Date: 19980319
Docket: T-919-97
BETWEEN:
ROGERS COMMUNICATIONS INC.
Applicant
- and -
THE ATTORNEY GENERAL OF CANADA and
B.C. TELECOM INC. c.o.b. as B.C. TEL
Respondents
REASONS FOR ORDER
NADON J.
[1] The applicant, Rogers Communications Inc., seeks an order declaring that Order-in-Council P.C. 1997-486 dated and registered with the clerk of the Privy Council on April 8, 1997, is invalid as being ultra vires the Broadcasting Act, S.C. 1991, c. 11.
[2] The respondent B.C. Telecom Inc. ("B.C. Telecom") is a Canadian company. Its shares are listed on three Canadian stock exchanges. One of its subsidiaries, B.C. Tel (formerly British Columbia Telephone), provides local and long distance telephone services in the province of British Columbia. B.C. Telecom is a holding company which holds the shares of B.C. Tel and the other companies within the B.C. Telecom Group.
[3] Approximately 49.2% of the common shares in B.C. Telecom are widely held in Canada, almost exclusively by Canadians. The Anglo-Canadian Telephone Company, incorporated pursuant to the laws of the province of Quebec, owns 50.8% of the common shares. In turn, Anglo-Canadian Telephone is 100% owned by G.T.E. - Anglo Holdings Incorporated ("G.T.E."), a company incorporated pursuant to the laws of the State of New York. Thus, G.T.E. indirectly holds 50.8% of the common shares of B.C. Telecom and B.C. Tel. G.T.E. also indirectly holds 50.8% of the common shares of the intervenor, Québec-Téléphone1. By reason of section 16 of the Telecommunications Act and section 17 of the Canadian Telecommunications Common Carrier Ownership and Control Regulations (the "Regulations"), SOR/94-667, the Canadian ownership of B.C. Telecom common shares cannot decrease by more than five percent below the 1987 level. On December 31, 1987, Canadians held approximately 49.67 percent of the ordinary shares of British Columbia Telephone.
[4] The chairman of the board of B.C. Telecom is a Canadian and ten of the eleven members of the boards of directors of B.C. Telecom and B.C. Tel are Canadians. Pursuant to section 16 of the Telecommunications Act, R.S.C., c. T-3.4, and section 17 of the Regulations, eighty percent of the directors of B.C. Telecom and B.C. Tel must reside in Canada and must be Canadian citizens or permanent residents of Canada.
[5] The B.C. Telecom Group employs approximately 13,000 people, most of whom reside in the Province of British Columbia. As a result, the Group is the largest employer in British Columbia. B.C. Tel operates mainly within British Columbia and most of its customers live in that province.
[6] I will now discuss Order-in-Council P.C. 1997-486 and the events leading to its issuance. I begin by referring to sections 7 and 26 of the Broadcasting Act which set out the powers of the Governor in Council with respect to the issuance of directions to the Canadian Radio-television and Telecommunications Commission ("C.R.T.C.") concerning Canada"s broadcasting policy. The policy itself is set out in subsection 3(1) of the Broadcasting Act . Sections 7 and 26 read as follows:
| 7. (1) Subject to subsection (2) and section 8, 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). |
| (2) No order may be made under subsection (1) in respect of the issuance of a licence to a particular person or in respect of the amendment, renewal, suspension or revocation of a particular licence. |
(3) An order made under subsection (1) is binding on the Commission beginning on the day on which the order comes into force and, subject to subsection (4), shall, if it so provides, apply with respect to any matter pending before the Commission on that day.
(4) No order made under subsection (1) may apply with respect to a licensing matter pending before the Commission where the period for the filing of interventions in the matter has expired unless that period expired more than one year before the coming into force of the order.
(5) A copy of each order made under subsection (1) shall be laid before each House of Parliament on any of the first fifteen days on which that House is sitting after the making of the order.
(6) The Minister shall consult with the Commission before the Governor in Council makes an order under subsection (1).
26. (1) The Governor in Council may, by order, issue directions to the Commission
(a) respecting the maximum number of channels or frequencies for the use of which licences may be issued within a geographical area designated in the order;
(b) respecting the reservation of channels or frequencies for the use of the Corporation or for any special purpose designated in the order;
(c) respecting the classes of applicants to whom licences may not be issued or to whom amendments or renewals thereof may not be granted; and
(d) prescribing the circumstances in which the Commission may issue licences to applicants that are agents of a province and are otherwise ineligible to hold a licence, and the conditions on which those licences may be issued.
