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A-386-74
In re Capital Cities Communications Inc., Taft Broadcasting Company and W.B.E.N. Inc. (Applicants) (Appellants)
Court of Appeal, Thurlow, Uric and Ryan JJ.— Ottawa, December 11-13, 1974; January 17, 1975.
Judicial review—Appeal—Cable television broadcasting— Licences to receive broadcasts from United States stations— Licence amended by Canadian Radio-Television Commis- sion—Amendment permitting deletion of commercial mes- sages—Validity of amendment upheld—Broadcasting Act, R.S.C. 1970, c. B-11, ss. 2, 3, 15, 17, 26—B.N.A. Act, 1867— Radio Act, R.S.C. 1970, c. R-1, ss. 7, 8 and General Radio Regs., Part II, s. 11—Income Tax Act, s. 12(a)—Copyright Act, R.S.C. 1970, c. C-30—Trade Marks Act, R.S.C. 1970, c. T-10—Federal Court Act, s. 28.
The appellants operated television broadcasting stations in Buffalo N.Y. and their broadcasts were receivable in adjacent Canadian communities. Some of their programs and commer cial messages were paid for by Canadian sponsors. The inter- vener Rogers Cable T.V. Limited was licensed under the Broad casting Act to operate within a specified area in a part of Toronto, a community and cable distribution system and to receive broadcasts of the appellants' stations. The understand ing that a licensee was not entitled to alter a program received, was withdrawn by the policy statement issued by the Canadian Radio-Television Commission, in July 1971. The announced withdrawal of the requirement against alteration was designed to permit removal by licensees of signals carrying commercial messages in making contracts for insertion of replacement signals carrying commercial messages sold by Canadian televi sion stations. Application was made by Rogers for amendment of its licence to permit deletion of commercial messages and to substitute commercial messages of its own. The present appel lants intervened to oppose the amendment. The Commission decided that since Rogers had made no commercial arrange ments with Canadian television stations in its area, the Com mission would not permit Rogers to insert replacement signals carrying commercial messages. However, the Commission authorized deletion of commercial messages received by Rogers, on condition that it inserted public service announce ments. The appellants brought a section 28 application under the Federal Court Act to review and set aside the decision and later appealed, by leave of the Court, under section 26 of the Broadcasting Act.
Held, the application and appeal should be dismissed. Parlia ment had exclusive jurisdiction over broadcasting, including both the transmission and the reception of signals. Parliament had exercised its power over the cablevision operation, a "broadcasting undertaking" within section 2 of the Broadcast ing Act, so that a broadcasting licence could be issued under section 17(1)(a) and amended under section 17(1)(b). The Commission's decision was made within the ambit of section
17(1)(b) and not under the statement of policy. The statement itself indicated that it was drafted for "the implementation of the broadcasting policy enunciated in section 3" of the Act. It was for the Commission and not for the Court to decide whether the policy and the particular decision were well cal culated to achieve the end sought. The decision was not con trary to the Inter-American Radiocommunications Convention concluded at Havana in 1937, whether or not the Convention was binding on the Commission as a public body. Inclusion in the statement of the Commission of its concern over the litigation between the appellants and Rogers in the Federal Court may have been unwise but it failed to vitiate the decision.
Per Thurlow J. concurring: In so far as the appellant's case was based on the first three points: the constitutional point, the scope of the Commission's powers under the Broadcasting Act and the Commission's policy statement, the appellants would also fail because the appellants failed to show that they had rights affected by the amendment of the Rogers licence.
In re Regulation and Control of Radio Communication in Canada [1932] A.C. 304; Re C.F.R.B. and Attorney Gen eral for Canada [1973] 3 O.R. 819; Public Utilities Commission v. Victoria Cablevision Ltd. (1965) 52 W.W.R. 286, applied. Fortnightly Corp. v. United Artists Television Inc. (1967) 392 US 390; British Oxygen Co. Ltd. v. Minister of Technology [1971] A.C. 610, discussed.
JUDICIAL review and appeal. COUNSEL:
G. F. Henderson, Q.C., A. O'Brien and W. G. Robinson for applicants and appellants. A. C. Pennington and D. F. Friesen for Canadian Radio - Television Commission. J. J. Robinette, Q.C., T. G. Heintzman and P. S. Grant for Rogers Cable T.V. Limited.
SOLICITORS:
Gowling & Henderson for applicants and appellants.
Deputy Attorney General of Canada for Canadian Radio - Television Commission. McCarthy & McCarthy for Rogers Cable T.V. Limited.
