July 25, 2002, E.C.B. 34/91/225

REASONS FOR DECISION

1.  APPLICATION

[1]  This decision concerns whether the claimant, Reon Management Services Inc., is entitled to recover from the respondent, Her Majesty the Queen in Right of the Province of British Columbia, costs in the nature of "witness fees" billed by those who attended to give evidence on the claimant's behalf at a final cost hearing before the board.

[2]  On August 14, 15 and 16, 2000, in Kamloops, British Columbia, I conducted a cost review in this matter under section 45 of the Expropriation Act, R.S.B.C. 1996, c. 125 (the "Act") and the Tariff of Costs Regulation, B.C. Reg. 189/99 (the "Tariff"). The costs at issue fell into three categories: legal costs, real estate appraisal costs and consultant costs. This last category included, among others, the costs of a report prepared by a professional engineer and costs said to have been incurred by the claimant as a result of services provided by the claimant's principal. Some of the legal and real estate appraisal costs had been incurred before the Tariff came into force on June 28, 1999, and consequently were assessed on the "actual reasonable" standard under section 45(7)(a), while others were incurred on or after that date and were therefore governed by the Tariff pursuant to section 45(7)(b) of the Act.

[3]  During the cost hearing, several of the professionals involved gave viva voce evidence in person concerning their expertise, the nature of the services they had performed on behalf of the claimant, and the basis upon which they had billed for those services. These witnesses were: Reinhard Burke, the lawyer who had principal conduct of the claimant's expropriation case over the period of a decade or more; Terry Kerslake, a real estate appraiser with the firm Flynn Mirtle Moran, who was retained in February, 1999 to prepare an appraisal of the claimant's interest in the expropriated property; Robert D.H. Lewis, the principal of R.D. Lewis & Associates Ltd., a firm of professional engineers, who was retained to prepare a report on the value of site preparation work on property being considered by Mr. Kerslake as a comparable for his report; and Robert E. (Bob) Simpson, the principal of the claimant who is also a chartered accountant by background.

[4]  A detailed description and evaluation of the evidence provided by the foregoing individuals is contained within my reasons for decision following the cost hearing. The decision was released on March 27, 2001: see Reon Management Services Inc. v. British Columbia (2001), 72 L.C.R. 257.

[5]  By notice of motion filed with the board, the claimant set down a further section 45 review in this matter. The claimant has applied for an order that it is entitled to the costs of the earlier section 45 hearing and for a review of its bill of costs of that hearing. The bill of costs consists of the following four items:

1.	R.D. Lewis & Associates Ltd.	$ 221.54
2.	Flynn Mirtle Moran	1,311.29
3.	R.E. Simpson, C.A.	4,280.00
4.	R. Burke	2,411.30
	Total:	$ 8,224.13

Attached to the bill of costs are corresponding invoices or statements of account rendered to the claimant. They pertain entirely to fees, disbursements and taxes related to witness preparation for and attendance at the section 45 cost hearing in August, 2000.

[6]  I heard this contested application by teleconference. The hearing lasted approximately one and a half hours. Claimant's counsel provided a written outline of submissions and two case authorities. The claimant's application was also supported by a sworn affidavit of Mr. Simpson. The respondent provided an affidavit sworn by Hugh Trenchard, a legal assistant in the Legal Services Branch of the Ministry of Attorney General, to which several items of correspondence between counsel for the parties were annexed.

2.  BACKGROUND

[7]  The lengthy background to this matter involving a partial taking and the circumstances surrounding the section 45 cost hearing are fully discussed in my initial cost decision and need not be reiterated at length. Some context is, however, desirable, particularly in light of subsequent developments in the case.

[8]  Briefly stated, there has never been a compensation hearing in this matter. The section 45 cost hearing in August, 2000 took place following an earlier determination by the board, on a contested motion, that the parties had reached a full and binding settlement of the claimant's claims for compensation except for costs on the eve of the compensation hearing scheduled for early April, 2000. The decision, dated June 2, 2000, is reported at 70 L.C.R. 29. My authority for conducting a final cost hearing therefore fell 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.

[9]  At the time of the cost hearing in August, 2000, the respondent had sought leave to appeal to the British Columbia Court of Appeal from the board's decision concerning settlement and the leave application was still pending. The respondent submitted at the outset that it was therefore premature to conduct a final cost hearing. If leave to appeal were granted, the respondent said, 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. If the August, 2000 hearing proceeded as a cost review under section 45, the respondent appeared to suggest that the claimant might be precluded under the principle of estoppel by res judicata from bringing a further application for a final award of costs. The claimant, citing an earlier cost decision of the board, submitted that the hearing could and should proceed. I accepted the claimant's argument. By the time the cost decision was rendered in March, 2001, the Court of Appeal had granted leave to appeal on the settlement question but the appeal itself remained to be heard and decided. In my cost decision I stated in part as follows at para. 29:

[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….[T]here 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).

[10]  On November 29, 2001, the Court of Appeal rendered its judgment, allowing the respondent's appeal from the board's decision and finding that no settlement agreement had come into effect: see British Columbia (Minister of Transportation and Highways) v. Reon Management Services Inc. (2001), 75 L.C.R. 81.

[11]  Although the Court of Appeal's judgment reopened the possibility of a compensation hearing before the board, and perhaps also cast in some doubt the conclusiveness of the section 45 cost review, the parties later advised the board that they had reached a settlement of all claims for compensation except for costs. They filed with the board a consent dismissal order to this effect on March 1, 2002.

