January 9, 2001, E.C.B. No. 35/99/195 (72 LCR 89)
Tariff Costs

REASONS FOR DECISION

1.  APPLICATION

[1] The claimants, Dennis Yew Gow Chu and Shew Ha Chu (Estate), have applied to the board for an order fixing the amount of advance costs payable to them by the respondent, The Board of School Trustees of School District No. 36 (Surrey), pursuant to section 48(3) of the Expropriation Act, R.S.B.C. 1996, c. 125 (the "Act"). Their application is with respect to cost claims submitted to the respondent on July 14, 2000 and August 10, 2000. All of the costs claimed relate to legal and real estate appraisal services said to have been provided to the claimants since June 28, 1999, when the Tariff of Costs Regulation, B.C. Reg. 189/99 (the "tariff regulation") came into force. The legal services span the period from June 28, 1999 to April 30, 2000, and the appraisal services from June 28, 1999 to August 8, 2000.

2.  BACKGROUND

2.1  The Expropriation and the Compensation Claim

[2] The claimants are the registered owners in fee simple of a property located at 15618 - 104th Avenue in the City of Surrey, British Columbia. The property is improved with a two-storey building with a convenience store on the lower level and residential premises above. The claimants operated the store and lived in the residence upstairs. The claimant Shew Ha Chu died on June 24, 1999, several weeks after the date of expropriation, and the claimant Dennis Chu, her husband, is the legal representative of his late wife's estate.

[3] This case involves the fee simple taking of a 10 metre (32.8 ft.) wide strip along the rear or southern boundary of the claimants' property as well as a 1.5 metre (4.92 ft.) temporary statutory right of way for construction purposes parallel to the 10 metre wide strip. According to the advance payment appraisal, the fee simple taking amounts to 15.6% of the total land area comprising the subject property. The purpose of the taking is to facilitate the construction of an access lane to an elementary school site east of the subject property. On April 9, 1999, the respondent filed expropriation notices in the land title office. On April 27, 1999, the respondent made advance payments to the claimants of $53,000 in respect of the fee simple taking and $800 in respect of the temporary right of way. Vesting occurred on April 29, 1999.

[4] On April 26, 2000, the claimants filed with the board an application for determination of compensation. They claim $69,000 for the market value of the fee simple interest taken, $40,000 for what is described as "injurious affection", that is to say, reduction in market value to the remaining land, and $1,035 for the market value of the temporary statutory right of way. The total claim is therefore in the sum of $110,035 which, after taking into account the advance payment, amounts to a net claim of $56,235 plus costs and interest. The claimants allege that at the date of expropriation their land was ripe for re-development but that the taking has reduced the development density available on the remainder as well as the land area required to satisfy off-street parking requirements, thereby reducing the market value to the remainder. There is no claim for disturbance damages.

2.2  Pre-Tariff Cost Claims

[5] More than a year before the expropriation occurred, the claimants had retained the services of a solicitor, Barry Joe, latterly of the firm of Kaminsky & Company, to advise them with respect to a proposed purchase by the respondent of that portion of the property required for its access lane. As evidenced in the respondent's affidavit material, Mr. Joe rendered three legal accounts to his clients between March 25, 1998 and December 30, 1998 totalling $1,058.99. These were ultimately forwarded to the respondent by the claimants' current solicitors, Peterson Stark, for reimbursement. Except for the last of these accounts in the sum of $57.00, the respondent refused payment on the ground that they did not actually relate to the expropriation. Reimbursement of the remaining two accounts was not sought on this cost application.

[6] The respondent also put in evidence an account dated April 30, 1999 received from the firm of Peterson Stark in the amount of $3,329.84 for legal services rendered to the claimants between December 10, 1998 and the date of billing. The respondent included in evidence a letter from its solicitors, the firm of Thompson & McConnell, dated May 12, 1999, showing that the account had been paid in full on a without prejudice basis.

2.3  The Tariff Cost Claims

[7] At the hearing of this application the claimants substantially modified the legal and real estate appraisal costs claimed under the tariff regulation. However, it is instructive to review the manner in which these claims were originally presented for payment to the respondent and the correspondence which followed between counsel for the parties.

[8] On July 14, 2000, the claimants forwarded to the respondent two tariff costs claim schedules for legal costs pursuant to Schedule 1 of the tariff regulation, one each for Dennis Chu and the Chu Estate. Except for disbursements totalling $259.17, all of which were shown only on Mr. Chu's account, the costs claim schedules were identical. Three items of description taken from Schedule 1 of the tariff regulation were contained in each, namely items 1, 4 and 5. Each of these items provides for minimum and maximum numbers of units. Under the tariff regulation the reviewer has discretion to allow a number within that range of units, having regard to the principle that, when assessing costs, one unit is for matters upon which little time should ordinarily have been spent, the mid-point of the range is for matters upon which an average amount of time should ordinarily have been spent, and the maximum number of units is for matters upon which a great deal of time should ordinarily have been spent.

[9] Item 1 refers to 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 the tariff. The range of units provided is from 1 to 20. In each of the claimants' two costs claim schedules, the full 20 units were claimed. Item 4 refers to instructing an expert witness if the witness prepares a report. It provides for a range of between 1 unit and 5 units. Again, the maximum number of units was claimed in each costs claim schedule. Item 5 refers to every process for commencing and prosecuting a claim before the board, ranging from between 1 unit and 10 units. Each of the claimants' schedules claims the full 10 units.

