Canadian Association of Broadcasters et al. v. Canada, 2006 FC 1482

• Judge: Shore, J.
• Court: Federal Court (Canada)
• Case Date: December 14, 2006
• Jurisdiction: Canada (Federal)
• Citations: 2006 FC 1482;(2006), 306 F.T.R. 109 (FC)

Cdn. Assoc. of Broadcasters v. Can. (2006), 306 F.T.R. 109 (FC)

MLB headnote and full text

Temp. Cite: [2006] F.T.R. TBEd. DE.045

Canadian Association of Broadcasters (the plaintiff Association), Group TVA Inc., CTV Television Inc., the Sports Network Inc., 2953285 Inc. (o.b.a. Discovery Channel Canada), Le Réseau Des Sports (RDS) Inc., the Comedy Network Inc., 1163031 Ontario Inc. (o.b.a. Out Door Life Network), Canwest Mediaworks Inc., Global Television Network Quebec Limited Partnership, Prime TV, General Partnership, Chum Limited, Chum Ottawa Inc., Chum Television Vancouver Inc., and Pulse24 General Partnership (the Corporate plaintiffs) (plaintiffs) v. Her Majesty the Queen (defendant)

Vidéotron Ltée, Vidéotron (Régional) ltée, and CF Cable TV Inc. (plaintiffs) v. Her Majesty the Queen (defendant)

(T-2277-03; T-276-04; 2006 FC 1482)

Indexed As: Canadian Association of Broadcasters et al. v. Canada

Federal Court

Shore, J.

December 14, 2006.

Summary:

In an action which contested the validity of annual broadcasting licence fees assessed by the Canadian Radio-Television and Telecommunications Commission (CRTC), the court was asked to determine whether (i) part II of the Broadcasting Licence Fee Regulations was ultra vires s. 11 of the Broadcasting Act if the fees imposed were considered to be a tax and (ii) s. 11 of the Regulations constituted an ineffective delegation of Parliament's taxation authority if the fees were considered to be a tax.

The Federal Court, in a decision reported at [2005] F.T.R. Uned. A71, answered both questions affirmatively. The Crown appealed.

The Federal Court of Appeal, in a decision reported at 353 N.R. 12, dismissed the appeal. Section 11 was ultra vires and an ineffective delegation of Parliament's taxing authority if the charges were a tax, rather than fees. The plaintiffs sought a declaration that s. 11 of the Regulations was ultra vires the authority conferred on the CRTC by the Broadcasting Act and, if so, a further declaration for the return of monies paid under s. 11.

The Federal Court declared that the fees were a tax and that s. 11 was ultra vires. However, the plaintiffs were not entitled to the return of the monies paid. The plaintiffs were awarded costs on a solicitor and client basis.

Constitutional Law - Topic 605

Powers of Parliament and the Legislatures - Delegation of power - Taxing powers - The plaintiffs asserted that Part II Licence Fees imposed under s. 11 of the Broadcasting Licence Fee Regulations were taxes, rather than fees - They sought a declaration that s. 11 of the Regulations was ultra vires the authority conferred on the Canadian Radio-Television and Telecommunications Commission by the Broadcasting Act - On a preliminary question, the Federal Court of Appeal had already ruled that s. 11 was ultra vires and an ineffective delegation of Parliament's taxing authority if the charges were a tax - The Federal Court declared that the fees were a tax and that s. 11 was ultra vires - The court discussed the principles to be applied in characterizing charges as fees or taxes where Parliament empowered the Crown to charge fees by regulation - See paragraphs 47 to 70.