3.  THE ISSUES

[12]  In the course of this further section 45 review, the parties raised the following issues for determination:

•	Is the claimant entitled to claim from the respondent the cost of witness fees for a section 45 cost hearing?
•	If the claimant is so entitled:
	•	has the claimant shown that the costs were necessarily incurred?
	•	are these costs to be considered under the "actual reasonable" standard pursuant to section 45(7)(a) or are some of them governed by the Tariff pursuant to section 45(7)(b) of the Act?
•	Is the claimant entitled to the costs of this further section 45 cost hearing?

4.  THE CLAIMANT'S POSITION

[13]  The claimant submits that witness fees and associated disbursements in connection with attendance to give evidence at a final cost hearing are a category of costs which can be claimed under section 45 of the Act. Claimant's counsel referred to a section 45 cost decision of the vice chair of the board, Sharon Walls, in Ingham v. Creston (Town) (2001), 73 L.C.R. 129, in support of that submission.

[14]  The claimant says all of these costs were actually incurred, as evidenced by the attendance of the witnesses at the cost hearing and by Mr. Simpson's affidavit attesting that the claimant was billed by each of the witnesses. Lisa McBain, claimant's counsel on this application, advised during her submissions, however, that Mr. Simpson's own account should be reduced inasmuch as not all of it could be said to relate to his role as a witness. She submitted that one day's preparation time and one day's attendance as a witness at the hearing for a total of 17 hours should be allowed. This, as I understand it, would have the effect of reducing the amount claimed in respect of Mr. Simpson's account from $4,280.00 to $1,819.00 inclusive of GST.

[15]  The claimant asserts that the attendance of these witnesses was both necessary and reasonable to support the cost claim and, for the most part, led to a successful result. Mr. Lewis testified as to his qualifications and hourly rate, and his account was allowed but for minor adjustments. Mr. Kerslake detailed the work he had performed both pre- and post-Tariff, his hourly rate was accepted, and the real estate appraisal costs allowed far exceeded those which the respondent had paid in advance. As claimant's counsel expressed it, the board relied on Mr. Burke's testimony with respect to the complexity of the issues involved, the conduct of the case and the legal accounts submitted. Although Mr. Burke's hourly rate was reduced and there were other small reductions and disallowances, legal fees were awarded in an amount more than double that which had been paid in advance. The claimant acknowledges that its claim to be reimbursed for services said to have been provided by Mr. Simpson was disallowed in its entirety, but argues that the claim raised novel issues and that the board has recognized that a claimant may be entitled to costs incurred in support of accounts for which no amount was ultimately awarded.

[16]  It is the claimant's position that the Tariff does not apply to the costs billed by any of the witnesses who appeared at the August, 2000 hearing. In my earlier cost decision in this matter, I determined that costs which were neither legal nor real estate appraisal costs would continue to be governed by the "actual reasonable" standard both before and after the Tariff came into force. This determination is clearly germane when considering the accounts rendered by the engineer, Mr. Lewis, and by Mr. Simpson. However, the claimant submits that even Mr. Burke, the claimant's legal counsel, and Mr. Kerslake, the claimants' real estate appraisal expert, were not incurring tariffed costs when they appeared in the role of witnesses to support the claimant's cost claim and, accordingly, their costs should also fall to be considered under the "actual reasonable" standard.

[17]  The claimant did not present a legal bill of costs under the Tariff with respect to this further section 45 hearing but seeks an order at this time entitling it to such costs. The claimant points out that the cost of witness fees and disbursements was not before the board at the cost hearing in August, 2000, and submits they could not have been identified with any certainty at that time so as to form part of the cost claim. Although the claimant was awarded legal costs under the Tariff for counsel's preparation for and attendance at the cost hearing, other actual hearing costs remained to be determined at a future section 45 hearing. The issue of recovery of those costs is not res judicata before the board, and the costs of a further cost hearing itself are therefore recoverable. The claimant refers to my comment noted above that there is "nothing in the Act which precludes the board from conducting more than one hearing in a matter under section 45 in appropriate circumstances." As well, the claimant says, there are other precedents in matters before the board for subsequently considering issues and evidence not dealt with in the first instance at a hearing. The claimant cites the board's interlocutory decision in Golden Valley Golf Course Ltd. v. British Columbia (Minister of Transportation and Highways) (1998), 65 L.C.R. 151, as well as the cost decision in Ingham referred to above in support of that submission.

5.  THE RESPONDENT'S POSITION

[18]  I did not understand the respondent to say that witness fees for attendance at a cost review could never be recoverable. Rather, the respondent's position proceeds from the basic principle that entitlement to costs under section 45(3) depends in the first instance upon a claimant demonstrating that such costs have been "necessarily incurred". Where the costs at issue are governed by the Tariff, they are to be allowed only if they fall within the items of description in the Tariff schedules and, additionally, if such costs are "proper or reasonably necessary to conduct the proceeding". Where the costs fall outside the Tariff, they must meet the "actual reasonable" test.

[19]  In the present instance, the respondent submits that the attendance of witnesses at the August, 2000 cost hearing was unnecessary and that the accounts which those witnesses have rendered are either improper or unreasonable or both. In the respondent's submission, if the claimant had provided particulars of its cost claims in a timely way so as to enable the respondent properly to consider them, the cost hearing itself might have been entirely avoided. Even if a hearing were required, evidence from the professionals involved in support of the claims could have been provided by affidavit; their viva voce testimony was unnecessary. However, despite repeated written requests by the respondent for particulars and documentation as well as for clarification on a number of questions relating to the claimant's cost claims, such information for the most part was provided only a few days before the cost hearing was scheduled to begin, and even then incompletely. Therefore, the respondent says, it had little or no information upon which to base any kind of reasonable payment that could have led to settlement.