(2) Where the Governor in Council deems the broadcast of any program to be of urgent importance to Canadians generally or to persons resident in any area of Canada, the Governor in Council may, by order, direct the Commission to issue a notice to licensees throughout Canada or throughout any area of Canada, of any class specified in the order, requiring the licensees to broadcast the program in accordance with the order, and licensees to whom any such notice is addressed shall comply with the notice.
(3) An order made under subsection (1) or (2) shall be published forthwith in the Canada Gazette and a copy thereof shall be laid before each House of Parliament on any of the first fifteen days on which that House is sitting after the making of the order.
(4) The Minister shall consult with the Commission with regard to any order proposed to be made by the Governor in Council under subsection (1).
[7] Between 1994 and 1995 the Government requested that the C.R.T.C. look into the "information highway"2. The report of the C.R.T.C., in response to the government"s directive, was tabled on May 19, 1995. On August 6, 1996, the government released its Convergence Policy Statement regarding broadcasting and telecommunications in Canada. The introduction thereto is as follows:
The policy and principles, announced by Deputy Prime Minister and Minister of Canadian Heritage Sheila Copps and Industry Minister John Manley, clear the way for cable and telephone companies to compete in each others" core businesses while ensuring better access and strong Canadian content.
The policy framework will guide industry as it gears up to meet the challenges of heightened competition, said Minister Manley. The cable and telephone companies have said they are poised to spend about $15 billion over the next 10 years to take advantage of new business opportunities. Consumers will benefit from the increased competition, new innovative services, and jobs and growth that are the certain results of this investment.
This policy statement makes it clear that Canadians will continue to have the tools necessary to promote Canadian content, said Ms. Copps. Convergence creates new exciting tools for Canadians to see and hear each other.
[8] Of particular relevance to the present matter is the statement that cable and telephone companies will be permitted "to compete in each others" core businesses". It goes without saying, however, that these companies will have to meet the Canadian ownership and control requirements of the Broadcasting Act and of the Telecommunications Act. At pages 7 and 8 of the policy statement, under the heading "Telephone company entry into broadcasting", the following appears:
All telecommunications carriers that meet the Canadian ownership and control requirements will be eligible to hold broadcasting licences.
Amendments to the Bell Canada Act will be introduced to eliminate the prohibition from holding broadcasting licences.
The Order in Council which limits the ability of crown corporations to hold broadcasting undertakings will be modified to allow such corporations to hold broadcasting licences while recognizing the obligation for broadcasting licensees to operate at arm"s length from governments, including programming independence.
Recognizing the special status of BC Tel and Québec-Téléphone as telephone companies grand fathered under the Canadian ownership requirements of the Telecommunications Act, the Government will amend the Order in Council which establishes the Canadian ownership requirements for broadcasting licensees so as to permit either of these two companies to be eligible to hold a broadcasting distribution licence through a structurally separate entity, which could be a wholly owned subsidiary. The licensee would have an all-Canadian board of directors and be subject to conditions designed to ensure that Canadians control all programming decisions arising from the operation of a broadcasting distribution undertaking.
[9] As appears from the above text, the government gave special consideration to the situation of B.C. Tel and Québec-Téléphone, both companies having been "grand fathered" under the Canadian ownership requirements of the Telecommunications Act . Specifically, in its policy statement, the government declares its intention of amending its Direction to the C.R.T.C. (Ineligibility of non-Canadians) so as to allow both companies "to be eligible to hold a broadcasting distribution licence through a structurally separate entity, which could be a wholly owned subsidiary".
[10] On April 8, 1997, pursuant to paragraph 26(1)(c) of the Broadcasting Act, the Governor in Council issued a revised Direction to the C.R.T.C. (Order-in-Council P.C. 1997-486) which provides:
2. The Canadian Radio-television and Telecommunications Commission is hereby directed that no broadcasting licence may be issued, and no amendments or renewals thereof may be granted, to an applicant that is a non-Canadian.
3. Where the Canadian Radio-television and Telecommunications Commission determines that an applicant is controlled by a non-Canadian, whether on the basis of personal, financial, contractual or business relations or any other considerations relevant to determining control, other than the beneficial ownership and control of the voting shares of a qualified successor by a Canadian carrier or its acquiring corporation, the applicant is deemed to be a non-Canadian.
