A-737-86
Bell Canada (Appellant)
v.
Canadian Radio-television and Telecommunica
tions Commission (Respondent)
INDEXED AS: BELL CANADA V. CANADA (CANADIAN RADIO-
TELEVISION AND TELECOMMUNICATIONS COMMISSION)
Court of Appeal, Pratte, Marceau and Hugessen
JJ.—Montréal, May 21 and 22; Ottawa, July 10,
1987.
Telecommunications — Canadian Radio-television and
Telecommunications Commission (CRTC) — Jurisdiction —
Appeal from CRTC order directing Bell Canada (Bell) to give
subscribers one-time credit of 206 million dollars — CRTC
granting interim rate increase in 1984, but suspending increase
in 1985 due to Bell's improved financial performance —
Subsequently finding Bell earned excess revenues in 1985 and
1986 — Appeal allowed — CRTC not having jurisdiction to
make order — Railway Act only giving CRTC power to
approve, suspend or disallow tariffs and tolls — Bell's
obligation to charge tolls previously approved not exposing
Bell to order not fixing tolls and tariffs — Railway Act, s.
321(5) giving CRTC power to make orders with respect to all
matters relating to traffic, tolls and tariffs, only defining
powers in context of Act, and not creating fundamental new
powers — Order relating to profits and revenues, not tolls and
tariffs — Case law that public utility board not having au
thority to deal with excess or deficiency of earnings — CRTC
not having jurisdiction to order retroactive decrease of tolls —
Power to vary rates in s. 63 of National Transportation Act not
implying power to vary with retroactive effect — "Vary"
neutral with respect to power to act retroactively — National
Transportation Act, s. 57(2) power to make interim orders and
to reseve for later final determination, distinguished from s.
57(1) and s. 63 power to make orders finally disposing of
matter — Regulatory role prospective only as indicated by
Railway Act, s. 320(2), tolls "to be" charged.
Construction of statutes — National Transportation Act, s.
63 giving Commission power to "review, rescind, change, alter
or vary" any order — Power to vary not implying power to
change rates retroactively — "Vary" neutral with respect to
power to act retroactively — Parliament not intending s. 63 to
give Commission power to destroy rights created by original
order — S. 57(2) giving Commission power to make interim
order, "instead of making an order final in the first instance"
— S. 57 of general nature meant to apply to all orders and
decisions of Canadian Transport Commission and CRTC— S.
57(2) order not intended to finally dispose of application as
opposed to s. 57(1) or s. 63 order — "Interim" meaning "in the
meantime" — Presumption against retrospective operation of
legal enactment.
This is an appeal from a decision of the CRTC directing Bell
Canada to give its subscribers a one-time credit of 206 million
dollars representing alleged excess revenue earned in 1985 and
1986. In May, 1984, Bell's application for rate increases was
denied but in December, the Commission granted a 2 per cent
interim rate increase. In April, 1985, the CRTC refused to
grant final approval of this increase and decided to postpone
the matter until a hearing in 1986. In August, 1985, the
Commission directed Bell to suspend the interim rate increases
due to Bell's improved financial performance. Although Bell
sought to withdraw its application for a general rate increase,
the CRTC decided to proceed, in that the question of the
appropriate rate of return for Bell had not been reviewed at an
oral hearing since 1981. This hearing resulted in the decision in
dispute. The Commission considered the question of what was a
permissible return on equity, and determined that Bell had
earned excess revenue of 206 million dollars in 1985 and 1986.
It then provided for a rate reduction effective January I, 1987.
With respect to 1985 and 1986 it directed Bell to give a
one-time credit to subscribers of record. The issue is whether
the CRTC had the statutory power to make such an order. The
appellant submits that the Commission is empowered only to
prescribe tolls. The respondent adopted two contrary ap
proaches in reply: I) the Commission is not limited to prescrib
ing tolls; 2) the order to allow a credit must be treated merely
as a means of giving effect to the establishment of rates for a
period already past.
Held (Hugessen J. dissenting), the appeal should be allowed.
The Commission did not have jurisdiction to make the disputed
order.
Per Marceau J.: 1. The argument that the Commission is not
limited to prescribing tolls is based on Bell's status as a public
utility whose works have been declared to be for the general
advantage of Canada, and the role of the Commission in
preventing Bell from abusing its privileged position as operator
of a monopoly. The respondent relied on paragraph 46(1)(b) of
the National Transportation Act which gives the Commission
general powers to make "orders or regulations ... for carrying
the Railway Act into effect" and subsection 321(5) of the
Railway Act which gives the Commission power to make orders
with respect to all matters relating to traffic, tolls and tariffs.
In order to regulate the nature and quality of services provided,
the CRTC must have a supervising and regulating authority
which goes beyond the fixing of tariffs and tolls. But the Act
does not give the Commission power to deal with tariffs and
tolls other than by approving, suspending or disallowing them.
Bell's sole obligation with respect to tariffs and tolls is to
charge only those tolls previously approved, and the existence
of such an obligation cannot expose Bell to an order which in
no way fixes tariffs or tolls. Subsection 321(5) did not intend to
say otherwise as its purpose was to define powers in the sole
context of the Railway Act. A general power to make orders for
the purpose of carrying other statutes into effect does not
create fundamental new powers. The order in dispute relates to
profit and revenue. Merely because the main source of that
profit and revenue has been charges for services rendered
established in accordance with tariffs approved by the Commis
sion does not make them a matter "relating to traffic, tolls and
tariffs". Calgary (City) & Home Oil Co. v. Madison Natural
Gas Co. & Br. American Utilities Ltd. (1959), 19 D.L.R. (2d)
655 (Alta. S.C.), is authority for the proposition that a public
utility board such as the Commission does not have authority to
deal with an excess or deficiency of earnings.
