Expropriation Compensation Board Link to Home Page

December 7, 1999, E.C.B. No. 60/95/178 (68 L.C.R. 225)

Between: Donald Alan Richards and Maryann Delores Richards
Claimants
And: Corporation of the District Of Maple Ridge
Respondent
Before: Fiona M. St. Clair
Vice Chair*

 

* Fiona M. St. Clair heard this matter in her capacity as Vice Chair but has completed there reasons for decision since subsequently leaving the Board.
Appearances: J. Bruce Melville, Counsel for the Claimants
James H. Goulden, Counsel for the Respondent

 

1.  THE APPLICATION

On May 21, 1998, I heard the application of the claimants, Donald Alan Richards and Maryann Dolores Richards, for an order fixing the amount of costs payable by the respondent, Corporation of the District of Maple Ridge, pursuant to section 45 of the Expropriation Act, R.S.B.C. 1996, c.125 ("the Act").

The Richards seek the costs necessarily incurred by them for the purpose of asserting their claim for compensation or damages under s. 45(3) of the Act. They also seek interest and the costs of this hearing, but request that the determination of those costs be addressed, if necessary, at a later time.

Apart from this final cost review itself, the costs claimed are in respect of the following seven accounts rendered to the Richards by the law firm of Peterson Stark:

December 6, 1994

$2,010.52

March 22, 1995

1,887.98

November 6, 1995

1,209.13

April 1, 1996

533.27

May 13, 1996

1007.94

February 1, 1998

$7,717.74

April 6, 1998

$2,269.14

TOTAL:

$16,635.72

The claims break down by category as follows:

Legal fees

$13,352.50

Experts' fees

533.33

Disbursements

617.99

GST

985.87

PST

934.69

Interest

211.34

TOTAL:

$16,635.72

Of this amount claimed, Maple Ridge has reimbursed the sum of $14,122.41, leaving $2,513.31 remaining unpaid.

 

2.  BACKGROUND

The Richards' claims in these proceedings arose from an expropriation by Maple Ridge in November of 1994 of a small portion of land from their residence for the purpose of a road expansion. Their Application for Determination of Compensation sets out a claim for $28,000 for the market value of the land taken, $15,500 for injurious affection to the remainder, and $20,000 disturbance damages, for a total of $63,500 plus costs and interest. Maple Ridge maintained in its Reply that its advance payment of $15,370 was adequate compensation for all of the items claimed. It broke down the amount of its advance payment as follows: $12,000 for market value, nothing for injurious affection, and $3,370 for disturbance damages.

The parties exchanged documents, and held examinations for discovery on January 12, 1998. The Richards obtained a report from a professional arborist regarding the value of trees taken from their property as well as damage done to trees remaining there. The Richards also retained the services of a professional appraiser, although they did not have a formal appraisal report prepared on their behalf. I understand from both counsel that at some point in their ongoing negotiations the parties reached agreement on the market value of the land taken as being the $12,000 allocated by Maple Ridge in its advance payment. No interlocutory applications were held, nor were any advance cost reviews. A compensation hearing was set to begin on February 1, 1998, but did not proceed as the parties reached a settlement on all issues but costs the day before.

Bruce Melville, counsel for the Richards, advised me that the terms of the settlement are subject to a confidentiality agreement with Maple Ridge, and he therefore did not adduce any evidence regarding those terms. In the course of the final cost hearing, however, Mr. Melville did acknowledge that the Richards accepted the bare land value of $12,000 in the advance payment, and that they did retain an appraiser and seek advice from him in order to get to that point of agreement. I was not provided with evidence of any other terms of the settlement.

 

3.  AREAS OF AGREEMENT BETWEEN THE PARTIES

Mr. Melville advised me that the parties have reached agreement on a number of issues, as follows:

  • Maple Ridge will reimburse for photocopies at the rate of $0.15 per page;

  • Maple Ridge will reimburse for fax transmissions at the rate of $0.50 per page;

  • Maple Ridge will reimburse for all other disbursements as billed, including the experts' fees of $533.33;

  • Maple Ridge accepts the hourly rate charged for Elizabeth Olkovick, the legal assistant, but disputes the time charged for her services.

