Judgments

Decision Information

Decision Content

A-1056-82
Okanagan Helicopters Ltd., Wescan Resource Equipment Ltd., and The Resource Service Group Ltd. (Appellants)
v.
Canadian Transport Commission (Respondent)
and
Sealand Helicopters Ltd. (Intervenant)
Court of Appeal, Urie, Ryan JJ. and Kelly D.J.— Toronto, December 1; Ottawa, December 24, 1982.
Aeronautics — 65% of Okanagan shares transferred from B.C. numbered corporation to parent, Wescan — After second transaction, shares to be held 17% by Wescan, 34% by its parent RSG and 49% by United, and English company — CTC concluding change of control of Okanagan effected in both transactions — First transaction effected change of "legal control"; second would give plurality shareholder "at least joint effective control" — Notice required under s. 22 of Regulations — CTC having jurisdiction to examine transac tions because Okanagan an "air carrier" as per s. 9(1) of Aeronautics Act — Meaning of "control" in s. 14(1)(l) of Act and in Regulations — Legal, de jure control by virtue of ownership of majority of voting shares vs. effective, de facto control notwithstanding ownership of less than majority "Control" to be interpreted in light of statutory context — Amendments contemporaneous to enactment of present s. 14(1)(1) attaching restrictive, de jure definition to ss. 15.1, 16, by reference to Canada Business Corporations Act — Inference that Parliament intended more comprehensive, de facto defini tion for s. 14(1)(1), enabling CTC to exercise s. 10(1)(b) juris diction — De facto encompasses legal control — Vote would produce same result whether shares give de facto or de jure control — Appeal dismissed — Aeronautics Act, R.S.C. 1970, c. A-3, ss. 9(1), 10(1)(b),(2), 14(1)(l) (as am. by S.C. 1976-77, e. 26, s. 2(2)), 15.1 (enacted by S.C. 1976-77, e. 26, s. 3); 16 (as am. by S.C. 1976-77, c. 26, s. 4(1)) — Air Carrier Regulations, C.R.C., c. 3, ss. - 21, 22 — Canada Business Corporations Act, S.C. 1974-75-76, c. 33, s. 2(3) (as am. by S.C. 1978-79, c. 9, s. 2(5)) — Income Tax Act, R.S.C. 1952, c. 148, s. 39 (as am. by S.C. 1960, c. 43, s. 11) — The Public Utilities Board Act, R.S.A. 1970, c. 302, s. 2(i).
Judicial review — Statutory appeals — Aeronautics — CTC deciding each of two transactions effected change of control of air carrier — Meaning of "control" in s. 14(1)(l) of Act and in Regulations question of law — Court lacking jurisdiction on questions of fact, including: existence of "con-
trol"; occurrence of "change of control"; reasoning of CTC; identity of "public interest" — Decision untouchable if CTC gives reasonable interpretation and if supporting evidence exists — CTC's decision consistent with Court's finding that "control" has comprehensive, de facto meaning — Whether CTC applied correct test in deciding first transaction effected change of "legal control" — De facto encompasses legal control — Vote would produce same result whether shares give de facto or de jure control — Appeal dismissed — Aeronautics Act, R.S.C. 1970, c. A-3, ss. 9(1), 10(1)(b), 14(1)(l) (as am. by S.C. 1976-77, c. 26, s. 2(2)) — Air Carrier Regulations, C.R.C., c. 3, ss. 21, 22 — National Transportation Act, R.S.C. 1970, c. N-17 (as am. by R.S.C. 1970 (2nd Supp.), c. 10, s. 65 (Item 32)).