4. The Direction to the CRTC (Ineligibility of Non-Canadians) is repealed.
5. This Direction comes into force on 8 April 1997.
[11] The effect of this revised Direction to the C.R.T.C. was to create and define a new class of applicants who are now eligible to hold broadcasting distribution licenses. This new class of applicants is referred to in the Direction as "qualified successor". As a result of the creation of the "qualified successor" class, subsidiary corporations of B.C. Tel and Québec-Téléphone will be deemed to meet the Canadian ownership requirements given in the Direction to the C.R.T.C.. The revised Direction defines "qualified successor" as:
"qualified successor" means a corporation referred to in paragraph 17(2)(b ) or (c) of the Canadian Telecommunications Common Carrier Ownership and Control Regulations as they read on October 25, 1994, registered as SOR/94-667, incorporated or continued under the laws of Canada or a province and directly controlled by a Canadian carrier referred to in subsection 16(2) of the Telecommunications Act, or by its acquiring corporation, where
(a) the control of the Canadian carrier and its acquiring corporation has remained unchanged since the date of the coming into force of this Direction;
(b) the chief executive officer of the corporation or, where the corporation has no chief executive officer, the person performing functions that are similar to the functions performed by a chief executive officer, and all its directors are Canadians;
(c) all the voting shares of the corporation that are not beneficially owned and controlled by the Canadian carrier or its acquiring corporation are beneficially owned and controlled by Canadians;
(d) in the case of a corporation referred to in subparagraph (i)(ii) of the definition "Canadian", all the voting shares of the qualified corporation that are not beneficially owned by the corporation are beneficially owned and controlled by Canadians;
(e) the corporation operates only in the operating territory of the Canadian carrier;
(f) the corporation does not beneficially own, directly or indirectly, voting shares of a corporation that holds a broadcasting distribution undertaking licence and that operates outside of the operating territory of the Canadian carrier;
(g) the directors of the corporation and its officers have complete and exclusive control over all programming decisions and
| (i) at least 33 1/3 per cent of the directors are independent members, and |
| (ii) a quorum at any meeting of the directors or of any committee of the directors must include at least one independent member; and |
(h) no parent corporation or affiliate corporation of the corporation exercises any control or influence over any programming decisions of the corporation. (ayant droit qualifié)
The definition of "qualified corporation" is also relevant:
"qualified corporation" means a corporation incorporated or continued under the laws of Canada or a province, where
(a) the chief executive officer or, where the corporation has no chief executive officer, the person performing functions that are similar to the functions performed by a chief executive officer, and not less than 80 per cent of the directors are Canadians,
(b) in the case of a corporation having share capital, Canadians beneficially own and control, directly or indirectly, in the aggregate and otherwise than by way of security only, not less than 80 per cent of all the issued and outstanding voting shares of the corporation, and not less than 80 per cent of the votes; and
(c) in the case of a corporation that is a subsidiary corporation,
| (i) the parent corporation is incorporated or continued under the laws of Canada or a province, |
| (ii) Canadians beneficially own and control, directly or indirectly, in the aggregate and otherwise than by way of security only, not less than 66 2/3 per cent of all of the issued and outstanding voting shares of the parent corporation and not less than 66 2/3 per cent of the votes, and |
| (iii) the parent corporation or its directors do not exercise control or influence over any programming decisions of the subsidiary corporation. (personne morale qualifiée) |
The interpretation section also defines the word "Canadian". It appears clearly from this definition that a "qualified corporation" and a "qualified successor" are "Canadian" for the purpose of the Direction to the C.R.T.C.. The definition is as follows:
"Canadian" means
(a) a citizen within the meaning of subsection 2(1) of the Citizenship Act who is ordinarily resident in Canada;
(b) a permanent resident within the meaning of subsection 2(1) of the Immigration Act who is ordinarily resident in Canada and has been ordinarily resident in Canada for not more than one year after the date on which that person first became eligible to apply for Canadian citizenship;
...
(e) a qualified corporation;
...
(i) a qualified successor
(i) for the purpose of holding a broadcasting distribution undertaking licence, or
(ii) for the purpose of beneficially owning, directly or indirectly, 50 per cent or less of all the issued and outstanding voting shares, and 50 per cent or less of the votes, of a qualified corporation that holds a broadcasting licence for a distribution undertaking only. (Canadien)
Another definition which is relevant is the definition of the word "control" which again one finds at section 1 of the revised Direction to the C.R.T.C.:
"control" means control in any manner that results in control in fact, whether directly through the ownership of securities or indirectly through a trust, an agreement or arrangement, the ownership of a corporation or otherwise. (contrôle )
[12] It is undeniable that without the "qualified successor" class of applicants, neither B.C. Tel, Québec-Téléphone nor their subsidiary corporations would meet the Canadian ownership requirements of the Direction to the C.R.T.C. and hence could not apply for and obtain a broadcasting distribution licence.