[10] The tariff regulation provides for fixing a scale of costs from scale 1 to scale 3. Scale 1 is for matters of less than ordinary difficulty or importance, scale 2 for matters of ordinary difficulty or importance, and scale 3 for matters of more than ordinary difficulty or importance. In fixing the appropriate scale under which legal costs are to be assessed, one factor which may be considered is whether a difficult issue of law, fact or construction is involved. For determining legal costs, the value allowed on an assessment is $100 for each unit under scale 1, $140 for each unit under scale 2, and $180 for each unit under scale 3.

[11] The claimants' legal cost claims fixed scale 3 as the appropriate scale for assessment on all of the foregoing items. The overall result of the approach adopted by the claimants in the presentation of their legal costs claim schedules was a claim for legal costs in the sum of $7,182, including GST and PST, for each of Dennis Chu and the Chu Estate, plus disbursements, or the sum of $14,623.17 in total.

[12] On August 10, 2000, the claimants forwarded to the respondent two tariff costs claim schedules for real estate appraisal costs, pursuant to Schedule 2 of the tariff regulation. The approach here was identical to that followed in the presentation of legal costs under the tariff. Wholly duplicative claims were made by each of the claimants. The first five items of description taken from Schedule 2 were contained in each. As with the legal costs schedule, Item 1 refers to correspondence, conferences, instructions or meetings relating to the claim for which provision is not made elsewhere under the tariff. The range of units is between 1 and 20. Item 2 is to inspect and research the subject property, with a range of between 1 unit and 30 units. Item 3 is for market research, including all necessary attendances, with a range of units of between 1 and 20. Item 4 refers to the inspection of comparable properties, ranging again between 1 unit and 20 units. Item 5 refers to analysis of the data and preparation of a report or reports. Here the range is between a minimum of 1 unit and a maximum of 60 units. Under each of these items, the claimants both claimed the maximum number of units available.

[13] As with legal costs, real estate appraisal costs are to be fixed on a scale, between scale 1 and scale 3, depending upon the difficulty or importance of the matter. One factor which may be considered in fixing the scale is whether a difficult appraisal issue is involved. For determining real estate appraisal costs, the value allowed on an assessment is $80 for each unit under scale 1, $100 for each unit under scale 2, and $120 for each unit under scale 3.

[14] The claimants' real estate cost claims fixed scale 3 as the appropriate scale for assessment on all of the foregoing items. The result was a claim for real estate appraisal costs in the sum of $19,260 including GST, for each of the claimants, or the sum of $38,520 in total.

[15] Between the rendering of these cost claims and the hearing of this cost application, there were several exchanges of correspondence between counsel for the parties. In summary, the respondent gave notice that it would require proof that the costs claimed had been "incurred" within the meaning of the Act and the tariff regulation, asserted that the tariff does not permit a "doubling up" of costs such as it said was occurring here, and questioned both the claimants' application of the maximum number of units for each item under the tariff schedules and their use of scale 3 throughout. In a letter dated July 20, 2000, respondent's counsel, Michael Woodward, wrote to claimants' counsel, J. Bruce Melville, as follows with respect to the scale:

"We see no argument available with respect to this file suggesting that it is a case of more than ordinary difficulty or importance. We are in fact doubtful as to whether the case qualifies as being of "ordinary" difficulty or importance, but without prejudice to our client's position in the event of litigation on that point, we will accept that scale 2 applies for the time being."

The respondent also took the position that the legal costs it had paid in the pre-tariff period should be taken into account in fixing the appropriate number of units for work performed within the period covered by the tariff. Mr. Melville, in a letter to Mr. Woodward dated July 25, 2000, replied to this latter point as follows:

"I do not understand how your client might justify offsetting previous advance payments against the present cost claims. Those previous advance payments were made pursuant to s. 48 in response to earlier costs claims. What authority do you have for this proposition?"

[16] Suffice it to say that, prior to the convening of this cost review by teleconference on the morning of September 7, 2000, very little had been resolved between the parties as to the issues around costs.

3.  THE COST REVIEW

3.1  Preliminary Observations

[17] At the outset of the hearing I was advised that the parties had reached agreement on two items. The agreement, I should note, was subject to the respondent's preliminary objection that this cost application should be dismissed outright for reasons which I will discuss later. First, they agreed on the disbursements as set out in the legal cost claim of Dennis Chu (and not duplicated in the cost claim of the Chu Estate) in the amount of $259.17 including GST. Second, the claimants agreed to the number of units suggested by the respondent in written submissions provided just prior to the hearing for each of the tariff items in the real estate appraisal claims: 7 units out of a maximum of 20 for Item 1, 10 units out of a maximum of 30 for Item 2, 7 units out of a maximum of 20 for each of Items 3 and 4, and 20 units out of a maximum of 60 for Item 5. These totalled 51 units for real estate appraisal costs. It was common ground that the appraiser had rendered no accounts in the pre-tariff period.

[18] Claimants' counsel for the first time also advised the board and respondent's counsel that the claims had been reconsidered in light of a recent cost decision by the board. The claimants now conceded that only one legal cost claim and one real estate appraisal cost claim would be put forward for review rather than duplicative claims being advanced for each of the claimants. The claimants were also now prepared to agree with the respondent's earlier suggestions that scale 2 would apply and that 15.5 units in total would be appropriate for the amount of legal work performed. Those suggestions, however, were made in the context of a proposed interim settlement to avoid an advance cost review. The respondent made clear that it did not feel bound by them at the hearing of this application.