2. The second argument is that the true nature of the
decision is a "disallowance" of the tolls for 1985 and 1986 and
its true effect is to bring about a substitution "of a tariff
satisfactory to the Commission" pursuant to paragraph
321(4)(b) of the Railway Act. That reasoning displayed a
confusion between the decision's goal and its true nature. That
distinction was crucial when the issue is whether there was
power to make the order actually made. The true nature of an
order is determined by the command it contains, which may be
identified by determining how the order can be enforced. The
question then arises as to whether the Commission had jurisdic
tion to order a retroactive decrease of tolls.
It was argued that section 63 of the National Transportation
Act giving the Commission power to "review, rescind, change,
alter or vary any decision made by it" implies the power to do it
retroactively. This argument was based on subsection 57(2) of
the National Transportation Act which permits the CRTC to
make interim orders "instead of making an order final" and to
reserve for later a final determination. It was argued that this
express statutory power included the power to correct retroac
tively what was ordered in the interval. But the power to vary
does not imply the power to do it with retroactive effect.
"Vary" is neutral with respect to the power to act retroactively.
Parliament did not intend by enacting section 63 of the Nation
al Transportation Act to give the CRTC power to destroy, as
opposed to protect, rights created by its original order.
It was argued that to give subsection 57(2) a real purpose,
the interim order had to be given a meaning other than that of
a mere temporary order since the power to make an order
having an effect for a limited time is already provided for in
subsection 57(1) and section 63. An order under subsection
57(1) and section 63, finally disposes of an application and an
order under subsection 57(2) does not, as indicated by the
words "instead of making a final order" in subsection 57(2),
Section 57 applies to all orders made by the Canadian Trans
port Commission and the CRTC, and not specifically to orders
establishing tariffs and tolls. The word, "interim" itself does
not suggest anything more than "in the meantime". The power
to make an interim order does not imply a power to make a
final order regulating differently the period covered by the
initial order.
A number of cases were cited where the power to act
retroactively was recognized in order to prevent prejudice to an
applicant arising from the time required to approve its applica
tion. The Commission does not, however, have the power to
disallow retroactively rates it has already approved, bearing in
mind the presumption against retrospective operation of any
legal enactment.
Parliament did not intend to confer on the CRTC a regulato
ry role that would be retrospective as well as prospective. The
Commission controls tolls to be charged (subsection 320(2) of
the Railway Act). It is these tolls which are subject to approval
and the only obligation imposed on Bell is to limit its charges to
the tolls approved.
Also, if the Commission could act forward and backward all
the care put into the process of approving the rates based on
forecasts would be useless. Subsection 321(1) requires that all
tolls be just and reasonable. Parliament has set up a particular
scheme to realize this goal which can fail, although rarely, to
the benefit of either Bell or the customers.
Per Pratte J.: The CRTC has no power to force Bell to part
with revenues earned as a result of having charged rates
approved by the Commission. Nor could it approve rates on the
basis that the telephone company will later have to reimburse
its subscribers if those rates were too high. It may only approve
rates that it considers at that time to be just and reasonable.
An interim decision may not be varied retroactively. It is
merely a temporary decision that does not finally dispose of the
case before the tribunal.
Section 63 does not authorize the Commission to modify a
previous decision retroactively. A decision that modifies a
previous decision retroactively does more than alter the previ
ous decision. It prescribes that this alteration will be deemed to
have been made prior to when it was actually made. A tribunal
which is vested with the power to rescind and vary its decisions
does not possess the authority to modify them retroactively.
This does not conflict with the decision in Bakery and Confec
tionery Workers International Union of America, Local No.
468 et al. v. White Lunch Ltd. et al., [1966] S.C.R. 282. There
the three orders of the provincial Labour Relations Board were
not modified retroactively as the changes were not deemed to
have been made on dates prior to those of the modifying orders.
The amending orders had "retroactive effect" because they
resulted in the new employer being bound by decisions made in
the past. "Retroactive" was used in a loose sense. The Supreme
Court did not hold that the power conferred on a tribunal to
modify its previous decisions includes the power to prescribe
that the modifications shall be deemed to have been made on a
date prior to the date on which they were actually made.
Per Hugessen J. (dissenting): The B.C.C.A. in Re Eurocan
Pulp & Paper Co. Ltd. and British Columbia Energy Commis
sion et al., interpreting a different regulatory scheme, found
that the power to fix rates retroactively exists. That decision
was quoted with no indication of disapproval in Nova, An
Alberta Corporation v. Amoco Canada Petroleum Co. Ltd. et
al., [1981] 2 S.C.R. 437.
The Commission's power flows directly from the fact that its
order was an interim order made pursuant to subsection 57(2)
of the National Transportation Act. Subsection 57(1) empow
ers the Commission to make orders subject to suspensive or
resolutory conditions. Subsection 57(2) adds to the existing
powers. But an interim order cannot simply be one which is
subject to later, prospective revision by the Commission
because all orders fixing tariffs may be so revised, even on the
Commission's own motion. It can only be one, which like all
rate orders, has prospective effect, but on which the Commis
sion reserves "further directions" which may be retroactive to
the date the order was made. The argument that even if the
Commission had power to revise its interim order, it could do so
only with respect to the two per cent increase, could not be
accepted. When a rate is increased on an interim basis, the
whole of the rate so increased becomes an interim rate and
subject to revision.
