Date: 20050909
Docket: T-2277-03
Citation: 2005 FC 1217
BETWEEN:
CANADIAN ASSOCIATION OF BROADCASTERS (The Plaintiff Association), GROUPE TVA INC., CTV TELEVISION INC., THE SPORTS NETWORK INC., 2953285 CANADA INC. (o.b.a. Discovery Channel Canada), LE RÉSEAU DES SPORTS (RDS) INC., THE COMEDY NETWORK INC., 1163031 ONTARIO INC. (o.b.a. Outdoor Life Network), GLOBAL COMMUNICATIONS LIMITED, GLOBAL TELEVISION NETWORK QUEBEC LIMITED PARTNERSHIP, PRIME TV, GENERAL PARTNERSHIP, CHUM LIMITED, CHUM OTTAWA INC., CHUM TELEVISION VANCOUVER INC. and PULSE24 GENERAL PARTNERSHIP (The Corporate Plaintiffs)
Plaintiffs
- and -
HER MAJESTY THE QUEEN
Defendant
Docket: T-276-04
BETWEEN:
VIDÉOTRON LTÉE, VIDÉOTRON (RÉGIONAL) LTÉE, and CF CABLE TV INC.
Plaintiffs
- and -
HER MAJESTY THE QUEEN
Defendant
REASONS FOR ORDER AND ORDER
HUGESSEN J.
[1] This is a motion for a determination of two questions of law. The questions, as set out in the Order of the Court dated May 6, 2005, are as follows:
(a) Is Part II of the Broadcasting Licence Fee Regulations, 1997, SOR/97-144 ultra vires s. 11 of the Broadcasting Act, S.C. 1991, c. 11, as amended, if the fees imposed thereunder are considered to be a tax?
(b) Does s. 11 of the Broadcasting Act, S.C. 1991, c. 11 as amended, constitute an ineffective delegation of Parliament's taxation authority if the fees imposed thereunder are considered to be a tax?
[2] Section 11 of the Broadcasting Act is as follows:
11. (1) The Commission may make regulations
(a) with the approval of the Treasury Board, establishing schedules of fees to be paid by licensees of any class;
(b) providing for the establishment of classes of licensees for the purposes of paragraph (a);
(c) providing for the payment of any fees payable by a licensee, including the time and manner of payment;
(d) respecting the interest payable by a licensee in respect of any overdue fee; and
(e) respecting such other matters as it deems necessary for the purposes of this section.
(2) Regulations made under paragraph (1)(a) may provide for fees to be calculated by reference to any criteria that the Commission deems appropriate, including by reference to
(a) the revenues of the licensees;
(b) the performance of the licensees in relation to objectives established by the Commission, including objectives for the broadcasting of Canadian programs; and
(c) the market served by the licensees.
[3] Section 11 of the Regulations, which defines a Part II fee, reads as follows:
11. A Part II licence fee shall consist of an annual licence fee, based on the fee revenue of a licensee for the return year that terminated in the current calendar year or during that portion of that return year in which the licensee held the licence to operate the undertaking, the amount of which shall be calculated as follows:
(a) for a distribution or a television undertaking, 1.365 per cent of the amount by which the fee revenue exceeds the applicable exemption level; and
(b) for a radio undertaking,
(i) subject to subparagraph (ii), 1.365 per cent of the amount by which the fee revenue exceeds the applicable exemption level, and
(ii) in the case of a joint radio undertaking, 1.365 per cent of the amount by which the combined fee revenue exceeds the applicable exemption level.