[19] The advance cost decision of the board which prompted these concessions by the claimants was one I rendered orally a week earlier in the matter of Kenneth Yan-Keung Yue and Joan Mi-Ping Yue v. City of Surrey, E.C.B. No. 10/00, August 31, 2000, cited in [2000] BCEA 327. This was the first decision since the introduction of the tariff regulation in which the board was actually called upon to apply the tariff on an interim review of legal and real estate appraisal costs. The owners in that case were represented at the cost hearing by the same legal counsel who appeared on this matter. The owners there had adopted the same approach followed by the claimants here. Separate and duplicative legal and real estate appraisal costs claim schedules were presented for each of the two joint owners of the property in question, the maximum number of units was claimed for each item in question in which a range is indicated under the tariff schedules, and scale 3 was applied throughout.

[20] I held that it was inappropriate to render separate bills of costs for each of two owners who have together asserted one application for determination of compensation, in which claims for compensation are not allocated as between the owners, and where in fact the claims asserted by both are the same. Based on my review of the available evidence, I further held that the matter appeared to be reasonably straighforward, involving only the highest and best use of the property before and after the taking and injurious affection to the remainder of the property which was not taken. To my mind, these issues did not fix the matter at scale 3, but at best, scale 2. I also observed that I had almost no useful evidence before me to be able to assess the necessity for or reasonableness of the costs claimed, and that the owners' choice to affix the maximum number of units in each category where a range is prescribed would need to be supported by a great deal more evidence than had been offered. I recognized that on an advance cost review which is intended to be summary in nature, owners were frequently reluctant to disclose all the details of the work being performed on their behalf out of concern that it might prejudice the strategy for presenting their case. Even so, I suggested that it must be within the ingenuity of counsel to be able to provide some reasonable indication that a particular amount of work had been performed, the nature of the work performed, and the time expended, in order to allow the reviewer of costs to make an assessment of the necessity for and reasonableness of what was being done.

3.2  The Issues

[21] The number of issues was narrowed somewhat at the outset of the hearing but several matters remained in contention. Based on the submissions of the parties, the issues which I identify as requiring my determination are as follows:

(1)	Have the claimants shown that the costs which they now claim have been "incurred" for the purposes of the Act and the tariff regulation?
(2)	Assuming that the costs claimed have been incurred, what is the appropriate scale at which the legal costs and real estate appraisal costs should be allowed?
(3)	In fixing the appropriate number of units under the tariff schedule for the legal work performed, what account should be taken of legal work performed in the period before the tariff regulation came into force?
(4)	Given the circumstances and manner in which the cost claims have been presented, are the claimants entitled to their costs on this application?

[22] Although the claimants brought this application for an advance cost review, it will facilitate my discussion of the issues if I first consider the objections raised by the respondent before turning to the claimants' position in response.

3.3  The Respondent's Position

[23] The respondent's threshold position is that the claimants have laid no proper foundation upon which an award of costs can be made. Section 48(1) of the Act provides that an owner may submit a written bill to the expropriating authority consisting of the reasonable legal, appraisal and other costs "that have been incurred by the owner" up to the time the bill is submitted. Mr. Melville's affidavit in support of his clients' cost claims does not expressly state that bills have been rendered to them or that legal and appraisal costs have been "incurred". No actual bills to the clients in respect of the costs claimed were in evidence. In the respondent's submission, such lack of proof is fatal to the claimants' application and should lead to its dismissal.

[24] Alternatively, if costs have been incurred, the respondent nevertheless characterizes the matter from which the claimants' costs arise as a very straight forward and comparatively simple expropriation claim. At this stage of the proceedings, it argues, both legal and appraisal costs should only be allowed at scale 1. From an appraisal perspective the matter involves a linear taking from along the undeveloped southern boundary of the property which, according to the respondent's advance payment appraiser, does not impact on any existing improvements or disrupt the present use of the property. It is not, for example, a "severance" case where the taking bifurcates the property and leaves a portion of the remainder isolated. The respondent's advance payment appraiser, Dale C. Hooker, AACI, in an affidavit sworn for the purposes of this application, deposes that in terms of the number of issues raised by the taking, the complexity of those issues, and the amount of appraiser's time ordinarily required to investigate, research, analyze and report on those issues, the case is comparatively simple on all counts. He ranks the case in the 30th to 40th percentile. Neither, according to respondent's counsel, do the pleadings in this matter raise any novel or complex legal issues or suggest that the case may be of unusual importance.

[25] The respondent submits that, in fixing the appropriate number of units under the tariff schedule for various descriptions of legal work performed since June 28, 1999, account must be taken of legal work of the same description already performed, billed for and reimbursed in the period before the tariff regulation came into force. In other words, when considering the appropriate number of units to allow within a particular range, some sort of allocation of pre-tariff and post-tariff work is necessary to avoid duplication of costs. In his letter to Mr. Melville of July 20, 2000, Mr. Woodward said the respondent considered the appropriate number of units for the three items claimed to be 8 units for Item 1 (correspondence, etc.), 2.5 units for Item 4 (instructing the expert) and 5 units for Item 5 (process for commencing the claim) for a total of 15.5 units. At the hearing, Mr. Woodward clarified the respondent's position. He said that total was the respondent's assessment in tariff format of all the legal work that had been performed by the claimants' law firm from the outset of their involvement in the matter in December, 1998. Peterson Stark had already billed $3,329.84 on April 30, 1999 in respect of legal services provided to the claimants and the respondent had fully paid that account. Therefore, irrespective of the scale under which the suggested total units might be allowed, the claimants had already been more than fully reimbursed for work now itemized under the tariff in the claimants' legal costs claim schedule. Accordingly, the present claim with respect to legal costs should be dismissed.

