September 4, 1991, E.C.B. 55/90/028
(46 L.C.R. 230)
|
IN
THE MATTER OF the Expropriation Act, S.B.C. 1987, c. 23; and
IN
THE MATTER OF an application by the claimants, TARRIS HRUSCHAK and TARRIS HRUSCHAK
in his capacity as executor of the estates of John and Mildred Hruschak, to the
Expropriation Compensation Board for an order that the respondent, THE CORPORATION
OF THE CITY OF VERNON, make an advance payment of costs pursuant to section 47
of the Expropriation Act. |
| Between: |
Tarris
Hruschak and Tarris Hruschak in his capacity as executor of the estates of John
and Mildred Hruschak
Claimants |
| And: |
The
Corporation of the City of Vernon
Respondent |
| Appearances: |
Reinhard
Burke, Esq., Counsel for the Claimant
Robert J. Bauman, Esq., Counsel for
the Respondent |
ORDER
1.
INTRODUCTION
This is an application by Tarris Hruschak
and Tarris Hruschak in his capacity as executor of the estates of John and Mildred
Hruschak (the "claimants") by way of Notice of Motion pursuant to section
47(3) of the Expropriation Act, S.B.C. 1987, c-231 asking that the chairman review the bill of costs and make an order for an advance payment of reasonable legal, appraisal and other costs incurred by them up to
and including June 15, 1991. Section 47 reads as follows:
| 47. |
(1) |
An
owner may, from time to time after an expropriation notice or an order under section
5(4)(a) has been served on him, submit a written bill to the expropriating authority
consisting of the reasonable legal, appraisal and other costs that have been incurred
by him up to the time the bill is submitted. |
|
(2) |
On
receiving a bill under subsection (1), the expropriating authority shall either
promptly pay the bill or apply to have the bill reviewed by the chairman. |
|
(3) |
Where
the expropriating authority fails to comply with subsection (2), the owner who
submitted the bill may apply to the chairman to have the bill reviewed.
[Emphasis added.] |
|
(4) |
At
a review under this section, the chairman shall take into account |
|
|
(a) |
the
complexity of the issues then outstanding between the expropriating authority
and the owner, and |
|
|
(b) |
the
probable amount that is involved with respect to the resolution of those issues. |
|
(5) |
Section
44(7), (12) and (13) apply to reviews under this section, |
|
(6) |
Where
the amount of costs paid under this section exceeds the amount of costs under
section 44, |
|
|
(a) |
the
expropriating authority may deduct the amount of the difference from any amounts
of compensation then outstanding, and |
|
|
(b) |
where
all compensation has been paid, by action against the owner. |
Since
the Corporation of the City of Vernon (the "respondent") did not pay
the claimants' bill of costs when presented for payment and did not apply to the
chairman for a review of the bill of costs pursuant to s.47(2), the claimants
filed an application pursuant to s.47(3).
The prerequisites
to jurisdiction as set out in s.47 having been satisfied, I proceeded to hear
the application. See Creative Stretch Fabrics Ltd. v. District of Pitt
Meadows, E.C.B. 6/91/025 (unreported).
2.
BACKGROUND
The respondent expropriated a 10-acre parcel
of land on or about February 12, 1990, the registered owner of which was one of
the claimants, Tarris Hruschak. The expropriated land was needed by the respondent
as part of its effluent disposal spray irrigation system. An advance payment together
with the appraisal report on which it was based was delivered on March 14, 1990
to the law firm of Alexander, Holburn, Beaudin & Langer ("Alexander Holburn")
who had been retained by Mr. Hruschak in December, 1989.
On
November 14, 1990 the claimants sought a second opinion from the law firm of Webber
Gillespie Renkema Burke ("Webber Gillespie"). Alexander Holburn continued
to act for the claimants until January 24, 1991 when they were advised by Webber
Gillespie that their firm had been retained by the claimants. On February 26,
1991 a Notice of Change of Solicitor was filed with the board.
An
Application and Amended Application for Determination of Compensation were filed
on behalf of the claimant, Tarris Hruschak, by Alexander Holburn on December 20,
1990 and on January 11, 1991 respectively. Both sets of pleadings were extraordinarily
brief documents which neglected to particularize the claim for compensation, the
basis on which the claim was advanced and the facts in support of each element
of compensation claimed.
On March 14, 1991 a further Amended
Application for Determination of Compensation was filed on behalf of the claimants
by Webber Gillespie. This application conceptually set forth the nature of the
claim in considerable detail, and added as a party, the executor of the estates
of John and Mildred Hruschak, who before their demise, were the owners of the
expropriated land.
