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Taxation Order CRTC 2001-5
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Ottawa, 29 June 2001
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In re: Application to review and vary Order CRTC 2000-531 -
Télébec ltée – Rate restructuring
Reference: 8662-A65-01/00 and 4768-097
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Application by Eve-Lyne H. Fecteau on behalf of Action Réseau
Consommateur (ARC) and the Association coopérative d'économie
familiale des Bois-Francs (ACEF-BF)
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Taxation of costs of ARC and ACEF-BF
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Taxation officer: Tariq Qureshi
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1. |
This order constitutes the taxation of costs awarded to ARC and
ACEF-BF for their intervention with respect to the application to
review and vary Order CRTC 2000-531, Télébec ltée – Rate
restructuring, dated 9 June 2000.
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2. |
In Costs Order CRTC 2001-7, Application to review and vary Order
CRTC 2000-531: Télébec ltée – Rate restructuring, dated 2 April
2001, the Commission awarded costs to ARC and ACEF-BF in accordance
with section 56(1) of the Telecommunications Act, and ordered that
those costs be paid by Télébec ltée.
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3. |
On 9 April 2001, ARC and ACEF-BF submitted their bill of costs in
the amount of $18,459.97, consisting of $18,108.10 in fees and
$351.87 in disbursements. ARC and ACEF-BF claimed that, under the
circumstances, those costs were reasonably and necessarily incurred.
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4. |
By letter dated 1 June 2001, ARC and ACEF-BF amended their bill
of costs, reducing it by $746.74, for taxes that ARC and ACEF-BF had
allocated for work done by the in-house analyst.
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Comments by Télébec
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5. |
On 24 April 2001, Télébec filed its comments regarding the bill
of costs of ARC and ACEF-BF, stating that it found the costs claimed
to be exaggerated. Télébec disputed the claim that, under the
circumstances, the costs were reasonably and necessarily incurred,
because the arguments raised by ARC and ACEF-BF in the review and
vary application are the same as those raised in the interventions
presented by those parties in opposition to Tariff Notice 239 (TN
239), and those raised in the dissenting opinion in Order CRTC 2000-531.
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6. |
Furthermore, Télébec submitted that those costs are
particularly exaggerated given that the amount claimed is almost 10
times higher than the amount claimed by ARC and ACEF-BF in their
original intervention opposing TN 239. Télébec was of the opinion
that such a difference in costs is disproportionate to the content
of the review and vary application filed by ARC and ACEF-BF.
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7. |
Finally, Télébec considered the amount to be particularly
excessive given that, for all intents and purposes, those costs will
be borne by the customers represented by ARC and ACEF-BF.
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8. |
For those reasons, Télébec was of the opinion that, at most,
the amount awarded be the same as that awarded for the initial
interventions by ARC and ACEF-BF in the proceeding leading to Order 2000-531, i.e., a total of $2,000.
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Reply from ARC and ACEF-BF
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9. |
By letter dated 25 April 2001, ARC and ACEF-BF, in reply to the
comments by Télébec, submitted that those comments do not take
into account the significant differences between the work required
to file an initial position in a rate case, and that of the work
required to file an application to rescind a decision made by the
Commission.
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10. |
In support of its application, ARC and ACEF-BF also cited
specific circumstances dating back to the beginning of the TN 239
proceeding. Following the departure of their analyst, Philippe
Tousignant, who had worked on the case, and given the need to
prepare an application to review and vary the resulting order, ARC
and ACEF-BF had to replace Mr. Tousignant, with all the associated
inconvenience.
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11. |
Moreover, ARC and ACEF-BF submitted that, given the complexity of
the work and the legal nature of an application to review, they had
to hire two outside lawyers to handle the work.
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12. |
Finally, ARC and ACEF-BF submitted that if the consumers they
represent were to pay the costs claimed, the amount claimed
constitutes a profitable investment, given that Télébec
subscribers will benefit from the $3.2 million placed in a deferral
account each year resulting from the review of the rate increase
initially granted to Télébec.
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Fees
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13. |
ARC and ACEF-BF claimed $5,370 for their four analysts, and
$11,991.36 (including taxes) for the services of two lawyers,
Eve-Lyne H. Fecteau and Franklin S. Gertler.
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14. |
The hourly rates claimed for the services of Eve-Lyne H. Fecteau
and Franklin S. Gertler are $100 and $200 respectively. For the work
done by their analysts, Nathalie St-Pierre, Louise Tardif and
Philippe Tousignant, ARC and ACEF-BF claimed a daily rate of $400.
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15. |
The rates claimed are, in each case, equal to or lower than those
set forth in the CRTC Legal Directorate Guidelines for the Taxation
of Costs (the Guidelines). In my opinion, given the interveners'
years of practice and their expertise, those rates are appropriate
under the circumstances.
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16. |
ARC and ACEF-BF also used the services of a fourth analyst for
whom they are claiming a daily rate of $400. Although the Guidelines
stipulate a rate of $400 per day for an in-house analyst, I am of
the opinion that that rate is representative of current market rates
for the services of an analyst with experience in the
telecommunications industry and paid to analyse matters submitted to
the Commission. I note that Jean Sébastien only has limited
experience (three months). In the past, taxation officers have
considered that an applicant's limited experience did not justify
allowing the hourly rate provided for in the Guidelines. In my
opinion, that approach is justified in determining the hourly rate.
In this case, I cannot accept the amount claimed by ARC and ACEF-BF.
I believe that a daily rate of $200 is more appropriate for the
services of Jean Sébastien in this matter.