RSG wholly owned Wescan, which in turn owned a B.C. numbered company. Initially, the latter held 65% of the shares of the air carrier Okanagan, with the balance being held by RSG. The first transaction then occurred. In it, the 65% of Okanagan held by the B.C. numbered company was transferred to Wescan. Wescan, RSG, and Okanagan entered into an agreement with United, a company having its registered office in England. This agreement was with respect to a second transaction, which would have resulted in the ownership of Okanagan being distributed as follows: 49% to United; 34% to RSG; 17% to Wescan. United was to have a financial interest in Okanagan in addition to that represented by its sharehold- ings, and was also to enjoy certain other rights pertaining to the transfer of Okanagan's shares and the direction of Okanagan. Sealand, a Canadian air carrier, filed a complaint with the CTC, which prompted the Commission to conduct investiga tions. These resulted in a decision by the CTC that each of the two transactions had effected, or would effect, a "change of control" of Okanagan, within the meaning of section 21 of the Air Carrier Regulations, and that notice of each transaction was therefore required to be given under section 22. According to the reasons which the CTC subsequently provided, the first transaction had produced a change in the "legal control" of Okanagan, while the second would have given "at least joint effective control" of that company to United. Leave to appeal the CTC decision was granted.
Held, the appeal should be dismissed. It is uncontested that Okanagan is an "air carrier" within the meaning of subsection 9(1) of the Aeronautics Act. Therefore, pursuant to subsection 10(2) and paragraph 14(1)(l) of the Act, the CTC had jurisdic tion to examine the transactions. The key matter is the meaning to be ascribed to the word "control", as used in paragraph 14(1)(1) and in the Regulations. The alternative definitions are: (1) legal, de jure control, being control by virtue of the ownership of a majority of the voting shares; and (2) effective, de facto control, being control notwithstanding that less than a majority of voting shares is owned. Since neither the Act nor the Regulations define the word, its meaning must be deter mined by reference to legal principles, the statutory context,
and the factual elements of actual control. Its meaning is thus a question of law. By contrast, whether "control" exists, whether there has been a "change of control", the reasoning upon which the CTC decides these points, and the identity of the "public interest" (referred to in paragraph 10(1)(b)), are all questions of fact. Under subsection 64(2) of the National Transportation Act, the Court has power to examine only questions of law and questions of jurisdiction; therefore, if the CTC has given the word "control" a reasonable definition, and if there was evi-.. dence to support the CTC's decision regarding the change and existence of "control" (as defined by the CTC), the Court cannot interfere with the decision. Now, the present form of paragraph 14(1)(l) was enacted by the same amending legisla tion which made other additions to the Aeronautics Act. By these other additions, "control" was defined for the purposes of sections 15.1 and 16, as control "determined pursuant to the Canada Business Corporations Act". The latter statute employs a restrictive, de jure definition, based on ownership of shares which confer certain voting majorities. The amending legislation did not attach the CBCA definition to paragraph 14(1)(l). Consequently, it must be inferred that Parliament intended the term "control" to have a more comprehensive, de facto meaning in that paragraph. This would leave the CTC free to exercise its jurisdiction under paragraph 10(1)(b), whereby the Commission is empowered to inquire into any matter if the public interest appears so to require. The decision of the CTC was consistent with such an interpretation. Hence it cannot be set aside by the Court. True, the CTC's conclusion regarding the first transaction was that there had been a change of legal control, and one may thus ask whether the CTC applied the correct test to that transaction. The concept of de facto control may, however, be regarded as encompassing the more limited idea of legal control. Whether the controlling party's shares give it de facto control or de jure control, the result of a vote on a given issue would be the same.
CASES JUDICIALLY CONSIDERED
DISTINGUISHED:
Her Majesty in right of the Province of Alberta v. Canadian Transport Commission, [1978] 1 S.C.R. 61.
CONSIDERED:
Buckerfield's Ltd. et al. v. Minister of National Revenue, [1965] 1 Ex.C.R. 299; 64 DTC 5301; Atco Ltd. et al. v. Calgary Power Ltd., et al., [1982] 2 S.C.R. 557, affirm ing (1980), 117 D.L.R. (3d) 332; 24 A.R. 300 (C.A.); Alleghany Corporation et al. v. Breswick & Co. et al., 353 U.S. 151 (1957).
