T-5512-80
Lount Corporation, Atlific Inc. and SaTel Con
sultants Limited (Plaintiffs)
v.
Attorney General of Canada, Minister of Com
munications and Canadian Radio-television and
Telecommunications Commission (Defendants)
Trial Division, Muldoon J.—Ottawa, August 31
and November 9, 1983.
Broadcasting — Action for declaration that parabolic dish
antenna ("earth station") and log-periodic antenna used by
hotel for guests' convenience exempt from licensing and cer
tification requirements of Radio and Broadcasting Acts —
Whether satellite transmissions intended for direct reception
by general public — Systems not "broadcasting receiving
undertakings", therefore exempt under both Acts — Radio
Act, R.S.C. 1970, c. R-1, ss. 2, 3(1),(3), 4, 10 — Broadcasting
Act, R.S.C. 1970, c. B-11, ss. 2, 3.
Judicial review — Equitable remedies — Declarations —
Injunction sought against defendants to prevent seizure or
shutting down of plaintiffs' parabolic dish antenna and log-
periodic antenna systems used in hotel for contravention of
licensing and certification requirements of Radio and Broad
casting Acts — Declaration that systems not "broadcasting
receiving undertakings", therefore exempt from such require
ments — Injunction denied as executive traditionally abides by
Court declarations and as ministers acting as servants of
Crown when investigating and prosecuting for alleged offences,
therefore not subject to injunction — Application for injunc
tion premature — Such denial without prejudice to right to
obtain restraining order in future if officials disobey law as
declared by Court — Radio Act, R.S.C. 1970, c. R-1, ss. 2,
3(1),(3), 4, 10 -- Broadcasting Act, R.S.C. 1970, c. B-11, ss.
2, 3.
The plaintiffs seek a declaration that a Manitoba hotel's
television receiving equipment consisting of a parabolic dish
antenna or "earth station" and two log-periodic antennae, with
their ancillary equipment, are exempt from the licensing and
certification requirements of the Broadcasting Act and the
Radio Act. They also seek an injunction to prevent the defend
ants from seizing or shutting down those systems. The defend
ants seek a declaration of non-exemption and, with respect to
the Radio Act, a declaration that the systems constitute "radio
apparatus" and are an integral part of a "radio station",
therefore subject to subsection 3(1) and not exempted by
subsection 3(3). The main issue is whether the operation of
each of the plaintiffs' systems can be characterized as a "broad-
casting receiving undertaking" or not. Parliament's power to
legislate with respect to the matter in issue is not denied; the
plaintiffs merely contend that it has not done so.
•
Held, the plaintiffs' action should be allowed and a declara
tion made but no injunction should issue. Consideration of the
question as to whether the operation of each of the plaintiffs'
systems (which constitute two distinct systems of radio
apparatus) can be characterized as a "broadcasting receiving
undertaking" resulted in the following findings. (1) There is no
dispute that the systems are "receiving" radiocommunication.
(2) What they receive is "broadcasting": the satellite transmis
sions "are intended [by the originators of the broadcasts] for
direct reception by the general public", as is evidenced by the
fact that the transmissions are not scrambled, that the pro
grams have mass appeal and that the transmissions are widely
dispersed over North America. As common sense dictates, they
must be deemed to intend the natural consequences (reception
by the general public) of their conduct (propagation of their
transmissions). (3) Neither plaintiff operates a broadcasting
receiving "undertaking". They do not engage themselves, for a
fee, to provide television program reception to subscribers. The
service is more akin to the elevator and telephone services
provided to the hotel guests. Therefore the plaintiffs' use of
their radio apparatus is simply not contemplated under the
Broadcasting Act. Also, since the plaintiffs are not engaged in a
broadcasting receiving undertaking, they qualify, under subsec
tion 3(3) of the Radio Act, for the exemption from its licensing
and certification requirements for their radio apparatus (which
constitutes a "radio station" under the Act).
As for the application for an injunction, it will not be granted
because the executive traditionally abides by declarations of the
Court even though not formally directed to do so. In any event,
as was established by the Federal Court of Appeal in Grand
Council of the Crees, no injunction against the Crown in right
of Canada or a minister thereof will be ordered in a case such
as this where the minister is acting as agent of the Crown
rather than as agent of the legislature for the performance of a
specific duty imposed by statute. Officials, of course, are bound
to obey the law as declared by this Court. At this time,
however, it would be premature to grant an injunction, but the
plaintiffs are not foreclosed from pursuing such remedies
should the need arise.
CASES JUDICIALLY CONSIDERED
APPLIED:
Jenner v. Sun Oil Co. Ltd. et al., [1952] 2 D.L.R. 526
(Ont. H.C.); Grand Council of the Crees (of Quebec), et
al. v. The Queen, et al., [1982] 1 F.C. 599 (C.A.).
DISTINGUISHED:
Capital Cities Communications Inc., et al. v. Canadian
Radio- Television Commission, [1978] 2 S.C.R. 141; The
Public Service Board, et al., v. Dionne, et al. [1978] 2
S.C.R. 191; Regina v. Communicomp Data Ltd. (1975),
53 D.L.R. (3d) 673; 6 O.R. (2d) 680 (Ont. Cty. Ct.); R.
v. Shellbird Cable Ltd. (1982), 38 Nfld. & P.E.I.R. 224;
108 A.P.R. 224 (Nfld. C.A.); Imperial Tobacco Ltd and
another v Attorney-General, [1980] 1 All E.R. 866
(H.L.); The Royal Bank of Canada v. The Deputy
Minister of National Revenue for Customs and Excise,
[1981] 2 S.C.R. 139.
REFERRED TO:
In re Regulation and Control of Radio Communication
in Canada, [1932] 2 D.L.R. 81; [1932] A.C. 304 (P.C.).
COUNSEL:
J. Greenstein, Q.C. for plaintiffs.
E. A. Bowie, Q.C. and P. K. Doody for
defendants Attorney General of Canada and
Minister of Communications.
D. Osborn and A. Cohen for defendant
Canadian Radio-television and Telecommuni
cations Commission.
SOLICITORS:
Doheny Mackenzie, Montreal, for plaintiffs.
Deputy Attorney General of Canada for
defendants Attorney General of Canada and
Minister of Communications.
Johnston & Buchan, Ottawa, for defendant
Canadian Radio-television and Telecommuni
cations Commission.
The following are the reasons for judgment
rendered in English by
MULDOON J.: In this action the plaintiffs seek
declaratory relief and an injunction against the
Minister of Communications in relation to their
television receiving equipment. They seek declara
tions that their equipment is exempt from licensing
and certification under the Radio Act [R.S.C.
1970, c. R-1] and the Broadcasting Act [R.S.C.
1970, c. B-11]. The defendants, plaintiffs by coun
terclaim, seek the diametrically contrary declara
tions, but no injunction.
In the southern sector of the City of Winnipeg,
in Manitoba, on Pembina Highway, there is a
hotel, a Holiday Inn. It is owned and operated by
the plaintiffs Lount Corporation and Atlific Inc.
Atop and within that hotel there is certain televi
sion receiving equipment. It is leased to Lount
Corporation and Atlific Inc. (hereinafter particu
larly referred to as: Lount) by their fellow plaintiff
SaTel Consultants Limited (hereinafter particular
ly referred to as: SaTel).
That equipment consists, in part, of a so-called
"earth station": a parabolic dish antenna of
approximately 3.65 metres (12 feet) in diameter
with feedhorn placed on the hotel roof, and con
necting cable running to a rack of three VR-3X
satellite receivers manufactured by Microwave
Associates Communication which are located in
the elevator penthouse of the hotel building. Run
ning from these three receivers there is coaxial
cable which joins a trunk coaxial line to each floor
of the hotel and thence cable lines to each guest
room, in which there is a television set producing
intelligible pictures and sound.
There is a second part of the hotel's television
receiving equipment which was disclosed by the
plaintiffs in response to the defendants' demand
for particulars and, accordingly, deemed to be
described in the pleadings, and subsequently
admitted by the defendants. This part of the equip
ment consists of two log-periodic antennae mount
ed on a single mast on the roof and connecting
cable running to a rack of four television signal
processors of a type known as Benevac, Mark 3SA,
also located in the elevator penthouse. Running
from these four processors there is a coaxial cable
which joins the earlier mentioned coaxial trunk
line to each floor of the hotel and thence the same
earlier mentioned cable lines to each guest room of
the hotel connected to the same television set
producing intelligible pictures and sound as was
earlier mentioned. This system of equipment is
that which is commonly called a master antenna
television or MATV and it is the same as, or
similar to the roof-top antennae seen on many
houses.