[13] The government"s rationale in modifying its Direction to the C.R.T.C. can be found in the Regulatory Impact Analysis Statement released on April 8, 1997. The explanation given at page 4 is as follows:
The Government"s August 6, 1996 decision to make the amendments was the result of a consultation process which began by the issuance of the Order in Council P.C. 1994-1689 dated October 11, 1994 requesting the Canadian Radio-television and Telecommunications Commission (CRTC) to gather information, seek input provide critical analysis and report to the Government on a number of matters in which the following question was asked: "Would it be appropriate for all telecommunications carriers to become eligible to hold broadcast licences subject to Canadian ownership rules and generally applicable regulation? Within what time frame and under what conditions might this be considered?"
In its May 19, 1995, reply to the Order-in-Council (P.C. 1994-1689) on the Information Highway, CRTC recommended that telephone companies should be allowed to apply for broadcasting distribution licences as soon as rules have been established to remove barriers to effective competition in local telephone business and that broadcasting activities of Canadian carriers as defined in section 16(2) of the Telecommunications Act should be allowed onlythrough [sic] their participation, at the threshold level, in a Canadian owned and controlled corporation.
The Government has consulted the Canadian carriers as defined in section 16 (2) of the Telecommunications Act. More than 33,000 coupon clips, a petition of 94,000 names and hundreds of letters signed by public in general, business and labour organizations, local newspapers, parliamentarians, municipalities and opinion leaders have been sent to the Government in support of the eligibility of the Canadian carriers as defined in section 16(2) of the Telecommunications Act to hold broadcasting distribution licences (same as cable).
[14] Since B.C. Tel and Québec-Téléphone are Canadian carriers eligible to operate as telecommunications carriers pursuant to subsection 16(2) of the Telecommunications Act, the government decided that these corporations should be allowed, through subsidiary corporations that meet the conditions set out in the revised Direction, to apply for broadcasting distribution licences. The sole issue for determination is whether Order-in-Council P.C. 1997-486 is invalid as being ultra vires the Broadcasting Act.
[15] Subsection 16(1) of the Telecommunications Act restricts the class of corporations which are eligible to operate as telecommunications carriers. Only corporations that are "Canadian-owned and controlled", within the meaning given to that expression by subsection 16(3), may operate as telecommunications carriers. Only one exception to that rule has been made and that appears at subsection 16(2). The exception was made to allow B.C. Tel and Québec-Téléphone to operate as telecommunications carriers even though they were not "Canadian-owned and controlled corporations". Pursuant to subsection 16(3), a corporation is "Canadian-owned and controlled" if:
(3) For the purposes of subsection (1), a corporation is Canadian-owned and controlled if
(a) not less than eighty per cent of the members of the board of directors of the corporation are individual Canadians;
(b) Canadians beneficially own, directly or indirectly, in the aggregate and otherwise than by way of security only, not less than eighty per cent of the corporation's voting shares issued and outstanding; and
(c) the corporation is not otherwise controlled by persons that are not Canadians.
Although eighty percent of the members of the Board of Directors of B.C. Tel and Québec-Tel are Canadians, more than fifty percent of both B.C. Tel and Québec-Tel"s voting shares issued and outstanding are beneficially owned, directly or indirectly, by non-Canadians.
