IN THE SUPREME COURT OF BRITISH COLUMBIA

Citation:	McKnight v. Hutchison,
	2003 BCSC 1240

Date: 20030808

Docket: 00/2093

Registry: Victoria

Between:

DONALD DALE McKNIGHT

PLAINTIFF

And:

JOHN MICHAEL HUTCHISON

DEFENDANT

 

 

 

Before: District Registrar Bouck

REGISTRAR’S DECISION ON COSTS

Donald Dale McKnight	Appearing in Person
John Michael Hutchison, Q.C.	Appearing in Person
Date and Place of Hearing:  (In Camera)	May 27th and July 21st, 2003
	Victoria, B.C.

 

INTRODUCTION

[1]            An assessment of the plaintiff’s bill of costs was conducted for one-half day on each of the above noted dates.

[2]            The bill containing my handwritten notes is attached as Schedule “A” to this decision. The Schedule will not be reproduced in the reported version of this decision as it may disclose information protected by solicitor/client privilege. This proceeding has been held in camera for reasons given by Grist, J. in his judgment pronounced September 27^th, 2002.[1]

[3]            The tariff items were largely resolved at the May 27^th hearing.

[4]            The disbursements were dealt with on July 21^st, 2003. As noted on Schedule “A”, I reserved my decision with respect to some of those disbursements.

[5]            The order authorizing this assessment was made by Grist, J. on April 14^th, 2003.[2] Following written submissions from the parties, Grist, J. declared that:

“1.   the plaintiff shall have the costs of the trial to date payable on the conclusion of proceedings.”

 

[6]            The history of this action is relevant in so far as the proceeding, and indeed trial, has yet to be concluded. In his ruling regarding costs, Grist, J. states:

“     The scope of this action is wider than the issues tried to date. Before there can be a final determination between the parties, an accounting will be required to determine what each was entitled to receive from the partnership over its life and what each is responsible for as a result of its dissolution. The accounting may be an extensive proceeding.”

 

[7]            The accounting was commenced before me on February 10^th and continued on March 3^rd, April 4^th and 17^th , May 26^th and July 21^st, 2003. I am awaiting the parties’ written submissions before issuing my Report and Recommendations.

[8]            Some of the tariff items have been marked as “deferred” on Schedule “A”; others have been disallowed entirely. As I advised the parties on May 27^th, I do not interpret the April 14^th, 2003 Order as including costs related to the accounting. In my view, the court has yet to determine entitlement of costs for that part of the proceeding. It follows that any tariff items or disbursements which relate to the accounting are not properly claimed on this assessment. Although the items and charges are marked as “deferred” (to a future assessment) it is more likely that a separate bill will be presented once the proceeding is concluded and subject to further cost orders.

[9]            The affidavit of Stacey McKnight sworn May 20^th, 2003 is relied on to justify the disbursements. In addition, I accepted unsworn statements from the parties.

THE TARIFF ITEMS

[10]        Following submissions from the parties, I allowed the tariff items in the sum of $41,036.80, inclusive of GST and PST.

[11]         Items 17.1 and 17.2 were disallowed or “deferred” as these items relate to the accounting.

[12]         I allowed units on most of the variable items at the higher end of the scale. Given the nature of these proceedings, I am satisfied that more than an ordinary amount of time should have been spent on these items.

DISBURSEMENTS

[13]        Notations on Schedule “A” also indicate which disbursements were challenged by the defendant. Items marked as “deferred” relate to the accounting. Items marked “ok” are accepted by the defendant. Items marked “reserve” are addressed in these reasons.

[14]        Before addressing each of the challenged disbursements, I will comment on the objections raised by the defendant.

[15]        At the May 27^th hearing Mr. Hutchison expressed general dissatisfaction with the affidavit material filed in support of the bill. He expected the plaintiff to produce an affidavit from Robert Johnston, Q.C., Mr. McKnight’s counsel at trial. This same general objection was raised at the July 21^st hearing.

[16]        Many of the statements made by Ms. McKnight in the affidavit are based on information and belief. The absence of affidavit material from Mr. Johnston is not explained. It is submitted that Ms. McKnight’s evidence is inadmissible or should be given no weight in this assessment. Accordingly, there is no evidence to support the necessity and/or the reasonableness of many of the disbursements claimed: Rule 57(4).

[17]        Mr. Hutchison relies on several authorities but in particular, the Court of Appeal decision in Holzapfel v Matheusik.[3]  That decision states a number of principles with respect to the presentation of evidence at assessments. The principles can be summarized as follows:

1.    The onus rests on the party submitting the bill to establish the necessity for and reasonableness of the charges for the disbursements claimed.

 

2.    The registrar must consider all of the circumstances of each case and determine whether the disbursements were reasonably incurred and were justified;

 

3.    In making such a determination, the party presenting the bill must present evidence “at minimum” from the solicitor responsible for the preparation of the case addressing the necessity of the disbursement;

 

4.    Nonetheless, the registrar is not bound by opinion set out in the affidavit.  That opinion should be weighed against any affidavit that deposes to the opposite effect;

 

5.    Ultimately, the registrar must determine whether the expense is a reasonable and justifiable expense which should be borne by the unsuccessful litigant.

