Federation of Canadian Municipalities v. AT & T Corp., 2002 FCA 500

Date: 20021217

Dockets: A-395-01

A-396-01

A-397-01

A-398-01

A-399-01

Neutral citation: 2002 FCA 500

CORAM:        LÉTOURNEAU J.A.

NADON J.A.

PELLETIER J.A.

                                                                                                                                                                                                                A-395-01

BETWEEN:

                                                                FEDERATION OF CANADIAN MUNICIPALITIES

                                                                                                                                                                                                              Appellant

                                                                                                             and

                         AT & T CANADA CORP., AT & T CANADA TELECOM SERVICES COMPANY, BCT.TELUS

                   COMMUNICATIONS INC., BELL CANADA, CALL-NET COMMUNICATIONS INC., CALL-NET

             ENTERPRISES INC., CALL-NET TECHNOLOGY SERVICES INC., CANADIAN CABLE TELEVISION

             ASSOCIATION, FUTUREWAY COMMUNICATIONS INC., GT GROUP TELECOM SERVICES CORP.,

                LEDCOR INDUSTRIES LTD., MTS COMMUNICATIONS INC., TELUS COMMUNICATIONS (B.C.)

                         INC., TELUS CORPORATION, WFI URBANLINK LTD., ALIANT TELECOM INC., SHAW

                                             COMMUNICATIONS INC., and ATTORNEY GENERAL OF CANADA

                                                                                                                                                                                                         Respondents

                                                                                                             and

                                                            THE ATTORNEY GENERAL OF BRITISH COLUMBIA

                                                                                                                                                                                                             Intervener

                                                                                                                                                                                                                A-396-01

BETWEEN:

                                                                                           CITY OF CALGARY

                                                                                                                                                                                                              Appellant

                                                                                                             and

                         AT & T CANADA CORP., AT & T CANADA TELECOM SERVICES COMPANY, BCT.TELUS

                   COMMUNICATIONS INC., BELL CANADA, CALL-NET COMMUNICATIONS INC., CALL-NET

             ENTERPRISES INC., CALL-NET TECHNOLOGY SERVICES INC., CANADIAN CABLE TELEVISION

             ASSOCIATION, FUTUREWAY COMMUNICATIONS INC., GT GROUP TELECOM SERVICES CORP.,

                LEDCOR INDUSTRIES LTD., MTS COMMUNICATIONS INC., TELUS COMMUNICATIONS (B.C.)

                         INC., TELUS CORPORATION, WFI URBANLINK LTD., ALIANT TELECOM INC., SHAW

                                             COMMUNICATIONS INC., and ATTORNEY GENERAL OF CANADA

                                                                                                                                                                                                         Respondents

                                                                                                             and

                                                            THE ATTORNEY GENERAL OF BRITISH COLUMBIA

                                                                                                                                                                                                             Intervener

                                                                                                                                                                                                                A-397-01

BETWEEN:

                                                                           HALIFAX REGIONAL MUNICIPALITY

                                                                                                                                                                                                              Appellant

                                                                                                             and

                         AT & T CANADA CORP., AT & T CANADA TELECOM SERVICES COMPANY, BCT.TELUS

                   COMMUNICATIONS INC., BELL CANADA, CALL-NET COMMUNICATIONS INC., CALL-NET

             ENTERPRISES INC., CALL-NET TECHNOLOGY SERVICES INC., CANADIAN CABLE TELEVISION

             ASSOCIATION, FUTUREWAY COMMUNICATIONS INC., GT GROUP TELECOM SERVICES CORP.,

                LEDCOR INDUSTRIES LTD., MTS COMMUNICATIONS INC., TELUS COMMUNICATIONS (B.C.)

                         INC., TELUS CORPORATION, WFI URBANLINK LTD., ALIANT TELECOM INC., SHAW

                                             COMMUNICATIONS INC., and ATTORNEY GENERAL OF CANADA

                                                                                                                                                                                                         Respondents

                                                                                                             and

                                                            THE ATTORNEY GENERAL OF BRITISH COLUMBIA

                                                                                                                                                                                                             Intervener

                                                                                                                                                                                                                A-398-01

BETWEEN:

                                                                 CITY OF OTTAWA AND CITY OF TORONTO

                                                                                                                                                                                                              Appellant

                                                                                                             and

                         AT & T CANADA CORP., AT & T CANADA TELECOM SERVICES COMPANY, BCT.TELUS

                   COMMUNICATIONS INC., BELL CANADA, CALL-NET COMMUNICATIONS INC., CALL-NET

             ENTERPRISES INC., CALL-NET TECHNOLOGY SERVICES INC., CANADIAN CABLE TELEVISION

             ASSOCIATION, FUTUREWAY COMMUNICATIONS INC., GT GROUP TELECOM SERVICES CORP.,

                LEDCOR INDUSTRIES LTD., MTS COMMUNICATIONS INC., TELUS COMMUNICATIONS (B.C.)

                         INC., TELUS CORPORATION, WFI URBANLINK LTD., ALIANT TELECOM INC., SHAW

                                             COMMUNICATIONS INC., and ATTORNEY GENERAL OF CANADA

                                                                                                                                                                                                         Respondents

                                                                                                             and

                                                            THE ATTORNEY GENERAL OF BRITISH COLUMBIA

                                                                                                                                                                                                             Intervener

                                                                                                                                                                                                                A-399-01

BETWEEN:

                                                                                         CITY OF VANCOUVER

                                                                                                                                                                                                              Appellant

                                                                                                             and

                         AT & T CANADA CORP., AT & T CANADA TELECOM SERVICES COMPANY, BCT.TELUS

                   COMMUNICATIONS INC., BELL CANADA, CALL-NET COMMUNICATIONS INC., CALL-NET

             ENTERPRISES INC., CALL-NET TECHNOLOGY SERVICES INC., CANADIAN CABLE TELEVISION

             ASSOCIATION, FUTUREWAY COMMUNICATIONS INC., GT GROUP TELECOM SERVICES CORP.,

                LEDCOR INDUSTRIES LTD., MTS COMMUNICATIONS INC., TELUS COMMUNICATIONS (B.C.)

                         INC., TELUS CORPORATION, WFI URBANLINK LTD., ALIANT TELECOM INC., SHAW

                                             COMMUNICATIONS INC., and ATTORNEY GENERAL OF CANADA

                                                                                                                                                                                                         Respondents

                                                                                                             and

                                                            THE ATTORNEY GENERAL OF BRITISH COLUMBIA

                                                                                                                                                                                                             Intervener

                                      Heard at Ottawa, Ontario, on October 29 and 30, 2002

                                Judgment delivered at Ottawa, Ontario, on December 17, 2002

REASONS FOR JUDGMENT BY:                                                                          LÉTOURNEAU J.A.

CONCURRED IN BY:                                                                                                         NADON J.A.

DISSENTING IN PART BY:                                                                                          PELLETIER J.A.

Date: 20021217

Dockets: A-395-01

A-396-01

A-397-01

A-398-01

A-399-01

Neutral citation: 2002 FCA 500

CORAM:        LÉTOURNEAU J.A.

NADON J.A.

PELLETIER J.A.

                                                                                                                                                                                                                A-395-01

BETWEEN:

                                                                FEDERATION OF CANADIAN MUNICIPALITIES

                                                                                                                                                                                                              Appellant

                                                                                                             and

                         AT & T CANADA CORP., AT & T CANADA TELECOM SERVICES COMPANY, BCT.TELUS

                   COMMUNICATIONS INC., BELL CANADA, CALL-NET COMMUNICATIONS INC., CALL-NET

             ENTERPRISES INC., CALL-NET TECHNOLOGY SERVICES INC., CANADIAN CABLE TELEVISION

             ASSOCIATION, FUTUREWAY COMMUNICATIONS INC., GT GROUP TELECOM SERVICES CORP.,

                LEDCOR INDUSTRIES LTD., MTS COMMUNICATIONS INC., TELUS COMMUNICATIONS (B.C.)

