[1] This is an appeal from a March 26, 2004 letter decision and from Telecom Circular CRTC 2004-3 dated April 7, 2004, of the Canadian Radio-television and Telecommunications Commission (Commission), leave having been granted under section 64 of the Telecommunications Act, S.C. 1993, c. 38.

[2] The appeal is about the assessment of user fees by the Commission. User fees are imposed under the Telecommunications Fees Regulations, 1995, SOR/95-157 (Fees Regulations) on "a Canadian carrier for which tariffs are filed with the Commission". Generally, they are intended to recover the costs of the Commission's operations from Canadian carriers that file tariffs rather than from tax dollars.

FACTS

[3] Telus Communications Inc. (TCI) is a Canadian carrier that files tariffs with the Commission. TELE-MOBILE Company (TMC) is also a Canadian carrier. It is a general partnership formed under the laws of Ontario. TCI has a 99.99 percent partnership interest in TMC. The other partner is 3817877 Canada Inc. TMC is a wireless service provider and does not file tariffs with the Commission. It is not disputed that both are subject to the legislative authority of Parliament.

[4] By its March 26, 2004 letter decision, the Commission assessed TCI user fees, which were calculated by taking into account TCI's operating revenues and 99.99 percent of the operating revenues of TMC. For the year 2003-2004, the additional user fees charged to TCI as a result of the inclusion of 99.99 percent of TMC's operating revenues were approximately $1.7 million.

ISSUE

[5] TCI submits that the Commission erred in its interpretation of the Fees Regulations. TCI says that TMC is a separate Canadian carrier from TCI and that as it does not file tariffs with the Commission, the regulation authorizing the imposition of user fees does not apply to TMC operating revenues. The Commission says that TMC is a partnership and not a distinct legal entity and that its operating revenues flow through to its owning partners. As such, 99.99 percent of TMC's operating revenues are TCI's operating revenues and are subject to the Fees Regulations.

[6] Subsections 3(1) and 4(1) of the Fees Regulations provide:

3. (1) A Canadian carrier for which tariffs are filed with the Commission shall, in respect of a year, pay to the Commission, on receipt of an invoice sent by the Commission, an annual telecommunications fee calculated in the manner set out in section 4 ...

3. (1) Toute entreprise canadienne qui a déposé une tarification auprès du Conseil paie à celui-ci à l'égard d'une année, à la réception de la facture envoyée par lui, des droits de télécommunication annuels calculés de la manière prévue à l'article 4 ...

4. (1) The annual telecommunications fee payable by a Canadian carrier, referred to in subsection 3(1), shall be calculated by the Commission by multiplying the total amount to be recovered by the Commission in respect of its current fiscal year through telecommunications fees by the ratio of the Canadian carrier's operating revenues, derived from the provision of telecommunications services and reported in that Canadian carrier's most recent annual financial statements, to the aggregate of such operating revenues of all the Canadian carriers referred to in subsection 3(1).

4. (1) Le Conseil calcule les droits de télécommunication annuels payables par une entreprise canadienne visée au paragraphe 3(1) en multipliant le montant total qu'il doit recouvrer pour l'exercice en cours au titre des droits de télécommunication par le rapport entre les recettes d'exploitation de l'entreprise canadienne provenant de la fourniture de services de télécommunication, indiquées dans ses derniers états financiers annuels, et l'ensemble de telles recettes de toutes les entreprises canadiennes visées au paragraphe 3(1).

[7] There is no dispute that TCI is a Canadian carrier that files tariffs with the Commission. The issue is whether the words in subsection 4(1) "the Canadian carrier's operating revenues, derived from the provision of telecommunications services and reported in that Canadian carrier's most recent annual financial statements" envision TCI's notional share of TMC's operating revenues being included in TCI's operating revenues for purposes of calculating the user fees payable to the Commission.