[4] The plaintiffs by their present action contest the validity of these charges. Their contention, put at its simplest, is that they are not "fees" at all because they bear no necessary relationship to the cost or value of what the licensee obtains from the privilege of having a licence. Rather, they are in reality a "tax" whose only or principal purpose is the raising of revenue. The Crown defends primarily on the ground that the charges are indeed fees not taxes, but also on the basis that, even assuming them to be taxes, they are authorized by the statute and that the latter does not constitute an improper delegation of Parliament's taxing power. Thus, although the two questions stated in the Court's Order above are conditional in their form, ("if the fees imposed thereunder are considered to be a tax") they are by no means hypothetical and deal with a very real issue as defined in the pleadings. They assume the charges to be a tax and, if answered in the negative would leave little or nothing of the plaintiffs' claim. Conversely, an affirmative answer would negate a significant part of the Crown's defence in law.
[5] The difference between a tax and a fee is not merely semantic or theoretical in the law of Canada. It was discussed, in the context of a decision relating to the validity of provincially imposed probate fees, in Eurig Estate (Re), [1998] 2 S.C.R. 565, at paras 15, 21-22 :
15. Whether a levy is a tax or a fee was considered in Lawson, supra. Duff J. for the majority concluded that the levy in question was a tax because it was: (1) enforceable by law; (2) imposed under the authority of the legislature; (3) levied by a public body; and (4) intended for a public purpose.
...
21. Another factor that generally distinguishes a fee from a tax is that a nexus must exist between the quantum charged and the cost of the service provided in order for a levy to be considered constitutionally valid: see G. V. La Forest, The Allocation of Taxing Power Under the Canadian Constitution (2nd ed. 1981), at p. 72. This nexus was also considered relevant to determining the nature of a municipal charge in Allard Contractors, supra. In that case the Court engaged the question of whether an indirect tax levied by a province was validly enacted as incidental to a matter of provincial jurisdiction. Addressing the relationship between a charge and the cost of the underlying service, Iacobucci J. wrote (at p. 411):
A surplus itself is not a problem so long as the municipalities made reasonable attempts to match the fee revenues with the administrative costs of the regulatory scheme. . . .
22. In determining whether that nexus exists, courts will not insist that fees correspond precisely to the cost of the relevant service. As long as a reasonable connection is shown between the cost of the service provided and the amount charged, that will suffice. The evidence in this appeal fails to disclose any correlation between the amount charged for grants of letters probate and the cost of providing that service. The Agreed Statement of Facts clearly shows that the procedures involved in granting letters probate do not vary with the value of the estate. Although the cost of granting letters probate bears no relation to the value of an estate, the probate levy varies directly with the value of the estate. The result is the absence of a nexus between the levy and the cost of the service, which indicates that the levy is a tax and not a fee.
[6] I accept, of course, that the governing principal for statutory interpretation is the "words in total context" approach (Ruth Sullivan, Sullivan and Driedger on the Construction of Statutes, 4th ed. (Toronto: Butterworths, 2002)):
Today there is only one principal or approach, namely, the words of an Act are to be read in their entire context, in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament.
[7] The ordinary and grammatical reading of the statutory and regulatory sections in question here discloses a power to charge and an actual levy of "fees". It is by no means obvious that this, even when read in its total context, is in reality a power to impose and the levying of a tax on licensees. Nor does the specific grant of authority to relate such fees to the licensee's revenue connote any intention that they are to be charged for the purpose of raising general government revenues as opposed to defraying the cost of services or of the regulatory scheme as a whole. Indeed, in the light of the provisions of s. 11(2)(b) of the statute supra it would be unusual, although admittedly not impossible, to find a taxation scheme where the rate would be calculated by reference to the taxpayer's performance in meeting the objectives established by a regulatory scheme.
[8] The jurisprudence has made it clear (see Eurig Estate, supra) that the concepts of "fee" and "tax" are logically and juridically distinct: a fee cannot be a tax, and a tax cannot be a fee. In the case of Westbank First Nation v. British Columbia Hydro and Power Authority, [1999] 3 S.C.R. 134, the Court defined both terms. A tax as a levy to raise revenue for general purposes, while a fee is a levy to charge for services directly rendered. The Court also suggested that there was a third category of levy, a regulatory charge, which it defined as a levy to finance or constitute a regulatory scheme, or to be ancillary or adhesive to a regulatory scheme.