[26] The respondent says that the tariff costs claim schedules as initially presented, seeking advance payment of costs totalling more than $52,000, were so fundamentally unreasonable as to turn the claimants' cost application into an abuse of the board's process. The respondent submits that the board, both by reference to the cost provisions of the Act as a whole and as master of its own procedures, should exercise its discretion to deny to the claimants the legal costs to which they would otherwise be entitled under the tariff schedule in bringing on this application.

3.4  The Claimant's Position

[27] The claimants rely primarily on two affidavits sworn by their legal counsel, Mr. Melville, as offering the necessary proof that they have "incurred" legal and real estate appraisal costs under the tariff. In the first affidavit, sworn on August 30, 2000, Mr. Melville among other things lists the steps which have been taken in the proceedings and describes the legal services rendered to the claimants during the period covered by the legal costs claim schedule. He further describes, on information and belief, the services provided to the claimants by the appraiser he retained. In the second affidavit, sworn on September 5, 2000, Mr. Melville deposes as to the number of hours recorded by the claimants' professional legal advisors in performing the services described under each of the three tariff items in question. Again on information and belief, he further sets out the number of hours recorded by the claimants' appraiser under each of the five tariff items included in the real estate appraisal costs claim schedule.

[28] In the claimants' submission, it is unnecessary to go beyond this level of detail at an advance cost review. The information clearly demonstrates that services have been provided and that an obligation has been incurred to pay for them. Given the introduction of the tariff regulation, the claimants say, there is no longer a requirement to produce actual invoices rendered to the client in order to show that costs have been incurred. In any case, each of the tariff costs claim schedules provided to the respondent was accompanied by a letter from the claimants' law firm stating that they list costs "incurred by our client." The claimants submit that the manner of their presentation of accounts under the tariff complies with what the board has prescribed in its decision in C.R. All Trucks Ltd. v. British Columbia (Minister of Transportation and Highways) (2000), 69 L.C.R. 197.

[29] The claimants say that the legal and appraisal issues around compensation which arise out of this expropriation are matters of at least ordinary difficulty or importance in respect of which scale 2 should be allowed. Mr. Melville deposes in his first affidavit that, based upon his initial review of the facts of this case and after discussion with the appraiser he retained, it became apparent to him there were difficult legal and appraisal issues involved, namely, "the highest and best use of the land in both the before and after taking situations and the measurement of injurious affection." These, he adds, were matters upon which in his opinion a "great deal of time should be spent." In his second affidavit, Mr. Melville states that, after reviewing the Hooker advance payment appraisal report and consulting with the claimants' appraiser, he determined that Mr. Hooker's report "overlooks several significant issues which affect the determination of compensation."

[30] As to the apportionment of legal costs between pre-tariff and post-tariff work, the claimants say that the legal costs claim schedule details new work only that was actually performed after the tariff regulation came into force. In the claimants' submission, it is inappropriate at an advance cost hearing to review a previous legal account falling outside the tariff which has already been submitted to and fully reimbursed by the respondent. Therefore, while the claimants are prepared to accept that a total of 15.5 units under the tariff are appropriate for the legal work performed in the period between June 28, 1999 and April 30, 2000, they reject the proposition that any adjustment should be made to the number of units shown in the legal costs claim schedule for prior legal services.

[31] The claimants say their cost application to the board under section 48(3) was made necessary because the respondent failed either to pay the tariffed bills of costs as presented, or such portion of them as it considered reasonable, or to apply promptly to have the costs reviewed as contemplated under section 48(2). Claimants' counsel argued that presentation of the costs claim schedules in the manner initially prepared, far from being unreasonable or an abuse of the board's process, was an exercise of professional responsibility. The claimants point out that, under section 48(1), each owner may submit a written bill to the expropriating authority. Until the board's decision in the Yue matter, there were no guidelines from case authority with respect to the appropriate number of costs claim schedules which joint owners of an expropriated property ought to submit or as to fixing the appropriate scale or the appropriate number of units under an item where a range is provided. In making the maximum claim in each respect, claimants' counsel who prepared the costs claim schedules was therefore simply protecting the clients' interest in the first instance. They made appropriate concessions at the cost hearing after the decision in Yue had been rendered.

[32] Since the claimants have not as yet submitted a cost claims schedule with respect to the advance cost hearing, they say that the board cannot make an award of costs on that item at this point. Nevertheless, it is their position that items 14 and 15 of Schedule 1 of the tariff regulation provide fixed numbers of units for preparation for and attendance at a cost hearing, and there is nothing in the Act or the tariff regulation which gives the board discretion to withhold costs from an owner in such circumstances.

3.5  Discussion and Conclusions

3.5.1  Have the Claimants "Incurred" Costs?

[33] That portion of section 48(1) of the Act which is relevant to the threshold issue before me provides as follows:

48 (1)

An owner may, from time to time (...) submit a written bill to the expropriating authority consisting of the reasonable legal, appraisal and other costs that have been incurred by the owner up to the time the bill is submitted. [Emphasis added]

[34] Prior to the introduction of the tariff regulation, owners seeking advance payment of costs satisfied the onus of proving that particular costs had been "incurred" within the meaning of the Act by submitting invoices showing out-of-pocket expenses or actual accounts rendered to them for services performed by the solicitors or other professionals they retained. With respect to legal or appraisal fees for which advance recovery was sought, it was invariably the case that these professional accounts, having first been rendered to the owner, were in turn provided to the expropriating authority and, in the event of a cost review before the board, to the reviewer of costs, albeit in some cases without full descriptions of the work performed.