The following are the reasons for judgment rendered in English by
THURLOW J.: I agree that the appeal and the review application fail for the reasons expressed by Mr. Justice Ryan but in so far as the appellants' case was based on the first three points, i.e. the constitutional point, the scope of the powers of the CRTC under the Broadcasting Act and the CRTC
policy statement, in my opinion the proceedings would also fail because the appellants have not shown that they have rights which are affected by the amendment of the Rogers' licence.
The appellants have no proprietary or other legal rights in their signals in Canadian air space. The radio frequencies in that space are public property under section 3(a) of the Broadcasting Act. When the appellants put out signals on any of such frequencies they make use of the public prop erty in the frequencies but they do not by so doing acquire any right either in the frequency or the signals they have generated on it, and they have no right to have their signals received in Canada in any form, whether altered or unaltered. Nor have they any right to require that the licence of a Canadian broadcasting receiving undertaking con form to their requirements or demands.
It is perhaps arguable that the appellants have a sufficient interest to give them status to raise the other two points but in my opinion these, as well as the others, should be rejected for the reasons given by Mr. Justice Ryan.
I would dismiss the appeal and the review application.
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The following are the reasons for judgment rendered in English by
RYAN J.: The appellants, Capital Cities Com munications Inc., Taft Broadcasting Company and W.B.E.N. Inc., operate television broadcasting sta tions at Buffalo, New York. They do not require a licence under the Broadcasting Act' but their broadcasts are receivable in adjacent Canadian communities and in particular in Toronto. They broadcast programs and commercial messages some of which are paid for by Canadian sponsors. They thus compete with Canadian broadcasting stations for advertising business.
R.S.C. 1970, c. B-I1 as amended.
Rogers Cable T.V. Limited (referred to in this judgment as Rogers) operates a community anten na and cable distribution system in a part of Toronto specified in its licence under the Broad casting Act. It is licensed to receive among other things the broadcasts of the appellants' stations. Its licence is to carry on a broadcasting receiving undertaking. Until 1971, it seems to have been understood that the licensee was not entitled to alter a program received by its system.
In July 1971 the Canadian Radio Television Commission (referred to in this judgment as CRTC), the respondent, issued a policy statement on cable television which included the following paragraphs:
In its first public announcement on cable television policy of May 13, 1969, the Commission accepted, for the time being, the long-standing Department of Transport policy that cable television systems should not alter the signals received from broadcasting stations. Since then, the Commission has carried out extensive studies which demonstrate that the unaltered carriage of some of these signals disrupts the ability of Canadi- an television stations to fulfill their mandate.
Deletion and Substitution of Commercials
At present, requiring cable television systems to delete the commercial messages in signals they distribute would be finan cially impossible for all but a few systems. Even these would suffer substantial financial damage. For this reason the Com mission has not adopted this policy.
Instead, it has decided to withdraw the requirement that received broadcasting signals should not be altered. The Com mission will permit the removal by cable television licensees of the commercial value contained in the signals of stations not licensed to serve Canada. While cable television licensees will not be permitted to sell replacement commercial messages themselves, they will be encouraged to make contractual arrangements with Canadian television stations in their areas to insert replacement signals carrying commercial messages sold by the Canadian television stations.
When a Canadian television station decides to undertake the negotiation of such an arrangement with a cable television system it must so advise the Commission. The Commission's approval of the subsequent contractual arrangement between the television station and the cable television system must be obtained.
In an area where there is more than one Canadian television station interested in participating in this activity, the Commis sion will ensure that sufficient and equitable opportunity be provided to the several stations. In all cases adequate provision
will be made for any television station that might be licensed in the future. The Commission will also be concerned that mar keting practices that develop shall not be detrimental to others.
The Commission is confident that where the commercial value is significant, both television stations and cable television systems will take advantage of this change in policy to help strengthen their ability to fulfill their obligations to the public.
The Commission expects these licensees to take the opportu nity thus provided to strengthen the Canadian broadcasting system. If this does not happen, the Commission will consider further action.
Amendment to Section 12a of the Income Tax Act
Some of the commercial messages of value in Canada but transmitted by stations not licensed to serve Canada are paid for by companies located in this country. Therefore, the Com mission has decided to request the Government of Canada to amend section 12a of the Income Tax Act to include advertis ing purchased by Canadian advertisers on stations not licensed by the Commission.
