TAX COURT OF CANADA PETER SOMMERER. and ORAL REASONS FOR JUDGMENT ON COSTS MOTION

Transcription

1 (IT)G TAX COURT OF CANADA BETWEEN: PETER SOMMERER Appellant and HER MAJESTY THE QUEEN Respondent ORAL REASONS FOR JUDGMENT ON COSTS MOTION The attached transcript is the Oral Reasons for Judgement in the Appellant s motion with respect to costs in the above-noted matter as recorded by the Court Reporter. This transcript has not been certified, confirmed or edited in any manner by the Tax Court of Canada or Associate Chief Justice Rossiter and could contain errors. Copyright in the transcript is held by

2 Court File No.: (IT)G TAX COURT OF CANADA BETWEEN: PETER SOMMERER Appellant - and- HER MAJESTY THE QUEEN Respondent CONFERENCE CALL TO HEAR ORAL REASONS BEFORE THE HONOURABLE JUSTICE CAMPBELL J. MILLER at Courts Administration Service, 200 Kent Street, 2 nd Floor, Ottawa, Ontario on Thursday, July 14, 2011 at 10:30 a.m. APPEARANCES: Mr. Daniel Sandler Mr. Luther Chambers, Q.C. for the Appellant for the Respondent Also Present: Ms. Sue Rochon Court Registrar Elgin St., Suite 1105 Ottawa, Ontario K2P 1L5 (613) Bay Street, Suite 900 Toronto, Ontario M5H 2T4 (416)

3 1 1 Ottawa, Ontario 2 Upon commencing on Thursday, July 14, at 10:30 a.m. 4 THE REGISTRAR: The sitting of the 5 Tax Court of Canada at Ottawa is now open. 6 Before the court is the appeal of 7 Peter Sommerer versus Her Majesty the Queen, file (IT)G. 9 For the appellant, Daniel Sandler; 10 and for the respondent, Luther Chambers. 11 The Honourable Justice Miller is 12 presiding. 13 Your Honour? 14 JUSTICE MILLER: Yes. Good morning, 15 Mr. Sandler. Good morning, Mr. Chambers. 16 MR. CHAMBERS: Good morning, Your 17 Honour. 18 MR. SANDLER: Your Honour. 19 JUSTICE MILLER: Yes. I am prepared 20 to give an order with respect to costs in this 21 matter. Later today, I will sign that order, but 22 right now I will give you my oral reasons as 23 follows. 24 Mr. Sommerer brings a motion for 25 an order pursuant to Rule 147 of the Tax Court of

4 2 1 Canada rules, general procedure, for directions 2 increasing costs awarded at trial to an amount in 3 excess of the tariff. 4 Specifically, he seeks 50 per cent 5 of solicitor-client costs to the date of a 6 settlement offer, September 21st, 2010, and 80 per 7 cent of solicitor-client costs after that date, 8 plus disbursements of $83,258 for a total amount 9 sought of $876, The respondent is prepared to pay 11 costs in accordance with tariff in the amount of 12 fees of $35,400, plus disbursements of $32,789 for 13 a total of $68, The parties are intimately 15 familiar with the facts of this case and the nature 16 and the length of these proceedings. It's 17 unnecessary for me to repeat the background, which 18 is clearly set out in my reasons for judgement of 19 April 14th, Before addressing criteria set out 21 in Rule 147(3), which will assist me in the 22 exercise of my discretion in determining the 23 quantum of costs, I wish to address whether there 24 is a threshold test that the parties seeking costs 25 beyond tariff must pass before the judge even

5 3 1 considers the factors set out in Rule 147(3). 2 The respondent argues, relying on 3 former Chief Justice Bowman's comments in 4 Continental Bank, that costs beyond tariff are only 5 justified in exceptional circumstances, though not 6 necessarily egregious circumstances that might 7 justify solicitor-client costs. The appellant 8 responds that there is no such threshold test, that 9 the judge is simply to exercise his or her 10 discretion considering the Rule 147(3) factors. 11 Certainly the wording of Rule suggests no threshold test but provides wide 13 discretion to the judge to consider the factors 14 identified in subsection (3) of Rule 147 in coming 15 to a reasoned, balanced decision. 16 I agree with the appellant. 17 Recent cases, such as General 18 Electric with Justice Hogan, the Campbell case 19 with, oddly enough, Justice Campbell, the Jolly 20 Farmer case, Justice Boyle suggest there is no 21 threshold, but that is open to the judge to take 22 into account the 147(3) factors. 23 Clearly, cases have suggested this 24 is an exercise that cannot be undertaken 25 capriciously.

