A-37-80
Consumers' Association of Canada (British
Columbia Advocacy) (Appellant)
v.
British Columbia Telephone Company (Respond-
ent)
Court of Appeal, Pratte, Heald and Urie JJ.—
Vancouver, December 10 and 11; Ottawa, Decem-
ber 23, 1980.
Judicial review — Appeal and application to set aside
CRTC decision made under s. 9A of the B.C. Tel Special Act
— Decision approving agreement for acquisition of shares
Public interest considerations equally balanced — Whether
approved on such basis constitutes an error in law — Whether
misconception of proper onus of proof — An Act respecting
British Columbia Telephone Company, S.C. 1916, c. 66, s. 9A
as amended — National Transportation Act, R.S.C. 1970, c.
N-17, s. 64(2) as amended — Federal Court Act, R.S.C. 1970
(2nd Supp.), c. 10, s. 28.
This is a joint appeal and section 28 application for judicial
review directed against a decision of the Canadian Radio-
television and Telecommunications Commission rendered under
section 9A of An Act respecting British Columbia Telephone
Company. By that decision, the Commission approved an
agreement for the acquisition by the respondent of all the
shares of GTE Automatic Electric (Canada) Limited. The
appellant submits that the Commission erred in law in approv
ing an agreement when the evidence was such that it could not
say whether the agreement would be beneficial or detrimental
to the public interest. It argues that in applications under
section 9A, the approval sought must be positively demonstrat
ed to be in the public interest. It also argues that the Commis
sion misconceived the proper onus of proof necessary for
approval of an application under section 9A.
Held, the appeal and the section 28 application are dis
missed. Section 9A sets out no criteria which the Commission is
required to consider when exercising its power of approval or
disapproval of an agreement of this kind. The Commission is
free to formulate and apply its own guidelines. Here, it estab
lished as a criterion whether or not the transaction could be
considered to be in the public interest. Then, after finding that
the public interest considerations were equally balanced, it
approved the application but only after imposing safeguards to
protect that interest. In other words, it concluded that with
adequate regulatory safeguards, the balance would tilt so that
the public interest would be protected. The question of onus
does not enter into the matter. The cases referred to do not deal
with the statute in issue; therefore, it is incorrect to say that the
Commission has formulated an "onus rule" with respect to that
kind of application. The failure to notify the parties of a change
in the practice relating to onus, if any, is not unfair: the
Commission is entitled to change it.
Consumers' Association of Canada v. The Hydra-Electric
Power Commission of Ontario [1974] 1 F.C. 453, referred
to. Seafarers International Union of Canada v. Canadian
National Railway Co. [1976] 2 F.C. 369, referred to.
APPLICATION for judicial review and appeal.
COUNSEL:
H. G. Intven for appellant.
P. Butler and B. Gibson for respondent Brit-
ish Columbia Telephone Company.
G. E. Kaiser and L. Dunbar for respondent
Director of Investigation and Research, Com
bines Investigation Act.
T. S. Robbins for respondent National Anti-
Poverty Organization.
Bryan Williams for respondent Canadian
Radio-television and Telecommunications
Commission.
SOLICITORS:
H. G. Intven, Ottawa, for appellant.
Farris, Vaughan, Wills & Murphy, Vancou-
ver, for respondent British Columbia Tele
phone Company.
Gowling & Henderson, Ottawa, for respond
ent Director of Investigation and Research,
Combines Investigation Act.
T. S. Robbins, Vancouver, for respondent Na
tional Anti-Poverty Organization.
Bryan Williams, Vancouver, for respondent
Canadian Radio-television and Telecommuni
cations Commission.
The following are the reasons for judgment
rendered in English by
PRATTE J.: These proceedings, which were com
menced under section 64 of the National Trans
portation Act, R.S.C. 1970, c. N-17, as amended,
and section 28 of the Federal Court Act, R.S.C.
1970 (2nd Supp.), c. 10, and later joined by an
order of the Court, are directed against a decision
of the Canadian Radio-television and Telecom
munications Commission. By that decision, which
was rendered under section 9A of An Act respect
ing British Columbia Telephone Company (S.C.
1916, c. 66 as amended by S.C. 1960, c. 66, s. 1),
(hereinafter also referred to as the British
Columbia Telephone Company Special Act), the
Commission gave its approval to an agreement for
the acquisition by British Columbia Telephone
Company of all the shares of GTE Automatic
Electric (Canada) Limited.