REFERRED TO:
Minister of National Revenue v. Dworkin Furs (Pem- broke) Limited, et al., [[1967] S.R.C. 223]; 67 DTC 5035; Rochester Telephone Corp. v. United States et al., 307 U.S. 125 (1939).
COUNSEL:
J. C. Major, Q.C. and M. Feldman for
appellants.
D. J. E. Scott and S. Watt for respondent.
W. F. Clark for intervenant.
SOLICITORS:
Herridge, Tolmie, Ottawa, for appellants.
D. J. E. Scott (Legal Services, Canadian Transport Commission), Ottawa, for respond ent.
Hamilton, Torrance, Stinson, Campbell, Nobbs & Woods, Toronto, for intervenant.
The following are the reasons for judgment rendered in English by
URIE J.: This is an appeal from a decision of the Air Transport Committee ("ATC") of the Canadi- an Transport Commission ("CTC"), pursuant to leave granted by this Court, that a change in control in the appellant Okanagan Helicopters Ltd. ("Okanagan") had occurred within the mean ing of section 21 of the Air Carrier Regulations, C.R.C., c. 3 ("the Regulations"), and that, accord ingly, the provisions of section 22 of the Regula tions requiring a determination by the ATC as to whether or not the transaction would unduly restrict competition or otherwise be prejudicial to the public interest would have to be complied with.
Before referring to the factual background of the case, it would be useful to set out the relevant provisions of the statute, the Aeronautics Act, R.S.C. 1970, c. A-3, and of the Regulations. The jurisdiction of the Air Transport Committee arises from subsection 10(2) of the Aeronautics Act reading as follows:
10.
(2) The Commission may order and require any person to do, forthwith, or within or at any specified time and in any manner prescribed by the Commission so far as it is not inconsistent with this Act, any act, matter or thing that such person is or may be required to do under this Part, or any regulation, licence, permit, order or direction made thereunder by the Commission and may forbid the doing or continuing of any act, matter or thing that is contrary to this Part or any such regulation, licence, permit, order or direction and, for the purposes of this section, has full jurisdiction to hear and determine all matters, whether of law or fact.
The jurisdiction of the Canadian Transport Commission to enact section 21 of the Regulations
stems from paragraph 14(1)(1) [as am. by S.C. 1976-77, c. 26, subs. 2(2)], which reads as follows:
14. (1) The Commission may make regulations
(1) prohibiting the change of control, transfer, consolidation, merger or lease of commercial air services or of any air carrier except subject to such conditions as may by such regulations be prescribed;
The relevant portion of section 21 and subsec tions 22(1) and (4) of the Regulations are the pertinent statutory provisions, and they read as follows:
21. No person shall enter into a transaction that is intended to or would result in a change of control ... of any commercial air service or of any air carrier unless he complies with section 22.
22. (1) Any person who proposes to enter into a transaction described in section 21 shall give notice of such proposed transaction to the Committee.
(4) The Committee may, following receipt of notice of a transaction described in section 21, require the person referred to in subsection (1) to file with the Secretary such information and documents as will enable the Committee to determine whether the transaction will unduly restrict competition or otherwise be prejudicial to the public interest.
The transactions which resulted in the making of the order by the ATC which is here under attack are somewhat complicated.
The appellant The Resource Service Group Ltd. ("RSG") is a public company, the shares of which are listed on both the Toronto and Montreal Stock Exchanges. The appellant Wescan Resource Equipment Ltd. ("Wescan") is an Alberta com pany which is a wholly-owned subsidiary of RSG.
246455 British Columbia Limited ("B.C. Com pany") was incorporated in British Columbia as a wholly-owned subsidiary of Wescan. The purpose of incorporation was to enable the company to hold approximately 65% of the issued and out standing shares of the appellant Okanagan. Okanagan is a British Columbia company. The balance of the issued and outstanding shares of Okanagan were held by RSG.