The Commission, having decided that the rates charged in
1985 and 1986 were not just and reasonable and having
determined the amount of excess revenues, was faced with
finding a fair and practical solution. The manner of revising the
rates is an "administrative matter" properly left to the Com
mission's determination.
The Commission's order relates to tariffs and tolls. As such it
falls within subsection 321(5) of the Railway Act giving the
Commission power to make orders with respect to all matters
relating to tolls and tariffs in all other matters not expressly
provided for.
STATUTES AND REGULATIONS JUDICIALLY
CONSIDERED
An Act to incorporate The Bell Telephone Company of
Canada, S.C. 1880, c. 67, s. 46 (as am. by S.C. 1882, c.
95, s. 4).
CRTC Telecommunications Rules of Procedure, SOR/
79-554.
Canadian Radio-television and Telecommunications
Commission Act, S.C. 1974-75-76, c. 49.
National Transportation Act, R.S.C. 1970, c. N-17, ss.
45(2) (as am. by S.C. 1977-78, c. 22, s. 18), 46(1), 48
(as am. idem), 57, 58, 63, 64 (as am. by R.S.C. 1970
(2nd Supp.), c. 10, s. 65).
Railway Act, R.S.C. 1970, c. R-2, ss. 320(2) (as am. by
R.S.C. 1970 (1st Supp.), c. 35, s. 2), (3),(6),
321(1),(2) (as am. idem, s. 3), (4),(5).
CASES JUDICIALLY CONSIDERED
APPLIED:
Calgary (City) & Home Oil Co. v. Madison Natural Gas
Co. & Br. American Utilities Ltd. (1959), 19 D.L.R. (2d)
655 (Alta. S.C.); R. v. Board of Commissioners of Public
Utilities (N.B.) Ex parte Moncton Utility Gas Ltd.
(1966), 60 D.L.R. (2d) 703 (N.B.S.C.).
DISTINGUISHED:
Bakery and Confectionery Workers International Union
of America, Local No. 468 et al. v. White Lunch Ltd. et
al., [1966] S.C.R. 282; 56 D.L.R. (2d) 193; aff'g R. v.
B.C. Labour Relations Board, Ex parte White Lunch
Ltd. (1965), 51 D.L.R. (2d) 72 (B.C.C.A.); Re Coseka
Resources Ltd. and Saratoga Processing Co. Ltd. et al.
(1981), 126 D.L.R. (3d) 705 (Alta. C.A.); Re Eurocan
Pulp & Paper Co. Ltd. and British Columbia Energy
Commission et al. (1978), 87 D.L.R. (3d) 727
(B.C.C.A.); Nova, An Alberta Corporation v. Amoco
Canada Petroleum Co. Ltd. et al., [1981] 2 S.C.R. 437;
United States v. New York Central R. Co., 73 L. ed. 619
(1929 S.C.).
CONSIDERED:
Young v. Adams, [1898] A.C. 469 (P.C.).
REFERRED TO:
Algar v. Middlesex County Council. In the matter of the
Local Government Superannuation Act, 1937, and 1939,
[1945] 2 All E. R. 243 (K.B.D.); Edmonton, City of et
al. v. Northwestern Utilities Limited, [1961] S.C.R. 392.
AUTHORS CITED
Coté, Pierre-André. The Interpretation of Legislation in
Canada. Cowansville, (Que.): Les Éditions Yvon Biais
Inc., 1984.
Romaniuk, Bohdan and Hudson N. Janisch. "Competi-
tion in Telecommunications: Who Polices the Transi
tion?" (1986), 18 Ottawa L.R. 561.
COUNSEL:
Louise Martin, Q.C. and Gérald R. Tremblay
for Bell Canada.
Janet Yale for Consumers Association of
Canada.
Raynold Langlois, Q. C., Greg van Koughnett
and Lisa de Wilde for Canadian Radio-televi
sion and Telecommunications Commission.
Michael Ryan for CNCP Telecommunica
tions.
Graham R. Garton for Attorney General of
Canada.
Michel Robert, Q.C., Andrew Roman and
Pierre-Paul Lavoie for National Anti-Poverty
Organization.
Ken Engelhart for Canadian Business Tele
communications Alliance.
SOLICITORS:
Clarkson, Tétrault, Montréal, for Bell
Canada.
Janet Yale, General Counsel, Consumers'
Association of Canada, Ottawa, for Consum
ers' Association of Canada.
Raynold Langlois, Q.C., Greg van Koughnett
and Lisa de Wilde, Counsel, CRTC, Ottawa,
for Canadian Radio-television and Telecom
munications Commission.
Michael Ryan, Counsel, Canadian Pacific
Law Department, Toronto, for CNCP Tele
communications.
Deputy Attorney General of Canada for
Attorney General of Canada.
Michel Robert, Q.C., Andrew Roman and
Pierre-Paul Lavoie, Counsel, Public Interest
Advocacy Centre, Ottawa, for National Anti-
Poverty Organization.
Kenneth G. Engelhart, General Counsel,
Toronto, for Canadian Business Telecom
munications Alliance.
The following are the reasons for judgment
rendered in English by
Pratte J.: I agree with my brother Marceau and
merely wish to add a few observations.