6 4 1 Further, cases have supported the 2 proposition that full solicitor-client costs should 3 only be considered in circumstances that might be 4 found to be egregious. But for award of costs above 5 tariff and below solicitor-client costs, it's for 6 the parties to satisfy a judge a consideration of 7 the Rule 147(3) factors should or should not result 8 in costs beyond tariff. 9 This may well represent a 10 departure from former Chief Justice Bowman's 11 comment in Continental Bank that, quote: 12 In the normal course, tariff 13 is to be respected unless 14 exceptional circumstances dictate 15 a departure from it. Such 16 circumstances could be misconduct 17 by one of the parties, undue 18 delay, inappropriate prolongation 19 of the proceedings, unnecessary 20 procedural wrangling, to mention 21 only a few. 22 Closed quotes. 23 Interestingly, I find that these 24 examples given by the former Chief Justice are 25 examples of some of the very factors listed in Rule

7 (3), such as: first, conduct of a party to 2 unnecessarily lengthen the duration of the 3 proceeding -- sub (g) of 147(3); or whether any 4 stage was improper or vexatious -- sub (i) of 5 147(3); or refusal of a party to admit anything 6 that should have been admitted -- sub (h) of 7 147(3). 8 In effect, I find support, even in 9 Continental Bank, for the proposition that the 10 judge, in awarding costs beyond tariff, though not 11 solicitor-client costs, simply reviews the Rule (3) factors to determine an appropriate award of 13 costs beyond tariff. 14 This approach is not, as the 15 respondent might suggest, centred on any principle 16 of punishment. Nor do I agree that it necessarily 17 leads to any litigacion or assessment chill. 18 This approach, I would suggest, is 19 in line with the court's clear shift to recognizing 20 the importance of settlement offers in making an 21 award of costs. 22 This is certainly apparent from 23 recent case law, such as Donato, Ducharme, 24 Langille, and Walsh, as well as from recent 25 Practice Note 17, notwithstanding it has not been

8 6 1 made a rule as yet. 2 I'll have more to say on the 3 impact of the settlement offer in a few minutes. 4 In summary, I find Justice Boyle's 5 concluding comment in Jolly Farmer a propos. Quote: 6 I'm confident that our 7 court's judges can exercise their 8 discretion appropriately, and 9 their discretion will not be 10 fettered by my decision in this 11 case. Indeed, it may be that any 12 risk that the threat of costs 13 deters individual Canadians from 14 pursuing tax appeals where they 15 perceive injustice can be 16 addressed by judges taking a 17 separate approach to awards of 18 costs in excess of tariff in 19 appropriate circumstances where 20 the parties are all well 21 represented. 22 Closed quotes. 23 As pointed out by Mr. Sandler, 24 award of costs is more art than science. And judges 25 of this court are entrusted by the rules to

9 7 1 practice their craft diligently, fairly and 2 responsibly, guided by suggested considerations, 3 but unburdened by rigid formulaic guidelines. 4 I share Justice Boyle's confidence 5 that judges of this court are up to the task. 6 I'll now turn to a consideration 7 of those factors in Rule 147(3) addressed by the 8 parties. 9 First, result of the proceeding. 10 The appellant did obtain the full relief sought, 11 though was not successful in all his arguments, 12 significantly on the issue of whether there was or 13 was not a trust. The result certainly justifies an 14 award of costs, but in the circumstances, in and of 15 itself, is not such an overwhelming victory to 16 warrant significant departure from tariff. 17 Second, the amounts in issue. 18 There was approximately $7 million in taxes and 19 interest in issue. While the amount was certainly 20 significant to Mr. Sommerer, this was not a lead 21 case for other taxpayers with any corresponding 22 multiplication of the amounts in issue. This factor 23 is worthy of some consideration, but again, by 24 itself does not warrant the extent of costs over 25 tariff sought by the appellant.