                         INC., TELUS CORPORATION, WFI URBANLINK LTD., ALIANT TELECOM INC., SHAW

                                             COMMUNICATIONS INC., and ATTORNEY GENERAL OF CANADA

                                                                                                                                                                                                         Respondents

                                                                                                             and

                                                            THE ATTORNEY GENERAL OF BRITISH COLUMBIA

                                                                                                                                                                                                             Intervener

                                                                                                                                                                                                                A-396-01

BETWEEN:

                                                                                           CITY OF CALGARY

                                                                                                                                                                                                              Appellant

                                                                                                             and

                         AT & T CANADA CORP., AT & T CANADA TELECOM SERVICES COMPANY, BCT.TELUS

                   COMMUNICATIONS INC., BELL CANADA, CALL-NET COMMUNICATIONS INC., CALL-NET

             ENTERPRISES INC., CALL-NET TECHNOLOGY SERVICES INC., CANADIAN CABLE TELEVISION

             ASSOCIATION, FUTUREWAY COMMUNICATIONS INC., GT GROUP TELECOM SERVICES CORP.,

                LEDCOR INDUSTRIES LTD., MTS COMMUNICATIONS INC., TELUS COMMUNICATIONS (B.C.)

                         INC., TELUS CORPORATION, WFI URBANLINK LTD., ALIANT TELECOM INC., SHAW

                                             COMMUNICATIONS INC., and ATTORNEY GENERAL OF CANADA

                                                                                                                                                                                                         Respondents

                                                                                                             and

                                                            THE ATTORNEY GENERAL OF BRITISH COLUMBIA

                                                                                                                                                                                                             Intervener

                                                                                                                                                                                                                A-397-01

BETWEEN:

                                                                           HALIFAX REGIONAL MUNICIPALITY

                                                                                                                                                                                                              Appellant

                                                                                                             and

                         AT & T CANADA CORP., AT & T CANADA TELECOM SERVICES COMPANY, BCT.TELUS

                   COMMUNICATIONS INC., BELL CANADA, CALL-NET COMMUNICATIONS INC., CALL-NET

             ENTERPRISES INC., CALL-NET TECHNOLOGY SERVICES INC., CANADIAN CABLE TELEVISION

             ASSOCIATION, FUTUREWAY COMMUNICATIONS INC., GT GROUP TELECOM SERVICES CORP.,

                LEDCOR INDUSTRIES LTD., MTS COMMUNICATIONS INC., TELUS COMMUNICATIONS (B.C.)

                         INC., TELUS CORPORATION, WFI URBANLINK LTD., ALIANT TELECOM INC., SHAW

                                             COMMUNICATIONS INC., and ATTORNEY GENERAL OF CANADA

                                                                                                                                                                                                         Respondents

                                                                                                             and

                                                            THE ATTORNEY GENERAL OF BRITISH COLUMBIA

                                                                                                                                                                                                             Intervener

                                                                                                                                                                                                                A-398-01

BETWEEN:

                                                                 CITY OF OTTAWA AND CITY OF TORONTO

                                                                                                                                                                                                              Appellant

                                                                                                             and

                         AT & T CANADA CORP., AT & T CANADA TELECOM SERVICES COMPANY, BCT.TELUS

                   COMMUNICATIONS INC., BELL CANADA, CALL-NET COMMUNICATIONS INC., CALL-NET

             ENTERPRISES INC., CALL-NET TECHNOLOGY SERVICES INC., CANADIAN CABLE TELEVISION

             ASSOCIATION, FUTUREWAY COMMUNICATIONS INC., GT GROUP TELECOM SERVICES CORP.,

                LEDCOR INDUSTRIES LTD., MTS COMMUNICATIONS INC., TELUS COMMUNICATIONS (B.C.)

                         INC., TELUS CORPORATION, WFI URBANLINK LTD., ALIANT TELECOM INC., SHAW

                                             COMMUNICATIONS INC., and ATTORNEY GENERAL OF CANADA

                                                                                                                                                                                                         Respondents

                                                                                                             and

                                                            THE ATTORNEY GENERAL OF BRITISH COLUMBIA

                                                                                                                                                                                                             Intervener

                                                                                                                                                                                                                A-399-01

BETWEEN:

                                                                                         CITY OF VANCOUVER

                                                                                                                                                                                                              Appellant

                                                                                                             and

                         AT & T CANADA CORP., AT & T CANADA TELECOM SERVICES COMPANY, BCT.TELUS

                   COMMUNICATIONS INC., BELL CANADA, CALL-NET COMMUNICATIONS INC., CALL-NET

             ENTERPRISES INC., CALL-NET TECHNOLOGY SERVICES INC., CANADIAN CABLE TELEVISION

             ASSOCIATION, FUTUREWAY COMMUNICATIONS INC., GT GROUP TELECOM SERVICES CORP.,

                LEDCOR INDUSTRIES LTD., MTS COMMUNICATIONS INC., TELUS COMMUNICATIONS (B.C.)

                         INC., TELUS CORPORATION, WFI URBANLINK LTD., ALIANT TELECOM INC., SHAW

                                             COMMUNICATIONS INC., and ATTORNEY GENERAL OF CANADA

                                                                                                                                                                                                         Respondents

                                                                                                             and

                                                            THE ATTORNEY GENERAL OF BRITISH COLUMBIA

                                                                                                                                                                                                             Intervener

                                                        REASONS FOR JUDGMENT

LÉTOURNEAU J.A.

[1]                 This is an appeal against a decision of the Canadian Radio-Television and Telecommunications Commission (CRTC). The decision was rendered on January 25, 2001 pursuant to subsection 43(4) of the Telecommunications Act, S.C. 1993, c. 38, (Act).

[2]                 The appeal is brought under section 64 of the Act. Other appeals were also brought in files A-396-01, A-397-01, A-398-01 and A-399-01. By order of our colleague Linden J.A. issued on September 13, 2001, all the files were consolidated. A single hearing of the five appeals was held at which appeared as appellants, represented by counsel, the city of Calgary, the city of Ottawa, the city of Toronto, the city of Vancouver, the Halifax Regional Municipality and the Federation of Canadian Municipalities (Federation).

[3]                 I reproduce the relevant sections of the Act:

[4]                 Stripped of their embellishment, the contentions of the appellants as well as those of the intervener, the Attorney General of British Columbia, who supports the position of the appellants, boil down to this simple question: did the CRTC err in law, exceed its jurisdiction or improperly exercise its discretion in rendering its decision?

[5]                 In its decision, the CRTC reviewed the terms and conditions sought to be imposed by the city of Vancouver on the respondent, Ledcor Industries Ltd. (Ledcor), which was seeking access to the municipality's roadways to install fibre optic lines. Notice of constitutional questions was sent by the appellants challenging the constitutional validity, applicability or operability of sections 42 and 44 and subsections 43(2) and (4) of the Act. At the hearing, it was conceded that these sections were constitutionally valid. The debate then revolved around the scope of the decision under attack, its impact in future cases and the jurisdiction of the CRTC to adjudicate as it did upon the issues that were before it. It is fair to say that what originated as a simple dispute between a carrier and the city of Vancouver evolved into, but not to the extent claimed by the appellants, something of a policy-making hearing leading to the impugned decision. Hence the numerous appellants and respondents. I shall come back to this point when I will discuss the scope of the CRTC's decision.

Facts and procedure

[6]                 Ledcor and its subsidiary, Worldwide Fibre Ltd., began to develop and construct in 1997 a fibre optic telecommunications transmission system, consisting of two fibre optic transmission lines which connected Western and Eastern Canada as well as points in the United States. Ledcor, along with numerous other telecommunication carriers sought to install fibre optic lines, ducts and vaults under the roadways in the downtown core areas of major municipalities.

[7]                 Beginning in October 1997, Ledcor and the city of Vancouver attempted to negotiate terms for access to certain lands (18 street crossings) for the purpose of installing and maintaining telecommunication lines. Ledcor acknowledged that it had continued to construct its fibre optic system while the discussions with the city were still in progress. The negotiations were unsuccessful.

[8]                 Ledcor stated that the city had proposed a number of conditions for granting access which it found unacceptable, including:

1.         Distance-based access (license) fees that far exceed the costs of providing access;

2.         Additional license fees that would require Ledcor to pay the city a share of its telecommunications revenues;

3.         A requirement to give the city exclusive use of four fibre strands on its fibre optic system in the Vancouver area;

4.         A requirement that Ledcor provide the city with information on Ledcor's customers, in order that the city could impose additional revenue-sharing licence fees on Canadian carriers that had purchased capacity on Ledcor's fibre optic system; and

5.         Numerous other restrictions and requirements that were far more costly and onerous than those imposed by other municipalities, railways and other owners with which Ledcor had successfully negotiated Access Agreements.

