January 22, 2001, E.C.B. No. 72/00/197
Tariff Costs

Between:	Elsie Yuen Ching Chan Claimant
And:	The City of Vancouver Respondent
Before:	Julian K. Greenwood, Presiding Member
Appearances:	Manjeet K. Chana, Counsel for the Claimant Tomasz M. Zworski, Counsel for the Respondent

REASONS FOR DECISION

1.   Introduction

[1] This is an application under s. 48(2) of the Expropriation Act, R.S.B.C. 1996, c. 125 (the "Act") for review of four accounts. The hearing was delegated to board member Greenwood by the chair of the board, pursuant to s. 48(4) of the Act. The hearing was conducted by telephone conference.

[2] The expropriation involved a partial taking of a residential property owned by the claimant for the purpose of widening Knight Street. At the time of the taking the residence was occupied by tenants.

[3] The expropriation notice was filed in the Vancouver Land Title Office on or about September 27, 1999. A notice of advance payment, served on the claimant on October 22, 1999, estimated compensation as $9,300 for the market value of the land taken, plus $3,500 for the cost of transplanting certain landscaping onto the remainder, for a total advance payment of $12,800. The vesting notice was filed in the land title office on November 2, 1999.

[4] The Form A statement of claim, filed with the board on October 13, 2000, claimed a total of $28,000 for the market value of land taken, for injurious affection to the remainder, and for disturbance damages. After subtraction of the advance payment, therefore, the net claim in this case is $15,200, plus interest and costs.

[5] On June 28, 1999, a tariff of costs for expropriation matters, as allowed for by s. 45(7) of the Act, was brought into effect by deposit of the Tariff of Costs Regulation, B.C. Reg. 189/99 (the "Tariff"). Although the expropriation notice in this case occurred after that date, some of the initial work performed by and through the claimant's solicitors pre-dated the Tariff. This arose because the respondent had held community information meetings about the plan to widen Knight Street in the latter part of 1996, and had advised the claimant (and others) that it would be seeking to negotiate the necessary acquisitions. The claimant had learned that hers would be one of the properties affected, and had contacted her solicitors for advice and assistance. The solicitors had then followed up with some preliminary telephone calls and correspondence with the respondent City in which they asked who would be handling negotiations and what the likely timing of construction would be.

[6] The claimant's solicitors served four bills on the respondent:

1.	An invoice dated July 24, 2000, directed to the claimant, and dealing with itemized services from September 17, 1996 to June 24, 1999 (the period prior to introduction of the Tariff). This bill was for a total of $1,395.48, including disbursements. This was served on the respondent under a cover letter of August 10, 2000.
2.	A "Tariff Costs Claim Schedule" dated July 26, 2000, claiming legal costs under the Tariff in the amount of $7,940.05, including disbursements. This was also served on the respondent under a cover letter of August 10, 2000.
3.	A further Tariff Costs Claim Schedule dated September 6, 2000, claiming real estate appraisal costs under the Tariff in the amount of $1,070, and served on the respondent under a cover letter of September 19, 2000.
4.	A further Tariff Costs Claim Schedule dated (and served on the respondent) December 7, 2000, claiming disbursements in the amount of $569.43.

[7] The claimant observed that she had applied for this advance costs review because the respondent had failed either to pay the bills presented or apply for the review itself.

2.   Issues

[8] The following issues were identified by the parties:

1.	Whether the claimant could recover costs for work done on the claimant's behalf prior to the service of the expropriation notice in September 1999 and prior to the introduction of the Tariff in late June 1999.
2.	If pre-Tariff work was the proper subject of costs, whether the "actual reasonable legal, appraisal and other costs" could be recovered. The claimant took the position that work done prior to the Tariff should be compensated under s. 45(7)(a), which uses the quoted words above. The respondent argued that the Tariff would apply, regardless of when the work was performed.
3.	If the Tariff did not apply to the earliest bill, then whether the bill was reasonable. Some of the items in that "actual" bill were questioned by the respondent.
4.	The appropriate scale of costs for legal work under the Tariff. Section 4 of the Tariff anticipates the use of one of three scales, depending on the difficulty or importance of the case. The claimant was prepared to accept scale 2; the respondent argued that I should consider scale 1.
5.	The number of units which should be allowed for various items of legal work under the Tariff.