10 Third, importance of the issues. The appellant suggests this is the first case in which the court has been called upon: A) to interpret the scope of 5 6 Subsection 75(2) Tax Act; of the Income 7 B) to determine whether a 8 relationship between a foreign 9 entity and a Canadian taxpayer 10 is such as to constitute a trust with a trustee of a act; foreign entity, a trust under the C) to clarify the status of the foreign entity; D) to determine whether a tax convention entered into in December of 1976 between Canada and another country based on the GECD model treaty, which provides exclusive taxing jurisdiction to the other 23 country in respect of a gain made upon the disposition of property by a person who is a

11 9 1 resident of the other country 2 is effective to deny Canada the 3 right to tax that gain in the 4 hands of another person 5 pursuant of a tax avoidance 6 provision in this case, 7 Subsection 75(2) of the Act. 8 The Federal Court of Appeal will 9 have an opportunity to rule on these issues as 10 these matters have been appealed. And I agree with 11 the appellant that decisions on these issues will 12 assist the resolution of similar disputes in the 13 future. 14 I also accept that resolution of 15 the application of Section 75(2), the application 16 of the treaty and a clarification of a foundation 17 must all be of interest to taxpayers, but certainly 18 they are of considerable interest and benefit to 19 Canada Revenue Agency. 20 This litigation did not cover any 21 well-worn paths of prior cases but dealt with those 22 identified previously unaddressed issues. 23 The world continues to grow 24 smaller, and international commercial or personal 25 arrangements are becoming more and more prevalent.

12 10 1 The types of issues brought to the court by Mr. 2 Sommerer reflect this international and economic 3 reality. It is important for government and 4 taxpayers to have some certainty on these issues. 5 This is an important factor. 6 Fourth factor: offer of settlement 7 that was made in writing. While, as I've indicated, 8 there are new rules pending in this court 9 addressing the issue of the impact of settlement 10 offers on costs, I share Justice Boyle's views 11 expressed in case of Langille versus the Queen, 12 paragraphs 10 through 12. Quote: 13 As I noted in Jolly Farmer 14 Products, the rules of this court 15 on costs do not specify, as those 16 of several jurisdictions do, that 17 if an unsuccessful party has not 18 accepted a settlement offer at 19 least as favourable as the outcome 20 of the trial, that party is 21 responsible for substantial 22 indemnity or solicitor-client 23 costs from the date of the offer 24 through to the end of the trial. 25 In Jolly Farmer I awarded an

13 amount in excess of the tariff amount on account of such a settlement offer. 4 I restate my comments therein that parties should take seriously their obligations to consider settlement offers carefully or run the risk of increased costs if they are not more successful at trial. Rule 147 specifically refers 12 to settlement offers as a matter to be considered in deciding cost awards. Logically, in most cases, this could only have been intended to justify an increase in the amount of costs awarded beyond the tariff. 19 I do not believe that the absence of an express rule permitting substantial indemnity cost awards where an at least as favourable settlement offer is rejected leaves this court unable, 25 as a matter of law or

14 12 1 jurisdiction, to choose to 2 exercise its discretion with 3 respect to costs by making such an 4 award inappropriate in the 5 circumstances. 6 Closed quotes. 7 On September 21st, 2010 the 8 appellant made a written offer to the respondent as 9 follows. Quote: 10 Having regard for the very 11 considerable cost of taking this 12 tax appeal to trial, Mr. Sommerer 13 will accept an inclusion into 14 income of one-sixth of the gain of 15 the foundation from the 16 disposition of the Vienna Systems 17 Corporation shares, reflecting six 18 discretionary contingent 19 beneficiaries existing throughout as full and final settlement 21 of his appeal. This offer is for 22 purposes only of settling the 23 present litigation and would 24 preclude any further tax 25 consequence under the Income Tax