[9]                 On March 19, 1999, Ledcor filed an application with the Commission, pursuant to subsection 43(4) of the Act, for an interim and final order granting it access to street crossings and other municipal property to install, operate and maintain its fibre optic transmission lines.

[10]            On May 17, 1999, the city filed an application with the Commission pursuant to sections 44 and 61(2) of the Act seeking an order setting the terms and conditions for access by Ledcor. It stated that Ledcor had constructed a fibre optic cable in the streets without obtaining its consent or permission.

[11]            On December 3, 1999 the Commission issued Telecom Public Notice CRTC 99-25 initiating a public proceeding to consider the appropriate terms and conditions of access by Canadian carriers and distribution undertakings. The Commission stated that while the proceeding would be limited in application to the case of the city, it expected that the principles developed in these proceeding might "inform the Commission's consideration of any disputes that may arise elsewhere". The appellant parties in the present case all filed written submissions as interested parties in response to the CRTC Public Notice.

[12]            On January 25, 2001, the Commission released its decision that Ledcor was to be granted access to the municipal lands subject to conditions including that it pay $7,616 to the city for the recovery of costs incurred to provide access. The Commission did not require Ledcor to pay land charges or access fees and fixed common costs to the city, payments which the city had been seeking.

[13]            By Notices of Appeal dated June 29, 2001, the city and the other appellant municipalities are appealing the Commission's decision.

The decision of the CRTC

[14]            The CRTC assumed exclusive jurisdiction over the subject matter with which it was seized. As requested by the city, the CRTC dealt with all the terms and conditions which the city sought to impose on the carrier in return for its consent to access its roadways. The decision is substantial: 28 pages with 184 paragraphs. It addresses the subjects of dispute between the respondent and the city. It grants the city causal costs defined as the prospective and incremental costs the city incurs when carriers construct and maintain transmission lines in municipal rights-of-way. Such costs would, depending on the circumstances, include plan approval and inspection costs, construction disruption costs, loss of productivity costs, costs resulting from drainage of telecommunications company vaults and pavement degradation costs. In addition, the CRTC included a provision for a mark-up of 29.6% to be applied on direct costs to provide recovery of certain indirect and common costs. The City had claimed in this respect a mark-up of 62% over direct costs.

[15]            The CRTC dismissed some of the city's claims and these claims are at the core of the present litigation. As previously mentioned, it denied land charges which the city would levy for use or occupancy of municipal lands: see decision, paragraphs 109 and following. It also denied fixed common costs of running the city: ibid, paragraph 63. With respect to the relocation costs of telecommunication facilities, the CRTC refrained from deciding the issue at this stage and from prescribing a mechanism governing the allocation of the cost of any future relocation of Ledcor's transmission lines. However, it enunciated a number of factors which it considered appropriate to take into account in allocating costs between carriers and municipalities: ibid, paragraphs 130-138. Finally, it rejected the city's proposals regarding limitations of liability. It made no order in this respect and left the issue of liability to be determined by the common law rules: ibid, paragraphs 148-155. I should add that it found the city's requirement that Ledcor execute a General Security Agreement in favour of the city with respect to its network too onerous. It accepted, however, that letters of credit or deposits of moneys constituted a reasonable assurance that the city could require: ibid, paragraphs 157-162.

[16]            I need not discuss at length the CRTC's decision since only certain aspects of it are challenged. It is sufficient to reproduce the paragraphs which the appellants say vitiate the decision and justify the granting of the appeals.

[17]            The appellants, while recognizing the exclusive jurisdiction of Parliament, take exception with the last sentence of paragraph 34 of the decision:

In the Commission's view, sections 43 and 44, and this decision, relate in pith and substance to telecommunications. Any effects on property and civil rights in the province are incidental. All matters that are a vital part of the operation of a federal undertaking are within the exclusive legislative control of Parliament. Whether to construct and where to construct transmission lines (a vital part of a telecommunications undertaking) are matters of exclusive federal concern, as are the design of the transmission lines, the material to be incorporated and other similar specifications. All terms and conditions that will be permanently reflected in the structure of the transmission lines, or have a direct effect on the operational qualities of the transmission lines, are within exclusive federal jurisdiction. Finally, the use of property (such as a municipal highway) for the purposes of a transmission line cannot be divorced from the exclusive federal constitutional jurisdiction over telecommunications.

                                                                                                                                           (emphasis added)

[18]            They attack these conclusions or findings found in paragraphs 63, 64, 130-138, 150-155 and 157-161 of the CRTC's decision:

The Commission notes that fixed costs, by definition, do not vary with a particular project. Thus, they are not incremental costs, as defined above. The Commission has allowed telephone companies to include a mark-up on their Phase II costs, representing a contribution to fixed common costs, in the prices they charge for their services. A municipality differs from a business in that it derives its revenues primarily from taxes, and the fixed common costs of running the municipality are appropriately covered by this tax revenue. Therefore, the Commission considers that fixed common costs should not be recovered through charges to carriers. Accordingly, the Commission considers it appropriate to exclude the 25% component for the recovery of fixed common costs from Vancouver's proposed 62% loading. The Commission finds acceptable Vancouver's proposed 29.6% loading on direct costs to estimate indirect and variable common costs.

For some of Vancouver's cost elements, the causal costs are small and the process to determine them accurately would be disproportionately difficult or complex. The Commission considers it appropriate to recognize such costs by way of a further 15% loading on plan approval and inspection costs, which can be more readily estimated.

[...]

Relocation costs

Vancouver submitted that it should not be responsible for the cost of relocating telecommunications facilities if relocation is required for municipal purposes. Vancouver added as a caveat on the application of this principle that the municipal government must act reasonably in coordinating the many uses of the public property in a manner that does not cause unnecessary or premature disruptions to telecommunications plant.

Vancouver proposed that relocation costs be incurred directly by the carrier if it undertakes the work, or be invoiced to the carrier if the city undertakes the work. It stated that these costs are project-specific and should be invoiced on a project-by-project basis.

Vancouver stated that much of the work that takes place on city streets is related to redevelopment of private property for which the city cannot fully plan or give advance notification. Vancouver also stated that redevelopment of private property, for example, for a shopping development, sometimes requires reconfiguring the adjacent street to accommodate changed traffic patterns. It noted that, in this case, it requires the developer to pay for the street changes and that it would be appropriate for the private developer to pay for costs of relocating the carriers's facilities.

FCM and municipalities supported Vancouver's position on relocation costs. FCM stated that, where relocation or adjustment is required for bona fide municipal purposes, the utility should be 100% responsible for the costs. In response to interrogatory FCM(CRTC)28Feb00-5, FCM stated that a bona fide municipal purpose is any purpose that is authorized at common law or by statute, for example, bridge reconstructions, improvements such as road widenings and municipal landscaping, infrastructure replacements, transit lane relocations, and the burial of aerial lines for safety, municipal redevelopment, security or other reasons.

Carriers objected to Vancouver's proposal, arguing, among other things, that: (a) Vancouver's approach would eliminate an incentive to municipalities to behave reasonably and consult properly with respect to relocation matters; and (b) a satisfactory approach to the allocation of relocation costs should be sensitive to the facts of a particular situation.

Bell Canada/MTS submitted that they have not traditionally been required by municipalities, as of right, to assume costs to relocate their plant located in public rights-of-way when a municipality requires it, but have generally negotiated the assumption of such costs on a case-by-case basis, or if applicable, adopted mechanisms set out in provincial legislation or regulations. They added that their experience with case-by-case negotiations is that the process is administratively burdensome, for themselves as well as for the municipality. They considered that the existing process could be streamlined to the benefit of both themselves and the municipalities. Therefore, in their model municipal consent agreement filed in this proceeding, Bell Canada/MTS proposed an alternative mechanism which, they stated, Canadian carriers and municipalities could choose to adopt. They described that mechanism as follows:

As municipalities have in place planning "windows" which typically span five or more years for projects of a scale which would require the relocation of underground utilities, relocations in the first five to ten years after construction of Canadian carrier plant are unusual. After this period, the allocation of relocation costs has typically been subject to negotiations. The mechanism put forward by the Companies in the model agreement codifies, on a going forward basis, such arrangements. Within an initial period which is well within municipal planning time frames, costs associated with relocation at the initiative of the municipality are allocated to the municipality. Following this period, a sliding scale is applied for a period of five years. Following the 9^th year, the Canadian carrier would henceforward assume all the costs associated with the relocation of its plant. Since equipment is typically operated in rights-of-way for a period of decades once installed, the result is that for most of the useful life of its equipment, the Canadian carrier will be responsible for all costs associated with the relocation of its equipment in municipality initiated relocations. The Companies believe that the mechanism they have codified in the model agreement is fair to all parties, provides certainty as to the specific terms thereby simplifying administration and provides an incentive to municipalities to conduct advance planning. The Companies reiterate that such advance planning by municipalities is routinely conducted today.

