Telecommunications Workers Union v. Canada (Canadian Radio-Television and Telecommunications Commission), 2003 FCA 381

Date: 20031020

Docket: A-21-03

Citation: 2003 FCA 381

CORAM:        LINDEN J.A.

ROTHSTEIN J.A.

SEXTON J.A.

BETWEEN:

                                    TELECOMMUNICATIONS WORKERS UNION

                                                                                                                                            Appellant

                                                                           and

                                           CANADIAN RADIO-TELEVISION AND

                                    TELECOMMUNICATIONS COMMISSION and

                                             SHAW CABLESYSTEMS COMPANY

                                                                                                                                      Respondents

                                                                           and

                        CONSUMERS' ASSOCIATION OF CANADA (BC BRANCH),

                          BC OLD AGE PENSIONERS' ORGANIZATION, COUNCIL

                                 OF SENIOR CITIZENS' ORGANIZATIONS OF BC,

                       END LEGISLATED POVERTY, FEDERATED ANTI-POVERTY

                        GROUPS OF BC, SENIOR CITIZENS' ASSOCIATION OF BC,

                TENANTS RIGHTS ACTION COALITION, and WEST END SENIORS'

                         NETWORK (COLLECTIVELY KNOWN AS CAC(BC) ET AL)

                     and CANADIAN CABLE TELEVISION ASSOCIATION ("CCTA")

                                                                                                                                         Interveners

                              Heard at Vancouver, British Columbia on September 18, 2003.

                               Judgment delivered at Ottawa, Ontario, on October 20, 2003.

REASONS FOR JUDGMENT BY:                                                                               SEXTON J.A.

CONCURRED IN BY:                                                                                                   LINDEN J.A.

                                                                                                                               ROTHSTEIN J.A.

Date: 20031020

Docket: A-21-03

Citation: 2003 FCA 381

CORAM:        LINDEN J.A.

ROTHSTEIN J.A.

SEXTON J.A.

BETWEEN:

                                    TELECOMMUNICATIONS WORKERS UNION

                                                                                                                                            Appellant

                                                                           and

                                           CANADIAN RADIO-TELEVISION AND

                                    TELECOMMUNICATIONS COMMISSION and

                                             SHAW CABLESYSTEMS COMPANY

                                                                                                                                      Respondents

                                                                           and

                        CONSUMERS' ASSOCIATION OF CANADA (BC BRANCH),

                          BC OLD AGE PENSIONERS' ORGANIZATION, COUNCIL

                                 OF SENIOR CITIZENS' ORGANIZATIONS OF BC,

                       END LEGISLATED POVERTY, FEDERATED ANTI-POVERTY

                        GROUPS OF BC, SENIOR CITIZENS' ASSOCIATION OF BC,

                TENANTS RIGHTS ACTION COALITION, and WEST END SENIORS'

                         NETWORK (COLLECTIVELY KNOWN AS CAC(BC) ET AL)

                     and CANADIAN CABLE TELEVISION ASSOCIATION ("CCTA")

                                                                                                                                         Interveners

                                                    REASONS FOR JUDGMENT

SEXTON J.A.

Introduction

[1]         The Broadcasting Act provides that the Canadian Radio-television and Telecommunications Commission ("CRTC") "shall regulate and supervise all aspects of the

Canadian Broadcasting System". The CRTC enacted a regulation providing that in certain circumstances increases in basic cable service rates will no longer have to be approved by the CRTC but rather will be set by each individual cable company according to the market competition in its licensed serviced area. The issue in this case is whether the CRTC, by enacting this regulation, has abdicated its obligations to "regulate and supervise all aspects" of the broadcasting system, resulting in the regulation being ultra vires.

Facts

[2]         The appellant, the Telecommunications Workers Union ("TWU") is the bargaining agent for unionized employees of the respondent, Shaw Cable Systems Company ("Shaw"). Shaw holds six Class 1 licences to carry on cable distribution undertakings in the Lower Mainland of British Columbia ("BC").

[3]         By letters dated June 12, 2002, Shaw made a proposal to the CRTC to have its rates "deregulated" pursuant to section 47 of the Broadcasting Distribution Regulations (the "Regulations"), the regulation at issue in this case. Section 47 provides that if a Class 1 licensee demonstrates, by filing documentation with the CRTC, that a certain level of competition exists in its licensed service area, and if the CRTC does not object within 60 days, the licensee will be exempted from Part V of the Regulations entitled "Fees For and Provision of Basic Services". Among other things, this part of the Regulations requires Class 1 licensees to seek the approval of the CRTC before increasing their basic service rates.

[4]         By letter dated July 31, 2002, the TWU made representations to the CRTC, taking the position that section 47 of the Regulations was ultra vires the CRTC on the basis that it was contrary to and not authorized by the Broadcasting Act. The TWU also argued that the CRTC should reject Shaw's rate deregulation proposal under section 47.

[5]         By letter dated August 23, 2002, the CRTC rejected TWU's arguments, without giving any reasons. Neither party has complained about the lack of reasons.

[6]         TWU appeals to this Court from the decision of the CRTC with respect to the following question of law: "whether section 47 of the Broadcasting Distribution Regulations is ultra vires the Canadian Radio-television and Telecommunications Commission".

History of the CRTC's Regulation of Cable Rates

[7]         Historically, cable distribution undertakings were typically licenced by the CRTC as territorial monopolies. Because of this monopoly system, the CRTC determined that it was necessary to restrict the rates charged by distribution undertakings in order to protect consumers.

