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Federal Court Cour fédérale

Date: 20110204

Docket: T-26-10

Citation: 2011 F C 130

Ottawa, O ntario, February 04, 2011

PR ESE N T : The Honourable M r. Justice H ughes

B E T W E E N:

PUB L I C M O BI L E I N C.

Applicant

and

A T T O RN E Y G E N E R A L O F C A N A D A,
G L O B A L I V E W I R E L ESS M A N A G E M E N T
C O RP., B E L L C A N A D A, R O G E RS
C O M M UNI C A T I O NS IN C., SH A W
C O M M UNI C A T I O NS IN C., A ND T E L US
C O M M UNI C A T I O NS C O M PA N Y

Respondents
and

A L L I A N C E O F C A N A DI A N C I N E M A,
T E L E V ISI O N A ND R A DI O A R T ISTS,
C O M M UNI C A T I O NS, E N E R G Y A ND
PAP E R W O R K E RS UNI O N O F C A N A D A, A ND
F RI E NDS O F C A N A DI A N BR O A D C AST I N G
Interveners

R E ASO NS F O R JUD G M E N T A ND JU D G M E N T

[1] This is an application for judicial review brought under the provisions of section 18.1 of the

Federal Courts Act, R.S. 1985, c. F-7 of a Decision dated December 10, 2009, made by the
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Governor in Council pursuant to section 12(1) of the Telecommunications Act, S.C. 1993, c. 38. By

that Decision, the Governor in Council varied a Decision of the Canadian Radio-television and

Telecommunications Commission (CRTC), Telecom Decision CRTC 2009-678. The Governor in

Council determined that the Respondent Globalive Wireless Management Corp. met the

requirements of section 16 of the Telecommunications Act and is currently eligible to operate as a

telecommunications common carrier in Canada.

[2] For the reasons that follow, I find that the Applicant Public Mobile Inc. has standing to bring

this Application, that the Decision of the Governor in Council is quashed, that the Judgment will be

stayed for forty-five days and that costs are to be spoken to.

IND E X

For convenience, these Reasons are indexed as follows:

T H E PA R T I ES paragraphs 3 to 7

B A C K G R O UND F A C TS paragraphs 8 to 13

C R T C D E C ISI O N 2009-678 paragraphs 14 to 37

T H E G O V E RN O R I N C O UNCIL’S DECISION paragraphs 38 to 59

ISSU ES paragraphs 60 to 61

COURT’S SUPERVISORY FUNCTION
– SE C T I O N 18.1 paragraphs 62 to 65

ISSU E 1 a) Standing paragraphs 66 to 79

ISSU E 1 b) Alternative Remedy paragraphs 80 to 83

ISSU E 2 a) The Telecommunications Act paragraphs 84 to 95

ISSU E 2 b) Findings of Fact paragraphs 96 to 119


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C O N C L USI O NS paragraphs 120 to 121

C OSTS paragraphs 122 to 123

JUD G M E N T

T H E PA R T I ES

[3] The Applicant Public Mobile Inc. successfully participated in 2008 in an auction of radio

frequency spectrum conducted by the Minister of Industry. As a result it proposed to commence

operation as a telecommunications common carrier and to introduce wireless services sometime in

2010. Public Mobile received a letter from the CRTC stating that Public Mobile was required to

satisfy the CRTC as to whether it complied with the Canadian ownership requirements of the

Telecommunications Act. The Record indicates that as of the date of filing of the Record, Public

Mobile was engaged in hearings before the CRTC in this respect.

[4] The Respondent Attorney General of Canada represents the Governor in Council in these

proceedings.

[5] The Respondent Globalive Wireless Managements Corp. also successfully participated in

the auction of radio frequency spectrum in securing the right to use radio frequencies that would

permit it to provide wireless telecommunications services to the public subject to compliance with

the provisions of the Telecommunications Act. The CRTC held a hearing as to whether Globalive

complied with the Canadian ownership requirements of that Act. The CRTC, in its Decision,

determined that Globalive did not meet the provisions of section 16(1) of that Act in that it was
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controlled by a non-Canadian. The Decision of the Governor in Council reversed that

determination.

[6] The Respondents Bell Canada, Rogers Communications Inc., Shaw Communications and

Telus Communications, like Public Mobile and Globalive, also successfully participated in the

auction of radio frequency spectrum. They were not required to demonstrate to the CRTC that they

met the requirements of the Telecommunications Act, presumably since they had already been

offering and providing wireless communication services in Canada. Only Telus appeared in these

proceedings. It made submissions at the hearing supportive of the positions taken by the Applicant

Public Mobile.

[7] The Alliance of Canadian Cinema, Television and Radio Artists; the Communications,

Energy and Paperworkers Union of Canada and; Friends of Canadian Broadcasting were each

granted intervener status in these proceedings. They were commonly represented by the same

Counsel who provided written submissions and addressed the Court at the hearing. Those

submissions were supportive of the positions taken by the Applicant Public Mobile.

B A C K G R O UND F A C TS

[8] Long-distance wireless telecommunication in Canada is governed by federal statues,

including the Telecommunications Act, supra, and the Radiocommunication Act, R.S. 1985, c R-2

and its Regulations SOR/96-484. The Telecommunications Act has an unusual history. It can be

traced back to the Railway Act 1903, 3 Edw. VII, c. 58, although it has undergone several revisions,

consolidations and new enactments since that time.


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[9] Wireless telecommunication is enabled by electronic devices which make use of the

electromagnetic spectrum. This spectrum encompasses a broad range of radio frequencies which are

treated as a public resource owned and administered by the federal government. The government

determines what frequencies may be used by what persons and for what purposes. Certain portions

of the frequency spectrum may become available for commercial use, such as by those offering cell

phone services, and have been sold by auction conducted by the federal government. The auction

relevant to the issues here commenced in the latter part of 2007 when the federal government

publicly announced the licensing framework for the issuance of spectrum licences in the Advanced

Wireless Services (AWS) band. The auction was held in mid 2008 and several parties were

successful in acquiring AWS spectrum licences. Among them were Globalive, Public Mobile, Bell,

Rogers, Shaw and Telus. Sums ranging up to over $900 million dollars were paid by various of

these parties for such licences. Globalive paid over $440 million for its licences.

[10] The successful bidders then had to obtain a licence from the Minister of Industry under the

provision of the Radiocommunication Act and Regulations, supra. Among the matters upon which

the Minister had to be satisfied was that the party was “Canadian owned and controlled” within the 

meaning of section 10 of those Regulations. This section uses wording identical to section 16(3) of

the Telecommunications Act, which will be discussed later. The Minister did not hold hearings or

deliver a reasoned decision under the Radiocommunication Regulations. A licence was simply

issued. All parties, including Public Mobile, Globalive, Telus and the other corporate Respondents,

received such a licence.


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[11] The second hurdle was for Public Mobile and Globalive to demonstrate to the CRTC that

each of them met the eligibility requirements of the Telecommunications Act and, in particular,

Canadian ownership and control. For this purpose, these parties had to provide information and

make submissions to the CRTC. The CRTC also invited submissions from other interested persons.

It conducted separate hearings for each of Globalive and Public Mobile Inc. in public and in

camera. On October 29, 2009, the CRTC released its Decision CRTC 2009-678 respecting

Globalive. It determined that Globalive was in fact controlled by a non-Canadian and, therefore, it

did not meet the requirements of section 16 of the Telecommunications Act, and was not currently

eligible to operate as a telecommunications common carrier.

[12] Section 12 of the Telecommunications Act provides that, within a stipulated period, the

Governor in Council may, on petition presented to it, or on its own motion, by order, vary or rescind

a CRTC Decision or send all or a portion of it back for reconsideration. In this case, the Governor in

Council on its own motion undertook a review of the CRTC Decision. Section 13 of the Act

requires that each province be given the opportunity to make submissions. This was done. The

parties, including Globalive and Public Mobile, made further written submissions to the Governor

in Council. Other submissions may have also been received. The Attorney General’s Counsel was

asked by the Applicant’s Counsel to produce copies of the documents referred to by the Governor in

Council in coming to its Decision. The Attorney General’s Counsel refused to do so.

[13] On December 10, 2009, the Governor in Council released its Decision P.C. 2009-2008, the

effect of which was to vary the CRTC Decision aforesaid, and to determine that Globalive was not
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controlled in fact by a non-Canadian, and thus was eligible to operate in Canada as a

telecommunications common carrier. This is the Decision that is the subject of this judicial review.

C R T C D E C ISI O N 2009-678

[14] The CRTC released its Decision, 2009-678, respecting whether Globalive fell within the

provisions of the Telecommunications Act, on 29 October 2009. The CRTC determined that

Globalive did not meet the requirements set out in section 16 of the Act and was currently not

eligible to operate as a telecommunications common carrier. It concluded at paragraph 119 of its

Decision:

119. In light of the above, the Commission finds that Globalive is


controlled in fact by Orascom, a non-Canadian. Therefore, the
Commission concludes that Globalive does not meet the requirements
set out in section 16 of the Act and is not currently eligible to operate
as a telecommunications common carrier.

[15] The evidence before the CRTC constituted documents and submissions from Globalive. It

appears that during the course of the proceedings, Globalive made certain amendments to some of

the documents, particularly those related to financing arrangements between it and an entity known

as Orascom Telecom Holding (Canada) Limited.

[16] At paragraph 30 of its Decision, the CRTC determined that Orascom was a non-Canadian

entity within the meaning of the Regulations. This finding was not challenged by the Governor in

Council.
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[17] The matter of principal concern for the CRTC was whether Globalive met the requirements

of subsection 16(3) of the Telecommunications Act, which states:

Canadian ownership and control

16. (3) For the purposes of subsection (1), a corporation is


Canadian-owned and controlled if

(a) not less than eighty per cent of the members of the board of
directors of the corporation are individual Canadians;

(b) Canadians beneficially own, directly or indirectly, in the


aggregate and otherwise than by way of security only, not less than
eighty per cent of the corporation’s voting shares issued and
outstanding; and

(c) the corporation is not otherwise controlled by persons that are


not Canadians.

[18] The first two of these provisions (a) and (b) are what are referred to as “legal control”. The 

CRTC found that Globalive met these requirements. The Governor in Council did not vary that

finding. That finding was not challenged at the hearing before me.