The Commission considers that sections 42 to 44 of the Act give it the jurisdiction to impose conditions relating to relocation matters, whether at the time of construction or afterwards. The Commission also notes that its predecessor bodies have generally declined to impose terms and conditions relating to relocation at the time of construction, preferring instead to consider the matter at the time the requirement for relocation arises, having regard to the circumstances then applicable.

Consistent with the above, the Commission is not prescribing a mechanism governing the allocation of the cost of any future relocation of Ledcor's transmission lines. If Vancouver requires the relocation of these lines at some time in the future, the Commission considers that the parties should negotiate the allocation of costs, taking into account the factors noted below, or adopt some administratively simple mechanism such as that advanced by Bell Canada/MTS. Failing an agreement, either Vancouver or Ledcor could apply to the Commission to resolve the dispute.

The Commission would generally consider it appropriate to take into account the following factors in allocating costs between the municipality and the carrier: (a) who has requested the relocation, i.e., the municipality, the carrier, or a third party; (b) the reason for the requested relocation (e.g., safety reasons, aesthetic reasons, to better serve customers); and (c) when the request is made vis-à-vis the original date of construction (e.g., whether the request is made a considerable length of time after the original construction, or very shortly after that time).

[...]

The Commission rejects arguments by FCM (and others) as to limitations on the Commission's jurisdiction under sections 42 to 44 of the Act to prescribe terms and conditions relating to limitations of liability. As noted earlier, where a carrier cannot obtain consent from a municipality on acceptable terms, the Commission may grant the permission "subject to any conditions that the Commission determines" (section 43(4) of the Act). The only qualification in the subsection with respect to the scope of the Commission's jurisdiction is that the Commission must have due regard to the use and enjoyment of the highway or other public place by others.

The Commission notes that, under section 43, carriers have a qualified right to enter on and break up any highway or other public place for the purpose of constructing, maintaining or operating their transmission lines, subject to a duty not to unduly interfere with the public use and enjoyment of the highway or other public place. The Commission agrees with TELUS that one-sided liability provisions such as those proposed by Vancouver are not necessary in order to ensure that carriers fulfill this duty. The Commission also considers that there is merit to the arguments of TELUS, CCTA and others that the ordinary provincial principles of liability for negligence should apply to encourage all users of rights-of-way, including municipalities, to take care and ensure that their activities do not harm others.

The Commission notes Vancouver's argument that damage to carriers' facilities is often occasioned by inadequate protection, such as wooden ducts placed by BC TEL that are rotting away but are still in use in many locations in city street space. The Commission considers that such concerns should also be addressed pursuant to the ordinarily applicable provincial principles of liability.

The Commission considers conditions 27 and 28 of the Bell Canada/MTS model municipal consent agreement to be appropriately balanced. The Commission also notes that several participants in this proceeding argued that parties may wish to exclude consequential or economic losses, which is the effect of Bell Canada/MTS' proposed condition 29. The agreement between Group Telecom and Calgary, advanced as a model by Group Telecom, contains generally mutual liability provisions and excludes damages for consequential losses, but also adds the following:

The City shall not be liable to, nor indemnify and save harmless, Group Telecom, pursuant to subsection (2) where:

(a) the City has not been advised in writing of Group Telecom's Installations being placed in a Highway and Group Telecom has, following a request by the City or any other Party, failed to identify the location of its Installations; or

(b) the City has corrected a default of Group Telecom's pursuant to the provisions of this Agreement provided the City is not negligent in its corrective action.

The Commission sees no reason to object to the inclusion of such provisions.

In light of the above, the Commission is not prescribing terms and conditions related to liability in this decision. The Commission would have no objection if Vancouver and Ledcor were to agree to provisions similar to those in Bell Canada/MTS's model municipal consent agreement or in Group Telecom's agreement with Calgary. Absent such agreement, provincial principles of liability for negligence would apply.

[...]

General security agreements, letters of credit

The SCA advanced by Vancouver during is negotiations with Ledcor would have required Ledcor to execute a General Security Agreement (GSA) with respect to its network in favour of the city.

In addition, it contains a requirement that, in order to obtain the city's permission for "new work" (e.g., construction), Ledcor must submit a letter of credit, valid for at least one year, equal to 100% of the estimated cost of the relevant restoration work, as determined by City Engineer (applying generally applicable formulas and principles).

The SCA further specifies that the letter of credit be renewed and replaced as required during the time the work is on-going. After the new work is satisfactorily completed, the letter of credit would be replaced with a new letter of credit equal to 20% of the value of the initial work. This subsequent letter of credit would be valid for at least one year.

Ledcor argued the following with respect to these requirements:

The Applicant considers these security obligations to be unduly burdensome, costly and restrictive requirements for municipal consent to cross a few streets on an existing railway right-of-way. Proper cost-based municipal access fees for access to such street crossings should be nominal, and security obligations minimal or non-existent. In fact, the applicant would consider prepaying the whole of a reasonable cost-based access charge in advance.

The Commission considers a requirement to enter into a GSA to be unduly onerous, and unnecessary to ensure that Ledcor will meet its obligations under the terms and conditions of the Commission's order.

With regard to letters of credit, the Commission considers it reasonable that municipalities would request some assurance that construction work (e.g., pavement restoration) will be completed satisfactorily. In the Commission's view, that assurance could be provided by various means, including a letter of credit or, for example, the deposit of a reasonable sum of money to ensure the satisfactory doing of the work.

The scope and future impact of the CRTC's decision

[19]            The appellants have expressed serious concerns regarding the impact of the decision on future cases and negotiations between municipalities and carriers. There is one concern that I can dispel immediately by putting the decision under attack in its proper context.

[20]            What was before the CRTC was a conflict between two parties: Ledcor and the city of Vancouver. In rendering its decision, the Federal board made it clear that it was binding only on those two parties and that it was rendered only in respect of the existing litigation. At paragraphs 42 and 44 of its decision, the CRTC wrote:

In this decision, the Commission, by majority, is granting Ledcor permission to construct, maintain and operate transmission lines in 18 street crossings in Vancouver, and is establishing terms and conditions related to that permission.

[...]

The Commission is not, in this decision, prescribing terms and conditions related to the future construction by Ledcor, or any other carrier, of transmission lines in Vancouver or elsewhere

                                                                                                                                           (emphasis added)

Indeed, paragraphs 181 to 184 of the decision contain the disposition of the case and their contents, specifically directed towards Ledcor and the city of Vancouver, leave no doubt as to the limited scope of the decision.

[21]            It is true that, in the context of settling the dispute before it, the CRTC elaborated a number of principles with a view to assisting carriers and municipalities in their future negotiations of terms and conditions of access. These principles are therefore not binding on anyone and the Commission expressly refrained from adopting "any particular model or agreement to serve as a starting point for discussions between municipalities and carriers": see the end of paragraph 44 of the decision. It is possible that these principles, although well intended, may in effect turn out to be less helpful and more problematic than anticipated. However, it is not open to us in these appeals, nor would it be advisable to do so, to review or sanction the principles set forth by the CRTC.

[22]            Counsel for the Federation, supported by the other appellants, submits that the CRTC, by asserting exclusive jurisdiction as it did in paragraph 34, previously cited, constitutionally eliminated the possibility for municipalities to regulate and manage in an orderly manner the rapidly increasing traffic on the roadways used by carriers. The deregulation of telecommunications, we are told, has substantially increased the number of carriers who want to access the limited roadways available in municipalities. The demand and the risks and inconveniences associated with it are on the rise across Canada. The need for control and rationalization is greater than ever. Control is better suited and more efficient if exercised at the local level of government. The appellants rely upon a dictum to that effect of L'Heureux-Dubé J. in 114957 Canada Ltée (Spray-tech, Société d'arrosage) v. Hudson (Town), [2001] S.C.J. No. 42, paragraph 3. It is in this context that the Federation fears the impact of the CRTC's decision on future negotiations and disputes. More precisely, the Federation fears that municipalities, as a result of the CRTC's decision, are now deprived of their constitutional powers to enact by-laws to protect their property rights. The Attorney-General for British Columbia expressed the same fear regarding the province's power to legislate.