[20]  The respondent says there is no case authority either from this board or from the courts to show that witnesses at a cost review or assessment can render accounts to a client as if those witnesses had attended as experts and expect them to be reimbursed as such by the expropriating authority. That, according to the respondent, is the real effect of what the claimant in this instance is seeking to recover: Mr. Burke's witness fees billed at $225 per hour, those of Mr. Kerslake at $125 per hour, Mr. Simpson's at $100 per hour, and Mr. Lewis's at $85 per hour. Hypothetically, the respondent submits, only an expert in costs might so qualify as a witness at a cost hearing.

[21]  Respondent's counsel suggests that the Ingham decision -- the one authority cited by the claimant in support of the payment of witness fees -- is of limited assistance beyond its general direction to parties to a cost hearing that they should avoid unnecessary expenses whenever possible, including not calling witnesses to testify when their affidavits would have sufficed.

[22]  With respect to Mr. Burke's and Mr. Kerslake's preparation and attendance, the respondent submits that cost recovery in their case is governed by the legal and real estate appraisal schedules under the Tariff. Citing Budd v. British Columbia (Minister of Transportation and Highways) (2001), 72 L.C.R. 114, at para. 50, the respondent observes that the board has found the Tariff to be exhaustive of the items of description in respect of which legal and real estate appraisal costs are allowed.

[23]  In the respondent's submission, legal costs of preparation for and attendance at the August, 2000 cost hearing were already awarded under the Tariff in my section 45 cost decision of March 27, 2001, and the matter is therefore res judicata. It was, of course, not Mr. Burke but his associate Ms. McBain who appeared as counsel on behalf of the claimant at that hearing. In the respondent's further submission, witness fees for Mr. Kerslake are not recoverable since they are not provided for under the real estate appraisal schedule in the Tariff. The respondent again cites Budd in support. At para. 59 of that decision I stated in part:

…the tariff schedule of legal costs makes specific provision for legal counsel's preparation for and attendance at a cost review before the board. No such express provision appears in the tariff schedule of real estate appraisal costs.

To say as the claimant has said that Mr. Burke and Mr. Kerslake were not providing legal and real estate appraisal services when they testified at the cost hearing, and that their accounts should be considered instead under the "actual reasonable" standard, is in reality, the respondent submits, an attempt to do an "end run" around the Tariff.

[24]  With respect to the account of Mr. Simpson, the claimant's principal, the respondent in the first place questions whether this cost was "truly incurred" in the sense that any obligation on the claimant has ever arisen to pay for his services as a witness. The respondent in the second place argues that it is highly improper and tantamount to an abuse of the board's process to put forward this account in the guise of a witness fee when Mr. Simpson's earlier account for services rendered to the claimant was rejected in its entirety in my initial section 45 cost decision. The respondent refers to my discussion of the subject at paras. 172 and 173 of that decision, and submits that the issue of Mr. Simpson's account now before me is also res judicata in light of what I earlier decided. The respondent rejects the claimant's submission that, although nothing was ultimately awarded with respect to Mr. Simpson's account, it raised novel issues which warranted his attendance to give evidence at the cost hearing. On that basis, respondent's counsel observed, "any specious, unfounded and ill-fated argument" might be called novel.

[25]  Although the respondent's primary submission is that having witnesses attend and give evidence at the August, 2000 hearing was unnecessary, and their costs were therefore improper, unreasonable, and unrecoverable, in the alternative the respondent says that the bill of costs is objectionable on other specific grounds. The hours said to have been spent in preparation for the cost hearing are excessive. Some of the accounts include amounts for GST which are not recoverable in this instance. The R.D. Lewis & Associates account includes billing for an office assistant whose work is properly subsumed within Mr. Lewis's fee rate as part of office overhead. The Flynn Mirtle Moran appraisal account includes disbursements which are not explained in any way. Finally, the respondent also refers to large unexplained disbursements for faxes and Quiklaw research in a prebilling report upon which Mr. Burke drew to render his account. On this last point, however, I observe that the costs actually claimed in respect of Mr. Burke's account are for his time and travel expenses only.

[26]  As to the claimant's entitlement to legal costs for this further section 45 review, the respondent again argues that the issue is res judicata since legal costs under the Tariff have already been awarded for a final cost assessment in my earlier decision. Alternatively, the respondent says, if the principle of res judicata does not apply, this further review has been unnecessary in any case since the additional costs claimed are neither proper nor reasonable.

6.  DISCUSSION AND CONCLUSIONS

6.1  Guiding Principles and Statutory Considerations

[27]  The board has long recognized that an owner's costs of preparation for and attendance at a cost hearing are normally recoverable. The guiding principles to which the board has subscribed are set out in E.C.E. Todd, The Law of Expropriation and Compensation in Canada, 2nd ed. (Scarborough, Ont.: Carswell, 1992), at p. 525:

"Costs are an integral part of an award of compensation and therefore the reasonable costs incurred in the assessment of costs are recoverable as coming within costs actually incurred for the purposes of determining the compensation payable.

Costs of assessment are assessed and allowed in the same manner as other costs of the expropriation. They must be reasonable and bear some relation to the success or lack of success on the assessment hearing. Unreasonable costs will be reduced or denied."

