1995 S.H. No. 120130 IN THE SUPREME COURT OF NOVA SCOTIA BETWEEN: GEORGE TANNOUS and LODY TANNOUS, and CITY OF HALIFAX, DECISION HEARD: at Halifax, Nova Scotia before The Honourable Justice Walter R.E. Goodfellow on October 2, 1995, in Chambers DECISION: October 2, 1995 (Orally) WRITTEN RELEASE OF ORAL: October 11, 1995 COUNSEL: Joel E. Fichaud, Q.C. Solicitor for the Appellants Mary Ellen Donovan Solicitor for the Respondent GOODFELLOW, J.: BACKGROUND Mr. and Mrs. Tannous own home at Kelvin Grove in Halifax. Their backyard abuts the Bedford Highway. On August 26, 1993, Halifax City Council passed resolution to expropriate parcel of land which included almost all of the backyard of Kelvin Grove, for the purpose of widening the Bedford Highway. The expropriation resolution was filed at the Registry on September 7, 1993, the effective date of expropriation. The area expropriated was approximately 10 feet of the 30 foot rear yard for retaining wall. The construction of the wall began in February, 1994 with the work in the area virtually completed by the middle of June, 1994. The above ground portion of the wall was designed to minimally intrude upon the appellants' property, but as result of design changes, was located entirely within the original street width, leaving only the footings protruding into the claimant's property. Subsections 13(2) and (3) of the Expropriation Act state that within 90 days of expropriation, the expropriating authority must make an offer for "full compensation" including injurious affection based on appraisal of value and injurious affection. By letter dated October 6, 1993, from the City to the Tannous', the City stated: "In accordance with the provisions of Section 13 of the Expropriation Act, the City hereby offers the amount of $5,855 in full compensation for your interest in the expropriated land; which offer, as required by the Act is based on an independent report appraising the market value of the land. copy of the appraisal report prepared by Ingram and Ingram Appraisals Services Limited is enclosed herewith." On November 10, 1993, prior to the completion of the work, the City received an appraisal report from the appellants' solicitor valuing the amount of compensation at $108,500. On March 7, 1994 notice and statement of claim was filed by the claimant with the Utility and Review Board under the Expropriation Act. Shortly thereafter certificates of readiness were filed by counsel and the Board set the matter down for hearing on November 14‑18, 1994. On September 29, 1994 the appraisal report for the City was completed and forwarded to the claimant's solicitor and which report valued the claim at $15,000. On October 19, 1994 the appellants were advised that the City intended to abandon the expropriation retaining only an easement necessary for the footing. City Council approved the abandonment on October 28, 1994. In early November on the date scheduled for the pre‑trial hearing at which an adjournment of the hearing was obtained by the Tannous' solicitor, the case was settled in discussions held after the pre‑trial, for the sum of $20,000. Mr. Fichaud rendered solicitor‑client account to the City in the amount of $19,420 plus taxes representing approximately 100 hours time spent on the file. The solicitor\'s account was taxed by Arthur Hare and in a decision dated August 25, 1995 he reduced the account to $14,000 plus taxes. At the taxation, report prepared by David Miller, Q.C. was filed by the City valuing the work done by Mr. Fichaud which report concluded that the work should have been billed at $10,000. The Tannous\' appealed the decision of the Taxing Master to reduce theft solicitor\'s account from $19,420 plus taxes to $14,000 plus taxes. 2. APPEAL ISSUES Issue 1. What is the standard for this Court on an appeal from taxation? Issue 2. Did the learned Taxing Master err in principle respecting the solicitor's account? Issue 3. Did the learned Taxing Master err in principle respecting the costs of the taxation? Issue 4. Did the learned Taxing Master err in principle respecting the interest on unpaid legal accounts? Issue 1. What is the standard for this Court on an appeal from taxation? Civil Procedure Rules 63.39 and 63.40 state: "63.39 (1) Unless the court otherwise orders, an appeal from taxation shall be confined to the items and grounds specified and shall be heard on the evidence before the taxing officer. (2) The decision of the taxing officer shall be final and conclusive on all matters which have not been appealed from." "63.40 On an appeal from taxation, the court may (a) exercise all the powers of taxing officer; (b) review any discretion exercised by the taxing officer as fully as if the taxation were made by the court in the first instance; and ©) grant such order on the application, including the costs of appeal and taxation, as is just." In Cape Breton Landowners v. Nova Scotia Forest Industries (1983), 1983 CanLII 3014 (NS CA), 58 N.S.R. (2d) 193 (CA), MacDonald, J.A., for the Court stated at pp. 197‑198: "In my opinion the discretion exercised by taxing master is not to be interfered with on appeal unless and until it is shown that he fell into error by the exercise of some wrong principle. Once such error is shown the judge hearing the appeal may exercise all the powers set out in Rule 63.40." The Tannous' must establish that the learned Taxing Master erred in principle. If there was an error in principle, this Court may exercise all the powers stated in Rule 63.40 to determine the costs. Issue 2. Did the learned Taxing Master err in principle respecting