The parabolic dish antenna is clearly visible in
the photographs received as Exhibits 7, 9 and 10:
and the two log-periodic antennae on a single mast
are quite visible in the photographs received as
Exhibits 7, 8 and 10. The three VR-3X satellite
receiver units, and the four Mark 3SA television
signal processors, are mounted in vertical racks,
side by side, together with a television monitor, all
clearly shown in the photograph which is Exhibit
6. The actual equipment mentioned above and
shown in the photographs is professionally
described in the report (Ex. 14) prepared by the
witness Hubert J. Schlafly. An exposition of elec-
tro-magnetic fields and waves, antennae and satel
lite communications is provided in the report (Ex.
15) prepared by the witness Dr. K. G. Balmain.
The plaintiffs admit that the above-mentioned
equipment leased to Lount by SaTel is "radio
apparatus", within the definition of that expression
in section 2 of the Radio Act, R.S.C. 1970, c. R-1.
However, the plaintiffs contend that the earth
station with its ancillary equipment, and the two
log-periodic antennae with their ancillary equip
ment, each constitute a separate and distinct set of
radio apparatus as that term is defined in section 2
of the Radio Act. That term appears in subsection
(1), thus:
2. (1) ...
"radio apparatus" means a reasonably complete and sufficient
combination of distinct appliances intended for or capable of
being used for radiocommunication;
The parties are in substantial agreement about
the capabilities and use of the plaintiffs' radio
equipment. The apparatus constituting the earth
station with its parabolic antenna is capable of
receiving radiocommunication signals transmitted
by radio transmitters located on communication
satellites operating in a synchronous orbit above
the earth's equator, at a radius of about 6.6 Earth
radii or 42,055 kilometres. The plaintiffs' witness,
Mr. Hubert J. Schlafly, characterized such an
orbit as "geostationary" (Ex. 14), and the defend
ants' witness Dr. Keith G. Balmain, explained (Ex.
15) that "at this radius a satellite's rotational
period around the earth is 24 hours, so if the
satellite is moving from west to east above the
equator, it appears to be stationary when viewed
from the earth". On the other hand, the two
log-periodic antennae are capable of receiving
radiocommunication signals transmitted "over-the-
air" by local conventional television broadcasting
stations. In both kinds of equipment the ancillary
electronic components stored in the racks within
the elevator penthouse of the hotel are capable of
translating the respective signals received from the
respective distinctively configured and differently
specialized antennae on the roof, into intelligible
pictures and sounds at the television sets in each
guest room. "Translating" here does not mean
decoding, for the evidence discloses, and the par
ties are in agreement, that neither the signals
received from the satellite to which the parabolic
antenna is directed, nor those received at the log-
periodic antenna from the local broadcasting sta
tions, are in any way "scrambled" or encoded.
Those signals have been, and still are, transmitted
in the clear to anyone who has use of the kind of
apparatus which is emplaced on and in the Hol
iday Inn at 1330 Pembina Highway, in Winnipeg.
The plaintiffs have been using the parabolic
antenna and its rack of ancillary electronic appli
ances to receive radiocommunication signals trans
mitted in the 3.7 to 4.2 Gigacycles per second
(gigahertz or GHz) band from a satellite (Satcom
1) owned by RCA American Communications Inc.
(RCA Americom) of the United States of Ameri-
ca. The area of reception of the satellite's downlink
signal—its so-called "footprint"—extends into
Canada. In particular, the plaintiffs' parabolic
antenna has been tuned to receive satellite signals
carrying the television programming of Home Box
Office Inc. (HBO), Showtime Entertainment
(Showtime) and WTBS. HBO, as the parties
agree by their pleadings, is a wholly owned sub
sidiary of Time Inc. Likewise, Showtime is a joint
venture of subsidiary corporations of Viacom
International Inc. and Teleprompter Inc., while
WTBS is a subsidiary of Turner Communications
Inc. All of those corporations are incorporated
pursuant to laws in force within the United States
of America and they are all resident in that
country.
The plaintiffs allege that the radio apparatus
which is the subject of this action comprises two
distinct systems, or that it consists of two sets of
radio apparatus. I was invited by the defendants'
counsel to find that there is only one system of
radio apparatus in place, instead of two, because
there is only one television set in each guest room
of the hotel and it produces all of the pictures and
sounds from all the signals carried over a common
coaxial cable running from the electronic appli
ances connected to each of the antennae. That is
true: but if this equipment constitutes one whole
and complete system, then removal or disconnec
tion of such crucial parts as an antenna and its
ancillary electronic appliances would surely cripple
the system and render it non-functional. That,
however, is not true of the radio apparatus
installed upon and in the Holiday Inn of South
Winnipeg. The removal or disconnection of either
antenna with its ancillary electronic appliances
would not prevent the other antenna with its elec
tronic appliances from receiving the signals which
are ultimately translated into pictures and sound
in the guest rooms. Clearly, they are two distinct
systems of radio apparatus which merely utilize a
common "highway", the cable which carries their
respective received signals to the television sets
throughout the hotel.
I make this finding of two distinct and separate
systems of radio apparatus at this point because it
is here that one must resolve the issue in order to
comprehend the events leading up to the institu
tion of this action and counterclaim. The parties'
first focus of dispute was centered on the so-called
"earth station" with its parabolic dish antenna and
ancillary electronic receiver appliances. The scope
of their dispute was widened by the pleadings
when the defendants sought particulars, and the
plaintiffs furnished particulars of the other system
of radio apparatus, the two log-periodic antennae
with ancillary receiver appliances, or MATV
system. It thereby became the subject of the same
dispute between the parties and the same prayers
for declarations and injunction as were framed in
the plaintiffs' statement of claim at the outset but
in regard to the "earth station" only.
Thus it was, as the parties agree, that toward
the end of September, 1980, Lount received a
letter (Ex. 1) from Mr. W. A. R. Johnston,
Regional Director of the Department of Com
munications, stating in effect the following;
(a) That the said earth station was a broadcasting undertak
ing not properly authorized under either the Broadcasting Act
or the Radio Act.
(b) That a radio licence was required for any satellite earth
receiving station.
(c) That Lount's earth station could not be licensed, since its
operation would violate certain international agreements to
which Canada was party.
(d) That unlicensed operators were subject to prosecution.
Following an exchange of correspondence, a
meeting was held in Winnipeg on October 22,
1980 between representatives of Lount and repre
sentatives of the Department of Communications,
at which meeting the representatives of the
Department of Communications demanded that
the installation be shut down, failing which Lount
would be prosecuted and the equipment seized and
taken away. A time limit of twelve o'clock noon on
Friday, October 24, 1980, was given and the
demand to cease operating the earth station was
put formally in writing in a letter (Ex. 2) dated
October 23, 1980 addressed by the Department of
Communications to Lount.
In order to avoid seizure of the earth station and
under reserve of all rights, Lount did, under pro
test, agree to discontinue the use of the earth
station, pending receipt of advice from legal coun
sel as to the legality of the threatened seizure
action. A telegram (Ex. 3) to that effect was
forwarded by Lount to the Department of Com
munications on October 24, 1980. Soon thereafter,
plaintiffs recommenced use of the earth station
and continue to operate same to the present date.
The defendants, the Attorney General of
Canada and the Minister of Communications aver
that any seizure of the plaintiffs' equipment, con
templated by the Minister of Communications
would have been authorized by a search warrant to
be applied for under section 10 of the Radio Act
for the purpose of obtaining evidence in support of
a prosecution for an alleged infraction of that Act.
In regard to the Court's finding that there are
two systems of radio apparatus under consider
ation here, one can now deal with the legal status
of that one which receives the signals from the
local conventional television broadcasting stations.
This is not the system which includes the parabolic
dish antenna: this is the system referred to as
MATV.
