Date: 20130228
Dockets: A-516-12
A-527-12
Citation: 2013 FCA 60
Present: MAINVILLE
J.A.
Docket: A-516-12
BETWEEN:
CANADIAN BROADCASTING
CORPORATION/SOCIÉTÉ RADIO-CANADA
Applicant
and
SOCIETY FOR REPRODUCTION RIGHTS
OF AUTHORS, COMPOSERS AND PUBLISHERS IN CANADA (SODRAC) INC. and SODRAC 2003
INC.
Respondents
Docket: A-527-12
BETWEEN:
ASTRAL MEDIA INC.
Applicant
and
SOCIETY FOR REPRODUCTION RIGHTS
OF AUTHORS, COMPOSERS AND PUBLISHERS IN CANADA (SODRAC) INC.
Respondent
REASONS FOR ORDER
MAINVILLE J.A.
[1]
The
Canadian Broadcasting Corporation/Société Radio-Canada (“CBC”) and Astral Media
Inc. (“Astral”) have filed judicial review applications with this Court which have
been consolidated by an order of this Court dated February 12, 2013. The
applicants seek to set aside a decision of the Copyright Board of Canada (the “Board”)
dated November 2, 2012 in Board files 70.2-2008-01 and 70.2-2008-02 (the
“Decision”) by which the Board, pursuant to section 70.2 of the Copyright
Act, R.S.C. 1985, c. C-42, fixed the royalties and their related terms and
conditions in respect of the following licences:
a. a licence authorizing
the Canadian Broadcasting Corporation to reproduce works in the repertoire of
SODRAC for the period from November 14, 2008 to March 31, 2012 (the “CBC
Licence”); and
b. a licence authorizing
Astral to reproduce works in the repertoire of SODRAC for the period from
December 19, 2008 to August 31, 2012 (the “Astral Licence”).
[2]
The
CBC and Astral have also filed motions seeking orders to stay the Decision and both
the CBC Licence and the Astral Licence, until the judicial review applications
have been finally dealt with by this Court. They seek to extend, for the
duration of the stay, the prior interim licences which the Board had issued
authorizing them to reproduce musical works in SODRAC’s repertoire pending its
final Decision.
[3]
The
CBC has since filed another judicial review application in docket A-63-13
seeking to set aside an interim decision of the Board dated January 16, 2013 in
Board file 70.2-2012-01 (the “Interim Decision”). In that decision, the Board
extended, on an interim basis, the CBC Licence from November 3, 2012 until its
final decision on an application by SODRAC for setting the terms for a new license
authorizing the CBC to reproduce works in its repertoire from April 1, 2012 to
March 31, 2016. The CBC has also filed a motion in docket A-63-13 seeking to
stay the Interim Decision.
[4]
Since
the issues raised by all three motions are similar, they were heard together in
Ottawa on February 27, 2013. These reasons concern the motions filed in
dockets A-516-12 and A-527-12.
THE CONTEXT
[5]
In
these reasons, the Society for reproduction rights of authors, composers and
publishers in Canada (SODRAC) Inc. and SODRAC 2003 Inc. shall be referred to as
“SODRAC” and shall be treated as the same society. SODRAC is a collective
society which administers the reproduction rights in musical works owned by
those who have authorized it to act on its behalf. It represents the majority
of rights holders in Quebec and holds in its repertoire most works written in
French by Canadians. It also administers in Canada the repertoire of many
foreign collectives holding similar rights.
[6]
The
CBC is Canada’s public broadcaster governed by Part III of the Broadcasting
Act, S.C. 1991, c. 11. It operates an extensive network of services and facilities
related to radio, television, and internet communication. In 1992, the CBC first
entered into an agreement with SODRAC for the use of its repertoire (the “1992
Agreement”). The 1992 Agreement was renewed until 2009 when the Board issued an
interim licence. The yearly royalties under that agreement and its renewals
reached $520,000.
[7]
Astral
is a private sector corporation which operates speciality television channels.
Unlike the CBC, it does not produce or co-produce any programming, but rather
licences such programming from third party producers, either directly or though
distributors. Unlike the CBC, Astral has never entered into an agreement with
SODRAC.
[8]
On
November 14, 2008, pursuant to section 70.2 of the Copyright Act, SODRAC
asked the Board to set the terms and conditions of a licence for the
reproduction of musical works in its repertoire by the CBC from that date to
March 31, 2012. On December 19, 2008, pursuant to the same provision, SODRAC
asked the Board to set the terms and conditions of a similar licence for most
of the speciality television channels of Astral from that date to August 31,
2012.
[9]
As
part of these proceedings, on March 31, 2009, the Board issued an interim licence
for the CBC, which was renewed on April 30, 2012. That interim licence
essentially extended the 1992 Agreement between the CBC and SODRAC - with
certain minor adjustments - pending the Board’s disposition of the proceedings
leading to its Decision.
[10]
On
December 14, 2009, the Board issued an interim licence for Astral authorizing
Astral to reproduce musical works in SODRAC’s repertoire for the first time.