The first transaction, which was described by the appellants as being an internal "housekeeping" matter, resulted in the 65% of Okanagan held by the B.C. Company being transferred to its parent, Wescan.
The second transaction arose from an agreement dated October 7, 1982, between United Heli copters Limited ("United"), a company having its registered office at Surrey, England, on the one part, and RSG, Wescan and Okanagan on the other part. Pursuant thereto, United subscribed for 661,053 ordinary shares of Okanagan for the aggregate sum of $9,800,000 and for 11,000 12 1 / 2 % cumulative, redeemable preference shares for an aggregate consideration of $11,000,000. As a result of these transactions, United is to become the owner of 49% of Okanagan and the balance thereof is to be owned, as to approximately 34%, by RSG and, as to 17%, by Wescan.
Apparently, as the result of a complaint filed by the intervenant Sealand Helicopters Ltd. ("Sea- land"), a company incorporated pursuant to the Canada Business Corporations Act [S.C. 1974-75- 76, c. 33] and a licensed air carrier, the Secretary of the CTC on September 17, 1982, requested certain information from Okanagan in regard to the first transaction. As a result, Okanagan was directed by the ATC to provide it with copies of all agreements which might effect any changes in the control or operations of Okanagan. It required confirmation that control of Okanagan remained in the B.C. Company.
As a result of its investigations, the CTC also, apparently, learned of the second transaction and, as a result, the order was made by the CTC on October 7, 1982, which is the subject-matter of this appeal. The relevant portions of the decision conveyed by telex to the solicitors for Okanagan read as follows:
THE AIR TRANSPORT COMMITTEE HAS EXAMINED ALL OF THE DOCUMENTS AND AGREEMENTS AS THEY RELATE TO THE PROPOSED UNITED HELICOPTERS LTD. PURCHASE.
THE PRESENT SHAREHOLDER OF RECORD OF OKANAGAN HELICOPTERS LTD. IS 246455 BRITISH COLUMBIA LTD. THE COMMITTEE NOTES THAT A CHANGE OF CONTROL OF OKANA- GAN HELICOPTERS LTD. HAS BEEN EFFECTED FROM 246455 BRITISH COLUMBA LTD. TO WESCAN RESOURCE EQUIPMENT LTD., ITS PARENT COMPANY. THE PARTIES CONCERNED ARE REQUIRED TO GIVE NOTICE OF THIS TRANSACTION PURSUANT TO SECTION [Sid] 21 AND 22 OF THE MR CARRIER REGULATIONS.
THE COMMITTEE HAS CONCLUDED THAT THE PROPOSED UNITED HELICOPTERS LTD. PURCHASE WILL ALSO RESULT IN A CHANGE OF CONTROL OF OKANAGAN HELICOPTERS LTD. FROM WESCAN RESOURCE EQUIPMENT LTD. TO UNITED HELI-
COPTERS LTD., THE RESOURCE SERVICE GROUP LTD. AND WESCAN HELICOPTERS LTD.
ACCORDINGLY THE PARTIES CONCERNED ARE ALSO REQUIRED TO GIVE NOTICE OF THIS TRANSACTION PURSUANT TO SECTION 21 AND 22 OF THE AIR CARRIER REGULATIONS.
REFERENCE CAN BE MADE TO APPENDIX 9 OF THE GUIDE FOR THE PREPARATION OF APPLICATIONS TO DETERMINE WHAT FORMAT THE NOTICES SHOULD TAKE.
