Docket: A-141-15
Citation:
2016 FCA 28
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CORAM:
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RYER J.A.
WEBB J.A.
NEAR J.A.
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BETWEEN:
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ROGERS
COMMUNICATIONS PARTNERSHIP, TELUS COMMUNICATIONS COMPANY, BELL MOBILITY INC.
AND QUEBECOR MEDIA INC.
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Appellants
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and
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SOCIETY OF
COMPOSERS, AUTHORS AND MUSIC PUBLISHERS OF CANADA (a.k.a. SOCAN)
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Respondent
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REASONS FOR JUDGMENT
RYER J.A.
[1]
Rogers Communications Partnership, Telus
Communications Company, Bell Mobility Inc. and Quebecor Media Inc. (the
“Corporations”) commenced an action in the Federal Court (the “Action”) against
the Society of Composers, Authors and Music Publishers of Canada (“SOCAN”)
seeking to recover certain amounts that they paid during the period from November
14, 2006 to July 12, 2012 pursuant to Tariff 24 (2003-2005) Ringtones (“Tariff
24 (2003-2005)”) and Tariff 24 (2006-2013) Ringtones (“Tariff 24 (2006-2013)”) (collectively,
“Tariff 24”). The payments were in relation to ringtones, containing
substantial portions of musical works in SOCAN’s repertoire that were
downloaded onto mobile devices of the Corporations’ customers.
[2]
SOCAN filed a defence to the Action and a
counterclaim against the Corporations seeking payment of certain ringtone
royalties that the Corporations had refused to pay since July 12, 2012 or, in
the alternative, November 7, 2012.
[3]
Upon receipt of a consent motion in the Action,
Justice Anne Mactavish issued an order on March 6, 2014, pursuant to Rule
220(1)(a) of the Federal Courts Rules, S.O.R./98-106 (the “Federal
Courts Rules”), directing the preliminary determination of six questions of
law (the “Rule 220(1)(a) Order”).
[4]
In a decision dated March 6, 2015, Justice James
O’Reilly (the “Judge”) reformulated and answered these six questions. The
decision is reported at 2015 FC 286.
[5]
Both the Corporations and SOCAN appeal portions
of the Judge’s determinations of the six questions.
[6]
For the reasons that follow, I would allow in
part both the Corporations’ appeal and SOCAN’s cross-appeal.
I.
BACKGROUND
[7]
The Corporations offer mobile communication
services in Canada.
[8]
SOCAN is a collective society, as defined in
section 2 of the Copyright Act, R.S.C. 1985, c. C-42 (the “Copyright
Act”). It carries on the business of collective administration of copyright,
as defined in subsection 3(1) of the Copyright Act, for the benefit of
persons who authorize it to do so on their behalf. Its business includes
granting licences for the public performance and communication to the public by
telecommunication in Canada of dramatico-musical and musical works. In its
business, it acts on behalf of Canadian music creators and publishers who hold
the copyright in relation to a work (the “Rightsholders”) and who authorize it
to do so.
[9]
In general terms, Rightsholders enter into
arrangements with collective societies, such as SOCAN, so that, on an economical
and efficient basis, the unauthorized use of their works can be prevented and
compensation for the authorized use of their works can be obtained. The
collective society provides “licenses” to persons
wishing to use the performance rights in the works under its administration and
collects fees for such use by those persons. After deducting agreed upon costs,
the collective society makes distributions to the Rightsholders.
[10]
The Copyright Board of Canada (the “Board”) is
established under subsection 66(1) of the Copyright Act. Its general
powers are set forth in sections 66.51 to 66.71 of that legislation.
[11]
A collective society is obligated under section
67.1 of the Copyright Act to propose tariffs to the Board setting out
the amounts of royalties or licence fees for the use of musical works forming
part of its repertoire, whether such use takes the form of a performance of the
work in public or a communication of the work to the public by
telecommunication.
[12]
After considering objections to a proposed
tariff, the Board is required, by subsection 68(3) of the Copyright Act,
to certify tariffs as approved with any alterations that the Board considers
necessary.
[13]
Section 66.52 of the Copyright Act
empowers the Board to vary a decision that it has made respecting royalties,
including a certification decision made pursuant to subsection 68(3) of the Copyright
Act, if the Board is of the opinion that there has been a material change
in circumstances since its decision was made. That provision reads as follows:
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Variation of
decisions
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Modifications de décisions
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66.52 A decision of the Board respecting royalties or their related
terms and conditions that is made under subsection 68(3), sections 68.1 or
70.15 or subsections 70.2(2), 70.6(1), 73(1) or 83(8) may, on application, be
varied by the Board if, in its opinion, there has been a material change in
circumstances since the decision was made.
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66.52 La Commission peut, sur demande, modifier
toute décision concernant les redevances visées au paragraphe 68(3), aux
articles 68.1 ou 70.15 ou aux paragraphes 70.2(2), 70.6(1), 73(1) ou 83(8),
ainsi que les modalités y afférentes, en cas d’évolution importante, selon
son appréciation, des circonstances depuis ces décisions.
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[14]
Subsection 68.2(1) of the Copyright Act permits
a collective society to collect the royalties stipulated in an approved tariff
and to recover them in a court of competent jurisdiction.
[15]
By virtue of subsection 68.2(2) of the Copyright
Act, no action for the infringement of the right to perform in public or
the right to communicate to the public by telecommunication, referred to in
section 3 of the Copyright Act, may be brought against a person who has
paid or offered to pay the royalties stipulated in an approved tariff.
[16]
In the circumstances of this appeal, the rights
in issue relate to the download of ringtones that consist of portions of
musical works. Some cellphone users prefer ringtones containing musical works as
the means by which they are notified of incoming calls. Thus, ringtones containing
musical works can be loaded into a cellphone’s memory and will then be heard as
the signal of an incoming call. When a ringtone containing a musical work is
used and a call is received, the cellphone will not “ring”;
instead, the music embodied in the ringtone will play.
[17]
Payments for ringtones embedded in cellphones at
the time of their purchase are not in issue in the Action. Instead, the Action
relates to ringtones that are subsequently “downloaded”
into cellphones. A download of a ringtone occurs when a ringtone file is
transmitted from a wireless carrier to a cellphone where the file is then
stored in the cellphone’s memory.
[18]
Over the objections of some of the Corporations,
the Board certified Tariff 24 (2003-2005) on August 18, 2006 with respect to
the years 2003, 2004 and 2005. Tariff 24 (2003-2005) authorized SOCAN to
collect royalties on the download of ringtones on the basis that such downloads
constituted a communication to the public pursuant to paragraph 3(1)(f)
of the Copyright Act. That provisions provides as follows:
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3(1) For the purposes of this Act, copyright, in relation to
a work, means the sole right to produce or reproduce the work or any
substantial part thereof in any material form whatever, to perform the work
or any substantial part thereof in public or, if the work is unpublished, to
publish the work or any substantial part thereof, and includes the sole right
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3(1) Le droit d’auteur sur l’oeuvre
comporte le droit exclusif de produire ou reproduire la totalité ou une
partie importante de l’oeuvre, sous une forme matérielle quelconque, d’en
exécuter ou d’en représenter la totalité ou une partie importante en public
et, si l’oeuvre n’est pas publiée, d’en publier la totalité ou une partie
importante; ce droit comporte, en outre, le droit exclusif :
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…
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[…]
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(f) in the
case of any literary, dramatic, musical or artistic work, to communicate the
work to the public by telecommunication,
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(f) de communiquer au public, par
télécommunication, une oeuvre littéraire, dramatique, musicale ou artistique;
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[19]
By its terms, Tariff 24 (2003-2005) had an
expiry date of December 31, 2005 but would continue as an interim tariff until
the Board certified a tariff for a period starting January 1, 2006.