3. THE BILL
OF COSTS
Counsel for the claimants, Mr. Burke, submitted
ten accounts for services incurred from December 20, 1989 to June 15, 1991. Each
account, except that of the appraiser, identified the dates on which services
were performed, a modest description of those services, total hours billed and
hourly rates charged. The account submitted on behalf of the claimant, Tarris
Hruschak, in the amount of $892.44 for out-of-pocket expenses, was not in issue.
Particulars of the accounts are as follows:
Legal
Accounts of Alexander Holburn
|
Disbursements |
Fees |
| March 30, 1990 |
$
51.75 |
$l,746,75 |
| September
30, 1990 |
2.48 |
4,162.75 |
| November
30, 1990 |
218.66 |
l,642.00 |
| December
31, 1990 |
73.90 |
426.50 |
| January
31, 1991 |
124.77 |
l,340.00 |
| March
25, 1991 |
371.99 |
11,845.50 |
|
$843.55 |
$11,163.50 |
The account of March 30, 1990
was revised downward from $2,609.25 to $1,798.50 (including disbursements) by
Alexander Holburn at the request of the respondent as the original account included
legal fees related to a civil claim for nuisance over which the board does not
have jurisdiction.
Legal Account of Webber Gillespie
|
Disbursements |
Fees |
| March 15, 1991 |
$509.14 |
$7,l57.50 |
Appraisal Account of Kent-McPherson
|
Disbursements |
Fees |
| July
30, 1990 |
$ |
$l,475.00 |
| December 4, 1990 |
116.00 |
2,750.00 |
|
|
$4,225.00 |
| Interest |
|
283.85 |
|
$116.00 |
$4,508.85 |
Planner's Account
|
Disbursements |
Fees |
| June 5, 1991 |
$698.70 |
$2,640.00 |
Claimant's Out-of-Pocket Expenses
for Travel, Telephone & Photocopying
4. ISSUES
The issues arising on this review are to determine
whether or not the bill of costs presented is reasonable and to determine an amount
to be paid by the respondent as an advance payment of costs as provided for in
s.47.
5. THE LEGAL FEES
Pursuant
to s.47(4) the chairman as a reviewing officer "shall take into account"
the complexity of the issues outstanding between the parties and the probable
amount involved to resolve those issues. The pleadings, as amended, filed by Alexander
Holburn were not particularized and contained only a bald request for relief.
They were, quite simply, a reproduction of the prescribed statutory form set out
in the regulations that stated that the value of the land expropriated by the
respondent was between $140,000 and $500,000.
Mr. Michael
Vaughan, a recently called lawyer representing Alexander Holburn and one of three
lawyers in this firm who worked on the claim, testified that the bulk of the time
recorded was devoted to organizing, reviewing, and cataloguing approximately 20
years of documentation, preparing documents for discovery purposes, analysing
legal issues and conceptualizing the claim. He further testified that the total
time devoted to legal research, analysis of the issues and framing the claim also
included that of two senior members of the firm and a legal assistant.
The
amended pleadings filed by Webber Gillespie on March 14, 1991 were detailed and
thorough and set out a range of issues which increased the complexity of these
proceedings. In addition to the value of the land, issues were introduced alleging
disturbance damages, injurious affection and a scheme on the part of the respondent
which had the effect of lowering the value of the expropriated land.
It
is not necessary at this time to determine with precision the complexity of the
issues nor the precise amount involved with respect to their resolution. My function
is to determine whether the costs claimed on this review are reasonable keeping in mind ss.47(4) and (5).
The total amount claimed
by way of an advance payment of costs including disbursements is $28,529.68. I
have no difficulty finding that the issue relating to the scheme is sufficiently
complex and that the amount involved justifies an advance payment of those costs
reasonably incurred. The sole issue is the reasonableness of those costs.
Another
issue to be addressed is that of duplication contained within the accounts of
both law firms. This duplication has two aspects, They are:
| 1. |
During
the period from November 14, 1990 until January 24, 1991, the claimants had retained
both law firms to work on these proceedings. This fact was not known to Alexander
Holburn until January 24, 1991 when they were advised that the claimants had decided
to change law firms; and |
| 2. |
The
legal work done by Alexander Holburn was virtually identical to work they had
done on behalf of an expropriated owner of a contiguous parcel of land, and for
which they billed that owner an amount approximating that billed to the claimants. |
