||September 23, 1999
||J. BRUCE MELVILLE
||NEW EXPROPRIATION ACT TARIFF OF COSTS B.C. Reg 189/99
A new tariff of costs was adopted as a
regulation pursuant to s. 54 of the Expropriation Act on
June 25, 1999. The regulation was deposited with the Registrar of
Regulations on June 28, 1999 and is cited as B.C. Reg 189/99. No
case law interpreting this regulation has been reported to date.
It appears to change the law affecting cost recovery under the
Act in many significant ways. This paper is intended to analyse
the features and implications of the tariff.
2.1 Scope of the Regulation
2.1.1 Jurisdiction to enact
The Act provides in s. 54 for the
adoption of a tariff of costs for the purposes of ss. 45 and 48
of the Act by way of a regulation. Jurisdiction to adopt a tariff
of costs clearly exists.
The Tariff appears to be intended to
regulate all cost recovery procedure, whether under s. 45 or s.
2.1.3 Final cost recovery (s. 45)
Section 45(7) of the Act provides that
the Board must use the tariff of costs, where such exists, as an
alternative to the "actual reasonable" criteria applied
where no tariff exists. The Act is quite specific in
distinguishing between "actual reasonable" costs and
"tariff" costs. The term "reasonable" is used
several times in the Act in relation to costs. However, for
purposes of final cost recovery in relation to the determination
of compensation (as opposed to costs following abandonment or the
costs of an inquiry) the concepts appear to be mutually exclusive
(see s.45(7)). This point may not have much significance in
relation to final cost recovery, although it may become a
contentious issue in relation to advance cost recovery (see below).
Costs payable following abandonment are
recoverable pursuant to s. 19(4)(b). However, the Act states that
an owner is entitled to actual reasonable costs to be determined
under s. 45. It appears that the tariff has no application in
this case given the express language of s. 19(4)(b). However, an
argument might be advanced that the reference to s. 45 found in s.
19(4)(b) incorporates whatever standard is in effect under s. 45.
Costs of an inquiry are recoverable
pursuant to s. 45(1). The standard is "reasonable".
There does not appear to be any "actual" requirement.
Neither is there any reference to the tariff. The costs are to be
determined by the inquiry officer, subject to an appeal to the
Chair. In the case of an appeal however, it appears that the
Chair must apply the same criteria, namely "reasonable".
To the extent that the tariff is
applicable to cost recovery, little of the previous case law
dealing with what is reasonable will be of continuing relevance.
2.1.4 Interim cost recovery (s. 48)
The Act also appears to make the Tariff
applicable to s. 48 cost recovery. Section 45 states that
recoverable costs are either the "actual reasonable legal,
appraisal and other costs" where no tariff exists or "the
amounts prescribed in the tariff" where a tariff has been
adopted. Section 48 does not contain parallel language and it
contains no direct reference to the tariff (unlike s. 45).
Section 48 simply permits the Claimant to submit a "written
bill" consisting of the "reasonable legal, appraisal
and other costs that have been incurred by the owner up to the
time the bill is submitted". On a s. 48 review, the Board is
required to "assess the reasonableness of the bill".
This language is consistent with use of the "actual
reasonable" standard for evaluation but not a tariff based
Section 48(6) provides that s. 45(7) is
applicable to s. 48 reviews. This was probably intended to make s.
48 reviews similar to s. 45 reviews, by permitting the tariff
option as an alternative to the "actual reasonable"
standard. Nevertheless, ss. 48(1) to (5) still provides in effect
for payment of costs based on the "actual reasonable"
Assuming that the tariff is to be applied
to s. 48 advance payments, some of the tariff items by definition
could not be recovered on an interim basis because they are tied
to the way in which the case is eventually resolved which cannot
be determined in advance. For example a range of units is
available under Item 18 of the legal tariff for hearing
preparation. However, the number of units is linked to the
duration of the compensation hearing. If no hearing takes place
nothing is recoverable for this item. Likewise, a range of units
is available for settlement discussions under Item 22 but only if
a final settlement results. Under the appraisal tariff, Item 6
allows 5 units for hearing preparation for each day of attendance
at a hearing. In all of these cases units could not be awarded on
an advance payment basis because the units are conditioned upon
A regulation, being subsidiary
legislation, cannot amend the Act. If the tariff takes away
statutory rights granted in the Act, it would be ultra vires.
The Act gives the statutory right in s. 45(3) to an owner to be
reimbursed for costs necessarily incurred for the purpose of
asserting a claim for compensation. This language is quite broad.