[20]
The Board’s decision to certify Tariff 24
(2003-2005) was judicially reviewed by the Federal Court of Appeal (Canadian
Wireless Telecommunications Association v. Society of Composers, Authors and
Music Publishers of Canada, 2008 FCA 6, 371 N.R. 273 [CWTA]) .
Before the Court, the applicants argued that Tariff 24 (2003-2005) was not
authorized by the Copyright Act because the download of a ringtone did
not constitute a communication to the public pursuant to paragraph 3(1)(f)
of the Copyright Act.
[21]
The Court dismissed the application for judicial
review. It determined that the download of a ringtone constituted a
communication of a musical work to the public pursuant to paragraph 3(1)(f)
of the Copyright Act (the “Ringtone Download Issue”). As a consequence,
the Board’s decision to certify Tariff 24 (2003-2005) was affirmed. Leave to
appeal the Court’s decision to the Supreme Court of Canada was denied on
September 18, 2008.
[22]
Subsection 67.1(1) of the Copyright Act
requires a collective society to file a proposed tariff with the Board stipulating
the royalties to be collected during the period in which that proposed tariff
is to apply before the date when its last approved tariff expires. The proposed
tariff must be filed on or before March 31st in the year that the
existing tariff will expire.
[23]
As a consequence of the expiry of Tariff 24
(2003-2005), SOCAN filed a proposed tariff to replace Tariff 24 (2003-2005).
The filing date is not in the record before the Court.
[24]
Objections to this proposed replacement tariff
were filed by a number of parties, including the Corporations. However, by correspondence
dated June 7, 2010, SOCAN informed the Board that SOCAN had reached an
agreement with several parties, including the Corporations, regarding the terms
and conditions of the proposed replacement tariff for the years 2006-2010 and extending
the period covered by that replacement tariff from 2006 to 2013 (the “2010
Agreement”). The June 7, 2010 correspondence requested that the Board certify a
tariff consistent with the 2010 Agreement. Subsequent to the Board’s receipt of
the June 7, 2010 correspondence, all remaining objections to the originally
proposed replacement tariff were withdrawn.
[25]
On June 29, 2012, the Board certified the tariff
contained in Appendix B to the 2010 Agreement. The Board’s decision to certify
Tariff 24 (2006-2013) was not challenged by judicial review.
[26]
Between November 14, 2006 and July 12, 2012, the
Corporations paid approximately $12,015,041.00 to SOCAN pursuant to Tariff 24.
[27]
In separate proceedings, the Board certified
Tariff 22.A for the years of 1996 to 2006 on October 18, 2007. Tariff 22.A set
the royalties to be paid when a musical work is downloaded or streamed over the
Internet or a mobile network.
[28]
The Board certified Tariffs 22.B to 22.G for the
years of 1996-2006 on October 25, 2008. Tariffs 22.B to 22.G set the royalties
to be paid when various media containing musical works, or a substantial
portion of a musical work, is streamed or downloaded over the Internet. Tariff
22.G set the royalties to be paid when a video game, containing a musical work,
is downloaded or streamed over the Internet.
[29]
The Board’s decisions to certify Tariffs 22.A
and 22.B to 22.G were judicially reviewed by the Federal Court of Appeal, which
heard both applications together. The Court dismissed the applications for
judicial review on September 2, 2010 (Shaw Cablesystems G.P. v. Society of
Composers, Authors and Music Publishers of Canada, 2010 FCA 220, 409 N.R.
102 [Shaw]; Entertainment Software Association and the Entertainment
Software Association of Canada v. CMRRA/SODRAC Inc., 2010 FCA 221, 406 N.R.
288 [ESA (FCA)]). In Shaw, the Court held that the Board’s
conclusion that the download of a musical file was a communication of a musical
work to the public, pursuant to paragraph 3(1)(f) of the Copyright
Act, was reasonable. In ESA (FCA), the Court held that its
conclusion in Shaw was dispositive of the issue of the reasonableness of
the Board’s determination that the download of a video game containing a musical
work is a communication to the public pursuant to paragraph 3(1)(f) of
the Act.
[30]
On March 24, 2011, the Supreme Court of Canada
granted leave to appeal the Federal Court of Appeal’s decisions in Shaw and
ESA (FCA). The appeals were heard together on December 6, 2011.
[31]
The Supreme Court of Canada rendered two split
decisions on July 12, 2012. In Entertainment Software Association v. Society
of Composers, Authors and Music Publishers of Canada, 2012 SCC 34, [2012] 2
S.C.R. 231 [ESA], a majority of the Supreme Court determined that the
download of video games containing musical works did not constitute a
communication within the meaning of paragraph 3(1)(f) of the Copyright
Act.
[32]
In Rogers Communications Inc. v. Society of
Composers, Authors and Music Publishers of Canada, 2012 SCC 35, [2012] 2
S.C.R. 283 [Rogers], a majority of the Supreme Court said that its
holding in ESA was not limited to the download of video games containing
musical works such that, more generally, “musical works
are not ‘communicated’ by telecommunication when they are downloaded”
(at paragraph 2, emphasis in original).
[33]
Following the release of ESA and Rogers,
SOCAN returned the royalties that it had collected from the Corporations under
Tariff 22.A and Tariffs 22.B to 22.G.
[34]
The Corporations decided that Rogers and ESA
rendered Tariff 24 “without legal foundation”.
As a result, they ceased making payments to SOCAN pursuant to Tariff 24
(2006-2013) on July 12, 2012.
[35]
On August 1, 2012, the Corporations brought an
application to vary the Board’s Tariff 24 certification decisions pursuant to
section 66.52 of the Copyright Act (the “66.52 Application”).
[36]
On January 18, 2013, the Board denied the 66.52
Application. It held that the application was properly characterized as an
application to rescind the Tariff 24 certification decisions. The Board
concluded that its power to vary did not include the power to rescind. It also concluded
that a determination of the Corporations’ claim that Tariff 24 was no longer
enforceable in light of ESA and Rogers was beyond its
jurisdiction and was a question for the courts to determine. The Board’s
decision to reject the 66.52 Application was not judicially reviewed.
[37]
Instead, the Corporations brought the Action
against SOCAN in the Federal Court, claiming that SOCAN was unjustly enriched
by the payments that the Corporations had made pursuant to Tariff 24. They sought:
a) Restitution arising from unjust enrichment in the amount of
$15,000,000.00;
b) Special damages in an amount to be particularized prior to trial;
c) In the alternative, a declaration that monies received by the
Defendant as described below (“Payments”) are infused with and have been held
by way of constructive trust on behalf of the Plaintiffs, and an order that the
Payments be delivered to the Plaintiffs forthwith;
d) A declaration that the transmission of a copy of a ringtone
containing a portion of a musical work is not a communication to the public by
telecommunication of the musical work, for the purpose of paragraph 3(1)(f)
of the Copyright Act, R.S.C. 1985, c. C-42, and the Copyright Board of
Canada’s (“Board”) decisions to certify Tariff 24 (2003-2005) and Tariff 24 (2006-2013)
(collectively, “Tariff 24”);
e) In the alternative, a declaration that Tariff 24 constitutes a
jurisdictional violation of and is ultra vires the Copyright Act;
f) An accounting of the Payments;
g) A tracing order with respect to the Payments;
h) Pre-judgment and post-judgment interest pursuant to the Federal
Courts Act, R.S.C. 1985, c. F-7.
