Confederation Broadcasting (Ottawa) Ltd. v. Canadian Radio-Television Commission, [1971] SCR 906

Supreme Court of Canada

Confederation Broadcasting (Ottawa) Ltd. v. Canadian Radio-Television Commission, [1971] S.C.R. 906

Date: 1971-04-05

Confederation Broadcasting (Ottawa) Limited Appellant;

and

Canadian Radio-Television Commission Respondent.

1970: December 2; 1971: April 5.

Present: Fauteux C.J. and Abbott, Martland, Judson, Ritchie, Hall, Spence, Pigeon and Laskin JJ.

ON APPEAL FROM THE CANADIAN RADIO-TELEVISION COMMISSION

Broadcasting—Jurisdiction of Commission—Licence—Renewal—Conditions—Right to apply for further renewal—Denial of natural justice—Broadcasting Act, 1967-68 (Can.), c. 25, ss. 2, 17(1).

The appellant is the holder of a private commercial radio broadcasting licence for station CKPM in Ottawa, granted in 1964 and effective to March 31, 1970. In February 1970, the Canadian Radio-Television Commission held hearings on the renewal of various radio broadcasting licences, including that of the appellant. The Commission renewed the appellant’s licence only until December 31, 1970, and stated that the frequency would be subject to re-assignment. The reasons given for the decision were that the appellant at the hearing had

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not satisfied the Commission that the principals of the licensee company had retained either management or financial control of the station and that the licensee had not demonstrated its ability to carry out its responsibilities under the Broadcasting Act. The appellant obtained leave to appeal to this Court and asked that the Commission be ordered to renew the licence for a further period of five years.

Held (Fauteux C.J. and Abbott, Judson and Ritchie JJ. dissenting): The appeal should be allowed.

Per Martland, Hall, Spence, Pigeon and Laskin JJ.: The Commission’s decision cannot stand in so far it denied the appellant the right to apply for a further renewal. The executive committee of the Canadian Radio-Television Commission is empowered by s. 17(1) of the Broadcasting Act to issue renewals of broadcasting licences for such terms not exceeding five years as it considers reasonable and subject to such conditions related to the circumstances of the licensee as it deems appropriate for the implementation of the broadcasting policy enunciated in s. 2 of the Act. However, a renewal term cannot be coupled with a peremptory denial, at the time the term is granted, of status to apply for a further renewal prior to expiration of the term. The Act nowhere gives such a power expressly; and in view of the range of authority to revoke, suspend, renew, and amend, as well as to issue licences, there is no justification in finding such a power implied in the authority to renew. The Act gives a licensee, whose licence has not been revoked or suspended during its currency, a right to apply for a renewal.

Per Martland, Hall, Spence and Pigeon JJ.: The appellant had no notice whatsoever that the issue of the financial and management control of the company would be canvassed at the hearing or in the consideration of the Commission following the hearing. The requirements of natural justice demand that a person have full and complete notice of the charges against him and an opportunity to reply thereto. Both these requirements were breached in the present case and by such breach the Commission lost jurisdiction to take action which it did take:

Per Fauteux C.J. and Abbott, Judson and Ritchie JJ., dissenting: The Commission’s decision was

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squarely within the statutory power given to the Commission by s. 17(1)(c) of the Act. It could have refused to renew the licence and, on the material before the Court, its decision would not be open to criticism. There was nothing wrong in giving a short renewal and throwing the licence open to competition.

APPEAL from an order of the Canadian Radio-Television Commission under the Broadcasting Act. Appeal allowed, Fauteux C.J. and Abbott, Judson and Ritchie JJ. dissenting.

W.G. Burke-Robertson, Q.C., for the appellant.

J.D. Hylton and Stephen Borins, for the respondent.

The judgment of Fauteux C.J. and of Abbott, Judson and Ritchie JJ. was delivered by

JUDSON J. (dissenting)—The appellant, Confederation Broadcasting (Ottawa) Limited, is the holder of a private commercial broadcasting licence for Station CKPM in Ottawa, granted on April 22, 1964. The licence was to remain in force until March 31, 1970. On February 10, 1970, the Commission held hearings for the renewal of licences, and on March 21, 1970, it issued its decision on the appellant’s application in the following terms: “The licence is renewed only until December 31, 1970.” The licensee now asks the Court to set aside this decision and order the Commission to renew the licence for a further period of five years. In my opinion, the application should be dismissed.

When the licence was issued in 1964, it was made subject to five special conditions respecting ownership and operation, three of which I now quote:

1. This licence shall be conditional upon the licensee being the owner of the station licensed, and upon the ownership of the station licensed not being transferred without the permission of the Minister having been first obtained upon the recommendation of the Board of Broadcast Governors.

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2. If the licensee is incorporated as a private company the licence shall be conditional upon the ownership, or control of any share of the capital stock of the company, not being transferred either directly or indirectly without the permission of the Minister having been first obtained, upon the recommendation of the Board of Broadcast Governors, and upon the control of the station licensed not being transferred in any manner whatsoever without the permission of the Minister having been first obtained upon the recommendation of the Board of Broadcast Governors.

4. The licensed station shall be operated in fact by the licensee in person or by bona fide employees of the licensee; provided, however, that this condition may be omitted or rescinded by the Minister acting upon the recommendation of the Board of Broadcast Governors.