the solicitor's account? The Tannous' allege three errors by the Taxing Master. will deal directly with each in the manner they are advanced, however, to some extent they are extracted out of context of the overall determination. Just as in most determinations where number of factors have to be considered and weighed, it is the totality of considerations which resulted in the Taxing Master's determination. These factors are not of themselves capable of scientific precision nor do they independently of necessity destroy or vary the final determination if they are off. In addition, the contribution of weight given to any factor is an exercise for the Trial Judge, or in this case the Taxing Master. First error: That the solicitors should have recognized the statutory offer was an initial offer and not necessarily or likely the final position of the City. The Taxing Master stated: "In this regard there have been pronouncements by our Courts that expropriation authorities do not always commence their dealings by offering reasonable amounts in compensation because of incomplete facts, but in due course what is thought as reasonable compensation is made." Counsel indicate they have not been able to find any such pronouncements, however, essentially agree with the sentiments expressed by the Taxing Master. suspect that there have been many findings that the initial offer made in an expropriation bears no resemblance to the final determination of value. It was common knowledge for years to note that municipalities offered assessed values where an entire property was taken by expropriation. Theoretically, assessed value was market value, but in reality rarely was such the case. For years, in most cases, market value was higher than the assessed value. However, at present with current uncertainties of the market, we see examples of market value being considerably lower than assessed municipal values as determined by sales in the open market. The statutory requirement is not for "full" or final offer but an offer of an amount in "full compensation" for the interest excepting compensation for business loss. The amount which constitutes "full compensation", will vary in most cases as conditions develop, such as appraisals, checking out the market place, etc. The solicitors for the Tannous' are probably correct that the failure of the City to include an item of compensation for injurious affection did not render the City's offer one of "full compensation" for interest. do not see how that is relevant to the issue of solicitor's fees. If anything, it is somewhat supportive of the Taxing Master's conclusion that the final determination was quite likely to be different after the input of consequences of the work, etc. Common sense normally decrees that you do not spend great deal of time and expense on briefing damages until you have clear picture of what is involved. The solicitor that expends an extensive amount of time briefing damages before receiving final medical report in an accident case would likely have difficult time justifying such position. The extensive brief filed by the Tannous' deals with arguments that the Statute does not say the City is to make "an unreasonably low" offer, etc. and such is of no assistance in determining the issue before me. The brief does acknowledge that the retaining wall was not completed until sometime around March of 1994. There was agreement for hearing dates in November, 1994. Second error: The Taxing Master compared the "award" of $20,000 to the legal fees of $19,400. The Taxing Master had the benefit of professional opinion by leading member of the Bar, David Miller, Q.C. It is always appropriate for professional to consider the result or fruits of professional labour as it relates to the benefit achieved by the client. This is by no means determining factor but general common sense view that should always be taken by professional. In many cases the circumstances may well justify rendering an account that exceeds or proximates the recovery. The intransigence of one's own client who insists on proceeding with course that they have been advised will result in expenses in proximity or greater than their recovery is one clear example. The Taxing Master is not in error in stating that as a generalization, legal charges must bear some reasonable relationship to the value of the matter at issue. This is only one of the factors that the Taxing Master obviously took into consideration. There is no significance to be attached to the Taxing Master's terminology, "the award was approximately $20,000", as para. 51 of appellants' brief states: "There was no 'award'. The matter was settled." The fact of settlement is an appropriate feature that generally mitigates against the incurring of certain legal fees. Third error: Failure to analyze reasonableness of services actually performed. The appellants suggest that the Taxing Master did not actually examine the completed work. The Taxing Master had the invoices before him and reviewed the invoices. There was no requirement in law that every individual item be examined. The Taxing Master did not conclude that the work was not completed. The Taxing Master, in my view, is entitled to take an overall view and to conclude there were number of factors mandating the reduction in the solicitor's account. There is nothing in the decision to suggest that the Taxing Master disallowed any services that were actually incurred. He simply concluded that the services, although actually incurred, were not reasonable in all the circumstances. Dill v. Town of Windsor (1976), 