[38]
On March 6, 2014, the Rule 220(1)(a) Order
was issued. It stipulated that the following six questions of law were to be
determined:
1. Does the Internet transmission to a customer’s mobile device of an
electronic ringtone file containing a musical work constitute a communication
of that work to the public by telecommunication within the meaning of section
3(1)(f) of the Copyright Act?
2. Were the decisions of the Copyright Board of Canada (the “Board”)
certifying SOCAN Tariff 24 (Ringtones) for the years 2003-2005 and 2006-2013
(“SOCAN Tariff 24”) intra vires the Board?
3. Is any part of the Plaintiffs’ entire claim barred under the
doctrine of res judicata?
4. Are the Plaintiffs estopped by claiming part or all of the relief
sought in this Action by an agreement executed by the Plaintiffs and filed with
the Board on June 7, 2010?
5. Did SOCAN’s collection of SOCAN Tariff 24 royalties constitute an
unjust enrichment?
6. Are the Plaintiffs entitled to an order tracing SOCAN Tariff 24
royalty monies?
II.
THE JUDGE’S DECISION
[39]
The Judge reformulated and answered the six
questions stipulated in the Rule 220(1)(a) Order. His reformulations and
answers are as follows:
1. Question: Has the plaintiffs’ claim already been finally decided
against them?
Answer: The plaintiffs’ claim has not been
finally decided against them.
2. Question: Based on their 2010 agreement with SOCAN, are the
plaintiffs precluded from claiming the relief they seek?
Answer: The 2010 agreement between the
plaintiffs and SOCAN does not prevent them from claiming the relief they seek.
3. Question: Is the Internet transmission of a ringtone file a
communication of a musical work to the public?
Answer: The Internet transmission of a
ringtone file does not constitute the communication of a musical work to the
public.
4. Question: Did the Board have jurisdiction to certify Tariff 24?
Answer: The Board had jurisdiction to
certify Tariff 24.
5. Question: Was SOCAN unjustly enriched when it received Tariff 24
royalties?
Answer: SOCAN has not been unjustly
enriched by its receipt of Tariff 24 royalties.
6. Question: Are the plaintiffs entitled to an order tracing the
distribution of Tariff 24 royalties?
Answer: The plaintiffs are not entitled to
a tracing order.
III.
ISSUE
[40]
The issue in this appeal is whether the Judge
erred in law in answering any of the six questions.
IV.
STANDARD OF REVIEW
[41]
Since Rule 220(1)(a) of the Federal
Courts Rules only authorizes the determination of questions of law, the
standard of review is correctness (Housen v. Nikolaisen, 2002 SCC 33 at
paragraph 8, [2002] 2 S.C.R. 235).
V.
ANALYSIS
A.
Introduction
(1)
Rule 220(1)(a)
[42]
As noted above, the questions that the Judge
determined arose out of a motion under Rule 220(1)(a) of the Federal
Courts Rules, made by the Corporations and consented to by SOCAN. That Rule
reads as follows:
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220. (1) A party may bring a motion before
trial to request that the Court determine
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220. (1) Une partie peut, par voie de requête
présentée avant l’instruction, demander à la Cour de statuer sur :
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(a) a question of law that may be
relevant to an action;
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a) tout point de droit qui peut être pertinent
dans l’action;
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[43]
The requirements of this Rule are set forth in Berneche
v. Canada, [1991] 3 F.C. 383, 133 N.R. 232 (C.A.) [Berneche], which
dealt with a predecessor of Rule 220(1)(a). At paragraph 6, Justice Mahoney
stated that the Rule:
…requires that the
Court be satisfied (1) that there is no dispute as to any fact material to the
question of law to be determined; (2) that what is to be determined is a
pure question of law, (3) that its determination will be conclusive of a
matter in dispute so as to eliminate the necessity of a trial or, at least,
shorten or expedite the trial.
[Emphasis added]
[44]
This Court further elaborated upon the Berneche
test in Perera v. Canada, [1998] 3 F.C.R. 381, 225 N.R. 162 (C.A.) [Perera]
where Justice Létourneau stated at paragraph 13:
…[A]s was stated in
the Berneche case, [the Rule requires] that the proposed questions are pure
questions of law, that is to say questions that may be answered without having
to make any finding of fact. Indeed, the purpose of the Rule is to have the
questions answered before trial; it is neither to split the trial in parts nor
to substitute for part of a trial a trial by affidavits.
[Emphasis added,
footnote omitted]
[45]
These authorities make it plain that Rule
220(1)(a) contemplates the determination of only pure questions of law.
This limitation is not uniformly applicable to all courts. For example, Rule
58(1) of the Tax Court of Canada Rules (General Procedure),
S.O.R./90-688a (the “Tax Court Rules”) enables the Tax Court of Canada
to determine preliminary questions of law, fact or mixed fact and law.
(2)
The Judge’s Reformulation of the Questions
[46]
The Judge chose to reformulate the questions
stipulated in the Rule 220(1)(a) Order and to answer the reformulated
questions in an order of his choosing.
[47]
Questions of law often entail the ascertainment
of legal tests or the interpretation of statutory provisions. Questions of
mixed fact and law involve the application of a legal test or principle to a
set of facts. A pure question of law, as contemplated in Berneche and Perera,
would not include a question of mixed fact and law.
[48]
In the circumstances of this appeal, the Rule
220(1)(a) Order was made on consent with the consequence that it is not
apparent that any detailed consideration was given to the appropriateness of
the six questions that were put forward by the parties; that is to say, whether
each of them was a “pure question of law”.
[49]
Whether these circumstances played any part in
the Judge’s decision to reformulate the questions stipulated in the Rule
220(1)(a) Order is not apparent from his reasons.
[50]
In somewhat analogous circumstances, Justice Hugessen,
then of the Federal Court, found that the Court should refuse to answer
questions when to do so would be wrong. In Bruyere v. Canada, 2005 FC
1371, 281 F.T.R. 221 [Bruyere], he stated, at paragraph 19, as follows:
[19] The
wording of Rule 220, by providing for a two-stage procedure, in which the Court
itself first determines the appropriateness of the questions to be asked before
undertaking to give an answer, is intended to avoid this sort of problem.
However, the policy considerations underlying the Rule coupled with the fact
that the first stage of the motion was not contested with the consequence that
the learned Prothonotary was not called on to turn her mind in any detail to
the appropriateness of the questions, leads me to the conclusion that the Court
should refuse to answer questions when to do so would be wrong. Obviously, it
would have been preferable if the motion had been dismissed at the first stage,
as it was in Wolf v. Canada, 2002 FCT 434, but while to answer a
question on inadequate facts may have far-reaching consequence for persons
other than the parties, a refusal to answer will cause inconvenience only to
the parties who themselves are responsible for the creation of the present
situation.