It seems clear that if the plaintiffs' use of one of
the operating systems of radio apparatus be a
"broadcasting receiving undertaking" then so must
the other be such an undertaking. However, the
defendants' interests and concerns about the
MATV system, as a distinct set of radio
apparatus, are neither so intense nor so crystal
lized as they are about the so-called "earth sta
tion" with its parabolic dish antenna, also referred
to as TVRO.
No doubt, their lesser concern has much to do
with the Canadian Radio-television and Telecom
munications Commission's view of such an opera
tion as is evinced by the plaintiffs' MATV. Exhibit
5 is a Public Announcement/Avis public, published
by the CRTC at Ottawa on March 16, 1977. It
was agreed by all counsel at trial that this media
release could be treated by the Court as if it were
itself an authentic rule or regulation lawfully pro
mulgated by the CRTC.
The title of the announcement (Ex. 5) is MATV
LICENSING AND EXEMPTION/OCTROI DE LICENCE
D'ANTENNE COLLECTIVE DE TÉLÉVISION ET
EXEMPTION. It purports to apply to "those broad
casting receiving undertakings which are more
commonly known as `master antenna television
systems' or `MATV systems", which distinct
application, in and of itself appears to accord
cogent support to the Court's finding of two dis
tinct systems of radio apparatus in the circum
stances, and on the evidence, in this case. The
important provisions of this pronouncement of the
CRTC in relation to the evidence in this case are:
New Requirements
The effect of the Commission's action is as follows:
A. A broadcasting receiving undertaking which meets all of the
criteria set forth in section 1 or 2 below, under the heading
"Criteria for Exemption", is exempt from any requirement
under the Broadcasting Act to be licensed.
B. Any master antenna television system which does not qualify
for exemption under paragraph A above must be operated
under a broadcasting receiving undertaking licence.
Rationale
The philosophy underlying the Commission's action was exten
sively discussed in the Public Announcement dated April 15,
1976 and may briefly be summarized. To the extent that an
MATV system is analogous to a homeowner's roof-top antenna
in both its configuration and its range of services, it may,
without adverse effect on its viewers or on the Canadian
broadcasting system, be exempted from Commission licensing
procedures. When a system goes beyond that point, however, in
terms of territorial reach, extra programming services, opera
tion for direct commercial gain, etc., then it must, for the
benefit of both viewers and the broadcasting system as a whole,
be the subject of regulation and licensing by the Commission.
Criteria for Exemption
(1)(a) The entire undertaking is located exclusively on land
owned or leased by the person carrying on the undertak
ing, or, in the case of an undertaking carried on by a
condominium corporation, by such corporation or any of
its members.
(b) The undertaking is not connected by any form or means
of transmission, apart from the direct off-air reception
of conventional broadcast signals,
(i) to any land not owned or leased by the person or
persons described above, or
(ii) over any public street or highway, except in the
case of an undertaking carried on by a condomini
um corporation, or by a registered cooperative
society all of whose members reside on the land on
which the undertaking is situated.
(c) No separate charge is levied or direct commercial gain
obtained for the use of any part of the distribution
system or for any signal or service provided through the
distribution cable used by the undertaking.
(d) The operator of the undertaking distributes through its
system all local Canadian television signals, in each case
with no degradation of received signal.
(e) No signals received by microwave, or by satellite trans
mission, or by any other form of transmission other than
directly off-air from conventional broadcasting transmit
ters, and no feature motion pictures locally originated,
are distributed on the undertaking.
[(2) is not relevant here.]
Interpretation of criterion 1(d)
With reference to criterion 1(d) outlined above, "local Canadi-
an television signals" means the signals of all television broad
casting stations licensed by the Commission having Grade A
"official contours" (as defined in the Cable Television Regula
tions) enclosing the area in which the MATV undertaking in
question is carried on.
Effect
The Commission recognizes that there are a number of master
antenna television systems the owners of which require a period
of time within which either to modify the systems so as to bring
them within the criteria for examption [sic] or else to make
arrangements for their service to be replaced by service from a
licensed broadcasting receiving undertaking. Accordingly, the
measures herein announced will take effect July 1, 1977.
Lise Guimet
Acting Secretary General
At this point, assuming the evidence establishes
conformity on the part of the plaintiffs' MATV
system with the criteria for exemption promulgat
ed by the CRTC, the question is begged as to
whether that MATV system is or is not a "broad-
casting receiving undertaking". Consideration of
the evidence and the authorities will lead to a
conclusion on that issue in regard to both systems.
Does the plaintiffs' MATV system meet all of
the criteria expressed in the CRTC's public
announcement? There was some discussion be
tween the Court and counsel for the CRTC as to
whether the plaintiffs' "MATV system is analo
gous to a homeowner's roof-top antenna in both its
configuration and its range of services" and wheth
er its operation be "for direct commercial gain,
etc." or not. Clearly, in order to come within the
CRTC's rationale, this equipment does not have to
be "identical" with "a homeowner's roof-top
antenna in both its configuration and its range of
services" because that would depend on which
homeowner or which roof-top the CRTC would
have had in mind. That Commission was no doubt
contemplating the generality of external antennae
installed on the roofs of homes throughout
Canada. To come within the CRTC's rationale,
the MATV system in question needs only to be
"analogous" or similar. This expression contem
plates a very broad and varied range of configura
tions and services, indeed, and surely includes the
plaintiffs' MATV system. From the viewpoint of
the defendants, the Attorney General of Canada
and the Minister of Communications, the MATV,
or log-periodic, system is of no concern. Counsel
for those defendants, always denying the MATV
system to be a separate and distinct one, neverthe
less submitted in argument that "the only reason
the Minister takes the position that this hotel is
acting contrary to the licensing requirements of
the Radio Act is because it has the TVRO there,
not because it has the log periodic antennae".
There was also discussion about the term "oper-
ation for direct commercial gain", leaving aside
the hopelessly indefinite catch-all "etc.", which
might have quantitative rather than qualitative
import, if any functional meaning at all can be
ascribed to it. It appears that a MATV system
operated merely for commercial gain, but not for
direct commercial gain, is acceptably included
within the CRTC's rationale. The adjective
"direct" focuses the concern very narrowly, and
excludes "indirect" commercial gain or even plain
unvarnished comercial gain. The French language
version, "d'exploitation dans un but lucratif' does
not contradict the English language version and
the latter, being the more explicitly explanatory of
the CRTC's rationale, is the definitive expression.
Now, this discussion bore pertinently on the
reserved question of whether there be an undertak
ing here. Counsel for the CRTC submitted that if
there were a fee it would be undeniable that there
was a direct commercial gain but that the expres
sion does not necessarily imply a fee. The evidence
is clear that Lount charged no fee to hotel guests
for the MATV system's reception, so counsel relat
ed the expression to a quantitative notion of the
number of hotel guests who could receive the
MATV signals, noting that it could exceed the
population of many a small town. Although it will
not dispose of the question about an "undertaking"
in these circumstances, the Court's finding is that
Lount's MATV system is not operated "for direct
commercial gain".
Setting aside, for the moment, the question of
whether the plaintiffs' MATV system be an under
taking or not, it meets every criterion of the CRTC
exemption. If it be a broadcasting receiving under
taking it is accordingly exempt from any require
ment under the Broadcasting Act to be licensed. If
it be not such an undertaking, then it meets those
criteria still, but gratuitously and unnecessarily,
and thus, again it is not required to be licensed
under the Broadcasting Act. The conclusions are
identical, whichever finding is made. Not being
required to be licensed under the Broadcasting Act
is, however, a status which is not dispositive of
requirements under the Radio Act. Those require
ments, if any in the circumstances, will be deter
mined with the other matters in issue, especially
that of whether the plaintiffs have a broadcasting
receiving undertaking.
The main thrust of the submissions of the
defendants, who are also plaintiffs by counter
claim, was directed at the other system of the
plaintiffs, the so-called "earth station" with its
parabolic dish antenna, the TYRO. The plaintiffs,
defendants by counterclaim, while acknowledging
Parliament's undoubted jurisdiction to make laws
in relation to the regulation and control of radio-
communication including transmission and recep
tion, and the character, use and location of
apparatus employed, contend simply that none of
such laws or regulations exacts the licensing of
their particular radio apparatus. The issue here is
not a constitutional one, such as arose in the Radio
case (In re Regulation and Control of Radio
Communication in Canada)' or again in Capital
Cities Communications Inc., et al. v. Canadian
Radio-Television Commission. 2 On the contrary,
the plaintiffs here freely admit that in regard to
their radio apparatus Parliament can competently
legislate, with delegated authority to the CRTC, to
regulate, control or license them. They contend
merely that Parliament has not done so. The
evaluation of that contention, opposed and denied
by the defendants, exacts a thorough consideration
of the relevant statutory provisions and the
jurisprudence.