[35] The respondent referred to the cost decisions of this board in Brietzke v. British Columbia (Minister of Transportation and Highways) (1996), 59 L.C.R. 76, and Ferguson v. British Columbia (Minister of Forests) (1998), 63 L.C.R. 219, in support of its position that no costs can be awarded in the absence of proof that the owner has "incurred" those costs.

[36] In the Brietzke case the then vice chair, Fiona M. St. Clair, considered the owners' application for advance payment of a sum to effect the retainer of a consultant who had not as yet performed any work. She declined to make an order for payment on the basis that no costs had been "incurred". The vice chair reasoned at pp. 79-80:

Thus, in addition to providing for the reimbursement of money already expended, s. 47 [now. s. 48] anticipates providing funds to owners who have become indebted to third parties that have provided services (and often, goods) to them by way of assistance in advancing their compensation claims. The factor that both these situations have in common is that the services have already been performed and the goods provided, resulting in either an expenditure or an indebtedness on the part of the owner.

[37] The Brietzke decision turned on the fact that no services had been performed and no legal obligations for payment created. It did not have to deal directly with whether an account had been rendered.

[38] In the Ferguson case, however, the expropriating authority, at the conclusion of a section 48 review, asked the former vice chair to award a fixed amount for the legal costs of the review itself. The owners argued that a reviewer did not have jurisdiction under the Act to review costs unless an owner had first sought reimbursement of those costs from the expropriating authority by submitting a written bill. Ms. St. Clair agreed with the owners' position, and stated at pp. 227-228:

Section 48 is all about reviewing "a bill", and I do not accept that I have the power to set a fixed amount for a claimant's costs of a s. 48 review over the objection of the claimants and without having their solicitor's bill for those services to review.

[39] Both of these cases were decided before the introduction of the tariff regulation which has altered the basis upon which costs become payable. Whereas previously the costs payable were "the actual reasonable legal, appraisal and other costs" under section 45(7)(a) of the Act, the legal and appraisal costs payable are now "the amounts prescribed in the tariff" under section 45(7)(b).

[40] However, the tariff regulation has not altered the basic requirement under section 48(1) of the Act that the costs in respect of which an advance payment is sought must "have been incurred by the owner". Under section 2 of the tariff regulation itself, the tariff is made applicable to costs payable "if the costs claimed were incurred on or after the date this regulation comes into force."

[41] Two related questions then arise: first, what meaning should be given to the term "incurred" in the context of tariffed costs, and second, what standard of proof should be required on an advance cost review that the tariffed costs at issue have been incurred by the owner?

[42] On the first question the respondent has argued, with respect to legal and appraisal costs, that owners only incur such costs when accounts have been rendered to them, thereby creating an actual debt. The claimants have argued that owners incur such costs when the legal and appraisal professionals they have retained perform services on their behalf, thereby creating an obligation to pay.

[43] On the second question the respondent says, at least for the purposes of a summary determination of advance costs, that the minimum proof required is a sworn affidavit to the effect that accounts have been rendered to the owners. The claimants say that whether actual accounts have been rendered to the owners is irrelevant, and the standard of proof is met by providing sufficient details of the services provided so that they can be properly assessed under the tariff schedules. The requirement for a "written bill" to the expropriating authority is satisified by the provision of cost claims schedules in the prescribed tariff format rather than actual statements of accounts.

[44] The point at which a cost may be said to have been "incurred" is not readily apparent. Black's Law Dictionary, Fifth Edition (St. Paul, Minn.: West Publishing Co., 1979), at p. 691, defines the word "incur" as meaning "to become liable or subject to". William C. Burton, Legal Thesaurus, Second Edition (Toronto: Maxwell Macmillan Canada, 1992), at p. 273, speaks of associated concepts which include to "incur a debt", to "incur a liability" and to "incur an obligation".

[45] I find the claimants' position on this question more compelling, particularly in light of the object of a tariff under which notional or standard allowances are made which are not dependent upon what an owner in fact may have been billed. The costs at issue in this matter are the amounts prescribed in the tariff rather than the actual costs so that the rendering of accounts to the claimants takes on far less relevance at an advance cost review than was previously the case. As the vice chair, Sharon I. Walls, pointed out in the C.R. All Trucks decision, at p. 214:

In my opinion a bill of costs that reflects the Tariff is not a translation of a bill that a lawyer or appraiser might send his or her client, but an entirely separate exercise.

[46] 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.

[47] For the purposes of this advance cost review, I am satisfied by Mr. Melville's affidavit evidence as to the work performed and time expended, both by himself and by the appraiser he retained on the claimants' behalf, that the claimants have incurred costs since June 28, 1999 which fall within items of description in the tariff schedules. Therefore, in my view, the threshold requirement for an advance award of costs has been met.

3.5.2  What is the Appropriate Scale?

[48] The tariff regulation expressly provides that, in fixing the appropriate scale under which real estate appraisal or legal costs are to be assessed, the reviewer may consider whether a difficult appraisal issue or difficult issue of law, fact or construction is involved. These are considerations which also entered into the board's determination of advance costs under the pre-tariff regime. In the absence of a scale, the reviewer was nevertheless required under section 48(5) to assess the reasonableness of a bill "after taking into account all relevant circumstances." In my view, section 48(5) continues to apply. At a final cost hearing, one of the mandatory considerations for the reviewer under section 45(10) was, and remains, "the number and complexity of the issues."