15 13 1 Act in respect of the gains 2 realized by the foundation. 3 As you can appreciate, expert 4 testimony must soon be prepared in 5 time for the trial commencing 6 December 6th, This offer will remain open 8 until October 8th, 2010 at which 9 time you must begin incurring the 10 expense of engaging experts and 11 preparing expert reports. 12 Closed quotes. 13 End of offer. 14 The respondent rejected the offer, 15 and countered on the basis that 50 per cent of the 16 taxable capital gain realized by the Sommerer 17 Private Foundation was attributable to Mr. 18 Sommerer. 19 The appellant rejected the counter 20 offer and made a second written offer on October 21 27th, 2010, accepting the respondent's alternative 22 argument as set out in the reply that one-fifth of 23 the tax book capital gain made by the Sommerer 24 Private Foundation was FAPI, F-A-P-I, to Mr. 25 Sommerer. The respondent rejected this offer on

16 14 1 November 15th, The respondent acknowledges there 3 may be tax cases in which a failure to enter into a 4 settlement agreement is relevant and cites the 5 example of where the rejected offer is based on 6 reasonable alternative grounds in accordance with 7 the Income Tax Act. 8 The respondent, however, 9 distinguishes settlements which would result in 10 arbitrary reassessments, contending that such 11 arbitrary settlement offers should not play any 12 part in determining whether one should depart from 13 the tariff in awarding costs. 14 With respect, I fail to see the 15 distinction. 16 Indeed, in this very matter, the 17 Crown did counter with an offer that would have led 18 to what she calls an arbitrary assessment. 19 In my view, the more critical 20 issue for the judge to consider in exercising his 21 or her discretion is the bona fides of the offer. 22 In this case, I have not heard any submissions that 23 the offers were anything other than serious, 24 thoughtful attempts to resolve a very complicated 25 matter.

17 15 1 I appreciate the respondent 2 strives to always reach a principled result. As 3 guardian of the public purse, this is appropriate. 4 But when a case such as this, with its many twists 5 and turns, leaves the respondent herself to engage 6 in haggling over money, I am unswayed by her 7 current argument that I should now ignore similar 8 offers from the appellant. 9 However, even if I accept the 10 respondent's argument that only principled offers 11 can and should be considered by a judge in relying 12 on settlement offers in determining an award of 13 costs, I find that is the kind of offer the 14 appellant made. 15 Mr. Sommerer relied upon the 16 respondent's own alternative argument in offering 17 to accept a portion of the taxable capital gains 18 that Mr. Sommerer -- sorry -- accept a portion of 19 the taxable capital gains. 20 Mr. Sommerer got the portion wrong 21 in the first offer and made a second offer agreeing 22 to a one-fifth allocation, believing that to be the 23 appropriate allocation. And certainly, it was the 24 allocation the respondent herself sought in her own 25 reply. A.S~A.P. Reporting Services Inc.

18 16 1 What did the respondent do? It 2 simply rejected the offer without reason. 3 Mr. Chambers now argues that the 4 appropriate allocation should have been one- 5 quarter, and therefore the one-fifth offer was not 6 principled. 7 With respect, this is somewhat 8 specious. The respondent did not, at the time of 9 the offer, say to the appellant: Oops, one-fifth is 10 wrong. It should be one-quarter. The respondent 11 just said no. 12 The respondent, relying on the 13 case of Galway, says the court could not have 14 approved a consent judgement at one-fifth. 15 Frankly, that does not sway me. 16 The respondent could have, and I 17 would suggest should have, pointed out the error in 18 the one-fifth allocation either by letter or, more 19 properly, amending their pleadings. 20 The respondent did neither. 21 I do not accept the respondent now 22 suggesting I should ignore the settlement offer as 23 it was not principled. I find it was a principled 24 offer. But even if it wasn't, it was certainly open 25 to the Crown to accept other than by the route of a