[16] I now turn to the Broadcasting Act. The broadcasting policy for Canada is set out at section 3 thereof which provides:
3. (1) It is hereby declared as the broadcasting policy for Canada that
(a) the Canadian broadcasting system shall be effectively owned and controlled by Canadians;
(b) the Canadian broadcasting system, operating primarily in the English and French languages and comprising public, private and community elements, makes use of radio frequencies that are public property and provides, through its programming, a public service essential to the maintenance and enhancement of national identity and cultural sovereignty;
(c) English and French language broadcasting, while sharing common aspects, operate under different conditions and may have different requirements;
(d) the Canadian broadcasting system should
(i) serve to safeguard, enrich and strengthen the cultural, political, social and economic fabric of Canada,
(ii) encourage the development of Canadian expression by providing a wide range of programming that reflects Canadian attitudes, opinions, ideas, values and artistic creativity, by displaying Canadian talent in entertainment programming and by offering information and analysis concerning Canada and other countries from a Canadian point of view,
(iii) through its programming and the employment opportunities arising out of its operations, serve the needs and interests, and reflect the circumstances and aspirations, of Canadian men, women and children, including equal rights, the linguistic duality and multicultural and multiracial nature of Canadian society and the special place of aboriginal peoples within that society, and
(iv) be readily adaptable to scientific and technological change;
(e) each element of the Canadian broadcasting system shall contribute in an appropriate manner to the creation and presentation of Canadian programming;
(f) each broadcasting undertaking shall make maximum use, and in no case less than predominant use, of Canadian creative and other resources in the creation and presentation of programming, unless the nature of the service provided by the undertaking, such as specialized content or format or the use of languages other than French and English, renders that use impracticable, in which case the undertaking shall make the greatest practicable use of those resources;
(g) the programming originated by broadcasting undertakings should be of high standard;
(h) all persons who are licensed to carry on broadcasting undertakings have a responsibility for the programs they broadcast;
(i) the programming provided by the Canadian broadcasting system should
(i) be varied and comprehensive, providing a balance of information, enlightenment and entertainment for men, women and children of all ages, interests and tastes,
(ii) be drawn from local, regional, national and international sources,
(iii) include educational and community programs,
(iv) provide a reasonable opportunity for the public to be exposed to the expression of differing views on matters of public concern, and
(v) include a significant contribution from the Canadian independent production sector;
(j) educational programming, particularly where provided through the facilities of an independent educational authority, is an integral part of the Canadian broadcasting system;
(k) a range of broadcasting services in English and in French shall be extended to all Canadians as resources become available;
(l) the Canadian Broadcasting Corporation, as the national public broadcaster, should provide radio and television services incorporating a wide range of programming that informs, enlightens and entertains;
(m) the programming provided by the Corporation should
(i) be predominantly and distinctively Canadian,
(ii) reflect Canada and its regions to national and regional audiences, while serving the special needs of those regions,
(iii) actively contribute to the flow and exchange of cultural expression,
(iv) be in English and in French, reflecting the different needs and circumstances of each official language community, including the particular needs and circumstances of English and French linguistic minorities,
(v) strive to be of equivalent quality in English and in French,
(vi) contribute to shared national consciousness and identity,
(vii) be made available throughout Canada by the most appropriate and efficient means and as resources become available for the purpose, and
(viii) reflect the multicultural and multiracial nature of Canada;
(n) where any conflict arises between the objectives of the Corporation set out in paragraphs (l) and (m) and the interests of any other broadcasting undertaking of the Canadian broadcasting system, it shall be resolved in the public interest, and where the public interest would be equally served by resolving the conflict in favour of either, it shall be resolved in favour of the objectives set out in paragraphs (l) and (m);
(o) programming that reflects the aboriginal cultures of Canada should be provided within the Canadian broadcasting system as resources become available for the purpose;
(p) programming accessible by disabled persons should be provided within the Canadian broadcasting system as resources become available for the purpose;
(q) without limiting any obligation of a broadcasting undertaking to provide the programming contemplated by paragraph (i), alternative television programming services in English and in French should be provided where necessary to ensure that the full range of programming contemplated by that paragraph is made available through the Canadian broadcasting system;
(r) the programming provided by alternative television programming services should
(i) be innovative and be complementary to the programming provided for mass audiences,
(ii) cater to tastes and interests not adequately provided for by the programming provided for mass audiences, and include programming devoted to culture and the arts,
(iii) reflect Canada's regions and multicultural nature,
(iv) as far as possible, be acquired rather than produced by those services, and
(v) be made available throughout Canada by the most cost-efficient means;
(s) private networks and programming undertakings should, to an extent consistent with the financial and other resources available to them,
(i) contribute significantly to the creation and presentation of Canadian programming, and
(ii) be responsive to the evolving demands of the public; and
(t) distribution undertakings
(i) should give priority to the carriage of Canadian programming services and, in particular, to the carriage of local Canadian stations,
(ii) should provide efficient delivery of programming at affordable rates, using the most effective technologies available at reasonable cost,
(iii) should, where programming services are supplied to them by broadcasting undertakings pursuant to contractual arrangements, provide reasonable terms for the carriage, packaging and retailing of those programming services, and
(iv) may, where the Commission considers it appropriate, originate programming, including local programming, on such terms as are conducive to the achievement of the objectives of the broadcasting policy set out in this subsection, and in particular provide access for under served linguistic and cultural minority communities.
(2) 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.