[49] Section 4(3) of the tariff regulation establishes a presumption that costs in a matter are to be assessed on the basis that the matter is of ordinary difficulty or importance. With reference to advance cost reviews, it states that if such costs are payable, the costs must be assessed under scale 2 unless a party, on application, obtains an order of the board that the costs be assessed under another scale.

[50] The respondent, in support of its position that both real estate and legal costs should only be allowed at scale 1, endeavoured to contrast this matter with other cases discussed by the board in the course of conducting cost reviews: Bill's Frontier Restaurant Ltd. v. British Columbia (Minister of Transportation and Highways) (1996), 58 L.C.R. 204, and McKinnon v. School District No. 36 (Surrey) (1997), 61 L.C.R. 9. Both of these decisions resulted from final cost reviews under section 45. The cost reviews occurred after all pre-hearing and hearing proceedings had been completed and final compensation decisions had been issued by the board.

[51] The Bill's Frontier Restaurant case arose out of the acquisition of a small portion of the owner's property from which it operated a restaurant business. The claim was for the market value of the land taken said by the owner to be between roughly $812,000 and $955,000, reduction in market value to the remaining land, disturbance damages and business loss. The compensation hearing involved approximately nine days of evidence and legal argument. In the final cost decision, I commented that this case was "one of average or, perhaps, slightly greater than average complexity."

[52] The McKinnon case involved, on a total fee simple taking, the determination of the highest and best use and market value of the owners' two unimproved contiguous lots for which the owners claimed compensation of $156,000. The case was heard together with that of the owners of a nearby property also expropriated and occupied, in all, five hearing days. In the final cost decision, I commented that:

... this was a comparatively simple case (...) There was no shortage of appraisal data available to assist in making those determinations and nothing to suggest that the exercise was other than routine, but for one factor. That factor was the claimants' assertion that the value of their lots had been negatively impacted by "project influence", that is, that the respondent's acquisition of the two lots was part of a larger scheme for park and school development the planning for which pre-dated that acquisition by several years.

[53] When it comes to deciding where on the scale of difficulty or importance a particular matter lies, cost claims which have been determined prior to implementation of the tariff regulation continue, in my view, to have some relevance. However, the comparison is necessarily more tenuous where it is between a previous final cost review and a present review of advance costs on a matter which is still at an early stage of proceedings.

[54] At this stage the difficulty or importance of the case can only be assessed on the pleadings and any affidavits that have been filed. With respect to appraisal matters, the respondent produced the affidavit of its advance payment appraiser. He deposed that the case ranks in the 30th to 40th percentile. If I were to accept his opinion at face value, it would appear to place the matter at the upper end of scale 1 or the bottom end of scale 2. However, an assessment by the respondent's appraiser as to the relative simplicity of the appraisal exercise does not necessarily settle the question. I note that he has valued the subject land on the basis that its highest and best use is also its existing use and that there is no reduction in value to the remainder as a result of the taking.

[55] The claimants' pleadings suggest that they take a different view of the matter. They speak of the land being ripe for redevelopment and of the reduction of development potential as a result of the taking. I construe this to mean that they disagree with the respondent's assessment of highest and best use. They clearly disagree with the view that there has been no reduction in value to the remainder. The bulk of their claim over and above the amount of the advance payment relates to such alleged injurious affection. In all probability they will have to marshall other evidence in support of these contentions and perhaps undertake additional appraisal approaches to valuation. These will add to the difficulty of the appraisal assignment. I also note that they make no claim for disturbance damages, which may be the result of proceeding on the theory that highest and best use is different from existing use.

[56] Mr. Melville's second affidavit, which was partly in response to that of the respondent's appraiser, deposes that the appraiser has overlooked several significant issues which affect the determination of compensation. Mr. Melville does not elaborate on what these other issues are and, indeed, claimants' counsel at the cost hearing said the claimants were neither required nor prepared at this point to disclose them.

[57] The situation with which I am confronted is somewhat reminiscent of that which faced the reviewer of advance costs in Roadmaster Auto Centre Ltd. v. Burnaby (City) (1994), 54 L.C.R. 148 (B.C.E.C.B.). There, the question was the sufficiency of evidence on an advance cost review as to the reasonableness of legal costs where there appeared to be duplication of legal services between the owner's past and present solicitors. The owner's solicitor at that cost review, Mr. Melville, was not prepared to detail and explain the reasonableness of the items in his firm's accounts since to do so, he indicated, might cause him to reveal to the expropriating authority his client's strategies on the compensation claim. The reviewer, former board member S.E. Ross, commented as follows at p. 155:

I see Mr. Melville's stance as a choice the claimant is entitled to make, but one that also has consequences in so far as it handicaps the process for the assessment of the reasonableness of the accounts. The review process under s. 47 [now s. 48] is designed to be a summary process, but it is not designed to be an automatic or purely mechanical process. I am required to assess reasonableness, though not in a final sense which happens under s. 44 [now s. 45]. Where the evidence does not allow me to do that because the claimant chooses not to provide information, then I must decline to order advance payment of costs which have not been established to be reasonable.