[28]  The introduction of the Tariff has affected the foregoing principles as they relate to legal and real estate appraisal costs since the basis of recovery is no longer the "actual reasonable" costs pursuant to section 45(7)(a) but instead "the amounts prescribed in the tariff" pursuant to section 45(7)(b) of the Act.

[29]  Certain mandatory factors also come into play at any cost review under section 45. Section 45(10) provides:

(10)	In a determination of costs under subsection (8) or (9), the following considerations must be taken 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.

While these factors also apply when considering the costs of a cost review, it is logically necessary to construe subsection (10)(b)(ii) with reference to the difference between the amount of costs awarded and the advance payment of costs under section 48.

6.2  Are Witness Fees Recoverable?

[30]  Although it is not uncommon for witnesses to testify at a final cost hearing, the costs associated with their preparation and attendance have seldom been before the board for consideration. The claimant relied entirely on the board's cost decision in Ingham for the proposition that witness fees in relation to a cost review can be and have been recovered. The respondent cited no cases on point.

[31]  The Ingham decision was concerned in part with the costs of a two day section 45 cost hearing, including an account for preparation and attendance by the claimants' legal counsel as well as accounts from five witnesses who attended either in person or by telephone. With respect to the witness accounts, two were for $50 or less, two others were in the $600 range, and the fifth account was for nearly $2,100. The vice chair allowed the two smallest witness accounts in full and the other three accounts in part after raising concerns about proportionality, reasonableness and the degree of success achieved. The vice chair also observed that, when considering the legal costs claimed, she would take into account that some of the witness costs which she found to be unreasonable and unnecessary had been incurred at the instance of legal counsel.

[32]  Perhaps the clearest indication that witness fees were awarded in Ingham of the type and magnitude claimed in the present instance was with respect to the account of the real estate appraisal firm Interwest. Its principal, Mr. Grant, gave evidence at the section 45 cost hearing in relation to the firm's accounts. The firm, in turn, billed the sum of $2,098.01 in connection with Mr. Grant's attendance. As the vice chair described it at para. 29 of her decision:

Mr. Grant attended in Cranbrook and has charged half his expenses and half his travel time since he was able to do other work while he was there. He has billed a total of six hours at $200 an hour for preparation for the hearing as well as waiting time and the actual attendance at the hearing.

The vice chair noted that the claimants had been substantially successful with respect to Interwest's accounts totalling $14,500. The respondent had also conceded that in the circumstances it was probably reasonable to have called Mr. Grant but if he had attended by teleconference the costs for his time and disbursements would have been significantly less. The vice chair continued:

I would note that I did not find Mr. Grant's evidence at the hearing contributed anything useful that could not have been put in an affidavit. However, after reviewing all of the factors, including the fact that Interwest has been able to halve the travel expenses, I allow Interwest's total account at $1,700 inclusive of disbursements and taxes.

[33]  While the Ingham cost decision is some authority for saying that witness fees are recoverable, I note that there was no reference to any decided cases on point nor does it appear that the issue itself was squarely raised in the hearing before the vice chair. Since the witness fees allowed for Mr. Grant were those in respect of a real estate appraiser, it is also germane to observe that the costs claimed were incurred in the pre-Tariff period.

[34]  There are, in fact, at least two other decisions by the board in the pre-Tariff period which address the matter of witness fees at a final cost review. In Branscombe v. British Columbia (Minister of Transportation and Highways) (1995), 56 L.C.R. 138, counsel for the expropriating authority argued that the owners' counsel on the compensation claim, Mr. Burke, should not be permitted to charge legal fees for his role as a witness at the subsequent section 45 hearing. The former vice chair of the board, Fiona St. Clair, rejected this contention. She stated in part at p. 142:

It was certainly not unreasonable for Mr. Burke to have taken the stand as a witness in the [s.45] application. He was the most knowledgeable person to be able to provide the board with evidence about the accounts being presented, and he could not have acted as both witness and counsel. In addition, there was enough at issue to justify Mr. Burke in providing oral testimony rather than swearing an affidavit. He gave testimony about what he knew from having been chief counsel for the Branscombes throughout the proceedings. As such, his legal knowledge and experience was called upon, even during his testimony. In my view, it is appropriate to reimburse the Branscombes for the reasonable time Mr. Burke spent preparing for and giving his testimony, as well as travelling to the costs hearing.

At the same time, the vice chair raised concerns about the total amount of time billed for legal services by owners' counsel related to the cost hearing and reduced by 50% the time allowed for Mr. Burke's preparation for the hearing.

[35]  In McKinnon v. School District No. 36 (Surrey) (1997), 61 L.C.R. 9, the owners claimed the reasonable costs of preparation for and attendance at a section 45 cost hearing, including witness fees for Mr. Bennett, their counsel on the compensation claim, and Mr. Grant, the real estate appraiser they had retained. The expropriating authority submitted that no costs ought to be awarded for either Mr. Bennett or Mr. Grant because the owners' retainers with both the law firm and the appraisal firm were silent as to witness fees. At pp. 37-38 of my decision, I stated in part as follows:

…in the preparation for and conduct of their case at this cost review, the claimants' decision to call Mr. Bennett and Mr. Grant to give viva voce evidence, rather than simply obtaining their affidavits, doubtless had the effect of increasing the actual costs incurred. However, the respondent had not particularized its objections to the accounts in question prior to the hearing, and it seems to me that the claimants acted prudently in the circumstances in incurring some additional cost. The testimony of both witnesses proved useful to my determination of costs. I am not persuaded by the respondent's argument that witness costs somehow fell outside the scope of the respective retainers….