[8]         In the mid 1980s, the CRTC began to refrain from regulating the basic rates of smaller cable distribution undertakings. By way of example, Class 3 undertakings (those undertakings serving less than 2000 subscribers or that operate in rural or remote areas) were rate deregulated in stages between 1986 and 1991. Class 2 undertakings (those serving between 2000 and 6000 subscribers) were rate deregulated in 1994.

[9]         On October 8, 1994, the Governor in Council issued Order-in-Council PC1994-1689, requesting the CRTC to report and make recommendations to the government of Canada on a number of specific questions. In the schedule to this Order, the government set forth a policy for the broadcasting and telecommunications industry, "to foster fair competition and increase reliance on market forces in the provision of facilities, products and services".

[10]       In response, the CRTC issued Public Notice CRTC 1994-130, which provided, "[t]he government's goal is to preserve and expand fair competition... A competitive model for Canadian communications facilities must, however, be consistent with the objectives and principles underpinning the information highway strategy and the objectives of both the Broadcasting Act and the Telecommunications Act".

[11]       In the mid 1990s, the CRTC began to license direct-to-home ("DTH") distribution undertakings. In Public Notice 1995-217, the CRTC decided not to impose restrictions on the rates charged by DTH distribution undertakings on the grounds that competition would "create sufficient market pressure to discipline the rates charged to DTH subscribers."

[12]       On May 19, 1995, the CRTC released its report entitled Competition and Culture on Canada's Information Highway. In this Report, the CRTC endorsed the principle of competition in the distribution of programming to Canadians and addressed the conditions and mechanisms that should be in place in order to ensure fair competition.

[13]       On May 17, 1996, in Public Notice CRTC 1996-69, Call For Comments on a Proposed Approach for the Regulation of Broadcasting Distribution Undertakings, the CRTC announced that "[t]he Canadian broadcasting system is undergoing fundamental technological and competitive change." In light of this change, the CRTC proposed to review and update the regulatory framework for distribution undertakings "to ensure that there is an orderly transition from a monopoly to a fully competitive environment, and that rules are established for the competitive environment that treat all distributors equitably and fairly."

[14]       In Part VI of the above mentioned Public Notice, the CRTC proposed that in the updated regulatory framework, it would not regulate the rates of new entrants since these entities would not have sufficient market power to necessitate rate regulation. In the case of Class 1 licensees, which generally have more than 6000 subscribers, the CRTC proposed to retain existing rate restrictions, pending the establishment of a competitive market structure. However, the CRTC proposed that, once established, competition would be sufficient to discipline rates and rate deregulation would occur.

[15]       In response to this Public Notice and call for comments, the CRTC received over 5800 written submissions and 34 parties appeared at an oral public hearing in October of 1996. Following this written comment process and hearing, the CRTC issued Public Notice CRTC 1997-25, entitled New Regulatory Framework for Broadcasting Distribution Undertakings. This public notice established a comprehensive policy framework for broadcasting distribution undertakings that would further the objectives of the Broadcasting Act in a competitive environment. The policies expressed in this public notice were reflected in the proposed regulations published in Public Notice CRTC 1997-84, Proposed Broadcasting Distribution Regulations. The final form of these regulations was announced in Public Notice CRTC-1997-150, Broadcasting Distribution Regulations. The conclusions regarding the rates charged by Class 1 cable distribution undertakings are codified in Part V of these Regulations.

[16]       The major purpose of Part V of the Regulations is to outline the specific circumstances under which a distribution undertaking is permitted to increase its basic service rate as well as the circumstances under which a distribution undertaking is required to install the system necessary for the provision of its basic service at a particular household or premises. With respect to rates, section 49 of the Regulations expressly provides: "A licensee shall not increase its basic monthly fee except in accordance with this Part."    

[17]       The impugned regulation in this proceeding, namely section 47, provides, inter alia, that Part V of the Regulations will not apply if the following conditions are met:

a)          the licencee provides documentation to the CRTC establishing that there are one or more competing undertakings serving at least 30% of the licenced territory of the licencee;

b)          the licencee has lost 5% or more of its subscriber base since the introduction of basic service by another competitor; and

c)         the CRTC has not suspended the application of section 47 to the licencee or disallowed the licencee's request for exemption from the provisions of Part V during a prescribed 60 day waiting period.

If a cable distributor is able to satisfy the conditions contained in section 47, the effect of an exemption from Part V of the Regulations is that the rate or "basic monthly fee" charged by the distributor will not have to be set or approved by the CRTC. The CRTC determined in Public Notice CRTC 1997-25 that, in the competitive circumstances described in section 47, the application of the rate restrictions imposed in Part V of the Broadcasting Distribution Regulations would not be in keeping with the objectives of encouraging increased reliance on market forces in the provision of services and ensuring fair and sustainable competition in the delivery of communication services to the home.

Relevant Statutory Provisions

[18]       The relevant provisions of the Broadcasting Act are as follows:

The relevant provisions of Part V of the Broadcasting Distribution Regulations are as follows:

Issues

1.         What is the appropriate standard of review to apply to the CRTC's decision that it had the authority to enact section 47 of the Regulations?

2.         Is section 47 of the Regulations under the Broadcasting Act ultra vires the CRTC?

Standard of Review

[19]       The TWU submits that the standard of review that is applicable to the CRTC's decision that it had the authority to enact section 47 of the Regulations is correctness. According to the TWU, curial deference need not be given to the decision of an administrative tribunal in the exercise of a legislative function. In particular, the TWU submits that determining the vires of section 47 involves statutory interpretation - a function that lies at the heart of the expertise of the Courts rather than the CRTC.