Constitutional Law - Topic 605

Powers of Parliament and the Legislatures - Delegation of power - Taxing powers - The plaintiffs asserted that fees imposed under s. 11 of the Broadcasting Licence Fee Regulations were taxes, rather than fees - They sought a declaration that s. 11 of the Regulations was ultra vires the authority conferred on the Canadian Radio-Television and Telecommunications Commission (CRTC) by the Broadcasting Act - On a preliminary question, the Federal Court of Appeal had already ruled that s. 11 was ultra vires and an ineffective delegation of Parliament's taxing authority if the charges were a tax - The Federal Court declared that the fees were a tax and that s. 11 was ultra vires - The fees exhibited the five hallmarks of a tax - They were (i) compulsory and enforceable under the Broadcasting Act, (ii) imposed under the legislature's authority, (iii) levied by a public body (CRTC), (iv) intended for a public purpose and (v) there was no reasonable nexus between the quantum charged and the service provided - The fees were used to raise revenue for general purposes and were not charges for services or used to finance a regulatory scheme - None of the monies collected were retained by the CRTC or designated for any Industry Canada regulatory costs - See paragraphs 98 to 118.

Constitutional Law - Topic 605

Powers of Parliament and the Legislatures - Delegation of power - Taxing powers - The plaintiffs asserted that fees imposed under s. 11 of the Broadcasting Licence Fee Regulations were taxes, rather than fees - They sought a declaration that s. 11 of the Regulations was ultra vires the authority conferred on the Canadian Radio-Television and Telecommunications Commission (CRTC) by the Broadcasting Act - On a preliminary question, the Federal Court of Appeal had already ruled that s. 11 was ultra vires and an ineffective delegation of Parliament's taxing authority if the charges were a tax - The Crown asserted that the fees were intended to earn a fair return for the broadcasters' use of the broadcasting spectrum, to recover Industry Canada costs of managing the broadcasting spectrum and to represent the privilege of holding a broadcasting licence for commercial benefit - The Federal Court declared that the fees were a tax and that s. 11 was ultra vires - The court indicated that the Crown's justification for the fees was not valid - The fees were not intended to cover the cost of regulating the broadcast system - The amounts collected grossly exceeded the cost of the regulatory scheme - The monies were deposited in the consolidated revenue fund and were intended to raise revenue for general public purposes - Further, the Broadcasting Act did not authorize the CRTC to impose a fee for a privilege or to extract economic rent - See paragraphs 119 to 179.

Constitutional Law - Topic 2523

Determination of validity of statutes or acts - Effect of invalidity - Acts done prior to declaration of invalidity - The plaintiffs asserted that fees imposed under s. 11 of the Broadcasting Licence Fee Regulations were taxes - They sought a declaration that s. 11 of the Regulations was ultra vires the authority conferred on the Canadian Radio-Television and Telecommunications Commission by the Broadcasting Act - On a preliminary question, the Federal Court of Appeal had already ruled that s. 11 was ultra vires and an ineffective delegation of Parliament's taxing authority if the charges were a tax - The plaintiffs also sought return of the monies paid - The Federal Court declared that the fees were a tax and that s. 11 was ultra vires - However, the plaintiffs were not entitled to the return of the monies paid - Money paid under legislation later found to be invalid was not recoverable by a fee-payer - Historically, money paid under mistake of law was not recoverable because the treasury's protection was necessary in avoiding "fiscal chaos" - Even restitutionary principles did not dictate the monies' return - Taxpayers did not expect the burden of a mistake as to the validity of the intended legislative scheme to be shifted from one group of taxpayers to another - The better course was simply to ensure that no further fees were collected - See paragraphs 180 to 198.

Constitutional Law - Topic 5763

Federal jurisdiction (s. 91) - Taxation - What constitutes a tax - [See all Constitutional Law - Topic 605 ].

Mistake - Topic 1706

Recovery of money paid under mistake - Mistake of law - Money paid under invalid legislation - [See Constitutional Law - Topic 2523 ].

Restitution - Topic 69

Unjust enrichment - General - Where money paid under invalid law - [See Constitutional Law - Topic 2523 ].

Restitution - Topic 70

Unjust enrichment - General - Where money paid under mistake of law - [See Constitutional Law - Topic 2523 ].

Restitution - Topic 705

Benefit acquired from the plaintiff - Recovery of money - Money paid under invalid law - [See Constitutional Law - Topic 2523 ].

Restitution - Topic 8005

Defences - General - Passing-on - [See Constitutional Law - Topic 2523 ].

Restitution - Topic 8006

Defences - General - Fiscal chaos - [See Constitutional Law - Topic 2523 ].

Statutes - Topic 4550

Operation and effect - Validity - Effect of declaration of invalidity - [See Constitutional Law - Topic 2523 ].

Statutes - Topic 5363

Operation and effect - Delegated legislation - Regulations - Validity of - Scope of authority to make - [See second and third Constitutional Law - Topic 605 ].

Telecommunications - Topic 6464

Commissions - Regulation - Powers - Licensing fees - [See second and third Constitutional Law - Topic 605 and Constitutional Law - Topic 2523 ].

Cases Noticed:

Air Canada and Pacific Western Airlines Ltd. v. British Columbia, [1989] 1 S.C.R. 1161; 95 N.R. 1, refd to. [para. 46].

Lawson v. British Columbia (Interior Tree Fruit and Vegetable Committee of Direction), [1931] S.C.R. 357, appld. [para. 56].

Eurig Estate v. Ontario Court (General Division), Registrar, [1998] 2 S.C.R. 565; 231 N.R. 55; 114 O.A.C. 55, appld. [para. 56].

Eurig Estate, Re - see Eurig Estate v. Ontario Court (General Division), Registrar.

Westbank First Nation v. British Columbia Hydro and Power Authority, [1999] 3 S.C.R. 134; 246 N.R. 201; 129 B.C.A.C. 1; 210 W.A.C. 1, appld. [para. 56].

Canada (Attorney General) v. Cie de Publication La Presse Ltée, [1964] Ex. C.R. 627; 63 D.T.C. 1335 (Ex. Ct.), revd. [1967] S.C.R. 60; 63 D.L.R.(2d) 396; 66 D.T.C. 5492, consd. [para. 60].

Pleau v. Nova Scotia (Prothonotary) (1998), 186 N.S.R.(2d) 1; 581 A.P.R. 1 (S.C.), refd to. [para. 73].

Urban Outdoor Trans Ad et al. v. Scarborough (City) (2001), 141 O.A.C. 37; 196 D.L.R.(4th) 304 (C.A.), refd to. [para. 100].

R. v. Breault (J.) (2001), 235 N.B.R.(2d) 337; 607 A.P.R. 337 (C.A.), refd to. [para. 102].

St. Francis Xavier University, Re (1999), 7 M.P.L.R.(3d) 165 (N.S.S.C.), refd to. [para. 103].

Surdell-Kennedy Taxi Ltd. et al. v. Surrey (City), [2001] B.C.T.C. 1265; 2001 BCSC 1265, refd to. [para. 104].

Alberta Natural Gas Tax Reference, [1982] 1 S.C.R. 1004; 42 N.R. 361; 37 A.R. 541, refd to. [para. 105].

Reference re Proposed Federal Tax on exported Natural Gas - see Alberta Natural Gas Tax Reference.

Ontario Home Builders' Association et al. v. Board of Education of York Region et al., [1996] 2 S.C.R. 929; 201 N.R. 81; 93 O.A.C. 241; 35 M.P.L.R.(2d) 1; 4 R.P.R.(3d) 1, refd to. [para. 112].

Mount Cook National Park Board v. Mount Cook Motels Ltd., [1972] N.Z.L.R. 481 (C.A.), refd to. [para. 112].

620 Connaught Ltd. et al. v. Canada (Attorney General) et al. (2006), 352 N.R. 177; 2006 FCA 252, consd. [para. 112].

Nanaimo Immigrant Settlement Society et al. v. British Columbia (2004), 202 B.C.A.C. 172; 331 W.A.C. 172; 242 D.L.R.(4th) 394 (C.A.), refd to. [para. 117].

Bell ExpressVu Limited Partnership v. Rex et al. (2002), 287 N.R. 248; 166 B.C.A.C. 1; 271 W.A.C. 1; 2002 SCC 42, refd to. [para. 184].

Genex Communications Inc. v. Canada (Attorney General) et al. (2005), 338 N.R. 268; 2005 FCA 283, refd to. [para. 188].

Grenier v. Canada (2005), 344 N.R. 102; 2005 FCA 348, refd to. [para. 193].

National Westminster Bank plc v. Spectrum Plus Ltd. et al., [2005] UKHL 41; 338 N.R. 201, refd to. [para. 194].

Télébec ltée v. Québec (Régie des télécommunications), [1999] J.Q. No. 756 (C.A.), refd to. [para. 195].

Peel (Regional Municipality) v. Ontario, [1992] 3 S.C.R. 762; 144 N.R. 1; 59 O.A.C. 81, refd to. [para. 196].

Peel (Regional Municipality) v. Canada - see Peel (Regional Municipality) v. Ontario.

Garland v. Consumers' Gas Co., [2004] 1 S.C.R. 629; 319 N.R. 38; 186 O.A.C. 128, refd to. [para. 197].

Kingstreet Investments Ltd. et al. v. New Brunswick (Minister of Finance) et al. (2007), 355 N.R. 336; 309 N.B.R.(2d) 255; 799 A.P.R. 255; 2007 SCC 1, reving. in part (2004), 285 N.B.R.(2d) 201; 744 A.P.R. 201 (C.A.), refd to. [paras. 202, 203].

Corbiere et al. v. Canada (Minister of Indian and Northern Affairs) et al., [1999] 2 S.C.R. 203; 239 N.R. 1, refd to. [para. 205].

R. v. Guignard (R.), [2002] 1 S.C.R. 472; 282 N.R. 365, refd to. [para. 206].

Authors and Works Noticed:

Canada, Report of the Standing Joint Committee for the Scrutiny of Regulations, Fees and taxes: The distinction and its implications (1989), pp. 9 [paras. 58, 59, 62, 66]; 10, 11, 12, 14 [paras. 62, 66].

Canada, Report of the Standing Committee on Canadian Heritage (2003), generally [para. 119].

Fridman, Gerald Henry Louis, Restitution (2nd Ed. 1992), pp. 39 to 41 [para. 198]; 94, 95, 99 [para. 199].

Lovell, John, From Now On: Temporal Issues in Constitutional Adjudication (2005), 18 N.J.C.L. 17, pp. 27 to 30 [para. 194]; 41 [para. 197].

May, Thomas Erskine, Treatise on the Law, Privileges, Proceedings and Usage of Parliament (23rd Ed. 2004), pp. 897, 899 [para. 6].

New Zealand, House of Representatives, Report of the Regulations Review Committee: Inquiry into the constitutional principles to apply when Parliament empowers the Crown to charge fees by regulation (1989), paras. 8.3, 8.4, 8.6 [para. 50]; 9.4, 9.5, 9.6, 9.7, 9.8 [para. 51]; 11.1 [para. 54].

Counsel:

Barbara A. McIsaac, R. Benjamin  Mills and Howard R. Fohr, for the plaintiffs;

F.B. (Rick) Woyiwada, R. Jeff Anderson, Francisco Couto and Alexander Pless, for the defendant.

Solicitors of Record:

McCarthy Tétrault LLP, Ottawa, Ontario, for the plaintiffs;

John H. Sims, Q.C., Deputy Attorney General of Canada, Ottawa, Ontario, for the defendants.

This action was heard at Ottawa, Ontario, on November 20-28, 2006, by Shore, J., of the Federal Court, who delivered the following reasons for judgment on December 14, 2006.