I note that the combined fax and photocopy reduction amounts to $131.65.

In addition, Mr. Melville advised that the Richards were voluntarily withdrawing their claim for 6 hours of Ms. Olkovick's time, in accordance with my earlier decision in Ferancik v. Langley (Township)(1996), 60 L.C.R. 144. This time represents Mr. Melville's conclusion as to what proportion of Ms. Olkovick's time was spent making cost claims and handling advance payments. The Richards continue to seek reimbursement for 16.1 hours of Ms. Olkovick's time, billed at the average rate of $67.38, for a value of approximately $1,085. The reduction amounts to $404.28.

Adding together these conceded reductions, the sum of $535.93 must be deducted from the overall amount claimed of $16,635.72. This leaves a claim of $16,099.79. When one subtracts from this revised amount the $14,122.41 already paid by Maple Ridge, the remaining unpaid amount becomes $1,977.38.

 

4.  THE ISSUES

I therefore must determine whether the 7 legal accounts billed by Peterson Stark between December 6, 1994 and April 6, 1998, totalling $16,099.79 after the above-noted agreed upon deductions, were necessary and reasonable, or if not, the appropriate amount that Maple Ridge should be required to reimburse on their account.

In order to make this determination I must consider the following issues:

  • Whether Mr. Melville's hourly rate is reasonable or excessive;

  • Whether any more of Ms. Olkovick's time is secretarial in nature and therefore not subject to reimbursement by Maple Ridge;

  • The global reasonableness of the legal fees;

  • Whether Maple Ridge should be ordered to pay interest on the unpaid accounts, and if so at what rate; and

  • Whether the Richards are entitled to an order for their costs of this cost application.

 

5.  THE PARTIES' POSITIONS

Mr. Melville maintained that all of the costs presented were both necessarily incurred and reasonable in all respects, and that I therefore should award the claimants full reimbursement for all of the costs sought.

James Goulden, counsel for Maple Ridge, argued that the legal fees sought are excessive for the work performed. He submitted that $10,000 in legal fees would be appropriate, which would represent approximately 50 hours of time at an hourly rate of $200. He compared this case with the cost decision handed down in McKinnon v. School District No. 36 (1997), 61 L.C.R. 9. In that matter there had been a five day compensation hearing with appraisal evidence, and the chair in his cost review determined that $22,000 (before adjustments) was appropriate for legal fees. Maple Ridge therefore seeks reimbursement of moneys already paid by way of advance cost payments in the present matter.

 

6.  JURISDICTION AND STATUTORY CONSIDERATIONS

As vice chair of the board when I heard this application, I was and am exercising the powers and jurisdiction of the chair under s.26(6) of the Act in making this cost determination. I have since resigned from the board, but pursuant to section 53(7) of the Act, I am entitled to "give judgment in a hearing in respect of which [I] was, while holding office, sitting as a member...and the judgment is valid and effective as though [I] still held office."

The chair's jurisdiction to determine costs following a settlement like this stems from s.45(8) of the Act, "where an expropriating authority and a person [whose interest or estate in land is expropriated] agree on the amount of compensation or damages, but do not agree on the amount of costs to be paid." Pursuant to s.45(3), these costs must be "necessarily incurred...for the purpose of asserting [the] claim for compensation or damages ." Pursuant to s. 45(7), the costs payable are the claimant's "actual reasonable legal, appraisal and other costs."

The board has set out relevant considerations arising from the common law that apply to final cost determinations. These, as summarized by Robert Shorthouse, the chair of the board, in Garnett v. British Columbia (Minister of Transportation and Highways) (1997), 62 L.C.R. 32:

...include not only the amount and character of the services rendered, and the labour, time and trouble involved, but also the character of the litigation in which the services were rendered, the amount of money or value of the property to be affected, the professional skill and experience called for, and the character and standing of counsel in their profession...[p.38].

Beyond this, s. 45(10) of the Act sets outs considerations that "must be taken into account" in a determination of costs under s. 45(8). It provides as follows:

(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.