[19] The point of controversy as between the CRTC and the Governor in Council, and as argued

before me at the hearing, was whether Globalive met the provision of subsection 16(3)(c) of the

Telecommunications Act. This provision is referred to as “control in fact”. The CRTC began its 

discussion as to this point at paragraphs 34 and 35 with reference to what has been called the

Canadian Airlines decision. The Governor in Council acknowledged that this decision was pertinent
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and no challenge in that respect was raised at the hearing before me. The CRTC wrote at paragraphs

34 and 35 of its Decision:

Control in fact

34. As noted in Broadcasting Decision 2007-429 (the CanWest3


decision) and applied in Broadcasting Decision 2008-69 (the BCE 4
decision), the Commission considers that the appropriate test for
assessing control in fact was set out in the Canadian Airlines
decision5 of the National Transportation Agency, now the Canadian
Transportation Agency. In that decision, the National Transportation
Agency found that:

…There is no one standard definition of control in 
fact but generally, it can be viewed as the ongoing power
or ability, whether exercised or not, to determine or decide
the strategic decision-making activities of an enterprise. It
can also be viewed as the ability to manage and run the
day-to-day operations of an enterprise. Minority
shareholders and their designated directors normally have
the ability to influence a company as do others such as
bankers and employees. The influence, which can be
exercised either positively or negatively by way of veto
rights, needs to be dominant or determining, however, for it
to translate into control in fact.

35. The National Transportation Agency went on to say that the


determination of control in fact turns on the consideration of
individual factors which, taken together, may result in a minority
shareholder exerting control:

In all previous Canadian ownership reviews and


enquiries, the Agency has not only looked at individual
arrangements between the shareholders and the air carrier
to determine where control in fact lies but has also
examined all arrangements taken together to make the
determination. Individual arrangements between the
minority shareholder and the airline can each result in the
minority shareholder exerting a degree of influence over
the company. Such influence, considered on an individual
arrangement basis, may not be determining and may not
result in the minority shareholder being able to exert
control over the airline. All such influence taken together,
however, may result in the minority shareholder being
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able to exert a degree of influence which translates into


control. [emphasis added]

[20] At paragraphs 36 and 37 of its Decision, the CRTC acknowledged that a careful

consideration of the facts in a particular case was required, and enumerated four major matters that

it would consider:

36. A determination of control in fact necessarily involves careful


consideration of the facts in a particular case. Accordingly, past
Commission decisions with respect to ownership and control are not
binding or determinative. However, they are useful in providing
guidance for the interpretation and application of the test for control
in fact.

37. Based on an analysis of all the information submitted in the


course of this proceeding, the Commission considers that the
following matters raise concerns relating to control in fact:

corporate governance;
shareholder rights;
commercial arrangements between Globalive and non-
Canadians; and
economic participation of Globalive and non-Canadians.

[21] As to the first of these four matters, corporate governance, the CRTC determined that

consideration of three points was required: composition of boards of directors, quorum provisions,

and the appointment of officers. At paragraph 38 of its Decision, it wrote:

Corporate governance

38. As noted in the BCE and CanWest decisions, specific corporate


governance arrangements may have substantial implications for
control in fact. In the present case, the relevant arrangements
include those with respect to the composition of the boards of
directors, quorum provisions, and the appointment of officers.

[22] On the first point, composition of the boards of directors, the CRTC analyzed the facts and

determined, at paragraph 45, that certain amendments were required to satisfy it on this point:
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45. In the present case, the Commission considers that the


revised board structure, including the role and composition of the
selection committee, does not ensure that the nominees of the
Canadian shareholder are sufficient in number to offset the influence
of Orascom, a non-Canadian shareholder. In order to address this
point, Globalive would have to amend its Shareholders' Agreement
and corporate documents such that on each of the two boards, AAL
nominates five directors, Orascom nominates four directors, and
AAL and Orascom each nominate one Independent Director. There
would be no further need for a selection committee.

[23] On the second point, quorum provisions, the CRTC concluded at paragraph 49 that provided

amendments were made as requested in paragraph 45, the quorum provisions could be satisfied:

Commission’s analysis and determination

49. Provided that the boards are reconstituted according to


paragraph 45 above, the Commission considers that the revised
quorum provisions ensure that the number of nominees of the
Canadian shareholder is sufficient to offset the influence of
Orascom.

[24] On the third point, appointment of officers, the CRTC determined that it had no concern. At

paragraph 53 it wrote:

53. The Commission has no concern with regard to the


appointment of officers under the revised structure.

[25] The second major matter addressed by the CRTC was shareholders’ rights. In this regard, 

commencing at paragraph 54 of its Decision, the CRTC dealt with liquidity rights, eligible

purchasers and veto rights. It concluded as to the first, liquidity rights, at paragraph 59 of its

Decision that, even in their revised form, liquidity rights provided an indication of Orascom’s 

influence over the venture:

Commission's analysis and determination


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59. The Commission considers that the liquidity rights in the revised
documents are an improvement on the array of rights originally
granted to Orascom as minority voting shareholder. Nevertheless,
the liquidity rights, even in their revised form, provide an indication
of Orascom's influence over the venture. The specification of a floor
price and the imposition of a cap on the proceeds generated in the
event that AAL sells its shares are inconsistent with the relative
voting interests of the shareholders.

[26] On the second point, eligible purchasers, the CRTC concluded at paragraph 64 of its

Decision that certain amendments were required:

64. Accordingly, the Commission considers that Globalive


should amend the definition of Strategic Competitor to include only
entities which, taken together with their affiliates, hold more than a
10 percent share of the Canadian wireless market on a per-
subscriber basis.

[27] On the third point, veto rights, the CRTC concluded at paragraphs 71 and 72 of its Decision

that further amendments were required:

Commission’s analysis and determination

71. The Commission notes that the modifications made to the


veto rights are substantial. The addition of an ordinary course of
business exception is an important step in allaying concerns that the
veto rights grant Orascom influence over the operation of the
wireless business. However, the Commission considers that the value
of the spectrum is not an appropriate foundation on which to base
the five percent veto threshold. The Commission considers that
Globalive's enterprise value is a more appropriate measure.

72. Accordingly, the monetary threshold for vetoes should be set


at five percent of Globalive's enterprise value as determined by its
board every two years, based on a third-party valuation.

[28] The third major matter addressed by the CRTC was commercial arrangements between

Globalive and non-Canadians. In that respect, the CRTC considered a Technical Services

Agreement (TSA) and a Trademark Agreement.


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[29] With respect to the Technical Services Agreement (TSA), the CRTC determined that such

an agreement resulted in continued influence by Orascom over operating and strategic decisions

related to Globalive’s network. It wrote at paragraphs 82 to 84 of its Decision:

Commission’s analysis and determination

82. The Commission accepts that the TSA is a dual-purpose


agreement in that it allows Globalive access to Orascom's
considerable wireless operating expertise, including access to its
global, preferred purchasing power, and it provides Orascom with
certain financial benefits. The Commission notes that under the
revised TSA, Globalive must pay a fixed fee to Orascom irrespective
of whether services are rendered, and if it terminates the agreement,
it must pay Orascom either an amount to be negotiated or $100
million less fees already paid, depending on the circumstances.

83. Moreover, the Commission notes that the TSA provides


Globalive with benefits that operate as key determinants of its
success. It is this reliance by Globalive on Orascom that defines their
relationship and allows Orascom the opportunity to influence a wide
range of operating and strategic decisions.

84. Given the significant benefits Globalive derives from the


TSA, the Commission is of the view that Globalive will maintain the
TSA for the foreseeable future. Consequently, the Commission
considers that Orascom will continue to have influence over
operating and strategic decisions related to Globalive's network.

[30] With respect to the Trademark Agreement (WIND) the CRTC determined that it provided

Orascom with influence over Globalive. It wrote at paragraph 89:

89. However, the Commission finds that Globalive's adoption


and use of a trademark belonging to an Orascom affiliate do provide
Orascom (or its controlling shareholder) with influence over
Globalive because Orascom has the power to limit how the brand
can be used.
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[31] The final major matter considered by the CRTC was economic participation of Globalive

and non-Canadians. On this matter, the CRTC considered both equity participation and financing

arrangements.

[32] As to equity participation, the CRTC determined that while there was an avenue of

influence, it was not sufficient to convert that influence to control. It wrote at paragraphs 90 and 94:

E conomic participation of Globalive and non-Canadians

A. Equity participation

90. The overall equity positions of the shareholders are the same
under both the pre-hearing and the revised structures. The
combination of Orascom's voting and non-voting shares in GIHC
translates into 65.1 percent of Globalive's total equity.
...

94. Orascom's equity participation is 65.1 percent, which is


consistent with levels of non-Canadian investment previously
approved by the Commission.9 The Commission is of the view that,
while in the circumstances of this case the level of equity
participation provides an avenue for influence, it is not sufficient on
its own to convert that influence into control.

[33] As to the financing arrangements, the CRTC devoted much attention to this matter in its

Decision and determined, at paragraph 112, that the high level of debt in the hands of a non-

Canadian was unacceptable. The CRTC began its discussion at paragraphs 95 and 96 of its

Decision:

B. F inancing arrangements

95. Orascom is the source of the vast majority of Globalive's


debt, having advanced $442.4 million by way of a Spectrum Loan
Agreement dated 31 July 2008 and committed a further $66 million
under an Operating Loan Agreement dated 23 March 2008, for a
total commitment of $508.4 million (collectively, the Orascom loan
agreements). In addition to the Orascom loans, GCC, a wholly-
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owned subsidiary of GIHC, committed $400,000 to Globalive by way


of a Loan Agreement dated 14 April 2008.

96. According to the pre-hearing loan documents, the loans were


to be due in full in August 2011, including an initial term and
extensions. Interest was set at a rate of LIBOR10 plus 12 percent for
the initial term, LIBOR plus 15 percent for the first extension, and
LIBOR plus 18 percent for the subsequent extension.

[34] The CRTC’s determination as to the financing arrangements led it to conclude that they

were unacceptable. It wrote at paragraphs 104 to 112:

Commission’s analysis and determination

104. The Commission recognizes that there are no statutory


restrictions on the amount of debt that a non-Canadian can provide
to a telecommunications common carrier. However, debt levels and
debt financing arrangements can be important indicia of where
influence lies. As stated in the CanWest decision, the concentration
of debt and equity in the hands of a single foreign entity can create
an opportunity for undue influence over the venture by that non-
Canadian entity:

The Commission was concerned that if a Goldman,


Sachs & Co. entity was the lead syndicator with respect to
the debt, or if it were the major debt holder under any of
the lending agreements, this together with G S CP's equity
interest could result in undue influence over the venture by
a non-Canadian.12

105. In the case of the CanWest decision, the non-Canadian


shareholder holding 65 percent of the equity was also providing a
significant amount of the debt. Prior to the oral phase of that
proceeding, the Commission expressed concern regarding the
proposed level of debt, and during the oral phase, CanWest
confirmed that the percentage of the debt held by the non-Canadian
investor had been reduced to less than 20 percent and that Goldman,
Sachs & Co. would not be lead syndicator.