At the request of RSG, the CTC, by letter dated October 22, 1982, gave reasons for its conclusion that a change of control of Okanagan had been effected in each of the two transactions. With respect to the first transaction, the CTC found a change of "legal control" of Okanagan had occurred as a result of the transfer of the shares of Okanagan from the B.C. Company to its parent Wescan. With respect to the second transaction, the respondent CTC found that United enjoyed "at least joint effective control of Okanagan", based on the following factors:
In arriving at its conclusion that, in the present case, United Helicopters Ltd. enjoys at least joint effective control of Okanagan Helicopters Ltd., the A.T.C. was influenced by the following factors:
1. The fact that United has also subscribed to all of the preferred shares of Okanagan, representing an additional investment by United in the amount of $11,000,000. Thus, in terms of the total equity in Okanagan United is by far the largest shareholder in Okanagan, and by far the investor who is assuming the greatest financial risk.
2. The fact that it is a condition of the share purchase agree ment that
(a) Okanagan enter into (aircraft) lease agreements with United and
(b) that a shareholders' agreement be executed by The Resource Service Group Ltd., Wescan Resource Equipment Ltd. and United Helicopters Limited.
3. The fact that the aforementioned shareholders' agreement outlines seventeen basic matters which the Board of Directors of Okanagan is incapable of accomplishing without the consent and approval of both United and The Resource Group Ltd. expressed by way of a shareholders' resolution.
4. The fact that the said shareholders' agreement also secures in favour of United an option of first refusal should another shareholder wish to transfer its shares, and in any event also secures in favour of United the right to approve of any other proposed transferee of shares.
5. The additional major financial interest to be held in Okana- gan by United via the aircraft lease agreements referred to previously. Okanagan has filed one lease agreement between it as lessee and United as lessor relating to one Sikorsky Model 561N helicopter. Further information submitted by Okanagan discloses that Okanagan and United intend to enter into two additional and similar lease agreements for two more Sikorsky Model 561N helicopters. The lease agreement that has been filed with the Committee provides for a term of seven years and
a cost of $40,000 (U.S.) per month for the lease of the aircraft. (The Committee notes that the lease agreement states that the aircraft is to be used in Canada or to and from offshore locations in proximity thereto. By letter dated September 30, 1982, Okanagan through its solicitors advised the Committee that the lease agreement would be amended to also permit use of the aircraft in foreign markets.)
6. The fact that United's expertise and facilities will play an influential role in the conduct of Okanagan's business, as evidenced by the following statements made by Okanagan in a document entitled "Summary of Facts Relating to the Transaction":
Okanagan is about to embark on a program of hangar construction at St. John's, Newfoundland and Halifax, Nova Scotia to service offshore oil and gas exploration activities. United has considerable experience in servicing the oil and gas exploration activities in the U.K. North Sea. United's North Sea terminal, hangar and support facility experience would be most helpful to Okanagan in its program in Atlan- tic Canada.
United's expertise in the areas of foreign market operations, technology and safety in offshore activity will be available to Okanagan ( ....)
Okanagan will improve its purchasing power with foreign manufacturers as a result of its interface with United. Okanagan is currently negotiating with foreign aircraft sup pliers for the trade of certain older model types against the purchase of advanced model aircraft to maintain Okanagan's competitive position in the years ahead. United's equipment experience and purchasing power will considerably aid Okanagan in this regard.
Okanagan currently employs aircraft in the Asian markets. As a result of this transaction, Okanagan will have access to United's facilities in Singapore.
It should first be observed that no serious ques tion was raised by any of the parties as to the jurisdiction of the CTC to make the order here attacked. In fact, subsection 10(2) of the Aeronautics Act, supra, provides the CTC with the jurisdiction to "hear and determine all matters, whether of law or fact". Moreover, paragraph 14(1)(1) of that Act, supra, provides the Commis sion with power to make regulations prohibiting the change of control of "commercial air services or of any air carrier...." "Air carrier" and "com- mercial air service" are both defined in [subsection 9(1) of] the Act. "Commercial air service" means "any use of aircraft in or over Canada for hire or reward". "Air carrier" means "any person who operates a commercial air service". It is uncontest ed that Okanagan is an air carrier, so that the jurisdiction of the CTC to examine this transac tion appears clear.