3.   Discussion

[9] There is little guidance in the Tariff on how it is to be applied to an advance costs review. The important thing to remember is that it is only an interim decision. No final amount is being decided. There will always be a later opportunity to revisit the total amount of allowable costs in an application under s. 45. This suggests that the practical approach is not to strive for some unachievable precision at this earlier stage. If the claimant is over-compensated for the work done to date, the respondent will be able to argue for a correction later. This is the effect of s. 48(7). The same applies if the claimant is under-compensated at this interim stage. On the final costs review the total allowable costs can be determined, and the amount paid on earlier advance costs applications will be set off against that total. Thus the claimant will eventually recover the proper amount of costs for the entire process.

[10] Nevertheless the attempt should be made to minimize over-compensation or under-compensation on an advance costs award. The object of s. 48 is to allow a claimant to pay its bills as they occur and therefore to continue its claim; it ought not to be forced into an untimely submission by the cost of the process. However an advance costs award is not intended to finance future expenses, but only those which have already been spent or incurred. This is clear from s. 48(1).

3.1  Issue 1: What pre-expropriation costs were recoverable

[11] The claimant argued that all the work actually done on her behalf by her solicitors before late June 1999 should be the subject of costs, as long as it was necessary and reasonable. She cited as authority Creative Stretch Fabrics Ltd. v. District of Pitt Meadows, (1991) 46 L.C.R. 111 (B.C.E.C.B.). The respondent did not in fact contest this principle in the hearing, and confined its argument to whether the costs so claimed were reasonable. I therefore follow the decision in Creative Stretch, and find that reasonable costs associated with seeking professional advice and assistance are recoverable from the date that the authority first gives a bona fide indication of its intention to acquire the property, even though some of those costs took place prior to the formal expropriation.

3.2  Issue 2: Whether the Tariff applies to measure the costs of work done prior to its introduction

[12] Section 2 of the Tariff says that it applies to costs payable under s. 45 or 48 of the Act "if the costs claimed were incurred on or after the date this regulation comes into force". That date was June 28, 1999. The question, therefore, is what is meant by the word "incurred"? The claimant argued that the costs were incurred if the work was in fact done on the claimant's behalf, regardless of whether the claimant had been billed for the work. The respondent took the position that pre-Tariff costs would not be incurred until a bill had been issued to the claimant for the work done. Since in this case the bill for pre-Tariff work was not generated until July 24, 2000, those costs were "incurred" after the Tariff came into effect, on this argument. The respondent took no position on whether the claimant needed to have received a bill for post-Tariff work, however.

[13] I accept the claimant's argument. I find that the costs related to the work done prior to the introduction of the Tariff, were "incurred" by the claimant when the work was done. As a general rule, if work is done or payments are made by a professional as a result of the claimant's general request to assist with the claim, and if that work is of a type normally covered by costs, then a present obligation arises to pay for such work even if the actual date of payment is deferred into the future. I find it unnecessary, for the purpose of deciding whether such work or expense is an item of costs or whether it falls under the Tariff, to know the precise details of the retainer agreement between the claimant and the professional or whether an invoice has yet been presented. However, when it comes to proving the amount, I would follow the established practice of the board on pre-Tariff cost reviews which has been to require that an actual invoice be in evidence.

[14] Post-Tariff costs may be treated slightly differently, since the actual amount of an invoice which may have been rendered to a claimant is not normally the amount being established by the review. However, I do not want to be taken as saying that the actual account from a lawyer or an appraiser is completely irrelevant to post-Tariff costs reviews. In a case under the Tariff, there may be a request for a higher than usual scale or number of units, and in such a case the reasonableness of the bill of costs might become an issue. In such a case the reviewer could well decide to ask for evidence of actual expenses, but the purpose of this evidence would be to assess reasonableness, rather than the threshold right to compensation. In any event, since this point is not something I need to decide, it can await another case.

[15] This finding on when costs were "incurred" does not dispose of the issue, however. The respondent has made the alternative argument that, even if some costs fall to be determined under an "actual reasonable costs" rule, at the end of the day the whole of the costs must be assessed under the Tariff. It says this is the proper interpretation of the Tariff, which sets an appropriate number or range of units for all the work on the case. As I understand this argument, if pre-Tariff costs are to be assessed on an "actual" basis, then a dollar-for-dollar reduction should be made when assessing post-Tariff costs. The result would be the same as if the whole exercise were conducted under the Tariff, and to perform the exercise in two parts is unnecessarily complex.