I am therefore directed by the legislation to consider the factors set out in s.45(10)(a) through (c) in reviewing this cost claim. The fact that the parties have imposed conditions of confidentiality on their settlement, which preclude disclosing the details of the settlement even to the board for purposes of a final cost hearing, seriously impairs and compromises my ability to properly weigh these factors.

I considered, in reviewing the evidence before me and the provisions of s.45(10) that I might have to decline to make a determination in this case. However, upon reflection I concluded that it would be more in the spirit of the Act as a whole to attempt to do what I could to assess the reasonableness of the accounts presented within the limits imposed upon me by both parties.

6.1 The Number and Complexity of the Issues

The first factor under s.45(10) is "the number and complexity of the issues". I can assess this case's issues to some extent based on the pleadings and the submissions of counsel.

Mr. Melville characterized this as a case with a significant number of issues, which he summarized as follows:

  • market value of the land

  • value of the trees removed

  • improvement value

  • damage to the trees on the remainder

  • impact of the loss of most of the driveway on the remainder

  • damage caused by the resulting non-conformity of the improvements on the remainder

  • damage to the house and garage

  • removal of trees on the remainder and replacement of lawn

  • installation of privacy hedge

Mr. Melville maintained that this case was more complex because it was only a partial taking. He also argued that the issues regarding the trees were very complex, because the law is not well settled with regard to trees as landscaping on residential property. An independent arborist was retained, and a report produced to Maple Ridge.

Mr. Goulden maintained that this was not a complex case, because there was not extensive documentation produced, there was only one examination for discovery lasting less than two hours, there were no complex issues, and no hearing took place.

I am more inclined to Mr. Goulden's view of the case. While it may be true that there are a number of issues relating to the trees, I view these issues as being sufficiently interrelated that they should not be viewed as amounting to a large number of separate issues. In addition, while they may be relatively unusual, I do not consider them to be particularly complex. I note as well that there does not appear to have been extensive documentation involved in this case, there was only one very short examination for discovery, and of course, there was no hearing. I would therefore view this case as one of merely average complexity.

6.2 The Degree of Success

Both counsel maintained that I could not take this factor into consideration because I have no evidence relating to it. Even without a confidentiality agreement, with certain types of settlements it can be hard to ascertain how the issues have been determined as between the parties, and the significance of the difference between the amount of the settlement and the amount of the advance payments. With a confidentiality agreement the task does appear to become impossible.

I am unable to consider the determination of the issues, because I do not know how they were determined, other than knowing that the market value assigned by Maple Ridge was ultimately accepted by the Richards. I have no information regarding the claims for injurious affection and disturbance damages.

I am similarly at a loss to draw any conclusions from the difference between the settlement amount and the advance payments, as I do not know what the final settlement figures were.

I must therefore agree with counsel that it is impossible for me to consider the factors set out in s.45(10)(b).

6.3 The Manner in which the Case was Prepared and Conducted

Mr. Melville argues that I also cannot consider this factor, set out in s.45(10)(c), because it is only possible to consider the manner in which the case was prepared and conducted where there has been a decision of the board. I disagree with this submission, and have in fact applied this factor previously in cases where there was only a settlement and no board decision. (See, for example, Hruschak v. The Corporation of the City of Vernon, unreported, E.C.B. No. 56/90/175, October 22, 1999).

Having said this, the only real evidence I have before me of the manner in which the case was prepared and conducted is contained in the account entries themselves. I intend to deal with this factor in my review of the legal fees later in these reasons.

6.4 Conclusions about Statutory Considerations Summarized

In summary, my conclusions regarding the various applicable statutory considerations set out in s.45(10) are as follows:

  • Degree of complexity: average

  • Degree of success: unknown

  • Manner in which the case was prepared and conducted: to be dealt with in review of legal fees

I conclude that no adjustment to the fees as billed is required as a result of my consideration of either of the first two factors.