16 N.S.R. (2d) 560. This is relied upon by the appellant, and agree but am bound by the decision as it is of our Court of Appeal. The determination is not solely on whether the services have actually been incurred but also "to the extent to which such costs are reasonable". have examined the accounts and the detailed explanations filed on this appeal. It appears that the account includes some 41.5 hours of research. It also discloses that there has been no charge for any paralegal services. There has been no premium added to the account, and in fact there has been "discount to the extent that number of hours are not billed in the account of $19,450". One of the reasons the hourly rate of $190 is appropriate is that counsel has many years of experience and has gained reputation as thorough barrister. In this case, briefing and research covers many interesting aspects such as interest, blasting claim, etc. Experienced counsel in the expropriation area would understand the position with regard to interest as well as understand the area concerning blasting claims since it is hardly unique for blasting to take place in the construction of the road. am satisfied all of the work was done, however, am left with the same conclusion as the Taxing Master that some of the research should be chalked up to the gaining of experience in this specific field of law. The Taxing Master might well have been justified in awarding an amount less than the $14,000 as it was open to him to put even greater weight upon the expert's report recommending an appropriate fee for the legal services at $10,000. Had found an error on the part of the Taxing Master, might well have attached greater weight to the expert's report than was done by the Taxing Master. Issue 3. Did the learned Taxing Master err in principle respecting the costs of the taxation? The solicitor and client account for the contested taxation is submitted in the amount of $7,212.24. The Expropriation Act R.S.C. 157, s. 35 dictates that costs are to be determined by s. 52 of the Act: "Costs if award eighty‑five per cent of offer 52 (1) Where the amount to which an owner is entitled upon an expropriation or claim for injurious affection is determined by the Board and the amount awarded by the Board is eighty‑five per cent, or more, of the amount offered by the statutory authority, the Board shall make an order directing the statutory authority to pay the reasonable legal, appraisal and other costs actually incurred by the owner for the purposes of determining the compensation payable, and may fix the costs in lump sum or may order that the determination of the amount of such costs be referred to taxing master of the Supreme Court who shall tax and allow the costs in accordance with this subsection and the tariffs and rules prescribed by the Costs and Fees Act. If award under eighty‑five per cent of offer (2) Where the amount to which an owner is entitled upon an expropriation or claim for injurious affection is determined by the Board and the amount awarded by the Board is less than eighty‑five per cent of the amount offered by the statutory authority, the Board may make such order, if any, for the payment of costs as it considers appropriate, and may fix the costs in lump sum or may order that the determination of the amount of such costs be referred to taxing master of the Supreme Court who shall tax and allow the costs in accordance with the order and the tariffs and rules prescribed by the Costs and Fees Act in like manner to the taxation of costs awarded on party and party basis. R.S., c. 156, s. 52." The Taxing Master is required ("shall") to tax and allow the costs in accordance with, in this case, s. 52(1) and the tariffs and rules prescribed by the Costs and Fees Act. S. 52(1) directs what is meant by costs in the words "pay the reasonable legal, appraisal and other costs actually incurred by the owner for the purposes of determining the compensation payable". It seems to me that the clear meaning of the words is in tune with the modem purposive approach to the interpretation of legislation. Dreidger on the Construction of Statutes, Third Edition, p. 38: "Modern purposive approach. Modern courts do not need an excuse to consider the purpose of legislation. Today purposive analysis is regular part of interpretation, to be relied on in every case, not just those in which there is ambiguity or absurdity. As Matthews J.A. recently wrote in v. Moore: From study of the relevant case law up to date, the words of an Act are always to be read in light of the object of that Act. Consideration must be given to both the spirit and the letter of the legislation.' and also at p. 39: Thomson v. Canada (Minister of Agriculture) 1992 CanLII 121 (SCC), [1992] S.C.R. 385, at 416, L'Heureux‑Dube' J. wrote: '[A] judge's fundamental consideration in statutory interpretation is the purpose of legislation.' At the conclusion of the settlement, the solicitor for the Tannous' rendered his final of series of accounts that totalled $19, 420 plus taxes. The accounts accumulatively covered the costs in legal services advanced as having been actually incurred by the Tannous' for the purposes of determining the compensation payable and concluding the matter by settlement. The Expropriation Act itself declares the purpose of the Act: PURPOSE OF ACT Purpose of Act (1) It is the intent and the purpose of this Act that every person whose land is expropriated shall be compensated for such expropriation. Further purpose (2) Further, it is the intent and purpose of this Act that where family home is expropriated