Counsel for the respondent
cited Gerestein et al v. District of Abbotsford (No. 2) (1990),
43 L.C.R. 262, a decision of this board to support, in part, his submission.
The
evidence revealed that Alexander Holburn billed 114 hours for the work they performed
for Mr. Hruschak. I have serious reservations as to the reasonableness of the
time expended and the amount charged considering the relatively limited progress
achieved. Specifically, the pleadings filed were basic and should not have taken
a great deal of time to prepare. Although a large number of documents were provided
for review and analysis, the evidence indicates that the conceptualization of
the claim did not translate into any significant progress. For example: discoveries
had not been conducted; a list of documents had not been produced; no request
for interrogatories had been made; nor had there been any negotiations with the
respondent or its counsel seeking resolution of the issues. In fact, progress
on the file was very limited other than securing a preliminary and final appraisal
report. This is to be contrasted with the work done by Mr. Burke of Webber Gillespie
who submitted an account for 41 hours of work. His pleadings particularized the
claim and defined the issues between the parties. Mr. Burke candidly testified
that his task of reviewing the documents received from Alexander Holburn was made
much easier in that they were well organized. He further testified that approximately
one-half (20 hours) of his time was spent on the claim after receiving the files
on March 11, 1991 from Alexander Holburn. He agreed with respondent's counsel
when asked if he "started right from scratch in preparing this claim?"
Proceedings: July 11, 1991, page 33.
The evidence further
revealed that during the same period Alexander Holburn not only expended 114 hours
on behalf of the claimants but also logged a similar number of hours on behalf
of a property owner whose land was contiguous to that of the claimants and which
was similarly expropriated. The features of this parcel are almost identical to
that of the claimants. During cross-examination Mr. Vaughan stated that the time
spent was divided equally between both clients. When asked by counsel for the
respondent, Mr. Bauman, if the total time spent on both files would approximate
228 hours, Mr. Vaughan replied that was the case. Proceedings: July 11, 1991,
page 74. A review of their accounts also revealed that joint conferences between
the lawyers in this firm were not uncommon. In addition, their accounts included
claims for word processing that, in my opinion, would normally be absorbed within
a solicitor's hourly rate. I find it difficult to justify the number of hours
spent and the number of lawyers assigned to the file as being necessary or reasonable.
Their combined hours indicate in my opinion that they
have done necessary work in an overly time-consuming manner. As stated by the
taxing officer in Lenjo Enterprises Ltd. v. Municipality of Metropolitan
Toronto (No. 3) (1977), 12 L.C.R. 13 (Ont. C.A.) at p. 14:
... I have been driven ... to the conclusion that ... many
solicitors acting for claimants seem to have conducted themselves in an expansive
manner such as to suggest an acute awareness that their clients will not be required
to pay their bills.
And in Gustafson v. The Queen in Right of Alberta (No. 2) (1987), 38 L.C.R. 180 at 183 the
Alberta Land Compensation Board stated:
...
this board has consistently held that where a high hourly rate is claimed the
lawyer charging such rate must bring to the case a high standard of experience,
expertise and efficiency in conducting the case.
I
have concluded that the total time devoted to cataloguing the documents and analysing
the issues by a junior solicitor and two senior members of the firm has contributed
to a duplication of effort, and in general, spending far more time on the file
than necessary. As was stated by the taxing officer in Briarfield Acres Development
Ltd., et al. v. Ministry of Transportation and Communications (1982),
25 L.C.R. 65 (Ont. S.C.) at 69:
... that
if the solicitors, clerks, and students expended as much time as they claim to
have, they spent far too much time on it, for whatever reason.
After
reviewing in detail the transcript in these proceedings and taking into account
the above factors, I find that the legal fees of Alexander Holburn should be reduced
by 50%. Considering the work performed by Mr. Burke, a senior counsel having considerable
experience in the field of expropriation, I find that his account should be reduced
by 30%. This finding is not a reflection on his work but is based only on the
fact that a duplication of effort was necessary on his part to become familiar
with the claim. This issue was previously addressed in Gerestein et al, supra, at p.272 where this board stated as follows:
The
additional costs incurred by the Claimants because they elected to change law
firms must be for their account. An expropriating authority is not responsible
for that time expended by a new law firm to become familiar with the nature of
the claim and the extent to which it had been prosecuted prior to being retained.
In this case, the cost was not caused by the Respondent nor was it a cost over
which it had any control. See Sheareen Ltd., supra; Farquar et
al. v. Ministry of Transportation and Communications (1983), 27 L.C.R.
1 (Ont. S.C.); Humenuk v. The Queen (1986), 36 L.C.R. 193 (Alta.
Court of Q.B.). Accordingly, a downward adjustment must be made.
A
further issue arose as to whether a portion of the legal services performed by
Webber Gillespie were justifiable on the basis that in a complex case a property
owner is entitled to obtain a second opinion with respect to the preparation and
prosecution of a claim for compensation. While there may be some attraction to
this submission, the words of s.47(l) must be kept in mind, namely, that a bill
of costs should consist of the "reasonable legal, appraisal and other costs."
