Date: 20040205
Docket: T-1717-01
Citation: 2004 FC 276
BETWEEN:
MATHEW ENGLANDER
Applicant
- and -
TELUS COMMUNICATIONS INC.
Respondent
Assessment Officer
[1] Further to the Personal Information Protection and Electronic Documents Act (hereafter the "PIPED Act"), the Applicant alleged that the business practices of the Respondent violated said legislation, ie. failure to obtain valid consent from its customers before publishing their telephone numbers, names and addresses in directories and improperly charging $2.00 per month for its Non-Published Number Service (hereafter "N-PNS"). The Information and Privacy Commissioner rejected the Applicant's complaint. The Applicant then applied to this Court, further to the PIPED Act, s. 14, for an order requiring the Respondent to correct its business practices and for restitution. The Court dismissed the application with costs to the Respondent. I issued a timetable for written disposition of the Respondent's bill of costs. The Applicant conceded certain items and the Respondent withdrew certain items in the face of objections thereto.
Counsel Fees (Tariff B)
Item 8: 5 units claimed for cross-examination on Supplemental Affidavit of Jim Brookes; available range 2-5 units (hereafter, the numbers in brackets following the claimed units represent the available range)
Item 10: 3 units claimed for preparation for telephone conference (3-6)
Item 11: 2 units per hour claimed for November 14, 2002 telephone conference (1-3)
Item 13(a): 5 units claimed for preparation for first day of hearing (2-5)
Item 13(b): 3 units claimed for preparation for second day of hearing (2-3)
Item 14(a): 3 units per hour claimed for nine hours appearance at hearing
by first counsel (2-3)
Item 26: 6 units claimed for assessment of costs (2-6)
The Applicant's Position
[2] The Applicant argued that, as the evidence is that the client did the bulk of the investigative research for accurate responses in the written cross-examination, only 4 units should be allowed for item 8 because said item addresses work by counsel, but not by the client. The Applicant argued that nil units and 1 unit should be allowed for items 10 and 11 respectively given that minimal preparation was required and that the only issue was the estimated length of the hearing. The evidence does not disclose what, if anything, the Respondent's counsel did to prepare.
[3] The Applicant argued further to Rules 409 and 400(3)(h) that the public interest warrants assessment of items 13 and 14 at the low end of available Column III ranges and, further to my decision in Bow Valley Naturalists Society et al. v. Minister of Canadian Heritage et al., [2002] F.C.J. No. 1795 (A.O.) at para. [10], that other Tariff items in issue could still be assessed without regard to the public interest factor. The Applicant argued that his circumstances meet the threshold of the five criteria in Harris v. Canada (Minister of National Revenue) (2001), 214 F.T.R. 1, ie. national importance given other telecommunication companies in Canada engaging in similar activities and given significant media and other interest; the pecuniary issue is minimal (less than $100.00); the issues here had not previously been determined; the Respondent, being the second largest telecommunications company in Canada, "has a clear superior capacity to bear the costs of the proceeding" (see Harris, supra) and the Applicant's conduct has not been vexatious, frivolous or abusive. Further, given that the Privacy Commissioner cannot resolve complaints by individuals with binding determinations, the prospect of a large award of adverse costs in the Federal Court, the only court which can make such binding determinations, would deter individuals with arguable cases, thereby frustrating the intent of the PIPED Act.
[4] The Applicant noted that the first and second days of the hearing required 6.5 and 2.5 hours respectively and that the Respondent's counsel began her submissions on the afternoon of the first day and concluded them the next morning. As the purpose of item 13(b) is preparation for days in court subsequent to the first day, only minimal preparation was required here for the second day. Therefore, each of items 13(a), 13(b) and 14(a) should be allowed only at the minimum 2 units.