[17] Of particular interest in this case is the policy statement which appears at paragraph 3(1)(a) which provides that the Canadian broadcasting system "shall be effectively owned and controlled by Canadians;". Pursuant to subsection 3(2) of the Broadcasting Act , responsibility for the regulation and supervision of the Canadian broadcasting system has been assigned to the C.R.T.C.. Subsection 3(2) of the Broadcasting Act must be read with subsection 5(1) which provides that it is incumbent upon the C.R.T.C. to regulate and supervise "all aspects of the Canadian broadcasting system" so as to implement the broadcasting policy set out in subsection 3(1).
[18] I have already referred to sections 7 and 26 of the Broadcasting Act which allow the Governor in Council to give directions to the C.R.T.C. to ensure compliance with Canada"s broadcasting policy. The applicant submits that the revised Direction to the C.R.T.C. which allows a subsidiary corporation of a foreign owned and controlled telephone carrier to obtain and hold a broadcasting distribution licence in Canada is invalid as being ultra vires the Broadcasting Act. The applicant submits that the delegated authority given to the Governor in Council must be exercised in strict accordance with the power creating it, and that it cannot conflict with the provisions of the enabling statute. Although section 26 of the Broadcasting Act allows the Governor in Council to issue Directions to the C.R.T.C. respecting "the classes of applicants to whom licences may not be issued ...", the powers given to the Governor in Council are limited by the policy statement set out in the Broadcasting Act . The applicant submits that the policy statement set out in paragraph 3(1)(a) of the Broadcasting Act is unequivocal: the Canadian Broadcasting system is to be "effectively owned and controlled by Canadians". According to the applicant, section 3(1)(a) of the Broadcasting Act applies to each element of the broadcasting system, including every individual broadcasting undertaking.
[19] The Telecommunications Act clearly provides that only entities which are "Canadian-owned and controlled corporations" may operate as telecommunications common carriers. The only exceptions are, as noted above, B.C. Tel and Québec-Téléphone. The Broadcasting Act , unlike the Telecommunications Act, does not define a Canadian broadcasting undertaking, nor does it limit the field to Canadian broadcasters. With respect to implementing the policy statement of section 3, the Broadcasting Act has entrusted this responsibility to the Governor in Council by way of sections 7 and 26. In New Brunswick Broadcasting Co., Ltd. v. Canadian Radio-Television and Telecommunications Commission, [1984] 2 F.C. 410, the nature and scope of the authority granted by Parliament to the Governor in Council were examined by the Federal Court of Appeal. At 430, Thurlow C.J., speaking for the Court, gave the following opinion:
Next, the authority conferred on the Governor in Council by subsection 27(1) and subparagraph 22(1)(a)(iii) of the Broadcasting Act, in my opinion, is neither judicial nor quasi-judicial nor administrative in nature. It is, in my view, legislative in character. It authorizes the making of orders to the CRTC respecting inter alia the classes of applicants, not individual applicants, to whom broadcasting licences or renewals thereof may not be granted. The authority is not restricted by wording dealing with bases on which particular classes may be disqualified. That is left for determination by the Governor in Council for such reasons of public policy as the Governor in Council may adopt. It is also not without significance on this point that subsection 27(2) requires that any order made under subsection 27(1) be not only published forthwith in the Canada Gazette but be laid before Parliament within fifteen days if Parliament is then sitting and if Parliament is not then sitting on any of the first fifteen days next thereafter that Parliament is sitting. This affords Parliament itself the opportunity to consider what has been done and to revoke or alter the direction if it sees fit to do so. In my view these features of the statute tend to show the legislative character of the direction and of the authority to make it.
[20] For the reasons that follow, I am of the opinion that the Direction from the Governor in Council to the C.R.T.C. is not ultra vires the Broadcasting Act nor has the Governor in Council acted beyond its jurisdiction.