The term "reasonable" must imply that legal advice, when given by a
senior solicitor seasoned in municipal planning law and a senior counsel, would
satisfy what is meant by the word "reasonable" with respect to costs.
In the absence of extraordinary circumstances, an expropriating authority should
not have to pay for a second legal opinion. An owner is free to seek a second
opinion but the cost will be borne by that owner and not by the expropriating
authority. This submission is further rejected on the grounds that the work done
by Mr. Burke exceeded by a considerable measure that required if a second opinion
was in fact the real objective of the claimants.
The two
remaining accounts presented for review are those of the appraiser and the planner.
The appraisal account, including fees, interest and disbursements, totalled $4,624.85.
The appraiser, Mr. Dennis Parkhill of Kent-McPherson Appraisals, testified on
this application.
Mr. Parkhill had also conducted an appraisal
of the adjoining land which, as stated above, had been expropriated by the respondent.
The appraisal of the adjoining land was a mirror image of the appraisal prepared
for the claimants with the exception of four very minor points. I was somewhat
concerned with the total number of hours allocated to both appraisals. However,
offsetting this factor was Mr. Parkhill's hourly rate of $75 which, when considering
his experience, leaves little room if any, for adjustment. In addition, Mr. Parkhill
was acutely aware when retained that his reports would in all likelihood be the
subject of a thorough cross-examination by respondent's counsel. As a result,
the time spent researching comparables, related data and preparation of his final
report required that it be prepared with considerable care.
Mr.
Bauman, counsel for the respondent, submitted that no amount should be allowed
for the planner's account on this review. He based his submission on the
fact that a report had not been prepared nor was there any evidence as to what
work the planner had done. While ostensibly there is merit to this submission,
it is my view that because of the issue relating to the development of an effluent
disposal spray irrigation system in respect of which the expropriation was made
the claimants are justified in retaining the services of a planner (see s.32(d)).
While the absence of evidence of work done by the planner causes some difficulty,
particularly with respect to quantum, having found it reasonable to retain a planner
in view of the facts presented, I will allow an arbitrary amount for planner's
fees of $1,500 plus those disbursements included in his account. Should the claimants
be able to justify a further amount at a later date they are free to make application.
As this board stated in Nygard et al v. District of Surrey (No. 2) (1989), 42 L.C.R. 279, 283:
... consideration
must be given to owners who may, in order to exercise their statutory rights to
fair compensation, be compelled to retain a level of expertise equivalent to that
which is available to and often employed by an authority.
and
at p.285:
Owners are not to be placed in
a position where they are reluctant to seek professional advice because of cost
considerations; they must have the economic freedom to seek the opinion of an
expert and the benefit of counsel particularly when an expropriating authority
has unilaterally intervened in the enjoyment of their property.
6.
THE GOODS AND SERVICES TAX
It will be necessary for
the parties to adjust one item of disbursement in the bill of costs, namely, the
Goods and Services Tax, as this tax was based on fees that have now been reduced.
THEREFORE IT IS ORDERED THAT
| (1) |
Pursuant
to s.47 of the Expropriation Act, the claimants' reasonable legal, appraisal
and planner's fees are hereby reviewed, fixed and allowed at $16,317.00 and shall
be paid forthwith to the claimant. Particulars of the constituent amounts of the
fees as reviewed and allowed are as follows: |
|
|
Legal
Fees |
|
|
|
Alexander
Holburn |
$5,581,75 |
|
|
Webber
Gillespie |
5,010.25 |
|
|
Appraisal
Fees |
|
|
|
Kent-McPherson
Appraisals |
4,225.00 |
|
|
Planner's
Fees |
|
|
|
Harry
Harker |
1,500.00 |
| (2) |
The
respondent shall pay forthwith to the claimant, Tarris Hruschak, the sum of $892.44,
for out-of-pocket expenses related to the taking and payment of which the respondent
consented to during these proceedings, |
| (3) |
All
disbursements incurred by the claimants and as reflected in each account, including
interest on appraisal fees, shall be paid by the respondent subject to an adjustment
to the Goods and Services Tax to be made and calculated by the parties. |
The costs of and incidental to this application
pursuant to s.47 will be dealt with on a subsequent application in the event the
parties are unable to agree as to what those costs should be.
EXPROPRIATION COMPENSATION BOARD
John H. Heinrich, Q.C.
1. Where reference is made in this decision to a section without a statutory references,
that section is found in the Expropriation Act.
|