106. In the present case, Orascom, the significant non-Canadian


equity holder, has provided approximately 99 percent of Globalive's
current debt, excluding some third-party vendor financing, which
represents the vast majority of Globalive's total financing.
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107. The concentration of debt and equity in the hands of a single


entity can create an opportunity for influence. In circumstances such
as the present, where a company is heavily debt financed, this
opportunity can translate into significant influence over the venture
by the debt holder.

108. The magnitude of the debt provided by Orascom, the relative


debt to equity financing, and the fact that the debt is concentrated in
the hands of a single entity cause the Commission concern with the
loans as a source of Orascom influence. The modifications to the
covenants and terms of the loans do little to reduce this concern.
Furthermore, the Commission notes that covenants similar to those
deleted from the Orascom loan agreements are still contained in
Schedule A to the Shareholders' Agreement.

109. In addition to the above-noted concerns, the Commission


considers that a company's inability to obtain financing from third-
party sources may also be relevant to the issue of control in fact. As
noted in the Unitel decision, "In certain circumstances it may be
possible to conclude that a non-Canadian shareholder or lender may
have a considerable amount of leverage, and even control, over a
cash-strapped telecommunications common carrier." 13

110. During the oral phase of the public hearing, Globalive noted
that Orascom and AAL had planned to rely heavily on external
financing to capitalize Globalive. However, following completion of
the AWS auction, Globalive's efforts to obtain external financing to
replace Orascom's loans coincided with a major downturn in the
credit markets. Orascom indicated that it is not interested in
remaining Globalive's major lender and is committed to transferring
its loans to an outside party. However, at this time, Orascom remains
the major source of financing for Globalive in the near term.

111. Globalive stated during the oral phase of the public hearing
that the capital investment required for a national wireless start-up is
well over $1 billion. Having raised approximately $600 million,
Globalive will require significant further capital in order to complete
its network rollout. The Commission considers that Globalive's
dependence upon Orascom for financing may well increase in the
near term, given its inability to date to attract substantial third-party
financing.

112. It is the Commission's view that such a significant


concentration of debt in the hands of Orascom, representing the vast
majority of Globalive's enterprise value, serves to provide Orascom
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with leverage over Globalive. Given Orascom's equity interest in


Globalive, such a high level of debt in the hands of a non-Canadian
is unacceptable.

[35] The conclusion reached by the CRTC was set out at paragraphs 113 to 119 of its Decision. It

determined that each of the factors considered may lead to an avenue for influence, when combined

they translated into the ability to control in fact (see section 16(3)(c) of the Telecommunications Act,

supra). It wrote:

Conclusion

113. The Commission considers that each of the factors addressed


above provides Orascom, a non-Canadian, with an avenue for
influence over Globalive. While disparate points of influence may not
individually result in control, when combined they can translate into
the ability to control in fact.

114. As noted above, control in fact is only established where


influence is dominant or determining. In particular, the issue is
whether or not there is an ongoing power or ability, whether
exercised or not, to determine the strategic decision-making
activities of a corporation or to dominate the ability to manage and
run its day-to-day operations.

115. Globalive has made numerous significant changes to its


corporate structure and documents in order to address many of the
Commission's concerns. In this decision, the Commission has
identified additional changes that are necessary to address certain
remaining concerns with respect to Orascom's influence over
Globalive. These changes relate to the composition of the boards of
directors, liquidity rights, and the threshold for veto rights.

116. Notwithstanding these additional changes, significant


concerns remain with respect to the control in fact of Globalive by
Orascom. In the present case, the record shows that Orascom, a non-
Canadian

holds two-thirds of Globalive's equity;


is the principal source of technical expertise; and
provides Globalive with access to an established
wireless trademark.
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117. Given the changes that were made during the public hearing
and presuming that the additional changes that have been identified
in this decision are made, these elements taken together, while
significant, would not cause the Commission, in the circumstances of
this case, to reach a decision that Orascom is in a position of
influence that is both dominant and determining.

118. However, when these levers are considered in concert with


Orascom's provision of the vast majority of Globalive's debt
financing, the Commission finds that it cannot conclude that
Globalive is not controlled in fact by a non-Canadian, to wit
Orascom. In other words, the Commission finds that Orascom has
the ongoing ability to determine Globalive's strategic decision-
making activities.

119. In light of all the above, the Commission finds that Globalive
is controlled in fact by Orascom, a non-Canadian. Therefore, the
Commission concludes that Globalive does not meet the
requirements set out in section 16 of the Act and is not currently
eligible to operate as a telecommunications common carrier.

[36] As to paragraph 115 above, the CRTC issued an erratum on 4 November 2009, in which the

words “liquidity rights” near the end of that paragraph, were replaced with the words “Eligible 

Purchasers” so as to read:

115. Globalive has made numerous significant changes to its


corporate structure and documents in order to address many of the
Commission's concerns. In this decision, the Commission has
identified additional changes that are necessary to address certain
remaining concerns with respect to Orascom's influence over
Globalive. These changes relate to the composition of the boards of
directors, Eligible Purchasers, and the threshold for veto rights.

[37] It was this Decision that the Governor in Council, on its own motion, undertook to review.

T H E G O V E RN O R I N C O UN C I L’S D E C ISI O N

[38] On December 10, 2009 the Privy Council released the Decision of the Governor in Council,

P.C. 2009-2008. This Decision comprised two parts. The first four pages set out a series of
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“Whereases” with a concluding “Therefore”. Attached as a Schedule were twenty-four paragraphs

which amended several paragraphs of the CRTC Decision in various respects. The result was, as set

out in paragraph 23 of the Schedule, to vary the CRTC Decision and to determine that Globalive

was not controlled in fact by Orascom, a non-Canadian, and that Globalive was eligible to operate

as a telecommunications common carrier. Paragraph 23 states:

23. In light of the above, Globalive is not controlled in fact by


Orascom, a non-Canadian. Therefore, Globalive meets the
requirements set out in section 16 of the Act and is currently eligible
to operate as a telecommunications common carrier.

[39] Section 12(8) of the Telecommunications Act stipulates that when the Governor in Council

makes an order such as this, reasons shall be set out. Mr. Heintzman, Counsel for Globalive,

described the structure of the Governor in Council’s document as being one in which the section 12

Order is set out in the “Whereas” pages and the decision under section 16 as to whether Globalive is 

in fact not controlled by non-Canadians is set out in the Schedule. Mr. MacKinnon, for the Attorney

General, argued that both the “Whereas” portion and the Schedule can be said to constitute the

Order and the Reasons. Counsel for the Applicant and those supporting the Applicant were puzzled

as to what portion of these documents can be said to be the Reasons.

[40] I prefer to consider the first four “Whereas” pages as being akin to what is sometimes

referred to in this Court as a “speaking Order”, such that the “Whereas” paragraphs can be

considered to be “reasons”. These Reasons may be considered to be supplemented by the Schedule.


Page: 20

[41] On the first page of the “Whereas” portion, the Governor in Council acknowledged that the

CRTC had identified four areas of concern with respect to control in fact:

Whereas, in the Decision, the Commission identified four


areas of concern relating to control in fact, namely, corporate
governance, shareholder rights, commercial arrangements and
economic participation of non-Canadians.

[42] The final paragraph of the first page stated that the debt financing was the main reason that

the CRTC found that Globalive did not meet the Canadian ownership and control requirements:

Whereas, in the Decision, the Commission concluded that


despite the changes made to Globalive’s corporate structure and 
documents and provided the additional required changes are made,
the levers of influence by a non-Canadian, namely, the fact that it
holds 65% of the equity financing, is the principal source of technical
expertise and provides access to an established wireless trademark,
would not have caused it to conclude that Globalive did not meet the
Canadian ownership and control requirements if it was not for the
fact that the same non-Canadian entity is providing the vast majority
of Globalive’s debt financing;

[43] At the top of the second page, the Governor in Council stated what it considered to be a

number of Canadian telecommunications policy objectives:

Whereas Canadian telecommunications policy objectives


include rendering reliable and affordable telecommunications
services of high quality accessible to Canadians in both urban and
rural areas in all regions of Canada, promoting the ownership and
control of Canadian carriers by Canadians and enhancing the
efficiency and competitiveness, at the national and international
levels, of Canadian telecommunications;
Page: 21

[44] This appears to reflect that which is set out in subsections 7(b), (c) and (d) of the

Telecommunications Act:

Objectives

7. It is hereby affirmed that telecommunications performs an


essential role in the maintenance of Canada’s identity and 
sovereignty and that the Canadian telecommunications policy has as
its objectives

...

(b) to render reliable and affordable telecommunications services of


high quality accessible to Canadians in both urban and rural areas
in all regions of Canada;

(c) to enhance the efficiency and competitiveness, at the national and


international levels, of Canadian telecommunications;

(d) to promote the ownership and control of Canadian carriers by


Canadians;

[45] The Governor in Council then referred to the bidding process for spectrum, and that

Globalive was a successful bidder. In the fourth paragraph on the second page, the Governor in

Council acknowledged that Globalive must satisfy the Canadian ownership and control

requirements set out in the Act:

Whereas, in order to operate as a telecommunications


common carrier in Canada, Globalive must satisfy the Canadian
ownership and control requirements set out in the Act;

[46] These requirements are set out in subsection 16(3) of the Act previously referred to. They

are the “legal” and “control in fact” requirements.

[47] The next paragraph of the Governor in Council’s “Whereas” provisions contains a puzzling

use of the words “when possible”, suggesting that the policy objectives requiring Canadian


Page: 22

ownership and control as set out in section 7(d) of the Telecommunications Act is somehow to be

considered as flexible and possibly subordinate to other considerations, such as that set out in

section 7(c), the enhancement of efficiency and competitiveness. One policy objective cannot be

subordinate to another:

Whereas the Governor in Council considers that, when


possible, the Canadian ownership and control requirements should
be applied in support of the Canadian telecommunications policy
objectives set out in the Act, including enhancing competition in the
telecommunications market (emphasis added);

[48] The next “Whereas” is critical, as it appears to insert a policy objective not found in section

7 or anywhere else in the Telecommunications Act; namely, that access to foreign capital technology

and expertise should be encouraged and ensured:

Whereas the Canadian ownership and control requirements


of the Act restrict the ownership of voting shares by non-Canadians,
but the Act does not impose limits on foreign investment in
telecommunication common carriers and should be interpreted in a
way that ensures that access to foreign capital, technology and
experience is encouraged in a manner that supports all of the
Canadian telecommunication policy objectives (emphasis added);

[49] The Governor in Council’s Decision next acknowledged that the test respecting control was

both legal and factual and, as found by the CRTC, the legal requirements had been met. No party

challenged this finding.