The record before us shows that the licensee was in breach of one or another of these conditions from the beginning of its operation.

The appellant obtained its financing in 1964 from one G.W. Stirling, who owned a Windsor radio station and had other interests in the broadcasting field. By a contract dated January 1964, which was before the date of the granting of the licence, Stirling obtained the widest powers of management and control for a term of ten years at a salary of $1,000 per month, plus a percentage of the gross sales. A copy of this management contract was filed in May of 1964 with the Board of Broadcast Governors (the Commission’s predecessor). By December 1, 1968, the station owed Stirling for loans and arrears under the management contract $240,000.

The details of Stirling’s control, both managerial and financial, came out at a hearing of the Commission in November of 1968 which was held to consider the renewal of the licence for Stirling’s Windsor station. He was asked about the Ottawa station and he admitted that he held 85 per cent of the common shares of the station, which shares had been endorsed in blank by J.A. Stewart, President and principal shareholder of the station. Following this there were meetings between Mr. Stewart and the executive committee of the Commission to discuss management and financial control of the station.

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Stewart next sought a loan from the Bank of Montreal for the $240,000 owing to Stirling or his companies. From the proceeds of the loan, $50,000 was paid to Stirling. A Stirling company, Apache Communications Limited, guaranteed the loan to the extent of $190,000 and put up full security for this amount. The bank also took an assignment of the station’s accounts receivable and a pledge of all the common shares held by Stewart. The Commission subsequently objected to the pledge of the shares and the bank returned these to Stewart and told the Commission that the shares had been deposited by Stewart as evidence of good faith only.

On March 31, 1969, the Commission wrote at length to Mr. Stewart and asked him to answer in detail several questions relating to the precise involvement of Mr. Stirling with Station CKPM. By letter dated May 6, 1969, Stewart replied in detail, answering each of the questions fully. In his reply, he admitted that while certain paragraphs in the management contract appeared to give Stirling a measure of control which could usurp his authority as licensee, these powers had never been exercised. There was no further correspondence between the parties on these issues. It was soon after this that the bank released the shares from the pledge.

On December 3, 1969, the Commission published a Notice of Public Hearing which indicated hearings would begin on February 10, 1970, with respect to licence renewals. The renewal of Station CKPM’s licence was among those to be heard at that time. In a letter dated January 8, 1970, Stewart advised the respondent that negotiations had been entered into with Bushnell Communications Limited for the sale of all issued shares in his company. He further requested that, as the licence renewal and the controversial matter concerning the Stirling agreement were involved in the proposed sale, the hearing set for February 10 might be postponed for a short time until the purchaser applied for approval of the sale, and that, in the meantime, the licence be extended.

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On January 19, 1970, the secretary of the respondent advised Stewart in conversation that the letter of January 8 had to be read at the public hearing on February 10.

In a letter dated January 20, 1970, the Commission stated that a representative must appear at the hearing for the licensee, and requested the name of the person so designated. On January 22, 1970, the appellant notified the Commission that it would be represented by a solicitor.

At the hearing on February 10, 1970, the solicitor told the Commission that an agreement to purchase the shares of the appellant had been executed on February 9, 1970, by Bushnell Communications, and that the agreement would be filed with the Commission later in the week. He further stated that the purchaser had assumed all obligations under the “Stirling Agreement” of 1964, and that approval of the share transfer would be sought at the respondent’s hearings in March 1970. A two-year renewal was requested in the interim. Upon being asked certain specific questions relating to management and financial control of Station CKPM, he admitted that he knew of these matters only in a general way.

On February 11, 1970, Stewart sent a telegram to the respondent, stating that “if sale to Bushnell of (CKPM) is not approved, we are well able to operate and will in fact do so.” On February 12, 1970, he appeared at the public hearings still in progress and requested the opportunity to be heard as to those issues raised at the February 10 hearing. Permission was denied. On February 13, 1970, Stewart wrote two letters to the respondent; in the first he apologized for the misunderstanding on his part that he need not appear in person, and in the second he requested a rehearing. This was not granted.

The agreement to purchase executed by Bushnell Communications and the appellant provided that while the purchaser was to assume all obligations to Stirling, negotiations were to be entered into (and if possible completed) with Stirling for the rescission of the existing Consulting Agreement. The formal transfer to the purchaser

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was made contingent upon obtaining the respondent’s approval of the transfer of the shares.

The first question on which leave to appeal was granted is:

1. Whether the Respondent erred in law in failing to give to the appellant notice of the issues intended to be raised at the hearing on the 10th day of February, 1970, and in failing to give to the appellant an opportunity to be heard on such issues.

The licensee contends that the Commission failed to give it notice of the issues intended to be raised at the hearing on February 10, 1970. The essential issue to be determined was whether the licensee’s broadcasting licence was to be renewed, and if it was, for what duration. Section 17(1)(c) of the Broadcasting Act does not provide for an automatic renewal of a broadcasting licence. It provides that the Commission may renew a licence for a term not to exceed five years as the executive committee of the Commission considers reasonable. The onus is on the licensee to persuade the Commission that the licence ought to be renewed and for a particular length of time. The discretion rests with the Commission whether it will renew and for how long. Under s. 22 of the General Radio Regulations, Part II, SOR/63‑297, it is provided that the assignment of a frequency to any station does not confer a monopoly of the use. of such frequency and the licence is not to be construed as conferring any right of continued tenure in respect of such frequency.