Section 9A of An Act respecting British
Columbia Telephone Company reads in part as
follows:
9A. The Company shall have power to purchase or otherwise
acquire the shares, and become a shareholder, of any company
or companies having objects in whole or in part similar to the
objects of the Company: Provided that no agreement therefor
shall take effect until it has been submitted to and approved by
the Board of Transport Commissioners for Canada [now the
CRTC] ... .
The Commission, according at least to the inter
pretation that the appellant puts on its decision,
first found that the evidence was so evenly
balanced that it was impossible to say whether the
proposed acquisition would be prejudicial to the
public interest and then, on the basis of that
finding, gave its approval to that acquisition. In
other words, the Commission, according to the
appellant, approved the proposed agreement
because the evidence did not show that it was
contrary to the public interest.
As I understand the submissions made by the
appellant and the interveners, the only real ground
of attack against that decision is that the Commis
sion erred in law in approving an agreement when
the evidence was such that the Commission could
not say whether the agreement would be beneficial
or detrimental to the public interest. That argu
ment was based exclusively on the use of the word
"approved" in section 9A of the British Columbia
Telephone Company Special Act. The verb "to
approve", it was said, implies necessarily that the
person who approves has formed a favourable
opinion of the thing that is the object of his
approval. It follows, says the appellant, that when
section 9A prescribes that "no agreement ... shall
take effect until it has been ... approved by the
Board", it requires in effect that no agreement
shall take effect until the Commission has found it
to be good. And as, according to counsel for the
appellant, this finding must clearly be made by
reference to the public interest, he says that sec
tion 9A requires the Commission, before approving
an agreement, to form the affirmative opinion that
the agreement will be either beneficial or at least
not detrimental to the public interest.
If I gave to section 9A the same interpretation as
the appellant, I would find much merit in that
submission since I consider the decision under
attack open to the interpretation that the Commis
sion gave its approval because it could not say
whether the proposed agreement would either ben
efit or cause injury to the public interest. However,
I must confess that I am unable to give to the word
"approved" as full a meaning as the appellant and
I cannot draw the same inferences from the use of
that word in section 9A. That section requires the
approval of the Commission. It does not, however,
give any indication of the manner in which the
Commission is to arrive at a decision; it does not
specify any criterion or standard to be applied by
the Commission. As I read section 9A, the Com
mission is given an entire discretion to approve or
not to approve as it sees fit. It is not, in my view,
within the power of the Court to limit that discre
tion by imposing on the Commission the duty to
make its decision by reference to precise criteria or
standards.
For these reasons, I would dismiss the
application.
* * *
The following are the reasons for judgment
rendered in English by
HEALD J.: This is a joint appeal and section 28
application attacking the same decision of the
Canadian Radio-television and Telecommunica
tions Commission (CRTC) dated September 18,
1979 and styled "Telecom Decision CRTC 79-17".
The appeal is taken pursuant to section 64(2) of
the National Transportation Act, and with the
leave of this Court. The relevant facts are not in
dispute. On March 13, 1979, the CRTC received
from the respondent an application pursuant to
section 9A of An Act respecting British Columbia
Telephone Company, an Act of the Parliament of
Canada (hereinafter referred to as the B.C. Tel
Special Act).' In that application the respondent
sought the Commission's approval of an agreement
between the respondent and GTE International
Incorporated whereby the respondent would
acquire all the shares of GTE Automatic Electric
(Canada) Limited (hereinafter "Automatic Elec
tric"). The vendor is a wholly-owned subsidiary of
General Telephone and Electronics Corporation
which is also the controlling shareholder in the
respondent through a holding company. Automatic
Electric is a wholly-owned subsidiary of the
vendor. Automatic Electric and its subsidiary
manufacture telephone sets, equipment used in
telephone switching systems, transmission equip
ment and related components which are sold to
operating telephone companies, including the
respondent.
On April 9, 1979, the CRTC issued a public
notice wherein was set out the respondent's
application and the procedure for public comment,
interventions, interrogations and replies or objec
tions thereto.
The CRTC then held a public hearing in respect
of this application. That hearing commenced on
June 12, 1979 and lasted four days. At the hearing
evidence was adduced on behalf of the appellant,
the respondent and the Director of Investigation
and Research, Combines Investigation Act, Con
sumer and Corporate Affairs Canada (hereinafter
the "Director"). Three other interveners par
ticipated in the public hearings before the CRTC.
Several other persons submitted written interven
tions to the CRTC.