The Act goes on to specify in s. 45(7) that such costs are either
"the actual reasonable legal, appraisal and other costs"
or "the amounts prescribed in the tariff" where one has
been established. It is submitted that this sub-section is
intended to establish a standard by which such costs are to be
evaluated. Costs will be evaluated either on an "actual
reasonable" standard or a tariff standard. Where the "actual
reasonable" standard is applied, the language of the Act
pretty much covers the whole range of costs that would normally
be incurred in pursuing a claim for compensation. It does not cut
back significantly on the broad language of s. 45(3) except to
establish a requirement that the accounts have actually been
incurred and that the amounts must be reasonable. However, the
tariff appears to be more restrictive in defining the type of
costs which can be recovered. To the extent that it does so, it
may be ultra vires and it could be argued that any cost
categories not covered by the tariff are still recoverable but
subject to the actual reasonable standard. To put the matter
another way, the provision allowing Cabinet to establish a tariff
should be interpreted such that the tariff can only be directed
at determining the extent to which a particular cost can be
recovered but not at the types of costs which can be recovered.
The tariff is a substitute only for the actual reasonable test
which would otherwise be applied.
Section 3 of the tariff imposes an
obligation on the reviewer to allow costs which "were proper
or reasonably necessary to conduct the proceeding". The term
"proceeding" is not defined in the Act or the tariff.
If "proceeding" is intended solely as a reference to a
compensation hearing then the tariff is clearly more restrictive
than the Act which permits recovery of costs "necessarily
incurred in pursuing a claim for compensation". The
definition in the Act permits recovery even where no hearing has
been conducted or applied for. On the other hand the tariff which
has been adopted does provide for certain elements which are not
dependent upon the filing of an action (eg. Tariff Items 1-4).
The bigger issue is whether the tariff is
intended to define both the nature and the amounts of recoverable
costs or whether it is intended only to define the amounts
recoverable. The tariff which has been adopted appears to deal
with both issues.
The tariff adopts a three level scale
depending upon the degree of difficulty or importance (see ss. 4(1)
and (2)). The tariff gives the Board jurisdiction to determine
the appropriate scale and several criteria are set out for doing
so. This feature may conflict with the global reasonableness
criteria found in s. 45(10) because it appears to impose
restrictions on recovery which go beyond those found in s. 45(10).
In fact, the tariff does not really leave any room for
application of the s. 45(10) global reasonableness criteria. The
only way in which the tariff ties recovery to results achieved is
through setting of the scale on which the costs are to be
assessed and by s. 4 of the Tariff, this depends on the nature of
the issues raised and their difficulty and importance, not the
amount of compensation recovered. Unless found to be ultra
vires, I would expect cost recovery in cases involving
little or no success to be higher than was previously the case,
although the converse will probably be true in cases involving
recovery of substantial additional compensation.
The new tariff specifically provides
tariffs for recovery of legal and appraisal costs. No other
categories are provided. This raises a serious question as to
whether accounts may be recovered from experts other than
appraisal accounts. The only way in which the tariff might be
construed to permit this is where it is claimed as a disbursement
on a legal or appraisal account. Logically, it should appear on
legal accounts rather than appraisal accounts in most cases.
The tariff also purports to deal with the
issue of GST recovery on costs. It looks like the tariff is
intended to confirm the existing jurisprudence, namely that GST
is only recoverable if the claimant is not a GST registrant.
However, in my opinion, the Board's jurisprudence on this issue
is wrong because it denies recovery to GST registrants who are
obligated to account for refunds of GST expense previously
claimed as input tax credits, thus putting GST registrants at a
disadvantage over non-registrants.
The tariff provides in s. 3(3) for the
Board to make a determination of the Scale upon which costs will
be assessed. This portion of the tariff could be in conflict with
the Act. For example, where the compensation awarded by the Board
is more than 115% of the advance payment, the Board has no
statutory discretion whatsoever to decide entitlement and the
owner is entitled to 100% reimbursement. The tariff cannot grant
new jurisdiction to the Board to interfere with entitlement.
However, the tariff could be interpreted on the basis that it
only applies to cases where the Board has a discretion under s.
45 to determine entitlement. If so, this problem would not arise.
Secondly, where the Board's discretion on
entitlement is invoked, the Act provides in s. 45(5) that the
Board may award the owner all or part of his or her costs. It
does not say anything about fixing a scale of costs to be applied
nor does it say that the Board must rely upon a tariff in
exercising its discretion. Section 3(3) and (4) of the tariff may
be ultra vires. In my opinion, use of the tariff should
be confined to the cost review process and not be extended to the
cost entitlement stage.