19 17 1 consent judgement. 2 Obviously, the appellant fared 3 better with my decision than he would have if the 4 respondent had accepted either offer. Hindsight is 5 always The respondent made a calculated risk 6 assessment, concluding, according to the CRA 7 officer, Mr. Dion, that the respondent's own 8 alternative position was simply not good enough. It 9 required considerable time and expense to find out 10 otherwise. 11 I am influenced by these offers 12 and the respondent's rejection of them and conclude 13 that this factor justifies costs in excess of 14 tariff, certainly with respect to the period 15 subsequent to the offers. 16 I note that in the cases cited 17 earlier of Donato, Longille, Ducharme and Walsh, 18 costs in excess of tariff were awarded entirely, 19 according to Mr. Sandler, on the basis of a 20 settlement offer having been made and rejected. 21 Fifth factor: volume of work. In 22 written submissions, the appellant advises that the 23 time spent by the firm of Couzin-Taylor in this 24 appeal was approximately 3,865 hours, 2,588 of 25 which were spent in preparation for the hearing of

20 18 1 the appeal and were directly related to the 2 complexity and number of issues and extensive 3 research required to prepare for and argue the 4 issues in court. 5 Indeed, it was indicated that 6 about 500 hours were spent researching, formulating 7 and writing the written submissions to assist with 8 oral arguments. Almost 200 hours were spent 9 researching the legislative background of 10 subsection 22(2) of the Act, the predecessor to 11 Subsection 75 (2). 12 The expression "no stone unturned" 13 leaps to mind. 14 The respondent appears to only 15 have questioned the reasonableness of the hours 16 spent by appellant's counsel's team in connection 17 with discovery, however. 18 The number of documents disclosed 19 pursuant to the respondent's full disclosure 20 request resulted in a list of over 900 documents. 21 The respondent listed 200 documents. A large number 22 of these required translation from German. This 23 naturally increased the already burdensome volume 24 of work. 25 I need little convincing that the

21 19 1 work by both sides was extensive. 2 As is already clear, I do believe 3 some amount in excess of tariff is warranted. The 4 impact of the volume of work goes to quantum. It is 5 always difficult to assess one firm's efforts 6 compared to another's or compared to any normative 7 standard, if there is such a thing. 8 If actual hours spent are the 9 starting point to which a percentage might be 10 applied, are those actual hours to be questioned? 11 By that, I do not mean whether or 12 not they were incurred. Certainly, they were 13 incurred. And further, I have no doubt they were 14 incurred on the principle of thoroughness. But how 15 much should a losing party cover the winning 16 party's diligence? 17 As mentioned, Mr. Chambers 18 challenges the time spent in connection with 19 examinations for discovery. 20 The example I use in this regard, 21 however, to illustrate the dilemma facing the judge 22 is whether the appellant was correct in the hours 23 spent in reaching a conclusion there was no helpful 24 legislative background of Subsection 22(2) of the 25 Act.

22 20 1 Was an additional 180 hours truly 2 necessary to nail that? Who knows? At some point 3 counsel, for any number of reasons, but cost being 4 one of them, decides that enough is enough. Some 5 counsel will reach that decision sooner than 6 others. I don't raise this as a criticism but as a 7 conundrum in determining who should bear the cost 8 of one counsel's decision to pullout all the 9 stops. 10 It's impossible and unwise, I 11 would suggest, to apply any robotic mathematical 12 formula; but I simply bear in mind that there comes 13 a point when counsel cannot expect the other side 14 to cover all the legal costs in extensive research 15 and preparation. 16 All to say I recognize the 17 considerable volume of work and will exercise my 18 discretion in assessing the impact of that in 19 coming to a fair and just award. 20 The sixth factor: the complexity 21 of the issues. The appellant stressed this factor 22 in arguing for a substantial cost award. 23 Again, it takes little convincing 24 me that these matters were complex. I agree this 25 was a lengthy appeal involving complex factual and