It was the contention of counsel for the appel lants that since "control" is not defined in either the Aeronautics Act or its Regulations, its mean ing must be ascertained by reference to legal prin ciples, the statutory scheme and the factual ele ments of control in reality. I agree with this submission, so that it seems to me that the mean ing to be ascribed to "control" is a question of law, while whether or not there has been "a change of control" within the meaning of the Act and the Regulations is a question of fact. Furthermore, it is undisputed, as I understand it, that the word "control" as used in the Act and Regulations means either legal, de jure control—which means control by virtue of the ownership of a majority of the voting shares—or effective, de facto control— which means control by virtue of something less than a majority of such shares. It is the determina tion of the meaning of "control" in the context in which the word is used in the Act and the Regula tions, here being examined, which must be made. If the CTC has correctly interpreted the word in the context in which it is used in the Regulations, whether or not there has, in fact, been a change of control is not a matter to be addressed by this Court. That the Court has no jurisdiction on the facts arises by virtue of subsection 64(2) of the National Transportation Act, R.S.C. 1970, c. N-17, and amendments thereto [R.S.C. 1970 (2nd Supp.), c. 10, s. 65 (Item 32)], which limits an appeal from the CTC to this Court to one upon a question of law or a question of jurisdiction.
The meaning of "control" in corporate law has been considered by the courts on many occasions, usually in the context of a particular statute. In Buckerfield's Ltd. et al v. Minister of National Revenue,' Jackett P. (as he then was) had to determine the meaning of the word as it was used in the Income Tax Act, R.S.C. 1952, c. 148, and amendments thereto [S.C. 1960, c. 43, s. 11], which provided that one corporation was associat ed with another corporation for the purposes of the Act if "both of the corporations were controlled by the same person or group of persons". At pages 302-303 of the report, President Jackett had this to say:
1 [1965] 1 Ex.C.R. 299; 64 DTC 5301.
Many approaches might conceivably be adopted in applying the word "control" in a statute such as the Income Tax Act to a corporation. It might, for example, refer to control by "man- agement", where management and the Board of Directors are separate, or it might refer to control by the Board of Directors. The kind of control exercised by management officials or the Board of Directors is, however, clearly not intended by section 39 when it contemplates control of one corporation by another as well as control of a corporation by individuals (see subsec tion (6) of section 39). The word "control" might conceivably refer to de facto control by one or more shareholders whether or not they hold a majority of shares. I am of the view, however, that, in section 39 of the Income Tax Act, the word "controlled" contemplates the right of control that rests in ownership of such a number of shares as carries with it the right to a majority of the votes in the election of the Board of Directors. See British American Tobacco Co. v. I.R.C. ([1943] 1 A.E.R. 13) where Viscount Simon L.C., at page 15, says:
The owners of the majority of the voting power in a company are the persons who are in effective control of its affairs and fortunes.
That definition was referred to with approval by Hall J. speaking on behalf of the Supreme Court of Canada in Minister of National Revenue v. Dworkin Furs (Pembroke) Limited, et al. 2
The word as used in section 21 of the Regula tions as they read in 1977 was said by Spence J. in Her Majesty in right of the Province of Alberta v. Canadian Transport Commission 3 to refer not to the control of an "air carrier" as defined in the Regulations, but only to control of a "commercial air service" as defined therein. Since that decision, subsection 14(1) of the Act and section 21 of the Regulations have been amended to their present forms, supra, so that the limitation in the meaning of the word to the control of a commercial air service has been removed, and the control envisaged relates also to control of an air carrier.
Recently, the Supreme Court of Canada dealt with the meaning of the word "controlling" as it appears in the definition of "owner of a public utility" in [paragraph 2(i) of] the Alberta Public Utilities Board Act, R.S.A. 1970, c. 302, in the case of Atco Ltd. et al. v. Calgary Power Ltd., et al. 4 Estey J., speaking for the majority of the Court, carefully reviewed the jurisprudence relat-
2 [[1967] S.R.C. 223]; 67 DTC 5035.