the position of the owner in regards to compensation shall be such that he will be substantially in the same position after the expropriation as compared with his position before the expropriation. Interpretation or Act where family home (3) Recognizing that strict market value is not in all cases true compensation for family home that is expropriated since it may not provide equivalent accommodation to the owner of the family home, this Act shall be interpreted broadly in respect of the expropriation of family home so that effect is given to the intent and purpose set forth in subsection (2). Exception to subsections (2) and (3) (4) The protection given by subsections (2) and (3) shall not extend to any person whose land is money asset or investment and not family home. R.S., c. 156, s. 2." Clearly the end result of the expropriation is to place the Tannous' in substantially the same position after the expropriation as they were before the expropriation. Before the expropriation they had no liability for legal services, and after the expropriation, until recovery of their solicitor's account for services incurred to determine the compensation, they have not been placed substantially in the same position as before the expropriation. Liability for costs of the Tannous' does not normally extend to solicitor and client costs of their solicitor taxing the solicitor and client account before the Taxing Master. In the normal course of litigation or legal services wherein no third party public body is involved, the Tannous', like any other client, are entitled to contest their solicitor's account. Furthermore, there is prerequisite of the account being taxed before legal recovery can be sought by solicitor for his/her account. The purpose of the Expropriation Act is to compensate the homeowner, but such does not extend to what is normally not matter of any liability to the client, namely time and effort required by solicitor in taxing her/his solicitor/client account. The purpose in approach to costs is from the indemnity aspect. Indemnity only extends that for which the client has any liability. Clearly the Tannous' solicitor is not entitled to solicitor and client costs for attendance and taxation of his account. have not been asked to address the question of whether or not the Tannous' solicitor is entitled to any party and party costs of the taxation. have no information as to whether or not any offer of settlement was advanced by the City of Halifax, etc. etc. simply want to make it clear that in my determination the Tannous' had no liability for any costs associated with the solicitor and client taxation, and that in so finding have not foreclosed the possibility in future case of costs on party and party basis being considered. When the taxation took place, clearly the dispute at that stage is between the solicitor and the expropriating body, and there may well be some justification for considering an award on party and party basis in an appropriate situation. conclude that the Taxing Master did not err in principle in denying solicitor and client costs related to the taxation of the solicitor's account When the Taxing Master reduces solicitor and client account by substantial amount, ie. in excess of 25% (and in this case actually 27.9%) it is probably appropriate to deny costs of the taxation. The Law of Expropriation and Compensation in Canada, Todd, Second Edition, c. 16 Costs. Issue 4. Did the learned Taxing Master err in principle respecting the interest on unpaid legal accounts? have provided counsel with copy of my unreported decision in Charles Hardy Appraisals Limited it. Ancaster Holdings Limited, file 93‑194 rendered orally April 29, 1994. In that case Hardy sought payment of interest as designated on its invoices in the following terms: "Accounts 30 days or more overdue are subject to service charge of 2% per month or 24% per annum." There was no term in the contract mandating interest, and concluded: "In the absence of evidence clearly establishing an entitlement to interest on default of payment being acknowledged and accepted by Ancaster Holdings Limited, it is not recoverable." Traditionally barrister did not charge interest on his/her accounts, however, modem practice is for almost all commercial accounts to have some reference to interest on overdue balances stated on invoices. The mere statement of an interest term on an invoice by itself raises no legal obligation for payment of such interest, and the Taxing Master was correct in declining any award of invoice interest. RESULT The appeal is dismissed, and the taxation of costs by the Taxing Master confirmed.
The respondent expropriated a parcel of land owned by the appellant. Prior to a hearing, all claims for the case were settled for the sum of $20,000. The appellant's solicitor presented solicitor and client accounts of $19,420 plus taxes. The respondent directed taxation, and the appellant's solicitor submitted further accounts for services and disbursements of the taxation hearing amounting to $7,212.24. The taxing master received expert opinion that a reasonable fee for the services, exclusive of taxation costs, would be $10,000. He proceeded to tax the account at $14,000, disallowed any costs of the taxation hearing, and disallowed a claim for interest on interim accounts submitted by the solicitor. The appellants appealed. Dismissing the appeal and confirming the taxation, that the taxing master did not make any errors in law. He was entitled to consider as one of the relevant factors the relationship of the total account to the recovery.