The owners in McKinnon suggested that they be allowed a fixed amount of $3,000 to take into account both their legal counsel's preparation and attendance time as well as witness fees for Mr. Bennett and Mr. Grant. They were in fact allowed $2,000 inclusive of fees, disbursements and tax.

[36]  There is therefore a body of precedent set by this board in the pre-Tariff period recognizing that a claimant in a section 45 cost hearing is entitled to claim for the reasonable costs incurred by those witnesses whose attendance was reasonably necessary to conduct the proceedings.

[37]  A recent Ontario cost decision is also of some assistance: Tripp v. Ontario (Ministry of Transportation) (1997), 64 L.C.R. 38 (Ont. Ct. Gen. Div.). This case involved an assessment of costs pursuant to an order of the Ontario Municipal Board following an award of expropriation compensation. One question before the assessment officer was whether the lawyer who acted for the owners on the compensation claim should be entitled to witness fees. Addressing the argument made by the expropriating authority, the assessment officer made the following significant distinction, at p. 45:

The Ministry submits that it is highly unusual for a solicitor who is called as a witness to prove his own bill, to be reimbursed his costs of testifying. I agree that, in a solicitor and his own client situation, it is not customary to reimburse the solicitor for his time. However, this is not the case in this matter. This is an assessment of a party/party bill on a solicitor-and-client basis where a third party is required to pay the reasonable costs of the Claimants who will be charged by the solicitor for his services in proving the Claimants' costs.

6.3  Were the Costs Necessarily Incurred?

[38]  Leaving aside for the moment any considerations that arise under the Tariff, I am satisfied from the foregoing discussion that there is in principle an entitlement to reimbursement for witness fees necessarily incurred at a section 45 cost hearing. The next question is therefore whether in the present instance such costs were necessary. In my view, there are really two parts to this question: first, was a section 45 cost hearing necessary at all, and second, if it was, did it necessitate the attendance of witnesses to give testimony in person?

[39]  Having reviewed Mr. Trenchard's affidavit, including the exchanges of correspondence between counsel for the parties in the months leading up to the August, 2000 cost hearing, it is apparent to me that any realistic chance of settling the costs at issue without a hearing was dimmed in the first instance by the claimant's late and incomplete disclosure of particulars of the cost claim.

[40]  The correspondence reveals that in a letter dated May 30, 2000, the respondent made a detailed request for particulars of the nature and purpose of all work performed, together with timesheets, and a detailed explanation of the disbursements. The initial reply from the claimant came only in a letter dated July 21, 2000, enclosing documents related to the legal accounts in the pre-Tariff but not the post-Tariff period, and indicating that details concerning the accounts of the experts would be provided "as soon as possible". Ms. McBain, counsel for the claimant, also wrote:

"However, please be advised that we intend to call these experts to provide evidence as to any contentious items and disbursements on these expert accounts."

Particulars of the expert accounts were provided under cover of a further letter dated August 8, 2000, which the respondent says was received only on August 10, 2000, less than a week before the cost hearing was scheduled to take place. These included supporting documents for the pre-Tariff appraisal account but very limited information concerning the real estate appraisal tariffed bill of costs. According to Mr. Trenchard's affidavit, respondent's counsel thereafter tried without success to have the cost hearing adjourned for a week by consent in order to have time to review the particulars provided "because it appeared that many of the issues relating to the claim for costs could be resolved without a hearing."

[41]  The claimant, for its part, sought to find out from the respondent what was or was not in dispute. Requests were made in both letters from claimant's counsel of July 21 and August 8, 2000. Although the respondent was hampered in any settlement efforts by late and incomplete disclosure, it is also the case that at no time before the cost hearing did the respondent, based on the particulars received, give the claimant any indication of the costs to which it might agree, which non-Tariff accounts would be contested and on what grounds they would be contested nor which items under the Tariff and which disbursements in the legal and real estate appraisal bills of costs would be in issue.

[42]  In my view other factors also militated against the resolution of costs without a hearing. For one, the amounts at issue were large, exceeding the amount for which the parties had purportedly settled the compensation claim before taking into account accrued interest. The costs claim totalled $119,172.32 in respect of which the respondent had made advance payments totalling $21,015.46. For another, few issues raised by the new Tariff regime had been decided at that point, including whether the claimant was obliged to disclose the details of actual legal and real estate appraisal accounts rendered to it in the post-Tariff period. At least part of the reason for the claimant's incomplete disclosure of particulars for that period was its contention that such actual account details were irrelevant to a determination of costs under the Tariff. I accepted this argument in part in my cost decision following the August, 2000 hearing.

[43]  The board has always encouraged early disclosure of particulars and issues in dispute prior to a cost review in order to facilitate settlement and reduce time and expense. While more might have been achieved by way of agreement in advance of the hearing if the claimant had been more forthcoming with particulars in a timely way, and the respondent had actually identified those issues which appeared to it could be resolved, I conclude that in all of the circumstances the August, 2000 section 45 cost hearing was necessary to determine the issues, large and small, which remained outstanding.

[44]  Whether the attendance of witnesses was also necessary is a question best addressed on an individual basis. I am satisfied, essentially for the same reasons set out by the former vice chair in the Branscombe cost decision, that Mr. Burke's testimony assisted me to understand the complexities of the claimant's case and the purpose for which various costs, legal and otherwise, were incurred in a way that I doubt could have been adequately addressed through an affidavit. The legal costs were presented in the amount of $44,372.85 and allowed in the amount of $37,166.43. In my view, Mr. Burke's viva voce evidence was reasonably necessary to the conduct of the proceedings and contributed substantially to the claimant's success.