[1978] 1 S.C.R. 61, at p. 82.
4 [1982] 2 S.C.R. 557.
ing to the use of the word in various statutes and concluded that, in the context of the statute which was being examined, the appellant was the "owner of a public utility". Excerpts from judgments of the Supreme Court of the United States in Rochester Telephone Corp. v. United States et al.' and from the Court of Appeal of Alberta in the judgment under appeal [(1980), 117 D.L.R. (3d) 332; 24 A.R. 300] were, in particular, relied on by him. At pages 580 and 581 of Mr. Justice Estey's reasons, the following appears:
Without proliferating unduly the study of peripheral aids to the interpretation of these sections of the Alberta statute, reference may be made to two United States decisions. In Alleghany Corp. v. Breswick & Co. (1957), 353 U.S. 151, the United States Supreme Court was concerned with the interpre tation of railway regulations which required administrative approval where "control" of a carrier is sought by a non-carrier "through ownership of their stock or otherwise". Frankfurter J., writing for the Court, stated at p. 163:
In 1939 ... this Court rejected artificial tests for "control", and left its determination in a particular case as a practical concept to the agency charged with enforcement. [Emphasis added.]
In its earlier decision referred to above, the Court stated:
Investing the (Federal Communications) Commission with the duty of ascertaining "control" of one company by another (as the basis for the Commission's jurisdiction), Congress did not imply artificial tests of control. This is an issue of fact to be determined by the special circumstances of each case. So long as there is warrant in the record for the judgment of the expert body it must stand. (Rochester Telephone Corp. v. United States, 307 U.S. 125 at pp. 145-6.)
Remarkably similar are the comments of Clement J.A. writ ing on behalf of the Court in this appeal:
Having all these matters in mind, I am of opinion that control is not to be confined in its meaning to immediate ostensible control of the operation and management of a public utility. In its context the word "controlling" must be accorded a more comprehensive meaning extending to the operational realities of control for public utilities purposes.
With respect I agree.
From all of the foregoing, it is quite apparent that determination of the meaning of "control" in a particular enactment depends upon the context in which it appears. The next step, then, is to look at the word as it is found in the context of para graph 14(1)(l) of the Act and section 21 of the Regulations.
5 307 U.S. 125 (1939), at pp. 145-146.
It should first be observed that, by An Act to amend the Aeronautics Act and the National Transportation Act, S.C. 1976-77, c. 26, para graph 14(1) (/) was amended to its present form [by subs. 2(2)], and section 15.1 was added to the Act [by s. 3], as were subsections 16(2.1), (2.2) and (2.3) [by subs. 4(1)]. The word "controlled" appears in subsections 15.1(1), 16(2), and 16(2.1). Subsections 15.1(2) and 16(2.3) each read as follows:
15.1 (1) From April 4, 1977, an air carrier, operating interprovincially or internationally, shall refuse to allow a transfer of a share of the capital stock of the air carrier to Her Majesty in right of a province, any agent thereof or any corporation controlled directly or indirectly by Her Majesty in right of a province or such an agent to be made in a register of transfer of shares of the capital stock of the air carrier unless the Governor in Council has approved such transfer.
(2) For the purposes of this section, "control" shall be as determined pursuant to the Canada Business Corporations Act.
16. ...
(2.1) No such licence shall be issued to any air carrier, operating interprovincially or internationally, in which Her Majesty in right of a province, any agent thereof or any corporation controlled directly or indirectly by Her Majesty in right of a province or such an agent has or is in the process of acquiring, directly or indirectly, a debt or equity interest with out approval of the Governor in Council, but any existing licence shall not be affected by this subsection.
(2.2) The Governor in Council may, on application by an air carrier referred to in subsection (2.1), prior to consideration by the Commission of an application by the air carrier for a licence, by order, approve, subject to the decision of the Com mission, the granting of a licence to the air carrier.