Page: 23

[50] The Governor in Council next considered “control in fact” and noted that the test, as set out 

in section 16(3)(c) of the Telecommunications Act, was expressed in the form of a double negative

(i.e.) not controlled by persons who are not Canadian:

Whereas the Governor in Council considers that, as a matter of


construction, it is significant that, when assessing control in fact, the
Act does not require the Commission to determine that a
telecommunications common carrier is controlled by Canadians but
rather that it not be controlled by persons that are not Canadian;

[51] When asked whether this use of a double negative was purely a semantical exercise,

Counsel for Globalive said no. This position was supported by Counsel for the Attorney General.

They argued that this wording made room for a situation where a broadly held multi-national entity

may have control. In this respect, they argued, control could be in the hands of an entity that was

“not a non-Canadian”.

[52] At the fifth “Whereas” at page 3 of the Decision the Governor in Council stated that it did

not agree with the CRTC’s finding as to multiple levers of influence. The sixth paragraph refers to

“Reasons” (not otherwise described or indicated as to where they could be found) which are said to

show why Globalive is not considered to be owned and controlled by non-Canadians:

Whereas the Governor in Council recognizes that multiple


levers of influence can, when combined, amount to control, but
considers that that is not the case with Globalive;

Whereas the Governor in Council considers that, on the basis


of a careful examination of the facts and submissions before the
Commission, it is reasonable to conclude, for the reasons set out in
this Order, that Globalive is not in fact controlled by persons that
are not Canadian and therefore meets the Canadian ownership and
control requirements under the Act and is eligible to operate as a
telecommunications common carrier in Canada;
Page: 24

[53] The first two “Whereas” paragraphs on page 4 state that submissions have been sought from 

provincial governments and that the submissions made by Globalive and others at the CRTC

hearing have been of benefit to the Governor in Council. Reference is also made to “additional

submissions” by others. The Applicant sought disclosure of these submissions and the Attorney 

General refused. While the refusal was argued in the Applicant’s written material as affording a

basis for setting the Governor in Council’s Decision aside, or drawing adverse inferences, the point

was not pursued with any vigour by Applicant’s Counsel at the hearing.

[54] The third paragraph of the fourth page sets out a criterion used by the Governor in Council

in coming to its Decision; namely, whether Canadians would be deprived of a more competitive

wireless telecommunication market. This criterion reflects the wording set out in section 7(c) of the

Telecommunications Act:

Whereas the Governor in Council considers that the Decision


deprives Canadians of the possibility for a more competitive wireless
telecommunication market by preventing the roll-out of service to the
public by a Canadian-owned and controlled company.

[55] The penultimate paragraph of the Decision appears to open the door for Globalive to enter

the Canadian market, but shut it for others:

And whereas the Governor in Council considers that this


Order is based on the facts of this particular case and has a
significant direct impact only on Globalive;

[56] The final paragraph of the Governor in Council’s Decision is a “Therefore” paragraph that 

leads the reader to the attached Schedule:

Therefore, Her Excellency the Governor General in Council,


on the recommendation of the Minister of Industry, pursuant to
subsection 12(1) of the Telecommunications Act, varies Telecom
Page: 25

Decision CRTC 2009-678, amended by Telecom Decision CRTC


2009-678-1, as set out in the annexed schedule to this Order.

[57] The Schedule in many respects tracks the language of the CRTC Decision, but makes

several changes which affect the resulting determination as it was made by the CRTC. These

include findings as to whether the structure of the board of directors ensured that non-Canadian

nominees could be elected, whether the debt financing structure could result in undue influence by a

non-Canadian, the effect of liquidity rights, the definition of eligible purchasers of shares, the effect

of the Technical Service Agreement and the Trademark Agreement; all of which led the CRTC to

conclude that Globalive was “controlled in fact” by non-Canadians. The changes made by the

Governor in Council led it to conclude the opposite.

[58] I accept the summary reflecting several of these differences between the CRTC Decision

and the Governor in Council’s Decision, as presented in the Applicant’s written submissions:

CRTC Findings Governor in Council Findings


(per Decision 2009-678) (per Schedule to Order in
Council)

Composition of the Board of Directors

45. In the present case, the 1. In the present case, the


Commission considers that the revised board structure,
revised board structure, including the role and
including the role and composition of the selection
composition of the selection committee, ensures that the
committee, does not ensure that nominees of Orascom Telecom
the nominees of the Canadian Holding S.A.E. (“Orascom”), a 
shareholder are sufficient in non-Canadian shareholder, are
number to offset the influence of insufficient in number to control
Orascom, a non-Canadian the strategic or operational
shareholder. decisions of Globalive. Indeed,
the board members nominated
by the Canadian shareholder
Page: 26

[The CRTC required that the and the independent directors,


arrangements be amended so as  defined  in  the  shareholders’ 
that AAL would nominate five agreement and corporate
GIHC directors, Orascom documents, (Independent
would nominate four directors, Directors”)  are  sufficient  in 
and that they would together number to offset the influence of
nominate one Independent Orascom. As a result, no
Director.] changes are required to the
composition of the boards of
directors I this case.

AAL’s Liquidity Rights

59. The Commission 5. The liquidity rights in


considers that the liquidity the revised corporate
rights in the revised documents documents of Globalive are an
are an improvement on the improvement on the array of
array of rights originally rights originally granted to
granted to Orascom as minority Orascom as a minority voting
voting shareholder. shareholder.
Nevertheless, the liquidity
rights, even in their revised 6. In this particular case,
form, provide an indication of the liquidity provisions operate
Orascom’s  influence  over  the  in a balanced way in regards to
venture. The specification of a both AAL and Orascom, with
floor price and the imposition the exception of the specified
of a cap on the proceeds floor price and the cap on the
generated in the event that AAL proceeds generated in the event
sells its shares are inconsistent that AAL sells its shares. The
with the relative voting interests cap on proceeds is consistent
of the shareholders. with the relative equity
investment of the shareholders.
The specified floor price
reflects the investment of an
established business in a high-
risk venture and has little
bearing on control.

Definition of Eligible Purchasers

63. The Commission 8. A significant issue with


considers that a significant regard to liquidity is the ability
issue with regard to liquidity is of the existing investor to find a
the ability of the existing suitable purchaser. While the
investor to find a suitable “Eligible  Purchase”  definition 
purchaser. The Commission is in  the  shareholders’  agreement 
Page: 27

concerned that the Eligible restricts the pool of potential


Purchaser definition limits the purchasers, this restriction does
pool of potential purchasers to not provide Orascom with an
financial investors and restricts avenue for influence over the
the ability of the majority voting day-to-day operations or
shareholder [AAL] to sell all or strategic decision-making
some of its shares … activities of Globalive. This is
64. Accordingly, the an acceptable means of
Commission considers that protecting the remaining
Globalive should amend the shareholders from being forced
definition of Strategic into a relationship with a
Competitor to include only competitor. Not only do
entities which, taken together shareholders have the
with their affiliates, hold more discretion to waive this
than a 10 percent share of the restriction, but the eligible
Canadian wireless market on a purchaser provisions apply
per-subscriber basis. equally to all shareholders and
all sale provisions are subject
to extensive rights of first
refusal in favour of the non-
selling shareholder. No
changes to the definition of
“Eligible  Purchaser”  in  the 
shareholders’  agreement are
required.

Technical Services Agreement

84. Given the significant 13. Given the significant


benefits Globalive derives from benefits Globalive derives from
the TSA, the Commission is of the TSA, valid commercial
the view that Globalive will reasons may exist for Globalive
maintain the TSA for the to maintain the TSA for the
foreseeable future. foreseeable future.
Consequently, the Commission Consequently, it is likely that
considers that Orascom will the TSA will continue to provide
continue to have influence over Orascom with an avenue for
operating and strategic influence over Globalive,
decisions related to Globalive’s  however such influence is not
network. dominant and determining in
itself.
Page: 28

WIND brand

89. However, the 14. The Trademark


Commission finds that Agreement does not provide
Globalive’s adoption and use of  Orascom with a significant
a trademark belonging to an avenue for influence over
Orascom affiliate do provide Globalive. The term of and the
Orascom (or its controlling termination rights set out in the
shareholder) with influence agreement are not of concern.
over Globalive because Furthermore, the terms and
Orascom has the power to limit conditions of it do not allow
how the brand can be used. Orascom to materially limit
how the mark can be used.

Debt Financing

114. The magnitude of the 18. While the magnitude of


debt provided by Orascom, the the debt financing provided by
relative debt to equity Orascom, the relative debt to
financing, and the fact that the equity financing and the fact
debt is concentrated in the that the debt is concentrated in
hands of a single entity cause the hands of a single entity
the Commission concern with cause concern with the loans as
the loans as a source of a source of Orascom influence,
Orascom influence. The the elimination of the positive
modifications to the covenants and negative covenants, the
and terms of the loans do little lack of conversion rights, the
to reduce this concern. lengthening of the term of the
loan and renewal rights
(thereby providing stability to
Globalive), the right of
Globalive to retire or replace
the debt without penalty and the
modifications to the default
provisions of the loan go a long
way toward minimizing this
concern. The ability of
Orascom to use the existing
loans, or the terms attached to
those loans, as levers of
influence is sufficiently
diminished.
Page: 29

Conclusion

118. …In  other  words,  the  22. …In  other  words, 


Commission finds that Orascom Orascom does not have the
has the ongoing ability to ongoing ability to determine
determine  Globalive’s  strategic  Globalive’s  strategic  decision-
decision-making activities. making activities.

[59] Those two documents, the “Whereases” and Schedule, comprise the Decision of the

Governor in Council which is now under judicial review.

ISSU ES

[60] I accept the succinct statement of issues as set out in the Attorney General’s Memorandum:

1. Whether Public Mobile has standing, and whether it has an effective remedy under

the Telecommunications Act, which it has not exhausted;

2. Whether the Governor in Council acted within the statutory mandate in varying the

CRTC Decision concerning Globalive.

[61] There will be sub-issues considered as well. I will begin with general comments as to

judicial review and section 18.1 of the Federal Courts Act.

COURT’S SUPERVISORY FUNCTION – SE C T I O N 18.1

[62] The general supervisory function of the Courts over administrative powers exercised by

government decision-makers was considered by the Supreme Court of Canada in Dunsmuir v. New

Brunswick, [2008] 1 S.C.R. 190. All public authority exercises of decision-making powers must
Page: 30

find their source in law, whether derived from the enabling statute or the pertinent common law, or

civil law. This principle recognizes that even the Governor in Council must adhere to the rule of law

and to the statutory enactments of Parliament. Bastarache and LeBel JJ wrote at paragraphs 27 to 29

of Dunsmuir:

III. Issue 1: Review of the Adjudicator's Statutory Interpretation


Determination

A. Judicial Review

27 As a matter of constitutional law, judicial review is intimately


connected with the preservation of the rule of law. It is essentially
that constitutional foundation which explains the purpose of judicial
review and guides its function and operation. Judicial review seeks
to address an underlying tension between the rule of law and the
foundational democratic principle, which finds an expression in the
initiatives of Parliament and legislatures to create various
administrative bodies and endow them with broad powers. Courts,
while exercising their constitutional functions of judicial review,
must be sensitive not only to the need to uphold the rule of law, but
also to the necessity of avoiding undue interference with the
discharge of administrative functions in respect of the matters
delegated to administrative bodies by Parliament and legislatures.

28 By virtue of the rule of law principle, all exercises of public


authority must find their source in law. All decision-making powers
have legal limits, derived from the enabling statute itself, the
common or civil law or the Constitution. Judicial review is the means
by which the courts supervise those who exercise statutory powers, to
ensure that they do not overstep their legal authority. The function of
judicial review is therefore to ensure the legality, the reasonableness
and the fairness of the administrative process and its outcomes.

29 Administrative powers are exercised by decision makers


according to statutory regimes that are themselves confined. A
decision maker may not exercise authority not specifically assigned
to him or her. By acting in the absence of legal authority, [page212]
the decision maker transgresses the principle of the rule of law.
Thus, when a reviewing court considers the scope of a decision-
making power or the jurisdiction conferred by a statute, the standard
of review analysis strives to determine what authority was intended
to be given to the body in relation to the subject matter. This is done
Page: 31

within the context of the courts' constitutional duty to ensure that


public authorities do not overreach their lawful powers: Crevier v.
Attorney General of Quebec, [1981] 2 S.C.R. 220, at p. 234; also Dr.
Q v. College of Physicians and Surgeons of British Columbia, [2003]
1 S.C.R. 226, 2003 S CC 19, at para. 21. 

[63] Section 18.1 of the Federal Courts Act gives to the Federal Court the power of judicial

review in respect of a decision of a federal board, commission or other tribunal, and the power to

grant relief where it has been determined that any one of a number of grounds as set out in

subsection 18.1(4) have been established:

Application for judicial review

18.1

(1) An application for judicial review may be made by the Attorney


General of Canada or by anyone directly affected by the matter in
respect of which relief is sought.
...

Powers of F ederal Court

(3) On an application for judicial review, the F ederal Court may

(a) order a federal board, commission or other tribunal to do any act


or thing it has unlawfully failed or refused to do or has unreasonably
delayed in doing; or

(b) declare invalid or unlawful, or quash, set aside or set aside and
refer back for determination in accordance with such directions as it
considers to be appropriate, prohibit or restrain, a decision, order,
act or proceeding of a federal board, commission or other tribunal.
Grounds of review

(4) The F ederal Court may grant relief under subsection (3) if it is
satisfied that the federal board, commission or other tribunal

(a) acted without jurisdiction, acted beyond its jurisdiction or refused


to exercise its jurisdiction;

(b) failed to observe a principle of natural justice, procedural


fairness or other procedure that it was required by law to observe;
Page: 32

(c) erred in law in making a decision or an order, whether or not the


error appears on the face of the record;

(d) 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;

(e) acted, or failed to act, by reason of fraud or perjured evidence; or

(f) acted in any other way that was contrary to law.

[64] The Supreme Court of Canada has recently considered the nature of judicial review under

the provisions of section 18.1 in its unanimous decision in Canada (Attorney General) v. TeleZone

Inc., 2010 SCC 62. It wrote that judicial review is directed at the legality, reasonableness and

fairness of the procedures employed and actions taken by government decision-makers; it is

designed to enforce the rule of law and adherence to the Constitution (paragraph 24). It also wrote

that the enactment of the Federal Courts Act, as amended, was designed to enhance government

accountability as well as to promote access to justice (paragraph 32).

[65] In the present case, this judicial review is to be undertaken with a view of determining

accountability of government decision-makers including the Governor in Council. The function of

the Courts is to enforce the rule of law, to determine whether there has been adherence to the

Constitution with respect to the procedures employed and actions taken and to determine the

legality, reasonableness and fairness of the decision made.


Page: 33

ISSU E 1: Whether Public Mobile has standing, and whether it has an effective

remedy under the Telecommunications Act which it has not exhausted.

a) Standing

[66] Public Mobile, just as Globalive, was a successful bidder in the auction of radio frequency

spectrum. It has received a licence from the Minister of Industry to offer wireless communication

services in Canada using that spectrum. It was required by the CRTC to demonstrate that it was

Canadian owned and controlled.

[67] The remaining Respondents, other than the Attorney General, have also been successful

bidders and received licences. They were not required to demonstrate to the CRTC that they were

Canadian owned and controlled, presumably since they were already active in the Canadian

marketplace.

[68] Only Globalive had experienced a change in its position. It was a successful bidder at the

auction; it received a licence from the Minister of Industry. The CRTC determined that it could not

operate in Canada, as it was not Canadian owned and controlled. That decision was reversed by the

Governor in Council.

[69] Much has been written as to who has standing to challenge a decision of a federal board or

tribunal. I reviewed some of this jurisprudence recently in Air Canada v. Toronto Port Authority,

2010 FC 774, particularly at paragraphs 58 to 66, paying attention, among other cases, to the recent

decision of the Federal Court of Appeal in Irving Shipbuilding Inc. v. Canada (Attorney General),

2009 FCA 116, 314 DLR (4th) 430 and to Ferring Inc. v. Canada (Minister of Health), 2007 FCA
Page: 34

276, 370 N.R. 263. I concluded at paragraph 65 of Air Canada that there was no simple formula

whereby a person having a commercial interest can be said to have or to lack standing. The context

of the situation and the basis for judicial review must be considered.

[70] I drew the attention of the parties at this hearing to the very recent decision of the Federal

Court of Appeal in League for Human Rights of B’Nai Brith Canada v. Canada, 2010 FCA 307

where Stratas JA for the Court considered both direct standing and public interest standing at

paragraphs 57 to 59:

C. Analysis

(1) Did the appellant have standing to bring the applications for
judicial review?

(a) Direct standing

57 The appellant submits that it has direct standing to bring the


application for judicial review against the decisions of the
Governor in Council because it is "directly affected" within the
meaning of subsection 18.1(1) of the F ederal Courts Act, R.S.C.
1985, c. F-7. That subsection provides that those who are "directly
affected" may bring an application for judicial review.

58 The appellant is not "directly affected." In order for it to be


"directly affected" by the decisions of the Governor in Council, the
decisions must have affected its legal rights, imposed legal
obligations upon it, or prejudicially affected it in some way:
Rothmans of Pall Mall Canada Ltd. v. Canada (M.N.R.), [1976] 2
F .C. 500 (C.A.); Irving Shipbuilding Inc. v. Canada (A.G.), 2009
F CA 116. There is no evidence before this Court suggesting that
the appellant is affected in this way. I adopt the words of the
motions judge (2008 F C 732 at paragraph 26):
Without doubt, the [appellant] and the family members it says it
represents deeply care, and are genuinely concerned, about Mr.
Odynsky's citizenship revocation process and his past service as a
perimeter guard of the Seidlung at the Poniatowa labour camp in
German-occupied Poland. However, that interest does not mean that
the legal rights of the applicant, or those it represents, are legally
impacted or prejudiced by the decision not to revoke Mr. Odynsky's
Page: 35

citizenship. Rather, their interest exists in the sense of seeking to


right a perceived wrong arising from, or to uphold a principle in
respect of, the non-revocation of Mr. Odynsky's citizenship.

(b) Public interest standing

59 In the alternative, the appellant submits that it has standing


as a public interest litigant to challenge the decisions of the
Governor in Council. It says that it meets the three fold test for
public interest standing set out in the Supreme Court of Canada's
reasons for judgment in Canadian Council of Churches v. Canada
(Minister of E mployment and Immigration), [1992] 1 S.C.R. 236,
namely, that:

(a) a serious issue has been raised;

(b) the party seeking public interest standing has a genuine or direct
interest in the outcome of the litigation; and

(c) there is no other reasonable and effective way to bring the issue
before the Court.

[71] This discussion in B’Nai Brith should not be taken to mean that the only persons who have

standing to challenge a decision are those whose own interests were immediately affected or those

who find themselves representing a public interest within certain enumerated criteria. As Evans JA

wrote in Irving Shipbuilding, supra, the question of standing cannot be answered in the abstract.

Standing must be considered in the context in which the review arises. He wrote at paragraphs 28,

32 and 33:

28 In my view, the question of the appellants' standing should be


answered, not in the abstract, but in the context of the ground of
review on which they rely, namely, breach of the duty of
procedural fairness. Thus, if the appellants have a right to
procedural fairness, they must also have the right to bring the
matter to the Court in order to attempt to establish that the process
by which the submarine contract was awarded to C SMG violated
their procedural rights. If PWG S C owed the appellants a duty of
fairness and awarded the contract to C SMG in breach of that duty,
they would be "directly affected" by the impugned decision. If they
Page: 36

do not have a right to procedural fairness, that should normally


conclude the matter. While I do not find it necessary to conduct an
independent standing analysis, I shall briefly address two issues
that arose from the parties' submissions.
...

32 To attach the significance urged by the respondents to


Parliament's choice of the words "directly affected" , rather than
any of the common law standing requirements ("person aggrieved"
or "specially affected" , for example) would, in my view, ignore the
context and purpose of the statutory language of subsection
18.1(1). As the Supreme Court of Canada said recently in Khosa
(at para. 19) :

... most if not all judicial review statutes are drafted against
the background of the common law of judicial review. Even
the more comprehensive among them ... can only sensibly be
interpreted in the common law context ...

...

33 Moreover, since all these terms are somewhat indeterminate,


Parliament's choice of one rather than another should be regarded
as of relatively little importance. See also Thomas A Cromwell,
Locus Standi: A Commentary on the Law of Standing in Canada
(Toronto: Carswell, 1986) at 163-64 ("Locus Standi "), especially
his apt description (at 163) of the "semantic wasteland" to be
traversed by a court in attempting to apply the various "tests" for
standing, both statutory and common law. Although directed at
differences between the F rench and English texts of subsection
18.1(4) of the F ederal Courts Act, the following statement in
Khosa (at para. 39) seems equally apt in the interpretation of the
words "directly affected" in subsection 18.1(1):

A blinkered focus on the textual variations might lead to an


interpretation at odds with the modern rule [of statutory
interpretation] because, standing alone, linguistic
considerations ought not to elevate an argument about text
above the relevant context, purpose and objectives of the
legislative scheme.

[72] The approach of the Courts as to the standing of those seeking judicial review should tend to

be inclusive rather than exclusory. By way of analogy, the Supreme Court of Canada, recently wrote
Page: 37

a unanimous decision in Canada (Attorney General) v. McArthur, 2010 SCC 63, saying at

paragraphs 11 and 12, that one should not exaggerate the exclusive nature of section 18 of the

Federal Courts Act; a person should not be put through unnecessary and unproductive procedural

hoops.

[73] Referring, for instance, to Thorson v. Canada (Attorney General), [1975] 1 S.C.R. 138, one

can understand the attitude of the Courts in exercising judicial discretion, particularly the majority

decision at pages 161 and 162 where it allowed a member of the Canadian public (albeit a former

President of the Exchequer Court) with no particular or unique interest, to challenge the

constitutionality of certain federal legislation.

[74] One can even go much further back in history in referring to the Roman/Jewish historian

Flavius Josephus in Book II of his dissertation “Against Apion”  written toward the end of the first

century of the Common Era, where he considered the writings of the Phonecians, Chaldeans and

Egyptians in respect of the laws of the Jewish nation and wrote at verse 28 (I refer to the latter

portion):

“If any judge takes bribes, his punishment is death; he that overlooks 
one that offers him a petition, and this when he is able to relieve him,
is a guilty person.”

[75] It all comes to the same thing. If there is merit to the issue raised, the Court should be lenient

in permitting standing.

[76] In the present case, Public Mobile, Globalive and the other corporate Respondents, were all

in the same commercial situation. They all bid at the spectrum auction. All were successful. All got
Page: 38

licences. The CRTC said that one of them, Globalive, was not eligible, particularly on the CRTC’s 

view of foreign control and the debt structure of Globalive. The Governor in Council reversed that

decision saying that the reversal was applicable only in this instance.

[77] Public Mobile was involved in the whole process. It made submissions to the Governor in

Council. The impact was clearly stated by Mr. Alex Krstajic, chief executive officer of Public

Mobile in his cross-examination in these proceedings conducted April 6, 2010, where he said in

answer to questions 181 and 182, notwithstanding the objection of his own Counsel:

BY MR. HUBBARD:

181. Q. Sir, you would agree with me that Public Mobile has
no direct interest in this Governor in Council decision?

MR. LAS KIN: That’s…

MR. HUBBARD:  What’s the basis for the refusal, Counsel?

MR. LAS KIN: He started answering, so I’ll let it go.

THE DEPONENT: Let me answer this. Yes, we do have a


direct interest in this. If the order in council had said we’ve 
changed the laws and anybody who is a new entrant like
Globalive, can have the same kind of structure as Globalive
and can get foreign capital, I can tell you right now, this
application would not have been brought forward, full stop.
But the fact that they tried to say…this isn’t in a change in 
the law, so look the other way, this thing isn’t really a change 
in the law, and it only applies to Globalive, made it a direct
impact on me because it directly impacts my ability to get
more money and grow. And they’re not having a level 
playing field, they’re allowing Globalive to have access to 
foreign capital that I don’t have. So, is that a direct impact
on me? Let’s go back to your economics lesson on what
allows a company to grow. It’s not just something as simple 
as market share. How do you get more markets? You get
more capital that allows you to build very expensive networks
and open more markets and therefore get more revenue. So,
does it directly impact me when one competitor can have
Page: 39

foreign capital and another can’t? Yes, yes, it directly 
impacts me.

[78] Counsel for the Attorney General argued that the Applicant did not “plead” the nature of the 

standing which it claimed in order to secure judicial relief. This is an application, not an action. The

requirements under the Federal Courts Rules for “pleading” are vague or even non-existent. I

reviewed this situation in my decision in Air Canada, supra, at paragraphs 77 to 85. Even if there

were requirements for pleadings, to “plead” standing in the Notice of Application would be to 

anticipate a defence. There is no requirement to plead in anticipation of a defence. In the present

application, the Respondents provided no “pleading” of any kind. At the hearing, the parties were

well aware of the arguments raised as to standing. Nobody was taken by surprise. Each party argued

the matter fully. I reject any argument as to lack of “pleading”.

[79] I find that Public Mobile has sufficient interest in the matters at issue so as to be a person

entitled to seek judicial review in these proceedings.

b) Alternative Remedy

[80] The Attorney General’s Counsel argued that Public Mobile should not be allowed standing 

because it has an effective alternate remedy. This point was not vigorously pursued at the hearing.

The argument is not based on any provision in the Telecommunications Act or other relevant statute;

rather, it relies on a suggestion that certain legal tactics may be pursued by Public Mobile that may

result in providing it with some relief that it may see as favourable. I repeat those tactics as

suggested in the factum of the Attorney General at paragraph 66:

66. The only means by which Public Mobile can achieve legal
certainty for its expressed concern is for the company to request a
Page: 40

Canadian ownership and control review by the CRTC on the facts of


its situation. If Public Mobile raises more foreign capital, and, as a
result, the CRTC can no longer conclude that Public Mobile is not
controlled in fact by a non-Canadian, Public Mobile can either ask
the CRTC to reconsider its decision under section 62 of the Act,
petition the Governor in Council to vary the decision under section
12, or appeal to the Federal Court of Appeal.

[81] The Attorney General cited the decision of the Federal Court of Appeal in Canada (Border

Services Agency) v. C.B. Powell Ltd., 2010 FCA 61 for the proposition that a party can proceed to

the court system only after all adequate remedial resources in the administrative process have been

exhausted.

[82] I agree that where the applicable statute or regulations provide for appeals, reviews and

other such remedies in respect of decisions, it is appropriate that such avenues be exhausted before

recourse to the courts. This does not mean that an opposing party who can offer legal strategies that

may or may not work can, by suggesting such strategies, frustrate access to the courts. That is all

that the Attorney General in paragraph 66, above, is suggesting.

[83] In the present situation, access to the court system is appropriate.


Page: 41

ISSU E 2: Whether the Governor in Council acted within its statutory mandate in

varying the C R T C Decision concerning Globalive

a) The Telecommunications Act

[84] It is common ground that the Telecommunications Act, S.C. 1993, c. 38 is the relevant

statute under which both the CRTC and the Governor in Council made their decisions. Sections 4

and 5 of that Act provide any person, other than a broadcasting undertaking, who operates any

transmission facility of a Canadian carrier, is subject to the Act. Each of these terms is a defined

term and, for purposes of these Reasons, it can be accepted that each of Public Mobile, Globalive

and the corporate Respondents is a person who is subject to the Act.

[85] Section 7 of the Act sets out the objectives of Canadian telecommunications policy. It says:

Objectives

7. It is hereby affirmed that telecommunications performs an


essential role in the maintenance of Canada’s identity and 
sovereignty and that the Canadian telecommunications policy has as
its objectives

(a) to facilitate the orderly development throughout Canada of a


telecommunications system that serves to safeguard, enrich and
strengthen the social and economic fabric of Canada and its regions;

(b) to render reliable and affordable telecommunications services of


high quality accessible to Canadians in both urban and rural areas
in all regions of Canada;

(c) to enhance the efficiency and competitiveness, at the national and


international levels, of Canadian telecommunications;

(d) to promote the ownership and control of Canadian carriers by


Canadians;

(e) to promote the use of Canadian transmission facilities for


telecommunications within Canada and between Canada and points
outside Canada;
Page: 42

(f) to foster increased reliance on market forces for the provision of


telecommunications services and to ensure that regulation, where
required, is efficient and effective;

(g) to stimulate research and development in Canada in the field of


telecommunications and to encourage innovation in the provision of
telecommunications services;

(h) to respond to the economic and social requirements of users of


telecommunications services; and

(i) to contribute to the protection of the privacy of persons.

[86] Sections 8, 10 and 11 of the Act permit the Governor in Council, by order, to issue directions

to the CRTC on broad policy matters with respect to Canadian telecommunications policy

objectives. No such order has been issued in this case.

[87] Section 12(1) of the Act permits the Governor in Council, on its own motion or on petition

from another, by order, to vary or rescind or send back to the CRTC any CRTC decision. Section

12(8) requires reasons to be given. Section 13 requires consultation with the provincial government.

Variation, rescission or referral

12. (1) Within one year after a decision by the Commission, the
Governor in Council may, on petition in writing presented to the
Governor in Council within ninety days after the decision, or on the
Governor in Council’s own motion, by order, vary or rescind the 
decision or refer it back to the Commission for reconsideration of all
or a portion of it.

Reasons

(8) In an order made under subsection (1) or (7), the Governor in


Council shall set out the reasons for making the order.


Page: 43

Provincial consultation

13. The Minister, before making a recommendation to the Governor


in Council for the purposes of any order under section 8 or 12, or
before making any order under section 15, shall notify a minister
designated by the government of each province of the Minister’s 
intention to make the recommendation or the order and shall provide
an opportunity for each of them to consult with the Minister.

[88] Section 72(15) exempts from a review by the Governor in Council decisions of the CRTC as

to violation of its orders and imposition of a penalty. This is not relevant here.

[89] Section 16(1) of the Act provides that a Canadian carrier is eligible to operate as a

telecommunications common carrier if it is a Canadian owned and controlled corporation

incorporated under Canadian or provincial laws.

Eligibility

16. (1) A Canadian carrier is eligible to operate as a


telecommunications common carrier if

(a) it is a Canadian-owned and controlled corporation incorporated


or continued under the laws of Canada or a province; or

(b) it owns or operates only a transmission facility that is referred to


in subsection (5).

[90] Subsection 16(3) of the Act which is pertinent here, defines what is Canadian-owned and

controlled for the purposes of subsection 16(1):

Canadian ownership and control

(3) For the purposes of subsection (1), a corporation is Canadian-


owned and controlled if

(a) not less than eighty per cent of the members of the board of
directors of the corporation are individual Canadians;
Page: 44

(b) Canadians beneficially own, directly or indirectly, in the


aggregate and otherwise than by way of security only, not less than
eighty per cent of the corporation’s voting shares issued and 
outstanding; and

(c) the corporation is not otherwise controlled by persons that are


not Canadians.

[91] It is agreed that the ‘legal control” requirements of subsections 16(3) (a) and (b) have been

met by Globalive. The CRTC and Governor in Council decisions differed as to whether the “control 

in fact” provision of subsection 16(3)(c) had been met.

[92] Section 47 of the Act provides that the CRTC shall exercise its powers with a view to

implementing Canadian telecommunications policy objectives.

Commission subject to orders and standards

47. The Commission shall exercise its powers and perform its duties
under this Act and any special Act

(a) with a view to implementing the Canadian telecommunications


policy objectives and ensuring that Canadian carriers provide
telecommunications services and charge rates in accordance with
section 27; and

(b) in accordance with any orders made by the Governor in Council


under section 8 or any standards prescribed by the Minister under
section 15.

[93] Section 52 of the Act is directed at findings of fact by the CRTC. Subsection 52(1) provides

that the CRTC’s determination on a question of fact is binding and conclusive:

Questions of law and fact

52. (1) The Commission may, in exercising its powers and


performing its duties under this Act or any special Act, determine
any question of law or of fact, and its determination on a question of
fact is binding and conclusive.
Page: 45

F actual findings of court

(2) In determining a question of fact, the Commission is not bound


by the finding or judgment of any court, but the finding or
judgment of a court is admissible in proceedings of the
Commission.

Pending proceedings

(3) The power of the Commission to hear and determine a question


of fact is not affected by proceedings pending before any court in
which the question is in issue.

[94] Sections 60 through 63 of the Act deal with decisions of the CRTC. Section 64(1) provides

for an appeal to the Federal Court of Appeal on any question of law or of jurisdiction:

Appeal to Federal Court of Appeal

64. (1) An appeal from a decision of the Commission on any question


of law or of jurisdiction may be brought in the Federal Court of
Appeal with the leave of that Court.

[95] The constant theme of the Act is adherence to Canadian telecommunications policy

objectives. Those objectives are set out in section 7 of the Act. The opening paragraph of section 7

emphasizes that telecommunications plays an essential role in the maintenance of Canada’s identity 

and sovereignty.

b) F indings of F act

[96] Subsection 52(1) of the Telecommunications Act as reproduced above, provides that a

determination by the CRTC on a question of fact is binding and conclusive.


Page: 46

[97] Counsel for Globalive traced this provision back to section 59 of the National

Transportation Act, R.S. 1985, c. N-20 and right back to the Railway Act, 3 Edw. VII, c. 58, section

42, which provided that findings of fact were binding “on all courts”. Thus, Globalive argued, 

subsection 52(1) must be read contextually so that the CRTC’s findings of fact are binding on courts 

but not on the Governor in Council.

[98] On the other hand, Public Mobile’s Counsel argues that subsection 52(1) is to be read

without restriction and applies equally to any body dealing with the CRTC’s decisions, including 

the Governor in Council. They argue that the Railway Act of 1903 should not reach “beyond the 

grave” so as to constrain the modern Telecommunications Act.

[99] To determine whether the question as to the reach of subsection 52(1) of the Act applies to

the Governor in Council’s Decision, the Court must first consider whether the Governor in Council

disturbed a “finding of fact” by the CRTC.

[100] The Supreme Court of Canada provided useful guidance on this issue in Housen v.

Nikolaisen [2002] 2 S.C.R. 235. The majority decision written by Iacobucci and Major JJ noted the

important distinction between findings of fact and conclusions drawn from those findings, which

conclusions are sometimes, somewhat carelessly, also called findings of fact. If a Court finds that a

person committed acts A and B and failed to commit act C, these are findings of fact. If the Court

then concludes that as a result, the person was negligent, that is a conclusion drawn from the

findings of fact. The result is termed a question of mixed fact and law. The majority wrote at

paragraph 26:
Page: 47

D. Standard of Review for Questions of Mixed Fact and Law

26 At the outset, it is important to distinguish questions of mixed


fact and law from factual findings (whether direct findings or
inferences). Questions of mixed fact and law involve applying a
legal standard to a set of facts: Canada (Director of Investigation
and Research) v. Southam Inc., [1997] 1 S.C.R. 748, at para. 35.
On the other hand, factual findings or inferences require making a
conclusion of fact based on a set of facts. Both mixed fact and law
and fact findings often involve drawing inferences; the difference
lies in whether the inference drawn is legal [page257] or factual.
Because of this similarity, the two types of questions are sometimes
confounded. This confusion was pointed out by A. L. Goodhart in
" Appeals on Questions of F act" (1955), 71 L.Q.R. 402, at p. 405:

The distinction between [the perception of facts and the


evaluation of facts] tends to be obfuscated because we use
such a phrase as "the judge found as a fact that the defendant
had been negligent," when what we mean to say is that "the
judge found as a fact that the defendant had done acts A and
B, and as a matter of opinion he reached the conclusion that
it was not reasonable for the defendant to have acted in that
way."

In the case at bar, there are examples of both types of questions.


The issue of whether the municipality ought to have known of the
hazard in the road involves weighing the underlying facts and
making factual findings as to the knowledge of the municipality. It
also involves applying a legal standard, which in this case is
provided by s. 192(3) of the Rural Municipality Act, 1989, S.S.
1989-90, c. R-26.1, to these factual findings. Similarly, the finding
of negligence involves weighing the underlying facts, making
factual conclusions therefrom, and drawing an inference as to
whether or not the municipality failed to exercise the legal
standard of reasonable care and therefore was negligent.

[101] Once it is determined that a finding is one of mixed fact and law, the Court must consider

whether the alleged error is purely one of law that is subject to review on the correctness standard.

The majority in Housen wrote at paragraph 27:

27 Once it has been determined that a matter being reviewed


involves the application of a legal standard to a set of facts, and is
thus a question of mixed fact and law, then the appropriate
Page: 48

standard of review must be determined and applied. Given the


different standards of review applicable to questions of law and
questions of fact, it is often difficult to determine what the
applicable standard of review is. In Southam, supra, at para. 39,
this Court illustrated how an error on a question of mixed fact and
law can amount to a pure error of law subject to the correctness
standard:

... if a decision-maker says that the correct test requires him


or her to consider A, B, C, and D, but in fact the [page258]
decision-maker considers only A, B, and C, then the outcome
is as if he or she had applied a law that required
consideration of only A, B, and C. If the correct test requires
him or her to consider D as well, then the decision-maker has
in effect applied the wrong law, and so has made an error of
law.

Therefore, what appears to be a question of mixed fact and law,


upon further reflection, can actually be an error of pure law.

[102] The Decision of the Governor in Council did not disagree with the CRTC on its factual

determinations. It disagreed with the CRTC as to the conclusions to be drawn from those facts. This

is quite apparent, for instance, with reference to the following “Whereas” clauses at page 3:

Whereas the Governor in Council recognizes that the


Commission came to its conclusion on Globalive’s non-compliance
with the ownership and control requirements based on an assessment
of various factors that provide influence to the non-Canadian
shareholder which in its view, when taken together, amount to
control;

Whereas the Governor in Council recognizes that multiple


levers of influence can, when combined, amount to control, but
considers that that is not the case with Globalive;

Whereas the Governor in Council considers that, on the basis


of a careful examination of the facts and submissions before the
Commission, it is reasonable to conclude, for the reasons set out in
this Order, that Globalive is not in fact controlled by persons that
are not Canadian and therefore meets the Canadian ownership and
control requirements under the Act and is eligible to operate as a
telecommunications common carrier in Canada;
Page: 49

[103] This is also apparent in reading the Schedule, much of which has been set out earlier in these

Reasons. I repeat paragraph 20:

20. In summary, such a significant concentration of debt in the


hands of Orascom provides Orascom with influence over Globalive.
However, given the exceptional terms and conditions of the lending
instruments which severely restrict the protection afforded to the
lender and the rights of Globalive to renew the debt for up to six
years or to retire it as its entire discretion without penalty (so that
the existence of those loans is not precarious), the debt financing
provided by Orascom does not enable it to control in fact either the
strategic or operational decisions of Globalive.

[104] I conclude, therefore, that the Governor in Council has not made any different findings of

fact than those found by the CRTC. However, the Governor in Council has drawn different

conclusions from those findings. It has made a legal determination drawn from those facts. As such,

the findings of the Governor in Council based on a legal determination are to be judicially reviewed

on a standard of correctness. ( Dunsmuir, supra. at paragraph 50.)

c) Legal Findings

[105] As determined above, the Decision of the Governor in Council involves legal findings and is

to be determined on a standard of correctness. The governing legal provisions are those of the

Telecommunications Act.

[106] The legal basis upon which the Governor in Council has stated that its Decision was made

has been set out at page 2 of the “Whereas” recitals:

Whereas Canadian telecommunications policy objectives


include rendering reliable and affordable telecommunications
services of high quality accessible to Canadians in both urban and
rural areas in all regions of Canada, promoting the ownership and
Page: 50

control of Canadian carriers by Canadians and enhancing the


efficiency and competitiveness, at the national and international
levels, of Canadian telecommunications;

Whereas the Minister of Industry took measures in the


context of the Advanced Wireless Spectrum auction in 2007-2008 to
encourage the emergence and participation of new entrants in order
to foster greater competition in the Canadian wireless
telecommunication market and further innovation in the industry and
to respond to the requirements of Canadian users of
telecommunication services with a goal of lower prices, better
service and more choice for consumers and business;

Whereas Globalive, as a new entrant, was a successful


bidder in the Advances Wireless Spectrum licensing process and was
issued spectrum licences by the Minister of Industry;

Whereas, in order to operate as a telecommunications


common carrier in Canada, Globalive must satisfy the Canadian
ownership and control requirements set out in the Act;

Whereas the Governor in Council considers that, when


possible, the Canadian ownership and control requirements should
be applied in support of the Canadian telecommunications policy
objectives set out in the Act, including enhancing competition in the
telecommunications market;

Whereas the Canadian ownership and control requirements


of the Act restrict the ownership of voting shares by non-Canadians,
but the Act does not impose limits on foreign investment in
telecommunication common carriers and should be interpreted in a
way that ensures that access to foreign capital, technology and
experience is encouraged in a manner that supports all of the
Canadian telecommunication policy objectives;

[107] The Governor in Council has in many respects adhered to and acknowledged the Canadian

telecommunication policy objectives as set out in section 7 of the Act. However, the Governor in

Council has stepped outside those provisions by inserting a previously unknown policy objective

into section 7; namely, that of ensuring access to foreign capital, technology and experience.

Secondly it erred by limiting its Decision to Globalive only. What is the effect of so doing?
Page: 51

[108] There is no doubt that the Governor in Council is bound by the Act and that the Courts may,

by way of judicial review, determine whether the Governor in Council has acted within or outside

the provisions of the Act. The Supreme Court of Canada has recently followed such a practice in

Montreal (city) v. Montreal Port Authority, 2010 SCC 14. LeBel J for the Court wrote at paragraphs

33 and 47:

33 However, in a country founded on the rule of law and in a


society governed by principles of legality, discretion cannot be
equated with arbitrariness. While this discretion does of course
exist, it must be exercised within a specific legal framework.
Discretionary acts fall within a normative hierarchy. In the instant
cases, an administrative authority applies regulations that have
been made under an enabling statute. The statute and regulations
define the scope of the discretion and the principles governing the
exercise of the discretion, and they make it possible to determine
whether it has in fact been exercised reasonably.

47 The respondents' decisions were consistent neither with the


principles governing the application of the PILT Act and the
Regulations nor with Parliament's intention. The way they
exercised their discretion led to an unreasonable outcome that
justified the exercise of the F ederal Court's power of judicial
review.

[109] The Supreme Court of Canada in dealing with a decision of the Governor in Council in

reviewing a decision of the CRTC in Canada (Attorney General) v. Inuit Tapirisat of Canada,

[1980] 2 S.C.R. 735 stated the same principles. Estey J for the Court wrote at page 748:

Let it be said at the outset that the mere fact that a statutory
power is vested in the Governor in Council does not mean that it is
beyond review. If that body has failed to observe a condition
precedent to the exercise of that power, the court can declare that
such purported exercise is a nullity.
Page: 52

[110] He wrote further at page 752:

However, in my view the essence of the principle of law here


operating is simply that in the exercise of a statutory power the
Governor in Council, like any other person or group of persons,
must keep within the law as laid down by Parliament or the
Legislature. Failure to do so will call into action the supervising
function of the superior court whose responsibility is to enforce the
law, that is to ensure that such actions as may be authorized by
statute shall be carried out in accordance with its terms, or that a
public authority shall not fail to respond to a duty assigned to it by
statute.

[111] The issues in the Inuit Tapirisat case are different from the issues in the present case in that

Inuit Tapirisat was dealing with the procedural aspects concerning a decision of the Governor in

Council. In the present case, we are dealing with the legal basis for such a decision.

[112] The Federal Court of Appeal in Canada (Canadian Wheat Board) v. Canada (Attorney

General), 2009 FCA 214, 392 N.R. 149 had stated that it is settled law that the Governor in Council

must stay within its boundaries of the enabling statute. Noël JA for the Court wrote at paragraph 37:

37 It is well settled law that when exercising a legislative power


given to it by statute, the Governor in Council must stay within the
boundary of the enabling statute, both as to empowerment and
purpose. The Governor in Council is otherwise free to exercise its
statutory power without interference by the Court, except in an
egregious case or where there is proof of an absence of good faith
(Thorne's Hardware Ltd. v. The Queen, [1983] 1 S.C.R. 106, p.
111; Attorney General of Canada v. Inuit Tapirisat et al ., [1980] 2
S.C.R. 735

[113] A decision-maker such as the Governor in Council is not only required to take into

consideration the relevant statutory criteria, but also to exclude irrelevant criteria. Binnie J for the
Page: 53

majority of the Supreme Court of Canada in Canadian Union of Public E mployees (C.U.P.E.) v.

Ontario (Minister of Labour), [2003] 1 S.C.R. 539 wrote at paragraph 172:

The principle that a statutory decision-maker is required to take into


consideration relevant criteria, as well as to exclude from
consideration irrelevant criteria, has been reaffirmed on numerous
occasions.

[114] The same proposition was stated by Cory J (as he then was) in delivering the judgment of

the Ontario Divisional Court in D octors’ Hospital and Minister of Health, (1976), 12 O.R. (2d) 164

at page 174:

It has been held that even if made in good faith and with the best of
intentions, a departure by a decision-making body from the objects
and purposes of a statute pursuant to which it acts is objectionable
and subject to review by the Courts.

[115] The Governor in Council in this case misdirected itself in law, particularly as expressed in

the “reasons” as set out in the following “Whereas” clauses:

Whereas the Canadian ownership and control requirements


of the Act restrict the ownership of voting shares by non-Canadians,
but the Act does not impose limits on foreign investment in
telecommunication common carriers and should be interpreted in a
way that ensures that access to foreign capital, technology and
experience is encouraged in a manner that supports all of the
Canadian telecommunication policy objectives; (emphasis added)

And whereas the Governor in Council considers that this


Order is based on the facts of this particular case and has a
significant direct impact only on Globalive; (emphasis added)

[116] In the present case, the Telecommunications Act makes it clear in the opening portion of

section 7 that telecommunications has an essential role in the maintenance of Canada’s identity and
Page: 54

sovereignty. Subsection 7(d) states as a policy objective the promotion of ownership and control of

Canadian carriers by Canadians. Section 16 of the Act requires legal control and control in fact to

be Canadian.

[117] In the first of the above “Whereas” clauses, the Governor in Council misdirected itself in

law by interpreting the Canadian ownership and control requirements of the Telecommunications

Act ,to use its words, “in a way that ensures access to foreign capital, technology and experience is

encouraged”. While the Governor in Council is correct in saying in the same clause that “the Act 

does not impose limits on foreign investment” it must be kept in mind that the Act does not refer

anywhere to “foreign investment” or to “foreign capital, technology and experience”. What the Act

does say is that telecommunications has an essential role in the maintenance of Canada’s identity 

and sovereignty and provides a policy objective which requires Canadian ownership and control to

be promoted. There is no policy objective in the Act that encourages foreign investment. The Act

provides tests as to Canadian ownership and control including in subsection 16(3)(c) that a

corporation not be otherwise controlled by a non-Canadian. The intent of the Act is clear that a

situation such as this is to be determined in a manner so as to ensure that there is Canadian control.

Where there is a concern that foreign investment and other factors may put Canadian control at risk

then it is the promotion of Canadian control that is to be the essential criterion upon which the

matter is to be determined. It is for Parliament not the Governor in Council to rewrite the Act.

[118] In the second of the above “Whereas” clauses, the Governor in Council acted outside the

legal parameters of the Act in stating that its Decision impacts only on Globalive. The
Page: 55

Governor in Council cannot restrict its interpretation to one individual and not to others who may

find themselves in a similar circumstance.

[119] These improper considerations were fundamental to the determination of the Governor in

Council to reverse the Decision of the CRTC. Therefore, the Decision of the Governor in Council

must be quashed.

C O N C L USI O NS

[120] For the reasons provided, I have determined that the Applicant Public Mobile has standing

to seek judicial review of the Decision of the Governor in Council dated 10 December 2009. That

Decision was based on errors of law and must be quashed.

[121] Counsel for Globalive submitted that, in the event that I made such a determination, it would

be reasonable to stay the determination for a period of time so as to permit Globalive and any other

relevant person to pursue such appeals and other remedies as may be available. I will stay my

Judgment for a period of forty-five (45) days.

C OSTS

[122] I invited Counsel for the parties to make submissions as to costs of the hearing. After

discussion, it was determined that those submissions could be made after the release of these

Reasons. I invite Counsel, therefore, to provide written submissions as to costs, both allocation and

quantum, not to exceed three (3) pages, within thirty (30) days of the date of release of these

Reasons.
Page: 56

[123] No costs will be awarded for or against any of the Interveners.


Page: 57

JUD G M E N T

F O R T H E R E ASO NS PR O V I D E D, T H IS C O UR T A DJUD G ES that:

1. The application is allowed;

2. It is declared that the Decision of the Governor in Council P.C. 2009-2008

dated December 10, 2009 is null and void in that it was determined on a

basis in law not provided for in the Telecommunications Act,

S.C. 1993, c. 38;

3. The Decision of the Governor in Council aforesaid is quashed;

4. The provisions of paragraphs 2 and 3 of this Judgment are stayed for a

period of forty-five (45) days from the date of the release of the Reasons and

Judgment herein;

5. No costs shall be awarded for or against any of the Interveners;

6. Counsel for the remaining parties shall provide written submissions as to

costs, both as to the allocation and quantum, not to exceed (3) pages in

length, within thirty (30) days from the date of the release of the Reasons and

Judgment herein.

"Roger T. Hughes"
Judge
F E D E R A L C O UR T

SO L I C I T O RS O F R E C O RD

DO C K E T: T-26-10

ST Y L E O F C A USE : PUB L I C M O BI L E I N C., (Applicant) v. A T T O RN E Y


G E N E R A L O F C A N A D A, G L O V A L I V E
W I R E L ESS M A N A G E M E N T C O RP., B E L L
C A N A D A, R O G E RS C O M M UNI C A T I O NS I N C L,
SH A W C O M M UNI C A T I O NS I N C L A ND T E L US
C O M M UNI C A T I O NS C O M PA N Y, (Respondents) v.
A L L I A N C E O F C A N A DI A N C I N E M A,
T E L E V ISI O N A ND R A DI O A R T ISTS,
C O M M UNI C A T I NS, E N E R G Y A ND
PAPE R W O R K S UNI O N O F C A N A D A, A ND
F RI E NDS O F C A N A DI A N BR O A D C AST I N G
(Interveners)

P L A C E O F H E A RI N G : Ottawa, Ontario

D A T ES O F H E A RI N G : January 19 & 20, 2011

R E ASO NS F O R JUD G M E N T : HUGHES J.

D A T E D: February X X, 2011

APPE A R A N C ES:

John B. Laskin FOR THE APPLICANT


Torys LLP, Toronto, ON

Michael H. Ryan
Arnold & Porter LLP, London,
England

Alexander Gay FOR THE RESPONDENT Attorney General of


Robert MacKinnon Canada

FOR THE RESPONDENT Globalive Wireless


Thomas G. Heintzman QC Management Corp.
Malcolm M. Mercer
Anna Matas
Page: 2

Kenneth Jull FOR THE RESPONDENT, Telus Communications


Stephen Schmidt Company

Steven Shrybman FOR THE INTERVENERS

SO L I C I T O RS O F R E C O RD:

Dougald E. Brown FOR THE APPLICANT


Nelligan O’Brien Payne LLP
Barristers & Solicitors
Ottawa, Ontario

Myles J. Kirvan FOR THE RESPONDENT, Attorney General of


Deputy Attorney General of Canada Canada
Ottawa, Ontario

McCarthy Tetrault LLP FOR THE RESPONDENT, Globalive Wireless


Barristers & Solicitors Management Corp.
Toronto, Ontario

Stephen Schmidt FOR THE RESPONDENT, Telus Communications


Chief Regulatory Legal Counsel Company
Telus Communications Company
Ottawa, Ontario

Sack Goldblatt Mitchell LLP FOR THE INTERVENERS


Barristers & Solicitors
Ottawa, Ontario

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