At the hearing of this appeal submissions were
made by counsel on behalf of the appellant, the
respondent, the Director and the National Anti-
Poverty Organization. Counsel for the CRTC also
appeared, but only in so far as the question of the
CRTC's jurisdiction was concerned.
The relevant portion of section 9A reads as follows:
9A. The Company shall have power to purchase or other
wise acquire the shares, and become a shareholder, of any
company or companies having objects in whole or in part
similar to the objects of the Company: Provided that no
agreement therefor shall take effect until it has been submit
ted to and approved by the Board of Transport Commission
ers for Canada [now the CRTC] ... .
The. decision of the CRTC was to approve the
application of the respondent subject to certain
conditions which it imposed upon the respondent.
That portion of the Commission's reasons read as
follows:
In conclusion, on the basis of the evidence and argument
presented in this case, the Commission considers that the
weight of the case for and against the application being in the
public interest is equally balanced. While the purchase price for
Automatic could, in the absence of regulatory safeguards,
result in undesirable subsidies from B.C. Tel subscribers to
Automatic, the Commission is satisfied that regulatory safe
guards can be instituted to protect subscribers from such
consequences. Accordingly, the Commission approves the
application, and at the same time establishes the following
safeguards:
1) For regulatory purposes, the treatment of B.C. Tel's
investment in Automatic Electric shall be accounted for
under the equity method of accounting with the following
modifications.
2) For regulatory purposes, the investment by B.C. Tel in
Automatic Electric shall be adjusted for all subsequent
capital transactions to include any loans, loan guarantees,
advances and non-trade receivables by the parent company
as equity investment.
3) For regulatory purposes, the Commission will require a
return on the investment in Automatic at a rate deemed by
the Commission from time to time to be commensurate
with the risk involved. At this time, the Commission
considers that the required return on the average invest
ment in Automatic Electric shall not be less than 15% on
an after-tax or equivalent basis. However, earnings in
excess of 17% need not be included for regulatory
purposes.
4) In the event that Automatic's actual earnings are less than
the required return in any given year, an amount equal to
the required return shall be used for regulatory purposes in
computing both the return and the investment in Automat
ic and in calculating B.C. Tel's revenue requirement.
5) Other adjustments of a capital nature pertaining to the
investment in Automatic shall be subject to prior approval
by the Commission for regulatory purposes.
The appellant attacks this decision because, in
its submission, the CRTC in so deciding, miscon
ceived the proper onus of proof necessary for
approval of an application under section 9A of the
B.C. Tel Special Act. The appellant refers, initial
ly to page 8 of the reasons of the CRTC (Appeal
Book, p. 2886) wherein the Commission stated:
The Commission considers that in the absence of statutory
criteria it should decide the case on the basis of whether the
transactions are in the public interest, viewed in the broad
sense.
The appellant then points to page 40 of the
reasons (Appeal Book, p. 2918) set forth supra,
wherein the CRTC said:
In conclusion, on the basis of the evidence and argument
presented in this case, the Commission considers that the
weight of the case for and against the application being in the
public interest is equally balanced.
The appellant then refers to page 33 of the
CRTC reasons (Appeal Book, p. 2911) where the
Commission expressed the view that in cases where
public interest considerations were equally
balanced on both sides, it would grant its approval
of the application. Accordingly, the appellant sub
mits that the application of this principle to the
case at bar where it has already found the evidence
on public interest to be equally balanced, repre
sents an error in law. It is the submission of the
appellant that the CRTC should only approve an
application of this kind under section 9A after the
approval sought has been positively demonstrated
to be in the public interest. The respondent, on the
other hand, while submitting that the Commission
is not required by section 9A to consider the public
interest, says that in the case at bar, it did never
theless consider the public interest and approved
the agreement because it found, on the evidence,
that the agreement was not contrary to the public
interest.
In my view, the appellant's allegations of error
by the Commission cannot prevail. Counsel was
not able to cite a previous case decided under
section 9A. The section itself sets out no criteria
which the Commission is required to consider
when exercising its power of approval or disap
proval of an agreement of this kind. The Commis
sion is, in my opinion, free to formulate and apply
its own guidelines. It is the master of its own
procedure. 2 In this case the Commission estab
lished as a criterion, whether or not this transac
tion could be considered to be in the public inter
est. Then, after finding, on the evidence before it,
that the case for and against the application was
equally balanced, it decided to approve the
application but only after imposing five safeguards
2 See Consumers' Association of Canada v. The Hydro
Electric Power Commission of Ontario [1974] 1 F.C. 453 at
pp. 457-458. See also Seafarers International Union of Canada
v. Canadian National Railway Company [1976] 2 F.C. 369 at
p. 373.
or conditions of its approval. (See page 40 of the
Commission's reasons—Case, Vol. XX, page 2918,
quoted supra.)