DECISION OF THE COMMISSION

[8] The Commission approached the issue by applying partnership law. The Commission determined that, at law, a partnership is the relation that subsists between persons carrying on a business in common with a view to profit (see section 2 of the Ontario Partnerships Act, R.S.O. 1990, c. P.5). There is no dispute that TCI and 3817877 Canada Inc. were persons carrying on a business in common with a view to profit. The name of the partnership was TMC. TMC provided telecommunications services. Therefore, the Commission treated 99.99 percent of TMC's operating revenues derived from the provision of telecommunication services as though they were the operating revenues of TCI. The Commission said that TCI chose to establish TMC as a partnership and that TCI cannot disavow the business structure that it established.

[9] In making its decision in this case, the Commission relied on its July 19, 1995 decision in the case of fONOROLA. The fONOROLA decision was not included in the record or the book of authorities and as far as I know, it is not reported. It appears from its explanation in its March 26, 2004 letter decision in this case that the fONOROLA decision involved the question of whether a partnership met the conditions of subsection 16(1) of the Telecommunications Act dealing with Canadian ownership and control in order to be able to operate as a telecommunications common carrier. Subsection 16(1) provides:

16. (1) A Canadian carrier is eligible to operate as a telecommunications common carrier if it is a Canadian-owned and controlled corporation incorporated or continued under the laws of Canada or a province.

16. (1) Est admise à opérer comme entreprise de télécommunication l'entreprise canadienne qui est une personne morale constituée ou prorogée sous le régime des lois fédérales ou provinciales et est la propriété de Canadiens et sous contrôle canadien.

[10] In fONOROLA, the Commission determined that if each partner complied with the Canadian ownership and control provisions of subsection 16(1), the fONOROLA partnership was eligible to operate as a telecommunications common carrier. Following the fONOROLA decision, the Commission in this case said that it had to look behind the TMC partnership at TMC's corporate partners to ensure compliance with subsection 16(1) of the Act. The Commission concluded that a consistent position must be taken with respect to the undertaking covered by subsection 16(1) on the one hand and the Fees Regulations on the other.

STANDARD OF REVIEW

[11] The parties are agreed that the standard of review is correctness and therefore I will deal with this issue summarily. Once leave to appeal has been granted under section 64, the right of appeal suggests less deference. The Commission's expertise lies primarily in its determination of facts in its exercise of discretion. When the question is one of law, the Commission's expertise may be a factor favouring greater deference. But in cases of ordinary statutory interpretation such as the one at issue here, the Agency's expertise relative to the Court would not normally support deference. Here, the argument pertains to the interpretation of provisions of the Telecommunications Act and the Fees Regulations as well as the applicability of partnership law. These are all matters suggesting a less deferential review. This is not a case involving the balancing of interests and the question is legal. For all these reasons, I agree with the parties that the standard of review is correctness.

ANALYSIS

[12] TCI argues that under the definitions in section 2 of the Telecommunications Act, a Canadian carrier is a telecommunications common carrier; a telecommunications common carrier is a person who owns or operates a transmission facility to provide telecommunications services; and a person includes a partnership. As the TMC partnership is a Canadian carrier that does not file tariffs, the Fees Regulations do not apply to TMC. The definitions upon which TCI relies state:

"Canadian carrier" means a telecommunications common carrier that is subject to the legislative authority of Parliament;

« _entreprise canadienne_ » Entreprise de télécommunication qui relève de la compétence fédérale.

"person" includes any individual, partnership, body corporate, unincorporated organization, government, government agency, trustee, executor, administrator or other legal representative;

« _personne_ » Sont compris parmi les personnes les particuliers, les sociétés de personnes, les personnes morales, les organisations non personnalisées, les gouvernements ou leurs organismes, ainsi que les fiduciaires, exécuteurs testamentaires, curateurs, tuteurs ou autres représentants légaux.

"telecommunications common carrier" means a person who owns or operates a transmission facility used by that person or another person to provide telecommunications services to the public for compensation;

« _entreprise de télécommunication_ » Propriétaire ou exploitant d'une installation de transmission grâce à laquelle sont fournis par lui-même ou une autre personne des services de télécommunication au public moyennant contrepartie.

[13] Under the general law applicable to partnerships, a partnership is not a person. The Telecommunications Act, however, gives the word "person" an extended definition. In the Act, the word "person" is defined to include a partnership. If a partnership, such as TMC, is a person that "owns or operates a transmission facility used by that person or another person to provide telecommunications services to the public for compensation", then it meets the definition of "telecommunications common carrier" and "Canadian carrier". It follows that in all matters to which the Fees Regulations relate, TMC must be treated like any other person that meets that definition of Canadian carrier.