On its face, the order made by the Commission
on October 14, 1986, directing the appellant to
give its subscribers of record on that date a one
time credit of $206,000,000 is not retroactive.
Indeed, it merely orders that something be done in
the future. If the order is thus viewed as not being
retroactive, its legal justification seems, at first
sight, to be found in subsection 57(2) of the
National Transportation Act [R.S.C. 1970,
c. N-171.' The Commission clearly made interim
orders under that subsection prescribing the rates
' That subsection reads thus:
57... .
(2) The Commission may, instead of making an order
final in the first instance, make an interim order, and reserve
further directions either for an adjourned hearing of the
matter, or for further application.
to be charged by the appellant from January 1,
1985, and apparently reserved itself the right to
give further directions with respect to that matter.
The order here under attack seems to be such a
further direction. The flaw in that reasoning is
that it does not take into account that the further
directions that may be made under subsection
57(2) must be directions that the Commission is
otherwise empowered to make and could have
made in the first instance. In my view, the Com
mission has no power to force a telephone com
pany to part with the revenues earned as a result
of having charged the rates approved or fixed by
the Commission. It would not have the authority,
either, to approve or prescribe rates on the condi
tion that the telephone company will later have to
reimburse its subscribers if those rates then appear
to have been too high. The only rates that the
Commission may approve or prescribe, be it by
final or interim decisions, are those that the Com
mission considers at that time to be just and
reasonable.
If the order under attack, in spite of its terms, is
viewed as being retroactive in that it, in effect,
modified the interim orders as of the date on
which those orders had been made, the question
then arises whether the Commission, which clearly
had the power to change the interim orders, had
the power to change them retroactively. It is said
that this power flows from subsection 57(2) of the
National Transportation Act, which authorizes
the Commission to make interim orders, and from
section 63 which empowers the Commission to
"review, rescind, change, alter or vary any order or
decision made by it".
The respondents invoke the decisions of the
Alberta Court of Appeal in Re Coseka Resources
Ltd. and Saratoga Processing Co. Ltd. et al. 2 in
support of their submission that the interim orders
that subsection 57(2) empowers the Commission
to make are orders that the Commission may later
rescind or vary retroactively. Like Marceau J., I
cannot agree with the reasons given in support of
2 (1981), 126 D.L.R. (3d) 705 (Alta. C.A.).
that decision. In my opinion, an interim decision is
not a decision that may be rescinded or varied
retroactively by the tribunal that made it; it is
merely a temporary decision that does not finally
dispose of the case before the tribunal.
As to section 63, I do not read it as authorizing
the Commission to modify a previous decision
retroactively. Retroactivity is a legal fiction. It is a
fiction because, in reality, a cause that does not
exist cannot produce any effect. It follows that a
decision that modifies a previous decision retroac
tively does something more than alter the previous
decision since, in addition, it prescribes that this
alteration will be deemed to have been made on a
date prior to that on which it was actually made.
For that reason, I am of opinion that a tribunal
which is vested with the mere power to rescind and
vary its decisions does not possess the authority to
modify them retroactively. This opinion may seem
to be in conflict with the decision of the Supreme
Court of Canada in Bakery and Confectionery
Workers International Union of America, Local
No. 468 et al. v. White Lunch Ltd. et al. 3 The
conflict, however, is merely apparent. That case
involved the Labour Relations Board of British
Columbia which had, under its governing statute,
the power to "reconsider . .. vary or cancel" its
decisions. The Board had modified three of its
decisions by substituting in those decisions the
name of White Lunch Ltd. for the name of the
employer that was named in them. The three
decisions in question were a certification order, an
order enjoining the employer to cease to intimidate
its employees and an order that the employer was
to reinstate two employees. It is apparent from the
decision of the British Columbia Court of Appeal
in that case 4 that the three orders of the Board had
not been modified retroactively and that the modi
fying orders of the Board had not prescribed that
the changes in three orders would be deemed to
have been made on dates prior to those of the
modifying orders. The argument in that case was
that the amending orders had what was referred to
as a retroactive effect because they resulted in the
3 [1966] S.C.R. 282.
4 R. v. B.C. Labour Relations Board, Ex parte White Lunch
Ltd. (1965), 51 D.L.R. (2d) 72.
new employer being bound by decisions made in
the past in proceedings to which he was not a
party. The word "retroactive" in that argument
was used in a very loose sense and when the
Supreme Court rejected it and held that the power
to vary previous decisions conferred on the Board
included the power to vary retroactively, it used it
in the same sense. In other words, the Supreme
Court, in that case, never held that the power
conferred on a tribunal to modify its previous
decisions comprises, in addition to the power to
modify those decisions, the power to prescribe that
the modifications ordered by it shall be deemed to
have been made on a date prior to the date on
which they were actually made.
* * *
The following are the reasons for judgment
rendered in English by
MARCEAU J.: On October 14, 1986, the Canadi-
an Radio-television and Telecommunications
Commission ("CRTC" or "the Commission") ren
dered a decision (Telecom Decision CRTC 86-17)
in which inter alia it directed Bell Canada ("Bell"
or "the Company"), to give its subscribers of
record a one-time credit of 206 million dollars
representing alleged excess revenue earned by the
Company in 1985 and 1986. This is an appeal by
Bell, following leave granted by this Court under
section 64 of the National Transportation Act [as
am. by R.S.C. 1970 (2nd Supp.), c. 10 s. 65],
against that direction. Bell submits that the Com
mission had no jurisdiction to make it. Its position
is supported in part by CNCP Telecommunica
tions, but all the other many intervenors dispute
the merit of the appeal. While the question, being
purely one of law, could be addressed and the
discussion carried out on the basis of only a brief
statement of facts, a more complete review of the
background in which it arose may be required to
fully appreciate some of the arguments which have
been advanced and will have therefore to be
considered.