Thereafter at some point Rogers began deleting, to some extent, the commercial messages in the broadcasts of the appellants and in October 1973, following threats of legal action by the appellants, Rogers applied to the CRTC for an amendment of its licence so as to permit random deletions of such commercial messages from the programs of the appellants carried by its cable system and to sub stitute commercial messages of its own. The appel lants intervened to oppose such amendment on a number of grounds including alleged infringement of the appellants' rights arising under the Copy right Act, the Trade Marks Act and the common law, and violations of international conventions including the Union Convention of Paris for the Protection of Industrial Property. They also chal lenged the Commission's jurisdiction to make the order sought and urged that to make it would be contrary to the announced policy. However, fol lowing an oral hearing, the Commission in May 1974 issued a decision granting Rogers' request in part in the following terms:
In accordance with its policy statement, the Commission authorizes the licensee to delete commercial messages from U.S. television signals on a random basis as applied for. The objective of the Commission's commercial deletion policy is to restore the logic of the local licence and strengthen Canadian television service. Revenue and other benefits derived from the implementation of the policy are intended to strengthen broad-
casters. Accordingly, since the licensee has not made contractu al arrangements with Canadian television stations in its area, the Commission will not permit the licensee to insert replace ment signals carrying commercial messages. Nor is the Com mission willing to permit the licensee to insert messages con taining promotional information to its subscribers since this is not consistent with the Commission's policy objective. Instead, the Commission authorizes the licensee to delete on condition that it inserts in replacement of the deleted messages public service announcements and other similar suitable replacement material.
The Commission is aware that statements of claim have been filed in the Federal Court against the licensee by stations in Buffalo. Where litigation occurs that may affect the ability of licensees to carry out their obligations under the Broadcasting Act, the Commission is properly concerned that licensees not voluntarily settle such litigation on terms that may inhibit their ability to conform with Commission policy and requirements under the Broadcasting Act. Hence, in such circumstances, the Commission's consent must first be obtained before any terms of settlement and, in particular, any injunction is voluntarily consented to by any licensee.
The appellants thereupon brought an applica tion under section 28 of the Federal Court Act to review and set aside the decision and subsequently appealed by leave of this Court under section 26 of the Broadcasting Act. The two proceedings were combined and heard together.
The appellants' case was based on four principal submissions. It was said (1) that Parliament has no authority under the British North America Act over a cablevision operation; (2) that if Parliament has such authority, it has not exercised it to confer on the CRTC jurisdiction over cablevision opera tions; (3) that if Parliament has the authority to regulate cablevision operations and has conferred on the CRTC jurisdiction to regulate such opera tions, the CRTC in amending the Rogers licence exceeded any jurisdiction it had; and (4) that the decision is contrary to an international treaty to which Canada is a party known as the Inter- American Radiocommunications Convention con cluded at Havana in 1937.
The submissions based on the British North America Act and on construction of the statute tend to overlap. I will, therefore, deal with them together.
By virtue of section 17 of the Broadcasting Act, the respondent has authority to license broadcast ing undertakings, to impose conditions on and to amend licences. The relevant parts of section 17 read as follows:
17. (1) In furtherance of the objects of the Commission, the Executive Committee, after consultation with the part-time members in attendance at a meeting of the Commission, may
(a) issue broadcasting licences for such terms not exceeding five years and subject to such conditions related to the circumstances of the licensee
(i) as the Executive Committee deems appropriate for the implementation of the broadcasting policy enunciated in section 3,
(b) upon application by a licensee, amend any conditions of a broadcasting licence issued to him;
Section 2 of the Broadcasting Act defines "broadcasting undertaking" so as to include "... a broadcasting receiving undertaking ... , located in whole or in part within Canada ... ". "Broadcast- ing" is defined to mean "any radiocommunication in which the transmissions are intended for direct reception by the general public". "Radiocommuni- cation" is in turn defined as meaning "any trans mission, emission or reception of signs, signals, writing, images, sounds or intelligence of any nature by means of electromagnetic waves of fre quencies lower than 3,000 Gigacycles per second propagated in space without artificial guide".
Rogers was licensed under section 17 to carry on a broadcasting receiving undertaking to serve Met ropolitan Toronto, Ontario. It was authorized by its licence to receive signals from the appellants' television stations as well as from other television stations. There is an adequate constitutional and statutory basis for licensing Rogers as a broadcast ing receiving undertaking. It is well established that Parliament has exclusive legislative authority over broadcasting, and that broadcasting includes both the transmission and the reception of signals'.
zIn re Regulation and Control of Radio Communication in Canada, [ 1932] A.C. 304.