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Preparation and procedural time
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17. |
In their bill of costs, ARC and ACEF-BF claimed a total of 94.05
hours for work done by their counsel, and a total of 13 and 3/7 days
for work done by their analysts. As stated above, and for the
reasons given, Télébec opposed that claim. After reviewing
Télébec's arguments and the reply from ARC and ACEF-BF, I find
that the amounts claimed were reasonably and necessarily incurred.
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18. |
I cannot agree with Télébec. I do not believe it is appropriate
to compare the time spent by an intervener to prepare an
intervention for a rate case, with the time it takes to file a
review and vary application, make representations supporting that
application and reply to comments by the other party.
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19. |
In a review proceeding, to refute the presumption of the
correctness of a decision by the Commission, the burden of proof
rests with the applicants, requiring not only technical arguments,
but also legal arguments based on the principles of administrative
law. In the case of the application to review and vary Order 2000-531, ARC and ACEF-BF presented arguments supporting their
application. This involved a review of previous decisions by the
Commission, an in-depth analysis of the Commission's policy with
respect to rate restructuring, and an analysis of Télébec's
regulatory and financial environment in order to argue that the
shortfall resulting from the depletion of Télébec's reserve
account should be offset by the approved rate restructuring. I am of
the view that this work was reasonably and necessarily incurred.
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20. |
Also, I cannot agree that there was an unnecessary duplication of
work by counsel and the analysts involved in this proceeding. Mr.
Tousignant, who had worked on preparing an application to rescind
the order, voluntarily left his position at ARC. ARC and ACEF-BF had
to find someone to take over the file. They were entitled to use
outside counsel, who were not involved in the original proceeding,
and thus had to become familiar with the issues addressed, the
status of the case, and the procedures undertaken before they began
working on the case. The somewhat high cost is the result of the
duplication of work that was begun by Mr. Tousignant and research
done by Ms. Fecteau to conclude the file. I consider that
duplication to be acceptable under the circumstances. As pointed out
by ARC and ACEF-BF, a change in staff in the middle of a case is not
an ideal situation, but it does happen. I do not believe it would be
appropriate to penalize ARC and ACEF-BF for a situation outside
their control.
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21. |
Although two analysts participated in preparing for the review
proceeding, half of the work was done by two lawyers somewhat
unfamiliar with CRTC proceedings. They had to become familiar with
the procedures, legislation and regulations, and with the
Commission's policies with respect to an application to review.
Although that task may have resulted in overtime, the hourly rate
charged for that learning curve is lower than the rate set forth in
the Guidelines for outside counsel. In my opinion, any other
approach would prevent an intervener from submitting a documented
and useful brief to the Commission.
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22. |
Although Ms. St-Pierre and Mr. Sébastien helped prepare the
review and vary application and the reply in addition to the two
lawyers assigned to the case, I am not convinced that there was a
duplication of work. In my opinion, each brought unique expertise to
the ARC and ACEF-BF intervention. This same approach was used in
Taxation Order CRTC 2000-3, In re: MTS Communications Inc. –
Mechanism to recover future income tax expense – Telecom Decision
CRTC 99-2, dated 1 May 2000, in which the taxation officer found it
appropriate that information prepared by an analyst for an
intervener was also reviewed by the intervener's counsel to ensure
that the information was relevant and accurate.
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23. |
With respect to the number of days claimed for Mr. Tousignant, I
find it appropriate to approve the number of days claimed. As stated
earlier, the nature of the arguments in a review application are
different from arguments used in an intervention responding to a
tariff notice. In the initial proceeding, ARC was only one of the
interveners responding to the TN filed by Télébec. In this matter,
ARC and ACEF-BF are the applicants and instigated the review
undertaken by the Commission. As such, they had to prepare a
complete case to meet the burden of proof required for reviewing the
Commission's decision.
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24. |
For all those reasons, I find that in the circumstances, the
preparation time claimed by ARC and ACEF-BF in this matter is
necessary and reasonable.
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Disbursements
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25. |
In their bill of costs, ARC and ACEF-BF claimed $351.87 for
in-house photocopying, postage and courier services, long distance
and research.
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26. |
I consider the disbursements to be reasonably and necessarily
incurred in the circumstances and I will allow them.
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Taxes and tax relief
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27. |
As stated in the Affidavit of Disbursements filed by ARC and
ACEF-BF, ARC and ACEF-BF are entitled to a 50% rebate for the
federal goods and services tax and a 50% rebate for the Quebec sales
tax.
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28. |
Although ARC and ACEF-BF confirmed this in their letter dated 1
June 2001, they did not amend their bill of costs accordingly. I
will thus adjust the costs claimed to reflect the tax rebate to
which ARC and ACEF-BF are entitled. The amendments to the bill of
costs involve only those amounts claimed for Eve-Lyne Fecteau and
Franklin Gertler, because the goods and services tax and the Quebec
sales tax are applicable in their cases.
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Costs as taxed
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29. |
I hereby tax the fees and disbursements of ARC and ACEF-BF as
follows:
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Legal counsel fees
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Eve-Lyne Fecteau |
$9,014.93 |
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Fraklin Gertler |
$2,193.26
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Analyst fees
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Nathalie St-Pierre |
$570 |
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Philippe Tousignant |
$4,000 |
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Jean Sébastien |
$200 |
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Louise Tardif |
$400
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Total fees
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$16,378.19 |
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Disbursements
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In-house photocopies |
$105.24 |
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Postage/courier |
$61.22 |
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Long distance |
$100.64 |
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On-line legal research
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$74.77 |
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Total disbursements
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$341.87 |
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Total fees and disbursements
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$16,720.06 |
30. |
Pursuant to Costs Order 2001-7, the respondent Télébec is to
pay the costs as taxed forthwith.
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Taxation officer |
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Tariq Qureshi
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Secretary General
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This document is available in alternative format upon request,
and may also be viewed at the following Internet site: http://www.crtc.gc.ca
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