 

6.    Although there may be significant practical problems in proving the necessity of each disbursement, when strict proof is demanded, there is alternative to providing it.

 

7.    If the party presenting the bill has taken all reasonable steps to disclose his affidavit of justification in good time and has inquired whether any disbursement will be contested and, if so, which disbursement and on what grounds, then the opposing party ought to confine his opposition to those disbursements which he has said, reasonably in advance, that he will be contesting, and to those grounds which he has said, reasonably in advance, that he will be making the basis of his objection.

 

[18]        Mr. Hutchison concedes that despite an invitation from the plaintiff, he did not provide details of his objections in advance of the assessment.  I note that the bill and supporting affidavit were provided to Mr. Hutchison on May 22^nd, 2003, yet he did not articulate these details to Mr. McKnight until the continuation of the assessment on July 21^st. Of course, by May 27^th Mr. McKnight was aware that the defendant expected an affidavit from Mr. Johnston. Mr. McKnight did not pursue this affidavit given that the defendant had failed to particularize his objections.

[19]        If a party is “ambushed” at an assessment, the ordinary rules of justice, fairness and prejudice dictate that an adjournment should be granted to allow the party presenting the bill to produce evidence with respect to the new matter raised: Holzapfel v. Matheusik, supra, @ p.140

[20]        Mr. McKnight requests an adjournment if I find that the evidence presented to date is insufficient. 

[21]        After careful consideration, I conclude that fairness and justice warrants an adjournment of the assessment to allow Mr. McKnight to provide further and better evidence in support of the disbursements.

[22]        I too would have expected an affidavit from Mr. Johnston addressing the necessity of various disbursements. It is well-established that such evidence should come directly from counsel who authorized or incurred the disbursement. The party challenging the disbursement may then cross-examine counsel as to the alleged necessity. Likewise, I would expect any evidence to the opposite effect to come from the defendant’s counsel, Mr. Harbottle.

[23]        Regrettably, in my experience, this standard is not universally observed.  Many counsel continue to rely on affidavit material from their support staff; most of this evidence is hearsay[4] and should be given no weight.  This may be an attempt to save costs but in the end, often results in a duplication of effort. If the statements are challenged, the material is of no use to the registrar.  The staff member could not be cross-examined on counsel’s opinions as to the necessity (or reasonableness) of the disbursement. 

[24]        Nonetheless, I accept that Mr. McKnight took reasonable steps to obtain particulars of the defendant’s objections before procuring an affidavit from Mr. Johnston. Mr. Hutchison failed to provide such particulars. It was not unreasonable, therefore, for Mr. McKnight to conclude that such an affidavit would not be necessary.

[25]        Since objections are now raised, I am unable to properly assess the necessity of the disbursements (and in some cases reasonableness) without better evidence.

[26]        Bearing those comments in mind, I now turn to the disbursements in issue.

1.    Lee Realtime Reporting Inc. ($4,981.50)

 

[27]        The evidence addressing the necessity of this disbursement is found at paragraph 12 of Ms. McKnight’s affidavit. She deposes that the transcripts available as a result of Realtime Reporting were “of considerable assistance” to the plaintiff and his counsel in preparing submissions. As well, the transcripts were available to the defendant to prepare his submissions and, subsequently, for inclusion in the defendant’s appeal books.  It appears that the defendant’s appeal is proceeding: 2003 BCCA 407.

[28]        Mr. Hutchison submits that statements justifying the reporting service can only be made by Mr. Johnston. After all, he is the counsel that was “convenienced”.

[29]        As to the reasonableness of the expense, Mr. Hutchison alleges that Realtime Reporting is the most expensive reporting service available. Mr. McKnight refutes this allegation. Neither party led evidence on this point.

[30]        The evidence of Ms. McKnight is not sufficient to address the necessity of this disbursement. Such evidence should indeed come from Mr. Johnston. If Mr. Johnston merely reiterates the facts deposed to by Ms. McKnight, the disbursement will likely be disallowed.

[31]        I must consider the necessity of the disbursement at the time it was incurred. The fact that the transcripts are available for later appeal books is irrelevant; it has no bearing on the necessity of incurring the expense at trial. I am inclined to follow the decision of Roesner v Roesner[5] in disallowing the disbursement if the transcript was ordered simply for the convenience of counsel.

[32]        Even if I find the disbursement necessary, the reasonableness of this cost must also be addressed in the additional affidavit material. I leave it to the parties’ judgment as to whether such evidence should come from a court reporter.

2.    Quicklaw Research ($1,429.82)

[33]        The plaintiff claims the sum of $1,429.82 for Quicklaw research. The necessity of the disbursement is addressed in Ms. McKnight’s affidavit at paragraphs 13 and 14. The evidence is given on information and belief. There is no invoice to support the expense. The charge was made on separate accounts rendered by Cox, Taylor to the plaintiff.

[34]        Paragraph 14 of Ms. McKnight’s affidavit clearly offends the hearsay rule and can be given no weight in my considerations. It amounts to double hearsay.

