Consumers Association of Canada et al. v. Canadian Radio-Television and Telecommunications Commission et al., (2009) 392 N.R. 323 (SCC)

• Judge: McLachlin, C.J.C., Binnie, LeBel, Deschamps, Fish, Abella, Charron, Rothstein and Cromwell, JJ.
• Court: Supreme Court (Canada)
• Case Date: March 26, 2009
• Jurisdiction: Canada (Federal)
• Citations: (2009), 392 N.R. 323 (SCC);2009 SCC 40

Consumers Assoc. of Can. v. CRTC (2009), 392 N.R. 323 (SCC)

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[French language version follows English language version]

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Temp. Cite: [2009] N.R. TBEd. SE.018

Bell Canada (appellant) v. Bell Aliant Regional Communications, Limited Partnership, Consumers' Association of Canada, National Anti-Poverty Organization, Public Interest Advocacy Centre, MTS Allstream Inc., Société en commandite Télébec and TELUS Communications Inc. (respondents) and Canadian Radio-television and Telecommunications Commission (intervenor)

TELUS Communications Inc. (appellant) v. Bell Canada, Arch Disability Law Centre, Bell Aliant Regional Communications, Limited Partnership, Canadian Radio-television and Telecommunications Commission, Consumers' Association of Canada, National Anti-Poverty Organization, Public Interest Advocacy Centre, MTS Allstream Inc., Saskatchewan Telecommunications and Société en commandite Télébec (respondents)

Consumers' Association of Canada and National Anti-Poverty Organization (appellants) v. Canadian Radio-television and Telecommunications Commission, Bell Aliant Regional Communications, Limited Partnership, Bell Canada, Arch Disability Law Centre, MTS Allstream Inc., TELUS Communications Inc. and TELUS Communications (Québec) Inc. (respondents)

(32607, 32611; 2009 SCC 40; 2009 CSC 40)

Indexed As: Consumers Association of Canada et al. v. Canadian Radio-Television and Telecommunications Commission et al.

Supreme Court of Canada

McLachlin, C.J.C., Binnie, LeBel, Deschamps, Fish, Abella, Charron, Rothstein and Cromwell, JJ.

September 18, 2009.

Summary:

In 2002, the Canadian Radio-Television and Telecommunications Commission (CRTC) established pricing constraints (the "price caps decision") that applied to the regulated services of Bell Canada and other incumbent local exchange carriers (ILECs). Although the formula established for residential telephone services in urban areas would have required a rate decrease in certain years, the CRTC did not order a rate reduction in order to encourage competition. Instead, the ILECs were directed to keep track of the rate reductions that would have been required and deposit those amounts in a deferral account. In 2006, the CRTC, in the "deferral accounts decision", directed the ILECs to allocate a minimum of 5% of their deferral account to improving accessibility for disabled persons. The remaining 95% could be invested in broadband expansion in rural and remote communities. If the expansion as approved cost less than 95% of the deferral account balance, the remainder was to be rebated to subscribers in urban areas. An ILEC choosing not to invest in broadband expansion had to rebate 95% of the deferral account balance to subscribers in urban areas. Bell Canada appealed, seeking an order quashing the part of the deferral accounts decision that required it to rebate a portion of its deferral account. The Consumers Association and the National Anti-Poverty Organization also appealed, seeking an order quashing the part of the deferral accounts decision that required a portion of the deferral accounts to be used to expand broadband services.

The Federal Court of Appeal, in a decision reported at (2008), 375 N.R. 124, dismissed the appeals. Bell Canada appealed. TELUS Communications joined Bell Canada in the appeal. The Consumers Association and the National Anti-Poverty Organization also appealed.

The Supreme Court of Canada dismissed the appeals.

Administrative Law - Topic 9058

Boards and tribunals - Jurisdiction of particular boards and tribunals - Canadian Radio-Television and Telecommunications Commission - [See first, second, third and fourth Telecommunications - Topic 6472 ].