[5] The Applicant argued further to Rule 402(3) [sic] that I should exercise my discretion to award costs of the assessment in his favour to be set off against the assessed costs owed to the Respondent. The Applicant noted that his appeal of this Court's decision remains outstanding, but conceded further to Time Data Recorder International Ltd. v. Canada (Minister of National Revenue), [1994] F.C.J. No. 744 (A.O.) affirmed by [1994] F.C.J. No. 910 (F.C.T.D.) that the Respondent could still proceed at this time with the assessment of its costs in this Court. The Applicant proposed, however, that said assessment be deferred pending disposition of the appeal and that he make monthly payments into Court as security for costs. The advantages would be twofold: preclusion of a waste of the parties' and of the Court's time on an assessment rendered moot if the appeal succeeds and a more efficient use of time if the appeal is dismissed with costs because then the appeal bill of costs could be assessed at the same time as the trial bill of costs. The Applicant argued that the conduct of the Respondent in pressing ahead with a premature assessment of costs, coupled with unreasonable claims, ie. computer search fees or claims with no underlying entitlement such as interlocutory motions, justify costs of the assessment in his favour to be set off against any costs assessed for the Respondent.
The Respondent's Position
[6] The Respondent argued that 5 units for item 8 are reasonable given that the evidence discloses active work by its counsel in overseeing the retrieval of information, assessing its relevance and drafting and revising the written responses. The Respondent argued that an Assessment Officer does not have jurisdiction to allow less than the minimum value in a given range, which is what is claimed here for item 10. The fact that the Applicant's own preparation time may have been minimal is irrelevant for assessment of the Respondent's preparation time. The ranges of units in the Tariff presume that counsel have adequately prepared for appearances before the Court and therefore items 10 and 11 as claimed are appropriate.
[7] For items 13 and 14(a), the Respondent argued that Rule 400(1) vests broad discretion in the Court, but the Rules do not include an Assessment Officer in the definition of Court. Rule 409, which vests an Assessment Officer with discretion to consider Rule 400(3) factors, does not expand jurisdiction to permit, for example, something less than the Column III range authorized by the Court's Rule 400(1) award of costs.
[8] Relative to Rule 400(3)(h), the Respondent argued that Harris supra does not warrant application here of public interest as a factor. First, if the respondent, as here, is not a public body, prima facie associated litigation does not meet the threshold for public interest. There is minimal case law supporting the premise, which is unusual, that private litigants should bear the costs of the public interest in the interpretation of legislation. The evidence here of minimal complaints does not establish public interest. Second, the pecuniary factor is irrelevant because it is really the Applicant's personal convictions which drove this litigation, something which does not mean the public at large thinks the case was important. Third, the record demonstrates that the material led before the Court established that these issues had previously been considered at length by the body with the authority for their disposition, ie. the Canadian Radio-Television and Telecommunications Commission (hereafter the "CRTC"). Fourth, the Federal Court Rules, 1998 were drafted with an awareness of public policy considerations relative to adverse consequences of costs. The Respondent argued that the Applicant here does not meet the threshold, available only in limited circumstances, for evading the consequences of costs.
[9] The Respondent argued that other Rule 400(3) factors counter any public interest factors. Relative to Rule 400(3)(a) (result), the Respondent was overwhelmingly successful. Relative to Rule 400(3)(b) (amounts claimed and recovered), the Applicant would have saved himself $2.00 per month if successful, but that would have exposed the Respondent to enormous financial impact given tens of thousands subscribers to N-PNS. The record demonstrates that Rules 400(3)(c) (importance and complexity) and (g) (amount of work) should be weighed in the Respondent's favour.
[10] The Respondent argued that its rationale above warrants the upper end claims for items 13(a) and (b) and 14(a) notwithstanding that the hearing did not last as long as estimated. The wording of item 13(a), "preparation...including correspondence, preparation of witnesses, issuance of subpoenas and other services not otherwise particularized in the Tariff", does not imply that witness preparation should be given more weight than preparation for hearings, as here, based on affidavit evidence. The Respondent argued that, as it had conceded that it could not claim under item 15 for the large amount of work required for its Memorandum, Rules 400(3)(c) and (g) should be given particular consideration in its favour. The Respondent noted that the Applicant specifically conceded that neither the Rules nor the case law require that assessment of a trial bill of costs be delayed pending disposition of an outstanding appeal and therefore there is no basis on which to deny item 26 fees to the Respondent.