[23]            I do not read the CRTC's decision as depriving the provinces and the municipalities of the legislative powers conferred upon them by the Constitution. Nor should that decision be read as altering or calling into question the existing constitutional principles applicable in such circumstances. Provincial authorities can legislate in matters constitutionally assigned to them, but such legislation is subject to the interjurisdictional immunity principle if the legislation affects a vital part of a federal undertaking or the paramountcy doctrine if it conflicts with a federal law: see for recent application of the principle Greater Toronto Airports Authority v. Mississauga (City) (2000), 50 O.R. (3d) 641 (Ont.C.A.), P. Hogg, Constitutional Law of Canada, Toronto, Thomson Canada Ltd., 1997, c. 16, pages 16-1 and 16-2. The validity of any municipal by-law or provincial legislation purporting to manage the traffic on its roadways and protect property rights will remain subject to these constitutional limitations.

[24]            The appellants argued forcefully that the issue in the present case is not one of access to municipal land, but rather one of control and management of traffic on municipal roadways and, therefore, one of property rights. They drew our attention to regulations 290 and 291 of the Vancouver Charter, SBC 1953, c. 55, part VIII which, in essence, prohibit excavation in a street without Council's approval and enable the city's Council to regulate access to and traffic on the streets. I fully understand the appellants' point of view, but, with respect, I believe that they are looking at the issue from the wrong end of the telescope. The litigation between Ledcor and the city of Vancouver does not pertain to the scope and merits of provincial or municipal legislation. The CRTC was not called upon to interpret such legislation. The proceedings were initiated by the parties under subsection 43(4) and section 44 of the Act which establish a procedure by which a carrier may be granted access to municipal land, and by which a carrier or a municipality may have the terms and conditions of such access determined. It is the scope of these valid federal provisions as they relate to access which are the subject of interpretation herein. I fail to see how the dispute between Ledcor and the city of Vancouver can legally be termed other than a case of access to municipal property. As the constitutional validity of sections 42 to 44 is no longer disputed by the appellants, all that is left for examination is the contents of these sections in order to determine whether the CRTC had jurisdiction to deal with the terms and conditions of access in the manner that it did.

The jurisdiction of the CRTC to adjudicate upon the terms and conditions sought to be imposed by the city of Vancouver

[25]            It is important to state at the outset that the city of Vancouver was of the view, when the dispute arose between itself and Ledcor, that the CRTC had jurisdiction to review and determine the conditions of a carrier's access to its facilities. As previously mentioned in the summary of the facts, it applied to the CRTC pursuant to section 44 of the Act.

[26]            It is therefore appropriate to refer to the terms then used by the city with respect to the jurisdictional issue that it now raises. In its Reply to the answers filed with the CRTC by BCT.Telus Communications Inc., Call-Net Enterprises Inc. and Bell Canada, the city of Vancouver wrote:

In reply to the submissions of the Respondents and Interveners, Vancouver wishes to make the following key points:

(a)            The Telecommunications Act explicitly provides to the Commission all the authority required to grant the relief requested in the city's Application.

(b)           There are no judicial or regulatory precedents which preclude the Commission from ordering compensation be paid by Canadian carriers or distribution undertakings to municipalities.

(c)            Vancouver is in agreement with the Respondents that the Commission should not set aside contracts entered into by Canadian carriers with municipalities.

(d)           Vancouver seeks in this proceeding recognition of the costs associated with the use of a scarce public resource. The granting of Vancouver's application would produce a fairer and a more efficient telecommunications environment in Canada.

[...]

The Respondents' Answers indicate significant confusion concerning the factual underpinning of the controversy between Ledcor and the city. In this proceeding before the Commission, the city seeks a determination of appropriate terms and conditions for the future, not only for itself, but as a benchmark for other municipalities in Canada. Nonetheless, in the interests of clarifying matters for the Respondents, the following discussion concerning the history of city negotiations with Ledcor may be of assistance.

                                                                                                                                                                                                  (emphasis added)

[...]

The Commission's powers under section 44 are amply supplemented by the provisions of section 42. Subsection 42(1) provides that "the Commission may ... in the exercise of its powers under this Act ... require ... any telecommunications facilities to be ... operated, used, ... or maintained ... by any person interested in or affected by the order ... subject to such conditions as to compensation or otherwise ... as the Commission determines to be just and expedient".

For greater certainty, subsection 42(2) specifies that "the Commission may specify by whom and in what proportion ... the cost of doing anything required or permitted to be done under subsection (1) shall be paid".

Section 42 is a provision to be used to assist the exercise of any other Commission power, as the Commission has recently determined in Bell Canada v. Metrus et al. In light of the proximity of section 42 to section 44, both appearing under the heading "Construction and Expropriation Powers", it would seem difficult to envisage more appropriate provisions than those contained in section 44 to which the provisions of section 42 may properly be joined.

[...]

Commission's Regulatory Role is Clear

As noted above, it is clear from a plain reading of sections 42 to 44 of the Telecommunications Act that the Commission has authority to pronounce upon all terms and conditions, including compensation and costs, that govern the relationship between Canadian municipalities and Canadian carriers and distribution undertakings.

                                                                                                                                                                                                  (emphasis added)

[...]

It is difficult to envisage a more competent public body than the Commission to embark on the task of prescribing terms and conditions and an appropriate costing methodology. The Commission's comprehensive treatment of costs in the three phases of the Cost Inquiry is unrivalled in Canada and, indeed, in the world.

                                                                                                                                                                                                  (emphasis added)

(See Compendium of the respondents at pages 475, 478, 484 and 485.)

[27]            Now, unsatisfied with the CRTC's ruling on some of the conditions, such as the question of fixed common and relocation costs as well as that of compensation for use of municipal land by a carrier, the city of Vancouver contends that the CRTC did not have jurisdiction to deal with these matters or exceeded it in so doing. More precisely, as it appears in the Notice of Appeal, it alleges that the CRTC had no jurisdiction:

a)         to mandate the terms and conditions under which a carrier can use a highway for the purpose of operating transmission lines;

b)         to prevent municipalities from setting such terms and conditions; and

c)         to make an order under subsections 42(1), 43(4) and/or section 44 of the Act allowing a carrier to use or occupy municipal land without payment of full compensation to a municipality.

The city also says that the CRTC erred in law and exceeded its jurisdiction when it denied full compensation for occupancy and use of the municipal land. Finally, it also submits that the CRTC erred in law and exceeded its jurisdiction when it ruled that a municipality may not recover its normal charges because it derives the bulk of its revenues from taxpayers. Its contention is supported by the other appellants. Of course, if the CRTC's decision had been favourable to it and adverse to the carrier, I have every reason to believe, in light of the city's previous position and demand to the CRTC to determine the terms and conditions of access, that the discourse would be different. That being said, one fact remains: there is an undisputed principle of law that the jurisdiction of an administrative board is not conditional on a litigant's satisfaction or dissatisfaction with the decision the board has rendered.

[28]            Section 43 of the Act gives a carrier what the CRTC called a qualified right to access municipal property for the purpose of installing transmission lines. Subsection 43(3) puts in place a dispute resolution mechanism in case of conflict between a carrier and a municipality. Subsection 43(4) gives the CRTC a wide discretion, based on its expertise, to fix conditions of access so as to implement the objectives of the Act contained in section 7, one being "to facilitate the orderly development throughout Canada of a telecommunications system that serves to safeguard, enrich and strengthen the social and economic fabric of Canada and its regions. In so doing, the CRTC has to strike a delicate balance between public, private and municipal interests.