The relevant statutes are the Radio Act' and the
Broadcasting Act, 4 together with the regulations
respectively made pursuant to each of them. Much
turns on the statutory definitions so far as they go,
which, happily, are mostly common to both Acts.
The common definitions found in section 2 of each
Act are:
' [1932] A.C. 304 (P.C.).
2 [1978] 2 S.C.R. 141.
3 R.S.C. 1970, c. R-1, as amended.
4 R.S.C. 1970, c. B-11, as amended.
"broadcasting" means any radiocommunication in which the
transmissions are intended for direct reception by the general
public;
"broadcasting undertaking" includes a broadcasting transmit
ting undertaking, a broadcasting receiving undertaking and a
network operation, located in whole or in part within Canada
or on a ship or aircraft registered in Canada;
"radiocommunication" [or "radio" in the Radio Act] means
any transmission, emission or reception of signs, signals,
writing, images, sounds or intelligence of any nature by
means of electromagnetic waves of frequencies lower than
3,000 Gigacycles per second propagated in space without
artificial guide;
The Broadcasting Act does express a definition of
"broadcaster", meaning a person, which is not
relevant here, but no corresponding definition of a
"receiver", meaning a person, which could have
been helpful here. The Radio Act contains some
further definitions which provide insight here as
follow:
2....
"radio apparatus" [already recited];
"radio station" or "station" means a place wherein radio
apparatus is located;
The salient issue here is whether the operation
of each of the plaintiffs' systems can be character
ized as a "broadcasting receiving undertaking" or
not. All defendants, plaintiffs by counterclaim,
pray the Court to declare so. In addition, the
Attorney General of Canada and the Minister of
Communications seek declarations (a) that all of
the plaintiffs' radio apparatus (each system, so
found) constitutes "radio apparatus" (which is
admitted in the plaintiffs' pleadings) and consti
tutes an integral part of a "radio station"; and (b)
that the apparatus is therefore subject to the provi
sions of subsection 3(1) of the Radio Act and is
not exempted by the provisions of subsection 3(3).
Do the operations of the plaintiffs' radio
apparatus, in its two distinct systems, constitute
"broadcasting receiving undertakings" as
expressed in both relevant statutes? The question
applies to both systems because both are operated
by the plaintiffs in the same manner as each other
and with the same objectives. The only element of
the term agreed upon by the parties is that which
refers to "receiving". It is unquestioned that the
plaintiffs' apparatus receives radiocommunica-
tion—television signals—"into" the respective
antennae and "down" to the hotel rooms. The
other elements are strongly disputed.
What is it which the apparatus is receiving?
"Broadcasting" say the plaintiffs, "not so" say the
defendants. There is no dispute as to whether the
plaintiffs' apparatus is receiving "radiocommuni-
cation", and so the opposing contentions about
"broadcasting" do not come into play in that
regard. Although the defendants deny that there
are two systems, it is not disputed that the MATV
system receives broadcasting. The dispute arises
over whether the satellite transmissions "are
intended for direct reception by the general
public".
Since that key phrase is expressed in the passive
mood, one is moved to ask: by whom are the
transmissions intended, or not intended, for direct
reception by the general public? The definition of
broadcasting, as it is expressed, clearly is not
concerned with whether such transmissions be
actually received by the general public, but is
concerned rather with intention. The intention,
whatever its object, must be found or deemed by
law to be that of the propagator of the radiocom-
munication. One cannot ascribe intention to inani
mate radio apparatus, and if it were the apparatus
which the legislative drafter had in mind, one
would expect the definition to speak of the trans
missions or transmitters being "technologically
designed" or "contrived" for direct reception of
radiocommunication by the general public. It
should be noted, however, that when a person's
intention is to be inferred or found as a fact, and
such intention is expressed through some instru
mentality other than the thoughts or words of the
person, the nature, capabilities, content and opera
tional functions of the instrumentality wielded or
operated by the person can certainly serve as
inferential indications of intent. In this regard,
determining what is or is not intended by the
persons who cause the signals of Showtime and
HBO to be propagated amounts to the same sort
of exercise as is conducted in relation to offences,
torts and delicts, even though no one is here seek
ing to fix those persons with civil or criminal
liability. Here, the inference is to be drawn, or
finding made, on a balance of probabilities and not
beyond reasonable doubt.
Three witnesses were called by the defendants
the Attorney General of Canada and the Minister
of Communications to testify as to what was
intended by those who produce HBO and Show-
time respectively. They were: Jonelle Procope, of
New York City, an attorney employed by Viacom
International Inc., which owns Showtime; Marvin
Freeling, of Livingston, New Jersey, principal
member of the engineering staff of RCA Ameri-
can Communications Inc. which owns and oper
ates the Satcom satellites F-3R and F-4 located at
131° West and at 83° West; and John S. Redpath,
of New York City, Senior Vice-President and
general counsel of HBO.
Mr. Freeling corrected the reference to Satcom
1 in the pleadings. He related that F-1 was obvi
ously the first Satcom satellite which was launched
in late 1974 and F-2 was the second one in 1975.
They are nearing the end of their useful lives "and
much traffic, including cable traffic, has been
transferred from the older satellites to the newer
ones". He testified only very briefly describing the
"uplink" to and the "downlink" from those satel
lites and said that "RCA Americom receives its
revenues from those members of the public who
pay the tariff, the published tariffs, for the tele
communications services". He was not cross-
examined.
Miss Procope explained that Showtime is a pay
television service of general entertainment fare
provided for a fee to contracting cable systems
across the United States who, in turn, offer that
general entertainment fare to their subscribers.
Showtime's programs are distributed by satellite to
the cable TV systems which they then send over
cable to subscribing households. Showtime's only
source of revenue is the fees which it charges to
the cable TV enterprises, who charge a fee from
their subscribers. It is only through the affiliated
cable TV systems that Showtime programs are
offered to individuals.
Miss Procope tendered the text of a printed
message which Showtime transmits without sound
once a day. It is Exhibit 17, thus:
SHOWTIME ON AIR COPYRIGHT DISCLAIMER
The Showtime Service is the property of Showtime Entertain
ment and is transmitted for the sole use of its duly authorized
licensees and their subscribers. The Showtime Service is not
transmitted for the public at large. Unauthorized reception or
distribution of the Showtime Service is a violation of both civil
and criminal law.
Copyright 1983 Showtime Entertainment. All rights reserved.
Miss Procope testified that Viacom International
Inc.'s management has taken the position that
scrambling of the signal is probably the best solu
tion to unauthorized reception of the Showtime
signal. She related that it is only recently that the
device which they would be using has become
available and cost effective for them. She elaborat
ed to the effect that only recently has the price of
such devices become economically feasible for
Showtime to purchase, because it would be Show-
time's intent to defray part of the cost of providing
the devices to each of the some 2,000 cable televi
sion affiliates with whom Showtime has contractu
al relations.
On cross-examination Miss Procope was specifi
cally asked if "Showtime's management is aware
that during this period that the signals have not
been encoded that it [the program] is receivable by
anyone with standard garden variety earth station
equipment". She answered affirmatively "that we
know it is technologically possible for the public at
large to receive it if they had ... an earth station.
It is not intended that individuals who are not
subscribers to an affiliated cable system receive
the signal." Miss Procope agreed that if the signals
were scrambled Showtime's intent would continue
to be to attract a continuously expanding audience
of subscribers, that is, those who pay the fee. The
more subscribers the greater is Showtime's reve
nue. Because Showtime's programming is of such
general interest, and not limited to any particular
segment of the population, Showtime can theoreti
cally hope to reach every home. Indeed, in addition
to cable television companies, some hotels and
motels have television reception contracts with
Showtime and more would be accepted, but Show-
time is cautious about contracting services to
apartment or condominium buildings right now,
because that seems to be trenching upon the cable
affiliates' franchised area.