Assessment
[11] Relative to item 8, I view the written questions here as normal probing. I would expect the amount of direct research by the client, as opposed to that performed by counsel using records and briefings provided by the client, to vary from case to case depending on the nature of the questions. However, what does not or should not vary is the necessity for the counsel of record to guide and shape the responses, as a function of a professional legal opinion in the best interests of the client as to what must, or must not, be provided. I reject the Applicant's premise: the information sought in the questions ranged from simply quantitative, ie. how many customers, to more qualitative, ie. what are the consequences associated with accounts in arrears. The answers to the questions reflected, in my opinion, the hand of the Respondent's counsel regardless of who actually researched said answers. I do not think the maximum is warranted. I allow 3 units for item 8. I allow items 10 and 11 as presented.
[12] Even if I concluded that litigation between private entities gives rise to public interest as a factor in the assessment of costs, the Applicant does not meet the threshold posed by his own authority, Harris supra. For example, the Court's decision does appear to recognize that the issues here can and have been addressed in another forum, ie. the CRTC. I think that those issues were not particularly complex, but their disposition could have significantly impacted the Respondent's operations with possible adverse consequences to the Respondent's customers not necessarily in agreement with the Applicant's position. I allow 4 and 3 units respectively for items 13(a) and (b). As I have done in the past when I think that circumstances make a choice between 2 or 3 units per hour perhaps not appropriate, I allow, for item 14(a), 4 hours and 5 hours at 2 and 3 units per hour respectively. I reject the Applicant's suggestion for periodic payments into Court as security for costs. I have addressed Rule 408(3) concerning the allowance or refusal of the costs of assessment to either side: see Carter-Wallace Inc. v. Wampole Canada Inc., [2003] F.C.J. No. 1273 affirmed by [2003] F.C.J. No. 1473 (F.C.T.D.) on issues not relevant here. I am not convinced that the Applicant should be given costs for set-off. I allow item 26 in favour of the Respondent at 5 units. The Applicant had objected to item 25 (services after judgment not otherwise specified) as part of his submissions for Rule 408(3) consideration. The phrase "services...not otherwise specified" means that item 25 cannot be linked to item 26. I allow item 25 as presented at 1 unit.
Disbursements
GST on Fees and Disbursements
The Applicant's Position
[13] The Applicant argued further to Perry v. Heywood et al. (1997), 159 Nfld. & P.E.I.R. 183 (Nfld S.C-M.) that GST, being a "flow-through" tax by design, would represent a windfall for the Respondent. The Applicant relied on V.A.H. v. Lynch et al. (1998), 238 A.R. 201 (Alta. Q.B.) (vacated and set aside by the Alberta Court of Appeal, Huet v. Lynch (2000), 184 D.L.R. (4th) 658, as a consequence of reversing the underlying decision on the merits, but noted that no error of discretion had been made for the scale of costs awarded) to argue that, the evidence being that the Respondent is a GST registrant for collection of GST on the telephone services it provides, the resultant "input tax credit" fully compensates it for GST on legal fees and disbursements. The Applicant noted, by contrast, that there is no objection to the claim for provincial sales tax.
The Respondent's Position
[14] The Respondent argued that Tariff B1(3)(b) of the Federal Court Rules, 1998 expressly provides for "any service, sales, use or consumption taxes paid or payable on counsel fees or disbursements". Further, it would be prohibitively expensive for the Court to investigate accounting practices and tax returns of each party appearing before it to determine whether GST "flowed through" a certain party at a certain time. Cases such as Launière v. Canada (Attorney General), [2002] F.C.J. No. 1505 (A.O.) confirm that GST is routinely allowed. The Applicant's authorities are from different jurisdictions, presumably with different rules.
Assessment
[15] This is what the Court said in V.A.H. supra:
[73] As to GST (pertaining to fees in the first instance), there is, in my view much confusion as to the law, and the logic behind it, because few seem to understand GST. This is clear from Orkin, at s. 204.1, at 2-20 (November 1997), where he states: "While the relationship between GST and an award of costs inter parties is perhaps not clear...". He went on to note that in Ontario GST has been awarded because:
"The reasoning behind this conclusion is that since the object of an award of costs is indemnification, whether partial or complete, the GST must be added to the award in order to achieve that goal ..."