I have already mentioned that in the letter of January 8, 1970, the president of the station, Mr. J.A. Stewart, asked only for a short period of extension pending the application for approval of the transfer to Bushnell. As an example of Stewart’s awareness of the issues to be raised, I quote two paragraphs from his letter:

In view of the fact that the renewal of the license and the controversial matters surrounding the Stirling Agreement are intimately bound up with the obligations being assumed by the purchaser, Bushnell Communications Limited, it seems to us that you might consider it appropriate to defer consideration of these matters until a date subsequent to February, 1970 when Bushnell Communications Limited will apply to the Commission for its approval of the purchase of the said shares.

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We would therefore appreciate if you would let us know whether the license may be extended for a short period without a formal hearing pending the application by Bushnell Communications Limited and of this Company in respect of the matters mentioned above.

How can it be said in view of this that the issues between the licensee and the station had not been raised? The issues were known both to the licensee and the Commission and they had been under discussion for a long time. The facts relating to the financial arrangements between the licensee and Stirling had been set out in great detail in the correspondence between the Commission and the licensee. There had been no change in this situation. This is the financial history. Originally, the licensee was under direct obligation to Stirling or his company. The transfer of the loan to the bank still kept Stirling’s company under obligation as a guarantor to the extent of $190,000, for which the bank was fully secured by the guarantor’s pledge of credit notes. If this loan had been called, the immediate result would be payment by the guarantor and its subrogation to the rights of the bank to the extent of $190,000. In other words, the parties would be back where they started to this extent.

The facts relating to the pledge of shares were matters of written record. Stirling had them in the latter part of 1968. When the loan was turned over to the bank they were pledged to the bank and then released from the pledge. These were the facts, incontrovertible and known to both the Commission and the licensee.

I have already mentioned that the Commission told the licensee that it must be represented at the hearing. The licensee was so represented by its solicitor. There was some suggestion on the argument that the representation was inadequate. With this I do not agree. The solicitor could only act according to his instructions. His instructions were to advise the Commission that there was a proposed sale to Bushnell and that the agreement

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would be filed within a very short time. He stated the terms of the Bushnell agreement and requested a two-year renewal. His principal, it will be noted, had asked only for a short period of renewal pending consideration of the Bushnell deal. The only lack in the knowledge of the representative was that he did not know the precise terms of the financial arrangements between the licensee and Stirling. He knew in a general way and he was accurate to this extent. The precise terms were known both to the licensee and the Commission and they had been dealt with in detail in correspondence.

The request for re-hearing was properly refused. There is nothing in the record before us to suggest that there was any additional information, evidence or argument to put before the Commission and there was none put before us in this Court.

Question 2

Whether the Respondent in its Decision exceeded or declined to exercise the jurisdiction committed to it by the Broadcasting Act.

At this point it is desirable to set out the decision in full. It is dated March 25, 1970, six days before the expiry of the original licence:

LICENSE RENEWAL

Decision CRTC 70-71

OTTAWA, ONT.

Licence renewal of Radio Station CKPM Ottawa, Ont.

Decision: The licence is renewed only until December 31, 1970.

The Commission will receive applications until July 10, 1970 for the frequency presently being, used by the licensee. These applications will be heard at the Fall hearings, provided they are acceptable by the Commission.

The Commission will be concerned, however, about continuation of service by the station and will take this factor into consideration when granting a new licence.

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Reasons: The ownership and control of the licensee Company has not been clarified to the satisfaction of the Commission. The evidence heard at the Commission Hearings of November 1968 and February 1970 has not satisfied the Commission that the principals of the licensee company have retained either management or financial control of the station.

In the opinion of the Commission, the licensee has not demonstrated his ability to carry out its responsibilities under the Broadcasting Act.

Because of these circumstances, the Commission has decided that this frequency, which is in the public domain, will be subject to reassignment.

F.K. Foster,

Secretary.

In my opinion this decision is squarely within the statutory power given to the Commission by s. 17(1)(c) of the Broadcasting Act. The relevant provisions of s. 17 are 17(1)(a) and 17(1)(c). These are:

17. (1) In furtherance of the objects of the Commission, the Executive Committee, after consultation with the part-time members in attendance at a meeting of the Commission, may

(a) issue broadcasting licences for such terms not exceeding five years and subject to such conditions related to the circumstances of the licensee (i) as the Executive Committee deems appropriate for the implementation of the broadcasting policy enunciated in section 2 of this Act, and

(ii) in the case of broadcasting licences issued to the Corporation, as the Executive Committee deems consistent with the provision, through the Corporation, of the national broadcasting service contemplated by section 2 of this Act;

(c) issue renewal of broadcasting licences for such terms not exceeding five years as the Executive Committee considers reasonable and subject to the conditions to which the renewed licences were previously subject or to such other conditions as comply with paragraph (a).

This is a case of renewal on terms and not one of revocation. The Commission could have refused to renew after March 31, 1970, and, on the

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material before us, its decision would not be open to criticism. Instead of doing this, it gave the licensee a nine-month renewal and said at the same time that it would throw the licence open to competition. What is wrong with this? This is the very job that the Commission was established to do under s. 17(1)(c) of the Act. In the first place, this licensee had asked for a brief renewal to suit its own purposes without a hearing. When told that it must be represented, the next request was for a two-year extension. It got a nine-month extension on terms. There was no revocation of the licence, and no revocation proceedings were necessary under s. 24 of the Act. I do not accept the proposition that if the Commission grants any kind of renewal, this automatically involves revocation proceedings if there is to be no further renewal.