The Tariff does not address the question
of how to apply the Tariff where there are multiple claimants in
a single action. A single expropriation can spawn multiple
compensation claims and often a single Form A application will be
filed covering the claims of multiple owners. If the Tariff is
applied once per action, where multiple claims are represented in
a single action, individual claimants will have their entitlement
to cost recovery reduced significantly and perhaps unfairly. Of
course, if the Tariff is applied once per action, there will be a
strong incentive for all claimants to file separate actions in
2.3 Schedule 1 - Legal costs
The tariff provides discrete
classifications of legal services some or all of which may be
required in an expropriation proceeding. In many respects this
tariff adopts features which are also found in the Supreme Court
Some tariff items provide a fixed number
of units, others provide for a range of units available where the
Board's discretion will necessarily be invoked.
Many of the services typically required have been included
although there are some omissions. For example there is no
express provision for a lawyer to travel to view and inspect the
subject property, although this might nevertheless be recovered
under Tariff Item 1.
The most significant consequence of the
adoption of the new tariff is that it imposes a partial flat rate
scheme (a fixed amount for a particular service regardless of the
time actually spent to provide it), something which all of the
Board's previous jurisprudence has discouraged. To date, the
Board's decisions have clearly stated that charges must be
claimed on an hourly rate basis so that the services rendered can
be minutely examined and dissected. Contingency fees were not
recoverable because while they would satisfy an "actual"
requirement, they did not satisfy the "reasonable" test.
Because the old regime required proof that expenses had actually
been incurred, this tended to make cost recovery difficult unless
the owner's professional accounts were billed on an hourly rate
The new regime no longer appears to
require proof of the reasonableness of hourly rates or the actual
amount of time spent on a particular case by the professionals
other than to establish the number of days for particular tasks
and whether the amount of time on each day was more or less than
2.5 hours or greater than 5 hours. The tariff of costs appears to
allow recovery of costs from an authority without proof of the
actual terms of the claimant's retainer agreement with his
professionals. This opens the door to fixed price billing and
contingency billing to owner clients by the owner's professionals.
Further, the amounts recoverable under the tariff do not appear
to be dependent in any way upon the skill and experience of
counsel. Since experienced counsel will achieve the same or
better results with less time than junior counsel, the tariff
scheme could well reward greater experience in a way that the old
regime did not. On the other hand it remains to be seen how
actual recovery of costs will compare to the actual expenses
incurred by claimants.
A surprising feature of the tariff is
that it will probably discourage settlement of many issues, be it
the main compensation claim or subsidiary issues which arise. The
tariff items which relate to preparation for motions or the
compensation hearing are only available where the hearings are
actually conducted. For example, Item 12 provides recovery for
hearing preparation but it is not available if settlement of the
issue in dispute occurs prior to commencement of the hearing of
the motion. Item 22 provides recovery for settlement discussions.
However, this item appears to be available only where a final
settlement of all issues results. It is unlikely to apply to
settlement of issues raised in a motion. It is also noteworthy
that the number of units available both for hearing preparation
and attendance at the hearing are greater where the hearing is
opposed than if unopposed. This may also tend to discourage
attempts at settlement since there is a premium attached to
opposition. Further, since there is no apparent limit to the
number of issues which could be raised by way of an interlocutory
application, claimants may be tempted to look for as many
opportunities to file motions (that can be expected to be opposed)
Tariff Item 22 which does allow a
significant number of units for settlement discussions appears to
be totally focussed on a global settlement of all issues. This
item is recoverable however, only where a settlement actually
results. Since the outcome cannot be predicted before the effort
is undertaken, many claimants may be reluctant to engage in the
Tariff Item 4 allows recovery for time
spent instructing expert witnesses but only where a report has
been produced. This appears to be intended to discourage
consultation with experts that stops short of report production
and may in the end produce higher costs than was previously the
Tariff Item 23 provides 1 unit per day
for each day of travel, provided that travel time is less than 2.5
hours, 2 units where travel time is between 2.5 and 5.0 hours and
3 units where the travel time is greater than 5.0 hours.
Previously, travel time was recoverable at 50% of normal hourly
rates. There are a number of conditions attached to the tariff
item which make it very restrictive. For starters, this item is
only available for travel to attend a "hearing, application,
examination or other analogous proceeding". This rules out
travel by a lawyer to view the subject property or to confer with
the claimant at that location which is an important and
previously recoverable function for a lawyer. Secondly, it is
only available where the trip is to a destination more than 40 km
from the lawyer's office. In my case, practising from a downtown
Vancouver office, the 40km radius extends out to Maple Ridge and
Langley. It therefore rules out recovery of travel time for
hearings at the usual Greater Vancouver locations, although not
where the hearing is at the Board offices in Victoria. Thirdly,
in most cases this item will provide a lower recovery than the
"actual reasonable" standard in many cases. However,
because it provides for recovery in discrete steps unlike the
previous standard, there will be some situations where it will
provide higher recovery. The outcome depends upon the hours of
actual travel time, the billed hourly rate for travel time and
the scale applied. Consider the following examples:
||New v. Old
Based on this analysis it appears that
travel time recovery will be less under the tariff except for the
shortest trips. Fourthly, from the cost recovery point of view,
these restrictions will discourage the conduct of compensation
hearings at locations far removed from the claimant's lawyer's
office. This appears to conflict with s. 27 of the Act which
encourages the conduct of hearings close to the subject property.