[51]
No issue was taken by either of the parties with
respect to the Judge’s reformulations of the six questions. That said, in my
view, in reformulating the six questions, the Judge was obliged to ensure that
the reformulated questions met the requirements set forth in Berneche
and Perera.
[52]
At the hearing of the appeal, the Court asked
whether it was obliged to consider the correctness of the Judge’s answer to any
reformulated question that was not a “pure question of
law”. Counsel for the Corporations responded that it was open to this
Court to refuse to do so and helpfully referred the Court to the decision in Bruyere.
Counsel for SOCAN responded that the Court should deal with the correctness of
the Judge’s answers to the reformulated questions on the basis that they
emanated from the Rule 220(1)(a) Order, which was granted on consent
given by “experienced counsel for sophisticated
clients”.
[53]
In my view, it is open to this Court to decline
to consider the correctness of the Judge’s answer to any question that does not
properly fall within the purview of Rule 220(1)(a) of the Federal Courts
Rules.
[54]
In Thomas Fuller Construction Co. v. Canada,
[1992] 3 F.C. 795, 147 N.R. 313 (C.A.), this Court set aside an order of a judge
who determined a preliminary question of law on the basis that the question of
law was not properly raised in the pleadings. In my view, this Court’s power to
set aside a determination of a question of law that is not raised in pleadings is
sufficient to enable the Court to set aside a determination of a question that
does not constitute a pure question of law.
[55]
In McLarty v. The Queen, 2002 FCA 206,
291 N.R. 396 [McLarty], Justice Rothstein, then of this Court, dealt
with a motion under Rule 58(1)(a) of the Tax Court Rules which,
at that time, provided only for the determination of preliminary questions of
law. At paragraphs 7 and 12 of his reasons, Justice Rothstein stated:
[7] Before a motion under rule 58(1)(a)
may be granted, the Motions Judge must be satisfied that there is no dispute as
to any fact material to the question of law to be determined. See Berneche
et al. v. Canada, [1991] 133 N.R. 232, at paragraph 6 (F.C.A.).
…
[12] Finally, once the Motions Judge
found that documents “may affect [...] the liability of the [tax] appellant
[...]” and that they constituted “contested evidence and not [...] agreed facts”,
the Motions Judge was required to dismiss the motion for the preliminary
question. It is only when there is no dispute as to material facts relevant to
the question of law that the question of law may be determined on a preliminary
basis. Once the Motions Judge determined that there were disputed facts that
were material to the question, he had to dismiss the motion for determination
of a preliminary question of law.
[56]
In conclusion, in my view, the Court need not
consider the correctness of any of the Judge’s answers to questions that did
not raise pure questions of law.
B.
The Questions
(1) Question One - Has the plaintiffs’ claim already been finally
decided against them?
[57]
The reformulated question essentially asks
whether the doctrine of res judicata applies to the Corporations’ claim.
The determination of whether the requirements of this doctrine are met is a
question of law (Re EnerNorth Industries Inc., 2009 ONCA 536 at
paragraph 52, 96 O.R. (3d) 1, leave to appeal to S.C.C. refused, 33354 (January
14, 2010); Ernst & Young Inc. v. Central Guaranty Trust Co., 2006
ABCA 337 at paragraph 26, 397 A.R. 225, leave to appeal to S.C.C. refused,
31794 (April 19, 2007)). Accordingly, it was an appropriate question to be
determined under Rule 220(1)(a) of the Federal Courts Rules.
[58]
The Judge found that the Corporations were not
precluded from pursuing the Action by virtue of the previous decisions of the
Board and the Federal Court of Appeal. He concluded that three criteria must be
met before the doctrine of res judicata – whether in the form of cause
of action estoppel or issue estoppel – could apply. He determined that a party
cannot re-litigate a matter where (a) the same question was decided in the
earlier proceeding, (b) the parties to both proceedings are the same, and (c)
the earlier decision was final.
[59]
While it is clear that the Judge was aware of
the fact that there were two Board certifications of Tariff 24, his analysis
appears to have focused upon the decision in respect of Tariff 24 (2003-2005)
which was affirmed in CWTA.
[60]
The Judge held that the Ringtone Download Issue
was the essential issue raised in the Action and was the same issue that was decided
in CWTA. In addition, he found that the parties to the Action and the
prior litigation were the same. As such, he concluded that the first two
criteria were met.
[61]
The Judge then found that the third criterion
was not met because, by virtue of section 66.52 of the Copyright Act,
which empowers the Board to vary a tariff certification decision if there has
been a material change in circumstances since the decision, “a decision of the Board is never really final”.
Additionally, the Judge postulated that the Supreme Court of Canada decisions
in ESA and Rogers “allegedly brought
about a material change of circumstances”, even though the Board had
refused to grant the 66.52 Application which was premised upon those decisions.
[62]
While the Judge appeared to focus his “finality requirement” analysis upon the decision with
respect to Tariff 24 (2003-2005), it seems logical that he was also of the view
that if the Tariff 24 (2003-2005) decision was not final, then the subsequent
Board decision with respect to Tariff 24 (2006-2013) would also lack finality. As
a result of his determination that the Board decisions lack finality, he
concluded that the third issue estoppel criterion was not met, and therefore res
judicata did not preclude the Corporations from pursuing the Action.
[63]
The Judge went on to determine that even if “the earlier decision on ringtone royalties was final”,
it “might have been unfair to stop” the
Corporations from pursuing the Action. This was so because ESA and Rogers
“effectively declared that the Board and the Federal
Court of Appeal erred in finding that the transmission of ringtone downloads amounts
to the communication of musical works to the public”.
[64]
As the Judge correctly concluded, issue estoppel
and cause of action estoppel share three common criteria. The Judge did not
find it necessary to distinguish between these two branches of res judicata.
In my view, the applicable branch is issue estoppel.
[65]
Issue estoppel is described in paragraph 24 of Danyluk
v. Ainsworth Technologies Inc., 2001 SCC 44, [2001] 2 S.C.R. 460 [Danyluk],
which reads as follows:
Issue estoppel was more particularly defined
by Middelton J.A. of the Ontario Court of Appeal in McIntosh v. Parent,
[1924] 4 D.L.R. 420, at p. 422:
When a question is litigated, the
judgment of the Court is a final determination as between the parties and their
privies. Any right, question, or fact distinctly put in issue and directly
determined by a Court of competent jurisdiction as a ground of recovery, or
as an answer to a claim set up, cannot be re-tried in a subsequent suit between
the same parties or their privies, though for a different cause of action. The
right, question, or fact, once determined, must, as between them, be
taken to be conclusively established so long as the judgment remains.
[Emphasis added.]
This statement was adopted by Laskin J.
(later C.J.), dissenting in Angle, supra, at pp. 267-68. This
description of the issues subject to estoppel (“[a]ny right, question or fact
distinctly put in issue and directly determined”) is more stringent than the
formulation in some of the older cases for cause of action estoppel (e.g., “all
matters which were, or might properly have been, brought into litigation”, Farwell,
supra, at p. 558). Dickson J. (later C.J.), speaking for the majority in
Angle, supra, at p. 255, subscribed to the more stringent
definition for the purpose of issue estoppel. “It will not suffice” he said,
“if the question arose collaterally or incidentally in the earlier proceedings
or is one which must be inferred by argument from the judgment.” The question
out of which the estoppel is said to arise must have been “fundamental to the
decision arrived at” in the earlier proceeding. In other words, as discussed
below, the estoppel extends to the material facts and the conclusions of law or
of mixed fact and law (“the questions”) that were necessarily (even if not explicitly)
determined in the earlier proceedings.