[58] Here, unlike in Roadmaster where the reviewer had little or no information to justify the reasonableness of the particular costs, there are allegations of fact in the claimants' pleadings which offer some assistance to me in fixing an appropriate scale at this stage. However, in my view, the claimants could have been more forthcoming with evidence as to the appraisal matters which they say are at issue between the parties without necessarily jeopardizing any tactical advantage. This would have avoided the resort on my part to a certain degree of inference in order to reach a decision.

[59] Notwithstanding what I have just said, I accept the claimants' position, on the basis of my consideration of the pleadings and the affidavit evidence before me, that it would be appropriate on this advance cost review to fix the scale for real estate appraisal costs at scale 2 as involving matters of ordinary difficulty or importance. I am not satisfied that the presumption in section 4(3) of the tariff regulation in favour of scale 2 has been rebutted. This determination does not, of course, foreclose the question from being revisited on any future advance cost reviews as the proceeding unfolds or on a final determination of costs.

[60] Fixing the scale at which legal costs should be allowed on this advance cost review is somewhat more problematic. Mr. Melville deposed to there being "difficult legal and appraisal issues" which he stated to be "the highest and best use of the land in both the before and after taking situations and the measurement of injurious affection". This description in itself, which is applicable to all partial takings no matter how simple or complex, offers no indication of a difficult question of law, fact or construction. Respondent's counsel noted that the respondent has not raised in its pleadings any unusual or complex legal defences. Nor is the preparation of the claimants' case by counsel at this point complicated by the need to marshall evidence of business loss or other disturbance damage. However, if my understanding of the thrust of the claimants' case is correct, their legal counsel will be faced with having to bring together evidence and argument on a range of appraisal, planning and development issues. In my view, this would support a presumption that the task at hand is one of ordinary difficulty and importance. Therefore, at least at this stage of the proceedings, I hesitantly agree with the claimants that the legal costs should also be fixed at scale 2.

3.5.3  Should the Units Allowed Reflect Pre-Tariff Work?

[61] The tariff regulation contains no transitional provision specifying how costs which an owner has incurred for legal or 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.

[62] Under section 48(5) of the Act, the reviewer on an application for payment of advance costs must first assess the reasonableness of the bill after taking into account all relevant circumstances. The introduction of the tariff does not render this subsection any less applicable. The reasonableness of the bill continues to be a primary consideration. Furthermore, section 3(2) of the tariff regulation provides:

3 (2)

When making an assessment of costs under section 45 or 48 of the Act, the reviewer must allow those costs under the tariff that were proper or reasonably necessary to conduct the proceeding.

In my view, the question of overlap or duplication between pre-tariff and post-tariff work is one which goes to the reasonableness of the tariff costs claim schedule presented in fixing the number of units for particular items under the schedule.

[63] In the present instance the respondent contends that it is entitled to full credit for the advance payments of legal costs which it made prior to implementation of the tariff, namely, the sum of $57.00 paid to Kaminsky & Company for referring the claimants to their current solicitors and the sum of $3,329.84 paid to Peterson Stark for legal services provided to the claimants between December 10, 1998 and April 30, 1999. The respondent refers in particular to entries in the Peterson Stark account of April 30, 1999 for correspondence, conferences, instructions and investigations which correspond to item 1 of the legal tariff schedule and to other entries for instructing the appraiser which correspond to item 4 of that schedule.

[64] I agree that account should be taken of those corresponding entries in fixing the appropriate number of units so as to avoid duplication of costs. Attention should also be paid to the totality of costs to date as a measure of global reasonableness. However, it does not follow that the legal costs already paid prior to June 28, 1999 must be directly offset, on a dollar for dollar basis, against legal costs incurred from and after that date. The reasonableness of the accounts rendered and fully reimbursed prior to the tariff are not the subject of review on this advance cost application, although of course they may become so on a section 45 final cost review. The necessity for and reasonableness of additional legal work performed since the implementation of the tariff must also be considered in its own right in making an award of advance costs.

[65] Mr. Melville deposes that, between June 28, 1999 and April 30, 2000, the claimants' professional legal advisors recorded a total of 7.25 hours on work described under tariff item 1 (correspondence, etc.), 3.95 hours under item 4 in instructing the appraisal expert, and 2.50 hours under item 5 in commencing and prosecuting a claim before the board, including the drafting and filing of an application for determination of compensation. In the pre-tariff period the claimants' law firm recorded and billed for a total of 12.95 hours. A significant portion of this time involved matters that correspond with the sort of legal work described under tariff item 1. Something less than an hour appears to have been spent on making initial contact with and instructing the appraiser, work which corresponds with item 4. No time appears to have been recorded in that pre-tariff period for work which corresponds with item 5.

[66] Evidence as to time actually spent is a useful indicator to the reviewer in determining that a certain amount of work has been performed and in making some reasonable allocation under the tariff for services provided pre-tariff. However, the tariff regulation contemplates an objective standard by requiring the reviewer to consider what amount of time "should ordinarily have been spent" on a particular item of work. I therefore agree with what was said by vice chair Walls in her recent oral decision in Danny James Topping and Tina Marie Topping v. H.M. the Queen in Right of the Province of British Columbia as represented by the Minister of Transportation and Highways, unreported, E.C.B. No. 40/99, October 20, 2000. In that section 48 review the vice chair commented:

Thus the evidence with respect to the actual time spent is not necessarily indicative of the number of units that are appropriate.