[21] I start with the proposition that the policy set out at paragraph 3(1)(a) of the Broadcasting Act does not require that each and every individual broadcasting undertaking in Canada be "effectively owned and controlled by Canadians". The expression "the Canadian broadcasting system" is not defined in the Broadcasting Act . However, the Broadcasting Act does make clear distinctions between the broadcasting system as a whole and the individual undertakings which comprise the system. Within the statutory scheme the "Canadian broadcasting system" is distinct from its components. Section 2 of the Broadcasting Act defines "broadcasting undertaking" and "distribution undertaking" respectively as follows:
"broadcasting undertaking" includes a distribution undertaking, a programming undertaking and a network;
"distribution undertaking" means an undertaking for the reception of broadcasting and the retransmission thereof by radio waves or other means of telecommunication to more than one permanent or temporary residence or dwelling unit or to another such undertaking;
[22] A reading of the Broadcasting Act and in particular of subsection 3(1) leaves me with no doubt that the broadcasting system and its individual components are distinct. For example, paragraph 3(1)(b) is to the effect that the Canadian broadcasting system comprises "public, private and community elements". Paragraph 3(1)(e ), on the other hand, states that "each element" of the broadcasting system will contribute to "the creation and presentation of Canadian programming". Paragraph 3(1)(f ) ensures that "each broadcasting undertaking" will encourage, as much as possible, Canadian creativity with respect to the creation and presentation of programs. I need not give further examples as it is abundantly clear that the Broadcasting Act distinguishes between the parts and the whole. I agree entirely with the submissions made by counsel for the Attorney General of Canada in his memorandum of fact and law at paragraphs 26 and 27:
26. Section 3(1)(a) is an expression of broadcasting policy in relation to the system as a whole rather than to each licensed undertaking. Had Parliament intended that each and every broadcasting undertaking be wholly owned and controlled by Canadians, it would have so prescribed, as it has explicitly done with regard to other policy objectives and requirements contained in section 3. Having not done so, Parliament clearly did not intend to dictate that all individual broadcasting undertakings be entirely or wholly Canadian owned and controlled.
27. Moreover, the policy that section 3(1)(a) seeks to address is an "effective", as well as a conjunctive, "owned and controlled" concept, as distinct from strictly formalistic legal and numerical disjunctive concepts of ownership and control. In doing so, the legislation clearly contemplates a flexible approach to the achievement of the broad, multifaceted and complex objectives of Canada"s broadcasting policy that include "to serve to safeguard, enrich and strengthen the culture, political, social and economic fabric of Canada" (section 3(d)(i)) and "be readily adaptable to scientific and technological change" (3(1)(d)(iv)).
[23] I accept, for the present purposes, the explanation given by Jean Guérette, Director, Distribution Systems and Multimedia Policy, with the Broadcasting Policy Branch of the Department of Canadian Heritage, regarding the nature of the Canadian broadcasting system in his affidavit sworn on July 4, 1997. Paragraph 4 of that affidavit reads as follows:
4. The Canadian broadcasting system is an agglomeration of all individual broadcasting undertakings licensed by the Canadian Radio-television and Telecommunications Commission (the C.R.T.C.) through which all radio and television programming is transmitted and distributed within Canada. The Broadcasting Act recognizes three major categories of broadcasting undertakings, namely (1) programming undertakings, which essentially originate and transmit programming to the public; (2) distribution undertakings, which essentially receive programming originally transmitted by programming undertakings and, normally for a fee, distribute such programming to the public via various telecommunications means; and (3) networks, which are undertakings essentially consisting of organizational arrangements among programming or distribution undertakings for the transmission or distribution of particular programs or programming services. The composition of the Canadian broadcasting system in terms of the number, location, type and class of undertakings holding broadcasting licences is accurately detailed in the statistical table produced by the C.R.T.C. as drawn from its own licensing records and databases. That table is attached as Exhibit "A" to my Affidavit.
[24] Exhibit "A" to Mr. Guérette"s affidavit shows that as of March 31, 1996, there were 5,696 individual licenced undertakings in the Canadian broadcasting system of which 2,301 were licenced distribution undertakings. Of this number, 2,038 were individual cable systems operating throughout Canada. With respect to the province of British Columbia, exhibit "A" shows that, again as of March 31, 1996, there were 151 licenced cable undertakings representing less than 7.5% of the total number of cable undertakings in Canada and approximately 2.7% of all licenced broadcasting undertakings which form the Canada broadcasting system.
[25] In view of the evidence and in particular the affidavit of Jean Guérette with respect to the number of broadcasting undertakings in Canada, it is beyond question that the Governor in Council has not and will not endanger the effective ownership and control by Canadians of the Canadian broadcasting system by allowing subsidiary corporations of B.C. Tel and Québec-Téléphone to apply and obtain a licence to carry-on distribution undertakings within the telecommunications service area of their parent companies. On the evidence, it is impossible to argue otherwise.