[9] In the instant matter, I am of the opinion that both questions must be answered in the affirmative. If the "fees" are assumed to be taxes, as they must be for the purposes of the questions, they cannot be fees or regulatory charges. I do not have to decide whether they fit into one or the other of those categories and, if so, which one. Nor is it necessary for me to find whether fees and regulatory charges are themselves mutually exclusive of one another (although I am inclined to think that they are not.) It is enough to hold, as I do, that the concept of taxes is exclusive of both of them.
[10] For the first question, if the fees under Part II of the Regulations are considered to be a tax, then Part II "fees", as taxes, are ultra vires s. 11 of the Broadcasting Act. The Act expressly provides for the charging of fees, and not of taxes and thus, insofar as Part II "fees" are taxes, the "fees" are ultra vires s. 11 of the Act.
[11] In the light of this conclusion it is not strictly necessary to answer the second question for, if the delegated power does not include the power to tax, the requirements for a valid delegation of a taxing power are not relevant. However, as the point was fully argued I think it proper briefly to state my view.
[12] The case law (notably Eurig Estate, supra andOntario English Catholic Teachers' Association v. Ontario (A.G.), [2001] 1 S.C.R. 470) makes it clear that any delegation by the elected legislature of its taxing powers must be clear, specific and explicit. Even if, by a strained interpretation it was found that the regulation was intra vires the statute, it seems to me beyond doubt that the grant to the Commission is far from meeting those criteria.
[13] Accordingly, both questions will be answered in the affirmative and those answers will be final and conclusive for the purposes of the action (Rule 220(3)).
[14] The plaintiffs are each entitled to their costs on both stages of the motion. I have already granted costs to the Crown on the plaintiffs' unsuccessful appeals of the Order stating the questions.
ORDER
The questions stated in the Order of May 6, 2005, herein are both answered in the affirmative.
The plaintiffs shall each have their costs to be assessed.
"James K. Hugessen"
Ottawa, Ontario
September 9, 2005
FEDERAL COURT
NAME OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: T-2277-03
STYLE OF CAUSE: CANADIAN ASSOCIATION OF BROADCASTERS et al v. HER MAJESTY THE QUEEN
- AND -
T-276-04
VIDÉOTRON LTÉE et al v. HER MAJESTY THE QUEEN
PLACE OF HEARING: OTTAWA, ONTARIO
DATE OF HEARING: SEPTEMBER 1, 2005
REASONS FOR ORDER
AND ORDER: HUGESSEN J.
DATED: SEPTEMBER 9, 2005
APPEARANCES:
BARBARA A. McISAAC, Q.C.
HOWARD FOHR FOR PLAINTIFFS
(Canadian Association of Broadcasters et al, in T-2277-03)
DANIEL URBAS
CARL J. SOUQUET FOR PLAINTIFFS
(Vidéotron Ltée et al, in
T-276-04)
F.B. (RICK) WOYIWADA
R. JEFF ANDERSON FOR DEFENDANT
(in T-2277-03)
FRANCISCO COUTO FOR DEFENDANT
(in T-276-04)
SOLICITORS OF RECORD:
McCARTHY TÉTRAULT
OTTAWA, ONTARIO FOR PLAINTIFFS
(Canadian Association of Broadcasters et al, in T-2277-03)
BORDEN LADNER GERVAIS srl/LLP
MONTREAL, QUEBEC FOR PLAINTIFFS
(Vidéotron Ltée et al, in
T-276-04)
JOHN H. SIMS, Q.C.
DEPUTY ATTORNEY GENERAL OF CANADA
OTTAWA, ONTARIO FOR DEFENDANT
(in T-2277-03)
JOHN H. SIMS, Q.C.
DEPUTY ATTORNEY GENERAL OF CANADA
MONTREAL, QUEBEC FOR DEFENDANT
(in T-276-04)
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