Question 3

Whether there was any evidence to support the Respondent’s opinion “that the licensee has not demonstrated its ability to carry out its responsibilities under the Broadcasting Act” and whether, if there was no such evidence, this invalidated the Decision.

In my opinion, this question cannot be isolated from the rest of the decision. It follows immediately upon an opinion of the Commission that the licensee had not satisfied it that the principals of the licensee company had retained either management or control of the station. I have set out the facts relating to these matters earlier in this opinion. It is obvious to me that the Commission was right. Financial control and management were still with Stirling and had been from the very beginning of this licence.

I would dismiss the appeal with costs.

The judgment of Martland, Hall, Spence and Pigeon JJ. was delivered by

SPENCE J.—I have had the opportunity of reading the reasons of Mr. Justice Laskin who has outlined the facts in very considerable detail

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so that it will be unnecessary for me to repeat them except where I wish to emphasize a particular element.

Mr. Justice Laskin would dispose of the appeal by making a declaration that the appellant was entitled to apply for a renewal of the licence already renewed for a limited period, to December 31, 1970, and that such renewed term already granted by the Commission must be deemed to remain in force for the reasonable period necessary to enable the appellant to apply for such further renewal and its application to be heard and a decision given. In view of the fact that the Commission, at the suggestion of this Court after the hearing of the appeal, has already undertaken that the licence would be extended to include the time which may be required for this Court to render its judgment, it would seem Mr. Justice Laskin’s proposed disposition is an efficient and workable one.

Mr. Justice Laskin arrived at his conclusion by a consideration of the provisions of the Broadcasting Act, 1967-68 (Can.), c. 25, and concluded that the statute did not permit the Commission to renew the licence for a stipulated time and provide as a term of the renewal that at the end of that period the licensee should not have a right to apply for a further renewal. Having come to this conclusion, Mr. Justice Laskin found it unnecessary to express any view as to the submission made by the appellant that it was denied natural justice by the proceedings of the respondent.

Although I agree with Mr. Justice Laskin’s analysis and conclusion as to the effect of the provisions of the Broadcasting Act, I think it proper to refer to and discuss that submission made by the appellant.

The licence which had been granted to the appellant by the Minister on April 22, 1964, was to remain in force until March 31, 1970. Almost immediately after the granting of the licence the appellant had entered into various arrangements with one Geoffrey W. Stirling. These arrangements were both for the financing of the new licensee and for the management of its broadcasting business by the said Mr. Stirling and/or

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his company Apache Communications Limited. Mr. Stirling testified, at a meeting of the Commission held on November 18, 1968, to consider the renewal of the licence for another station owned and controlled by Mr. Stirling known as CKWW in Windsor, that he held 85 per cent of the shares of the appellant which had been delivered to him endorsed in blank by Mr. James Alan Stewart, the owner thereof and the president of the appellant, and that he also held a management contract. Mr. Stirling further testified at that time that he had attended the then Chairman of the Board of Broadcast Governors, the predecessor of the present respondent Commission, and had explained the whole situation to him. No further reference would seem to have been made to the situation which resulted from these arrangements by either the Board or its successor, the respondent, until the said November 18, 1968, when Mr. Stirling outlined the situation in giving evidence in reference to the proposed renewal of the licence for the other station. Neither the appellant nor Mr. James Alan Stewart, its president, had any notice of the hearing which took place on November 18, 1968, and Mr. Stewart was neither present nor represented. As a result of Mr. Stirling’s testimony at that hearing, Mr. Stewart testified that he had several conversations with the secretary of the respondent relating to the question of management and financial control of radio station CKPM operated by the appellant and a series of correspondence ensued during the next five months. Much of this correspondence was filed as exhibits to Mr. Stewart’s affidavit sworn on April 14, 1970, on application for leave to appeal to this Court from the decision of the respondent Commission made on March 25, 1970. The decision will be more particularly referred to hereafter.

In the meantime, the arrangements between Mr. Stirling and Apache Communications Limited, on the one part, and Mr. Stewart, on the other, had altered. The amount owing by the appellant to Mr. Stirling and Apache Communications Limited had been repaid to them by borrowing the money from the Bank of Montreal. Mr. Stirling had, it is true, guaranteed the loan by the Bank of Montreal to the appellant and with part of the proceeds of the loan which he received from the

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Bank of Montreal he purchased deposit certificates in the amount of $190,000, representing the major amount of the guarantee, and had left those deposit certificates in the hands of the Bank of Montreal. This latter transaction is set out in the letter from the Assistant Manager of the Bank of Montreal to Mr. F.K. Foster, the secretary of the respondent, dated January 23, 1969. The requirements of the Bank of Montreal before proceeding with the loan on the amount of $240,000 for the purpose of discharging the indebtedness to Apache Communications Limited and Mr. Stirling were outlined in a letter from the Bank to Mr. J.A. Stewart, the president of the appellant, dated January 2, 1969. In that letter, the Bank of Montreal required hypothecation of all issued common stock of the appellant comprising 19,501 common shares and a copy of that letter was forwarded by Mr. Stewart to the respondent on January 9, 1969.