[45]  The testimony of Mr. Kerslake, the real estate appraiser, also assisted my understanding of the scope of his assignment, the difficulties involved, and the way in which he carried out his various tasks. This was particularly the case in the post-Tariff period where, because the relevance of actual accounts was put in question by the claimant, far less backup information had been provided. The appraisal costs of Mr. Kerslake's firm were presented in the amount of $29,035.48 and allowed in the amount of $17,081.90. While Mr. Kerslake's attendance was less pivotal to the claimant's cost claim than that of Mr. Burke, who also testified concerning the role of the appraisers in this matter, I consider it also to have been reasonably necessary.

[46]  Mr. Lewis, the consulting engineer, testified only briefly at the cost hearing concerning his professional experience, the nature of his rather modest assignment and the basis upon which it was billed. His engineering firm had rendered an invoice to the claimant for the work performed totalling $1,219.98, which following the cost hearing was allowed in the amount of $1,086.95. I accept that some evidence was necessary at the cost hearing to substantiate this claim. At the same time, I doubt that there was anything in Mr. Lewis's oral evidence that could not have been provided instead through a properly prepared affidavit. However, there is also time and expense associated with swearing an affidavit. Mr. Lewis charged two hours of his time to come to the hearing and testify instead.

[47]  This brings me to the testimony of the claimant's principal, Mr. Simpson, which was largely concerned with his account for services rendered to the claimant over the 10 years following the expropriation. The claim was presented in the amount of $31,000 and was disallowed in its entirety. It was disallowed in the first place on the basis that it properly belonged under the heading of a disturbance damage in the nature of executive time for which compensation was in any case doubtful. In the second place, even assuming that it could be considered instead as a cost claim, Mr. Simpson's statement of account lacked the necessary indicia of authenticity and reliability for me to be able to conclude that the costs in question had actually been incurred or that any reasonable quantum could be calculated. Had this been a proper cost claim, Mr. Simpson's attendance in person to prove it might have been reasonably necessary. However, given that the claim was, as I found at para. 167 of my decision, "fraught with considerable difficulty" from the outset, I do not consider that the witness fees said to have been incurred by the claimant for Mr. Simpson's preparation and attendance were necessary. With respect, I am unable to accept the claimant's argument that the state of the law concerning executive time made this account "novel" and therefore warranted the expense of trying to prove it at a section 45 cost hearing.

6.4  Are the Costs Reasonable?

[48]  To the extent that the cost of having witnesses testify was a cost necessarily incurred, it is still necessary to consider whether the amounts billed were themselves proper and reasonable. I propose to deal first with those accounts in the bill of costs which clearly fall outside of the Tariff and are to be assessed on the "actual reasonable" standard -- those of R.D. Lewis & Associates Ltd. and of R.E. Simpson, Chartered Accountant.

[49]  As I have previously indicated, Mr. Lewis charged two hours of his time to prepare for and attend the section 45 cost hearing at the hourly rate of $85. This is the same rate at which he charged the claimant to research and prepare a two page engineering report on the value of site preparation work at one of Mr. Kerslake's comparables. His hourly rate was accepted by the board and the only disallowances made from the R.D. Lewis & Associates Ltd. account were for items going to office overhead and for GST, in the latter case because the claimant acknowledged that it was a GST registrant entitled to claim for recovery of GST paid.

[50]  I can see in principle no reason why an expert called to testify to prove his account rendered to the claimant should not be entitled to charge his usual hourly rate. This has nothing to do with whether Mr. Lewis is an expert in costs; it is simply an extension of his professional services on the claimant's behalf. The claimant, in turn, is entitled to seek reimbursement from the respondent of the reasonable costs incurred.

[51]  The invoice of R.D. Lewis & Associates Ltd. related to the section 45 cost hearing totals $221.54. It comprises Mr. Lewis's fee charge of $170, one hour of an office assistant's time charged at $35, photocopies charged at $0.15 per page totalling $1.95, a 5% handling charge of $0.10, and GST of $14.49. Where in this instance an affidavit probably would have sufficed, I would allow as reasonable the time Mr. Lewis with assistance from his office required to review the file and otherwise provide the necessary evidence in affidavit form. In my opinion, it would be reasonable to allow one hour of Mr. Lewis's time on this account at $85, the office assistant's charge of $35, and the photocopying charge of $1.95. Neither the handling charge nor the amount of GST should be allowed. Therefore, I allow this account in the sum of $121.95.

[52]  Since I have already determined that witness fees said to have been incurred by the claimant for Mr. Simpson's preparation and attendance were unnecessary, it follows on that ground that they cannot be allowed. There is, however, a further consideration and it relates to Mr. Simpson's position as the principal and sole shareholder of the claimant. In my initial section 45 cost decision in this matter, I stated at para. 172:

[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.

The foregoing statement logically supports the respondent's argument that the issue of Mr. Simpson's further account is barred from consideration by the principle of estoppel by res judicata.

[53]  It is also of some relevance to note that under Schedule 3 to Appendix C of the Rules of Court, B.C. Reg. 55/93, headed "Fees Payable to Witnesses", in all cases in which a witness is required to attend an examination, hearing or trial, witness fees and fees for travel, meals and preparation are payable, provided that the witness is not "a party or a present officer, director or partner of a party to a proceeding". (Emphasis added.) While this provision is not one which has been expressly incorporated in either the Act or the board's regulations, the board frequently has reference to the Supreme Court Rules for guidance on practice and procedural matters.