As indicated above, the respondent, on an application by Rogers under section 17(1)(b) to amend the conditions of its licence, authorized the licensee to delete commercial messages from the United States television signals on a random basis on condition that it insert public service announce ments and other similar suitable replacement ma terial. I am of opinion that the making of this amendment falls within the authority granted to the Commission by section 17(1)(b), and that section 17(1)(b) is intra vires of Parliament in so far as it authorizes the making of the amendment. The legislative authority of Parliament extends over the content of broadcasts as well as over the physical undertaking of the television reception unit 3 .
The appellants submitted that the statute should not be interpreted so as to encompass the contents of broadcasts after the reception of the Hertzian waves at Rogers' antenna. In support of this sub mission the appellants stressed the terms of the definition of "radiocommunications" in section 2 of the Act. It was submitted that Rogers' cable television system is a distributing system with two aspects. One aspect is the reception at the antenna of the Hertzian waves from television broadcast ers: this aspect is subject to federal regulation. The other aspect is the distribution of received mes sages by means of cable, an "artificial guide": in this aspect it was submitted that the operation is within provincial jurisdiction.
In my opinion this is not the correct way to view the undertaking. The Rogers cablevision system as a unit receives signs or signals from the appellants' television stations by means of Hertzian waves, propagated in space in Buffalo without artificial guide. The messages are received, not merely by the antenna, but by the undertaking as a whole 4 . The cablevision operation is a kind of antenna system'. It is a broadcasting receiving undertaking and thus a "broadcasting undertaking" under sec tion 2 of the Broadcasting Act in respect of which
3 Re C.F.R.B. and Attorney-General for Canada [1973] 3 O.R. 819.
4 Public Utilities Commission v. Victoria Cablevision Ltd. (1965) 52 W.W.R. 286 (B.C.C.A.).
5 Fortnightly Corp. v. United Artists Television Inc. (1967) 392 US 390 at pp. 397-401.
a broadcasting licence may be issued under section 17(1)(a) and amended under section 17(1)(b). Broadcasting licence, as defined in section 2, ".. . means a licence to carry on a broadcasting under taking issued under this Act."
It was also argued that the respondent exceeded its authority under the statute by making its deci sions on the basis of the published policy statement mentioned above. Attention was drawn to section 3(c) of the Act:
3. It is hereby declared that
(c) all persons licensed to carry on broadcasting undertak ings have a responsibility for programs they broadcast but the right to freedom of expression and the right of persons to receive programs, subject only to generally applicable stat utes and regulations, is unquestioned;
It was submitted that the decision to amend the licence to permit deletion and substitution was void because it was based on the policy statement and not on the statute and regulations. It is, however, clear that the decision was made under statutory authority, section 17(1)(b) of the Act. The decision does, however, state that it was made in accordance with the policy statement. This would be objectionable if the statement set out policies which it was not open to the respondent to pursue. In my opinion, however, the policies outlined are well within the range of the respond ent's mandate under section 15 to "... regulate and supervise all aspects of the Canadian broad casting system with a view to implementing the broadcasting policy enunciated in section 3 of this Act".
The policy statement would also be objection able if it so fettered the discretion of the Commis sion as to render the Commission unfree to make an appropriate decision on the merits of particular applications. The way in which a court should
assess a policy statement of an administrative agency with discretionary powers for the purpose of determining whether the statement is acceptable in content and in use was described by Lord Reid in British Oxygen Co. Ltd. v. Minister of Technology':
It was argued on the authority of Rex v. Port of London Authority, Ex parte Kynoch Ltd. [1919] 1 K.B. 176 that the Minister is not entitled to make a rule for himself as to how he will in future exercise his discretion. In that case Kynoch owned land adjoining the Thames and wished to construct a deep water wharf. For this they had to get the permission of the authority. Permission was refused on the ground that Parlia ment had charged the authority with the duty of providing such facilities. It appeared that before reaching their decision the authority had fully considered the case on its merits and in relation to the public interest. So their decision was upheld.
Bankes L.J. said, at p. 184:
There are on the one hand cases where a tribunal in the honest exercise of its discretion has adopted a policy, and, without refusing to hear an applicant, intimates to him what its policy is, and that after hearing him it will in accordance with its policy decide against him, unless there is something exceptional in his case. I think counsel for the applicants would admit that, if the policy has been adopted for reasons which the tribunal may legitimately entertain, no objection could be taken to such a course. On the other hand there are cases where a tribunal has passed a rule, or come to a determination, not to hear any application of a particular character by whomsoever made. There is a wide distinction to be drawn between these two classes.