[16] I do not accept this argument. In my view, the Tariff has introduced a different costs regime, which often (though not always) will produce a lower than "actual" cost recovery. In that there is an express indication that the Tariff is not to apply retrospectively to costs incurred before it came into force, I decline to adopt an interpretation of the Tariff which would have precisely that effect.

[17] There must indeed be some adjustment made on an advance costs review as well as in a final costs hearing under s. 45, for the fact that some costs have been incurred by the owner and wholly or partially reimbursed by the expropriating authority on a pre-Tariff basis in order to avoid duplication of costs. The process of adjustment will be more refined on a final costs hearing than on a typical advance costs review. An appropriate method might be to adjust on the basis of time rather than on dollar amount. Without binding the reviewer of final costs, I suggest that he or she may decide, having arrived at the total units which would have been allowable under each Tariff item for the entire case, to estimate the proportion of the total time under each item which should ordinarily have been spent in the pre-Tariff period. That could then be the basis on which to reduce the number of units to arrive at post-Tariff costs.

3.3   Issue 3: Whether the pre-Tariff bill, as an "actual" bill, was reasonable

[18] The principal objection taken by the respondent to the account for pre-Tariff work was that the amount of time recorded was too high. It submitted an affidavit of Yvonne Liljefors, a solicitor for the respondent, on what had taken place in this period. Negotiation attempts were commenced in November 1998, but after some telephone discussions there was a blunt refusal to negotiate contained in a letter of July 16, 1999 from the claimant's lawyer. The respondent therefore questioned whether it was reasonable for the claimant to charge for 7.6 hours of lawyer and legal assistant time in the period prior to July 1999.

[19] The claimant's lawyers justified the claimant's bill for pre-Tariff legal work by presenting its time docket for the period, which records an initial hour with the client in September 1996, several short telephone conversations with the respondent's staff, some internal conversations with secretaries or between lawyers, and two outgoing letters. Most of the time entries were for small fractions of an hour, and most occurred over the 7 month period between November 1998 and June 1999. Two lawyers recorded a total of 5.7 hours, and an assistant recorded 1.9 hours. Some initial property searches were done, which would justify some of the legal assistant time. The rates charged by the senior lawyer varied from $215 to $230 over the period; the junior lawyer charged $150, and the assistant either $65 or $75. I would observe that the hourly rate charged by the senior lawyer is somewhat greater than what the board has allowed on previous costs reviews. Similarly, I tend to agree with the respondent that the amount of recorded time is high for the small amount of work in this period.

[20] Disbursements on the pre-Tariff account are $66.17. The respondent raised a concern about the amounts of $0.30 being charged for photocopies, and $0.50 for faxes, as well as a doubt about the number of photocopies. In absence of contrary evidence, I have no basis for altering the numbers of copies or faxes, but I do feel that the rates are high by comparison with what the board has previously allowed.

[21] However, I would prefer in any case to deal with the pre-Tariff account in a more summary way by considering time spent, hourly rates charged and items of disbursement together.

[22] In my view an advance costs reviewer should, within the parameters of what appear necessary and reasonable at the time, strive to protect a claimant from being seriously out of pocket in the early stages. At the end of the process, there will be an opportunity to adjust for costs paid which are later shown to have been excessive. The total bill in this period was for $1,395.48, which was largely paid from a $1,280 retainer. Taking what I said about time, hourly rates and disbursements into account, I consider it reasonable at this point simply to reduce the pre-Tariff bill to a lump sum equal to the amount taken from retainer, $1,280.

3.4   Issue 4: What scale should be used under the Tariff

[23] The issue here is only whether the matter is of "ordinary difficulty or importance", in which case Scale 2 under the Tariff should be used, or whether it is of less difficulty or importance, justifying Scale 1.

[24] The case is a small one, as expropriation cases go. It involves the partial taking of a strip of land from one edge of a residential property. There is no evidence at this stage that the taking has done any unusual amount of damage to the continued use of the property as a tenantable residence. There will be argument over the value of the strip taken, disturbance damages, and the amount by which the remainder is less valuable as a consequence of the taking, but those arguments are typical.

[25] At this stage the difficulty of the case can only be judged on the pleadings and any affidavits that have been filed. I do not find anything in those materials which convinces me that the matter is other than "ordinary" in difficulty, although I do find it to be of less than ordinary importance. I propose to allow costs on scale 2. It may be that later in the process a reviewer of costs under either s. 48 or s. 45 will find that another scale is appropriate. If so, that reviewer can make an appropriate adjustment.