[29]            It cannot be doubted that the CRTC had jurisdiction to embark upon an inquiry into the terms and conditions sought to be imposed by the city of Vancouver: it did not lose or exceed its jurisdiction by rendering the decision that it did. A finding of a lack or an excess of jurisdiction is not a finding that can be made lightly because decisions made without jurisdiction can, at any time in any subsequent proceedings, be the subject of collateral attacks, thereby undermining the finality of decisions and jeopardizing the activities of those who acted pursuant to these decisions: see [1983] 2 S.C.R. 594">R. v. Wilson, [1983] 2 S.C.R. 594, at pages 599, 603-605; R. v. Sarson, [1996] 2 S.C.R. 223, at paragraphs 21 and 23; R. v. Litchfield, [1993] 4 S.C.R. 333, at paragraphs 14 and 15; Antwerp Bulkcarriers N.V. (Re) (2000), 187 D.L.R. (4^th) 106, at paragraph 34 (Que. C.A.); Holt Cargo Systems Inc. v. ABC Containerline N.V. (Trustees of) (1999), 173 D.L.R. (4^th) 493, at paragraph 12 (F.C.A.).

[30]            In the present instance, the exercise by the CRTC of its jurisdiction involved the exercise of a discretionary power to grant access to a carrier and to determine the conditions of such access. At most, it can be argued that the CRTC erred in law in the exercise of its jurisdiction or that it improperly exercised its discretion in granting access and fixing the conditions that it did. That being the case and since the decision relates to issues that fall squarely within the domain of expertise of the CRTC, this Court ought to defer to the CRTC. Consequently, this means the applicable standard of review of the CRTC's legal conclusions on matters within its expertise is that of reasonableness: see British Columbia Telephone Co. v. Shaw Cable Systems (B.C.) Ltd., [1995] 2 S.C.R. 739, at page 759; Canadian Broadcasting Corp. v. Métromédia CMR Montréal Inc., [1999] F.C.J. No. 1637 (F.C.A.). Patent unreasonableness governs the review of its factual findings. With these standards in mind, I now turn to a review of the decision.

Whether the appeals should be allowed

[31]            The decision granting the appellants leave to appeal authorized them to appeal against a ruling of the CRTC dismissing their request for disclosure, by some carriers, of financial details of their operations. This issue was not argued by the appellants at the hearing. The respondents in their oral submissions alluded to this ground of appeal only to say that they assumed that the appellants had abandoned it since they had not argued it. No objection was made by the appellants to the respondents' stated assumption. It is thus reasonable to conclude that this ground of appeal was abandoned.

[32]            The appellants' main attack was directed at the CRTC's findings on costs and compensation, two matters squarely falling within the board's expertise. Whether or not such findings were findings of law, of fact or of mixed law and fact, I cannot conclude that they were unreasonable, let alone patently unreasonable. In addition, no evidence was adduced to show that the CRTC exercised its discretion capriciously or arbitrarily.

[33]            For these reasons, I would dismiss all five appeals.

[34]            At the hearing, the appellants indicated to the panel that they were prepared to make representations as to costs. The parties were invited to make these representations in writing. The submissions of the appellants and the respondents were respectively filed on November 4 and November 12, 2002.

[35]            After careful consideration of the parties' contentions, I have come to the conclusion that the respondents should be entitled to modulated costs. I cannot agree with the appellants' contention that this appeal raised issues of such novelty and importance so as to depart from the usual practice in such matters of awarding costs against the losing party in accordance with Column III of Tariff B of the Federal Court Rules, 1998. What the appellants have described as important novelty is, in fact, an ingenuous but erroneous qualification of the issues involved in these proceedings, along with a strained interpretation and a misconstruction of the CRTC's decision.

[36]            However, since the five appeals were consolidated and argued together and since many of the respondents were represented by same counsel, costs should be allocated as follows:

a)         one set of costs to respondents AT & T Canada Corp., AT & T Canada Telecom Services Company, Canadian Cable Television Association, TELUS Communications Inc., TELUS Corporation, Call-Net Communications Inc., Call-Net Enterprises Inc. and Call-Net Technology Services Inc. and disbursements in each of the five files;

b)         one set of costs to respondents Bell Canada, Ledcor Industries Limited, MTS Communications Inc. and WFI Urbanlink Ltd. and Aliant Telecom Inc. and disbursements in each of the five files; and

c)         one set of costs to respondents GT Group Telecom Services Corp. and Shaw Communications Inc. and disbursements in each of the five files.

There should be no costs against the Attorney General of British Columbia and no costs in favour of the Attorney General of Canada.

                                                                                                                                         "Gilles Létourneau"                

                                                                                                                                                                  J.A.

"I agree,

M. Nadon J.A."

PELLETIER J.A. (Dissenting in part)

[37]            I have had the benefit of reading the reasons of my brother Létourneau J.A., with whom I must respectfully disagree on two points. The first is the characterization of the appellants' position with respect to the constitutional validity of subsection 43(4) of theTelecommunications Act (1993), ch.38 ("the Act"). The second is whether the CRTC's decision with respect to compensation to the appellant City of Vancouver ("Vancouver") for the use and occupation of the subsurface below Vancouver's street crossings justifies this court's intervention.

[38]            I would add the following to Létourneau J.A.'s statement of the facts. For most of its length within the City of Vancouver, the portion of Ledcor's transmission line which is in issue in these proceedings runs within the Canadian Pacific Railway (CPR) right of way, and not on municipal property. Ledcor paid for the right to bury its cable under that right of way. Ledcor's line only runs under city property at 1 street crossing and at 17 road allowances. Ledcor's construction technique did not require it to open up the street crossing or the road allowances in order to cross them. It simply drilled through the city property from its position on the CPR right of way. The portion of the transmission line located on City property is a small part of the total length of the line.

[39]            The Notices of constitutional question filed by the appellants put into the question the validity of subsection 43(4) of the Act. However, in argument, the appellants took the position that subsection 43(4) could be construed in such a way as to avoid a finding of invalidity. In their view, subsection 43(4) was valid federal legislation if it was interpreted to allow the CRTC to make orders with respect to matters falling within provincial jurisdiction only if they affected a vital part of a federal undertaking. According to the appellants, subsection 43(4) gives the CRTC the power to settle questions which a federally regulated carrier and a municipality have been unable to negotiate if those questions are either otherwise within federal jurisdiction or if they are matters within provincial jurisdiction which affect a carrier in a vital aspect of its operation.

[40]            I do not take this to be an abandonment of the constitutional challenge to the validity of subsection 43(4). I think it is perhaps more appropriate to say that the appellants proposed an interpretation of subsection 43(4) which avoided the issue of validity by limiting its scope. If that limitation is maintained, then the subsection is valid federal legislation.

[41]            This approach to the interpretation of a statute is not novel. The CRTC itself has resorted to it on occasion. In an application dealing with access to utility poles owned by provincial utilities, the CRTC was required to interpret subsection 43(5) of the Act. The language of that subsection is very broad and could be interpreted in such a way as to include persons and undertakings beyond the jurisdiction of the CRTC and perhaps Parliament itself. In Barrie Public Utilities v. Canadian Cable Television Assn. [2001] 4 F.C. 237 (C.A.), Rothstein J.A. described how the CRTC "read down" the broad language of ss. 43(5) so as to restrict it to matters within CRTC jurisdiction. At paragraph 25 of his reasons, my colleague observed that "reading down legislation to comply with jurisdictional limits is an acceptable interpretive strategy".

[42]            If, however, subsection 43(4) is given a broader scope than the interpretation favoured by the appellants, I understood them to maintain their position that it is constitutionally invalid. I did not understand the appellants to make an unqualified concession that subsection 43(4) is valid federal legislation.

[43]            Similarly, I did not take the appellants' concession that Parliament could validly legislate in relation to telecommunications to mean that every disposition of such a law was therefore valid. One can concede that Parliament can legislate in relation to criminal law without admitting that every section of the Criminal Code is validly enacted. Consequently, I am of the view that if the construction of subsection 43(4) proposed by the appellants is rejected, this court is called upon to deal with the question of the constitutional validity of subsection 43(4) more broadly construed.

[44]            The construction of subsection 43(4) proposed by the appellants necessarily leaves certain questions which the CRTC cannot address when granting permission for access to municipal streets under that clause, specifically, matters within provincial jurisdiction which do not affect a carrier in a vital part of its undertaking. The appellants say that such a gap is not unreasonable and simply requires the carrier to negotiate with the municipality. The respondents say that this interpretation of subsection 43(4) does not solve the problem which the subsection was designed to overcome, the inability of a municipality and a carrier to conclude an agreement. From the respondents' point of view, the CRTC must have jurisdiction to deal with all unresolved questions between the carrier and the municipality because of the necessity of resolving the impasse so as to allow construction of the transmission line to proceed.