[20]       According to TWU, because the question in this case is jurisdictional, the standard of review should automatically be correctness. However, Dr. Q, supra, clearly indicates that this kind of reasoning is no longer appropriate, and that the nature of the question is only one factor to consider. McLachlin C.J. explained in Dr. Q, supra at paras. 23-25 that it is no longer sufficient to slot a particular issue, such as jurisdiction, into a pigeon hole of judicial review:

... The nominate grounds, language of jurisdiction, and ossified interpretations of statutory formulae, while still useful as familiar landmarks, no longer dictate the journey.

For this reason, it is no longer sufficient to slot a particular issue into a pigeon hole of judicial review and, on this basis, demand correctness from the decision-maker. Nor is a reviewing court's interpretation of a privative clause or mechanism of review solely dispositive of a particular standard of review: Canada (Deputy Minister of National Revenue) v. Mattel Canada Inc., [2001] 2 S.C.R. 100, [2001] S.C.J. No. 37, 2001 SCC 36">2001 SCC 36, at para. 27. The pragmatic and functional approach demands a more nuanced analysis based on consideration of a number of factors. This approach applies whenever a court reviews the decision of an administrative body. As Professor D.J. Mullan states in Administrative Law (2001), at p. 108, with the pragmatic and functional approach, "the Court has provided an overarching or unifying theory for review of the substantive decisions of all manner of statutory and prerogative decision makers". Review of the conclusions of an administrative decision-maker must begin by applying the pragmatic and functional approach. [emphasis added]

[21]       The CRTC, on the other hand, submits that because of its expertise and the polycentric nature of its role in interpreting the broad policy objectives of the Act, the standard of review should be reasonableness simpliciter. It was argued that the interpretation of the policy objectives of the Act is a classic example of a polycentric exercise which requires that the Tribunal balance competing interests among a variety of stakeholders. The policy oriented purpose of the statute and the broad mandate accorded to the CRTC suggest that the manner in which the objects are to be fulfilled leaves considerable scope for the discretion of an expert tribunal, even on a question of law. The respondent Shaw concurs with this submission.

Analysis

[22]       In Dr. Q. v. College of Physicians and Surgeons of British Columbia, [2003] S.C.J. No. 18 at para. 21 ("Dr. Q"), McLachlin C.J., for the Court, explained that the pragmatic and functional approach must be undertaken in every case dealing with an administrative decision-maker, regardless of whether the case is an appeal directly from the administrative body or an application for judicial review.

[23]       In Dr. Q, supra, McLachlin C.J. went on to list the four contextual factors that make up the pragmatic and functional approach:

[T]he presence or absence of a privative clause or statutory right of appeal; the expertise of the tribunal relative to that of the reviewing court on the issue in question; the purposes of the legislation and the provision in particular; and, the nature of the question - law, fact, or mixed law and fact. The factors may overlap. The overall aim is to discern legislative intent, keeping in mind the constitutional role of the courts in maintaining the rule of law.

The Presence or Absence of a Privative Clause or Statutory Right of Appeal

[24]       The fact that subsection 31(2) of the Broadcasting Act expressly provides for a right of appeal to the Federal Court of Appeal, with the leave of the Court, on questions of law or jurisdiction suggests that a more searching standard of review should be applied to the CRTC's decision in this case. The issue of whether or not the CRTC had the authority to enact section 47 of the Regulations is a question of jurisdiction that falls precisely within the scope of this appeal right. According to Gonthier J. in Barrie Public Utilities v. Canadian Cable Television Association, [2003] S.C.J. No. 27 at para. 11 ("Barrie"): "While the presence of a statutory right of appeal is not decisive of a correctness standard, it is a factor suggesting a more searching standard of review."

The Expertise of the Tribunal Relative to that of the Reviewing Court on the Issue in Question

[25]       While the general expertise of the CRTC to answer policy questions is accepted, the issue in the present case - whether section 47 of the Regulations is ultra vires the CRTC - is not a question of policy but rather a question of law or jurisdiction. The CRTC is not more expert than this Court in answering jurisdictional questions which involve interpreting the Broadcasting Act; as a result, this factor also suggests a less deferential standard of review. In Barrie, supra, Gonthier J. stated at paras. 12 to 16:

The proper concern of the reviewing court is not the expertise of the decision maker in general, but its expertise relative to that of the court itself vis-à-vis the particular issue...

These points are illustrated by L'Heureux-Dubè J.'s discussion of the standard of review in British Columbia Telephone Co. v. Shaw Cable Systems (B.C.) Ltd., [1995] 2 S.C.R. 739. There, L'Heureux-Dubé J. aptly described the CRTC as "a specialized administrative tribunal... which possesses considerable expertise over the subject matter of its jurisdiction" yet found that it was reviewable on a correctness standard "as regards jurisdictional questions and questions of law outside the CRTC's area of expertise" (at paras. 30-31)...

Deference to the decision maker is called for only when it is in some way more expert than the court and the question under consideration is one that falls within the scope of its greater expertise (Dr. Q., at paras. 28). In my view, this is not such a case. The proper interpretation of the phrase "the supporting structure of a transmission line" in s. 43(5) is not a question that engages the CRTC's special expertise in the regulation and supervision of Canadian broadcasting and telecommunications. This is not a question of telecommunications policy, or one which requires an understanding of technical language. Rather, it is a purely legal question and is therefore, in the words of La Forest J., "ultimately within the province of the judiciary" (Ross v. New Brunswick School District No. 15, [1996] 1 S.C.R. 825, at para. 28). This Court's expertise in matters of pure statutory interpretation is superior to that of the CRTC. This factor suggests a less deferential approach.