The respondent, over the signature of the secretary, replied to Mr. Stewart on January 20, 1969, requiring that the Assistant Manager of the Bank of Montreal advise the respondent of the additional security “i.e., the amount and terms of the partial security by Apache Communications Limited and the form, amount and terms of the various Certificates of Deposit”. It was in reply to this demand that the Assistant Manager of the Bank of Montreal forwarded to the respondent his letter of January 23, 1969, to which reference was made above.

On March 31, 1969, the respondent, over the signature of its secretary, addressed to Mr. Stewart, the president of the appellant, a very long letter in which it made many requests for further information and clarification and on May 6, 1969, Mr. Stewart replied to that letter by his own communication, also in great detail, in which he set out and answered seriatim all requests for information and clarification made in Mr. Foster’s letter of the 31st of March.

On April 3, 1969, the Assistant Manager of the Bank of Montreal returned, in a letter to Mr. Stewart, the certificates for the 19,501 common shares of the appellant which had been deposited by Mr. Stewart with the Bank of

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Montreal at the time of the loan of $240,000 to the appellant. In this letter, the said Assistant Manager concludes with the words:

As mentioned to you today, these securities were being held by us as evidence of good faith only.

This action by the Bank of Montreal was reported to the respondent in Mr. Stewart’s letter of May 6, 1969. Mr. Stewart further stated in the said letter that no question of voting rights arose or was discussed with the Bank at the time the loan was made or at any other time and that he, Mr. Stewart alone, had the right to vote the shares in the appellant during the period of the bank loan.

No further reference to the question as to the financing and management of the appellant was made by the respondent or by any officer thereof after the receipt of Mr. Stewart’s letter dated May 6, 1969.

Mr. Stewart deposes in his affidavit that in or about the month of October 1969 he was approached by Bushnell Communications Limited of Ottawa with an offer to purchase his shares in the appellant company and that after negotiations an agreement for such sale was made. This agreement bore the formal date of December 31, 1969, but it was not actually executed until February 9, 1970. In the meantime, that is, during the course of these negotiations, a notice of public hearing was issued by the respondent giving notice of a meeting to be held at 9:30 a.m. on Tuesday, February 10, 1970, at the King Edward Hotel, in Toronto. The notice stated:

Among other matters, the Commission will consider the licence renewals of the following broadcasting undertakings whose licences expire on March 31, 1970, September 1, 1970, September 30, 1970, October 17, 1970, November 1, 1970, March 31, 1971 and March 31, 1972, respectively.

The notice continued with a listing of licence renewals and in paragraph A entitled BROADCASTING UNDERTAKING LICENCES EXPIRING MARCH 31, 1970, PRIVATELY OWNED AM BROADCASTING UNDERTAKINGS, there are listed a very large number of

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radio stations including CKPM, Ottawa, Ontario. Similar lists followed as to the various other stations having different expiry dates.

Although the notice was dated December 3, 1969, Mr. Stewart, in his affidavit, deposed that it was only received on or about January 21, 1970, and the letter enclosing it dated January 20, 1970, is filed as an exhibit to Mr. Stewart’s affidavit. Previously, on January 8, 1970, Mr. Stewart had forwarded to the secretary of the respondent a letter in which he outlined the proposed sale of his shares to Bushnell Communications Limited. That letter contained two paragraphs which were the subject of much comment during the appeal and which read as follows:

In view of the fact that the renewal of the license and the controversial matters surrounding the Stirling Agreement are intimately bound up with the obligations being assumed by the purchaser, Bushnell Communications Limited, it seems to us that you might consider it appropriate to defer consideration of these matters until a date subsequent to February, 1970 when Bushnell Communications Limited will apply to the Commission for its approval of the purchase of the said shares.

We would therefore appreciate it if you would let us know whether the license may be extended for a short period without a formal hearing pending the application by Bushnell Communications Limited and of this Company in respect of the matters mentioned above.

The letter dated January 20, 1970, enclosing the notice of hearing does not refer to Mr. Stewart’s letter of January 8, 1970, but simply requests that the respondent be notified of the names and designations of the persons who will be attending the hearing. On the 22nd of January, Mr. Stewart replied to that request stating that Mr. Ken McCloskey, a solicitor, would attend on behalf of the appellant.

Mr. Stewart further deposed that on January 19, 1970, Mr. Foster, the secretary of the respondent, also notified him that the public hearing would be held on February 10, 1970, at which the renewal of the appellant’s licence would be considered and at which the respondent required that Mr. Stewart’s letter of the 8th of January addressed to the Commission be read. This, of course, was the letter in which Mr. Stewart in-

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formed the Commission of the pending sale of his shares to Bushnell Communications Limited and requested a renewal only to cover the period until application would be made to the respondent for approval of the transfer of the shares.

No reference was ever made by the respondent or anyone on its behalf in communication either by way of public notice or by correspondence or personal conversation to any further investigation of the financial control of the appellant or of any part which Mr. Stirling and Apache Communications Limited had in its management or control.