John S. Redpath testified that HBO's business
consists of producing and acquiring rights to pro
gramming which it assembles into two pay televi
sion channels, HBO and Cinemax, which are then
uplinked to the RCA satellites and distributed to
cable operators, MDS (multipoint distribution ser
vices) and, he thought, one or two large hotel
chains. HBO does business with many thousands
of cable companies all over the United States,
authorizing them to receive HBO's signal and to
distribute it to their subscribers. HBO does not do
business directly with individual homeowners or
apartment dwellers. Its affiliates do that, collect
ing money from subscribers and remitting a por
tion of that to HBO. In relation to the service of
uplinking and downlinking of its signals, HBO
pays a fee to RCA Americom.
HBO tries to put together a service which will
appeal to a broad section of the population. In
other words, the service is not intended to be
limited to any particular segment of the population
but rather to have wide appeals because the more
subscribers there are, the better is HBO's revenue.
Evidently it has been quite successful. Mr. Red-
path revealed that at the end of 1977 there were a
million subscribers; at the end of 1978, two mil
lion; at the end of 1979, four million; and at the
present time there are twelve million, and more
than two million Cinemax subscribers, for a total
of fourteen million, approximately.
Since it first became a national service by going
on the satellite, HBO's commercial objective is to
reach every potential paying subscriber in the
United States, through its affiliated authorized
distributors. However, the management of HBO is
aware that, after its signals began to be carried by
satellite, they could be received by persons other
than those whom it licenses to receive them for
distribution to subscribers. So, from time to time
HBO transmits a warning to unauthorized recipi
ents similar to that which Showtime displays.
Mr. Redpath testified that HBO has in the past
brought suit against manufacturers and retailers of
equipment which was designed to intercept the
MDS signal. That effort proved to be very expen
sive but not very effective. He said as well: "We
are planning to scramble the HBO West feed by
the end of the year, and the HBO East feed should
be scrambled within a year." He did allow that, in
regard to its inauguration, scrambling is always
subject to technological problems. Until about a
year ago, HBO's decision was not to scramble the
signal. Since then, inquiries about the feasibility of
a scrambling system have been pursued, but
HBO's engineering department considered that,
until recently, "there has not been a scrambling
system which was secure enough at a reasonable
cost and which did not degrade the signal quality".
In the meanwhile, when HBO hears "about some
body taking the signal without authorization we
send them a cease and desist letter, for whatever
that is worth".
Miss Procope for Showtime and Mr. Redpath
for HBO both testified that their respective trans
missions are intended to be received only by sub
scribers who pay fees to and through licensed or
affiliated cable television enterprises. It would be
easy, then, to draw the inference that their trans
missions are not intended for direct reception by
the general public. That is, it would be an easy
inference if their so expressing themselves in oral
testimony were necessarily to be taken as conclu
sive of the matter.
"Direct reception by the general public" must
be understood in its statutory context to mean
those of the general public who have bought or
rented for their own use, or otherwise have access
to, receiving apparatus which is in working condi
tion. Such a meaning must be accorded because it
is an obvious fact, of which judicial notice can be
taken, that human faculties of perception simply
cannot receive the transmissions of radiocommuni-
cation without the intermediation of radio receiv
ing apparatus. Because the satellite transmissions
in issue here are not scrambled or encoded, but are
sent "in the clear", they are certainly available for
direct reception by the general public within the
meanings of the Radio Act and the Broadcasting
Act.
But, when the originators of those transmissions
say that the transmissions are not intended for
such direct reception, what do they mean? After
all, they know full well that their transmissions can
be directly received by the general public. Indeed,
they both include warnings and disclaimers in
their programs, HBO also sends cease and desist
letters, and both are contemplating, if not actively
planning, the encoding of their signals so as to
deny intelligible reception to persons who are not
subscribers. Clearly, they do not wish to provide
their transmissions for direct reception by the gen
eral public, but they continue knowingly to trans
mit signals which are easily available for direct
reception by the general public. Plainly they desire
and hope that their transmissions will not be
directly received by that sector of the general
public who decline to subscribe to their affiliates'
cable television service. Plainly also their business
objective is to protect their affiliates' interests in
augmenting the number of subscribers among the
general public, to the exclusion of non-subscribers.
Can one then conclude that their transmissions are
not intended for direct reception by the general
public?
In all the circumstances of this case the choice
and expression of the word "intended" in the
testimony of Miss Procope and Mr. Redpath are
not legally conclusive of the issue. In the first
place, as the plaintiffs plead in their answer and
statement of defence to the counterclaim, and as
the evidence amply discloses, the transmissions are
neither scrambled nor encoded so that anyone
utilizing standard TVRO earth station equipment
can directly receive them. Secondly, the programs
have mass appeal, are not limited in content nor
directed to any particular segment of the general
public but are formulated so as to attract as wide
an audience as possible. Thirdly, the transmissions
are widely dispersed in an extensive "footprint"
which permits direct reception not merely in the
United States, but also in parts of Mexico and
Canada.
Finally, in this regard, the "conduct" of Show-
time and HBO, (their propagation of their trans
missions), "may be treated as intentional even
though its results", (direct reception by the general
public), "are not actually desired, if the conse
quences are known to be substantially certain to
follow." 5 "This is not unlike the criminal law
principle which holds that individuals are deemed
to intend the natural and probable consequences of
their acts." 6 Of course, this case sounds neither in
tort nor in criminal law, but the principles are
founded upon good sense and a profound apprecia
tion of human behaviour, which are wholly perti
nent in construing the meaning of "broadcasting"
in the Radio Act and in the Broadcasting Act.
Good sense must surely be the basic objective in
the interpretation of the laws of Canada which are
not to be deprived of it, even though in the instant
case the law under consideration is a regulatory
one, rather than compensatory or penal. In 1952,
Chief Justice McRuer, in an action for damages
for a defamation carried in a program which was
put on the air for advertising purposes applied the
same principle. Of course the basis of that action,
and the advertising element in the program, are
not present in the case at bar here. It is, however,
in the nature of good sense that even when his
enunciation of the principle is stripped of the
presently extraneous elements, it still carries the
wisdom of that basic objective in the interpretation
of the law. Thus, the essence of Chief Justice
McRuer's conclusion can, without distortion, be
rendered as follows:
I have come to the conclusion that there are fundamental and
common-sense principles which govern the present case. Radio
broadcasts are made for the purpose of being heard .... It is to
be presumed that those who broadcast over a radio network in
the English language intend that the messages they broadcast
will be heard by large numbers of those who receive radio
messages in the English language .... A radio broadcast is not
a unilateral operation. It is the transmission of a message.'
He then cited the often quoted passage of Viscount
Dunedin in In re Regulation and Control of Radio
Communication in Canada:
Now a message to be transmitted must have a recipient as well
as a transmitter. The message may fall on deaf ears, but at
least it falls on ears.'
5 Linden, Canadian Tort Law (1977), at p. 30.
6 lbid. at pp. 30 and 31.
' Jenner v. Sun Oil Co. Ltd. et al., [1952] 2 D.L.R. 526
(Ont. H.C.) at p. 535.
8 [1932] 2 D.L.R. 81 at p. 87; [1932] A.C. 304 (P.C.) at p.
316.
Can it be accepted in construing the pertinent
provisions of the two statutes of Canada, in the
circumstances and on the evidence in this case,
that common sense is to be abandoned?
To put the matter another way, suppose with the
full knowledge of their instrumentalities' capabili
ties which HBO, Showtime and RCA Americom
have, the programs were obscene or seditious in
content (which they are not) or the transmissions
were otherwise deleterious to life and safety (as no
one alleges). Could HBO, Showtime or RCA
Americom ever be heard seriously to say that
direct reception by the general public is not intend
ed? In such circumstances they would surely be
fixed with having intended the consequences which
are known to be substantially certain to follow.
That conclusion is plain good sense. How, then,
does their intent differ when they are not the kind
of malefactors conjured up for purposes of the
hypothetical example just posited? Indeed, their
program content seems to be of innocuous general
interest, which also bears on intent. Although they
are innocent of wrong doing, (to strip the proposi
tion of extraneous elements) their knowledge of
their instrumentalities' capabilities is the same;
those capabilities, that is to say the uplink and
downlink transmissions "in the clear" with the
resulting transnational "footprint", are the same;
and the ready availability of direct reception by
the general public is the same.