Purpose of the Legislation and the Provision in Particular

[26]       Unlike the first two factors, the third factor of the pragmatic and functional approach, the purposes of the legislation as a whole and the provision in particular, suggests a more deferential or less searching standard of review. The Broadcasting Act gives the CRTC a broad mandate in which the CRTC must consider some 40 different and potentially conflicting policy objectives set out in s. 3 before rendering decisions or enacting regulations. Furthermore, paragraph 10(1)(k) of the Broadcasting Act provides the CRTC with broad authority to enact regulations: "The Commission may, in furtherance of its objects, make regulations ... respecting such other matters as it deems necessary for the furtherance of its objects."

[27]       According to Létourneau J.A. in Canadian Broadcasting Corp. v. Métromédia CMR Montréal Inc., [1999] F.C.J. No. 1637 ["Métromédia"] at para. 5: "The CRTC is a specialized, independent agency to which, precisely because of its expertise, Parliament has granted extensive powers for the supervision and regulation of the Canadian broadcasting system to allow it to implement the broadcasting policy set out in section 3 of the Broadcasting Act, S.C. 1991, c.11."

[28]       By enacting section 47 of the Regulations, the CRTC was attempting to fulfill its broad mandate of implementing the various different policy objectives, both cultural and economic, contained in the Act; this factor indicates that deference should be given to the CRTC's decision.

Nature of the Question

[29]       Finally, because the nature of the question in this case is jurisdictional and involves statutory interpretation, a more searching standard of review should be applied to the CRTC's decision.

[30]       As explained by Rothstein J.A. in Canadian Pacific Railway Co. v. Canada (Canadian Transportation Agency), [2003] F.C.J. No. 997 (F.C.A.) at para 18, less deference is owed where the question is one of statutory interpretation:

[T]he question here is one of statutory interpretation. More specifically, the question is whether the Agency's mandate empowers it to determine if a railway company's demurrage revenues are reasonable and order that an amount found to be unreasonable be included in the company's revenues subject to its revenue cap. This is not a technical question. On this question, there is no expertise in the Agency relative to that of the Court that would support a more deferential standard of review. On the contrary, questions of statutory interpretation are generally within the province of the judiciary. This factor suggests a less deferential approach.

[31]       Likewise, as explained by the Supreme Court of Canada in Canada (Deputy Minister of National Revenue) v. Mattel Canada Inc., [2001] 2 S.C.R. 100, a case involving a CITT decision with a similar statutory structure and policy-based mandate, Major J. stated at para. 33 that "these are pure questions of law that require the application of principles of statutory interpretation and other concepts which are intrinsic to commercial law. Such matters are traditionally the province of the Courts and there is nothing to suggest that the CITT has any particular expertise in respect of these matters".

Conclusion

[32]       Therefore, in summary, the first, second, and fourth factors of the pragmatic and functional approach point to a correctness standard of review, and the third factor, the purpose of the legislation and the provision in particular, suggests a more deferential standard of review. Overall, combining the four factors, I must conclude that the standard of review in this particular case is correctness. Not only is there a statutory right of appeal to this Court with respect to questions of law and jurisdiction, but also the CRTC does not have more expertise than this Court in conducting statutory interpretation and answering jurisdictional questions.

[33]       Importantly, the question in this case is not whether the CRTC chose to implement the policy objectives of the Act in the best way possible, which would require considerable deference from this Court, but rather the question is one of statutory interpretation with jurisdictional implications.                            

Is Section 47 of the Regulations Ultra Vires the CRTC?

[34]       The appellant argues that under the Broadcasting Act, the CRTC is obligated to set all rates of cable distribution undertakings and therefore could not introduce the type of rate deregulation envisioned by section 47. In other words, the CRTC acted outside of its jurisdiction by enacting such a regulation.

[35]       In making this argument, the appellant relies on section 5(1) of the Act, which states that "the Commission shall regulate and supervise all aspects of the Canadian Broadcasting System with a view to implementing the policy objective set out in subsection 3(1)". Furthermore, subparagraph 3(1)(t)(ii) specifically establishes as broadcasting policy that "distribution undertakings...should provide efficient delivery of programming at affordable rates". According to the appellant, the combination of section 5(1), which is written in the imperative, and subparagraph 3(1)(t)(ii), obliges the CRTC to restrict, by regulation, the basic service rate charged by a Class 1 distribution undertaking. In other words, the CRTC cannot enact regulations which result in a failure to regulate and supervise that which Parliament has expressly said it shall regulate and supervise.

[36]       The essence of the appellant's argument is that the CRTC is under a positive obligation at all times to regulate all aspects of the Canadian Broadcasting System and that one such aspect is the regulation of rates. What this means is that the CRTC is at all times obligated to regulate the rates of all licensees.

[37]       The appellant argues that while the CRTC has discretion as to how best to regulate and supervise, the CRTC does not have the latitude to completely abdicate the function of regulation and supervision.

[38]       Finally, the appellant argues that the result of the application of section 47 is that the exempted licensee is never again subject to regulation and supervision of its rate by the CRTC because the Regulations do not provide for the reversal of the deregulation or for any ongoing supervision of the licensee's rate by the CRTC. That is, the licensee is permanently exempted.

Analysis

[39]       It is my conclusion that, even using the correctness standard of review, the CRTC did not err in finding that it had the authority to enact section 47 of the Regulations.