Under these circumstances, Mr. McCloskey, the solicitor for the appellant, attended the hearings on February 10, 1970, which were presided over by the Chairman of the Commission; neither Mr. Stewart, the president of the appellant, nor any other officer, attended, and this fact, of course, was well known to the respondent as, in compliance with the respondent’s request, the appellant had designated Mr. McCloskey alone to appear on its behalf. Mr. McCloskey commenced his presentation by advising of the proposed sale of the shares to Bushnell Communications Limited and concluded his original presentation with a statement:

On behalf of CKPM, at this time, I would appreciate it if, for the meantime, the commission would renew the licence of the Confederation Broadcasting for the period of two years and then deal with the application for the approval of the transfer of shares at the hearing next month.

Counsel on behalf of the respondent immediately commenced to question and, I might say, cross-examine Mr. McCloskey upon the details as to financing and control of the appellant, the subject-matter which had been dealt with in the long series of conferences and correspondence to which I have referred ending on May 6, 1969, and to which no reference had been made thereafter. Mr. McCloskey was taken completely by surprise and was quite unable to give any positive or authoritative information. The chairman purported to be considerably interested in Mr. McCloskey’s inability to provide such information and I am sure that he failed to realize that Mr. McCloskey was not prepared simply for the reason that there was no notice whatsoever that

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those subjects would be the matter of inquiry at the hearing. Mr. McCloskey had his file with him and was only able to repeat any information which the file contained. The brief hearing of the Commission as to the renewal of the appellant’s licence concluded on that day. Mr. Stewart has deposed that when he learned of the situation he and the vice-president and counsel of the appellant immediately attended Toronto where the hearings were still proceeding in reference to the renewal of other licences and attempted, by personal attendances, by telegram and by letter to obtain a continuance of the hearings as to the renewal of the appellant’s licence so that Mr. Stewart who had all the information available could outline it and receive the assistance of the vice-president and counsel who knew such matters intimately both from a legal and a practical point of view. Such an opportunity was refused to the appellant.

Mr. Stewart deposed that at ten o’clock in the evening on March 31, 1970, the day on which the appellant’s licence to operate was due to expire, he received a telegram advising him of the respondent’s decision to extend the licence only to December 31, 1970, a period of nine months. The decision as to the renewal dated March 25, 1970, included a term “the commission will receive applications until July 10th, 1970, for the frequency presently being used by the licensee. These applications will be heard at the fall hearings, provided they are acceptable by the Commission”.

Short reasons were set out in the decision of the respondent, as follows:

Reasons: The ownership and control of the licensee company has not been clarified to the satisfaction of the Commission. The evidence heard at the Commission Hearings of November 1968 and February 1970 has not satisfied the Commission that the principals of the licensee company have retained either management or financial control of the station.

In the opinion of the Commission, the licensee has not demonstrated his ability to carry out its responsibilities under the Broadcasting Act. Because

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of these circumstances, the Commission has decided that this frequency, which is in the public domain, will be subject to reassignment.

I am in agreement with counsel for the appellant that those reasons, and particularly the last sentence thereof, are plain indication, firstly, that the appellant would not be able to apply for a further renewal and, secondly, that even if the appellant filed an application for a new licence along with the other competitors such application for a new licence would not be successful. The word “reassignment” at the very end of the reasons is most significant. In addition, the appellant has filed an affidavit of one Kevin Doyle in which he has sworn that the chairman of the respondent commission had stated to him on March 31, 1970, that it was “inconceivable that the commission would consider an application for such frequency by the present owner, Confederation Broadcasting (Ottawa) Limited”. This affidavit was not the subject of cross-examination nor was there any evidence adduced to rebut it.

I have recited the facts in reference to the controversy as to the financial control and management control of the appellant and the consideration of that issue by the respondent commission at its hearing on February 10, 1970, and its reasons with some particularity in order to demonstrate that the appellant had no notice whatsoever that that issue would be canvassed at the said hearing or in the consideration of the respondent Commission following the hearing. Certainly after the matter had been ignored for well over four years, it had been the subject of very close scrutiny by the Commission during the period between December 1968 and May 1969 but it had not been referred to thereafter.

The respondent commission had exact notice of the course which the appellant intended to pursue at the hearing on February 10, 1970, and had apparently acquiesced in that course by informing Mr. Stewart that his representative would be required to read his letter of January 8, 1970, outlining the proposed sale of the shares. Moreover, the commission had failed, if one could not say it had refrained from, replying to that letter to inform the appellant that much

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more than any proposed sale of shares would be considered on the hearing. Counsel for the respondent has stressed the two paragraphs in the letter of January 8, 1970, which I quoted above, as indication that the appellant knew that the matter of financial control would be considered by the respondent Commission at the hearing. The words relied upon are:

In view of the fact that the renewal of the licence and the controversial matters surrounding the Stirling Agreement are intimately bound up with the obligations being assumed by the purchaser, Bushnell Communications Limited …

Counsel for the appellant submitted that those words must mean the controversy between the appellant and Mr. Stewart as its president, on the one hand, and Apache and Mr. Stirling, on the other hand. He has pointed out that the management agreement with Mr. Stirling made back in 1964 had not been carried out by either side over a long period and that Mr. Stewart was doing his best to get rid of it and further that the agreement with Bushnell Communications provided that the latter should institute discussions with Mr. Stirling with a view to terminating the existing agreement with Confederation Broadcasting. In fact, the recital of such provision in the agreement appears in the very paragraph preceding that relied on by counsel for the respondent.