[66]
Thus, because the Judge found that the Ringtone Download
Issue had previously been determined as between the Corporations and SOCAN, the
Judge must be seen to have concluded that there had been no final
determination of the Ringtone Download Issue.
[67]
In my view, the validity of Tariff 24
(2003-2005) and the Ringtone Download Issue, upon which such validity was
dependent, were finally determined when the Supreme Court of Canada denied
leave to appeal CWTA. The final paragraph of CWTA reads as
follows:
[44] In my view, the Copyright Board was
correct in law to conclude that the transmission of ringtones by wireless
carriers to their customers on request is a communication to the public by
telecommunication within the meaning of paragraph 3(1)(f) of the Copyright
Act. I would dismiss this application with costs.
[68]
The Judge’s conclusion that Board decisions are “never really final”, by virtue of section 66.52 of
the Copyright Act, does not support the conclusion that the decision in CWTA
was not a final decision. Even if the Board is empowered, by section 66.52 of
the Copyright Act, to overturn its own decisions, that power would not
enable the Board to overturn judicial decisions. In my view, this Court’s
decision in CWTA is a final decision on the validity of Tariff 24
(2003-2005) and the Ringtone Download Issue. As such, I am of the view that the
finality criterion of issue estoppel has been satisfied and the Judge erred in
law in finding otherwise.
[69]
In the event that I am incorrect in concluding
that the Ringtone Download Issue has been finally decided by virtue of the
decision in CWTA and the finality requirement must be determined by
reference to the finality of the Board’s Tariff 24 (2003-2005) decision, I am
of the view that the Judge erred in law in his interpretation of section 66.52 of
the Copyright Act that underpins his conclusion that decisions of the
Board are “never really final”.
[70]
The ability of the Board to vary its own
decisions engages the principle of functus officio. In Chandler v.
Alberta Association of Architects, [1989] 2 S.C.R. 848, 62 D.L.R. (4th) 577
[Chandler], the Supreme Court determined that the applicability of this
principle extends to decisions of administrative tribunals. At page 861,
Justice Sopinka stated:
…As a general rule, once such a tribunal has
reached a final decision in respect to the matter that is before it in
accordance with its enabling statute, that decision cannot be revisited because
the tribunal has changed its mind, made an error within jurisdiction or because
there has been a change of circumstances. It can only do so if authorized by
statute or if there has been a slip or error within the exceptions enunciated
in Paper Machinery Ltd. v. J. O. Ross Engineering Corp., supra.
The error referred to in the latter portion
of this quotation is an error in expressing the “manifest
intention” of the court or tribunal in respect of its decision.
[71]
Thus, under the doctrine of functus officio,
the Board would not be permitted to reopen one of its decisions in the absence
of a slip or an error that runs counter to the Board’s manifest intention in
reaching its decision. Neither of these exceptions to the functus officio
principle is relevant in the circumstances. However, as indicated in the
excerpt from Chandler, an administrative tribunal can be empowered by
statute to revisit its decisions. Indeed, the Copyright Act provides
such a power.
[72]
In reaching his conclusion that there had been
no final decision in respect of Tariff 24 (2003-2005), and therefore no final
decision in respect of the Ringtone Download Issue, the Judge determined that
the decisions of the Supreme Court of Canada in ESA and Rogers
constituted a material change in circumstances, the occurrence of which empowered
the Board to vary its decision to certify that tariff. He concluded that ESA
and Rogers changed the law because they effectively declared that the
Board and this Court in CWTA had erred in their decisions regarding the
Ringtone Download Issue. In so concluding, the Judge interpreted the phrase “material change in circumstances since the decision was
made” in section 66.52 of the Copyright Act as including a change
in law arising from judicial decisions rendered subsequent to the decision that
is to be varied.
[73]
In making this interpretation, the Judge did not
refer to any jurisprudence that considered subsection 66.52 of the Copyright
Act or, in the absence of any controlling authority, did not conduct an
analysis based upon the well-known textual, contextual and purposive approach
to statutory interpretation (Canada Trustco Mortgage Co. v. Canada, 2005
SCC 54 at paragraph 10, [2005] 2 S.C.R. 601).
[74]
To support his interpretation, the Judge
referred to Adar v. Canada (Citizenship and Immigration), 132 F.T.R. 35,
[1997] F.C.J. No. 695 (QL) [Adar], a decision of the Federal Court which
considered the reconsideration power of the Convention Refugee Determination
Division of the Immigration and Refugee Board under subsection 69.2(2) of the Immigration
Act, R.S.C. 1985 (4th Supp.), c. I-2, as amended by S.C. 1992, c. 49 (the “Immigration
Act”). The Judge concluded that this provision contained a “comparable power” to that given to the Board under
section 66.52 of the Copyright Act. Subsection 69.2(2) of the Immigration
Act reads as follows:
|
69.2(2) The Minister may, with leave of the Chairperson, make an
application to the Refugee Division to reconsider and vacate any
determination made under this Act or the regulations that a person is a
Convention refugee on the ground that the determination was obtained by
fraudulent means or misrepresentation, suppression or concealment of any
material fact, whether exercised or made by that person or any other person.
|
69.2(2) Avec l’autorisation du president, le
minister peut, par avis, demander à la section du statut de réexaminer la
question de la reconnaissance du statut de réfugié au sens de la Convention
accordée en application de la présente loi ou de ses règlements et d’annuler
cette reconnaissance, au motif qu’elle a été obtenue par des moyens
frauduleux, par une fausse indication sur un fait important ou par la
suppression ou la dissimulation d’un fait important, même si ces agissements
sont le fait d’un tiers.
|
[75]
This provision relates to a largely factual
determination – Convention refugee status – and permits reconsideration where
that determination was premised upon fraud or a misrepresentation, suppression
or concealment of any material fact.
[76]
With respect, to the extent that this provision
is comparable to section 66.52 of the Copyright Act, it would suggest
that a “material change in circumstances” ought
to be limited to material changes of a factual nature. Indeed, the word
circumstance, in ordinary parlance, can be taken as a synonym for the word
fact.
[77]
However, in the circumstances of this appeal, a
comprehensive interpretation of the phrase “material
change in circumstances” is not required. All that is required is a
determination of whether the alleged change of law that is said to arise out of
the Supreme Court decisions in ESA and Rogers constitutes a “material change in circumstances”, within the meaning
of section 66.52 of the Copyright Act.
[78]
The scope of section 66.52 of the Copyright
Act was considered by this Court in Canadian Association of the Film
Distributors and Exporters v. Society for Reproduction Rights of Authors,
Composers and Publishers in Canada (SODRAC) Inc., 2014 FCA 235, 378 D.L.R.