 

7.  LEGAL ACCOUNTS

I have attempted to reconstruct the accounts extracting the 6 hours of legal assistant's fees that Mr. Melville has conceded. Since he calculated the deduction on an average hourly billing rate, I have had to review the accounts and estimate approximately where to assign proportions of the amount of the deduction. After having done this, the hours billed and amounts claimed for legal fees on the various accounts become as follows:

Date of account Total hours billed Total fees billed

December 6, 1994

7.45

$1,436.00

March 22, 1995

8.20

1,361.00

November 6, 1995

5.10

936.50

April 1, 1996

2.20

272.50

May 13, 1996

2.75

591.25

February 1, 1998

35.20

6,398.25

April 6, 1998

10.95

1,952.72

TOTALS:

71.85

$12,948.22

7.1  Lawyer's Hourly Rates

Mr. Melville was the only lawyer involved in the conduct of this case. His time (55.75 hours total) was billed at the hourly rate of $200 up to and including part of the April 1, 1996 account, $215 for the remainder of the April 1, 1996 account and the May 13, 1996 account, and $220 for the final two 1998 accounts. His total fee billing is $11,863.50. Using a straight mathematical calculation, the average hourly rate charged over the entire course of representing the Richards amounts to $212.79.

In support of the hourly rates charged in these accounts, Mr. Melville has presented the relevant portions of various Vancouver Association of Legal Administrators/BC Branch, Canadian Bar Association (VALA/CBA) surveys on standard charge-out rates. He has directed my attention to the entries for the average fees charged in a litigation practice within a firm of between 6 and 15 lawyers like Peterson Stark, by lawyers with a 1981 call date such as his own. The data in these surveys deals with the period from January to October of each year. In each of the first three years, the sample group consisted of 5 lawyers, and in 1997 it consisted of 6. The ranges and average rates in these categories, for the years covered by the accounts under review are:

Year

Average

Range

1994

$190.00

$165 - 225

1995

$212.00

$185 - 250

1996

$198.00

$185 - 250

1997

$215.00

$185 - 275

Mr. Melville's hourly rate in these accounts can be summarized like this:

Year

Rate

1994

$200.00

1995

$200.00

1996

$200.00/$215.00

1997

$220.00

I note that Mr. Melville's rate was higher than the VALA/CBA reported average in 1994, 1996 and 1997. Only in 1995 was it lower than the reported average. In all years it has been within the reported range.

Mr. Melville has produced an "hourly rate analysis" sheet, which he prepared on the basis of a linear regression analysis. He states that it averages out the annual data, and shows a projection for 1998 based on the historical data for the period from 1987 to 1997. The graph contrasts this straight-line progression with both the unadjusted rates reported and with Mr. Melville's own billing rates. According to this graph, his billing rate was above the adjusted VALA/CBA rates in 1994 and 1996, the same as VALA/CBA in 1995, and slightly below it in 1997 and projected 1998.

He maintains that a narrow practice such as his, which is focused mainly on expropriation law, generally attracts higher rates, whereas his time has been billed at rates which are very close to the VALA/CBA rates. In addition, he points out that the bulk of the billings were in 1998, when his hourly rate fell below the projected VALA/CBA rate. On this basis, the Richards claim that the billed rates are reasonable for the purpose of this review.

Mr. Goulden, on behalf of Maple Ridge, argued that Mr. Melville's rates are excessive and that they should be reduced. He maintained that for the 1994, 1995 and 1996 accounts the appropriate rate is what the board was routinely awarding at the time, which he suggested was $185 per hour. He suggested that a rate of $200 should be applied to the last two accounts, because the VALA/CBA survey does not deal specifically with the expropriation bar, and therefore is of limited relevance.

With regard to the VALA/CBA surveys in general, Mr. Goulden argued that they were of limited use. They contain no indication of their margin of error, there is a very limited number of lawyers forming part of the samples referred to, and there is an extremely wide range of rates charged even within those small samples. Finally, he pointed out that there was no evidence before me that a more specialized practice justifies higher hourly rates.