The CRTC has a very broad mandate under the Broadcasting Act

[40]       The broad power of the CRTC to make regulations is illustrated by subsection 10(1)(k), which provides: "The Commission may, in furtherance of its objects, make regulations generally... respecting such other matters as it deems necessary for the furtherance of its objects." This is a very broad section and in my view it is certainly broad enough to give the Commission the power to pass section 47 of the Regulations. The CRTC clearly determined that section 47 was necessary in order to achieve the following of its objects. First, under subparagraph 3(1)(t)(i), "distribution undertakings... (ii) should provide efficient delivery of programming at affordable rates, using the most effective technologies available at reasonable cost." Second, under paragraph 5(2)(g), "[t]he Canadian broadcasting system should be regulated and supervised in a flexible manner that... is sensitive to the administrative burden that, as a consequence of such regulation and supervision, may be imposed on persons carrying on broadcasting undertakings."

[41]       This analysis is consistent with the test set out by the Supreme Court of Canada for assessing the validity of a regulation made by the CRTC. In [1979] 1 S.C.R. 2">CKOY Ltd. v. The Queen, [1979] 1 S.C.R. 2 ("CKOY"), Spence J., writing for the majority at pages 11 and 12, stated:

The grant of power to enact regulations is given to the Commission by s. 16 [now s. 10] of the statute. By its opening words, such a power is directed to be exercised "in furtherance of its objects". Section 15 [now subsection 5(1)] is entitled "Objects of the Commission". For our purposes, the said objects may be briefly stated in the last words of s. 15, "with a view to implementing the broadcasting policy enunciated in section 3 of this Act". Therefore, I agree with the courts below that the validity of any regulation enacted in reliance upon s. 16 must be tested by determining whether the regulation deals with a class of subject referred to in s. 3 of the statute and that in doing so the Court looks at the regulation objectively. However, I also agree with Evans, J.A. when he states:

It is obvious from the broad language of the Act that Parliament intended to give to the Commission a wide latitude with respect to the making of regulations to implement the policies and objects for which the Commission was created.

Therefore, whether we consider that the impugned regulation will implement a policy or not is irrelevant so long as we determine objectively that it is upon a class of subject referred to in s. 3.I should add that as Evans J.A. noted there is no suggestion that the Commission acted capriciously. Of course, no allegation of bad faith has been advanced.[emphasis added]

[42]       Furthermore, in Canadian Broadcasting League v. Canada (Canadian Radio-television and Telecommunications Commission - C.R.T.C.), [1982] F.C.J. No. 528 ("Canadian Broadcasting League"), this Court applied CKOY, supra to determine that the CRTC had the authority to regulate fees charged by cable television undertakings, both by way of regulation and by condition of licence, notwithstanding that the Act did not contain any express authority to do so. Le Dain J.A. said as follows at page 192:

I conclude from these passages of Spence J. in the CKOY case that while it is for the Court to determine objectively whether a regulation deals with or is upon a subject referred to in section 3 of the Act, a broad view is to be taken of what is embraced by that section, having regard to the latitude or discretion that has been committed to the Commission to determine what may be necessary in a particular case for the furtherance of its policy objectives. [emphasis added]

[43]       As CKOY, supra and Canadian Broadcasting League, supra suggest, the issue in this case is not whether section 47 of the Regulations will be successful in achieving the policy objectives of the Act but rather whether objectively it deals with a class of subjects referred to in section 3. Since section 47 deals with the affordability of rates, which is one of the objects of the Act, this test is clearly met.

The CRTC continues to regulate and supervise distribution undertakings

[44]       Although section 47 of the Regulations means that certain class 1 licensees may be exempted from Part V of the Regulations dealing with basic service rates, these licensees are extensively regulated in many other ways, both by way of conditions of license and regulations. First, the Regulations dictate which types of programming services must be provided by cable distributors and which types of programs are optional. Section 3 of the Regulations expressly provides: "A licensee shall not distribute programming services except as required or authorized under its license or these Regulations."    

[45]       The following are examples of ways in which programming is regulated under the Act. Section 6 of the Regulations provides that licensees must ensure that a majority of the video and audio channels received by a subscriber are devoted to the distribution of Canadian programming services. Section 7 outlines the circumstances under which a licensee is permitted to alter or delete a programming service. Section 8 sets out a prohibition on distributing certain kinds of programming content: for example, content that contravenes any law, content that is likely to expose an individual or group to hatred on the basis of race, national or ethnic origin, colour, religion, sex, sexual orientation, age or mental or physical disability, content that contains any obscene or profane language or pictorial representation or any false or misleading news. Section 16.1 deals with the provision of French-language Canadian programming services. Section 17 outlines the television programming services that must be distributed as part of the basic service as well as the priority which must be given to each service. Section 19 specifies optional television programming services that may be provided under certain circumstances. Sections 27 and 28 deal with the provision of Community Programming. Section 29 specifies the conditions under which certain licenses are required to make a contribution to Canadian programming.

[46]       In addition to regulating the types of programming services that are provided by distribution undertakings, the Regulations also set out certain reporting requirements. Under section 11 of the Regulations, licensees are required to submit information to the Commission. Not only does this section list specific forms that must be completed by each licensee, but also subsection 11(2) says that a licensee shall, at the request of the Commission, submit "any other forms that are issued by the Commission". Furthermore under subsection 11(3): "At the request of the Commission, a licensee shall provide the Commission with a response to any inquiry regarding the licensee's programming, ownership or any other matter within the Commission's jurisdiction that relates to the licensee's undertaking."

[47]       Section 4 of the Regulations requires licensees to obtain the prior approval of the CRTC before a transfer of ownership occurs.