[54]  Before turning to the issue of the applicability of the Tariff to the legal account rendered by Mr. Burke and the appraisal account rendered by Flynn Mirtle Moran, I next propose to consider the "reasonableness" of those accounts on the claimant's theory that they also fall under the "actual reasonable" standard set out in section 45(7)(a) of the Act.

[55]  Mr. Burke's account for his witness fee comprises 10.5 hours of time charged at $225 per hour together with $48.80 in travel costs between his legal offices in Chase, B.C. and the cost hearing in Kamloops. Although no precise breakdown is provided, it would appear that roughly half the time spent was for preparation and the other half for attending the cost hearing to testify. Mr. Burke's testimony was interrupted by legal objections and argument and by a ruling on my part with respect to the disclosure of post-Tariff legal account details.

[56]  When viewed under the "actual reasonable" standard, nothing about this account appears to me to be excessive or unreasonable. The preparation time is modest. Certainly, it compares favourably with that in the Branscombe cost decision, where Mr. Burke had billed over 27 hours to prepare and the vice chair reduced the allowable time by half. Mr. Burke's hourly rate at $225 is at the top end of what the board has previously considerable reasonable for a legal practitioner of his experience. However, considering that I allowed his hourly rate in my previous cost decision in this matter at $180 in the period 1990-'93, a rate of $225 in 2000 does not strike me as inappropriate. As I said above when reviewing Mr. Lewis's witness fee charges, there is no reason in principle why Mr. Burke should not be entitled to charge his usual hourly rate when being called to prove his account on the claimant's behalf. I have already found that Mr. Burke's testimony was reasonably necessary, and that the claimant enjoyed a high degree of success with respect to the amounts allowed on legal costs, particularly in the post-Tariff period.

[57]  The Flynn Mirtle Moran account for Mr. Kerslake's preparation for and attendance at the section 45 cost hearing comprises 9.5 hours of time charged at $125 per hour, his usual hourly rate, together with disbursements of $38.00 and GST of $85.79. The respondent has correctly observed that GST is not recoverable in this case and that the disbursements, although modest in amount, are not specifically identified. There is also, in my view, some force to the respondent's argument that excessive time was spent in preparation for the cost hearing. When time spent at the hearing on the legal argument and ruling with regard to disclosure of post-Tariff accounts are subtracted, Mr. Kerslake actually testified for somewhat under a half day. Given the scope of what he was required to address, I am inclined to think that a similar amount of time to prepare would reasonably have sufficed. The evidence was that it was legal counsel in consultation with Mr. Kerslake, rather than Mr. Kerslake himself, who prepared the real estate tariffed bill of costs.

[58]  When viewed from the perspective of the degree of success achieved, however, it is also the case that the respondent had made no payment in advance with respect to the Flynn Mirtle Moran pre-Tariff account or its real estate tariffed bill of costs, whereas over $17,000 of the approximately $29,000 claimed was allowed.

6.5  Does the Tariff Apply?

[59]  The foregoing discussion of the accounts for witness fees rendered by Mr. Burke and by Flynn Mirtle Moran begs the question of whether these bills, as the respondent submits, fall to be considered instead under the legal and real estate appraisal schedules of the Tariff and, if so, whether any amount is recoverable.

[60]  Section 3(1) of the Tariff provides as follows:

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.

[61]  Item 15 under Schedule 1 provides for 4 units for each day of attendance before the board to assess costs and Item 14 provides for 2 units for preparation for each day of attendance. These units have already been awarded in my previous decision with respect to Ms. McBain's preparation for and attendance as legal counsel for the claimant at the August, 2000 cost hearing. It is also, in my view, appropriate to note that Schedule 1 treats the legal costs of cost hearings as being on a lower order of recovery by comparison with compensation hearings, which allow for 10 units for each day of attendance and 5 units for preparation for each day. This logically suggests to me that cost reviews contemplate a more straightforward process.

[62]  I have already observed in the case of the consulting engineer, Mr. Lewis, that his testimony at the cost hearing to prove his account was really an extension of his professional services on the claimant's behalf. The same holds true of Mr. Burke and Mr. Kerslake. That being the case, I fail to see how, in light of section 3(1), their appearances in the role of witness to prove cost claims fall outside the legal and real estate appraisal schedules of the Tariff, respectively, as the claimant has submitted.

[63]  Neither does it seem to me, however, that the time necessarily spent by Mr. Burke and Mr. Kerslake on the claimant's behalf should be treated as gratuitous from the point of view of cost recovery if there are provisions under the Tariff schedules which can address it.

[64]  With respect to Mr. Burke's witness fees, I again find some assistance in principle at least from the Ontario cost decision in the Tripp case. In Tripp the assessment officer's discretion to award legal costs for witness fees was somewhat limited by the applicable tariff under the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. The actual bill presented by Mr. Kelly, the lawyer who acted for the owners on their compensation claim, for his role as witness at the assessment hearing amounted to more than $41,000. The assessment officer observed at pp. 43-44 (64 L.C.R.):

Mr. Kelly was required to spend three days on the witness stand and approximately two of those days were spent on cross-examination which, in my opinion, covered a great deal of material and subject matter which was not relevant to the assessment of the bill of costs and could have been dealt with differently by the Ministry. He was also required to prepare for the hearing, and to review several boxes of files to so do and, in my opinion, in the name of fairness and equity, he should be fairly compensated for his time within the limits of the tariffs by which we are governed.