The VALA/CBA surveys have been considered in a number of cases put before the board. In Buchanan v. School District No. 36 (Surrey) (1997), 61 L.C.R. 288, the chair of the board, Robert Shorthouse, came to the following conclusion at p.299 of his reasons:

I view this evidence as a useful indicator of the hourly rates which lawyers seek to charge but not a determinative indicator of what they effectively receive.

Mr. Shorthouse considered the evidence contained in VALA/CBA surveys once again in Garnett. At pages 48 and 49 of his reasons, he stated:

...I conclude that this evidence, useful as it may be, cannot be accepted at face value as a determinative indicator of the market rates effectively received by lawyers. First, as counsel for the Ministry points out, the information contained in the surveys is clearly hearsay and its reliability as such is weakened somewhat by a lack of evidence concerning how the survey was conducted and what the respondents intended in answering as they did. Second, the sample size (that is, the number of respondents) is very small and, in that way, the result is subject to statistical distortion. Third, there has been evidence before the board in other cost reviews showing that the hourly rates paid to ad hoc counsel by the Crown Provincial in expropriation and assessment matters are significantly lower than those disclosed in the survey...

I agree with the conclusions drawn by the chair in these decisions, and with the concerns put forward in this review by Maple Ridge. I therefore find the VALA/CBA evidence to be of some utility and interest, but certainly not to be a determinative indicator of the relevant market rates. I note, in addition, that there is no evidence before me regarding 1998 rates other than Mr. Melville's projected figures, which, given the small sampling they are based on, would be statistically quite unreliable.

I have also reviewed all of the board's decisions regarding hourly rates during the relevant period of time covered by these accounts. Taking into account all the evidence before me and the previous decisions of the board, I have decided that the following hourly rates would be reasonable for Mr. Melville's time in this matter:

Year

Rate

1994

$180.00

1995

$190.00

1996

$200.00

1997

$200.00

1998

$200.00

Using Mr. Melville's table, which breaks down the legal fees by account and by hourly rate, and as between himself and Ms. Olkovick, I conclude that adjusting the hourly rate in this way would bring Mr. Melville's fees from the $11,863.50 charged down to $10,875.50.

7.2 Reasonableness of Fees

Maple Ridge maintains that much of Ms. Olkovick's time (still left after the voluntary reductions referred to earlier in these reasons) is secretarial in nature and should therefore be disallowed. In addition, it points out that an overly large portion of the accounts (about 15%) is dedicated to the time after the settlement was reached. I note, however, that Maple Ridge has not, beyond highlighting this fact, indicated why it was not reasonable for Mr. Melville to have spent this time on the file at that point. As I indicated earlier in these reasons, Maple Ridge simply argues that $10,000 would be an appropriate award of costs in this case.

Mr. Melville argued that, while claimants are normally required to demonstrate that the costs they have incurred are reasonable in a global sense, the Richards cannot do this without breaching their confidentiality agreement with Maple Ridge. He therefore submitted that a global reasonableness test should not be applied in this case.

I concede that my ability to determine global reasonableness is impaired by the existence of the confidentiality agreement and the therefore limited evidence and submissions before me on this review. I nonetheless feel that I am obliged to look carefully at all of the account entries, and to do my best to determine whether the time billed appears reasonable in light of the claims that were being put forward in the compensation proceedings.

Turning first to Ms. Olkovick's time, I am unable, on the face of the account entries, to find that any more of her time should be disallowed on the basis of its representing secretarial duties rather than the duties of a legal assistant. It appears to me that she was the legal firm's primary contact with the expert arborist, and also that she spent time assisting with documents and with hearing preparation. There are a number of entries for telephone calls to Mr. Goulden and others, but these could quite properly have been performed in the discharge of these legal assistant duties. I therefore will allow the remainder of Ms. Olkovick's time as billed.

In terms of Maple Ridge's criticism of the seventh and final account, I calculate that, after the adjustments for Ms. Olkovick's time and Mr. Melville's fees, the claim amounts to $1,795.72. This is made up of 7.85 hours of Mr. Melville's time at an hourly rate of $200 ($1,570), plus just over 3 hours of Ms. Olkovick's time amounting to $225.72 in fees. This is just short of 11 hours out of an adjusted total of 71.85 hours billed, which amounts to approximately 15.3% of the total number of hours.