Before coming to that review, however, I will
take the time to reproduce the main statutory
enactments which give the Commission its author
ity over Bell. Several provisions are involved and
some will have to be more thoroughly analyzed
later on in the course of these reasons but I think
that a careful reading of them, all at once, will
give a general perspective which may be extremely
helpful. These provisions are to be found in the
Railway Act, R.S.C. 1970, c. R-2 and the Nation
al Transportation Act, R.S.C. 1970, c. N-17.
In the Railway Act, there are special provisions
governing telegraphs and telephones: of these, sub
sections 320(2) [as am. by R.S.C. 1970 (1st
Supp.), c. 35, s. 2], (3),(6), 321(1),(2) [as am.
idem, s. 3], (4) and (5) ought to be reproduced:
320... .
(2) Notwithstanding anything in any other Act, all telegraph
and telephone tolls to be charged by a company, other than a
toll for the transmission of a message intended for general
reception by the public and charged by a company licensed
under the Broadcasting Act, are subject to the approval of the
Commission, and may be revised by the Commission from time
to time.
(3) The company shall file with the Commission tariffs of
any telegraph or telephone tolls to be charged, and such tariffs
shall be in such form, size and style, and give such information,
particulars and details, as the Commission, from time to time,
by regulation, or in any particular case, prescribes, and unless
with the approval of the Commission, the company shall not
charge and is not entitled to charge any telegraph or telephone
toll in respect of which there is default in such filing, or which
is disallowed by the Commission; but any company, prior to the
1st day of May 1908, charging telegraph or telephone tolls,
may, without such filing and approval, for such period as the
Commission allows, charge such telegraph or telephone tolls as
such company was immediately prior to the said date author
ized by law to charge, unless where the Commission has
disallowed or disallows such tolls.
(6) The Commission may, by regulation or otherwise, deter
mine and prescribe the manner and form in which any tariff or
tariffs of telegraph or telephone tolls shall be published or kept
open for public inspection.
321. (1) All tolls shall be just and reasonable and shall
always, under substantially similar circumstances and condi
tions with respect to all traffic of the same description carried
over the same route, be charged equally to all persons at the
same rate.
(2) A company shall not, in respect of tolls or any services or
facilities provided by the company as a telegraph or telephone
company,
(a) make any unjust discrimination against any person or
company;
(b) make or give any undue or unreasonable preference or
advantage to or in favour of any particular person or com
pany or any particular description of traffic, in any respect
whatever; or
(c) subject any particular person or company or any particu
lar description of traffic to any undue or unreasonable preju
dice or disadvantage, in any respect whatever;
and where it is shown that the company makes any discrimina
tion or gives any preference or advantage, the burden of
proving that the discrimination is not unjust or that the prefer
ence is not undue or unreasonable lies upon the company.
(4) The Commission may
(a) suspend or postpone any tariff of tolls or any portion
thereof that in its opinion may be contrary to section 320 or
this section; and
(b) disallow any tariff of tolls or any portion thereof that it
considers to be contrary to section 320 or this section and
require the company to substitute a tariff satisfactory to the
Commission in lieu thereof or prescribe other tolls in lieu of
any tolls so disallowed.
(5) In all other matters not expressly provided for in this
section the Commission may make orders with respect to all
matters relating to traffic, tolls and tariffs or any of them.
In the National Transportation Act, there are
no special provisions relating to telegraphs and
telephones but Part IV, comprising sections 45 to
64 and entitled GENERAL JURISDICTION AND
POWERS [of the Commission] IN RESPECT OF
RAILWAYS, has always been taken as covering all
matters dealt with in the Railway Act: subsection
45(2) [as am. by S.C. 1977-78, c. 22, s. 18],
subsection 46(1), sections 48 [as am. idem], 57,
58, 63, and subsection 64(1) ought to be
reproduced:
45....
(2) The Commission may order and require any company or
person to do forthwith, or within or at any specified time, and
in any manner prescribed by the Commission, so far as is not
inconsistent with the Railway Act, any act, matter or thing that
such company or person is or may be required to do under the
Railway Act, or the Special Act, and may forbid the doing or
continuing of any act, matter or thing that is contrary to the
Railway Act, or the Special Act; and for the purposes of this
Part and the Railway Act has full jurisdiction to hear and
determine all matters whether of law or of fact.
46. (1) The Commission may make orders or regulations
(a) with respect to any matter, act or thing that by the
Railway Act or the Special Act is sanctioned, required to be
done, or prohibited;
(b) generally for carrying the Railway act into effect; and
(c) for exercising any jurisdiction conferred on the Commis
sion by any other Act of the Parliament of Canada.
48. The Commission may, of its own motion, or shall, upon
the request of the Minister, inquire into, hear and determine
any matter or thing that, under this Part or the Railway Act, it
may inquire into, hear and determine upon application or
complaint, and with respect thereto has the same powers as,
upon any application or complaint, are vested in it by this Act.