There is no good purpose to be served in law or
in reason for devising a double standard here. The
transmissions of Showtime and HBO must be
found to be intended for direct reception by the
general public, even though that result is not really
desired by them, because that is the wholly fore
seeable and, indeed, known consequence of their
conduct. Accordingly, their signals are "radiocom-
munication in which the transmissions are intend
ed for direct reception by the general public".
That which the plaintiffs receive from HBO and
Showtime is therefore "broadcasting" as defined
in the Radio Act and in the Broadcasting Act.
The plaintiffs' radio apparatus is certainly
receiving broadcasting and, thus, the next matter
for determination is whether the plaintiffs are
engaged in a broadcasting receiving undertaking,
as that term is not defined in the two Acts. In
particular, it is the word "undertaking", or "entre-
prise" in the French language versions of the
statutes, from which Parliament's meaning is to be
taken. The plaintiffs and the defendants both
assert that the words "entreprise" and "undertak-
ing" carry a connotation of commerce. The plain
tiffs contend that the words refer to the carrying
on of a complete, separate business as a commer
cial entity or a distinct profit centre. The defend
ants, the Attorney General and the Minister of
Communications, contend that the plaintiffs' radio
apparatus and what it provides to hotel guests
together constitute an undertaking because there is
a commercial aspect about the combination of
apparatus and use and because it is not merely a
hobby or a personal entertainment operation for its
owners and lessees. Curiously, having argued
strenuously that the plaintiffs' TYRO at least does
not receive "broadcasting", these two defendants,
plaintiffs by counterclaim, contend by their plead-
ings that the plaintiffs Lount and Atlific operate
the radio apparatus as a "broadcasting receiving
undertaking". Such pleading probably reflects
these defendants' opinion that the plaintiffs'
TVRO and MATV apparatus constitute one
system and, therefore, are operated as one under
taking. The defendant, the CRTC contends, as do
the first defendants, that any commercial aspect of
the operations points to their being an undertaking
and counsel emphasized the potentially great
number of viewers and the importance and magni
tude of the apparatus. The CRTC, also a plaintiff
by counterclaim, contends by its pleadings that all
of the plaintiffs' apparatus forms an integral part
of a "broadcasting receiving undertaking", again
probably on the assumption that it is all one
system.
The evidence discloses that the Holiday Inn on
Pembina Highway in Winnipeg opened for busi
ness in July, 1980, and that all of the radio
apparatus was installed by the plaintiff SaTel
about that time. The decision to carry all four of
the local Canadian television channels through the
TVRO earth station system was made also about
that time. There are 187 guest rooms, each with a
television receiving set. The hotel has a cocktail
lounge, a restaurant and banquet facilities for
about 600 persons. Television programs are also
received in the cocktail lounge. No charge or fee is
levied upon hotel guests or patrons for any of the
television services which are provided in the hotel.
The programs received from the satellite trans
missions are varied from time to time by switching
channels. Showtime, WTBS and Cinemax have
been chosen and at the time of the trial the hotel
manager, Mr. R. M. Williams, testified that the
movie channel ESPN and HBO were then current
ly being shown. He agreed that selection of chan
nels is predicated upon whatever he and his staff
think their guests will find most pleasing among
the 24 channels carried by the satellite. Indeed, by
re-aiming the parabolic antenna, the whole range
of channels of another satellite could be chosen,
four at a time with the actual apparatus.
In regard to the meaning of the word "undertak-
ing", reference was made again to the case of
Capital Cities Communications Inc., et al. v.
Canadian Radio- Television Commission in the
Supreme Court of Canada. There, Chief Justice
Laskin speaking for the majority of the Court
cited with approval the Radio case in which the
Privy Council remarked that " `undertaking' is not
a physical thing but is an arrangement under
which of course physical things are used" ([1932]
A.C. 304, at p. 315). 9 He went on to say:
The word has been given a large meaning, as indicated by the
references by Kellock, J. in the Stevedoring case ([1955]
S.C.R. 529), at p. 556 to the broad view taken in both the
Winner case ([1954] A.C. 541), where the word "undertaking"
was used interchangeably with "enterprise" and in the Empress
Hotel case ([1950] A.C. 122), where it was equated with
"organization". 1 O
In specific regard to the expression, "broadcasting
undertaking", Chief Justice Laskin said:
It is patent to me that a cable distribution system, at least
one which receives signals from a broadcaster and sends them
through the system, is a broadcasting receiving undertaking
9 [1978] 2 S.C.R. 141, at p. 161.
10 Ibid. at pp. 161-162.
and is in that respect at least within the regulatory and
licensing authority of the Commission. '
It is settled therefore that commercial television
cable distribution enterprises, such as the affiliates
of HBO and Showtime in the United States, such
as the companies which operate cable distribution
systems appearing in the Capital Cities case, such
as the cablevision operators in The Public Service
Board, et al. v. Dionne, et al., 12 all which contract
with subscribers for reception of the television
programs which they carry, are broadcasting
receiving undertakings. The latter case, like that of
Capital Cities, was decisive of a constitutional
issue which does not arise in the present case.
However, a crucial concept was expressed by Chief
Justice Laskin, again speaking for the majority, in
The Public Service Board, et al. v. Dionne, et al.,
thus:
In all these cases, the inquiry must be as to the service that is
provided and not simply as to the means through which it is
carried on. 13
Similarly, in Regina v. Communicomp Data
Ltd., 14 Shapiro Co.Ct.J. related the service pro
vided to the equipment or means utilized to pro
vide it. He said:
"Broadcasting undertaking" by definition, includes "a broad
casting receiving undertaking". Leaving the definition of the
word "broadcasting" for the moment, I have no hesitation in
concluding that the defendant company was engaged in a
"receiving undertaking". Its antenna equipment and head
equipment were for the express purpose of receiving signals and
programmes transmitted by T.V. stations. Even a home T.V.
set with only "rabbit ears" is engaged in receiving such signals.
The matter becomes an "undertaking" when there is a commer
cial aspect about it, as was the case here. Roget's Thesaurus
equates "undertaking" with "entreprise" [sic], "business",
"work". And in this respect the defendant's receiving differs
from the home T.V. set in that the programme does not just
stop on the receipt, but is for some financial consideration
passed on to other persons. As Lacourciere, J., in R. v. Ontario
Labour Relations Board, Ex p. Northern Electric Co. Ltd.,
[1970] 2 O.R. 654, 11 D.L.R. (3d) 640 [affirmed [1971] 1
O.R. 121, 14 D.L.R. (3d) 537], has pointed out, "undertaking"
should be considered in the light of the use one makes of a
particular installation. He cites a dictionary definition "as inter
alia, 'a task, enterprise, etc.' " He then lists a number of
Ibid. at p. 166.
12 [1978] 2 S.C.R. 191.
13 Ibid. at p. 197.
14 (1975), 53 D.L.R. (3d) 673; 6 O.R. (2d) 680 (Cty. Ct.).
references in which the word has been judicially considered. 15
Here again one notices that the company's com
mercial undertaking is to pass on programs to
other persons for some financial consideration.
So it was, also, in the case of R. v. Shellbird
Cable Ltd., 16 where it appears that the negation of
broadcasting reception was founded upon agree
ment of the parties, and where the court's con
siderations were confined to the regulatory powers
of the CRTC over a person operating a cable
television undertaking by virtue of a licence issued
by the CRTC. The Newfoundland Court of
Appeal pronounced itself to be "not concerned
with any other persons or bodies". " In these cases
the cable companies, which undoubtedly operate
broadcasting receiving undertakings, must attract
and maintain a sufficient number of subscribers to
sustain the undertaking, to import purpose to it, if
not profits.
Counsel for all parties acknowledged that there
is some ambiguity in the statutes and regulations,
and so several dictionaries were consulted includ
ing the Canadian Law Dictionary, Dalloz' Dic-
tionnaire de droit, and both volumes of Harrap's,
as well as Robert. The Shorter Oxford defines
"undertaking" in terms of enterprise as do the
others. But leaving aside the funereal, the mean
ings also import an engagement in the nature of a
promise. This latter meaning helps to capture the
commercial connotation by highlighting the notion
of contractual obligations to perform, to produce,
to provide in exchange for a fee for the goods or
services. Here surely resides the essence of "under-
taking" promulgated in the two statutes. It
imports the aspect of justiciability for failure to
meet a commercial obligation and is, therefore, to
be distinguished from those undertakings men
tioned in the Constitution which signal the division
of legislative powers.
