A-122-75
John Graham & Company Limited, Ernest L.
Bushnell and John Graham, Jr. (Applicants)
v.
Canadian Radio-Television Commission (Respon-
dent)
Court of Appeal, Thurlow, Urie and Ryan JJ.—
Ottawa, October 23, 24, 27 and December 12,
1975.
Judicial review and appeal—Decision of CRTC approving
share transfer having condition attached—Whether beyond
Commission's jurisdiction—Whether error in law—Whether
failure to observe principle of natural justice—Whether condi
tion severable from order—Whether decision administrative—
Broadcasting Act, R.S.C. 1970, c. B-11, ss. 17 and 26—
Federal Court Act, s. 28.
In its decision approving a proposed transfer of shares of B
Limited from W Limited and associates to S Limited, the
CRTC required as a condition that S agree to cause B to divest
itself of its cable undertaking at Rockland, Ont., and its
interests in Laurentian and Skyline Cablevision companies. The
Commission would review the question in the case of each
licensee at the time of licence renewal. Applicants claim that
(1) the condition effectively precluded B, Laurentian or Skyline
their rights to proper consideration of licence renewal applica
tions. It converted the share transfer application into one for
the additional purpose of requiring new conditions in their
existing licences, and, as the licences were not under review in
any of the circumstances prescribed by section 17, the Commis
sion acted beyond its powers; and (2) the CRTC failed to meet
natural justice requirements because actual notice that the
divestiture question would be dealt with at the share transfer
hearing was not given or dealt with per se at the hearing.
Respondent claims that (3) applicants lack status, and (4) the
decision was purely administrative and not subject to review.
Held, allowing the appeal, the matter is referred back to the
Commission for a decision on the application without inclusion
of any condition not authorized by the Broadcasting Act. As to
(3), the Commission permitted applicants to intervene. Partici
pation at the hearing and the "demonstrable interest" which
the Graham Company has shown in the outcome of the hearing
make it at least a proper section 28 party. The firm is equally a
proper party to an appeal under section 26 of the Broadcasting
Act. Concerning (4), section 26 provides a right of appeal on a
question of law or jurisdiction; the section 28 application
cannot prevail.
As to (1), the effect of the condition was to impose an
additional condition on each of the licences, effectively denying
licensees their right to seek unconditional renewals. The condi-
tion was not imposed at a hearing called to issue or renew any
licence, or to amend B's licence by inclusion of the condition,
pursuant to section 17, but at a hearing called only to consider
an application for approval of a transfer of shares of only one of
the licensees. No renewal application had been made, nor was it
required. The Commission lacked jurisdiction in making any
order affecting any licence held or controlled by B. Existing
licences, or their renewal were affected in that (a) the commis
sion impliedly included a new condition in each, effectively
cutting off the right to apply for unconditional renewals;
and/or (b) it imposed in advance of any renewal application a
restriction on the renewal right. Either way, the Commission's
discretion was frozen. (3) It is unnecessary to consider the
natural justice question.
Finally, a plain reading of the decision indicates that the
condition goes to the root of the approval, and the whole
decision must fall.
Also, per Thurlow J.: The Commission's policy of not grant
ing licences for transmitting and receiving undertakings to the
same controlling interest had no application to the licences of
the B companies which had already been granted. In the case of
a company already licensed, interference by the Commission
with licence conditions may be highly prejudicial, and under
section 17(1)(b), can be done only on application by the
licensee.
Attorney General of Manitoba v. National Energy Board
[1974] 2 F.C. 503; Confederation Broadcasting (Ottawa)
Limited v. CRTC [1971] S.C.R. 906 and Okanagan Heli
copters Ltd. v. Canadian Transport Commission [1975]
F.C. 396, applied. Maurice v. London County Council
[1964] 2 Q.B.D. 362, agreed with.
JUDICIAL review and appeal.
COUNSEL:
J. Richard for applicants.
C. Thomson and C. C. Johnston for
respondent.
J. Sopinka for Standard Broadcasting.
J. L. McDougall for Western Broadcasting.
SOLICITORS:
Gowling & Henderson, Ottawa, for
applicants.
Campbell, Godfrey & Lewtas, Toronto, for
respondent.
Fasken & Calvin, Toronto, for Standard
Broadcasting.
Henry & Brown, Toronto, for Nathan A.
Taylor.
Herridge, Tolmie, Gray, Coyne & Blair,
Ottawa, for Bushnell Communications Ltd.
Fraser & Beatty, Toronto, for Western
Broadcasting.
The following are the reasons for judgment
rendered in English by
THURLOW J.: I am in substantial agreement
with the reasons of Mr. Justice Urie and I agree
with his conclusion.