He also notes that GST has been allowed in a number of cases in Alberta - additionally, see Ropchan v. Duncan (1992), 134 A.R. 224, at 229 (Q.B. - Montgomery, J.). However, statements such as Orkin's miss the real point, as to whether there is need for indemnification (recouping of an actual out of pocket expense) of GST.
[74] It is clear that counsel for the defendants will have charged the defendants, or their representatives, GST on the fees and disbursements that were billed. On this basis it is often held that, accordingly, the party paying costs should pay the GST to recognize this. However, that pre-supposes that the defendants, or their representatives, will be out of pocket for the GST paid on such fees and disbursements billed by their counsel. However, under the GST legislation that is only the case if the payor is the final consumer of the goods and services and provides no goods and service to anyone else for a fee. If they are not the final consumer, but provide goods and services to others, then they are entitled to an "input tax credit" equal to the GST they paid, with the result that they are not out of pocket. The result is important to the plaintiff as she is clearly a "final consumer" and can obtain no input tax credit. This is consistent with and supported by similar reasoning (shared with the parties in this case) as I applied in Parkridge v. Anglin, [1996] A.J. No. 768 (Q.B.), where I said at para. 87:
"However, there will be no GST allowed to Parkridge unless its proper officers certify under oath by affidavit that Parkridge is unable to claim any GST paid to its Counsel by way of input tax credits, and would, without such a claim, be responsible for those costs in the end result. See in this regard the logic, which I support, set out in Sherman, "GST Times", Supplement to Canada GST Service, (Calgary: Carswell), July 17, 1995, at p. 4, where after reference to then existing GST cases on costs, the editor states:
'Allan Selkopf of Blake, Cassels & Graydon points out that an award of 7% to cover GST will be a windfall if the winning party is already able to claim input tax credits in respect of the GST it pays on the legal services ... In such cases it would be appropriate for no amount to be added to an award of costs to reflect the GST.'"
[75] Accordingly, I advised Counsel for the defendants that they would only be entitled to GST on fees if they were able to satisfy the court that the parties responsible for the legal fees to the defendants would not be entitled to claim an input tax credit for the GST paid to Counsel, and would be required to pay same - therefore, as a true cost, and recoverable. Counsel for the defendant Doctors advised that was the case but that his clients were not prepared to execute an affidavit to prove same. Counsel for the defendants, Hospital/Staff, did not address the item, and accordingly I presume that they will have no real cost. The result is the same in both cases, namely, that the plaintiff will have no liability for GST on fees.
[76] GST on disbursements (there is no GST on some disbursements) merits the same result, based on the same reasoning.
[16] For reference as well, the following is the analysis in Perry supra:
Fourth Issue
[86] Upon the taxation of costs between parties on a party and party basis, a Taxing Officer's authority is restricted to allowances set out in the Scale of Costs. The Scale appears as the Appendix to Rule 55 of the Rules of the Supreme Court of Newfoundland 1986, as amended which in turn were enacted pursuant to the Judicature Act, R.S.N. 1990, c. J-4. As the Scale fails to address GST or HST, a Taxing Officer has no authority to make allowances for such claims upon such a taxation, absent an express direction to the contrary by the court pursuant to rule 55.04(1). See: Taylor v. Hogan (1993), 107 Nfld. & P.E.I.R. 56; 336 A.P.R. 56 (Nfld., per Chalker, Master), which was affirmed on appeal at (1993), 112 Nfld. & P.E.I.R. 1; 350 A.P.R. 1 (Nfld. T.D., per Riche, J.).
[87] The court is not so constrained and may allow for GST and HST where it exercises its discretion pursuant to rule 55.02(1) to award a lump sum in lieu of taxed costs, rather than ordering that the costs be taxed by a Taxing Officer. See: Abitibi-Price Inc. v. Voith Hydro Inc. (1993), 115 Nfld. & P.E.I.R. 183; 360 A.P.R. 183 (Nfld. T.D. per Cameron, J.); Colt Engineering et al., 1990 St. J. No. 4439 and Quidi Vidi/Rennies River Development Foundation et al. 1991 St. J. No. 2918 (1993), (Nfld. T.D. per Wells, J., unreported), which was affirmed on appeal [Colt Engineering and Construction Ltd. v. Bond Architects & Engineers Ltd. et al. (1996), 140 Nfld. & P.E.I.R. 45; 438 A.P.R. 45 (Nfld. C.A.), and Newfoundland Processing Ltd. v. DGH Construction Ltd. et al. (1994), 118 Nfld. & P.E.I.R. 350; 369 A.P.R. 350 (Nfld. T.D. per Orsborn, J.).