In my view, what the Commission is saying here
is that it has concluded that while, without regula
tory safeguards, it cannot be said that the subject
acquisition is either detrimental or beneficial to
the public interest, nevertheless, with adequate
regulatory safeguards, the balance would tilt so
that the public interest would be protected. Viewed
in this manner, it is unnecessary to determine
whether the appellant's or the respondent's version
of the proper test of public interest be applied. The
fact is that the Commission has had regard to the
public interest and has, in the proper exercise of
the wide administrative discretion given to it under
the statute, established safeguards to protect that
interest. In such circumstances, this Court has, in
my view, no power to interfere.
Counsel for the Director submitted that the
Commission erred in law on the basis that it
should have held that the respondent carried the
onus of proof in an application under section 9A. It
is my opinion that the question of onus does not
enter into the matter. The cases cited by counsel
for the Director relate to the onus in judicial
proceedings and, in my view, have no application
to the factual situation here.
Director's counsel also made reference to the
dictum of Lord Loreburn L.C. in Board of Educa
tion v. Rice [1911] A.C. 179 at page 182:
They can obtain information in any way they think best, always
giving a fair opportunity to those who are parties in the
controversy for correcting or contradicting any relevant state
ment prejudicial to their view.
where the Lord Chancellor was discussing the
duties incumbent upon an administrative tribunal.
It is counsel's submission that, in this case, the
Commission changed the rule with respect to onus
which it had adopted in previous cases, and that in
the absence of express notice to the parties that the
customary onus practice adopted by the Commis
sion was to be changed for this case, there was an
element of unfairness in the procedure followed by
the Commission which amounted to an error in
law. I would observe firstly that the previous deci
sions of the Commission referred to by counsel are
decisions either under the Broadcasting Act or the
Railway Act. Not one of them is under this Act,
the B.C. Tel Special Act. Therefore it is not
correct to say that the Commission had formulated
an "onus rule" with respect to this kind of an
application. I would add, further, that even if it
had in other cases adopted such a practice it is
entitled to change it and my perusal of the record
does not convince me that in failing to notify the
parties of a change in the practice, if any, there
was any element of unfairness in the Commission's
procedure. The notice of public hearing sent out by
the Commission refers to the nature of the applica
tion as follows:
This application raises a number of important regulatory
issues on which the Commission invites comments from inter
ested parties. With regard to B.C. Tel's revenue requirement,
the Commission will wish to determine the effect of the pro
posed acquisition on the Company's rate base, financial report
ing requirements and income.
The relationship between B.C. Tel and Automatic Electric,
both controlled directly or indirectly by GTE, has been a
matter of considerable concern and attention in past regulatory
proceedings. In the Commission's view, the effects of the
proposed acquisition on this relationship must be carefully
examined. In this regard, it will be important to ensure that the
technological decisions and purchasing practices of B.C. Tel, as
well as the prices paid for equipment by the Company, will be
in the best interests of B.C. Tel subscribers, if the application is
approved. [Public Notice, p. 2; Case, Vol. III, p. 317.]
It seems to me that, in the above notice the
Commission was making it clear that, in making
this decision, it was going to have regard to the
public interest. The record discloses further that
most of the evidence adduced before the Commis
sion was directed to this issue and that all of the
parties and interveners were given every possible
opportunity to address themselves to the public
interest issue. It is, therefore, my view that this
submission by counsel for the Director is without
merit.
Counsel for the appellant also submitted that
the Commission erroneously found as fact that
approval of the acquisition agreement would not
be contrary to the public interest, having regard to
the material before it. At the hearing of the
appeal, the Court advised counsel for the respond
ent at the conclusion of submissions by counsel for
the appellant and the interveners supporting him
that it would not be necessary to hear the respond
ent on this allegation of error. It is clear, in my
opinion, that there was ample evidence before the
Commission upon which it could reasonably reach
the conclusion which it did. I also think that the
order which it made was reasonably open to it,
having regard to this record.
I would therefore dismiss the appeal and the
section 28 application.
* * *
URIE J.: I agree.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.