First with respect to status, the applicant for the
Commission's approval was Standard, with the
concurrence of the three licensee companies.
Before the Commission, John Graham & Com
pany Limited, a shareholder of Bushnell had at
least as much status to object to the granting of
such approval as Standard, who was not yet a
shareholder, had to apply for it. In my opinion, the
status of John Graham & Company Limited in
this Court, after obtaining leave to appeal under
subsection 26(1) of the Broadcasting Act, is at
least equal to that of Standard which by the
decision attacked, has obtained the Commission's
approval.
Second, with respect to the administrative
nature of the function exercised by the Commis
sion it appears to me that the grant of a permission
required by the condition of a licence is an exercise
of a function which arises under section 17 of the
Broadcasting Act in respect of the granting of
licences but which has been reserved to the Com
mission by the condition. It is, as I see it, a part or
an aspect of deciding who shall have a licence. The
condition is, I think, one relating to the circum
stances of the licensee within the meaning of para
graph 17(1) (a) and it appears to me that what the
Commission has to consider on an application for
its permission under the condition is whether the
licensee should be permitted to continue to be
licensed in view of the proposed change in the
circumstances relating to control of the licensee.
The decision to grant such permission is thus, in
my opinion, a decision within the meaning of
subsection 26(1) of the Broadcasting Act and is
subject to appeal in accordance with that
provision.
Next, the licensee companies, Bushnell, Ottawa-
Cornwall and Laurentian, having joined Standard
in making the application to the Commission, the
application was theirs as well as Standard's. The
decision, as well, bound them as well as Standard
and imposed on Bushnell in particular the necessi
ty to submit to what the new shareholder was
required by the new condition to do to it. It thus
became a condition of Bushnell's licence (for that
is the only hold which the Commission has on
Bushnell) and a restriction upon its opportunity or
right to have its licence renewed without any such
fetter being imposed upon it. The company had
applied for no such term and it was given no option
to reject it. The effect was to impose on the
company through its new controlling shareholder,
and the new board of directors to be installed by it,
a policy which was not necessarily in the best
interests of the company and its shareholders as a
whole, and to which the company was under no
obligation to submit, whether under the terms of
its licence or otherwise.
The fact that the Commission had adopted a
policy of not granting to the same controlling
interest licences for both transmitting and receiv
ing undertakings was relevant to the application
before it only in so far as it may have had a
bearing on whether Standard with its radio trans
mitting undertaking should be permitted to take
control of Bushnell with its television transmitting
and receiving undertakings. In my view, it had no
application to the licences of the Bushnell compa
nies which had already been granted notwithstand
ing the policy. These companies were entitled to
expect the unaffected continuance of their licences
provided the terms of the licences were observed
and the performance of their undertakings met the
required standards. I To interfere in such a situa
tion on the basis of a policy applicable in the
granting of licences is quite a different matter
from following the policy when dealing with
applications for licences. In the case of a company
already licensed interference by the Commission
' See the Commission's Public Announcement of June 2nd,
1972, cited in the reasons of Mr. Justice Urie.
with the conditions of the licence may be highly
prejudicial to the interests of the licensee and its
shareholders and in my opinion under section
17(1) (b) this can be done only on the application
of the licensee. It follows that the imposition of the
condition was ultra vires and, in so far as it
purported to have any immediate effect, was not
binding. Moreover, in my view, it represented an
unwarranted encumbrance on the right of the lic
ensee companies to renewal of their licences and is,
in that aspect as well, ultra vires.
Finally, I am in agreement with Mr. Justice
Urie that the condition is a foundation of the
approval and cannot be severed without usurping
the function of the Commission to grant or with
hold its approval.
I would allow the appeal and refer the matter
back to the Commission for reconsideration as
proposed by Mr. Justice Urie.
* * *
The following are the reasons for judgment
rendered in English by
URIE J.: This is a section 28 application to
review and set aside the decision of the Cana-
dian Radio-Television Commission (hereinafter
referred to as "the Commission") made on the
13th day of March 1975, approving the transfer of
894,802 common shares of Bushnell Communica
tions Limited (hereinafter referred to as "Bush-
nell") from Western Broadcast Holdings Limited
and its associates (hereinafter referred to as
"Western") to Standard Broadcasting Corporation
Limited (hereinafter referred to as "Standard"). It
is also an appeal from that decision made pursuant
to section 26 of the Broadcasting Act, leave of this
Court having been given by an order pronounced
on April 16, 1975. The application and the appeal
were directed to be joined and treated as one
proceeding by the order of the Chief Justice dated
September 5, 1975.
In order to appreciate the basis upon which the
application and appeal are brought, a rather full
review of the facts is necessary. The applicant,
John Graham & Company Limited, is a registered
shareholder of Bushnell, as is the applicant, Ernest
L. Bushnell. The latter was, at all material times,
the Chairman of the Board and a director of
Bushnell. The applicant, John Graham, Jr., is
President of John Graham & Company Limited
and appeared in that capacity at the hearing of the
Commission held in Toronto on February 26,
1975, having filed an intervention in accordance
with the Commission rules. The applicant Ernest
L. Bushnell also appeared at the hearings, appar
ently not in his personal capacity but as an officer
and director of Bushnell. Bushnell is a public
company incorporated under the laws of the Prov
ince of Ontario and as at the close of business on
December 15, 1974, there were issued and out
standing 1,718,527 common shares in the capital
stock of the company held by approximately 437
registered shareholders. At the time of the applica
tion for transfer of the shares of Bushnell here
under review, Ottawa-Cornwall Broadcasting Lim
ited (hereinafter referred to as "Ottawa-Corn-
wall") was a wholly owned subsidiary of Bushnell.
Bushnell also at that time held 75 per cent of the
common voting shares of Laurentian Cablevision
Limited (hereinafter referred to as "Laurentian")
and 25 per cent of the preferred shares thereof. In
addition, Bushnell held 25.3 per cent of the issued
and outstanding common shares of Skyline
Cablevision Limited (hereinafter referred to as
"Skyline") and all of the issued and outstanding
preferred shares thereof.
Ottawa-Cornwall is the holder of a licence
issued by the Commission pursuant to the Broad
casting Act and its Regulations authorizing it to
carry on a broadcasting transmitting undertaking
(television) to serve the cities of Ottawa and Corn-
wall and the town of Deseronto all in the Province
of Ontario, which licence is valid until September
30, 1976. Bushnell is the holder of a licence issued
by the Commission authorizing it to carry on a
broadcasting receiving undertaking (cable) to
serve the town of Rockland in the Province of
Ontario, the expiry date of that licence also being
September 30, 1976.
Skyline is also the holder of a broadcasting
receiving undertaking licence (cable) to serve part
of the National Capital Region. The date of expiry
of that licence is also September 30, 1976.
Laurentian also holds a broadcasting receiving
undertaking licence authorizing it to serve the
towns of Aylmer, Lucerne, Deschênes and the City
of Hull in the Province of Quebec and again the
date of expiry of that licence is September 30,
1976. The latter company holds an additional
broadcasting receiving licence to serve Touraine in
the Province of Quebec, the date of expiry of that
licence having been extended in June 1975 to
September 30, 1976.
Each of the above mentioned licences issued has
the following condition attached:
This licence shall be conditional upon the effective ownership or
control of the broadcasting undertaking licence not being trans
ferred without the permission of the Canadian Radio-Television
Commission.
Standard, a public company whose shares are
traded on the Toronto Stock Exchange, holds,
through wholly owned subsidiaries, broadcasting
licences issued by the Commission to carry on
broadcasting transmitting undertakings (radio) in
the Cities of Montreal and Toronto. Western, also
a public company, through its subsidiaries or
affiliated companies, holds radio broadcasting
licences in four cities in Canada and television
licences in two cities in Canada.
By a private agreement dated January 14, 1975
Standard agreed to purchase from Western 894,-
802 common shares of Bushnell comprising not
less than 52 per cent of the issued and outstanding
shares of the company. The agreement provided
inter alia
(a) that Standard would forthwith cause an
application to be made to the Commission for
approval of the transaction;
(b) that the application be approved without
qualification or condition by the Commission on
or before 31 March 1975;
(c) that from the date of the agreement until
closing Western would not discuss or otherwise
communicate with any person other than Stand
ard concerning the sale and the purchase of the
Bushnell shares; and
(d) that if the Commission had not, on or
before 31 March 1975, given its approval with
out qualification or condition to the transaction
involving the control by Standard of Bushnell,
the agreement would have no further force and
effect.
Standard, in accordance with its undertaking,
filed with the Commission a document in the form
provided by the Commission entitled "Application
for Authority, under the Broadcasting Act, to
Transfer Securities in a Company Licensed to
Carry on a Broadcasting Undertaking in Canada".
This form of application was in 3 parts—Part A
which was required to be completed by the licensee
company, Part B by each transferee wishing to
acquire securities and Part C to be completed by
the person who would have signing authority in
any organization where the proposed transfer of
securities would affect the control of the licensee.
Its covering letter, dated January 15, 1975,
reads as follows:
January 15, 1975.
Mr Guy Lefebvre,
Director General,•
Licencing Policy and Administration Branch,
Canadian Radio-Television Commission,
100 Metcalfe Street,
Ottawa, Ontario.
Dear Mr Lefebvre:
We enclose the following documents with respect to an
application by Standard Broadcasting Corporation Limited to
purchase 894,802 (52%) of the common shares of Bushnell
Communications Limited from Western Broadcast Holdings
Ltd. and associates:
1. Two (2) copies of CRTC "Part A" as prepared and execu
ted by officials of the applicable companies for
(a) Bushnell Communications Limited
(b) Ottawa-Cornwall Broadcasting Limited
(c) Laurentian Cablevision Limited
2. Four (4) copies of CRTC "Part B" as prepared and execu
ted by officials of Standard Broadcasting Corporation Limited,
including the Purchase Agreement between Standard and
Western.
3. Two (2) copies of CRTC "Part C" as prepared and executed
by officials of Ottawa-Cornwall Broadcasting Limited, with
additional comments by Standard.
4. Two (2) copies of the shareholder list of Bushnell and four
(4) copies of the shareholder list of Standard.
We trust the foregoing meets with your approval.
Yours truly,
(sgd) J.M. Packham
Enc. Secretary & Treasurer
A copy of the agreement of purchase apparently
also was filed at that time. None of the above facts
is in dispute.
As a result of the receipt of the application the
Commission caused a notice of public hearing to
be published in the Canada Gazette and in news
papers circulated in the areas served by the licen
sees and in the manner provided by section 5 of its
Rules of Procedure. The notice of public hearing
referred only to an application to transfer directly
or indirectly the effective ownership and control of
Bushnell, Ottawa-Cornwall and Laurentian and of
the broadcasting undertakings operated by them
through the transfer of the shares of Bushnell from
Western and its associates to Standard.
Following the public hearing held in Toronto on
February 26, 1975, the Commission rendered its
decision on March 13, 1975 which is the subject of
this application whereby it approved the applica
tion subject to the following:
The Commission will require, as a condition of its approval of
these applications, that Standard agree to cause Bushnell to
divest itself of its cable television undertaking at Rockland,
Ontario, as well as its interests in Laurentian Cablevision Ltd.
and Skyline Cablevision Limited. The Commission will review
the question of the divestiture of these interests in the case of
each licensee at the time of licence renewal with a view to
establishing an appropriate time for each divestiture to be
completed.
The applicants in their memorandum of points
of argument stated the points in issue to be as
follows:
a) The CRTC in making such a decision acted beyond its
jurisdiction.
b) The CRTC erred in law in making its decision.
c) The CRTC in making such a decision failed to observe a
principle of natural justice.
The respondent Commission agreed that these
were the points in issue but also raised the follow
ing issues:
a) The Applicants have no status to bring this application
and appeal.
b) The decision of the Commission was purely an adminis
trative one which is not subject to judicial review.
Standard and Western filed notices of intention
to participate and each filed a memorandum of
points of argument agreeing with the points in
issue raised by the applicants, upon which they
took no position, but submitted the following as an
additional issue:
The provision respecting divestiture is severable from the order
of approval to the transfer of shares.
The position of the applicants, briefly stated, is
that the result of the imposition of the condition
requiring divestiture of Bushnell's interest in its
cable television undertaking at Rockland, Ontario
as well as its interests in Laurentian and Skyline as
cable licensees, with the question of such divesti-
ture to be reviewed at the time of licence renewal
with a view to establishing an appropriate time for
each divestiture to be completed, effectively pre
cluded Bushnell, Laurentian or Skyline their
respective rights to proper consideration of their
applications for renewals of their licences. That is,
in their view it had the effect of converting the
simple application for approval of the transfer of
shares into one which was for the additional pur
pose of imposing new conditions in their existing
licences. By virtue of section 17 of the Broadcast
ing Act, they submitted that the Commission can
impose conditions only at the time of issuance of
the licences or when the Commission is considering
a revocation, suspension or amendment of an exist
ing licence or upon an application to renew an
existing licence. The applicants take the position
that since the decision here attacked, in substance
imposes a condition on each of the existing licences
when the licences are not under review in any of
the circumstances prescribed by section 17, the
Commission acted beyond its powers and the deci
sion must be set aside.
Secondly, the applicants take the position that
the Commission failed to meet the requirements of
natural justice because actual notice that the ques
tion of the requirement that Bushnell divest itself
of any of its interests, direct or indirect, in cable
undertakings would be considered and dealt with
at the hearing of the application to transfer shares
was not given in the notice of hearing or dealt with
per se at the hearing.
Before these contentions are dealt with two
objections of the respondent should be considered,
the first being that the applicants do not have any
status permitting them the right to bring either the
section 28 application or the appeal pursuant to
section 26 of the Broadcasting Act. The relevant
subsections of those sections read respectively as
follows:
28. (1) Notwithstanding section 18 or the provisions of any
other Act, the Court of Appeal has jurisdiction to hear and
determine an application to review and set aside a decision or
order, other than a decision or order of an administrative
nature not required by law to be made on a judicial or
quasi-judicial basis, made by or in the course of proceedings
before a federal board, commission or other tribunal, upon the
ground that the board, commission or tribunal
(a) failed to observe a principle of natural justice or other
wise acted beyond or refused to exercise its jurisdiction;
(b) erred in law in making its decision or order, whether or
not the error appears on the face of the record; or
(c) based its decision or order on an erroneous finding of fact
that it made in a perverse or capricious manner or without
regard for the material before it.
(2) Any such application may be made by the Attorney
General of Canada or any party directly affected by the
decision or order by filing a notice of the application in the
Court within ten days of the time the decision or order was first
communicated to the office of the Deputy Attorney General of
Canada or to that party by the board, commission or other
tribunal, or within such further time as the Court of Appeal or
a judge thereof may, either before or after the expiry of those
ten days, fix or allow.
26. (1) An appeal lies from a decision or order of the
Commission to the Federal Court of Appeal upon a question of
law, or a question of jurisdiction, upon leave therefor being
obtained from that Court upon application made within one
month after the making of the decision or order sought to be
appealed from or within such further time as that Court or a
judge thereof under special circumstances allows.
(2) No appeal lies after leave therefor has been obtained
under subsection (1) unless it is entered in the Federal Court of
Appeal within sixty days from the making of the order granting
leave to appeal.
It will be observed that a section 28 application
may be brought "by the Attorney General or any
party directly affected by the decision or
order ...". On the other hand, section 26 is silent
on the question as to who may bring an appeal
from a decision or order of the Commission.
While no one of the applicants is a party to the
proceeding in the sense that the Broadcasting Act
requires them to appear or to be heard or to file
pleadings as though the matter were a judicial
proceeding, the Commission did, in fact, permit
them to intervene, to file "an intervention" and to
make representations at the hearing. 2
The applicant, John Graham & Company Lim
ited, filed documentary evidence that it represent
ed 17 per cent of the minority shareholders. The
other applicants represented a further 12 per cent
of such shareholders. Those facts alone, in my
view, demonstrate that they are just as directly
affected by the outcome of the application for
transfer of controlling interest in Bushnell, as was
Standard, the applicant for approval of such trans
fer. The value of their shares in terms of earnings,
capital appreciation or depreciation and participa
tion in the affairs of the company could well be
affected by the decision. That is the kind of
"demonstrable interest" referred to, in another
context, in the case of The Attorney General of
Manitoba v. National Energy Board [1974] 2 F.C.
503 at page 518. Its participation in the hearing
when coupled with this demonstrable interest
clearly makes it at least a proper "party" for the
section 28 application. Whether this reasoning
applies to John Graham in his personal capacity,
and to a lesser extent to Ernest L. Bushnell, is
doubtful but it is not necessary to finally decide
their status in view of the finding of the right of
the company to apply.
For the same reasons I believe John Graham &
Company Limited is a proper party to an appeal
under section 26 of the Broadcasting Act, notwith
standing the silence of that section as to who is the
proper party to an appeal. This is a firm which
itself has, and represents persons who have, a
genuine grievance because a decision has been
made which may prejudicially affect their inter
ests. They are not busybodies interfering in things
2 While section 19(3) of the Act permits the Commission to
hold a public hearing in any matter in which it deems such a
hearing to be desirable, its regulations for the conduct of such
hearings appear to be applicable only to applications for the
issuance, amendment or renewal of licences and for interven
tions to be filed by "any person interested in an application".
Counsel agreed that the Commission adopted these regulations
for the application to transfer shares and nothing, therefore,
turns on this apparent lack of authority for the procedure
adopted.
that do not concern them. Thus, it is entitled to
appeal. See: Okanagan Helicopters Ltd. v.
Canadian Transport Commission [1975] F.C. 396
and Maurice v. London County Council [1964] 2
Q.B.D. 362.
The second contention of the respondent is that
the decision of the Commission was purely an
administrative one which is not subject to judicial
review. That, too, in my opinion must be rejected.
It might conceivably be sustainable if a section 28
application alone were before the Court. But that
is not the case. Section 26 of the Broadcasting Act
provides a right of appeal to this Court on a
question of law or jurisdiction upon leave to do so
having been granted. As already mentioned leave
to appeal has been granted to these applicants. The
applicants' objection based as it is on the require
ments of section 28 therefore cannot prevail.
(Okanagan Helicopters Ltd. v. Canadian Trans
port Commission) (supra).
Before dealing with the substantive issues in the
appeal, it is necessary, I believe, to refer to some
further facts which may be essential in consider
ation of the issues raised by the appeal and the
arguments in opposition to those supporting the
alleged lack of jurisdiction, error in law or failure
to observe a principle of natural justice.
Western acquired almost 47 per cent of the
shares of Bushnell by purchases in the open
market from time to time prior to April of 1972.
As a result the Commission convened a public
hearing in Ottawa for the purpose of ascertaining
whether or not the acquisition represented a
change in control of Bushnell. On June 2, 1972 the
Commission issued a "Public Announcement", in
which it stated, inter alia, that at the public
hearing it had been established that Western was
then in a position to exercise effective control of
Bushnell and its licensees at a meeting of its
shareholders, although that control had not yet
been assumed and that the approval of the Com
mission of the transactions had not been sought. It
was further stated that such approval was manda
tory whether effective control was acquired in the
open market or private purchase.
In October 1972, Western and its associates
applied for approval of the transfer of effective
control, which application was denied. In its "rea-
sons" for its decision the Commission made the
following statements:
The Commission reiterates its opinion that television stations
should also remain independent from cable television operations
except in special circumstances.
In the light of this decision and the statements of the President
of Western at the public hearings, the Commission expects that
Western will, as rapidly as possible, dispose Of the shares of
Bushnell held by it and will divest itself of any control that it
has over the broadcasting undertakings in question.
Any transactions involving the shares of Bushnell should be
made having regard to the concerns of the Commission
expressed in its public announcement of June 2, 1972.
By its decision of March 26, 1974 the Commis
sion denied an application to transfer 894,802
common shares of Bushnell owned by Western to
I.W.C. Communications Limited. In its "reasons"
for that decision the following statement was made
by the Commission:
In numerous decisions dating back to 1969, the Commission
has, directly and by implication, expressed its opinion that
except in special circumstances television undertakings should
be independent of cable television undertakings, both as regards
ownership and control and as regards substantial shareholdings.
(Decisions 69-197, 69-198, 70-145, 70-153, 70-157, 70-167,
70-168, 71-424, 72-316 and 74-35).
By its decision of July 5, 1974, the Commission
approved the acquisition of the balance of the
outstanding common shares of Laurentian
Cablevision Limited, inter alia, by Bushnell, thus
giving it 100 per cent of the outstanding shares.
The Commission reiterated that except in special
circumstances the ownership of television and
cable undertakings should be separate, finding
such special circumstances present in that
application.
An application by Campeau Corporation Lim
ited to acquire the 894,802 common shares of
Bushnell from Western was denied on October 21,
1974 and the Commission stated that it expected a
further application for the divestiture of the Bush-
nell shares held by Western to be made not later
than April 1, 1975.
Standard's application for approval in January,
1975 resulted in the decision appealed from.
Earlier herein the two contentions of the appli
cants are set forth. The first combines two of the
three issues which all of the parties agree are
before this Court, namely that the Commission
acted beyond its jurisdiction and erred in law in
making its decision. The second is that the Com
mission in making its decision failed to apply a
principle of natural justice.
With respect to the first contention, in requiring
Standard to apply for approval of the transfer of
the control block of Bushnell shares, the Commis
sion purported to act pursuant to the condition to
which I have previously made reference, contained
in the respective licences of Bushnell, Ottawa-
Cornwall, Laurentian and Skyline. There is no
specific statutory requirement that such approval
be obtained but undoubtedly the power to include
such a condition arises by virtue of sections 15 and
16 of the Broadcasting Act. 3 Nor does the statute
specifically empower the Commission to impose
any sanctions or penalties for the breach of the
condition, but the methods whereby the Commis
sion proposed to enforce compliance with the con
dition were clearly spelled out in its public
announcement dated June 2, 1972 hereinbefore
referred to. The relevant portions are as follows:
Where acquisitions of shares which result in a change in the
effective control of a licensee company or its broadcasting
undertaking are made without the prior approval of the Com
mission, the Commission may proceed by revocation proceed
ings or upon renewal to consider what course of action seems to
it most consistent with the policy objectives governing the
Canadian broadcasting system.
Should Western proceed with its declared intention to exercise
control over Bushnell and its licensee companies, the Commis
sion will consider, either at revocation proceedings or upon
renewal, the position of each of the licensees in which Western
has a direct or indirect participation, including Bushnell and its
licensee companies, with a view to determining whether that
participation is in the best interests of the Canadian broadcast
ing system, whether in consequence the licences held by them
should be continued or renewed and, if so, upon what
conditions.
It must be obvious to those in control of Western that indirect
acquisitions of broadcasting undertakings are made at the peril
of the licensees of such undertakings. When the Commission
approves an application for a change of control, whether direct
or indirect, of a broadcasting undertaking, licensees may expect
that their licences will be renewed from time to time by the
Commission provided the broadcasting undertaking has been
satisfactorily operated. When control is changed without the
• approval of the Commission, the licensee companies must
3 R.S.C. 1970, c. B-11.
expect, either at a revocation hearing or upon an application for
renewal, that the Commission will scrutinize all aspects of any
controlling influence over them and may in an appropriate case
revoke their licences or refuse to renew them.
The Commission is not, by expressing these views, prejudging
the conclusion that it might reach upon an application for
renewal or following a revocation hearing. The Commission
however considers that the uncertainty that has been created in
the broadcasting industry as a result of the activities of West
ern makes a Public Announcement by the Commission manda
tory so that the guidelines contained in this announcement may
be available, in addition to those contained in past Commission
decisions, to assist interested parties.
It will be noted that each of the possible actions
which might be taken by the Commission in
respect of an alleged breach of the licence condi
tion relates to actions in respect of licences. Thus it
seems that the effect of the condition of approval
of the transfer of shares to Standard, namely that
Bushnell divest itself of its various direct and
indirect cable interests, at a time to be designated
as appropriate when each licensee applied for
renewal of its licence, was to impose an additional
condition in each of the licences. That condition
effectively denied to the licensees their right to
apply for unconditional renewals of their licences.
This is so notwithstanding the fact that a licence
cannot be made subject to-a condition other than
at the time of issuance of a licence, or upon the
application of a licensee to amend any conditions
of a broadcasting licence issued to him. (See sec
tion 17(1)(a),(b) and (c) of the Broadcasting
Act). 4 The condition for divestiture was not
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, and
(ii) in the case of broadcasting licences issued to the
Corporation, as the Executive Committee deems consistent
with the provision, through the Corporation, of the nation
al broadcasting service contemplated by section 3;
(b) upon application by a licensee, amend any conditions of
a broadcasting licence issued to him;
(c) issue renewals of broadcasting licences for such terms
not exceeding five years as the Executive Committee consid
ers reasonable and subject to the conditions to which the
renewed licences were previously subject or to such other
conditions as comply with paragraph (a);
imposed at a hearing called for the purpose of
considering an application for the issuance or
renewal of any licence or for amendment of Bush-
nell's licence by the inclusion of the divestiture
condition, pursuant to section 17, but at a hearing
which, on the evidence, was clearly called only for
the purpose of considering an application for the
approval of a transfer of shares of only one of the
licensees. No application for renewal had been
made nor had the time yet arrived when the
licences were about to expire and require renewal.
Neither had the Commission sought to revoke any
of the licences. That being so, it would appear that
the Commission was without jurisdiction in
making any order that affected any of the licences
held or controlled by Bushnell.
In Confederation Broadcasting (Ottawa) Lim
ited v. Canadian Radio-Television Commission
[1971] S.C.R. 906, the question to be decided was
whether a renewal of licence could be lawfully
coupled with a contemporaneous determination
that the licensee's frequency would be re-assigned
in the light of applications therefor to be made up
to a stated date within the renewal period. Laskin
J. (as he then was) speaking for Hall J. and
himself decided that it could not, the Commission
in so doing having exceeded its statutory power. At
pages 931-2 he said:
In my opinion, the Act gives a licensee, whose licence has not
been revoked or suspended during its currency, a right to apply
for a renewal. There are obvious economic factors involved in
qualifying for and remaining qualified for licensing, and the
right to apply for a renewal of a licence cannot be dismissed as
having merely ephemeral value because there is no right of
renewal .... However, I cannot agree that a renewal term can
be coupled with a peremptory denial, at the time the term is
granted, of status to apply for a further renewal prior to
expiration of the term. The Broadcasting Act nowhere gives
such a power expressly; and in view of the range of authority to
revoke, suspend, renew, and amend (a power which I have not
thought it necessary to consider), as well as to issue licences, I
do not think that I would be justified in finding such a power
implied in the authority to renew. Indeed, s. 17(1)(c) appears
to preclude it. The case would be different if the licensèe
consented to a terminal renewal term, agreeing that no applica
tion would be made for a further renewal.
The above reasoning, derived from a different
set of facts is, I believe, equally applicable in the
case at bar. Unlike the situation in the Confedera
tion case (supra) no renewal had yet been granted
to any of the Bushnell licensees. Nonetheless what
was done either affected the existing licences or
their renewals in either or both of the following
ways:
(a) as previously observed, the Commission by
implication included a new condition in each of
the existing licences effectively denying to the
licensees the right to apply for unconditional
renewals of those licences, or
(b) imposed in advance of any application for
renewal a restriction on the licensee's right to
renewal which had not previously existed.
Viewed either way the exercise of the Commis
sion's discretion was frozen and such an action is
neither expressly nor impliedly conferred on it by
the Broadcasting Act, at least without compliance
with section 17 thereof.
It follows then that the Commission's decision of
March 13, 1975 cannot stand at least in so far as it
imposed the condition of divestiture on the approv
al of transfer of the shares of Bushnell owned by
Western to Standard. It is thus unnecessary for me
to decide whether or not the Commission denied
natural justice to the applicants in respect of the
failure of the notice of the hearing held on Febru-
ary 26, 1975 to make any reference to the fact that
the question of Bushnell being required to divest
itself of its cable interests, would be dealt with at
that time.
Whether or not the whole decision must fall or
whether the impugned part thereof is severable
from the approval of transfer is the next question
requiring resolution. In my opinion, a plain read
ing of the decision indicates that the condition was
fundamental to the approval granted. Without the
agreement of Standard to the condition imposed, it
is quite apparent that approval would not have
been considered. It was thus a condition which
went to the root of the approval and striking it out
fundamentally alters the decision. That being so,
the whole decision must fall.
The proper judgment, therefore, would appear
to be to allow the appeal and refer the matter back
to the Commission for a decision on the applica
tion before it without the inclusion of any condi
tion not authorized by the Broadcasting Act.
* * *
The following are the reasons for judgment
rendered in English by
RYAN J.: I have had the advantage of reading
the reasons for judgment of my brother Urie J. He
has set out in detail the facts and the issues. I
agree with him on the questions of status and I
also agree that the appropriate procedure in the
circumstances of this case is by way of an appeal
under section 26 of the Broadcasting Act', not by
way of an application under section 28 of the
Federal Court Act 6 .
I am further of the opinion, as was Mr. Justice
Urie, that the condition, to which the approval of
the transfer of the effective ownership or control of
Bushnell, Ottawa-Cornwall Broadcasting Limited
and Laurentian Cablevision Limited, and of the
broadcasting undertakings operated by them, from
Western to Standard, contained in decision
CRTC -75-78, dated March 13, 1975, was made
subject, was a condition imposed by the Commis
sion without authority.
For the sake of convenience, I will quote again
the condition, set out in Mr. Justice Urie's reasons,
to which the approval was made subject:
The Commission will require, as a condition of its approval of
these applications, that Standard agree to cause Bushnell to
divest itself of its cable television undertaking at Rockland,
Ontario, as well as its interests in Laurentian Cablevision Ltd.
and Skyline Cablevision Limited. The Commission will review
the question of the divestiture of these interests in the case of
each licensee at the time of licence renewal with a view to
establishing an appropriate time for each divestiture to be
completed.
Action by the Commission in respect of compli
ance with the condition was to be postponed until
applications are made for renewals of the licences
involved. The mandate embraced in the condition
was nonetheless peremptory: "The Commission
will require, as a condition of its approval of these
R.S.C. 1970, c. B-11 as amended.
6 R.S.C. 1970, c. 10 (2d Supp.).
applications, that Standard agree to cause Bush-
nell to divest itself of its cable television undertak
ing at Rockland, Ontario, as well as its interests in
Laurentian Cablevision Ltd. and Skyline Cablevi-
sion Limited." That decision was not left open for
reconsideration. At the time of an application to
renew a licence, the question of divestiture is, it is
true, to be reviewed but, significantly, only ".. .
with a view to establishing an appropriate time for
each divestiture to be completed". The reference to
"establishing an appropriate time for divestiture"
is significant when read in relation to the sentence
in the decision which immediately precedes the
words of the condition quoted above: "At the
public hearing, the President of Standard
expressed a desire to retain Bushnell's cable televi
sion interests but a willingness to divest, if given a
reasonable period of time to do so."
In my view, the critical defect of the condition is
the fetter which, by imposing it, the Commission
has placed on the exercise of the discretion, which
it has a statutory duty to exercise, to grant or
refuse a renewal of a licence in the light of all
relevant circumstances at the time a renewal
application is heard. I do not think that it is an
answer to say that, in the interval before an
application for renewal is made, the Commission
may change its mind. So far as a licensee is
concerned, it is faced with a decision expressed in
unqualified words of command. From its point of
view, unless the command is obeyed, an applica
tion will be futile. In these circumstances, the
condition cannot stand.
I have had difficulty in deciding whether the
offending condition is severable from the approval.
I have decided that it is not. The approval, and the
important condition to which it is made subject,
are inextricably interwoven. The decision to
approve, stripped of its condition, would be a very
different decision.
I agree that the appeal should be allowed and
the matter referred back to the Commission on the
terms stipulated by Mr. Justice Urie.
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.