review. I would go on
to observe, by way of comment only, that its fate as
a disturbance damage must be seen as highly tenuous,
first, because there was no evidence at least within
this hearing to suggest the claimant had suffered a
business loss as a consequence of Mr. Simpson's involvement
on the expropriation or that Mr. Simpson himself had
suffered any personal loss of income and, second, because
the intervening settlement of the compensation issues
renders moot all claims for disturbance damage, subject
to the outcome of the appeal.
[173] If I am wrong in my initial conclusion, and the
statement of account can be considered as an item of
costs, I am nevertheless of the view that it lacks the
necessary indicia of authenticity and reliability for
being able to say that the costs in question have actually
been incurred or for calculating any reasonable quantum.
It is not dated. It is not said to be payable by the
claimant when rendered. Indeed, Mr. Simpson's evidence
was that it would not become payable until the end of
the year 2000, without interest. It is a bald rendering
of time spent on four specified areas of activity, replete
with acknowledged errors which required correction at
the cost hearing, and does not square even with the
recently constructed time sheet. For example, 160 hours
are charged in the account for communications with Mr.
Burke, yet the only reference to time spent with Mr.
Burke in the time sheet is for 32 hours, said to have
taken place over a 10 year period. There are other similar
inconsistencies. The bases upon which the fee rate of
$100 per hour have been fixed, with reference to fees
charged by chartered accountants or commissions charged
by realtors, seems to me quite inappropriate. I agree
with the respondent that the board's decision in Cjeka
has some application here. I am not satisfied that this
particular account is a true account, and therefore
would in any event disallow it.
7. INTEREST ON OUTSTANDING ACCOUNTS
[174] Prior to the introduction of the Tariff, it had
been clearly established that reasonable interest expenses
incurred on professional accounts were recoverable under
the Act, and that the determination of what was reasonable
was for the board to decide on the facts of each case.
Under section 5(6) of the Tariff, however, an allowance
must not be made for interest on legal or real estate
appraisal costs or expense or disbursement claims.
[175] The claimant did not strenuously assert a claim
for interest and the respondent took the position that,
in all of the circumstances surrounding the rendering
and payment of accounts, no interest should be allowed.
[176] It seems to me that the only accounts on which
interest might be considered were those rendered by
the claimant's law firm between October, 1991 and January,
1993. My review of the evidence concerning payment of
those accounts by the respondent indicates that they
were paid within a reasonable period of time after having
been provided and that the only reductions made were
with respect to the hourly rates for legal counsel and
a student. Although I have allowed the fee accounts
in that period at a slightly higher hourly rate than
the respondent initially reimbursed, I do not consider
that the respondent's position at the time was unreasonable
in light of board cost decisions dealing with hourly
rates. In my view, the timing and amount of payment
by the respondent of these accounts was not such as
to attract interest.
[177] With respect to the legal accounts dated between
January, 1997 and June, 1999, the evidence is that these
accounts were only provided to the claimant on or about
April 10, 2000, in anticipation of a section 45 cost
hearing at that time, and so the fact that the respondent
made no payment in respect of them while awaiting the
convening of the cost hearing again provides no reasonable
basis for an award of interest. It was also the respondent's
undisputed assertion that particulars of the appraiser's
actual account dated July 7, 1999 and of the engineering
account were only provided to the respondent at or shortly
before the commencement of this cost hearing. Accordingly,
I again make no award of interest.
8. SUMMARY OF COST AWARD
[178] My determination of the costs in this matter
are as follows:
| (1) |
Pre-Tariff legal
costs are allowed in the amount of $15,147.49 for
fees, $822.93 for disbursements, and $365.66 for
PST for a total sum of $16,336.08. Post-Tariff legal
costs are allowed in the amount of $18,200.00 for
fees, $1,356.35 for disbursements, and $1,294.00
for PST for a total sum of $20,830.35. The total
of legal costs allowed is therefore the sum of $37,166.43,
in respect of which the respondent to date has paid
the sum of $15,517.10. Accordingly, there remains
owing by the respondent to the claimant on account
of its legal costs in this matter the sum of $21,649.33. |
| (2) |
Pre-Tariff real
estate appraisal costs in respect of the account
of Flynn Mirtle Moran are allowed for fees only
in the amount of $8,687.50. I was not asked to review
in any critical way the earlier pre-Tariff appraisal
costs of D.C. Cavazzi & Associates Inc. in the
amount of $5,498.36, in respect of which the respondent
made full reimbursement. I would therefore not disturb
the amount of that payment except that, in my view,
consistency dictates that the GST component in the
amount of $359.71 should be subtracted from the
final award. Post-Tariff real estate appraisal costs
are allowed in the amount of $7,800.00 for fees
and $594.40 for disbursements for a total sum of
$8,394.40. The total of real estate appraisal costs
allowed is therefore the sum of $22,220.55, in respect
of which the respondent to date has paid the sum
of $5,498.36. Accordingly, there remains owing by
the respondent to the claimant on account of its
real estate appraisal costs the sum of $16,722.19. |
| (3) |
The account of R.D.
Lewis & Associates Ltd., engineering consultants,
is allowed in the amount of $922.50 for fees and
$164.45 for disbursements for a total sum of $1,086.95.
The respondent has made no payment with respect
to this account and, accordingly, the full amount
awarded remains owing by the respondent to the claimant. |
| (4) |
The account of Mair
Jensen Blair for services rendered on the question
of the liquor licence application was settled at
or shortly before the cost hearing for the amount
of the fees and disbursements totalling $4,730.00.
As I indicated earlier, I am unaware as to whether
the parties agreed that PST on the legal fee portion
of the account would be added. |
| (5) |
The account of Hick
& Associates Consulting Ltd. for a retainer
of $500.00 with respect to the question of the liquor
licence application is disallowed. |
| (6) |
The account of the
claimant's principal, R.E. Simpson, Chartered Accountant,
for fees in the amount of $31,000.00 for acting
as a consultant on the claimant's expropriation
compensation claim is disallowed. |
| (7) |
No interest is awarded on any
of the costs allowed. |
|