57. (1) The Commission may direct in any order that such
order or any portion or provision thereof, shall come into force
at a future time or upon the happening of any contingency,
event or condition in such order specified, or upon the perform
ance to the satisfaction of the Commission, or a person named
by it, of any terms which the Commission may impose upon
any party interested, and the Commission may direct that the
whole, or any portion of such order, shall have force for a
limited time, or until the happening of a specified event.
(2) The Commission may, instead of making an order final
in the first instance, make an interim order, and reserve further
directions either for an adjourned hearing of the matter, or for
further application.
58. Upon any application made to the Commission, the
Commission may make an order granting the whole or part
only of such application, or may grant such further or other
relief, in addition to or in substitution for that applied for, as to
the Commission may seem just and proper, as fully in all
respects as if such application had been for such partial, other,
or further relief.
63. The Commission may review, rescind, change, alter or
vary any order or decision made by it, or may re-hear any
application before deciding it.
64. (1) The Governor in Council may at any time, in his
discretion, either upon petition of any party, person or company
interested, or of his own motion, and without any petition or
application, vary or rescind any order, decision, rule or regula
tion of the Commission, whether such order or decision is made
inter partes or otherwise, and whether such regulation is gener
al or limited in its scope and application; and any order that the
Governor in Council may make with respect thereto is binding
upon the Commission and upon all parties.
Now the factual background.
The series of events and decisions that has to be
recorded is relatively long and for the sake of
accuracy quotations will be numerous. But the
facts are not really complex and their sequence,
although dates are to be carefully noted, is easy to
follow.
Until August 4, 1982, the rates charged by Bell
for its services had always been approved by the
Commission as required by the legislation. The
last decision to that effect had been Telecom Deci
sion CRTC 81-15, dated September 28, 1981,
which had followed an application for a general
rate increase that Bell had filed a few months
previously. On August 5, 1982, the Governor in
Council, with a view to giving effect to the Gov
ernment's restraint program and pursuant to para
graph 64(1) of the National Transportation Act,
issued an Order in Council (P.C. 1982-2350)
increasing all rates approved the year before by 6%
effective September 1, 1982 and by a further 5%
effective September 1, 1983.
On March 28, 1984, Bell applied to the Com
mission for increases in certain of its rates, and
purported to do so under Part VII of the CRTC
Telecommunications Rules of Procedure [SOR
/79-554] alleging that the normal but more
involved procedure set out in Part III for general
rate increase applications was not warranted since
its rates were still being governed by the 1982
Order in Council. On May 22, 1984, the Commis
sion refused Bell's application in Telecom Decision
CRTC 84-15 the concluding paragraphs of which
read as follows:
In light of the foregoing, Bell's application is denied.
The Commission recognizes that, in 1985 and beyond, in the
absence of rate relief, a deterioration in the Company's finan
cial position could occur. In this regard, if the Company should
find it necessary to file an application for a general rate
increase under Part III of the Rules, the Commission would be
prepared to schedule a public hearing on such an application in
the fall of 1985.
Should Bell consider it necessary to seek rate increases to come
into effect earlier in 1985 than this schedule would allow, it
may of course apply for interim relief. In the event Bell were to
seek such interim relief, it would be open to the Company to
suggest that the Commission's traditional test for determining
interim rate applications is overly restrictive in light of the
Commission's hearing schedule and to put forward proposals
for an alternative test for consideration.
On September 4, 1984, Bell, in accordance with
the directions of the Commission, filed an applica
tion for an interim rate increase of approximately
3.6% to become effective on January 1, 1985
which would be followed by a full rate application
to be filed on June 4, 1985. On December 19,
1984, the Commission agreed in part to the
request and granted a 2% interim rate increase; its
decision (Telecom Decision CRTC 84-28) ended
thus:
Taking the above factors into account, the Commission has
decided that an interim rate increase of 2% for all services in
respect of which rate increases were requested by the Company
in the interim application is appropriate at this time. This
increase is expected to generate additional revenues of $65
million from 1 January 1985 to 31 December 1985. To permit
the review of the Company's 1985 revenue requirement by the
Commission at the fall 1985 public hearing, Bell is directed to
file its 4 June 1985 general rate increase application on the
basis of two test years, 1985 and 1986.
Bell is directed to file revised tariffs forthwith, with an effective
date of 1 January 1985 to give effect to the rates approved in
this decision.
By letter to the Commission dated March 20,
1985, Bell asked that its general rate increase
application, scheduled for June 4, 1985, be post
poned to February 10, 1986 suggesting however
that the interim rate increase in force since Jan-
uary be given immediate final approval. In CRTC
Telecom Public Notice 1985-30, dated April 16,
1985, the Commission agreed to the postponement
but rejected the suggestion for final approval in
these words:
With respect to Bell Canada's request for final approval of the
interim increases of 2%, the Commission does not consider it
appropriate to grant final approval of interim general rate
increases without further process and has therefore decided not
to consider this matter at this time but will review the 1985
interim increases during the 1986 hearing.
In view of the improving trend in the Company's financial
performance, the Commission further directs as follows:
Bell Canada is to provide to the Commission for the balance of
1985, within 30 days after the end of each month, commencing
with April 1985, a full year forecast of revenues and expenses
on a regulated basis for the year 1985, together with the
estimated financial ratios including the projected regulated
return on common equity.
The Commission will monitor the Company's financial
performance during 1985, in order to determine whether any
further rate action may be necessary.