[48]       Under subparagraphs 9(1)(b), 9(1)(c) and 9(1)(d), the CRTC has broad power to impose conditions of license. The only limitation on the conditions that the CRTC may impose is that it must deem the conditions "appropriate for the implementation of the broadcasting policy set out in subsection 3(1)."

[49]       Clearly, the CRTC has a wide mandate that extends far beyond the regulation of rates. There is a long list of diverse policy objectives in subsections 3(1) and 5(2) of the Act, and the affordability of rates is only one of these many objectives. While the CRTC may not approve the rate increases of class 1 undertakings in certain instances when there is a demonstrable level of competition, the CRTC is continuing to regulate in order to fulfill its broad mandate under the Broadcasting Act.

[50]       Furthermore, with respect to rates, the CRTC clearly continues to regulate the rates of class 1 undertakings that are unable to demonstrate that the level of competition specified in section 47 of the Regulations exists in their licensed area. For those undertakings that succeed under section 47 in becoming exempted from rate regulation, the CRTC continues to supervise rates as discussed hereafter.

[51]       The CRTC continues to collect information regarding the rates charged by Class 1 licensees. All Class 1 licensees, including those exempted from Part V of the Regulations, are required to complete in full an annual Return of "Broadcasting Distribution" Licensee (Long Form). In this form, each licensee is required to report annually its fees for basic service, installation and re-connection. The CRTC uses the information provided in the annual returns to prepare its Broadcasting Policy Monitoring Report, a publicly available document that reports annually on all aspects of the Canadian broadcasting system, including the basic service rates of de-regulated Class 1 cable systems and the affordability of basic services.

[52]       It also appears that the CRTC appreciated the necessity of continuing to "supervise" the competitive environment when, in Public Notice CRTC 1997-150, it stated as follows:

The publication of the Broadcasting Distribution Regulations constitutes an important step by the Commission in attaining the objectives set out in the Broadcasting Act and in promoting the development of effective competition in the delivery of broadcasting services to Canadians. Nevertheless, the competitive environment will continue to develop and market forces will have an increasingly important influence on consumers and on the Canadian broadcasting system.

The Commission therefore intends to undertake a general review of the effectiveness and appropriateness of the new regulations after two years, and to consider whether further refinements to the regulatory framework are appropriate in pursuit of the objectives of the Broadcasting Act.

The Commission will, of course, closely monitor the development of the competitive environment in the meantime, and it will address specific issues and concerns as they are brought to its attention.

An exemption granted under section 47 is not final and irrevocable

[53]       The Appellant argues inter alia that because an exemption under section 47 is final and irrevocable, this illustrates s. 47 is ultra vires. The Appellant stated at para. 53 of its factum:

The Regulations do not provide for the reversal of the deregulation or for any ongoing supervision of the licensee's rates by the Commission. After the relevant 60 days have passed, the licensee is permanently exempted from the regulation and supervision by the Commission of its rates and service delivery obligations. There is no mechanism for the ongoing supervision of the licensee's rates to determine whether they are affordable, in order to implement the policy set out in section 3(1)(t)(ii) of the Act, nor is there a mechanism for the "re-regulation" of a licensee should circumstances change in the future, should the licensee's rates exceed what the Commission would otherwise deem to be appropriate, or should the licensee fail to adequately deliver services. Section 47 provides what might be described as a "one-way door" and therefore constitutes an abdication of authority.

[54]       Contrary to the Appellant's argument, not only does the CRTC continue to supervise the affordability of basic services, as previously outlined, but also if it finds that section 47 of the Regulations is not fulfilling its purpose, it is in a position to repeal, amend or entirely replace this provision. Subsection 31(4) of the Interpretation Act R.S. 1985, c.I-21, clearly states: "Where a power is conferred to make regulations, the power shall be construed as including a power, exercisable in the same manner and subject to the same consent and conditions, if any, to repeal, amend or vary the regulations and make others."

[55]       It is also significant that under subsection 18(2) of the Act, the Commission shall hold a public hearing in connection with the renewal of a licence unless it is satisfied that such a hearing is not required in the public interest. This mechanism provides another way for the CRTC to ensure that the policy objective of affordable rates is met.

[56]       Furthermore, when deciding whether or not to renew the license of a particular licensee who has been exempted from Part V of the Regulations or any other licensee for that matter, the CRTC can take into account whether there has been efficient delivery of programming at affordable rates by the licensee, which subparagraph 3(1)(t)(ii) lists as one of the policy objectives of the Act. If it concludes that this has not been the case, it can impose a condition of license under paragraph 9(1)(b) requiring approval of rates or a condition of license requiring it to once again comply with Part V of the Regulations.

[57]       Also, subsection 9(1)(c) permits the CRTC to amend any condition of a licence on its own motion where five years have expired since the issuance or renewal of the licence. Thus presumably if the Commission finds that competition is not working to ensure that the rate of an exempted undertaking is affordable, it can, as previously outlined, impose a condition for the approval of rates or the removal of the exemption from section 47 of the Regulations.

[58]       It may well be in addition that under subsection 18(3), the Commission could issue a decision which would involve removing an exemption which had been given previously under section 47 of the Regulations. Subsection 18(3) is worded in very broad terms:

The Commission may hold a public hearing, make a report, issue any decision and give any approval in connection with any complaint or representation made to the Commission or in connection with any other matter within its jurisdiction under this Act if it is satisfied that it would be in the public interest to do so.

We are advised that the section has not been tested in this way but it seems to me that it is arguable that the section could be used in the manner I have suggested. However, in any case, I do not think that this conclusion is necessary to this decision.