[67] Having regard to all of the evidence before me on this application and to the foregoing considerations, I conclude that it would be appropriate to allow 3 units under item 1, 2 units under item 4, and 5 units under item 5, for a total of 10 units under the legal tariff schedule. At scale 2 this amounts to $1,400.00 to which GST and PST would also apply.

[68] The parties are agreed that all of the appraisal services provided to date fall under the real estate appraisal tariff schedule and that the appropriate number of units for that work, said to comprise a total of 89.25 hours of billable time, is 51. I allow 51 units accordingly. At scale 2 this amounts to $5,100.00 to which GST would apply.

3.5.4  Are the Claimants Entitled to their Costs on this Review?

[69] The claimants cite the Ferguson decision in support of their submission that I have no authority to make a fixed award of costs for this cost review when the claimants have not as yet submitted a bill in respect of it. Technically this appears to be the case in that the claimants' legal costs claim schedule constituting a "written bill" to the respondent does not make any provision for items 14 and 15 in Schedule 1. Presumably they would be covered in a future bill of legal costs in tariff format.

[70] It is, however, worth noting that item 14 allows the fixed number of 2 units for preparation for each day of attendance before the board to assess costs and item 15 allows the fixed number of 4 units for each day of actual attendance. Where the time spent on attendance at the application is less than 2 1/2 hours, section 4(7) of the tariff regulation applies and only half the amount for preparation and attendance is allowed. According to my notes of the proceedings, this advance cost review lasted somewhat more than 2 1/2 hours and, therefore, no adjustment would be made under section 4(7). The parties will have an opportunity to make their submissions on this point at a future cost review, should one become necessary.

[71] For the future, I would make the general observation that provision should be made for items 14 and 15 in a tariffed legal bill of costs presented on a review of advance costs since the reviewer is in the position to apply the fixed number of units, subject to section 4(7), at the cost hearing itself and thereby avoid a further application.

[72] The real issues before me on this application are whether I have the discretion, as the respondent submits, to withhold costs from an owner when Schedule 1 of the tariff regulation provides fixed numbers of units for preparation for and attendance at a cost hearing and, if so, whether I should exercise that discretion in the circumstances of this case.

[73] It is clear from the board's decision in C.R. All Trucks that the tariff regulation should be interpreted in the context of its enabling statute and in a manner which seeks to avoid repugnancy or inconsistency. Although the tariff regulation prescribes fixed numbers of units for certain steps in proceedings before the board, in my view it does not remove the reviewer's discretion to decide whether such steps were necessary or reasonable in the circumstances.

[74] I have already referred to section 3(3) of the tariff regulation which requires the reviewer to allow those costs under the tariff that were "proper or reasonably necessary" to conduct the proceeding. Reference should also be made to the costs provisions of the Act itself. Section 48(6) of the Act makes section 45(7), among others, applicable to an advance cost review. Section 45(7), under which authority for prescribing a tariff regulation is to be found, refers to the costs payable under section 45(3), wherein a person whose interest or estate in land is expropriated is entitled to be paid costs "necessarily incurred by the person for the purpose of asserting his or her claim for compensation or damages". [Emphasis added] In my opinion, the reviewer's authority under both the Act and the tariff regulation to determine what is "necessary" and "reasonable" vests the reviewer with a discretion, to be exercised judicially, over the items set out in the tariff schedules.

[75] In the present case the claimants presented for payment to the respondent duplicative costs claim schedules which, in the first instance, made no reasonable attempt to assess in tariff format either the difficulty or importance of the matter or the amount of time necessarily and reasonably spent on particular items of work. The costs claimed at this early stage of proceedings were wildly disproportionate to the amount of compensation at issue in the claim. I am unable to accept the submission of claimants' counsel which amounts to saying that the absence of case authority on how the tariff regulation should be applied relieved them of the normal requirement to exercise professional judgment on the matter.

[76] Equally I am unimpressed by the argument that the respondent in these circumstances should have paid an amount which it considered appropriate and applied to have the balance of the cost claim reviewed by the board. The correspondence between counsel for the parties demonstrates that the respondent, while quite properly questioning the magnitude of the claims and the bases upon which they were made, sought an interim settlement of the matter without the necessity of a hearing on what it considered reasonable terms.

[77] Although the claimants modified their claims and provided some additional evidence at the outset of the hearing in light of Yue, their approach up to that point unnecessarily added to the preparation which respondent's counsel was required to make and also somewhat prolonged the hearing before the board. The claimants were otherwise not prepared to disclose information which would have assisted me in assessing the reasonableness of the costs in question and whether the matters in issue on the compensation claim were such as to warrant the scale they sought to have applied.

[78] Due recognition needs to be given to the fact that this is one of the first advance cost reviews under the tariff regulation, which introduces some novel considerations. Nevertheless, I conclude that it is appropriate to exercise my discretion in these circumstances to deny the claimants a portion of their costs on this review. Accordingly, I award the claimants 50% of the costs to which they might otherwise be entitled under the tariff.

4.  SUMMARY CONCLUSIONS

[79] As a result of this advance cost review, I have allowed to the claimants in respect of their legal costs claim schedule a total of 10 units at scale 2 which amounts to the sum of $1,400.00, disbursements as agreed in the sum of $242.22, plus GST and PST where applicable in the sum of $212.95, for a total of $1,855.17. I have further allowed to the claimants in respect of their real estate appraisal costs claim a total of 51 units at scale 2 which amounts to the sum of $5,100.00 plus GST of $357.00, for a total of $5,457.00. The claimants are awarded 50% of the costs of this application to which they might otherwise be entitled under the tariff.