[45]            As a practical matter, both carriers and municipalities have a common interest in concluding an agreement. However, even the City of Vancouver's co-appellants conceded that the latter's demands in this case were excessive, so that common interest in arriving at an agreement is no guarantee that one will be reached. Consequently, the position advocated by the appellants leaves open the possibility that, failing agreement, a carrier could either bypass a municipality, putting into question the national character of the transmission line (in the sense of the area serviced by the transmission line), or be forced to accept conditions which it regarded as detrimental to its interests. The multiplication of such conditions at successive municipal boundaries could ultimately affect a carrier's undertaking in a vital aspect, even if no single imposition of those conditions could be said to do so.

[46]            If the object of the subsection is to ensure that the construction of the transmission line is not frustrated by unreasonable demands, the CRTC must be able to decide any question which could result in an impasse, and its decision must bind both parties. This does not leave room for questions which are exempt from consideration and on which an impasse could continue to the point of frustrating the construction of the transmission line. In its simplest form, the thrust of the appellants' interpretation of subsection 43(4) is that Parliament is competent to create the conditions for an impasse by requiring the carrier to obtain the permission of the municipality but incompetent to provide for its resolution by giving the CRTC the power to dispose of all questions upon which the carrier and the municipality cannot agree. I have no difficulty concluding that the appellant's position cannot be correct.

[47]            I have concluded that subsection 43(4) is valid federal legislation because it is necessarily incidental to the exercise of exclusive federal jurisdiction over telecommunications, which includes the construction of transmission lines. Subsection 43(4) is a response to the interlocking rights given to municipalities and carrier in the preceding paragraphs of the Act:

[48]            The policy behind the requirement that carriers obtain municipal permission to enter upon and break up municipal streets is clear. It is designed to ensure that there is consultation between the carriers and the municipal authorities. However, it is equally clear that carriers cannot be put in the position where they are subject to being held to ransom at each municipal boundary. The Privy Council came to the same conclusion with respect to dominion railways and provincial lands in Attorney General for Quebec v.Nipissing Central Railway Company et al., [1926] A.C. 715 at p. 721 where the issue was the power of the federal crown to take provincial crown lands for railway purposes:

"...but if any executive consent was to be required to the taking of Crown lands for the purposes of a Dominion railway, it was to be expected that the consent required would be that of the Dominion Government, for otherwise the construction of the railway be dependent upon the consent of the Government of each Province through which it was intended to pass."

[49]            As a result, I concluded that subsection 43(4) gives the CRTC the authority to decide any question upon which a carrier and a municipality are unable to agree, and to grant the carrier permission to enter upon and break up municipal streets for the purpose of constructing its transmission line upon such conditions as it considers appropriate.

[50]            The difficulty with the appellants' argument is that there is no doctrine of intergovernmental immunity such as they propose which would result in a reading down of federal legislation so as to protect provincial jurisdiction except where a federal undertaking would be sterilized, or affected in a vital part of its undertaking. Such a doctrine was explicitly rejected in Friends of the Old Man River Society v. Canada, [1992] 1 S.C.R. 3 at pp. 68-69:

That begs the question and posits an erroneous principle that seems to hold that there exists a general doctrine of interjurisdictional immunity to shield provincial works or undertakings from otherwise valid federal legislation. As Dickson C.J. remarked in Alberta Government Telephones, supra, at p. 275:

It should be remembered that one aspect of the pith and substance doctrine is that a law in relation to a matter within the competence of one level of government may validly affect a matter within the competence of the other. Canadian federalism has evolved in a way which [page69] tolerates overlapping federal and provincial legislation in many respects, and in my view a    constitutional immunity doctrine is neither desirable nor necessary to accommodate valid provincial objectives.

[Note: A party may attempt to avoid a finding of constitutional invalidity by "reading down" a legislative provision, but the courts will not limit federal legislative jurisdiction by "reading down" federal legislation to avoid intruding upon areas of provincial jurisdiction.]

[51]            In this case, once it is determined that a mechanism is required to resolve disputes arising by reason of the rights given to municipalities and carriers under section 43, there is no doctrine which would limit the scope of the questions which can be decided. For that reason, the appellants' constitutional challenge to validity or operability of subsection 43(4) must fail.

[52]            However, the fact that there are no constitutional limitations on the CRTC's authority to impose conditions does not mean that its discretion to impose conditions is totally unfettered. The appellants' attempt to circumscribe the CRTC's jurisdiction appeared to be motivated, in part, by the CRTC's claim that "the only qualification with respect to the scope of the Commission's jurisdiction is that the Commission must have due regard to the use and enjoyment of the highway or other public place by others". (Para. 150 of the CRTC's decision).

[53]            When one reads this passage in context, it is clear that the CRTC is rejecting the limits which the respondents sought to impose on its ability to deal with matters in issue between the parties. The CRTC was making the point that the statute which gave it the authority to decide questions between carriers and municipalities directed it to consider only the use and enjoyment of other users of streets and public spaces.

[54]            However, the CRTC, like any other administrative tribunal, is bound to decide the matters before it by taking into account relevant considerations. While it is true that subsection 43(4) requires the CRTC to take into account the use and enjoyment of the streets by other users, it does not necessarily follow that there are no other relevant considerations to be taken into account.

[55]            This brings me to the issue of compensation for the use and occupation of municipal land. Vancouver's Notice of Appeal contains the following:

The Appellant asks that:

a) the court allow this appeal

[...]

c) the CRTC erred in law and exceeded its jurisdiction in holding that it could make an order under ss. 42(1), 43(4) and/or 44 of the Act allowing a Canadian carrier to enter on, break up, occupy and use municipal lands without payment of full compensation to the municipality for the value of the interest or right in the municipal lands acquired by the Canadian carrier.

d) the CRTC erred in law and exceeded its jurisdiction by deny municipalities full compensation for the occupancy and use of municipal lands by Canadian carriers while refusing to admit evidence with respect to the financial impact on Canadian carriers, thereby failing to give any consideration to the financial impact on Canadian carriers of such payments.

[56]            Each of the Notices of Appeal contains similar language. It is clear from this that the appellants understood the CRTC to have decided that they were entitled to no compensation whatsoever for the use and occupation of their land.

[57]            The CRTC's conclusions with respect to this issue are reproduced below:

117. The Commission considers that, in most instances, it would be extremely difficult to establish a "market based" rate for the use of municipal property, as there is no "free market", consisting of totally willing buyers and sellers, for municipal consent to occupy and use municipal rights-of- way. The Commission is not satisfied that Vancouver's reference to adjacent lands is appropriate in these circumstances, given that the land in which the right of way is situate is a public street and in most instances will remain dedicated to that purpose. By contrast, adjacent lands are largely privately owned, are dedicated to diverse and essentially private uses and are freely traded. In addition, the Commission notes that much of the value of the adjacent land derives from the fact that the land is serviced by "utilities" such as communications carriers

118. Further, the Commission considers that, provided the municipality's causal costs are recovered from carriers, as discussed above with regard to other elements of Vancouver's costing proposal, there is no issue of taxpayers "subsidizing" carriers, in that additional costs imposed by the construction, maintenance, and operation of the transmission lines would be absorbed by carrier, not taxpayers.

119. Finally, the Commission considers that many of the arguments and concerns raised by Vancouver and other municipalities in support of such fees (scarcity, congestion, etc.) can be addressed through improved planning (see Joint Planning issues, above).

120. In light of the above, the Commission considers that the blanket imposition of "market based" charges is not necessary or appropriate.

121. The Commission considers that percentage of revenue fees raise the same concern as land-based charges.

122. Accordingly, the Commission is not including a requirement for Ledcor to pay a land-based charge in the terms and conditions of its permission to Ledcor to construct, maintain and operate the transmission lines in question.

[58]            While Vancouver's submissions to the CRTC make it clear that it is asserting a claim to compensation, the CRTC appears to have disposed of the question on the basis of rejecting Vancouver's proposals with respect to the manner in which the compensation is to be determined. It does not deal with the question of entitlement apart from the question of method of calculation. The two issues are obviously distinct; the rejection of particular methodologies does not necessarily lead to the conclusion that municipalities have no right to compensation for the use and occupation of their lands. On the other hand, a finding that municipalities are not entitled to compensation makes any discussion of the method of determining such compensation superfluous. Since the CRTC took the trouble to consider Vancouver's proposals, it cannot be said to have dismissed the claim for compensation out of hand.