This interim licence set out interim royalties of $7,368 a month, or approximately
$88,416 a year.
[11]
The
Board issued its final Decision on November 2, 2012. The royalties charged
under the CBC Licence and the Astral Licence are substantially higher compared
to the interim licences. The CBC is now obliged to pay retroactive royalties
estimated to exceed $6.8 million for the period from November 14, 2008 to March
31, 2012: Affidavit of Chantal Carbonneau at para. 25, CBC motion record in docket
A-516-12 at p. 9. Astral estimates that the royalties set out in the Astral
Licence would represent a fourfold retroactive increase in its royalty payments
for the period of December 19, 2008 to August 31, 2012, the yearly payment
increasing from $88,416 a year to approximately $370,000 a year: Affidavit of
David Cantin at para. 11, Astral motion record in docket A-527-12 at p. 8.
ANALYSIS
[12]
The
applicable test is well-known. It was set out in RJR-MacDonald Inc. v.
Canada (A.G.), [1994] 1 S.C.R. 311. It includes three criteria.
[13]
First, an assessment must be made of the merits of the concerned
judicial review applications to ensure that there is a serious issue to be
determined. There are no specific requirements which must be met in order to
satisfy this test. A prolonged examination of the merits of the applications is
neither necessary, nor desirable.
[14]
Second, it must be determined whether the CBC and Astral will
suffer irreparable harm if their stay motions are rejected. The only issue to
be decided at this stage is whether the refusal to grant the stay could so
adversely affect their interests that the harm could not be remedied in the
event their judicial review applications are successful. Irreparable harm
refers to the nature of the harm suffered rather than its magnitude. It is harm
which cannot be quantified in monetary terms or cured, usually because one
party cannot collect damages from the other. The fact that one party may be
impecunious does not automatically determine the application in favour of the
other party ultimately unable to collect damages, although it may be a relevant
consideration.
[15]
Third, an assessment must be made, taking into account the
circumstances related to the matter at hand, as to which of the parties would
suffer greater harm from the granting or refusal of the stay pending the decision
on the judicial review applications.
Serious Issue
[16]
The
CBC and Astral raise many issues in their judicial review applications. I am
satisfied that at least some of these issues meet the requirements of the first
criterion of the test concerning a serious issue. Moreover, SODRAC does not
dispute that the requirements of this branch of the test have been met in these
proceedings, although it does challenge this branch of the test in the motion
submitted in docket A-63-13.
Irreparable
Harm
[17]
The
CBC submits that if the stay is not granted, it will suffer irreparable harm
resulting from (a) its disputes with the independent producers with which it
has contractual relationships; (b) the financial consequences of the Decision,
which would detrimentally affect its programming; and (c) the fact that it would
not be in a position to recuperate the royalties paid to SODRAC, in the event
it is successful in its judicial review application.
[18]
For
its part, Astral submits that irreparable harm would result from (a) the costs
it would incur in order to comply with the administrative requirements of the
Astral Licence; (b) the loss of the benefit of a royalty discount based on a
faulty discount formula; and (c) the fact that it would not be in a position to
recuperate the royalties paid to SODRAC, in the event it is successful in its judicial
review application.
[19]
I
forthwith state that I do not accept that the CBC or Astral will suffer
irreparable harm as a result of the financial consequences of the Decision or
of the administrative measures that they would be required to implement in
order to comply with it.
[20]
As
aptly noted by SODRAC, the estimated amount of $6,800,000 which the CBC will be
required to pay as additional royalties for the period of November 14, 2008 to
March 31, 2012 (covering four of the CBC’s financial years) is minimal compared
to the CBC’s annual revenues, which for its 2011-2012 financial year alone exceeded
$1.8 billion: Respondent SODRAC’s record in docket A-516-12 at p. 62. Moreover,
the CBC’s financial statements for its 2011-2012 financial year indicate that an
amount for the additional royalties has already been provisioned in its
financial statements: Respondent SODRAC’s record in docket A-516-12 at p. 65.
[21]
As
for Astral, it has not established that it will suffer an irreparable harm in paying
SODRAC approximately $700,000 in retroactive royalties required pursuant to the
Decision, or if it must assume the costs required to comply with the
administrative aspects of the Decision. Astral’s evidence in this matter is
limited to vague allegations which are not supported by any convincing
evidence.
[22]
Regarding
the CBC’s allegations of disputes with independent producers as a result of the
Decision, these would result from the fact the CBC Licence would not longer
contemplate the synchronisation (i.e. the process of incorporating a
musical work into an audiovisual work) effected by the independent producers
with which the CBC has maintained a contractual relationship. Since the
contracts which bind these producers with the CBC would provide that the CBC
assumes the costs of the royalties for the works in SODRAC’s repertoire which
are so synchronized, these producers would now be threatening legal action
against the CBC for the additional costs which are now to be assumed by them
following the Decision. However, the evidence submitted by SODRAC shows that the
CBC consented before the Board to exclude from its licence the synchronization
effected by independent producers: Affidavit of Martin Lavallée para. 20 and
Exhibit A thereto, Respondent SODRAC’s record in docket A-516-12 at pp. 36 and
51-52, and Decision at paras. 31 and 115. It is not appropriate for the CBC to
rely in support of its stay motion on harm (if harm exists) which it has itself
agreed to.