[35]        The proper evidence to support the necessity and reasonableness of this disbursement should come from Cox, Taylor. If that evidence simply reiterates the statements made in Ms. McKnight’s affidavit, I would be inclined to substantially reduce the amount allowed for this disbursement or even disallow the charge altogether.

[36]        As Mr. Hutchison submits, there is a difference of opinion among registrars as to whether Quicklaw is properly claimed as a disbursement at all. I am of the view that Quicklaw can be a necessary disbursement. For example, it may be allowed if shown to be the only source for certain case law or other authorities. Furthermore, the evidence in support should address whether the use of Quiklaw is the most efficient legal research tool; a bald statement to that effect will not be sufficient.

[37]        There must be persuasive evidence as to both the necessity and reasonableness of this charge. As registrar, I typically allow Quiklaw disbursements in the sum of $60 to $70. The amount claimed by the plaintiff is extraordinarily high; an explanation must be given by Cox, Taylor to justify this large amount. Determining the reasonableness of the charge may depend on whether the law firm has a flat fee arrangement; the number of hours involved in the research; and the alternatives to this expense.

[38]          The parties might also consider whether the full amount should be allowed in this particular assessment when I have already allowed near the maximum number of units under item 1. Arguably the time spent on research, even on the somewhat novel issues involved here, could be included under item 1.

3.    Thomson Carswell – case law ($40.00)

[39]        The necessity of this expense is addressed in Ms. McKnight’s affidavit in very general terms at paragraphs 18 and 19.

[40]        Again, the plaintiff is at liberty to adduce further evidence on the necessity and reasonableness of this disbursement. I expect that evidence to address whether or not that case law was accessible either on the Supreme Court website or in a reported series.

4.    Aequitas Corporation ($107.00); BC Online; ($31.50) LTO Search ($29.00)

 

[41]        All of these disbursements relate to locating a witness for the purpose of an intended court application under Rule 28 of the Rules of Court.

[42]        I am told that Mr. Johnston could explain the necessity of this disbursement.

[43]        Mr. Hutchison submits that the expenses were unnecessary as the work could have been performed by counsel or the plaintiff himself.[6] Furthermore, there is no evidence with respect to the reasonableness of the charges rendered by Aequitas Corporation. Appending the invoice as an exhibit to Ms. McKnight’s affidavit is insufficient.

[44]        While I agree in principle with the objections raised by Mr. Hutchison, the plaintiff will be given the opportunity to present further and better evidence in support of these disbursements.

6.    Photocopying

      - Cox, Taylor

            (3,367 pages x $0.15 per page)      $  505.05

 

-        McKnight & Company

(15,342 pages x $0.15 per page)     $2,301.30

 

[45]        Mr. Hutchison acknowledges that a great number of documents were used in the litigation.  However, he submits that there is no proper evidence to support the disbursement. For example, some of the charges of Cox, Taylor may include copying correspondence and other documents to the client. Such expenses should not be borne by the defendant.

[46]        Again, I am prepared to adjourn consideration of these charges pending further and better evidence from Cox, Taylor.

[47]        I would expect that evidence to address whether any part of the charges includes copies of correspondence and documents sent to the client.

[48]        I would also expect further and better evidence from McKnight & Company addressing whether any of the 15,342 pages include documents used at the accounting. As determined above, those charges will not be allowed at this assessment.

SUMMARY

[49]        In summary, I am prepared to adjourn the final determination of the contested disbursements pending delivery of additional evidence addressing the necessity and reasonableness of these particular disbursements.

[50]        Where appropriate, I expect Mr. Hutchison to provide affidavit material in reply. Given the nature of the objections, I expect that some of the rebuttal evidence will come from Mr. Harbottle.

[51]        I appreciate that in the result both parties will incur further expense in an exercise which is often described as “rough justice”. However, neither party has provided the necessary evidence to support their positions.

[52]         In addition to the common law remedy authorized by Holzapfel v. Matheusik, supra, I rely on Rule 57(29.02) of the Rules of Court to order further and better particulars to support the challenged disbursements.

[53]         If the parties are unable to resolve the outstanding issues and a further hearing is scheduled, I am prepared to hear submissions on costs pursuant to Rule 57(14) and (19). As well, I will hear submissions as to whether the plaintiff is entitled to additional units under items 20 and 21 and for expenses incurred in the preparation of additional affidavit material.

“District Registrar C. Bouck”

 

August 14, 2003 – Corrigendum to the Registrar’s Decision on Costs issued by District Registrar C. Bouck advising that paragraph 27 should read:

 

“The evidence addressing the necessity of this disbursement is found at paragraph 12 of Ms. McKnight’s affidavit.  She deposes that the transcripts available as a result of Realtime Reporting were “of considerable assistance” to the plaintiff and his counsel in preparing submissions.  As well, the transcripts were available to the defendant to prepare his submissions and, subsequently, for inclusion in the defendant’s appeal books.  It appears that the defendant’s appeal is proceeding:  2003 BCCA 407.”