[88] Where the court makes an award of costs as between parties on a solicitor and own client basis, and particularly where, as here also, the Court directs that a Party (Perry) be fully indemnified for all costs reasonably incurred by her in the litigation, the authority of a Taxing Officer is not so constrained. To give effect to the principle of indemnification inherent in an award of costs on a solicitor and own client basis, as well as to give effect to the express direction of the court in this case, without more, it would appear reasonable to allow GST and HST on professional services fees. This includes the professional service fees of both Perry's solicitor and Harris.
[89] The HST is a joint federal-provincial, value-added sales tax imposed broadly on all commercial goods and services. It modified, in part, the federal GST which was a similar scheme. The GST in turn replaced the federal sales tax (the "FST"). The FST was imposed on selective manufacturers, wholesalers and importers and was effectively passed on to retail consumers, not in the form of an identifiable tax, but hidden in the sale price. In part also, the HST replaced the provincial retail sales tax payable by retail consumers in Newfoundland.
[90] Under the Excise Tax Act, legal fees are considered as a taxable supply of services. They are taxable, whether or not the taxpayer is entitled to recover GST or HST as a registrant.
[91] A registrant can claim an input tax credit for GST/HST paid on the supply of services used in the registrant's commercial (professional) activity. The theory is that the ultimate consumers (such as Perry's personal clients or persons buying her retail commercial clients' products or services) will bear the burden of the GST and HST. Taxes are paid at every link in the chain, and at all links but the last, corresponding tax credits are received by the taxpayer.
[92] Each of Perry, her solicitor's law firm and Heywood et al. are registrants under the Excise Tax Act. Without more, the present state of affairs would require the solicitor's law firm to make a remittance to the Government of Canada of GST and HST in the amounts for which they have invoiced Perry. Subject to taxation, Perry is liable to pay the amounts of GST and HST. In turn, as a registrant, Perry is entitled to claim an input tax credit for such amounts from Government. This statutory process provides Perry, as the person whom the Act considers to have acquired the taxable legal services supplied, with a full indemnity for the amounts her solicitor is obliged to collect from her as GST and HST.
[93] The theoretically ideal process would be as follows: by an allowance on taxation, Heywood et al. would be compelled to remit to Perry amounts for GST and HST on allowed costs, including professional service fees and non-exempt disbursements. Heywood et al. would claim an input tax credit from Government for the same amounts. Perry would effectively channel the monies she receives from Heywood et al. to her solicitor in payment of GST and HST. He collects it and remits it to Government.
[94] On closer analysis, allowing amounts for GST and HST on solicitor's fees and on their disbursements when being taxed as between parties on a solicitor and own client basis will not satisfy the principles of indemnification. It would result in a windfall benefit to Perry, to the detriment of Heywood et al.
[95] The court's granting of the award of costs and this taxation process do not constitute a taxable supply of services as provided for in the Excise Tax Act. If I were to tax and allow GST and HST as claimed, and Heywood et al. were so required to pay such amounts to Perry, an inequity would result. The Excise Tax Act does not require Perry to collect these amounts as agent for the Government, and she is not bound to remit them to Government. She did not provide a taxable supply of services to Heywood et al. In turn, Heywood et al. has no means available to them under the Excise Tax Act to receive an input tax credit from Government for any such payments.
[96] To receive an input tax credit, the person must both pay the tax and acquire the service supplied for which supply the tax was paid (s. 169(1)). Perry is the only person here who fits the definition. She is obliged to pay the tax to her solicitor, who collects it as agent of the Government and to whom he remits it. As well, Perry is entitled to claim the amount of her tax payment as an input tax credit. Accordingly, she receives offsetting debits and credits in her financial position.