(4th) 72 [CAFDE]. In this case, the Board reopened a decision to certify
a tariff on the basis that it recognized that it had erred in its
interpretation of the proposed tariff and thereby committed a “palpable error”. This Court concluded that the Board
was not able to reopen its decision to certify the tariff under section 66.52
of the Copyright Act. In so doing, it is clear that the Court concluded
that a palpable error on the Board’s part did not constitute “a change in circumstances” for the purpose of section
66.52 of the Copyright Act.
[79]
In Metro Can Construction Ltd. v. The Queen,
2001 FCA 227, 273 N.R. 273 [Metro Can], this Court considered the
rescission and variation powers granted under Rule 399(2)(a) of the Federal
Courts Rules, which reads as follows:
|
399(2)
On motion, the Court may set aside or vary an order
|
399(2) La Cour peut, sur requête, annuler ou
modifier une ordonnance dans l’un ou l’autre des cas suivants :
|
|
(a) by reason of a matter that arose or was discovered subsequent
to the making of the order;
|
a) des faits nouveaux sont survenus ou ont été
découverts après que l’ordonnance a été rendue;
|
[80]
In considering the scope of this power, Justice
Rothstein, who was then on this Court, stated:
[4] Reconsideration is a narrow
exception to the doctrine of res judicata. In Jhajj v. Canada
(M.E.I.), [1995] 2 F.C. 369 (T.D.), it was determined that subsequent
decisions of a higher court do not constitute “a matter that arose […]
subsequent” as those words are used in paragraph 399(2)(a). The same principle
would apply to subsequent decisions of the same Court. In Jhajj, it was
decided that reconsideration on the basis of subsequently decided jurisprudence
was not reconcilable with the res judicata doctrine and that taken in
this context, “a matter” did not include subsequent decisions of a higher
court. If “a matter” included subsequent decisions, reconsideration could be
sought in any previous case whenever there was a change in the law that would
result in a different disposition of that previous case. Further, it would
create unacceptable uncertainty for litigants and the public who must be
satisfied that, once a judgment is rendered, it is final. We see no reason to
depart from this analysis and conclusion.
[5] Metro Can has cited Ontario and
House of Lords decisions which stand for the proposition that where there has
been a change in the law, the res judicata doctrine will not always
prevent a decided issue from being relitigated in subsequent proceedings.
See Minott v. O’Shanter Development Co. (1999), 168 D.L.R. (4th)
270 (Ont. C.A.), Robb v. St. Joseph’s Health Care Centre, 2001 O.J. No.
606 (Q.L.) (C.A.) and Arnold et al. v. National Westminster Bank Plc.
(1991) 142 N.R. 31 (H.L.). These cases allow for the exercise of discretion by
a court, in special circumstances, in deciding whether to permit an issue, that
would otherwise be prevented from being raised by reason of res judicata
or issue estoppel, to be relitigated in subsequent proceedings. However, none
of these decisions are reconsideration cases and they do not stand for
the proposition Metro Can advances before us, that subsequent decisions that
change the law should be a basis for reconsidering previously decided cases.
There is a fundamental difference between permitting an issue that has been
decided being relitigated and redetermined in subsequent litigation on the
basis of a change in the law on the one hand, and reopening a previously
decided case on the basis of a change in the law on the other. It is only the
latter that would lead to the reconsideration of an indefinite number of
previous cases, a result not reconcilable with the rationale for the res
judicata doctrine.
[6] Metro Can says that it will
suffer injustice if the Court does not re-open its appeal. However, we would
note that, in its application for leave to appeal the Metro Can decision
of this Court to the Supreme Court of Canada, Metro Can raised the alleged
inconsistency between Madison and Metro Can. Nonetheless, the
Supreme Court dismissed the leave application.
[Emphasis in original]
[81]
This Court applied the conclusion in Metro
Can, that subsequent jurisprudence does not constitute a “matter” for the purposes of Rule 399(2) of the Federal
Courts Rules, in Ayangma v. Canada, 2003 FCA 382, 313 N.R. 312,
wherein Justice Pelletier, at paragraph 4, stated:
We are not persuaded that the “matter”
referred to in Rule 339 (“faits nouveaux” in the French version of the text)
refers to jurisprudence. In Metro-Can Construction Ltd. v. Canada.,
[2001] F.C.J. No. 1075 (F.C.A.), this Court decided that subsequent
jurisprudence of our Court or of a higher Court does not constitute a “matter”
that arose subsequently to the making of the order, within the meaning of Rule
399(2)…
Noteworthy is Justice Pelletier’s reference
to the French version of the Rule in question which refers to “faits nouveau” or new facts.
[82]
The decisions in CAFDE, Metro Can
and Ayangma point to a more limited interpretation of the scope of the
Board’s variation power under section 66.52 of the Copyright Act than
that adopted by the Judge. Accordingly, I conclude that the phrase “material change in circumstances since the decision was
made”, in section 66.52 of the Copyright Act, does not extend to
jurisprudence that arises subsequent to the decision contemplated by that
phrase and that the Judge erred in law in interpreting that phrase in the
contrary manner.
[83]
It follows that the Judge erred in his conclusion
that the finality criterion of issue estoppel was not met in relation to the
Board’s decision to certify Tariff 24 (2003-2005) and, to reiterate my earlier
conclusion, the Ringtone Download Issue was finally decided.
[84]
The Judge refers to “previous
decisions of the Board” in paragraph 25 of his reasons. Thus, it is also
necessary to address the Board’s decision with respect to the validity of
Tariff 24 (2006-2013) in relation to the finality issue.
[85]
No application for judicial review of this
decision was made; as such, its finality, for the purposes of issue estoppel,
must be determined without reference to a decision of this or a higher court.
[86]
Without more, the effluxion of the period of
time for the making of an application for judicial review of a decision renders
that decision final. This is evident from paragraph 10 of this Court’s decision
in Yeager v. Day, 2013 FCA 258, 453 N.R. 385, in which Justice Stratas
stated:
[10] In this case, Mr. Yeager did not
appeal the Deputy Judge’s order. Upon expiry of the deadline for filing a
notice of appeal, and in the absence of a motion to extend the time to appeal,
the matter became res judicata. Upon becoming res judicata, the
order is presumed to be valid, absent proof of fraud in its making, even if
there is a later change in the law: see, e.g., Régie des rentes du Québec v.
Canada Bread Company Ltd., 2013 SCC 46 at paragraph 55, citing Roberge
v. Bolduc, [1991] 1 S.C.R. 374 at page 403. For example, where a person is
convicted of a criminal offence, is sitting in jail, and has not appealed his
conviction, he cannot take advantage of a later, favourable court decision: R.
v. Wigman, [1987] 1 S.C.R. 246 at paragraph 21. Accordingly, having not
appealed the Deputy Judge’s order, Mr. Yeager could not benefit from any subsequent
changes in the law, such as the change wrought by Felipa, supra.
[87]
Accordingly, I conclude that the Judge erred to
the extent that he concluded that the finality criterion of issue estoppel was
not met in respect of the Board’s decision to certify Tariff 24 (2006-2013).
[88]
For completeness, I reject the Corporations’
argument that the Blackstonian principle must prevail over res judicata
in the instant circumstances. They assert that, by virtue of the decisions in ESA
and Rogers, SOCAN never had the right to collect royalties under Tariff
24. In my view, this assertion has no merit.
[89]
ESA and Rogers
did not address Tariff 24 (2003-2005) or Tariff 24 (2006-2013). In CWTA,
this Court affirmed the validity of Tariff 24 (2003-2005) and the Supreme Court
denied leave to appeal that decision. The Board certified Tariff 24 (2006-2013)
and no judicial review of that decision was taken by the Corporations, even
though they could have done so, on a timely basis, after the decisions in ESA
and Rogers were rendered.