15 At p. 680 D.L.R.
16 (1982), 38 Nfld. & P.E.I.R. 224 and 108 A.P.R. 224
(Nfld. C.A.).
17 Ibid. at p. 228.
But that is not the end of it say the defendants,
for they urge that even where the services are
provided without direct or extra fee or charge
there remains a commercial aspect to support the
notion of "undertaking". Cited in this regard is the
judgment of the House of Lords in Imperial
Tobacco Ltd and another v Attorney-General. 18
The tobacco company started a sales promotion
called "Spot Cash" and included in every packet
of cigarettes a ticket whereby a lucky purchaser
might possibly win a prize of modest or substantial
value. The scheme was advertised as being free
and cigarette packets containing the tickets were
sold at the usual price. The question was whether
this promotional campaign constituted an unlawful
lottery. It was so held, regardless of the fact that it
was impossible to ascribe any part of the purchase
price to the value of the chance obtained and
paying for a packet, even at the normal price,
amounted to a payment, contribution or consider
ation for the chance of a prize. The defendants
urge that, by analogy, that Imperial Tobacco
judgment stands for the proposition that the plain
tiffs here are conducting a broadcasting receiving
undertaking.
The defendants further analogize by reference
to the case of The Royal Bank of Canada v. The
Deputy Minister of National Revenue for Cus
toms and Excise. 19 There the bank installed gener
ators to supply emergency or back-up electrical
power in its office tower. The generators were
capable of producing about ten percent of the
building's peak requirement and were operated for
only about one hundred hours per year. The ques
tion was whether the bank had to pay excise tax or
whether it could qualify for an exemption as a
manufacturer or producer of the electricity pro
duced or manufactured directly by the generating
machinery. In delivering the unanimous judgment
of the Supreme Court of Canada, McIntyre J.
stated:
18 [1980] 1 All E.R. 866 (H.L.).
19 [1981] 2 S.C.R. 139.
In approaching this case it is important, in my opinion, to
consider the appellant's position in the matter as that of an
owner and operator of a commercial building and not as a
banker. This is important because the expenditures made by the
appellant for the generators and their installation were made in
the construction and operation of the building. The supply of
electrical power to the tenants of the building is accordingly
much more than an incidental part of the appellant's operation.
It is a highly important step in the performance of its contrac
tual obligations to its tenants and an important part of its
business as a building operator. The fact that the generators
produce only a small portion of the electricity supplied by the
system seems to me to be of no significance. The generators
form a part of the total system and their services when needed
are available for the tenants on the same footing as the regular
power supply, and the provision of such an emergency or
back-up service is no more than a prudent step taken to
complete a total electrical service.
... I conclude that the appellant is performing the act of
manufacturing electricity by the use of the generators and,
being unable to find anything in the Act to dictate otherwise, I
conclude that the appellant becomes a manufacturer by pro
ducing electric current by the operation of the generators. 20
This case is said to demonstrate that if an exten
sive business conducts only a minor, subordinate
activity without fee or profit, it can still be charac
terized as being in that subordinate business, as
was the bank, not in its role of bank, but in its role
of landlord.
Analogies, even when bolstered by weighty juris
prudence like the Imperial Tobacco case, can be
imprecise, for if the ratio of that decision on a
lottery promotion can support a finding of a broad
casting receiving undertaking on the part of the
plaintiffs, then it could so operate for department
stores and radio repair shops where radio
apparatus is played and demonstrated for the cus
tomers, actual and potential. Such enterprises have
radio apparatus constantly in operation in order to
entice and please customers who are on or near the
premises in furtherance of the commercial objec
tives of those enterprises. But they make no
engagement to do so and carry no contractual
obligation in that regard. It is simply recognized as
being good for business, but surely it does not
characterize the arrangement of operating the
radio apparatus without fee or charge as a broad
casting receiving undertaking. So the plaintiffs
argue. This is not a precise analogy either, any
more than the Royal Bank case is a precise analo-
20 [1981] 2 S.C.R. 139, at pp. 142-143-144.
gy. It demonstrates the danger of analogizing too
easily.
The service which the plaintiffs provide by
means of their radio apparatus does not constitute
an undertaking within the meaning of the Radio
Act and the Broadcasting Act because it is not in
itself a commercial enterprise whereby the plain
tiffs undertake, or engage themselves, to provide
television program reception to subscribers who
have to pay for it. It is not a profit centre such as
the hotel's restaurant or cocktail lounge. It is more
akin to the elevator service and telephone service
provided to hotel guests, although there is no
evidence here as to the imposition, or not, of
telephone use charges. The plaintiffs say their
television services are analogous to their towel and
bed-linen services, but that presses the analogy too
far since towels and bed-linen are surely much
more of the essence of hotel accommodation than
is television service. On the other hand, if a hotel
chambermaid gratuitously leaves a confection each
evening on the pillow in each guest room, must
that "free" service be held to be a confectionary
undertaking? So, in my opinion, the television
service provided by means of the plaintiffs' radio
apparatus is neither one broadcasting receiving
undertaking, nor two.
In regard to there being no broadcasting receiv
ing undertaking in the circumstances of this case,
is there any distinction to be drawn among the
plaintiffs? It is noted that SaTel charges a rental
fee for the radio apparatus, according Lount an
option to purchase it at any time (Ex. 11), while
Lount, in turn, levies no charge and makes no
undertaking to hotel guests for the television ser
vice in their rooms. Clearly there exists a commer
cial relationship between the plaintiff SaTel, as
lessor, and the plaintiff Lount, as lessee. Does that
commercial relationship render Lount's use of the
apparatus, in order to provide television reception
in its hotel, an undertaking within the meaning of
the two statutes? It does not, for otherwise every
lessee or hire-purchaser of radio apparatus or
television receiving sets could be said to be
engaged in a broadcasting undertaking on that
basis alone. Such an imputation of an undertaking,
it seems clear from the language and structure of
the statutes, was not intended by Parliament.
There is no broadcasting receiving undertaking,
and there is no distinction between the plaintiffs in
that regard.
The difficulty which the defendants, plaintiffs
by counterclaim, face in advancing their conten
tions is this. They seek, as they are quite entitled
to do, to stretch the notion of "undertaking"
around that which the plaintiffs are doing with the
radio apparatus. As noted, Parliament has not
provided a definition of what is meant by "under-
taking". No doubt, by the choice of clear and
specific words Parliament could enact that the
circumstances disclosed in this case are meant to
be comprehended in that term. Parliament's
competence to do so is not disputed, nor could it
successfully be disputed.
Apart from the scope and inherent senses of the
word "undertaking", there is another provision of
the Broadcasting Act which accords independent
vitality to the premise that the two statutes are not
to be regarded as contemplating the plaintiffs'
circumstances unless they do so by means of
cogently apt expression. Section 3 declares the
"Broadcasting Policy for Canada". Here Parlia
ment promulgated a declaration of national pur
pose in broadcasting. Indeed, one can characterize
it as strongly nationalistic, without being in the
slightest pejorative about it. The strongly national
istic flavour of this declaration of policy can be
appreciated from only a few excerpts from section
3, whereby it is declared that
3. ...
(a) broadcasting undertakings in Canada make use of radio
frequencies that are public property and such undertakings
constitute a single system, herein referred to as the Canadian
broadcasting system, comprising public and private elements;
(b) the Canadian broadcasting system should be effectively
owned and controlled by Canadians so as to safeguard,
enrich and strengthen the cultural, political, social and eco
nomic fabric of Canada;
(h) where any conflict arises between the objectives of the
national broadcasting service and the interests of the private
element of the Canadian broadcasting system, it shall be
resolved in the public interest but paramount consideration
shall be given to the objectives of the national broadcasting
service;
and that the objectives of the broadcasting policy for Canada
enunciated in this section can best be achieved by providing for
the regulation and supervision of the Canadian broadcasting
system by a single independent public authority.
That Parliament intended no sort of xenophobic
ukase here can be readily appreciated through
consideration of one highly significant qualifying
objective, enunciated in paragraph (c) of section 3,
as follows:
3....