On July 19, 1985, the Commission invited Bell
to provide explanations as to why, in light of its
improved financial performance, "the 2% interim
increases granted in Decision 84-28 should not be
suspended effective 1 September 1985". Bell, in its
reply insisted that such a suspension would not be
justified, but the Commission was of a different
view. On August 14, 1985, Telecom Decision
CRTC 85-18 disposed as follows:
In view of the improving trend in Bell's financial performance,
the Commission is satisfied that the company no longer needs
the 2% interim increases which were awarded in Decision 84-28
in order to avoid serious financial deterioration in 1985.
Accordingly, Bell is directed to file revised tariffs forthwith
with an effective date of 1 September 1985, to suspend these
increases.
In arriving at its decision the Commission has estimated that,
with interim rates in effect for the complete year, the company
would earn an ROE* of approximately 14.5% in 1985, a return
well in excess of the 13.7% considered appropriate for deter
mining the 2% interim rate increases. The Commission also
projected that interest coverage would be approximately 3.9
times. This would improve on the actual 1984 coverage of 3.8
times. These estimates are not significantly different from
Bell's current expectation of its 1985 results.
The Commission will make its final determination of Bell's
revenue requirement for the year 1985 in the general rate
proceeding currently scheduled to commence with an applica
tion to be filed on 10 February 1986.
* ROE: rate of return on average common equity for regulato
ry purposes.
On October 31, 1985, Bell informed the Com
mission that it had decided not to proceed with its
application for a general rate increase, requesting,
in consequence, that the Directions on Procedures
given in Telecom Public Notice 1985-30 be with
drawn. The response of the Commission was con-
tained in Telecom Public Notice 1985-85, dated
December 23, 1985, which read in part as follows:
The Commission notes that the appropriate rate of return for
Bell has not been reviewed in an oral hearing since the proceed
ing which culminated in Bell Canada—General Increase in
Rates, Telecom Decision CRTC 81-15, 20 September 1981
(Decision 81-15). The Commission considers that, given Bell's
current forecasts, it would be appropriate to review the compa-
ny's cost of equity for the years 1985, 1986 and 1987 in the
proceeding scheduled for 1986. Such a review would allow
consideration of the changing financial and economic condi
tions since Decision 81-15 and the impact of Bell's corporate
reorganization and its rate of return. The Commission notes
that other issues arising from the reorganization will also be
addressed in the 1986 proceeding.
The Commission, therefore, concludes that the schedule
announced in the amended Directions and Procedure enumer
ated in Public Notice 1985-30 is still appropriate with the
exception of items 5 and 6 which will now read as follows:
The Commission directs Bell to file on 10 February 1986 the
Memoranda of Support contemplated by section 38(1)(b) of
the CRTC Telecommunications Rules of Procedure to address
the test years 1985, 1986 and 1987. the Commission will make
a final determination regarding Bell's revenue requirements for
the years 1985, 1986 and 1987 and establish an acceptable
range for Bell's ROE for the years 1986 and 1987 in that
proceeding. In this context, Bell is directed to file appropriate
information of the company's cost of common equity and
revenue requirements, including 1985 financial results and
forecasts for 1986 and 1987, in its submission of 10 February
1986.
As was to be expected, the hearing turned out to
be quite a lengthy and complex one. It lasted from
June 2 to July 16, 1986. More than 300 persons
had filed interventions and many of them appeared
or were represented. Not only was it necessary to
review thoroughly the financial situation of the
Company but several incidental or accessory issues
had to be considered. After deliberations, the
Commission rendered its decision on October 14,
1986. It is this decision CRTC 86-17 which is put
in question here.
Not all of it is disputed however, but only the
part which can quickly be summarized ordering
Bell to give its customers of record a one-time
credit. The Commission proceeds first to express
its view as to what would have been the permissi-
ble return on equity (ROE) for the years 1985,
1986 and 1987; it writes:
Taking all the evidence before it into account, the Commission
has concluded that, for the 1986 and 1987 test years, the
permissible ROE range for Bell should be between 12.25% and
13.25%.
With respect to the 1985 test year, the Commission considers
that the cost of capital was higher in that year. Accordingly, it
has determined that the permissible ROE range for 1985 would
have been 12.75% to 13.75%.
The Commission has used the middle point of the range, which
is 12.75%, for the purpose of determining the company's rev
enue requirement for 1987. Since most of the test year 1986
and all of the test year 1985 have elapsed, the Commission
considers it fair and reasonable to use the upper end of the
range for each year, 13.25% for 1986 and 13.75% for 1985, to
determine the respective revenue requirements.
The Commission then considers its findings as to
the revenues earned by Bell in 1985 and 1986 and
determines that the Company had made excess
revenue of 63 million dollars in the first of the two
years and 143 million dollars in the other, estimat
ing at the same time that in 1987 "a revenue
requirement reduction of 234 million dollars would
provide the Company with the permissible ROE".
The Commission thereupon proceeds to draw con
clusions: with respect to 1987, it provides for rate
reductions to be effective 1 January 1987; with
respect to 1985 and 1986, it disposes as follows:
Concerning the excess revenues for the years 1985 and 1986,
the Commission directs that the required adjustments be made
by means of a one-time credit to subscribers of record, as of the
date of this decision, of the following local services: residence
and business individual, two-party and four-party line services;
PBX trunk services; centrex lines; enhanced exchange-wide dial
lines; exchange radio-telephone service; service-system service;
and information system access line service. The Commission
directs that the credit to each subscriber be determined by
pro-rating the sum of the excess revenues for 1985 and 1986 of
$206 million in relation to the subscriber's monthly recurring
billing for the specified local services provided as of the date of
this decision. The Commission further directs that the work
necessary to implement the above directives be commenced
immediately and that the billing adjustments be completed by
no later than 31 January 1987. Finally, the Commission directs
the company to file a report detailing the implementation of the
credit by no later than 16 February 1987.