[97] The most equitable result is achieved by continuing with the status quo ante, and disallowing claims for amounts in respect of GST and HST. In the absence of mandatory provisions in Rule 55 or the Scale of Costs, or of suitable mechanisms in the Excise Tax Act, I do so. The amounts disallowed for GST and HST comprise: (a) those paid by Perry's solicitor to providers of non-exempt disbursements, and (b) those charged by him on his fees for taxable legal services and on disbursements for other non-exempt services provided by his firm. While this results in a temporary cash-flow problem for Perry, there is a financial "wash", as her liability to the solicitor for GST and HST is offset by a corresponding input tax credit. As a registrant under the Excise Tax Act, she is immediately entitled to this credit from Government. Perry can restore her cash flow by utilizing the credit directly setting it off against HST collections from her clients which otherwise she would be liable to remit to Government. Although affect, she suffers no undue hardship or prejudice.
[98] In disallowing claims for GST and HST, I distinguish the line of authorities in this court where, in making lump sum awards in lieu of taxed costs, allowances were made for GST on counsel fees. In those cases, there was not evidence before the courts as to the status of parties as registrants, nor was consideration given to the applicable provisions of the Excise Tax Act.
[99] In the result this provides the most satisfactory disposition available and one which is practical, serves the purpose of the statutory scheme, and best achieves indemnification for Perry while not prejudicing Heywood et al. inequitably.
[17] The pursuit of litigation, or even merely obtaining legal advice, is not the core function of the Respondent, but it is an expense of carrying out that core function. I would be surprised if an experienced commercial entity such as the Respondent did not claim an input tax credit for such legal expenses: the record before me does not establish that this has occurred here.
[18] The decisions in V.A.H. and Perry supra are essentially the same. Paragraph [86] of Perry supra notes the absence in the relevant scale for costs of provision for GST. I conclude from my reading of the Excise Tax Act that GST falls within the scope of our Tariff B 1(3)(b). My view, often expressed further to my approach in Grace M. Carlile v. Her Majesty the Queen (1997), 97 D.T.C. 5284 at 5287 (T.O.) and the sentiment of Lord Justice Russell in Re Eastwood (deceased) (1974), 3 All. E.R. 603 at 608, that assessment of costs is "rough justice, in the sense of being compounded of much sensible approximation", is that discretion may be applied to sort out a reasonable result for costs. Further, consistent with Rule 3, and with my sentiment in Feherguard Products Ltd. v. Rocky's of B.C. Leisure Ltd., [1994] F.C.J. No. 2012 (A.O.) at para. [10] that the "best way to administer the scheme of costs in litigation is to choose positive applications of its provisions as opposed to narrower and negative ones", the application of discretion should be part of a reasoned process to achieve a result on assessment which is equitable for both sides. I am not sure whether a judge could take a step to effectively negate a rule of its own Court, particularly one expressed in very broad terms, ie. Tariff B 1(3)(b) which provides for "any...taxes paid or payable". I conclude that such a step would not be within the ambit of discretion available to me and therefore is beyond my jurisdiction irrespective of whether I think the Respondent here may benefit from a windfall. I allow GST on assessed fees and disbursements.
Court filing service ... $66.00
Long distance charges ... $45.56
Facsimiles (201 pages @ $0.30 per page) ... $60.30
The Applicant's Position
[19] The Applicant argued that only $33.00 should be allowed for court filing services because two of the invoices address interlocutory motions for which costs cannot be claimed. The Applicant argued that the charge of $45.56 for long distance tolls should be disallowed because the Respondent, as a telecommunications company, indirectly paid that amount to itself. The Respondent should not be permitted to recover for services it provided, or could have provided, to its own solicitor. As well, given that both parties and the Court registry are in Vancouver, the evidence does not establish relevance and necessity for those calls. The Applicant argued that only $15.00 should be allowed for facsimiles as the evidence does not establish relevance. As well, the majority of the transmissions appear to be in the nature of status reports to the client, ie. the June 3, 2003 transmission of 46 pages which was likely the Court's reasons for judgment, a service not properly claimed in party and party costs.