23 legal questions, which the appellant summarized as follows: 1) the legal effectiveness of a transaction entered into in 1996; 2) the characterization of the relationship between the SPF and Canadian taxpayers in order to determine whether such 10 entity or such a relationship 11 constituted a trust for the purpose of Section 75(2) Act; of the ) the applicability of Section 75(2) of the Act to a person who transferred property for 17 value to a trust; ) the applicability of the Canada-Austria Tax Convention having regard to the basis of the liability of the SPF to taxation in Austria; 5) if applicable, the effect of the convention upon Canada's right to tax in the hands of a

24 Canadian taxpayer the taxable portion of the gain realized by an Austrian resident upon the disposition of shares; 6) whether the SPF was the agent of the appellant for purposes of holding and disposing of property; 7) whether a portion of the capital gains realized by the SPF was foreign accrual property income of the appellant; 8) whether Section 74.4(2) applied to deem the appellant to have received interest in accordance with that subsection; and 9) how the French text of Section 75(2) (a) (i) could be reconciled with the English text of that paragraph. The international context of this appeal also required the testimony of two experts 25 from Austria. I note that the respondent expanded

25 23 1 the issues from a concentration on the issue of 2 trust versus corporation and the application of 3 Subsection 75(2) of the Act to add the issues of 4 agency, the timing of the sale of shares, FAPI, and 5 the application of the Canada-Austria Income Tax 6 Convention. 7 Anyone of these issues would 8 require a significant thought, preparation and 9 presentation. Cumulatively, it was an epic task. 10 The correct interpretation of Subsection 75(2) of 11 the Act alone presented the parties with a Rubix 12 cube-like puzzle. 13 So it's an easy conclusion to 14 reach that the legal issues and factual context 15 were complex. It's also easy for me to say that I 16 consider this an important factor in the 17 determination of costs. 18 The hard part is translating that 19 into a dollar amount. 20 The appellant has made no 21 representations with respect to the other factors 22 itemized in Rule 147(3), though I have made note, 23 as indicated, that the respondent added issues 24 throughout the litigation, which she is certainly 25 entitled to do. But at least two of such issues

26 24 1 were dropped at the trial, having left the 2 appellant to prepare for such arguments 3 unnecessarily. 4 I also am influenced 5 No, sorry. Bear with me a moment. 6 In summary, I conclude that due to 7 the importance and complexity of the issues, but 8 mainly due to the settlement offers made by the 9 appellant and rejected by the respondent, that 10 costs in accordance with tariff are not a just 11 reflection of the appellant's entitlement. 12 There is also something of a 13 cumulative effect of such a number of the Rule (3) factors coming into play. 15 I conclude there should be some 16 significant indemnity for post-settlement costs, 17 yet not so much for pre-settlement costs. Taking 18 into account then the volume of the work, while 19 acknowledging the difficulty in assessing the need 20 for the extent of the work undertaken by 21 appellant's counsel, I direct that costs prior to 22 the settlement offer should be $150,000 and costs 23 post-settlement offer should be $450,000 for a 24 total lump sum of $600,000, plus disbursements, 25 which I will now address.

27 25 1 The appellant lists his 2 disbursements in accordance with tariff as follows: 3 filing fee, $550i Apex translation costs: $10,030i 4 court reporting services at examination for 5 discovery, $4,590i certified copy of trial 6 transcript, $4,108i consulting fees for Albert 7 Oosterhoff, $2,800i fees for Dr. Torggler, the 8 expert witness, $52,898i photocopy charges, $8,279, 9 for a total of $83, The respondent challenges the 11 following: the cost of transcript, $4,108i Mr. 12 Oosterhoff's fees of $2,800i and the expert Dr. 13 Torggler's fees of $52, With respect to the cost of the 15 transcript and Oosterhoff fees, I accept the 16 respondent's argument that these are not 17 appropriate for the Crown to bear. Parties can 18 normally make arrangements for sharing transcript 19 costs. 20 With respect to Mr. Oosterhoff, 21 who was not called as an expert but appears to have 22 been tapped into for his expertise on the law of 23 trusts as a leading author in that regard, he was 24 not presented to the court as co-counselor as an 25 expert. This is not an appropriate disbursement to