3.5   Issue 5: The number of units allowed under the Tariff

[26] The claim is at an early stage. "Pleadings" have been exchanged. The claimant's lawyers say they have spent a total of 15.7 hours since the Tariff came into effect, made up of 8.8 hours under item 1 (general correspondence and instructions) and 6.9 hours under item 5 (process for commencing action). The property has been viewed and legal searches have been done, as has some preparatory work for a disturbance damages claim. An appraiser was retained to review the advance payment appraisal and provide a verbal opinion. The appraiser has recorded 6 hours on the file. It does not appear that work has begun on a written appraisal for the claimant. No formal discovery, either of documents or parties, has yet taken place.

[27] In addition to the above, I have borne in mind that the claimant's lawyers recorded 7.6 hours on the file before the Tariff introduction date. It appears from the detailed descriptions that this time would largely come under the heading of item 1 (general correspondence and instructions).

[28] In their affidavit material, the claimants claimed the following Tariff items (before disbursements):

Legal Tariff:

Appraisal Tariff

[29] The inappropriateness of claiming maximum scale and maximum units on an advance cost application has been the subject of a previous oral decision involving the same law firm (Yue v. Surrey, ECB 10/00, Shorthouse, Chair, Aug 31, 2000). On a final cost review under s. 45, the total allowable under the legal Tariff for item 1, for example, is to be between 1 and 20 units, depending on an objective assessment of how much time "should ordinarily have been spent". Likewise the total allowance for instructing an expert is to be between 1 and 5 units. It is not helpful, therefore, to award maximum units at an early stage of the process. Such a course would usually force an application for a refund at the close of the case. Likewise, one should avoid setting a scale on an advance costs review which is likely to be higher than the scale used at the end.

[30] I recognize that in argument, the claimant tempered these requests, submitting that scale 2 could be applied to the legal Tariff claim, and acknowledging that maximum units should not be awarded.

[31] The respondent in argument, by reference to the Yue case, suggested using 5 units for legal item 1 (correspondence etc.), 3 units for legal item 4 (instructing expert), 3 units for legal item 5 (prosecuting claim) and 5 units for appraisal item 1 (correspondence etc.) With reference to the claim under item 2 for advising with respect to a s. 3 agreement, the respondent observed not only that there was no such agreement, but it showed correspondence in which the claimant's lawyer summarily refused even to discuss such a thing. It therefore suggested that no units should be allowed.

[32] I take the following approach. I have no basis to assume that in a s. 45 application at the close of the case, the claimant will do better than average on those items that have a range of units: i.e. 10 units on item 1, 2 or 3 units on item 4, and 5 units on item 5 of the legal Tariff, and 10 units on item 1 of the appraisal Tariff. Since the case is still at an early stage, the number of units "earned" to date is only a portion of those average numbers. I have used roughly a quarter of the maximum allowances. I am then reducing the allowance on legal item 1 by one unit (from 5 to 4) in recognition that some work under this heading predated the Tariff. With respect to legal item 2, there was correspondence, however minimal, regarding a s. 3 agreement, and one unit is therefore permitted by the Tariff. And as I have decided above, scale 2 will be used throughout. My decision on scale and number of units is therefore:

Legal Tariff:

Appraisal Tariff:

[33] Disbursements appear to total $532.18 since the introduction of the Tariff (before adding GST). I had some doubt whether $133.14 of disbursements listed in Mr. Melville's affidavit of October 20, 2000 was intended to be replaced by or in addition to the larger amount of $532.18 listed in his affidavit of December 7, 2000. However, the later affidavit appears to speak to a period that largely overlaps the period of the earlier affidavit, and says that the total of disbursements is $532.18. I shall take him at his word, and assume that the smaller figure is replaced. If that is incorrect, it can be corrected at a final costs review.

[34] For the reasons touched on earlier, I am reducing the photocopying charges to $0.15 per page and the fax charges to $0.35 per page, thereby reducing the post tariff disbursements from $532.18 to $496.23.

[35] I should perhaps make it clear that the decisions in this part of my reasons deal with all three of the post-Tariff cost bills or claims together.

[36] Since the claimant is not a GST registrant, GST should be added to the disbursements and the appraisal Tariff allowance, and both PST and GST to the legal Tariff allowances.