It is quite plain that the requirements of natural justice demand that a person have full and complete notice of the charges against him and an opportunity to reply thereto. It has been said in this Court in two recent decisions: Regina v. Quebec Labour Relations Board, ex parte Komo Construction Inc.[1] and Quebec Labour Relations Board v. Canadian Ingersoll Rand Co. Ltd. et al.[2], that the requirement of natural justice did not extend to demanding that a hearing policy be had. These cases cited by counsel for the respondent on the present appeal are not, in my opinion, important on the present issue because here there was a hearing but in both judgments it is said plainly that “each party be given the opportunity to put its arguments” (Komo case) and “what is

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required is that the parties be given the opportunity to put forward their arguments” (Canadian Ingersoll Rand case).

In the present case, the complaint is not that there was not a hearing but that the respondent failed to indicate in any fashion whatsoever what issue would be considered on that hearing.

In Board of Education v. Rice et al.[3], Lord Loreburn L.C. put it well when he said at p. 182:

In the present instance, as in many others, what comes for determination is sometimes a matter to be settled by discretion, involving no law. It will, I suppose, usually be of an administrative kind; but sometimes it will involve matter of law as well as matter of fact, or even depend upon matter of law alone. In such cases the Board of Education will have to ascertain the law and also to ascertain the facts. I need not add that in doing either they must act in good faith and fairly listen to both sides, for that is a duty lying upon every one who decides anything. But I do not think they are bound to treat such a question as though it were a trial. They have no power to administer an oath, and need not examine witnesses. They can obtain information in any way they think best, always giving a fair opportunity to those who are parties in the controversy for correcting or contradicting any relevant statement prejudicial to their view.

(The underlining is my own.)

And in Ridge v. Baldwin[4], the various Law Lords all expressed themselves in like fashion. Lord Reid at p. 80 said:

So I would hold that the power of dismissal in the Act of 1882 could not then have been exercised and cannot now be exercised until the watch committee have informed the constable of the grounds on which they propose to proceed and have given him a proper opportunity to present his case in defence.

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and at p. 81:

The body with the power to decide cannot lawfully proceed to make a decision until it has afforded to the person affected a proper opportunity to state his case.

Lord Hodson, at p. 114, said:

No one, I think, disputes that three features of natural justice stand out—(1) the right to be heard by an unbiassed tribunal, (2) the right to have notice of charges of misconduct, (3) the right to be heard in answer to those charges.

In my view, both the second and third requirements stated by Lord Hodson were breached in the present case and by such breach the commission lost jurisdiction to take action which it did take.

For these reasons, I am in agreement with Mr. Justice Laskin as to the form of the order which this Court should make. I also agree that the appeal should be allowed with costs.

The judgment of Hall and Laskin JJ. was delivered by

LASKIN J.—On April 22, 1964, a private commercial radio broadcasting licence was granted to the appellant effective to March 31, 1970, on payment of prescribed annual fees, and subject to the observance of applicable statutory provisions and regulations, and also to conditions specified in the licence. The Minister of Transport was then the licensing authority, but this function was transferred to the Canadian Radio-Television Commission under the Broadcasting Act, 1968, (Can.), c. 25. Licences theretofore issued were to have effect as if issued under this Act, which limited the duration of a licence to a maximum of five years, with the possibility of renewals for similar maximum periods. Five years was also the maximum under the predecessor legislation and regulations, save that in the case of a new licence issued after April 1 in any year (which was the situation here) the expiry date was fixed at March 31 following the expiration of the five year period.

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On February 10, 1970, the Commission held hearings on the renewal of various radio broadcasting licences, including that of the appellant. By a decision dated March 25, 1970, and headed “Licence Renewal”, the Commission renewed the appellant’s licence “only until December 31, 1970”, and stated in the decision that it would receive applications until July 10, 1970, for the frequency being used by the licensee. There followed reasons by the Commission for its decision, having to do with asserted failure of the appellant to live up to its statutory responsibilities as licensee and to comply with certain conditions of its original licence. The decision concluded that “because of these circumstances the Commission has decided that this frequency, which is in the public domain, will be subject to re-assignment”.

Pursuant to s. 26 of the Broadcasting Act, the appellant sought and obtained leave to appeal to this Court from the Commission’s decision on three questions of law, of which the second was “whether the respondent in its decision exceeded or declined to exercise the jurisdiction committed to it by the Broadcasting Act”. At the time leave was given, the Commission agreed not to solicit applications for the frequency pending the appeal proceedings in this Court; and on the hearing of the appeal it agreed to postpone the terminal date of the appellant’s licence, fixed in its decision, until judgment on the appeal was given and, of course, subject to the terms of the judgment.

Although a central issue in this appeal was whether the Commission had denied natural justice to the appellant in connection with the notice of the hearing on February 10, 1970, and in connection with the hearing itself—that is whether the audi alteram partem rule had been observed or whether it was open to the appellant to rely on it—I am content to deal with this appeal on the point of excess of jurisdiction alone, or, as I prefer to say, excess of statutory power. I resolve the point against the Commission and, accordingly, hold that its decision cannot stand in the terms in which it was given.