Telecommunications - Topic 6461

Commissions - Regulation - Powers - General - The Supreme Court of Canada stated that a central responsibility of the Canadian Radio-television and Telecommunications Commission (CRTC) was to determine and approve just and reasonable rates to be charged for telecommunications services - Together with its rate-setting power, the CRTC had the ability to impose any condition on the provision of a service, adopt any method to determine whether a rate was just and reasonable and require a carrier to adopt any accounting method - It was obliged to exercise all of its powers and duties with a view to implementing the Canadian telecommunications policy objectives set out in s. 7 of the Telecommunications Act - See paragraph 36.

Telecommunications - Topic 6461

Commissions - Regulation - Powers - General - The Supreme Court of Canada discussed the nature of the Canadian Radio-television and Telecommunications Commission's (CRTC) rate-setting power under the Telecommunications Act - The predecessor statute for telecommunications rate-setting, the Railway Act, stipulated that rates be "just and reasonable" - Traditionally, those rates were based on a balancing between a fair rate for the consumer and a fair return on the carrier's investment - However, even before the expansive language now found in the Telecommunications Act, regulatory agencies had enjoyed considerable discretion in determining the factors to be considered and the methodology that could be adopted for assessing whether rates were just and reasonable - That broad discretion was enhanced by the inclusion of s. 27(5) in the Telecommunications Act, permitting the CRTC to adopt "any method", language that had been absent from the Railway Act - More significantly, the Railway Act contained nothing analogous to the statutory discretion under s. 47 of the Telecommunications Act that the CRTC had to exercise its rate-setting powers with a view to implementing the Canadian telecommunications objectives set out in s. 7 of the Telecommunications Act - The court concluded that the CRTC could set rates that were just and reasonable for the purposes of the Telecommunications Act through a diverse range of methods, taking into account a variety of different constituencies and interests referred to in s. 7 of the Telecommunications Act, not simply those that it had previously considered when it was operating under the more restrictive provisions of the Railway Act - See paragraphs 39 to 48.

Telecommunications - Topic 6472

Commissions - Regulation - Powers - Rates - In 2002, the Canadian Radio-Television and Telecommunications Commission (CRTC) established pricing constraints (the "price caps decision") that applied to the regulated services of Bell Canada and other incumbent local exchange carriers (ILECs) - Although the formula established for residential telephone services in urban areas would have required a rate decrease in certain years, the CRTC did not order a rate reduction in order to encourage competition - Instead, the ILECs were directed to track the rate reductions that would have been required and deposit those amounts in a deferral account - In 2006, the CRTC, in the "deferral accounts decision", directed the ILECs to allocate a minimum of 5% of their deferral account to improving accessibility for disabled persons - The remaining 95% could be invested in broadband expansion in rural and remote communities - If the expansion as approved cost less than 95% of the deferral account balance, the remainder was to be rebated to subscribers in urban areas - An ILEC choosing not to invest in broadband expansion had to rebate 95% of the deferral account balance to subscribers in urban areas - Bell Canada appealed, seeking an order quashing the part of the decision that required it to rebate a portion of its deferral account - The Federal Court of Appeal dismissed the appeal - Bell Canada appealed, asserting, inter alia, that the CRTC had no statutory authority to order what it claimed amounted to retrospective "rebates" to customers - The Supreme Court of Canada dismissed the appeal - The credits ordered out of the deferral accounts were neither retroactive nor retrospective - They did not vary the original rate as approved, which included the deferral accounts, nor did they seek to remedy a deficiency in the rate order through later measures - The credits or reductions were contemplated as a possible disposition of the deferral account balances from the beginning - The funds were properly characterized as encumbered revenues because the rates always remained subject to the deferral accounts mechanism established in the price caps decision - See paragraphs 58 to 63.

Telecommunications - Topic 6472

Commissions - Regulation - Powers - Rates - In 2002, the Canadian Radio-Television and Telecommunications Commission (CRTC) established pricing constraints (the "price caps decision") that applied to the regulated services of Bell Canada and other incumbent local exchange carriers (ILECs) - Although the formula established for residential telephone services in urban areas would have required a rate decrease in certain years, the CRTC did not order a rate reduction in order to encourage competition - Instead, the ILECs were directed to track the rate reductions that would have been required and deposit those amounts in a deferral account - In 2006, the CRTC, in the "deferral accounts decision", directed the ILECs to allocate a minimum of 5% of their deferral account to improving accessibility for disabled persons - The remaining 95% could be invested in broadband expansion in rural and remote communities - If the expansion as approved cost less than 95% of the deferral account balance, the remainder was to be rebated to subscribers in urban areas - An ILEC choosing not to invest in broadband expansion had to rebate 95% of the deferral account balance to subscribers in urban areas - Bell Canada appealed, seeking an order quashing the part of the decision that required it to rebate a portion of its deferral account - The Federal Court of Appeal dismissed the appeal - Bell Canada appealed, asserting, inter alia, that the distributions ordered by the CRTC were in substance a variation of rates that had been declared final - The Supreme Court of Canada dismissed the appeal - The deferral accounts decision was the culmination of a process undertaken in the price caps decision - In the price caps decision, the CRTC indicated that the amounts in the deferral accounts were to be used in a manner contributing to achieving the CRTC's objectives - In the deferral accounts decision, the CRTC summarized its earlier findings that draw-downs could occur for various purposes, including through subscriber credits - When the CRTC approved the rates derived from the price caps decision, the portion of the revenues that went into the deferral accounts remained encumbered - The deferral accounts were an integral part of the rate-setting exercise - Nothing in the deferral accounts decision changed either the price caps decision or any other prior CRTC decision on this point - The CRTC's later allocation of deferral account balances was not a variation of a final rate order - Further, nothing in the deferral accounts decision undermined the financial stability of the affected carriers - The amounts at issue were always treated differently for accounting purposes - The carriers were aware that the funds remained encumbered - See paragraphs 64 to 66.

Telecommunications - Topic 6472

Commissions - Regulation - Powers - Rates - In 2002, the Canadian Radio-Television and Telecommunications Commission (CRTC) established pricing constraints (the "price caps decision") that applied to the regulated services of Bell Canada and other incumbent local exchange carriers (ILECs) - Although the formula established for residential telephone services in urban areas would have required a rate decrease in certain years, the CRTC did not order a rate reduction in order to encourage competition - Instead, the ILECs were directed to track the rate reductions that would have been required and deposit those amounts in a deferral account - In 2006, the CRTC, in the "deferral accounts decision", directed the ILECs to allocate a minimum of 5% of their deferral account to improving accessibility for disabled persons - The remaining 95% could be invested in broadband expansion in rural and remote communities - If the expansion as approved cost less than 95% of the deferral account balance, the remainder was to be rebated to subscribers in urban areas - An ILEC choosing not to invest in broadband expansion had to rebate 95% of the deferral account balance to subscribers in urban areas - Bell Canada appealed, seeking an order quashing the part of the decision that required it to rebate a portion of its deferral account - The Federal Court of Appeal dismissed the appeal - Bell Canada appealed - TELUS Communications joined Bell Canada in the appeal - The Supreme Court of Canada dismissed the appeal - The court stated that it had difficulty accepting TELUS' argument that the deferral accounts decision constituted a confiscation of its property - The funds in the accounts never belonged equivocally to the carriers and had always consisted of encumbered revenues - Had the CRTC intended that these revenues were to be used for any purposes that the affected carriers wanted, it could simply have approved the rates as just and reasonable and ordered the balance of the deferral accounts turned over to them - It chose not to do so - See paragraph 67.

Telecommunications - Topic 6472

Commissions - Regulation - Powers - Rates - In 2002, the Canadian Radio-Television and Telecommunications Commission (CRTC) established pricing constraints that applied to the regulated services of Bell Canada and other incumbent local exchange carriers (ILECs) - Although the formula established for residential telephone services in urban areas would have required a rate decrease in certain years, the CRTC did not order a rate reduction in order to encourage competition - Instead, the ILECs were directed to track the rate reductions that would have been required and deposit those amounts in a deferral account - In 2006, the CRTC, in the "deferral accounts decision", directed the ILECs to allocate a minimum of 5% of their deferral account to improving accessibility for disabled persons - The remaining 95% could be invested in broadband expansion in rural and remote communities - If the expansion as approved cost less than 95% of the deferral account balance, the remainder was to be rebated to subscribers in urban areas - An ILEC choosing not to invest in broadband expansion had to rebate 95% of the deferral account balance to subscribers in urban areas - The Consumers Association and the National Anti-Poverty Organization (the consumers) appealed, seeking an order quashing the part of the decision that required a portion of the deferral accounts to be used to expand broadband services - The Federal Court of Appeal dismissed the appeal - The consumers appealed - The Supreme Court of Canada dismissed the appeal - At its core, the consumers' argument was that the deferral accounts decision effectively forced residential subscribers in certain areas to subsidize future users of broadband services, that this was an indication that the rates charged to residential users were not just and reasonable and that, therefore, the deferral account balances should be distributed to consumers - However, the CRTC did not have to limit itself to considering solely the service at issue in determining whether rates were just and reasonable - The Telecommunications Act contemplated a comprehensive telecommunications framework - The CRTC did not have to atomize individual services - It was up to the CRTC to determine a tolerable level of cross-subsidization - The CRTC properly considered the objectives set out in s. 7 of the Act when it ordered expenditures for the expansion of broadband infrastructure and consumer credits - It treated the statutory objectives as guiding principles in rate-setting - Pursuing policy objectives through the exercise of its rate-setting power was precisely what the CRTC was required to do - The CRTC's decision to order broadband expansion was reasonable - See paragraphs 70 to 78.

Telecommunications - Topic 6472

Commissions - Regulation - Powers - Rates - [See both Telecommunications - Topic 6461 ].

Telecommunications - Topic 6481

Commissions - Regulation - Appeals and judicial review - Standard of review - In 2002, the Canadian Radio-Television and Telecommunications Commission (CRTC) established pricing constraints (the "price caps decision") that applied to the regulated services of Bell Canada and other incumbent local exchange carriers (ILECs) - Although the formula established for residential telephone services in urban areas would have required a rate decrease in certain years, the CRTC did not order a rate reduction in order to encourage competition - Instead, the ILECs were directed to track the rate reductions that would have been required and deposit those amounts in a deferral account - In 2006, the CRTC, in the "deferral accounts decision", directed the ILECs to allocate a minimum of 5% of their deferral account to improving accessibility for disabled persons - The remaining 95% could be invested in broadband expansion in rural and remote communities - If the expansion as approved cost less than 95% of the deferral account balance, the remainder was to be rebated to subscribers in urban areas - An ILEC choosing not to invest in broadband expansion had to rebate 95% of the deferral account balance to subscribers in urban areas - Bell Canada appealed, seeking an order quashing the part of the decision that required it to rebate a portion of its deferral account - TELUS Communications joined Bell Canada in the appeal - The Consumers Association and the National Anti-Poverty Organization (the consumers) also appealed, seeking an order quashing the part of the decision that required a portion of the deferral accounts to be used to expand broadband services - The Federal Court of Appeal dismissed the appeals - The parties appealed - At issue was the standard of review - The Supreme Court of Canada stated that the issues in these appeals went to the very heart of the CRTC's specialized expertise - The core of the quarrel was with the methodology for setting rates and the allocation of certain proceeds derived from those rates, a polycentric exercise with which the CRTC was statutorily charged and which it was uniquely qualified to undertake - This argued for a more deferential standard of review, which led the court to consider whether the CRTC was reasonable in directing how the funds from the deferral accounts were to be used - See paragraph 38.

Cases Noticed:

VIA Rail Canada Inc. v. Canadian Transportation Agency et al., [2007] 1 S.C.R. 650; 360 N.R. 1; 2007 SCC 15, refd to. [para. 33].

Council of Canadians with Disabilities v. VIA Rail Canada Inc. - see VIA Rail Canada Inc. v. Canadian Transportation Agency et al.

New Brunswick (Board of Management) v. Dunsmuir, [2008] 1 S.C.R. 190; 372 N.R. 1; 329 N.B.R.(2d) 1; 844 A.P.R. 1; 2008 SCC 9, refd to. [para. 38].

Khosa v. Canada (Minister of Citizenship and Immigration), [2009] 1 S.C.R. 339; 385 N.R. 206; 2009 SCC 12, refd to. [para. 38].

Northwestern Utilities Ltd. v. Edmonton (City), [1929] S.C.R. 186, refd to. [para. 39].

ATCO Gas and Pipelines Ltd. v. Energy and Utilities Board (Alta.), [2006] 1 S.C.R. 140; 344 N.R. 293; 380 A.R. 1; 363 W.A.C. 1; 2006 SCC 4, refd to. [para. 39].

General Increase in Freight Rates, Re (1954), 76 C.R.T.C. 12 (S.C.C.), refd to. [para. 40].

Canadian National Railways Co. v. Bell Telephone Co., [1939] S.C.R. 308, refd to. [para. 40].

Edmonton (City) v. 360Networks Canada Ltd./London Connect Inc. et al., [2007] 4 F.C.R. 747; 361 N.R. 124; 2007 FCA 106, leave to appeal refused [2007] 3 S.C.R. vii; 380 N.R. 394, refd to. [para. 47].

Barrie Public Utilities et al. v. Canadian Cable Television Association et al., [2003] 1 S.C.R. 476; 304 N.R. 1; 2003 SCC 28, dist. [para. 49].

Bell Canada v. Canadian Radio-Television and Telecommunications Commission, [1989] 1 S.C.R. 1722; 97 N.R. 15, refd to. [para. 58].

EPCOR Generation Inc. v. Energy and Utilities Board (Alta.) (2003), 346 A.R. 281; 320 W.A.C. 281; 2003 ABCA 374, refd to. [para. 63].

Reference Re Section 101 of the Public Utilities Act (Nfld.) (1998), 164 Nfld. & P.E.I.R. 60; 507 A.P.R. 60 (Nfld. C.A.), refd to. [para. 63].

Statutes Noticed:

Telecommunications Act, S.C. 1993, c. 38, sect. 7 [para. 28]; sect. 27 [para. 30]; sect. 37(1) [para. 31]; sect. 47 [para. 28].

Authors and Works Noticed:

Ryan, Michael H., Canadian Telecommunications Law and Regulation (1993 Looseleaf) (2008 Update), §§ 604 [paras. 47, 73]; 612 [para. 40].

Counsel:

Neil Finkelstein, Catherine Beagan Flood and Rahat Godil, for the appellant/respondent, Bell Canada;

Michael H. Ryan, John E. Lowe, Stephen R. Schmidt and Sonya A. Morgan, for the appellant/respondent, TELUS Communications Inc., and the respondent, TELUS Communications (Québec) Inc.;

Richard P. Stephenson, Danny Kastner and Michael Janigan, for the appellants/respondents, the Consumers' Association of Canada and the National Anti-Poverty Organization, and the respondent, the Public Interest Advocacy Centre;

Michael Koch and Dina F. Graser, for the respondent, MTS Allstream Inc.;

John B. Laskin and Afshan Ali, for the respondent/intervenor, the Canadian Radio-television and Telecommunications Commission;

No one appeared for the respondents, Société en commandite Télébec, Arch Disability Law Centre, Bell Aliant Regional Communications, Limited Partnership, and Saskatchewan Telecommunications.

Solicitors of Record:

Blake, Cassels & Graydon, Toronto, Ontario, for the appellant/respondent, Bell Canada;

Burnet, Duckworth & Palmer, Calgary, Alberta, for the appellant/respondent, TELUS Communications Inc., and the respondent, TELUS Communications (Québec) Inc.;

Paliare, Roland, Rosenberg, Rothstein, Toronto, Ontario, for the appellants/respondents, the Consumers' Association of Canada and the National Anti-Poverty Organization, and the respondent, the Public Interest Advocacy Centre;

Goodmans, Toronto, Ontario, for the respondent, MTS Allstream Inc.;

Torys, Toronto, Ontario, for the respondent/intervenor, the Canadian Radio-television and Telecommunications Commission.

These appeals were heard on March 26, 2009, by McLachlin, C.J.C., Binnie, LeBel, Deschamps, Fish, Abella, Charron, Rothstein and Cromwell, JJ., of the Supreme Court of Canada. On September 18, 2009, the judgment of the court was delivered in both official languages by Abella, J.