[23]
As
for Astral’s alleged loss of the benefit of a royalty discount based on a
faulty discount formula set out in the Astral Licence, this is an issue related
to the merits of the dispute and not to any irreparable harm.
[24]
There
remains the issue of recuperation of the amounts which would have been wrongly
paid as royalties to SODRAC, in the event the judicial review applications are
allowed by this Court.
[25]
Both
the CBC and Astral hold that they will not be in a position to recuperate these
amounts in such circumstances, since these amounts will have been distributed to
the concerned members of SODRAC. Consequently, SODRAC will not be in a
position to reimburse the applicants.
[26]
SODRAC
submits that the amounts at issue will be paid by the CBC and Astral to it
directly, and not for the benefit of the third parties who have assigned their
right to SODRAC. It finds support for this proposition in an interim decision
of the Board in another matter. SODRAC adds that the distribution of the
amounts at issue to the entitled third parties will not affect its liability to
reimburse the CBC and Astral in the event of an unfavourable judgment. SODRAC states
that it collects approximately $15 million in revenues annually and denies
having financial difficulties or being in debt. It claims to act prudently and is
ready to make the provisions suggested by its auditors when legal proceedings
are pending.
[27]
I
have no reason to doubt the solvency of SODRAC with respect to its current and
usual operations. However, here we are contemplating a financial operation
which is unusual and major for SODRAC. The retroactive royalties to be paid to
SODRAC to give effect to the Decision would be approximately $6,800,000 for the
CBC and approximately $,700,000 for Astral, or approximately $7,500,000 in all,
without considering accumulated interest.
[28]
These
amounts would be paid to SODRAC as royalties for “all or part of a musical or
dramatico-musical work for which SODRAC may authorize the reproduction in Canada, in proportion to the rights it holds”: definition of “work” in section 1 of the CBC
Licence and the Astral Licence. These rights are held by SODRAC by means of
assignments, grants or licences from authors, performers and sound recording
makers: definition of “collective society” in section 2 of the Copyright Act.
These royalties must in turn be distributed by SODRAC to these authors,
performers and sound recording makers, taking into account the information relating
to the use of each work which is provided to it by the CBC and Astral: Section
6 of the CBC Licence and of the Astral Licence; Affidavit of Martin Lavallée at
para. 59, SODRAC’s record in docket A-516-12 at p. 44.
[29]
Once
the concerned amounts have been distributed by SODRAC, it would be difficult to
retrieve them from the entitled third parties, SODRAC’s repertoire being
comprised of a multitude of works from a very large community of individuals
and corporations. SODRAC will thus have to assume the whole of the amount owed.
According to the evidence submitted, the revenues at the disposal of SODRAC
come from the collection of royalties. In light of the mechanisms set out in
the Copyright Act concerning the collective administration of copyright,
it is improbable that SODRAC will be able to allocate the royalties paid to it
under other tariffs, agreements or licences for the purpose of reimbursing the CBC
or Astral. In such circumstances, SODRAC risks getting bogged down, with the CBC
and Astral, in an avalanche of protracted and uncertain litigation.
[30]
Consequently,
and for this latter reason, I am of the view that, in the event their
applications for judicial review are successful, the CBC and Astral will suffer
an irreparable harm if the stay is not granted.
Balance of
Inconvenience
[31]
If
the stay is granted, SODRAC will suffer no serious harm. Indeed, if it is
successful in the judicial review applications, the CBC and Astral will then
have to pay to it the amounts at issue, with accumulated interest calculated in
accordance with the formula provided in section 12 of the CBC Licence and the
Astral Licence, namely interest calculated daily at a rate equal to one per
cent above the Bank Rate effective on the last day of the previous month.
[32]
In
light of my conclusion concerning the serious difficulties to reimburse, and
considering that SODRAC will suffer no serious harm if the stay is granted, the
balance of convenience clearly favours the CBC and Astral.
CONCLUSIONS
[33]
For
these reasons, it is appropriate to grant a stay and to order the appropriate
measures which will maintain the status quo which prevailed between the
parties prior to when the Decision was issued.
[34]
The
Court shall thus order (a) a stay of the operation of the Decision as it
pertains to the CBC Licence and the Astral Licence; (b) a stay of the
application of the CBC Licence and of the Astral Licence; (c) an extension, as
of November 3, 2012, of the interim licence issued to the CBC by the Commission
under its interim decision dated April 30, 2012; (d) an extension, as of
November 3, 2012, of the interim licence issued to Astral by the Commission
under its interim decision dated December 14, 2009, 2012. These measures will
be in force until a final decision has been reached by our Court in the
judicial review applications of the CBC and Astral in dockets A-516-12, and
A-527-12.
[35]
The
CBC and Astral did not seek costs in their motions; consequently there shall be
no order as to costs.
"Robert M. Mainville"
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