While there might well be good reasons for the settlement details to take this long to iron out, I have been provided no evidence as to why this was the case here. Under these circumstances, I feel compelled to reduce this time to a figure that would be more normal under most circumstances with a case of average complexity. I therefore reduce the time allowed on the final account of April 6, 1998 to 4.5 hours for Mr. Melville and 1.5 for Ms. Olkovick. This, at the hourly rates of $200 and $75 respectively, brings the fee total for this account to $1,012.50.

I am unable, based on the evidence before me, to find any other obvious areas of unreasonableness with the fee accounts submitted. On the other hand, the claimants bear the onus of proving the reasonableness of their accounts, a burden which in the circumstances of the confidentiality agreement they have been unable effectively to discharge. I have concluded that the only sensible way to deal with this unsatisfactory situation is to deduct a further amount from the accounts as billed to reflect this fact. I deduct as reasonable the further sum of $1,000. In the result, I therefore calculate the amounts allowed to be as follows:

Date of account

Fees allowed

December 6, 1994

$1,305.00

March 22, 1995

1,273.50

November 6, 1995

891.50

April 1, 1996

260.00

May 13, 1996

550.00

February 1, 1998

5,893.50

April 6, 1998

1,012.50

Total:

$11,186.00

Less $1,000:

$10,186.00

Since the fax and photocopy disbursements are not set out in the accounts on a per item basis, I am unable to adjust the amounts due as agreed between the parties, and I am also unable to adjust the GST and PST for the same reason. I will therefore have to leave these calculations to the parties.

 

8.  INTEREST

The terms of the retainer agreement between Peterson Stark and the Richards provide for interest at the rate of 1.5% per month on accounts unpaid over 30 days. This agreement is in evidence before me, and Mr. Melville has prepared a table showing the history of the cost claims and payments in this matter.

The dates and amounts of the claims and payments are as follows:

Date

Claimed

Paid

Dec. 6/94

2,010.52

Jan. 20/95

 

$1,809.59

Mar. 22/95

1,887.98

May 15/95

 

$1,711.28

Nov. 6/95

$1,209.13

Nov. 27/95

 

$1,080.88

April 1/96

$533.27

 

May 13/96

$1,007.94

 

July 11/96

 

$1,020.66

Feb. 1/98

$7,717.74

 

March 30/98

 

$8,500.00

April 6/98

$2,269.14

 

Total:

$16,635.72

$14,122.41

As I noted above, the difference between what was originally claimed and what was paid only amounts to $2,513.31. While I am unable to calculate the final figure for my cost award in this review, I am able to calculate that the fees awarded differ from the fees originally claimed by $3,166.50, which is more than the difference that the claimants maintained was owing at the start of the review.

This means that Maple Ridge has overpaid the Richards in terms of what they will be entitled to under this award of costs. I note, in addition, that the payments made in this case were reasonably prompt, having generally been made within the time frame the board has previously determined to be reasonable. Under these circumstances, I have concluded that the Richards have been adequately compensated for any loss they may have suffered as a result of the rather short delays in receiving reimbursement for their claims, by the fact and the amount of the overpayment. I therefore decline to award interest on the costs allowed in this review.

 

9.  COSTS OF THIS REVIEW

Mr. Melville has requested that the matter of the costs of this review not be addressed at this time. He maintained that if the costs could not be settled between the parties, he intended to call additional evidence which he stated should not be put before me at this time. He therefore sought leave to re-apply for a determination of costs if the parties were unable to resolve the matter. Mr. Goulden maintained that Maple Ridge should not be required to pay anything more than it already has towards the Richards' costs.

Since the Richards have been awarded less than they were paid for their costs, and since I have awarded legal fees in almost exactly the amount Maple Ridge represented should be found to be reasonable under the circumstances, I find that the claimants have been unsuccessful in their claims for reimbursement, and therefore should not be awarded their costs of this review.

 

Top Link to Home Page >>

 

Government of British Columbia