Finally, the tariff item is available for travel of a "solicitor"
to attend a hearing. It might be argued that this item is
therefore not available for counsel to attend a hearing. It is
noteworthy that solicitors in this province rarely attend
hearings in that capacity.
2.4 Schedule 2 - Real estate appraisal costs
Unlike Schedule 1, there is no precedent
for this tariff in the Supreme Court Rules.
Many of the services typically required
have been included although there may be some omissions.
Tariff item 1 provides for recovery of
time spent on meetings with a claimant and counsel relating to a
claim. This might be construed to permit recovery only where
counsel has been retained and where counsel participates in the
meeting. If so, it would discourage claimants from retaining an
appraiser without also having retained a lawyer.
Some of the comments above in relation to
the adoption of a flat rate scheme appear to apply with equal
force to the real estate appraisal tariff. However, it is
unlikely that contingency fee retainers will be adopted due to
the ethical concerns which this raises for appraisers.
Tariff Item 6 provides units for hearing
preparation. However, the units available are directly linked to
the number of days of attendance by the appraiser at the
compensation hearing. This may discourage efforts to reach
agreement on appraisal facts at compensation hearings because the
more appraisal facts which are agreed upon the less which can be
recovered by way of costs from the authority for the
contributions of the appraisers in reaching that agreement on the
Unlike the legal tariff which does not
provide for travel time to inspect the subject property, the
appraisal tariff does so expressly in Tariff Item 2.
The Tariff of Costs Regulation was
adopted on June 25, 1999 and deposited June 28, 1999. Section 4
of the Regulations Act provides that the tariff came
into force as of the date of deposit, or June 28, 1999.
Section 2 of the Tariff states that it
applies to costs payable under the Act if the costs claimed were
incurred on or after the date the regulation came into force.
This will require a determination as to when a cost was incurred
for purposes of cost recovery. It could refer to the date on
which the service was provided or the date on which the service
was invoiced or possibly the date on which the claim was
submitted to the authority for reimbursement, although the last
date seems the least likely of the three to be the correct
No special provision has been made for
cost reviews in cases where some of the services were provided
prior to June 28, 1999 and some were provided after that date.
This issue will present the greatest problem on s. 45 final
reviews. An illustration will suffice. Where most of the costs
were incurred prior to adoption of the tariff, those costs
presumably will be evaluated on the actual reasonable standard.
However, units are available under the tariff for both
preparation and attendance at the compensation hearing. The Board
is not given any discretion with respect to those units and the
units are tied directly to the length of the hearing. A claimant
would therefore appear to be entitled to full recovery under the
tariff for preparation and attendance in addition to the actual
reasonable costs for doing so.
A further (interim) problem in applying
the tariff standard to interim cost recovery is that it makes no
provision for transition from the actual reasonable standard to
the tariff standard.
2.6 Overall assessment
Without actual experience to analyse it
is difficult to tell what significance this tariff will have. It
is clear that there are several opportunities to challenge the
validity of the tariff as it appears to be in conflict with
several statutory provisions. On the other hand, the tariff
places less reliance on results achieved and leaves fewer
opportunities to fight over reasonableness of particular items
claimed. Most noticeable is that there is no longer any reason
for disputes over hourly rates.
The tariff provides a significant number
of units for settlement negotiations presumably for the purpose
of encouraging settlement. However, those units are only
available where settlement actually results so it may not have
the desired result. Claimants may not wish to run the risk of
incurring the expense of a failed effort at negotiation and
therefore refuse to engage in the process, particularly when the
authority may use this feature of the tariff as a lever to
unfairly extract additional concessions from an owner.
The tariff provides relatively few units
for cost review applications. This appears to be intended to
discourage lengthy reviews. However, to date, the length of a
cost review hearing has been driven largely by the number of
challenges to the accounts by the authority. The recent decision
in Ferguson v. British Columbia (Minister of Forests) demonstrates
the problems which can occur. On the other hand, I think the
tariff will simplify the review process on final reviews
considerably such that fewer final reviews will be required and
those that proceed will be shorter. As for interim reviews, there
is considerable doubt as to how the review will be conducted
since the tariff is not clearly applicable. For that matter, it
looks like cost claims may have to be submitted on the same basis
3. CASE LAW