[26] My review of the broadcasting policy for Canada as set out in subsection 3(1) of the Broadcasting Act leads me to the conclusion that what Parliament had in mind, in formulating the broadcasting policy for Canada, was to ensure that Canada"s national identity and cultural sovereignty would be maintained and enhanced by the Canadian broadcasting system. This is expressly stated at paragraph 3(1)(b ) of the Broadcasting Act. Paragraphs 3(1)(c), (d), (f), (i), (n), (o), (p), (q) and (r) support this proposition. Thus, the distribution subsidiary of B.C. Tel which will operate almost exclusively as a cable service, will certainly not threaten the policy enacted by Parliament. Having two companies not "effectively owned and controlled by Canadians" out of thousands involved in the industry does not alter the Canadian character and control of the system as a whole.
[27] One of the arguments advanced by the applicant in support of its interpretation of paragraph 3(1)(a) of the Broadcasting Act is that since 1969 the Directions to the C.R.T.C. have always contained "precise limitations as to the permissible level of ownership interests of each Canadian broadcasting undertaking that may be held by non-Canadian interests". As a result, foreign owned and controlled broadcasting undertakings have had to comply with the ownership requirements of the Directions to the C.R.T.C.. At page 14 of its memorandum of fact and law, at paragraph 29, the applicant states:
... None of the foreign owned and controlled broadcasting undertakings were grand-fathered by the C.R.T.C. into the new regime. As of 1978, each Canadian broadcasting and cable television undertaking had complied with the Ownership Direction.
[28] At paragraph 30 of its memorandum of fact and law, the applicant further states:
In order to ensure compliance with the Ownership Direction, the CRTC has consistently examined the ownership structure of each individual broadcasting undertaking licensed to operate in Canada. All applicants for broadcasting licences, or for the renewal of broadcasting licences, are required to submit with their application documentation demonstrating compliance with the Ownership Direction. This practice is evidence (sic) by all CRTC decisions to date.
[29] In my view, the applicant"s argument misses the point. In enacting the Broadcasting Act , Parliament did not limit the field to broadcasting undertakings which were owned and controlled by Canadians. Rather, Parliament provided that the Canadian broadcasting system should be "effectively owned and controlled by Canadians". With respect to how best to implement this policy, Parliament entrusted the Governor in Council to devise the most appropriate means. The applicant is correct in saying that until the impugned Direction to the C.R.T.C. was given in April 1997, all broadcasting undertakings had to comply with the ownership requirements of the prior Direction which required that all applicants be "Canadian" as that term was defined in the Direction. Under the former Direction, B.C. Tel and Québec-Téléphone were not "Canadian" and therefore could not apply to the C.R.T.C..
[30] Because responsibility for the implementation of the policy was entrusted to the Governor in Council, the Governor in Council was fully empowered to modify or repeal the former Direction if it was of the view that such a change was consistent with the government"s stated policy objectives. I have already canvassed some of the reasons why the Governor in Council appears to have decided to make the impugned Direction. That decision is one that the Governor in Council could take. It is irrelevant that the former Directions required corporations to be controlled by Canadians as opposed to allowing exceptions for "qualified successors". Both forms of Direction are equally within the boundaries of the policy.
[31] In conclusion, Canadians, including the applicant, may agree or disagree with the decision taken by the Governor in Council to allow subsidiary corporations of B.C. Tel and Québec-Téléphone to apply for and obtain broadcasting distribution licences. Whether subsidiaries of foreign owned and controlled telephone carriers should be allowed to obtain the licences at issue is a question open for debate. However, the responsibility to devise and implement the best means of attaining the goals of national identity and cultural sovereignty in the broadcasting field has been left by Parliament to the Governor in Council. As a result, a decision made by the Governor in Council cannot be successfully challenged here, provided that it comes, as it does here, within the broad terms of the policy. The court of public opinion is the appropriate forum for this debate.
[32] For these reasons, the application for judicial review shall be denied.
"MARC NADON"
Judge
Ottawa, Ontario
March 19, 1998
__________________1One hundred percent of Québec-Téléphone"s common shares are owned by Le Groupe QuébecTel Inc., a company incorporated pursuant to the laws of the Province of Quebec. Québec-Téléphone provides telephone services, both local and long distance, to approximately 550 000 people residing in the Province of Quebec. Its shares, like those of B.C. Tel, are held by a holding company whose common shares are owned by the Anglo-Canadian Telephone Company.
2Order-in-Council P.C. 1994-1105 pursuant to which the request was made to the C.R.T.C. defined the "information highway" as follows:
The term "Information Highway" describes a network of networks that will link Canadian homes, businesses and institutions to a wide range of services. The Information Highway will provide the necessary infrastructure for Canada"s emerging knowledge-based economy, and therefore, development of the highway will be critical to the competitiveness of all sectors of the economy.