[59]       All of this demonstrates that there is no merit to the appellant's argument that an exemption received under section 47 of the Regulations is permanent or irrevocable. It should also be pointed out that section 47 itself gives the CRTC before an exemption has been granted under section 47, the power to suspend its application or to disallow a licensee's proposal to be removed from the obligations of Part V of the Regulations. Given this, it would be surprising if, once the CRTC had granted the exemption, it had no power under the Act to take it away. Surely common sense and the policies of the Act dictate that the CRTC would continue to have the power to remove the exemption.

[60]       In addition, during oral argument, when counsel for the appellant was asked what was required of the CRTC in terms of regulation, he said that the CRTC must at all times know what the rates are and have a mechanism for reviewing those rates to see whether they are affordable. The above analysis indicates that the CRTC continues to monitor and report on the affordability of rates and is in a position to reintroduce fixation of rates or conditions of license if it determines this is necessary.

[61]       Thus it is my conclusion that an exemption under section 47 is not final and irrevocable, the CRTC continues to regulate and supervise all aspects of the broadcasting system. The CRTC retains control over all licensees; it has the power to revoke or amend section 47 of the Regulations or to impose conditions of license removing the exemption from Part V of the Regulations. The CRTC may meet its legislative obligation to regulate and supervise without specifically setting or approving the rate of all undertakings.

The Broadcasting Act does not require the CRTC to specifically set and approve all rates

[62]       The words used in the Broadcasting Act to the effect that "the Commission shall regulate and supervise all aspects of the Canadian broadcasting system" do not mean that it is required to specifically approve or set the rates of licensees. Indeed, the only specific reference to rates in the Act is in subparagraph 3(1)(t)(ii) which provides: "It is hereby declared as the broadcasting policy for Canada that... distribution undertakings... should provide efficient delivery of programming at affordable rates, using the most effective technologies available at reasonable cost". While the CRTC has an obligation to try to ensure that rates are affordable, the Act does not specify how the CRTC must do this. The choice of mechanism is for the CRTC to determine and reliance on market forces is certainly one alternative for that purpose.

[63]       The Appellant pointed to two cases in support of its position that the CRTC's decision to "deregulate" rates is contrary to the Broadcasting Act. First, in TWU v. Canadian Radio-television and Telecommunications Commission,[1989] 2 F.C. 280 (C.A.) ("TWU"), the CRTC decided to deregulate the tolls charged by telephone and telegraph companies under the Railway Act, R.S.C. 1970, c. R-2, and the Court decided that the CRTC did not have the authority to do this. However, this case is distinguishable in that, unlike the Broadcasting Act, subsection 320(2) of the Railway Act expressly provided that tolls were subject to the approval of the CRTC:

Notwithstanding anything in any Act passed before the 7^th day of July 1919, all telegraph and telephone tolls to be charged by the company, and all charges for leasing or using the telegraph or telephones of the company, are subject to the approval of the Commission, and may be revised by the Commission from time to time..."

[64]       Broadcasting is a different sector, with a different policy and enabling Act. Also, Marceau J., himself, noted in TWU, supra at para. 1 that the legal issue was narrow and thus the ratio would not apply beyond its narrow context:

The legal issue it raises is a narrow one insofar as it relates solely to the interpretation of a short and incidental phrase in one of the provisions of the Railway Act, R.S.C. 1970, c. R-2; but a basic aspect of the jurisdiction of the Commission is involved and the importance of the case is attested by the fact that no less than nine (9) different parties have sought and been given leave to intervene in the proceedings.

[65]       Second, the appellant pointed to Saskatchewan Wheat Pool v. Canada (Attorney-General), 107 D.L.R (4^th) 190 ("Saskatchewan Wheat Pool"), which also did not involve the Broadcasting Act. In this case, Rothstein J., as he then was, determined that a regulation passed by the Governor in Council deregulating the interprovincial marketing of barley and the export and import of barley to or from the United States under section 47 of the Canadian Wheat Board Act, R.S.C., 1985, c. C-24 was ultra vires. The Canadian Wheat Board Act enabled the Governor in Council to make regulations providing for the "granting of licenses" for the interprovincial transport, sale, purchase or delivery of barley and the export and import of barley to and from the United States. In the absence of such licenses, only the Canadian Wheat Board had the authority to market barley inter-provincially and internationally. Rather than making regulations providing for the granting of licenses, however, the Governor in Council made regulations granting the authority to "a person other than the Board" to market barley inter-provincially and internationally without a license. Rothstein J. (as he then was) stated at page 203: "[I]n my view, in the present case, the Governor in Council cannot dispense with the requirement for a license altogether when the statute conferring regulation-making authority expressly contemplates regulations providing for the granting of licenses."

[66]       Saskatchewan Wheat Pool, supra is not helpful to the appellant because it deals with an entirely different statutory scheme; there is no requirement in the Broadcasting Act that the CRTC specifically approve or set all rates.

[67]       The statutory provisions in these cases demonstrate that when Parliament intends to require a tribunal to set or approve all rates, it uses clear language. Yet another example of this is subsection 25(1) of the Telecommunications Act, 1993, c. 38:

No Canadian carrier shall provide a telecommunications service except in accordance with a tariff filed with and approved by the Commission that specifies the rate or the maximum or minimum rate, or both, to be charged for the service [emphasis added].