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The Broadcasting Act provides for the issue, renewal, revocation and suspension of broadcasting licences. (Although the Canadian Broadcasting Corporation is also, to a degree, subject to the jurisdiction of the Commission, I need not be concerned here with any provisions of the Act which relate to the Corporation; and hence the references that follow are directed only to other licensees.) Revocation or suspension applies to an existing licence, and s. 24 of the Act provides for a previous public hearing in either case, unless the licensee applies for or consents to the revocation or suspension. A public hearing is mandatory under s. 19 (1) in connection with the issue of a broadcasting licence; and under s. 19 (3) “a public hearing shall be held by the Commission in connection with the renewal of a broadcasting licence unless the Commission is satisfied that such a hearing is not required.” In the present case, as already noted, there was a hearing in connection with the renewal of the appellant’s licence.

Whereas revocation is committed by the Act to the Commission, on the recommendation of the Executive Committee thereof (see s. 16 (1) (c)), issue, renewal and suspension of licences is a function of the Executive Committee “after consultation with the part-time members in attendance at a meeting of the Commission” (see s. 17). The powers of the Executive Committee in these respects are set out in s. 17 as follows:

(1) In furtherance of the objects of the Commission, the Executive Committee, after consultation with the part-time members in attendance at a meeting of the Commission, may

(a) issue broadcasting licences for such terms not exceeding five years and subject to such conditions related to the circumstances of the licensee

(i) as the Executive Committee deems appropriate for the implementation of the broadcasting policy enunciated in section 2 of this Act,.,

* * *

(c) issue renewals of broadcasting licences for such terms not exceeding five years as the Executive Committee considers reasonable and subject to the conditions to which the renewed

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licences were previously subject or to such other conditions as comply with paragraph (a);

(d) subject to the provisions of this Part, suspend any broadcasting licence other than a broadcasting licence issued to the Corporation;…

There is nothing in the Act nor are there any rules of procedure (which the Commission is authorized to make under s. 21) which specify the time at or within which a renewal application must be made in respect of a subsisting licence. So far as appears from the record before the Court, it was the Commission which announced hearings on the renewal of a large number of licences. It may be that the Commission feels that it must take such an initiative by reason of the terms of s. 19 (3) of the Act, previously mentioned. I draw attention to this feature of the case simply because the renewal hearing took place in the very shadow of the terminal date of the licence, and because the decision of the Commission came down less than a week before the licence would have expired by effluxion of time.

It was the contention of Commission counsel that there is no right to a renewal any more than there is a right to an original licence and, a fortiori, there is no right to a renewal for any specific period. Hence, so the contention ran, the renewal granted here was within the power of the Commission as fully as it would have been open to the Commission to refuse a renewal on the same stated grounds.

Although counsel for the appellant contended that the Commission’s decision herein amounted to a revocation effective December 31, 1970, and that it failed to meet the statutory directions for revocation prescribed by s. 24, I find it unnecessary to consider this submission. The question to be decided is, in my view, whether a renewal can be lawfully coupled with a contemporaneous determination that the licensee’s frequency will be re-assigned in the light of applications therefor to be made up to a stated date within the renewal period. There was affidavit evidence that the Chairman of the Commission had stated that the appellant would not be considered as an eligible

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applicant in connection with the re-assignment of its frequency; and it was contended by the appellant that this fortified the view that it took of the effect of the decision of March 25, 1970. Whether or not the appellant could apply afresh for the frequency, it needs no demonstration that an applicant for a licence who must compete for it with an undetermined number of other applicants is, prima facie at least, in a less favourable position than it would be in if it were applying for renewal of a subsisting licence.

In my opinion, the Act gives a licensee, whose licence has not been revoked or suspended during its currency, a right to apply for a renewal. There are obvious economic factors involved in qualifying for and remaining qualified for licensing, and the right to apply for a renewal of a licence cannot be dismissed as having merely ephemeral value because there is no right to a renewal: cf. de Smith, Judicial Review of Administrative Action (2nd ed. 1968), at pp. 210-211. No question of bona fides was raised in the present case in respect of the period of renewal, and hence I put aside the applicability of cases involving alleged colourable exercises of discretion such as Williams v. Giddy[5] where a board, empowered to grant to an entitled retired civil servant a gratuity to a fixed amount for each year of service, awarded him a penny a year for the last seven years of his service. This was held to be tantamount to a refusal to exercise the discretion. However, I cannot agree that a renewal term can be coupled with a peremptory denial, at the time the term is granted, of status to apply for a further renewal prior to expiration of the term. The Broadcasting Act nowhere gives such a power expressly; and in view of the range of authority to revoke, suspend, renew, and amend (a power which I have not thought it necessary to consider), as well as to issue licences, I do not think that I would be justified in finding such a power implied in the authority to renew. Indeed, s. 17(1)(c) appears to preclude it. The case

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would be different if the licensee consented to a terminal renewal term, agreeing that no application would be made for a further renewal.

It follows that the Commission’s decision of March 25, 1970, cannot stand in so far as it denied the appellant the right to apply for a further renewal. In my view, the proper order is to declare that the appellant was entitled to apply for a renewal of the renewed licence, and that the renewal term granted by the Commission must be deemed to be in force for such reasonable period of time as is necessary to enable the appellant to apply for a further renewal and for its application to be heard and for a decision to be given. The terms of judgment should be spoken to in implementation of this direction.

I would, accordingly, allow the appeal with costs.

Appeal allowed with costs, FAUTEUX C.J. and ABBOTT, JUDSON and RITCHIE JJ. dissenting.

Solicitor for the appellant: W.G. Burke-Robertson, Ottawa.

Solicitor for the respondent: J.D. Hylton, Ottawa.