[90]
While the reasoning that underpins ESA
and Rogers may indicate that the determinations of the Ringtone Download
Issue by the Board and this Court are suspect, or even incorrect, the validity
of those decisions was not directly in issue before the Supreme Court of Canada
in ESA and Rogers. In my view, the Blackstonian principle does
not sanction the overturning of decided cases as a consequence of decisions in subsequent
cases. Indeed, in Canada (Attorney General) v. Hislop, 2007 SCC 10,
[2007] 1 S.C.R. 429, the Supreme Court was careful to note, in paragraph 86,
that retrospective remedies may not always be available to a successful party
in the litigation.
[91]
My conclusion that the Judge erred in determining
that the criteria for issue estoppel were not met with respect to the Ringtone
Download Issue does not fully answer the question of whether the Corporations
should be precluded from pursuing the Action by virtue of the doctrine of issue
estoppel.
[92]
It is well established that after a court has
determined the existence of the preconditions to the operation of issue
estoppel, the court must nonetheless determine whether issue estoppel ought to
apply (Danyluk at paragraph 33). More particularly, Justice Binnie, at
paragraph 62 of Danyluk, stated:
The appellant submitted that the Court
should nevertheless refuse to apply estoppel as a matter of discretion. There
is no doubt that such a discretion exists. In General Motors of Canada Ltd.
v. Naken, [1983] 1 S.C.R. 72, Estey J. noted, at p. 101, that in the context
of court proceedings “such a discretion must be very limited in application”.
In my view the discretion is necessarily broader in relation to the prior
decisions of administrative tribunals because of the enormous range of
diversity of the structures, mandates and procedures of administrative decision
makers.
[93]
At the hearing, the parties urged the Court to
undertake this exercise of discretion. I decline to do so. In my view, this
would be better done by the judge who conducts the trial of the Action.
[94]
Accordingly, the Judge erred in failing to find
that the three requirements for issue estoppel had been met. The discretion of
whether to apply issue estoppel to bar the Corporations’ claim should be
decided by the judge who conducts the trial of the Action.
(2) Question Two – Based on their 2010 agreement with SOCAN, are the
plaintiffs precluded from claiming the relief they seek?
[95]
The reformulated question essentially asks
whether the 2010 Agreement provides a basis upon which the Corporations could
be precluded from the relief that they seek.
[96]
In my view, this is a question that the Judge
should have declined to answer. It is not a pure question of law.
[97]
It is clear from the Judge’s reasons that he
undertook a construction of the 2010 Agreement. The Supreme Court of Canada has
determined that contractual interpretation is a question of mixed fact and law
(see Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53 at
paragraph 50, [2014] 2 S.C.R. 633). In addition, the Judge’s conclusion with
respect to this question was dependent upon his finding that “…the parties clearly did not have a common understanding of
the significance of the agreement…” and “…given
that there was no common understanding of the meaning of the agreement, SOCAN
cannot claim that it relied on that common understanding” (Reasons at
paragraphs 29 and 35). These are factual findings which the Judge apparently believed
to be necessary preconditions to answering this question. As indicated in McLarty,
this requirement to make factual findings should have led the Judge to decline
to answer this question. Additionally, as Justice Létourneau stated in Perera,
the purpose of Rule 220(1)(a) of the Federal Courts Rules is not
to split the trial into parts.
[98]
Accordingly, whether the 2010 Agreement precludes
the Corporations from the relief that they seek remains to be determined by the
judge who conducts the trial of the Action.
(3) Question Three – Is the Internet transmission of a ringtone file a
communication of a musical work to the public?
[99]
The Judge determined that the internet
transmission of a ringtone file does not constitute the communication of a
musical work to the public.
[100] At the hearing, counsel for SOCAN advised that SOCAN was no longer
appealing against the Judge’s determination of this question.
(4) Question Four – Did the Board have the jurisdiction to certify
Tariff 24?
[101] The Judge reformulated the question slightly but the substance of
the question was unchanged. The question of the Board’s jurisdiction to certify
Tariff 24 is a question of law.
[102] The Judge found that the Board had the jurisdiction to certify
Tariff 24.
[103] In effect, the Corporations argue that the Board lacked the
jurisdiction to certify a tariff if the Board made a mistake in the reasoning
that underpinned its certification decision. With respect, that argument is
misguided. Tariff certification is clearly the responsibility of the Board
under the Copyright Act. If the Board certifies a tariff on a basis that
appears to be erroneous, it is open to an affected party to initiate judicial review
proceedings with a view to correcting the alleged error.
[104] In the present circumstances, the Federal Court of Appeal in CWTA
considered complaints with respect to the validity of Tariff 24 (2003-2005) and
leave to appeal that decision to the Supreme Court of Canada was denied. With
respect to Tariff 24 (2006-2013), the Corporations declined the opportunity to
seek judicial review of the Board’s decision. Indeed, pursuant to the 2010
Agreement, the Corporations agreed to support the approval of Tariff 24
(2006-2013).
[105] Accordingly, the Judge made no error in determining that the Board
had jurisdiction to certify Tariff 24.
[106] It is worth mentioning that the Corporations’ Notice of Appeal does
not raise this issue, although it is argued in the Corporations’ Memorandum of Fact
and Law. In the unique circumstances of this appeal, in which the Corporations
take issue with respect to the correctness of several of the Judge’s answers to
specific questions, the Corporations’ failure to raise this issue in their Notice
of Appeal could well have been a sufficient basis for the Court to have
disposed of this aspect of the appeal. That said, the Court has considered the
issue because SOCAN took no exception to this issue being raised only in the
Corporation’s Memorandum of Fact and Law.
(5) Question Five – Was SOCAN unjustly enriched when it received Tariff
24 royalties?
[107] The Judge did not reformulate this question in any material way.
However, in my view, he should have declined to answer it because it is not a
pure question of law. Indeed, rather than a preliminary question which will
shorten the duration of the trial, or possibly obviate the need for one, this
question is a significant - if not the central - issue that must be tried in
the Action.
[108] The Judge determined that the doctrine of unjust enrichment requires
an enrichment received to the defendant’s benefit, at the plaintiff’s expense
and made in the absence of a juristic reason. He concluded that the first two
elements, which in my view are evidently factual, were “clearly
present” and that the only issue related to whether there was the
absence of a juristic reason.
[109] A review of the Statement of Agreed Facts reveals no agreement on
these two factual matters.
[110] A review of the Statement of Defence indicates that SOCAN put in
issue the question of whether it had received an “incontrovertible
benefit” from the royalty payments, having regard to its non-profit
corporation status and its obligation to distribute royalties net of expenses
to Rightsholders. Similarly, the Statement of Defence puts in issue the
question of whether the Corporations suffered any deprivation by virtue of
having made royalty payments or whether those payments were costs that were
passed on by the Corporations to their customers.