The Respondent's Position
[20] The Respondent argued that court filing services ($66.00) were expenses incurred in defending in this proceeding and they should be allowed in full regardless of whether they related to the interlocutory motions. The Respondent argued that the long distance tolls paid by its solicitor of record on its behalf include the base cost of the service and there is no obligation to undertake the prohibitively expensive task of breaking down the charges into cost, tax, overhead and net profit for each call. The evidence discloses relevance for calls to the Privacy Commissioner and the CRTC in Ottawa. The Respondent argued that facsimile technology is a useful means of communication and the $60.30 claimed is reasonable in the circumstances of this case.
Assessment
[21] The invoice dated 12/18/01 ($16.50 + GST) for filing of a motion record relates to an interlocutory order (January 4, 2002) silent as to costs. Consistent with my conclusions in Webster v. Canada (Attorney General), [2003] F.C.J. No. 1652 (A.O.), the Respondent cannot claim costs as a function of an interlocutory order silent as to costs. The same conclusion applies to the invoice dated 03/28/02 for $16.50 + GST (Order dated April 10, 2002). I allow the reduced amount of $33.00 conceded by the Applicant, plus GST consistent with my conclusions above. I allow long distance and facsimile charges as presented at $45.56 and $60.30 respectively.
Computer search fees ... $3,260.96
The Applicant's Position
[22] The Applicant argued that the charge by Quicklaw to a law firm the size of the Respondent's solicitor of record would be approximately, for unlimited access, about $6,000.00 per month (volume discounted rate) or $9,375.00 per month (flat rate of $125.00 per lawyer). The $3,260.96 claimed here, being approximately 40-50% of the amount paid each month by the Respondent's solicitor of record for legal research on behalf of all of its clients, is unreasonable and does not qualify as an indemnifiable disbursement given that the charge does not represent an actual expense exclusively attributable to this litigation and is rather a notional figure with no basis in reality. Nothing should be recoverable for computer research because the flat monthly rate paid by the Respondent's solicitor is simply overhead, ie. akin to other flat fees such as rent, secretarial wages or local telephone service. The Applicant argued alternatively that, if computer research fees are approved, the claim here is grossly excessive and should be reduced to $125.00, the rate per month for unlimited use by one lawyer.
The Respondent's Position
[23] The Respondent argued that the standard hourly rate ($190.00) paid to its solicitor was reasonably necessary for research ultimately of benefit to the Court because the newness and complexity of the PIPED Act made location of relevant authorities particularly difficult, but was justified given that this was one of the first cases to consider the PIPED Act. The Respondent noted that authorities such as Canadian National Railway v. Norsk Pacific Steamship, [1994] F.C.J. No. 1293 (A.O.) at para. 17 and Pharmacia Inc. v. Canada (Minister of National Health and Welfare), [1999] F.C.J. No. 1770 (A.O.) at paras. 48-55 have recognized that computer research is a new tool in litigation preparation and its expense should be accepted as a disbursement. By analogy, the practice of providing photocopied briefs of authorities, made possible by the widespread use of photocopiers, was preceded by the practice of bringing law books to court. Just as disbursements for photocopying charges to produce briefs of authorities are now properly recoverable in litigation costs, the disbursements for accessing online case law, as distinct from the costs associated with the lawyer's time for conducting the research, should now be considered properly recoverable in litigation costs. The Respondent argued further to Black's Law Dictionary, 5th ed., (St. Paul, Minn.: West Publishing Co. 1983) at p. 573 that costs of computer research can be directly traced to a particular product unlike overhead costs which are administrative costs not directly traceable in an economically feasible manner to a particular product. Here, the direct costs were measurable, reasonable and attributable to a particular file because the time spent was logged by file number.
Assessment
[24] I routinely allow costs for computer research further to my conclusions in Canadian National Railway supra. Those conclusions were supported in an analysis published by the Vancouver Bar Association in The Advocate, Vol. 55, Part I, January 1997 at p. 79 entitled "Recovery of Legal Research Expenses and Assessments of Costs" by Lisa A. Peters. However, part of the difficulty with the evidence, as here, has been the absence of search parameters which might permit confirmation that the work done was not predicated on irrelevant considerations. The entries in the client ledger all used the same format, ie. date, lawyer's initials, Quicklaw identifier, invoice number, amount (ranging from $0.37 to $208.91) and other identifiers, but nothing about search parameters or results. The initial analyses, via litigation, of new legislation can provide added challenges, even for experienced counsel. A result of nil dollars at assessment would be absurd given that I think the Respondent's counsel had an obligation to carry out research for the assistance of the Court in resolution of the issues. However, the Applicant is not obligated to pay for the costs of irrelevant research. Some of the research occurred close to interlocutory events for which no costs are assessable, but my reading of the various documents in the record, with particular regard to motion records, does not reveal obvious linkages. I allow a reduced amount of $2,100.00.