[68]       There is no similar provision in the Broadcasting Act, which demonstrates that Parliament did not intend to provide for the strict regulation of rates. While it is a policy objective under subparagraph 3(1)(t)(ii) of the Act that rates should be affordable, the Act does not dictate how the CRTC is to achieve this policy objective. The CRTC is given the discretion to determine when and how these powers should be exercised, taking into account the policies set forth in the Act. It is clear that Parliament intended the CRTC to be the only authority with the broad discretion to decide how best to implement broadcasting policy. This is emphasized by subsection 3(2), which provides:

It is further declared that the Canadian broadcasting system constitutes a single system and that the objectives of the broadcasting policy set out in subsection (1) can best be achieved by providing for the regulation and supervision of the Canadian broadcasting system by a single independent public authority.

Competition as a Means of Regulating and Achieving the Policy Objectives of the Act

[69]       In exercising its broad discretion to determine how to implement the policy objectives of the Act that undertakings should provide programming at "affordable rates" and that the CRTC should be sensitive to the administrative burden that regulation and supervision may create, the CRTC created section 47 of the regulations which introduces competition as one of the means to ensure that rates are affordable. The CRTC did not pass a regulation that market competition will determine the rates for all distribution undertakings, but rather provided that when a particular undertaking can demonstrate a sufficient level of competition in its service area, it will no longer have its rate determined by the CRTC. In these cases, the competition, that has been demonstrated to exist in that particular area, will serve to regulate the rates and keep them affordable.

[70]       Importantly, if the CRTC finds that this system of market competition does not achieve the policy objectives of the Act, as stated previously, it has the means to correct and change this system.

[71]       Furthermore, when the CRTC enacted section 47 of the Regulations, which introduces competition as a means of keeping rates affordable, it was following a binding policy directive issued to it by the Governor in Council in Order-in-Council PC1994-1689. This Order provided that "[i]t is government policy to foster fair competition and increased reliance on market forces in the provision of facilities, products and services." Subsection 7(1) of the Broadcasting Act specifically provides that "the Governor in Council may, by order, issue to the Commission directions of general application on broad policy matters with respect to (a) any of the objectives of the broadcasting policy set out in subsection 3(1); or (b) any of the objectives of the regulatory policy set out in subsection 5(2)." Subsection 7(3) states that an order made under subsection 7(1) is binding on the CRTC.

The Broadcasting Act must be interpreted in a coherent manner

[72]       The Appellant's argument that the CRTC is precluded from enacting section 47 because it is only allowed to regulate and not deregulate rates also fails because it would result in an incoherent interpretation of the Act. In a recent Federal Court of Appeal case, Shebib v. Canada (Attorney General), [2003] F.C.J. No. 281, involving a judicial review application concerning a claim for employment insurance benefits, the issue of whether a regulation was ultra vires was raised. This Court held that the regulation was not ultra vires the Canada Employment Insurance Commission and not in conflict with the provisions of the Employment Insurance Act. At para. 20, Rothstein J.A. used the presumption of coherence to come to this conclusion.

[73]       The presumption is that different provisions of the statute are intended to work together logically and rationally, and an enactment is presumed not to contain contradictions and inconsistencies. Rothstein J.A. went on to quote from Driedger at page 262 of the 4^th edition:

It is presumed that the provisions of legislation are meant to work together, both logically and teleologically, as parts of a functioning whole. The parts are presumed to fit together logically to form a rational, internally consistent framework; and because the framework has a purpose, the parts are presumed to work together dynamically, each contributing something toward accomplishing the intended goal.

The presumption of coherence is also expressed as a presumption against internal conflict. It is presumed that the body of legislation enacted by a legislature does not contain contradictions or inconsistencies, that each provision is capable of operating without coming into conflict with any other.

[74]       In my opinion, to read the powers of the CRTC as the appellant does would go against this presumption of coherence. Subsection 9(4) of the Act confirms that it was Parliament's intention that the CRTC would have the power to exempt persons from the regulations requiring CRTC approval of rate increases; it provides:

The Commission shall, by order, on such terms and conditions as it deems appropriate, exempt persons who carry on broadcasting undertakings of any class specified in the order from any or all of the requirements of this Part or of a regulation made under this Part where the Commission is satisfied that compliance with those requirements will not contribute in a material manner to the implementation of the broadcasting policy set out in subsection 3(1).

Since subsection 9(4) of the Act clearly gives the CRTC the power to grant exemptions from the regulations, it would be incoherent, if when interpreting the CRTC's very broad mandate under the Act, this Court found that it did not have the authority to enact section 47 of the Regulations.

Conclusion

[75]       Therefore, after examining the statutory scheme of the Act as a whole, it is clear that section 47 of the Regulations is not inconsistent with the Act or the powers of the CRTC granted by the Act and it is not ultra vires. The CRTC did not err in deciding it had the authority to enact this regulation.

[76]       This appeal will therefore be dismissed with costs.

                                                                        "J. EDGAR SEXTON"      

                                                                                                      J.A.

"I agree

    "A.M. Linden J.A."

"I agree

    "Marshall Rothstein J.A."

                          FEDERAL COURT OF APPEAL

    NAMES OF COUNSEL AND SOLICITORS OF RECORD

DOCKET:                  A-21-03

STYLE OF CAUSE: Telecommunications Workers Union v. CRTC et al. and                                                                    Consumers'Association of Canada (BC Branch) et al.

                                                           Intervenors

PLACE OF HEARING:                                 Vancouver B.C.

DATE OF HEARING:                                   September 18, 2003

REASONS FOR JUDGMENT:                    SEXTON J.A.

CONCURRED IN BY:                                  LINDEN, J.A.

ROTHSTEIN J.A.

DATED:                     Ottawa, Ontario, October 20, 2003

APPEARANCES:

SOLICITORS OF RECORD: