A-703-79
Câble Laurentide Ltée (Appellant)
v.
Canadian Radio-television and Telecommunica
tions Commission (Respondent)
and
Attorney General of Canada and Lachute Cablevi-
sion Ltée (Mis -en-cause)
Court of Appeal, Pratte and Le Dain JJ. and
Lalande D.J.—Montreal, June 10 and 11, 1980.
Judicial review — Appeal — Combined under Rule 1314
Decision of CRTC dismissing application to purchase assets of
cable television undertaking and for licence to continue opera
tion, challenged — Proposed financing by subsidiary of foreign
corporation — Whether insufficient reasons given by CRTC
Whëther CRTC misinterpreted— Direction— byGovernor_in_
Council — Whether CRTC contravened Direction by refusing
to issue licence to person entitled to obtain one — CRTC's
discretion to refuse licences is not limited by Direction —
Application and appeal dismissed — Broadcasting Act, R.S.C.
1970, c. B-11, ss. 3, 22(1)(a), 26, 27(1) — CRTC Rules of
Procedure, CRC, Vol. IV, c. 375, s. 42 — Direction to the
CRTC (Eligible Canadian Corporations), CRC, Vol. IV, c.
376, s. 8 — Federal Court Act, R.S.C. 1970 (2nd Supp.), c. 10,
s. 28 — Federal Court Rule 1314.
APPLICATION for judicial review and appeal.
COUNSEL:
Michel Robert for appellant.
J. Ouellet, Q.C. for mis -en-cause Attorney
General of Canada.
SOLICITORS:
Robert, Dansereau & Barre, Montreal, for
appellant.
Deputy Attorney General of Canada for mis -
en-cause Attorney General of Canada.
The following is the English version of the
reasons for judgment delivered orally by
PRATTE J.: Appellant is challenging a decision
of the Canadian Radio-television and Telecom-
munications Commission.' By that decision, the
Commission dismissed an application submitted by
appellant for authority to purchase the assets of a
cable television undertaking in Lachute, Quebec,
and for a broadcasting licence enabling it to con
tinue operating that undertaking.
Counsel for the appellant first argued that insuf
ficient reasons were given for the decision of the
Commission, and that it accordingly contravened
Rule 42 of the CRTC Rules of Procedure, which
requires the Commission to give reasons for its
decision. 2 The reasons given by the Commission in
support of its decision need only be read to see that
this complaint is without foundation. In my opin
ion, those reasons clearly demonstrate that the
Commission dismissed appellant's application
because the latter was proposing to finance pur
chase of the television undertaking that it wished
to operate in a manner which might allow that
undertaking to pass into the control of a foreign
corporation. Indeed, the Commission's reasons are
short enough to be cited in their entirety:
In its examination of this application, the Commission has
noted that the applicant is proposing to finance this transaction
through a Canadian subsidiary of a non-Canadian finance
company, and that the conditions attached to the financing
offer would open the way to a possible takeover of a licensed
broadcasting undertaking by a non-Canadian firm.
The Ownership Direction, P.C. 1969-2229 as amended stipu
lates that the Commission shall not "issue or renew" any
broadcasting licence to "persons who are not [...] eligible
Canadian corporations". Paragraph 4(c) states that "in any
case where in the opinion of the Commission [...] the corpora
tion is effectively owned or controlled either directly or in
directly and either through the holding of shares of the corpora
tion or any other corporation or through the holding of a
significant portion of the outstanding debt of the corporation or
in any other manner whatever, by or on behalf of any [ineli-
gible corporation], the corporation shall be deemed not to be an
eligible Canadian corporation."
Accordingly, the Commission does not consider it desirable to
approve the purchase on the basis of the financing proposed.
I Appellant initially asked that his decision be set aside in the
manner provided for in section 28 of the Federal Court Act,
R.S.C. 1970 (2nd Supp.), c. 10. It then appealed from the same
decision pursuant to section 26 of the Broadcasting Act, R.S.C.
1970, c. B-11. These two actions were subsequently joined by
an order of the Court under Rule 1314.
2 Section 42 provides that "the Commission may give orally
or in writing the reasons for its orders or decisions".
I should like to digress here and say a few words
on the "Ownership Direction" mentioned in the
Commission's decision. This Direction is an order
of the Governor in Council, the correct title of
which is "Direction to the CRTC (Eligible
Canadian Corporations)"; it is now contained in
chapter 376 of the Consolidated Regulations of
Canada, 1978. This order prohibits the Commis
sion from issuing broadcasting licences to govern
ments, persons and foreign corporations, and also
to corporations which, in the opinion of the Com
mission, are effectively controlled by foreigners. It
was adopted in accordance with subsection 27(1)
and paragraph 22(1)(a) of the Broadcasting Act.
Under subsection 27(1):
27. (1) The Governor in Council may by order from time to
time issue directions to the Commission as provided for by
subsection 18(2) and paragraph 22(1)(a).
Paragraph 22(1) (a) provides as follows:
22. (1) No broadcasting licence shall be issued, amended or
renewed pursuant to this Part
(a) in contravention of any direction to the Commission
issued by the Governor in Council under the authority of this
Act respecting
(iii) the classes of applicants to whom broadcasting
licences may not be issued ... .
Having said this by way of explanation, I now
turn to the second argument put forward by coun
sel for the appellant. In his submission, the deci
sion a quo is vitiated by illegality because it is
based on the misinterpretation of the Direction
given by the Governor in Council. Counsel for the
appellant contended that this Direction in no way
prohibits the issuing of the broadcasting licence to
a corporation like appellant, which is manifestly
neither a foreign corporation nor a corporation
which is effectively controlled by foreigners. He
submitted, therefore, that it is incorrect for the
Commission to base its decision to dismiss appel
lant's application on this Direction.
This second argument appears to rest on a mis
interpretation of the Commission's decision, as the
latter in my opinion never held that the Governor
in Council's order prohibited issuing a licence to
appellant. What the Commission appears to have
held is that, in the circumstances, it did not seem
desirable to it to allow appellant's application
because, by doing so, it might be creating the
possibility that a situation would arise in the
future in which the Direction given by the Gover
nor in Council might be avoided.
Counsel for the appellant argued, finally, that if
that was the real meaning of the Commission's
decision, it was nonetheless illegal because, in
making it, the Commission contravened the Direc
tion of the Governor in Council, since in his sub
mission it refused to issue a licence to a person
who, under the Direction, was entitled to obtain
one. I feel that this final argument must also be
dismissed. Under section 17 of the Broadcasting
Act, the Commission has a discretionary power to
grant broadcasting licences, in accordance with the
principles set forth in section 3, and in particular,
paragraph (b) of that section, by which "the
Canadian broadcasting system should be effective
ly owned and controlled by Canadians . ..". This
discretion is limited by the Direction given by the
Governor in Council under subsection 27(1), and
the effect of this Direction is indicated in para
graph 22(1)(a):
22. (1) No broadcasting licence shall be issued, amended or
renewed pursuant to this Part
(a) in contravention of any direction to the Commission
issued by the Governor in Council ... .
Under the latter provision, therefore, it is clear
that the only effect which the Direction given by
the Governor in Council can have on the discretion
conferred on the Commission by section 17 is to
prevent the latter from issuing, amending or
renewing a licence contrary to the Direction. The
Direction cannot have the effect of obliging the
Commission to issue a licence. Indeed, if one reads
the Direction at issue here, it is clear that it only
prohibits the Commission from issuing licences to
certain classes of persons, and does not limit the
discretion of the Commission to refuse the licence
to a person who is not prohibited by the Direction
from obtaining one. If there were any doubt in this
regard, it would be dispelled by paragraph 8(b) of
the Direction, to the effect that:
8. Nothing in this Direction shall be construed as limiting
(b) the power of the Canadian Radio-television and Tele
communications Commission, in carrying out its objects ...
to refuse to issue a broadcasting licence to or to grant an
amendment or renewal of a broadcasting licence to an appli
cant of a class other than a class described in section 3.
For these reasons, I would dismiss the appeal
and the application made pursuant to section 28.
* * *
LE DAIN J. concurred.
* * *
LALANDE D.J. concurred.
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