Couriers ... $173.47
Photocopying (25,132 pages) ... $3,912.60
The Applicant's Position
[25] For courier charges, the Applicant reiterated his objection above to any GST allowances and asserted that the Respondent has incorrectly claimed GST twice, ie. once in each of 11 invoices and then as part of a separate GST calculation in the bill of costs. The Applicant argued that only $37.78 of the remaining $162.12 (exclusive of GST) should be allowed as the costs for communications between counsel and clients relating to preparation of materials such as affidavits or to the Courthouse Library are proper disbursements, but the costs associated with unexplained or excessive invoices, status reports for the client, deliveries to non-parties such as the CRTC and interlocutory matters for which no costs were awarded are not proper.
[26] The Applicant argued that 25,132 photocopies are excessive for several reasons. The Respondent's record included materials already present in the Applicant's record, contrary to Rules 70(1)(f) and (g). In Compulife Software Inc. v. Compuoffice Software Inc., [2002] F.C.J. No. 1509 (A.O.) at para. [27], the cost of copies of documents for the client was held to be not recoverable. The Applicant should not be responsible for additional copies of the Applicant's record made by the Respondent and for which no explanation is provided in the evidence. The client ledger in evidence likely includes multiple copies for various lawyers and articled students as well as copies associated with interlocutory motions for which no costs were awarded. The Applicant conceded that $0.156 per page ($3,912.60 for 25,132 pages) is reasonable and suggested a reduced allowance of $1,560.00 (10,000 copies at $0.156 per copy).
The Respondent's Position
[27] The Respondent argued that courier charges for communications between counsel and client and for affidavits and other time-sensitive correspondence were justified. The Respondent asserted that the Applicant's position on photocopies did not account for double-sided copies, which count as two copies per Compulife Software Inc. supra. The primary documents, ie. affidavit of Jim Brookes, the Respondent's Record and its Appendices and the Supplemental Book of Authorities, totalled approximately 2,020 copies. Five copies of the Record were required. Additional miscellaneous copies, including motion materials, bring the total to 25,132 copies which, given the complexity of this matter, are reasonable.
Assessment
[28] The invoices for courier charges do not identify which documents were delivered. I think that some, but not all, of these charges were warranted in the circumstances of this litigation. I allow a reduced amount of $115.00 + GST for couriers. As for photocopies, I note that, in the face of the Applicant's objections, the Respondent earlier withdrew claims for costs associated with interlocutory orders silent as to costs. Again, the evidence is less than absolute. It is likely that the claim for photocopies includes costs associated with interlocutory events. Consistent with Re Eastwood (deceased) supra and my approach in Carlile supra and in Canadian Union of Public Employees, Local 4004 v. Air Canada, [1997] F.C.J. No. 464 (A.O.), I allow a reduced amount of $2,700.00 for photocopies.
[29] The Respondent's Bill of Costs, presented at $17,944.64, is assessed and allowed at $11,906.41.
(Sgd.) "Charles E. Stinson"
Assessment Officer
Vancouver, B.C.
February 5, 2004
FEDERAL COURT
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: T-1717-01
STYLE OF CAUSE: MATHEW ENGLANDER
Applicant
- and -
TELUS COMMUNICATIONS INC.
Respondent
ASSESSMENT OF COSTS IN WRITING WITHOUT
PERSONAL APPEARANCE OF PARTIES
REASONS FOR ASSESSMENT OF COSTS: CHARLES E. STINSON
DATED: February 5, 2004
SOLICITORS OF RECORD:
Farris, Vaughan, Wills & Murphy for Respondent
Vancouver, B.C.