28 26 1 be borne by the respondent, especially in light of 2 the very well regarded senior counsel, acting for 3 the appellant, whose time is being compensated. 4 With respect to Dr. Torggler, the 5 cost of retaining him, described of the Cadillac of 6 experts in Austrian foundations, is trickier. 7 First, I find it was essential to 8 have experts assist me in understanding the 9 Austrian legislation with respect of foundations 10 and how the Austrian courts have interpreted such 11 legislation. 12 The testimony of both Dr. Torggler 13 and Dr. Plesser helped immensely in grappling with 14 the determination of the nature of an Austrian 15 foundation. This, in turn, allowed me to apply 16 Canadian law to figure out whether a trust 17 relationship existed. 18 I concluded a trust did exist 19 under Canadian law, a conclusion contrary to what 20 the appellant thought. 21 Because the appellant was 22 otherwise successful in the end result, should my 23 conclusion on the trust issue be disregarded for 24 purposes of determining who should bear how much of 25 the cost of Dr. Torggler?

29 27 1 Experts are in court to help the 2 judges, not to serve as advocates for one side or 3 the other. 4 I concur with Justice Hogan's 5 comments in the General Electric case at, quote: 6 Costs and disbursements 7 should not be distributed with 8 amounts being determined on the 9 basis of results achieved with 10 respect to specific arguments. 11 Closed quotes. 12 Costs of experts can be recovered 13 as disbursements and are not limited to the $ found in tariff A, provided they are reasonable. 15 I was provided little guidance on 16 the reasonableness of Dr. Torggler's charges 17 compared to other experts on Austrian foundations 18 or legal experts generally. 19 What I do know, however, is that 20 Dr. Torggler charged 400 an hour, except for the 21 trial time where he charged 7,200 a day. If I 22 calculate that latter rate on eight-hour days, Dr. 23 Torggler's charge was 900 a day, well over twice 24 his rate for the per hour, sorry, not per 25 day -- well over twice his rate for the preparation A.S.A.P. Reporting Se~"ices Illc.

30 28 1 of his expert report. 2 I'm not prepared to require the 3 losing side, in these circumstances, to bear such 4 excess, and I limit the three-day trial to Dr. 5 Torggler's, what I will call, regular rates. That 6 reduces the 21,600 charge for the three days to 7 9, A further 1,379 was charged by 9 Dr. Torggler for post-trial work, which Mr. Sandler 10 described as Dr. Torggler clarifying his testimony. 11 I find that out-of-court 12 clarifying comments by a witness post-trial are not 13 appropriate costs to be borne by the losing side. 14 That goes well beyond what constitutes the cost of 15 an expert's report and appearance that could be 16 charged to the other side. The 1,379 charge is not 17 recoverable. 18 I conclude that all other charges 19 by Dr. Torggler went to the preparation of the 20 expert report and any rebuttal, notwithstanding 21 that his schedule of time worked is not as explicit 22 as the respondent felt it should be. 23 In summary, I reduced Dr. 24 Torggler's charge from 41,001 to 27,622, which 25 converted at the rate of is $35, A.S.A.P. Reporti1lg Services I1lc.

31 29 1 The allowable disbursements 2 therefore are: translation, $10,030.94; court 3 reporting for examinations, $4,590.40; Dr. 4 Torggler, $35,522.39; and photocopy, $8, for 5 a total of disbursements of $58, In conclusion, the appellant is 7 awarded costs of $658,423.33, which includes the 8 disbursements of the $58, That's all. Thank you. I will sign 10 an order later today and get it to you as soon as 11 possible. 12 Thank you all very much. 13 MR. SANDLER: Thank you, Your 14 Honour. 15 THE REGISTRAR: The court is now 16 closed. You may hang up. 17 Whereupon the conference call ended on Thursday, 18 July 14, 2011 at 11:06 a.m.

32 I HEREBY CERTIFY THAT I have, to the best of my skill and ability, accurately transcribed the foregoing interview. Antoinette Forcione, Legal Transcriptionist