(2.3) For the purposes of this section, "control" shall be as determined pursuant to the Canada Business Corporations Act.
Subsection 2(3) of the Canada Business Corpo rations Act (as amended by S.C. 1978-79, c. 9 [subs. 2(5)]) reads:
2....
(3) For the purposes of this Act, a body corporate is con trolled by a person if
(a) securities of the body corporate to which are attached more than fifty per cent of the votes that may be cast to elect directors of the body corporate are held, other than by way of security only, by or for the benefit of that person; and
(b) the votes attached to those securities are sufficient, if exercised, to elect a majority of the directors of the body corporate.
Clearly this subsection describes what is com monly referred to as "legal" or de jure control. Since paragraph 14(1)(l) was amended at the same time as section 15.1 and subsections 16(2.1), (2.2) and (2.3) were added, it must be presumed that Parliament intended "control" in paragraph 14(1)(l) to be accorded a different interpretation than that given to the word by virtue of subsec tions 15.1(2) and 16(2.3). Since these subsections are restrictive in the meaning to be accorded the word, I am of the opinion that the word "control" in paragraph 14(1)(l) must be given a more com prehensive meaning. That must be a kind of con trol different from the absolute, legal control aris ing from the ownership of a majority of the voting shares of a company.
Parliament, in differentiating between the con cepts of control envisaged by those sections, appar ently did so to enable the CTC to exercise the jurisdiction available to it by virtue of paragraph 10(1)(b) of the Act, which reads:
10. (1) The Commission has full jurisdiction to inquire into, hear and determine any matter
(b) where it appears to the Commission that the circum stances may require the Commission, in the public interest, to make any order or give any direction, leave, sanction or approval that by law it is authorized to make or give, or with respect to any matter, act, or thing that by this Part or any such regulation, licence, permit, order or direction is prohib ited, sanctioned or required to be done. [Emphasis added.]
When the purpose in creating the differentiation is thus understood (i.e., to enable the CTC to inquire into any matter where it appears to be in the public interest), the meaning to be accorded to the word to enable the CTC to exercise its review jurisdiction is understandable and sustainable. That being so, it did not commit, in my view, any error in law or jurisdiction which would entitle this Court to set aside the order here attacked.
Before leaving that aspect of the matter, it should be recalled that, with respect to the first transaction, the CTC found a change in the "legal control" of Okanagan had occurred as a result of the transfer of the shares of Okanagan from the B.C. Company to its parent, Wescan. That finding raises a question as to whether or not the CTC applied the correct test, in view of my conclusion with respect to the meaning to be given to "con-
trol". The short answer to that problem is as follows. The more comprehensive meaning to be given the word is "effective" or de facto control. That arises by virtue of a degree of control which is achieved by the holding of something less than a majority of the voting shares of the company. A fortiori, then, it must embrace control through the ownership of an outright majority of the voting shares. That being so, the result of a vote would be the same in either case, assuming that the holder, whether of a number of shares sufficient to effec tively control or to absolutely control, would vote the same way on a given issue.
The existence or non-existence of "control", whether de jure or de facto, according to the meaning ascribed to the word by the CTC in an interpretation which was reasonably open to it, is a question of fact for the Commission to decide, as is the question of "public interest" a matter of opin ion for it to determine. So long, therefore, as there was evidence upon which it could conclude as it did, then there cannot have been an error of law justifying this Court's interference with the order.
The appellants, through their counsel, have raised a number of questions relating to the cor rectness of the reasoning of the CTC in concluding that United enjoys "at least joint effective control of Okanagan ...." The reasoning and the conclu sions are questions of fact which are not amenable to appeal pursuant to subsection 64(2) of the National Transportation Act, and should not, therefore, be the subject of any comment or scruti ny by this Court.
Accordingly, for all of the foregoing reasons, I would dismiss the appeal.
RYAN J.: I concur. KELLY D.J.: I concur.
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