Having reference to what he considered the applicable tariff item, the assessment officer allowed Mr. Kelly $6,000 for his services at the hearing.

[65]  While there is no express reference in the Tariff to witness fees, there is provision under Item 19 of Schedule 1 for "attendance at hearing of claim or of an issue in a claim", for each day of which 10 units are available, and under Item 18 for "preparation for hearing, if claim set down, for each day of hearing" for which 5 units are available to a maximum of 30 units. Undoubtedly these items were framed primarily with compensation claims rather than cost claims in mind. However, I do not view them as inapplicable to the situation where a solicitor attends at a cost hearing to give evidence and be cross-examined on a legal bill of costs. As I observed earlier, citing Professor Todd, costs are an integral part of an award of compensation. Provided that the solicitor's attendance was a cost "necessarily incurred" within the meaning of section 45(3) of the Act, and the costs were "proper or reasonably necessary to conduct the proceeding" pursuant to section 3(2) of the Tariff, I consider that units can and ought to be awarded.

[66]  In this instance, I would allow 5 units under Item 18 and 10 units under Item 19 for Mr. Burke's preparation for and attendance at the August, 2000 cost hearing in the role of witness. The parties agreed at that hearing that legal costs should be fixed at Scale 2, which is for matters of ordinary difficulty or importance. Under Schedule 1, the value allowed on an assessment under Scale 2 is $140 for each unit.

[67]  There is also provision under Item 23 for "travel by a solicitor" in certain specified circumstances but, since I have already awarded 6 units for Ms. McBain's travel to and from Kamloops as legal counsel on the claimant's cost claim, I do not consider it proper or reasonable to allow further units in that regard. However, "reasonable travelling and subsistence expenses" are to be allowed as a disbursement, and I regard the "travel costs" claimed by Mr. Burke in the sum of $48.80 to fall within this description.

[68]  Accordingly, I allow the claimant's claim for reimbursement of the legal costs billed by Mr. Burke in the amount of $2,148.80. Since I regard Mr. Burke's bill as a legal account, it follows that PST also applies, bringing the total payable to $2,295.80.

[69]  With respect to Mr. Kerslake's witness fees, billed by Flynn Mirtle Moran, there are corresponding provisions under Items 6 and 7 of Schedule 2 for preparation for a hearing and necessary attendance at the hearing by an appraiser. Since I consider that the effective time spent by Mr. Kerslake in giving evidence at the August, 2000 cost hearing was less than 2 ½ hours, section 4(7) of the Tariff applies, and only half the amount or 7.5 units should be allowed. The parties agreed at the August, 2000 hearing that real estate appraisal costs should also be fixed at Scale 2. Under Schedule 2, the value allowed on an assessment under Scale 2 is $100 for each unit. There are no travel considerations involved in this instance, and since the entry of $38.00 for disbursements in the appraisal account is unexplained, I agree with the respondent that the amount should be disallowed. Accordingly, I allow the claimant's claim for reimbursement of the real estate appraisal costs billed by Flynn Mirtle Moran in the amount of $750.

6.6  Is the Claimant Entitled to the Further Costs of this Hearing?

[70]  The one remaining issue is whether the claimant is entitled to the further legal costs of this second section 45 cost hearing. The respondent has argued that those costs are res judicata since tariffed legal costs were already awarded in my decision following the first section 45 review and, in any case, this second cost hearing was unnecessary since the further claim for witness fees and associated disbursements was neither proper nor reasonable.

[71]  In my view successive section 45 cost hearings should be avoided wherever possible in the interest of both costs savings and finality. However, I recognize that there are circumstances where a further hearing into costs is appropriate. It is apparent from what I have already said that, except in regard to Mr. Simpson's account, I do not agree with the respondent's position that this hearing was unnecessary on the ground that the claims asserted were improper and unreasonable. Witness fees and associated disbursements were not before the board in the August, 2000 hearing. Although some of the principles governing recovery might perhaps have been explored by the parties at that time, I accept that the quantum of costs incurred could not reasonably have been set out with any degree of certainty. It is also relevant that the interpretation of the Tariff was still in its infancy. I do not regard the awarding of legal costs for the first section 45 review as rendering the legal costs of this second review, where witness fees were at issue, res judicata before the board.

[72]  The board has generally refrained from fixing the legal costs of a cost review in the absence of a properly drawn bill of costs. The claimant provided no such bill of costs for this hearing. However, to save a further application, I observe again that this hearing was conducted by teleconference and lasted approximately 1 ½ hours. This means the claimant would be entitled to half the fixed units under the Tariff for Ms. McBain's preparation for and attendance at this section 45 cost hearing or 3 units in total. Since I regard this matter as being of ordinary difficulty or importance, I fix it at Scale 2, where the value allowed on an assessment is $140 for each unit. Accordingly, before applying any of the factors under section 45(10) of the Act which I am required to take into account, the claimant would be entitled to $449.40 including PST and a reasonable amount for any expenses and disbursements that were necessarily and properly incurred in the conduct of the proceeding. Having regard to the factors under section 45(10), and noting in particular the divided success on the determination of the issues on this further review, I consider that some reduction should be made. I therefore allow 75% of the tariffed legal costs of $449.40 on this review, or the sum of $337.05 plus reasonable expenses and disbursements.

7.  SUMMARY OF AWARD

[73]  As a result of this further section 45 cost hearing, I have determined the costs as follows: