A-386-74
In re Capital Cities Communications Inc., Taft
Broadcasting Company and W.B.E.N. Inc.
(Applicants) (Appellants)
Court of Appeal, Thurlow, Uric and Ryan JJ.—
Ottawa, December 11-13, 1974; January 17, 1975.
Judicial review—Appeal—Cable television broadcasting—
Licences to receive broadcasts from United States stations—
Licence amended by Canadian Radio-Television Commis-
sion—Amendment permitting deletion of commercial mes-
sages—Validity of amendment upheld—Broadcasting Act,
R.S.C. 1970, c. B-11, ss. 2, 3, 15, 17, 26—B.N.A. Act, 1867—
Radio Act, R.S.C. 1970, c. R-1, ss. 7, 8 and General Radio
Regs., Part II, s. 11—Income Tax Act, s. 12(a)—Copyright
Act, R.S.C. 1970, c. C-30—Trade Marks Act, R.S.C. 1970, c.
T-10—Federal Court Act, s. 28.
The appellants operated television broadcasting stations in
Buffalo N.Y. and their broadcasts were receivable in adjacent
Canadian communities. Some of their programs and commer
cial messages were paid for by Canadian sponsors. The inter-
vener Rogers Cable T.V. Limited was licensed under the Broad
casting Act to operate within a specified area in a part of
Toronto, a community and cable distribution system and to
receive broadcasts of the appellants' stations. The understand
ing that a licensee was not entitled to alter a program received,
was withdrawn by the policy statement issued by the Canadian
Radio-Television Commission, in July 1971. The announced
withdrawal of the requirement against alteration was designed
to permit removal by licensees of signals carrying commercial
messages in making contracts for insertion of replacement
signals carrying commercial messages sold by Canadian televi
sion stations. Application was made by Rogers for amendment
of its licence to permit deletion of commercial messages and to
substitute commercial messages of its own. The present appel
lants intervened to oppose the amendment. The Commission
decided that since Rogers had made no commercial arrange
ments with Canadian television stations in its area, the Com
mission would not permit Rogers to insert replacement signals
carrying commercial messages. However, the Commission
authorized deletion of commercial messages received by
Rogers, on condition that it inserted public service announce
ments. The appellants brought a section 28 application under
the Federal Court Act to review and set aside the decision and
later appealed, by leave of the Court, under section 26 of the
Broadcasting Act.
Held, the application and appeal should be dismissed. Parlia
ment had exclusive jurisdiction over broadcasting, including
both the transmission and the reception of signals. Parliament
had exercised its power over the cablevision operation, a
"broadcasting undertaking" within section 2 of the Broadcast
ing Act, so that a broadcasting licence could be issued under
section 17(1)(a) and amended under section 17(1)(b). The
Commission's decision was made within the ambit of section
17(1)(b) and not under the statement of policy. The statement
itself indicated that it was drafted for "the implementation of
the broadcasting policy enunciated in section 3" of the Act. It
was for the Commission and not for the Court to decide
whether the policy and the particular decision were well cal
culated to achieve the end sought. The decision was not con
trary to the Inter-American Radiocommunications Convention
concluded at Havana in 1937, whether or not the Convention
was binding on the Commission as a public body. Inclusion in
the statement of the Commission of its concern over the
litigation between the appellants and Rogers in the Federal
Court may have been unwise but it failed to vitiate the decision.
Per Thurlow J. concurring: In so far as the appellant's case
was based on the first three points: the constitutional point, the
scope of the Commission's powers under the Broadcasting Act
and the Commission's policy statement, the appellants would
also fail because the appellants failed to show that they had
rights affected by the amendment of the Rogers licence.
In re Regulation and Control of Radio Communication in
Canada [1932] A.C. 304; Re C.F.R.B. and Attorney Gen
eral for Canada [1973] 3 O.R. 819; Public Utilities
Commission v. Victoria Cablevision Ltd. (1965) 52
W.W.R. 286, applied. Fortnightly Corp. v. United Artists
Television Inc. (1967) 392 US 390; British Oxygen Co.
Ltd. v. Minister of Technology [1971] A.C. 610,
discussed.
JUDICIAL review and appeal.
COUNSEL:
G. F. Henderson, Q.C., A. O'Brien and W. G.
Robinson for applicants and appellants.
A. C. Pennington and D. F. Friesen for
Canadian Radio - Television Commission.
J. J. Robinette, Q.C., T. G. Heintzman and P.
S. Grant for Rogers Cable T.V. Limited.
SOLICITORS:
Gowling & Henderson for applicants and
appellants.
Deputy Attorney General of Canada for
Canadian Radio - Television Commission.
McCarthy & McCarthy for Rogers Cable
T.V. Limited.
The following are the reasons for judgment
rendered in English by
THURLOW J.: I agree that the appeal and the
review application fail for the reasons expressed by
Mr. Justice Ryan but in so far as the appellants'
case was based on the first three points, i.e. the
constitutional point, the scope of the powers of the
CRTC under the Broadcasting Act and the CRTC
policy statement, in my opinion the proceedings
would also fail because the appellants have not
shown that they have rights which are affected by
the amendment of the Rogers' licence.
The appellants have no proprietary or other
legal rights in their signals in Canadian air space.
The radio frequencies in that space are public
property under section 3(a) of the Broadcasting
Act. When the appellants put out signals on any of
such frequencies they make use of the public prop
erty in the frequencies but they do not by so doing
acquire any right either in the frequency or the
signals they have generated on it, and they have no
right to have their signals received in Canada in
any form, whether altered or unaltered. Nor have
they any right to require that the licence of a
Canadian broadcasting receiving undertaking con
form to their requirements or demands.
It is perhaps arguable that the appellants have a
sufficient interest to give them status to raise the
other two points but in my opinion these, as well as
the others, should be rejected for the reasons given
by Mr. Justice Ryan.
I would dismiss the appeal and the review
application.
* * *
The following are the reasons for judgment
rendered in English by
RYAN J.: The appellants, Capital Cities Com
munications Inc., Taft Broadcasting Company and
W.B.E.N. Inc., operate television broadcasting sta
tions at Buffalo, New York. They do not require a
licence under the Broadcasting Act' but their
broadcasts are receivable in adjacent Canadian
communities and in particular in Toronto. They
broadcast programs and commercial messages
some of which are paid for by Canadian sponsors.
They thus compete with Canadian broadcasting
stations for advertising business.
R.S.C. 1970, c. B-I1 as amended.
Rogers Cable T.V. Limited (referred to in this
judgment as Rogers) operates a community anten
na and cable distribution system in a part of
Toronto specified in its licence under the Broad
casting Act. It is licensed to receive among other
things the broadcasts of the appellants' stations.
Its licence is to carry on a broadcasting receiving
undertaking. Until 1971, it seems to have been
understood that the licensee was not entitled to
alter a program received by its system.
In July 1971 the Canadian Radio Television
Commission (referred to in this judgment as
CRTC), the respondent, issued a policy statement
on cable television which included the following
paragraphs:
In its first public announcement on cable television policy of
May 13, 1969, the Commission accepted, for the time being,
the long-standing Department of Transport policy that cable
television systems should not alter the signals received from
broadcasting stations. Since then, the Commission has carried
out extensive studies which demonstrate that the unaltered
carriage of some of these signals disrupts the ability of Canadi-
an television stations to fulfill their mandate.
Deletion and Substitution of Commercials
At present, requiring cable television systems to delete the
commercial messages in signals they distribute would be finan
cially impossible for all but a few systems. Even these would
suffer substantial financial damage. For this reason the Com
mission has not adopted this policy.
Instead, it has decided to withdraw the requirement that
received broadcasting signals should not be altered. The Com
mission will permit the removal by cable television licensees of
the commercial value contained in the signals of stations not
licensed to serve Canada. While cable television licensees will
not be permitted to sell replacement commercial messages
themselves, they will be encouraged to make contractual
arrangements with Canadian television stations in their areas to
insert replacement signals carrying commercial messages sold
by the Canadian television stations.
When a Canadian television station decides to undertake the
negotiation of such an arrangement with a cable television
system it must so advise the Commission. The Commission's
approval of the subsequent contractual arrangement between
the television station and the cable television system must be
obtained.
In an area where there is more than one Canadian television
station interested in participating in this activity, the Commis
sion will ensure that sufficient and equitable opportunity be
provided to the several stations. In all cases adequate provision
will be made for any television station that might be licensed in
the future. The Commission will also be concerned that mar
keting practices that develop shall not be detrimental to others.
The Commission is confident that where the commercial
value is significant, both television stations and cable television
systems will take advantage of this change in policy to help
strengthen their ability to fulfill their obligations to the public.
The Commission expects these licensees to take the opportu
nity thus provided to strengthen the Canadian broadcasting
system. If this does not happen, the Commission will consider
further action.
Amendment to Section 12a of the Income Tax Act
Some of the commercial messages of value in Canada but
transmitted by stations not licensed to serve Canada are paid
for by companies located in this country. Therefore, the Com
mission has decided to request the Government of Canada to
amend section 12a of the Income Tax Act to include advertis
ing purchased by Canadian advertisers on stations not licensed
by the Commission.
Thereafter at some point Rogers began deleting,
to some extent, the commercial messages in the
broadcasts of the appellants and in October 1973,
following threats of legal action by the appellants,
Rogers applied to the CRTC for an amendment of
its licence so as to permit random deletions of such
commercial messages from the programs of the
appellants carried by its cable system and to sub
stitute commercial messages of its own. The appel
lants intervened to oppose such amendment on a
number of grounds including alleged infringement
of the appellants' rights arising under the Copy
right Act, the Trade Marks Act and the common
law, and violations of international conventions
including the Union Convention of Paris for the
Protection of Industrial Property. They also chal
lenged the Commission's jurisdiction to make the
order sought and urged that to make it would be
contrary to the announced policy. However, fol
lowing an oral hearing, the Commission in May
1974 issued a decision granting Rogers' request in
part in the following terms:
In accordance with its policy statement, the Commission
authorizes the licensee to delete commercial messages from
U.S. television signals on a random basis as applied for. The
objective of the Commission's commercial deletion policy is to
restore the logic of the local licence and strengthen Canadian
television service. Revenue and other benefits derived from the
implementation of the policy are intended to strengthen broad-
casters. Accordingly, since the licensee has not made contractu
al arrangements with Canadian television stations in its area,
the Commission will not permit the licensee to insert replace
ment signals carrying commercial messages. Nor is the Com
mission willing to permit the licensee to insert messages con
taining promotional information to its subscribers since this is
not consistent with the Commission's policy objective. Instead,
the Commission authorizes the licensee to delete on condition
that it inserts in replacement of the deleted messages public
service announcements and other similar suitable replacement
material.
The Commission is aware that statements of claim have been
filed in the Federal Court against the licensee by stations in
Buffalo. Where litigation occurs that may affect the ability of
licensees to carry out their obligations under the Broadcasting
Act, the Commission is properly concerned that licensees not
voluntarily settle such litigation on terms that may inhibit their
ability to conform with Commission policy and requirements
under the Broadcasting Act. Hence, in such circumstances, the
Commission's consent must first be obtained before any terms
of settlement and, in particular, any injunction is voluntarily
consented to by any licensee.
The appellants thereupon brought an applica
tion under section 28 of the Federal Court Act to
review and set aside the decision and subsequently
appealed by leave of this Court under section 26 of
the Broadcasting Act. The two proceedings were
combined and heard together.
The appellants' case was based on four principal
submissions. It was said (1) that Parliament has no
authority under the British North America Act
over a cablevision operation; (2) that if Parliament
has such authority, it has not exercised it to confer
on the CRTC jurisdiction over cablevision opera
tions; (3) that if Parliament has the authority to
regulate cablevision operations and has conferred
on the CRTC jurisdiction to regulate such opera
tions, the CRTC in amending the Rogers licence
exceeded any jurisdiction it had; and (4) that the
decision is contrary to an international treaty to
which Canada is a party known as the Inter-
American Radiocommunications Convention con
cluded at Havana in 1937.
The submissions based on the British North
America Act and on construction of the statute
tend to overlap. I will, therefore, deal with them
together.
By virtue of section 17 of the Broadcasting Act,
the respondent has authority to license broadcast
ing undertakings, to impose conditions on and to
amend licences. The relevant parts of section 17
read as follows:
17. (1) In furtherance of the objects of the Commission, the
Executive Committee, after consultation with the part-time
members in attendance at a meeting of the Commission, may
(a) issue broadcasting licences for such terms not exceeding
five years and subject to such conditions related to the
circumstances of the licensee
(i) as the Executive Committee deems appropriate for the
implementation of the broadcasting policy enunciated in
section 3,
(b) upon application by a licensee, amend any conditions of
a broadcasting licence issued to him;
Section 2 of the Broadcasting Act defines
"broadcasting undertaking" so as to include "... a
broadcasting receiving undertaking ... , located in
whole or in part within Canada ... ". "Broadcast-
ing" is defined to mean "any radiocommunication
in which the transmissions are intended for direct
reception by the general public". "Radiocommuni-
cation" is in turn defined as meaning "any trans
mission, emission or reception of signs, signals,
writing, images, sounds or intelligence of any
nature by means of electromagnetic waves of fre
quencies lower than 3,000 Gigacycles per second
propagated in space without artificial guide".
Rogers was licensed under section 17 to carry on
a broadcasting receiving undertaking to serve Met
ropolitan Toronto, Ontario. It was authorized by
its licence to receive signals from the appellants'
television stations as well as from other television
stations. There is an adequate constitutional and
statutory basis for licensing Rogers as a broadcast
ing receiving undertaking. It is well established
that Parliament has exclusive legislative authority
over broadcasting, and that broadcasting includes
both the transmission and the reception of signals'.
zIn re Regulation and Control of Radio Communication in
Canada, [ 1932] A.C. 304.
As indicated above, the respondent, on an
application by Rogers under section 17(1)(b) to
amend the conditions of its licence, authorized the
licensee to delete commercial messages from the
United States television signals on a random basis
on condition that it insert public service announce
ments and other similar suitable replacement ma
terial. I am of opinion that the making of this
amendment falls within the authority granted to
the Commission by section 17(1)(b), and that
section 17(1)(b) is intra vires of Parliament in so
far as it authorizes the making of the amendment.
The legislative authority of Parliament extends
over the content of broadcasts as well as over the
physical undertaking of the television reception
unit 3 .
The appellants submitted that the statute should
not be interpreted so as to encompass the contents
of broadcasts after the reception of the Hertzian
waves at Rogers' antenna. In support of this sub
mission the appellants stressed the terms of the
definition of "radiocommunications" in section 2
of the Act. It was submitted that Rogers' cable
television system is a distributing system with two
aspects. One aspect is the reception at the antenna
of the Hertzian waves from television broadcast
ers: this aspect is subject to federal regulation. The
other aspect is the distribution of received mes
sages by means of cable, an "artificial guide": in
this aspect it was submitted that the operation is
within provincial jurisdiction.
In my opinion this is not the correct way to view
the undertaking. The Rogers cablevision system as
a unit receives signs or signals from the appellants'
television stations by means of Hertzian waves,
propagated in space in Buffalo without artificial
guide. The messages are received, not merely by
the antenna, but by the undertaking as a whole 4 .
The cablevision operation is a kind of antenna
system'. It is a broadcasting receiving undertaking
and thus a "broadcasting undertaking" under sec
tion 2 of the Broadcasting Act in respect of which
3 Re C.F.R.B. and Attorney-General for Canada [1973] 3
O.R. 819.
4 Public Utilities Commission v. Victoria Cablevision Ltd.
(1965) 52 W.W.R. 286 (B.C.C.A.).
5 Fortnightly Corp. v. United Artists Television Inc. (1967)
392 US 390 at pp. 397-401.
a broadcasting licence may be issued under section
17(1)(a) and amended under section 17(1)(b).
Broadcasting licence, as defined in section 2, ".. .
means a licence to carry on a broadcasting under
taking issued under this Act."
It was also argued that the respondent exceeded
its authority under the statute by making its deci
sions on the basis of the published policy statement
mentioned above. Attention was drawn to section
3(c) of the Act:
3. It is hereby declared that
(c) all persons licensed to carry on broadcasting undertak
ings have a responsibility for programs they broadcast but
the right to freedom of expression and the right of persons to
receive programs, subject only to generally applicable stat
utes and regulations, is unquestioned;
It was submitted that the decision to amend the
licence to permit deletion and substitution was
void because it was based on the policy statement
and not on the statute and regulations. It is,
however, clear that the decision was made under
statutory authority, section 17(1)(b) of the Act.
The decision does, however, state that it was made
in accordance with the policy statement. This
would be objectionable if the statement set out
policies which it was not open to the respondent to
pursue. In my opinion, however, the policies
outlined are well within the range of the respond
ent's mandate under section 15 to "... regulate
and supervise all aspects of the Canadian broad
casting system with a view to implementing the
broadcasting policy enunciated in section 3 of this
Act".
The policy statement would also be objection
able if it so fettered the discretion of the Commis
sion as to render the Commission unfree to make
an appropriate decision on the merits of particular
applications. The way in which a court should
assess a policy statement of an administrative
agency with discretionary powers for the purpose
of determining whether the statement is acceptable
in content and in use was described by Lord Reid
in British Oxygen Co. Ltd. v. Minister of
Technology':
It was argued on the authority of Rex v. Port of London
Authority, Ex parte Kynoch Ltd. [1919] 1 K.B. 176 that the
Minister is not entitled to make a rule for himself as to how he
will in future exercise his discretion. In that case Kynoch owned
land adjoining the Thames and wished to construct a deep
water wharf. For this they had to get the permission of the
authority. Permission was refused on the ground that Parlia
ment had charged the authority with the duty of providing such
facilities. It appeared that before reaching their decision the
authority had fully considered the case on its merits and in
relation to the public interest. So their decision was upheld.
Bankes L.J. said, at p. 184:
There are on the one hand cases where a tribunal in the
honest exercise of its discretion has adopted a policy, and,
without refusing to hear an applicant, intimates to him what
its policy is, and that after hearing him it will in accordance
with its policy decide against him, unless there is something
exceptional in his case. I think counsel for the applicants
would admit that, if the policy has been adopted for reasons
which the tribunal may legitimately entertain, no objection
could be taken to such a course. On the other hand there are
cases where a tribunal has passed a rule, or come to a
determination, not to hear any application of a particular
character by whomsoever made. There is a wide distinction
to be drawn between these two classes.
I see nothing wrong with that. But the circumstances in
which discretions are exercised vary enormously and that pas
sage cannot be applied literally in every case. The general rule
is that anyone who has to exercise a statutory discretion must
not "shut his ears to an application" (to adapt from Bankes
L.J. on p. 183). I do not think there is any great difference
between a policy and a rule. There may be cases where an
officer or authority ought to listen to a substantial argument
reasonably presented urging a change of policy. What the
authority must not do is to refuse to listen at all. But a Ministry
or large authority may have had to deal already with a multi
tude of similar applications and then they will almost certainly
have evolved a policy so precise that it could well be called a
rule. There can be no objection to that, provided the authority
is always willing to listen to anyone with something new to
say—of course I do not mean to say that there need be an oral
hearing. In the present case the respondent's officers have
carefully considered all that the appellants have had to say and
6 [1971] A.C. 610 at pp. 624 and 625.
I have no doubt that they will continue to do so. The respondent
might at any time change his mind and therefore I think that
the appellants are entitled to have a decision whether these
cylinders are eligible for grant.
A reading of the transcript of the Commission's
hearings on the application by Rogers to amend
the licence conditions indicates that the Commis
sion did not shut its ears to the appellants' inter
vention. A clear indication that the Commission
was not proceeding with a closed mind lies in the
fact that Rogers' application was granted, but in
modified form. In addition the Commission did not
adhere strictly to its own policy. The Commission
granted permission to delete commercials, but only
on condition of substituting public service
announcements. Its policy statement indicates that
the desirable course is for a cablevision undertak
ing to make contracts with local television stations
for the purpose of substituting commercials.
The policy statement itself indicates that it was
drafted and promulgated for the purpose of "the
implementation of the broadcasting policy enun-
_ ciated in section 3". The conditions imposed by
amendment of the Rogers licence are designed to
further this policy. It is for the Commission, not
for us, to decide whether the policy and the par
ticular decision are well calculated to achieve the
end sought.
The appellants also took the point that the
decision to amend the Rogers licence is contrary to
the Inter-American Radiocommunications Con
vention concluded at Havana in 1937, a convention
to which Canada and the United States are par
ties. Reliance was placed on Article 11(a) and (b):
(a) The contracting Governments recognize the sovereign
right of all nations to the use of every radio broadcasting
channel.
(b) The American Governments, upon the sole condition
that no interference will be caused to the services of another
country, may assign any frequency and any type of wave to
any radio station under their authority.
It seems clear that the "interference" referred to
in (b) is technical interference with the receipt of
the signal from the air, such as by the generation
of a competing signal of the same frequency. It
also seems clear that the scope of the Article is to
agree that frequencies will not be so assigned or
used in one country as to interfere with the recep
tion in another country of signals generated on the
same frequency in that country. The Article thus
has no application to the present problem.
Reliance was also placed on Article 21:
The contracting Governments shall take appropriate meas
ures to ensure that no program transmitted by a broadcasting
station may be retransmitted or rebroadcast, in whole or in
part, by any other station without the previous authorization of
the station of origin.
The rebroadcasting station shall announce at suitable periods
during the retransmission the nature of the broadcast, the
location and the official call letters or other identification of the
station of origin.
The appellants claimed that authorization by the
respondent of the deletion of commercials from
their broadcasts without their consent would be
action by the respondent inconsistent with this
Article. It would appear, however, that "any other
station" in the Article refers to any other broad
casting station and Rogers is not a broadcasting
station, but a broadcasting receiving undertaking.
It also appears that the scope of this particular
Convention is limited to radiocommunication and
that the expression "retransmitted or rebroadcast"
refers only to retransmission or rebroadcast by
radiocommunication.
It is thus unnecessary to decide whether the
Convention is binding on the respondent as a
public Commission or because it has been made
legislatively binding by a combination of section
7(1)(d) and section 8(1) of the Radio Act, Regu
lation 11 of the General Radio Regulations, Part
II, and section 15 of the Broadcasting Act.
Finally, the appellants complained of that part
of the decision of the CRTC which has to do with
the litigation between the appellants and Rogers in
the Federal Court. The portion complained of
expresses the concern of the respondent that
Rogers should not make a contract in the form of
a settlement of the action that could interfere with
the implementation of CRTC policy. While one
may question the wisdom of including in a formal
decision a mandate such as that expressed, it falls
short of vitiating the decision in any way.
I would dismiss the appeal and deny the motion
to set aside.
* * *
URIE J. concurred.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.