[111] The Judge then delved into the issue of whether there was a juristic
reason for the royalty payments. In doing so, the Judge, in paragraph 56 of his
reasons, undertook an adjudication of whether the Corporations had met their “low, initial burden to show a prima facie absence of a
juristic reason for the payment of ringtone royalties”. In that same
paragraph, the Judge also found that the unjust enrichment analysis required
him to make determinations with respect to “the
reasonable expectations of the parties, and public policy factors”. In
undertaking this analysis, the Judge determined what he considered to be the relevant
factors.
[112] In paragraph 59 of his reasons, the Judge made a determination that
Tariff 24 did not amount to a juristic reason for the payment of royalties
beyond the point in time when SOCAN was “put on notice
of ‘a serious possibility’ that the legal foundation on which Tariff 24 was
based was faulty”. This enabled him to conclude that the receipt of
royalties by SOCAN before the ESA and Rogers decisions was not an
unjust enrichment but that any receipt after those decisions would constitute
an unjust enrichment.
[113] In undertaking this analysis, the Judge did not simply answer a pure
question of law to simplify or shorten a trial of the Action. Instead, he
undertook to decide one of the central issues raised in the Action and made
both findings of fact and mixed fact and law.
[114] The inappropriateness of this action on the part of the Judge is
further demonstrated by the arguments of the parties in this appeal.
[115] The Corporations assert that the Judge followed the wrong process in
making his determinations with respect to unjust enrichment. They say that
where the claim for restitutionary recovery is based upon an “established category”, the entire juristic reason
element need not be considered and the Court’s “discretion
to deny recovery is narrower” (Corporations’ Memorandum of Fact and Law
at paragraph 43).
[116] The Corporations invite this Court to overturn the Judge’s
adjudications with respect to unjust enrichment. In doing so, they request that
the Court:
a) overturn the Judge’s reasonable belief findings (Corporations’
Memorandum of Fact and Law at paragraph 60);
b) substitute their suggested date upon which there was an unjust
enrichment for that of the Judge’s (Corporations’ Memorandum of Fact and Law at
paragraphs 61, 77 and 78);
c) conclude that “[t]here are no facts in this
case that would justify this Court coming to the aid of SOCAN in the way it has
come to the aid of aggrieved persons in the family law context”
(Corporations’ Memorandum of Fact and Law at paragraph 69); and
d) conclude that SOCAN knew that the retention of the royalties was
unjust (Corporations’ Memorandum of Fact and Law at paragraph 71).
[117] SOCAN asserts that it should be able to keep the royalty payments
and invites this Court to:
a) uphold the Judge’s finding that SOCAN was not “put on notice” of issues relating to its right to
collect royalties until the ESA and Rogers decisions (SOCAN’s Memorandum
of Fact and Law at paragraphs 63 to 72);
b) conclude that the 2010 Agreement settles an honest claim (SOCAN’s Memorandum
of Fact and Law at paragraphs 77 and 79);
c) conclude that the Corporations intended to be bound by the 2010 Agreement
(SOCAN’s Memorandum of Fact and Law at paragraphs 80 to 87);
d) determine that SOCAN has changed its position in good faith so as to
factually establish a defence to restitution (SOCAN’s Memorandum of Fact and
Law at paragraphs 92 to 102);
e) determine that the Corporations did not make a mistake of law (SOCAN’s
Memorandum of Fact and Law at paragraphs 115 to 121); and
f) determine whether the Corporations made royalty payments voluntarily
(SOCAN’s Memorandum of Fact and Law at paragraphs 122 to 135).
[118] It is clear to me that both parties are requesting this Court to
pass judgment upon the Judge’s factual findings and to make additional fresh
factual findings.
[119] All of this is wholly inappropriate in an appeal from an order that
was supposed to have determined the answers to preliminary questions of pure
law. In the circumstances, it is my view that the Judge erred in not declining
to answer this question having regard to the clear need to make factual
findings in order to do so.
[120] The Corporations ask this Court to order that they are entitled to a
return of all monies paid to SOCAN with respect to Tariff 24. For its part,
SOCAN asserts that it should be entitled to keep the royalty payments. One of
these outcomes may logically follow from the conclusion of a trial of the
Action in which the trial judge will determine the applicable law and apply
that law to the facts as determined in the trial. A motion under Rule 220(1)(a)
would be expected to assist the trial judge in relation to the determination of
the applicable law so that the trial could potentially be shortened. However, in
the circumstances, the Judge turned the determination of preliminary questions
of pure law into, in effect, a summary trial. Indeed, the Judge may have gone
beyond merely splitting the trial into parts and undertaken the conduct of the
entire trial.
[121] Accordingly, the issue of whether SOCAN was unjustly enriched should
be determined by the judge who conducts the trial of the Action.
(6) Question Six – Are the plaintiffs entitled to an order tracing the
distribution of Tariff 24 royalties?
[122] The Judge did not reformulate this question in any material way. He
determined that his conclusion that SOCAN was not unjustly enriched by the
receipt of royalties was determinative of this question.
[123] While the Corporations asked this Court for an “accounting and tracing order with respect to ringtone
royalties paid to the Respondent pursuant to Tariff 24”, their
memorandum of fact and law makes no argument with respect to why the Judge’s
disposition of this question was erroneous.
[124] Once again, I fail to see how this question could be characterized
as a pure question of law, much less one that could potentially shorten or
eliminate a trial of the Action. This question is one of alternative remedy in
the event that the unjust enrichment claim is made out but restitution is
denied. It is at best a question of mixed fact and law. As previously
determined, the question of unjust enrichment (Question 5) was not properly
before the Judge because it is a question of mixed fact and law and not a pure
question of law. The same reasoning also precludes this question from being
properly before the Judge.
[125] Accordingly, whether the Corporations are entitled to a tracing
order will be determined by the judge who conducts the trial of the Action.
VI.
DISPOSITION
[126] For the foregoing reasons I would dispose of the appeal and the
cross appeal as follows:
a)
With respect to Question One, the conditions
necessary for the application of the doctrine of issue estoppel have been made
out. The judge who conducts the trial of the Action must determine whether, in
the exercise of such judge’s discretion, the doctrine of issue estoppel should
be applied in respect of the claims made by the Corporations in the Action. To
this extent, the cross-appeal is allowed.
b)
With respect to Question Two, this question was
not properly before the Judge and should not have been answered because it is
not a pure question of law. The judge who conducts the trial of the Action
shall do so without regard for the decision of the Judge in relation to this
question. To this extent, the cross-appeal is allowed.
c)
With respect to Question Three, because SOCAN abandoned
its appeal in this regard at the hearing, the cross-appeal is dismissed.
d)
With respect to Question Four, the Board had
jurisdiction to certify Tariff 24 (2003-2005) and Tariff 24 (2006-2013). To
this extent, the appeal is dismissed.
e)
With respect to Question Five, this question was
not properly before the Judge and should not have been answered because it is
not a pure question of law. The judge who conducts the trial of the Action
shall do so without regard for the decision of the Judge in relation to this
question. To this extent, the appeal is allowed.
f)
With respect to Question Six, this question was
not properly before the Judge and should not have been answered because it is
not a pure question of law. The judge who conducts the trial of the Action
shall do so without regard for the decision of the Judge in relation to this
question. To this extent, the appeal is allowed.
Costs of this
appeal shall be in the cause.
“C. Michael Ryer”
“I agree
Wyman W. Webb
J.A.”
“I agree
D.G. Near J.A.”
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