[14] If the Commission's approach is followed, telecommunications fees are required from the Canadian carrier TMC, a person under the extended definition of that term in the Act, although it does not file tariffs. That would be inconsistent with the scheme of subsections 3(1) and 4(1).

[15] In my respectful view, the Commission has misapplied the fONOROLA decision. The purpose of subsection 16(1) is to establish criteria for determining the eligibility of a Canadian carrier to operate as a telecommunications common carrier. Canadian ownership and control is a requirement. In the context of determining whether a Canadian carrier that is a partnership may operate as a telecommunications common carrier, subsection 16(1) requires that the Commission look at the owners of the partnership in order to determine the question of ownership and control of the partnership. In that context, it is necessary to consider whether the owners are corporations and if so, whether they are Canadian owned and controlled. The answer to that question will determine whether a partnership that is a Canadian carrier is eligible to operate as a telecommunications common carrier. The same would apply if the telecommunications common carrier was a corporation. While the requirement to be a corporation would be met, it would still be necessary to look at the shareholders and directors of the corporation to determine whether there was compliance with subsection 16(1).

[16] Unlike subsection 16(1) of the Act, nothing in the Fees Regulations implies that the Commission is to look behind the partnership that is the Canadian carrier. TMC is a Canadian carrier that does not file tariffs. Therefore, its operating revenues are not to be included in any calculation of telecommunications fees payable under subsections 3(1) and 4(1) of the Fees Regulations.

OTHER ARGUMENTS

[17] TCI argued that the Commission committed a breach of the rules of procedural fairness and that its charging policy was not consistent with the External Charging Policy, Treasury Board Secretariat, August 12, 2003, of the Treasury Board of Canada or the User Fees Act, S.C. 2004, c. 6. In view of my interpretation of the Fees Regulations, it is not necessary to address these arguments.

[18] At the outset of the oral hearing of the appeal, the Court heard argument on the motion of the Attorney General of Canada to dismiss the appeal in respect of Telecom Circular CRTC 2004-3 because it did not constitute a decision. TCI says it appealed the Circular in order to invoke the User Fees Act which came into force after the letter decision of March 26, 2004, but before the Circular of April 7, 2004. Because it is not necessary to address the application of the User Fees Act, it is not necessary to decide whether the Circular is a decision and the appeal in respect of the Circular should be dismissed.

CONCLUSION

[19] The appeal in respect of the Commission's letter decision of March 26, 2004, should be allowed with costs and that decision should be quashed. The user fees charged by the Commission to TCI should be calculated by excluding the operating revenues of TMC. The appeal in respect of Telecom Circular CRTC 2004-3 dated April 7, 2004, should be dismissed.

"Marshall Rothstein"

J.A.

"I agree

A.M. Linden J.A."

"I agree

B. Malone J.A."

FEDERAL COURT OF APPEAL

NAMES OF COUNSEL AND SOLICITORS OF RECORD

DOCKET: A-364-04

STYLE OF CAUSE: TELUS COMMUNICATION INC. V. ATTORNEY GENERAL OF CANADA

PLACE OF HEARING: CALGARY, ALBERTA

DATE OF HEARING: NOVEMBER 16 AND 17, 2005

REASONS FOR JUDGMENT BY: ROTHSTEIN J.A.

CONCURRED IN BY: LINDEN J.A.

MALONE J.A.

DATED: DECEMBER 6, 2005

APPEARANCES:

Mr. John Lowe

Mr. Stephen Schmidt FOR THE APPELLANT

Mr. John S. Tyhurst FOR THE RESPONDENT

SOLICITORS OF RECORD:

Burnet, Duckworth & Palmer LLP

Calgary, Alberta FOR THE APPELLANT

John H. Sims, Q.C.

Deputy Attorney General of Canada

Ottawa, Ontario FOR THE RESPONDENT

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Telus Communications Inc. v. Canada (Attorney General), 2005 FCA 409

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2005 FCA 409