I see nothing wrong with that. But the circumstances in which discretions are exercised vary enormously and that pas sage cannot be applied literally in every case. The general rule is that anyone who has to exercise a statutory discretion must not "shut his ears to an application" (to adapt from Bankes L.J. on p. 183). I do not think there is any great difference between a policy and a rule. There may be cases where an officer or authority ought to listen to a substantial argument reasonably presented urging a change of policy. What the authority must not do is to refuse to listen at all. But a Ministry or large authority may have had to deal already with a multi tude of similar applications and then they will almost certainly have evolved a policy so precise that it could well be called a rule. There can be no objection to that, provided the authority is always willing to listen to anyone with something new to say—of course I do not mean to say that there need be an oral hearing. In the present case the respondent's officers have carefully considered all that the appellants have had to say and
6 [1971] A.C. 610 at pp. 624 and 625.
I have no doubt that they will continue to do so. The respondent might at any time change his mind and therefore I think that the appellants are entitled to have a decision whether these cylinders are eligible for grant.
A reading of the transcript of the Commission's hearings on the application by Rogers to amend the licence conditions indicates that the Commis sion did not shut its ears to the appellants' inter vention. A clear indication that the Commission was not proceeding with a closed mind lies in the fact that Rogers' application was granted, but in modified form. In addition the Commission did not adhere strictly to its own policy. The Commission granted permission to delete commercials, but only on condition of substituting public service announcements. Its policy statement indicates that the desirable course is for a cablevision undertak ing to make contracts with local television stations for the purpose of substituting commercials.
The policy statement itself indicates that it was drafted and promulgated for the purpose of "the implementation of the broadcasting policy enun-
_ ciated in section 3". The conditions imposed by amendment of the Rogers licence are designed to further this policy. It is for the Commission, not for us, to decide whether the policy and the par ticular decision are well calculated to achieve the end sought.
The appellants also took the point that the decision to amend the Rogers licence is contrary to the Inter-American Radiocommunications Con vention concluded at Havana in 1937, a convention to which Canada and the United States are par ties. Reliance was placed on Article 11(a) and (b):
(a) The contracting Governments recognize the sovereign right of all nations to the use of every radio broadcasting channel.
(b) The American Governments, upon the sole condition that no interference will be caused to the services of another country, may assign any frequency and any type of wave to any radio station under their authority.
It seems clear that the "interference" referred to in (b) is technical interference with the receipt of the signal from the air, such as by the generation of a competing signal of the same frequency. It also seems clear that the scope of the Article is to agree that frequencies will not be so assigned or used in one country as to interfere with the recep tion in another country of signals generated on the same frequency in that country. The Article thus has no application to the present problem.
Reliance was also placed on Article 21:
The contracting Governments shall take appropriate meas ures to ensure that no program transmitted by a broadcasting station may be retransmitted or rebroadcast, in whole or in part, by any other station without the previous authorization of the station of origin.
The rebroadcasting station shall announce at suitable periods during the retransmission the nature of the broadcast, the location and the official call letters or other identification of the station of origin.
The appellants claimed that authorization by the respondent of the deletion of commercials from their broadcasts without their consent would be action by the respondent inconsistent with this Article. It would appear, however, that "any other station" in the Article refers to any other broad casting station and Rogers is not a broadcasting station, but a broadcasting receiving undertaking. It also appears that the scope of this particular Convention is limited to radiocommunication and that the expression "retransmitted or rebroadcast" refers only to retransmission or rebroadcast by radiocommunication.
It is thus unnecessary to decide whether the Convention is binding on the respondent as a public Commission or because it has been made legislatively binding by a combination of section 7(1)(d) and section 8(1) of the Radio Act, Regu lation 11 of the General Radio Regulations, Part II, and section 15 of the Broadcasting Act.
Finally, the appellants complained of that part of the decision of the CRTC which has to do with the litigation between the appellants and Rogers in the Federal Court. The portion complained of expresses the concern of the respondent that Rogers should not make a contract in the form of a settlement of the action that could interfere with the implementation of CRTC policy. While one may question the wisdom of including in a formal
decision a mandate such as that expressed, it falls short of vitiating the decision in any way.
I would dismiss the appeal and deny the motion to set aside.
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URIE J. concurred.
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