[59]            It will be recalled that the portion of Ledcor's transmission line which intersected Vancouver's streets was located on the CPR right of way, and that Ledcor had paid CPR a fee for the right to bury its transmission line on the latter's right of way. This means that every lineal foot (or meter) of Ledcor's transmission line on the CPR right of way bore its pro rata share of the fee paid to CPR. On those facts, having dismissed Vancouver's proposals for compensation, the CRTC was still faced with the fact that each meter of Ledcor's transmission line, except the street crossings, had a cost associated with land use. The question which arose was whether there was any reason in principle why those portions of the transmission line under the streets should not bear the same cost as the parts of the line on either side of the street. In saying this, I am not suggesting that the CRTC was bound to accept the CPR fee as setting the appropriate compensation rate for Vancouver. I am saying that the issue before the CRTC was compensation for the use of Vancouver land, and that the facts before the CRTC raised both the question of entitlement and an alternate way of determining the amount of compensation.

[60]            In my view, the appellants read more into the CRTC's decision than appeared there. The CRTC rejected Vancouver's proposed methodology for calculating fees to be charged to carriers. It also rejected certain arguments as to management of scarce resources which the appellants had tied to "market based" compensation. And, in the end, it declined to order Ledcor to compensate Vancouver for the use and occupation of its land. However, it did so on the basis of rejecting particular means of calculating that compensation rather than on the basis of a finding of an absence of entitlement to such compensation. The question of Vancouver's entitlement to compensation, however calculated, remains unanswered. It was a question which was clearly before it and which it was required to answer.

[61]            The counter-argument is that the CRTC did exactly what it was required to do by the terms of subsection 43(4): it determined the conditions of Ledcor's access to Vancouver's streets. Having done so, it had fulfilled its mandate. It was not obliged to go behind Vancouver's demands to see if some other form or type of compensation was appropriate. If, on a subsequent application, a municipality proposes a different compensation formula, the merits of that proposal can be considered then.

[62]            The difficulty is that the CRTC invited the participation of entities who were not implicated in the specific dispute, and then held its decision out as providing assistance to carriers and municipalities in negotiating the terms of access in the future. It is somewhat disingenuous, in that context, to argue that the decision should be treated as simply disposing of a specific demand for compensation. The respondents certainly supported the decision on the basis that municipalities have no right to compensation for the use of their streets by federally regulated entities. And the appellants approached the appeal on the basis that it was the right to compensation which was in issue. No one, not even Vancouver, argued that the CRTC erred in not accepting Vancouver's compensation proposals.

[63]            The question of entitlement to compensation is implicit in a request for a particular form of compensation. Whether the question of entitlement must be specifically addressed depends upon the context. On the facts of this proceeding, I believe it was incumbent upon the CRTC to address the implicit as well as the explicit question before it.

[64]            The failure to answer a question can be qualified as an error of law, in the same way as asking the wrong question was found to be an error of law in Upper Lakes Group Inc. v. Canada (National Transportation Agency), [1995] 3 F.C. 395 (C.A.) at para. 48. Or, it can be treated as jurisdictional error as that term is used in the jurisprudence following [1975] 1 S.C.R. 382">Service Employees' International Union, Local No. 333 v. Nipawin District Staff Nurses Assn., [1975] 1 S.C.R. 382. In either case, it is not a matter with respect to which the CRTC is due any deference since it represents a failure to exercise its discretion, as opposed to an alleged abuse of that discretion. As noted by Létourneau J.A. this decision binds only the parties to the original dispute. However, considering the CRTC's view that the terms of the decision "will also assist carriers and municipalities in negotiating the terms and conditions under which municipalities will grant carriers consent" to access its streets, the question of entitlement to compensation ought not to be allowed to go by default on the basis of the CRTC's rejection of Vancouver's overreaching demands. I would therefore allow the appeal on this issue only, and remit the matter to the CRTC for determination of the question of the entitlement of Vancouver to compensation for the use and occupation of its land.

                                                                                                                                  "J.D. Denis Pelletier"                 

                                                                                                                                                                  J.A.

                                                    FEDERAL COURT OF APPEAL

                              NAMES OF COUNSEL AND SOLICITORS OF RECORD

DOCKETS:                                        A-395-01, A-396-01, A-397-01, A-398-01 and A-399-01

STYLE OF CAUSE:                           FEDERATION OF CANADIAN MUNICIPALITIES AND

OTHERS

v.

AT & T CANADA CORP. AND OTHERS

PLACE OF HEARING:                     Ottawa, Ontario

DATE OF HEARING:                       October 29 and 30, 2002

REASONS FOR JUDGMENT:       LÉTOURNEAU J.A.

CONCURRED IN BY:                      NADON J.A.

DISSENTING IN PART BY:           PELLETIER J.A.

DATED:                                                December 17, 2002

APPEARANCES:

Mr. John Nelligan, Q.C.                                                                FOR THE APPELLANT -

Mr. Christian Tacit                                                                          Federation of Canadian

Ms. Erin Smith                                                                               Municipalities

Ms. Patsy J. Scheer                                                                        FOR THE APPELLANT -

City of Vancouver

Mr. Andrew J. Roman                                                                  FOR THE APPELLANT -

Ms. Michelle Wong                                                                        City of Ottawa & City of Toronto

Ms. Mary Ellen Donovan                                                               FOR THE APPELLANT -

Halifax Regional Municipality

Mr. Brand R. Inlow, Q.C.                                                             FOR THE APPELLANT -

City of Calgary

Mr. Jeffrey M. Loenen                                                                  FOR THE INTERVENER -

Attorney General of British

Columbia

Mr. Thomas G. Heintzman, Q.C.                                                  FOR THE RESPONDENTS -

Ms. Susan L. Gratton                                                                     AT & T Canada Corp., AT & T Canada Telecom Services Company, Canadian Cable Television

Assoc., TELUS Communications Inc., TELUS Corporation, Call-Net

Communications Inc., Call-Net

Enterprises Inc. and Call-Net

Technology Services Inc.

Mr. Brian A. Crane, Q.C.                                                              FOR THE RESPONDENTS -

Mr. Ronald D. Lunau                                                                      Aliant Telecom Inc., Bell Canada,

Ledcor Industries Ltd., MTS

Communications Inc. and WFI

Urbanlink Ltd.

Mr. Neil Finkelstein                                                                        FOR THE RESPONDENTS -

Ms. Charlotte Kanya-Forstner                                                     GT Group Telecom Services Corp.

and Shaw Communications Inc.

Mr. Peter M. Southey                                                                     FOR THE RESPONDENT -

Attorney General of Canada

SOLICITORS OF RECORD:

Nelligan O'Brien Payne LLP                                                          FOR THE APPELLANT -

Ottawa, Ontario                                                                             Federation of Canadian

Municipalities

Law Department, City of Vancouver    FOR THE APPELLANT -

Vancouver, B.C.                                                                            City of Vancouver

Miller Thompson LLP                                                                     FOR THE APPELLANT -

Toronto, Ontario                                                                            City of Ottawa & City of Toronto

HRM - Legal Services                                                                  FOR THE APPELLANT -

Halifax, N.S.                                                                                   Halifax Regional Municipality

Law Department, City of Calgary                                                  FOR THE APPELLANT -

Calgary, Alberta                                                                             City of Calgary

Ministry of Attorney General                                                          FOR THE INTERVENER -

Victoria, B.C.                                                                                  Attorney General of British

Columbia

McCarthy Tétrault LLP                                                                 FOR THE RESPONDENTS -

Toronto, Ontario                                                                            AT & T Canada Corp., AT & T Canada Telecom Services Company, Canadian Cable Television

Assoc., TELUS Communications Inc., TELUS Corporation, Call-Net

Communications Inc., Call-Net

Enterprises Inc. and Call-Net

Technology Services Inc.

Gowling Lafleur Henderson LLP                                                   FOR THE RESPONDENTS -

Ottawa, Ontario                                                                             Aliant Telecom Inc., Bell Canada,

Ledcor Industries Ltd., MTS

Communications Inc. and WFI

Urbanlink Ltd.

Blake, Cassels & Grayden LLP                                                    FOR THE RESPONDENTS -

Toronto, Ontario                                                                            GT Group Telecom Services Corp.

and Shaw Communications Inc.

Mr. Morris Rosenberg                                                                  FOR THE RESPONDENT -

Deputy General of Canada                                                             Attorney General of Canada

Ottawa, Ontario