(c) ... but ... the right of persons to receive programs,
subject only to generally applicable statutes and regulations,
is unquestioned;
Chief Justice Laskin, for the majority of the
Supreme Court of Canada, observed in the Capital
Cities case:
The words more aptly apply to ultimate receivers of pro
grammes but, whether they do or not, I would not read s. 3(c),
a general object clause, as prevailing over the specific licensing
authority of the Commission, an authority which is under a
generally applicable statute. 21
It was conceded by the parties in that case that
there are no "generally applicable statutes and
regulations" other than the Broadcasting Act and
any regulations thereunder.
Obviously, the intended scope of the regulatory
and licensing system committed to the authority of
the CRTC is very large; and that authority must
prevail wherever it can be supported by an apt
expression of legislative intent. So, subject only to
the provisions of the Act and regulations, the
unquestioned right of persons to receive programs
must be understood to be an unlimited, unfettered,
unregulated or unrestricted right, since Parliament
characterizes it as unquestioned. Hence, the plain
tiffs' and the hotel guests' right to receive the
programs transmitted via satellite is and remains
"unquestioned", because the plaintiffs are not
engaged in a broadcasting receiving undertaking.
That is the crucial negative status under the
21 [1978] 2 S.C.R. 141, at p. 168.
Broadcasting Act since, as counsel for the CRTC
neatly encapsulated the situation here:
... it comes to that regulation and supervision [of the Canadi-
an broadcasting system] through broadcasting undertakings
and in s. 17 it deals with licences which we have seen by virtue
of s. 2, are licences issued to carry on broadcasting undertak
ings. In other words, the Commission is not concerned with
"apparatus" or "systems" or pieces of equipment. It is con
cerned with undertakings and that underlines its concern in this
particular case.
Because Parliament, in its generally applicable
statute, did not evince an intention through any
aptly defined expression to subject the plaintiffs'
operations to the regulatory supervision of the
CRTC (although it might have done so, and might
yet do so if such were to become the legislative
intent, by defining "undertaking"), one must con
clude that the plaintiffs' use of their radio
apparatus, apart from their unquestioned right to
receive programs, is simply not contemplated
under the present Broadcasting Act.
What then is the plaintiffs' situation, if any, in
contemplation of the provisions of the Radio Act?
At once it is clear that their possession of radio
apparatus carries a further implication, because
section 2 provides that:
2. (1) ...
"radio station" or "station" means a place wherein radio
apparatus is located;
Having installed radio apparatus, the plaintiffs
have surely established a radio station according to
the definition. The Radio Act further provides:
3. (1) Subject to subsections (2) and (3), no person shall
(a) establish a radio station, or
(b) install, operate or have in his possession a radio apparatus
at any place in Canada or on board any
(c) ship or vessel that is registered or licensed under the
Canada Shipping Act or owned or under the direction or
control of Her Majesty in right of Canada or a province,
(d) aircraft registered in Canada, or
(e) spacecraft under the direction or control of Her Majesty
in right of Canada or a province, a citizen or resident of
Canada or a corporation incorporated or resident in Canada,
except under and in accordance with a licence and, to the
extent that it is a broadcasting undertaking, except under and
in accordance with a technical construction and operating
certificate, issued by the Minister under this Act.
(2) [not relevant]
(3) Any radio station or radio apparatus that is capable only
of receiving radiocommunications and that is not a broadcast
ing receiving undertaking is exempt from the requirements of
subsection (1) if it is intended only for the reception of
(a) broadcasting;....
At this juncture, it again becomes necessary to
determine what is intended by those whose radio
apparatus receives signals. Here again it is not
only their expressed intention, but also their con
duct, the capabilities of their equipment, and the
foreseeable consequences which must be examined
and evaluated. This time it is what the plaintiffs
intended which has to be determined. The plain
tiffs certainly say that they intend to receive only
"broadcasting" and their expression of intention is
utterly consonant with their conduct and the
capabilities of their equipment. The consequence
here, the reception of broadcasting only, is objec
tively foreseeable, even if it were denied, which it
is not. Thus, the plaintiffs, not being engaged in a
broadcasting receiving undertaking, qualify for the
exemption accorded in subsection 3(3) of the
Radio Act.
The classes of licences and technical construc
tion and operating certificates which the Minister
may prescribe pursuant to section 4 and subse
quent provisions are the same licences and certifi
cates mentioned in subsection 3(1), from whose
requirements the plaintiffs' radio station is
exempted by subsection 3(3).
A further matter awaits disposition. In their
statement of claim the plaintiffs expressed a fur
ther prayer for relief in the following terms:
Granting in favour of Plaintiffs an order of injunction, restrain
ing the Defendants, their agents, representatives and employees
from seizing or shutting down the Earth' Station operated by
Lount at its said hoteji, or in any other way interfering with the
operation by Lount of the said Earth Station;
Because of the introduction into the pleadings of
the particulars of the MATV system, the plain
tiffs' prayer for an injunction should be deemed to
refer to that system, too. In view of the conclusions
reached in these reasons for judgment, and in view
of the apparent determination evinced by the
departmental official of the Minister of Communi
cations to seize the plaintiffs' radio apparatus (see
Exs. 1 and 2) for the purposes of prosecuting the
plaintiffs, it would seem appropriate to accommo
date the plaintiffs' prayer for an injunction. In
view of the plaintiffs' admissions, now a matter of
public record in this case, it would be ludicrous to
put their equipment in close custody (since it could
always be rendered "law abiding" through aiming
and turning) unless the plaintiffs persisted in disre
garding the rulings of a court of competent juris
diction. They are blameless in that regard.
On the other hand, because, by long tradition,
the executive abides by declarations of the Court
even though not formally or specifically directed to
do so, no injunction will be issued in this case at
this time. In any event, in terms of investigating
and prosecuting for an alleged offence, the defend
ant ministers, with their officials, would be acting
as servants of the Crown rather than as agents of
the legislature for the performance of a specific
duty imposed by statute. Therefore, according to
the judgment of the Federal Court of Appeal in
Grand Council of the Crees (of Quebec), et al. v.
The Queen, et a1., 22 no injunction against the
Crown in right of Canada or a minister thereof
will be ordered in such, or these, circumstances.
Officials, of course, are bound to obey the law as
declared by this Court. That being so, the granting
of an injunction at this time would be premature,
but the plaintiffs are not foreclosed from pursuing
such remedies as may be advised if the need arise
in the future.
In the result, there will be a declaration that
neither the earth station (TYRO) receiving
apparatus, nor the log-periodic (MATV) receiving
apparatus, nor any of their connected parts, wiring
or systems from their respective antennae to the
television sets in the rooms, owned or operated by
the plaintiffs Lount, Atlific or SaTel, or any of
them, at the Holiday Inn Hotel at 1330 Pembina
Highway in Winnipeg, Manitoba, constitutes, or is
part of, a broadcasting receiving undertaking
22 [1982] 1 F.C. 599.
within the meaning of the Broadcasting Act and
the Radio Act; and that none of the plaintiffs, nor
their said radio apparatus, is subject to the
requirement of a licence under the Broadcasting
Act.
There will also be a declaration that neither
system of the said radio apparatus, comprising a
radio station on the premises of the said Holiday
Inn in Winnipeg, within the meaning of sections 2
and 3 of the Radio Act, fails to qualify for the
exemption provided in subsection 3(3) of that Act;
and that both of the plaintiffs' TVRO and MATV
radio apparatus and radio stations, including all of
their connected parts, wiring or systems from
antennae to television sets in the rooms of said
Holiday Inn, are exempt from the requirements of
a licence and a technical construction and operat
ing certificate, pursuant to subsection 3(3) of the
Radio Act.
Further, the plaintiffs' prayer for an order of
injunction restraining the defendants, their agents,
representatives and employees from seizing or
shutting down the plaintiffs' radio apparatus and
radio station at the said hotel, or in any other way
interfering with the plaintiffs' operation of that
radio apparatus is dismissed, but without prejudice
to the plaintiffs' rights to seek, if so advised, and to
obtain any such restraining order as may be pro
nounced in this regard in the future.
It follows that the defendants' respective coun
terclaims must be dismissed with costs, but such
costs will be restricted to the plaintiffs' disburse
ments only, of and incidental to said counter
claims, to be taxed.
Finally, the plaintiffs are entitled to their tax
able costs of this action.
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.