This is the part of Telecom Decision CRTC 86-17
the validity of which is disputed in this appeal.
As pointed out at the outset, the sole question is
one of jurisdiction. Had the Commission the statu
tory power to order Bell to give a one-time credit
of 206 million dollars to its subscribers of record?
The findings of fact underlying the order, specifi
cally the assessment of Bell's revenue requirements
for 1985 and 1986, the appropriateness of the rates
of return for the same years and, as a consequence,
the determination of the amount of excess rev
enues earned by Bell, are not put in question. The
issue is therefore purely one of law, which is why I
could observe as I did that a complete recounting
of the facts and a review of all the decisions
rendered before the final one was not strictly
required to be able to address it. It was neverthe
less of the utmost importance that the decision be
clearly seen in context, in order, for one thing, to
understand how, in answer to the submission of the
appellant that the Commission is only empowered
to prescribe tolls which it certainly did not do in
the impugned order, the respondent and its sup
porters could adopt in turn two contrary ap
proaches and follow two different lines of reason
ing. Some agree that the decision must be taken as
it is, that is to say as an order to pay a bulk sum,
but they contend that the Commission is not lim
ited to prescribing tolls; others submit that the
decision has to be interpreted and the order to pay
treated as only a means to give effect to the
establishment of rates for a period already past. I
have become convinced that neither of the two
approaches reaches the heart of the problem but,
for the moment, I will only deal with the argu
ments as submitted.
1. Those who contend that the Commission is
not limited to prescribing tolls insist upon the
status of Bell as a Public Utility whose works have
been declared to be for the general advantage of
Canada (section 46 of An Act to incorporate The
Bell Telephone Company of Canada, S.C. 1880, c.
67, as am. by S.C. 1882, c. 95, s. 4, the "Special
Act") and the role of the Commission in prevent
ing Bell from abusing its privileged position as
operator of a monopoly. Going through the provi
sions of the Special Act and the Railway Act, they
point out the number of conditions and require
ments to which Bell is subject and the extensive
authority conferred on the Commission for the
supervision of the Company's operations and
activities. They then refer to the general powers to
make "orders or regulations ... for carrying the
Railway Act into effect" given to the Commission
by paragraph 46(1)(b) of the National Transpor
tation Act and specially to subsection 321(5) of
the Railway Act which, for convenience, I quote
again:
321. ...
(5) In all other matters not expressly provided for in this
section the Commission may make orders with respect to all
matters relating to traffic, tolls and tariffs or any of them.
The conclusion for them is inevitable: the Commis
sion's role goes far beyond fixing rates or tolls and
its powers to make any type of order on the sole
condition that it be to carry into effect the Rail
way Act, and remains in relation to tolls and
tariffs clearly entitled it to make the order it made.
I do not share that view. It simply does not
appear to me that the conclusion is inevitable. Of
course, I readily agree that the Commission has a
supervising and a regulating authority which goes
beyond the fixing of tariffs and tolls. The fixing of
tariffs and tolls covers in fact only what can be
referred to as one "side of the equation": the side
of the remuneration the Company is to receive for
the services it provides; it has nothing to do with
the nature and quality of the services provided.
Obviously, both sides must be supervised and regu
lated if possible abuses are to be restrained and it
can easily be seen that the regulation of the nature
and the quality of the service would require a great
range of means of actions in order to have the
necessary flexibility to deal with the wide variety
of events that may arise. But I fail to see where in
the Act the Commission is given the power to deal
with tariffs and tolls otherwise than by approving,
suspending or disallowing them. No doubt the
Commission can make all types of orders to force
Bell to respect the many conditions and require
ments imposed on it by, or in accordance with, the
Special Act or the Railway Act; but, with respect
to tariffs and tolls, Bell's sole obligation under the
legislation is to charge only those tolls previously
approved and the existence of such an obligation
cannot expose Bell to an order which in no way
fixes tariffs or tolls. Subsection 321(5) could not
and did not intend to say otherwise, however vague
may be its wording, the purpose for which it was
adopted being to define powers in the sole context
of the Railway Act. As pointed out by B. Roma-
niuk and H. Janisch in their extensive article on
"Competition in Telecommunications: Who
Polices the Transition?" ((1986), 18 Ottawa L.R.
561) where they discuss the interplay between
provisions of the National Transportation Act and
the Railway Act [at page 594]: "A general power
to make orders and regulations for the purpose of
carrying other statutes into effect or exercising a
jurisdiction conferred by other statutes cannot be
construed as creating fundamental new powers,
that is, powers that cannot logically be derived
from the original enabling legislation." Besides, I
would have great difficulty in accepting that the
order we are concerned with is in any real and
direct sense one "with respect to a matter relating
to tolls and tariffs" as contemplated by the legisla
tion; it appears to me to relate rather to profit and
revenue. Merely because the main source of that
profit and revenue has been charges for services
rendered established in accordance with tariffs
approved by the Commission does not make them
a matter "relating to traffic, tolls and tariffs".
If the CRTC's order is taken on its face, it
seems to me obvious that it implies an authority in
the Commission to deal with excess or deficiency
of earnings as such and it has been found, a long
time ago, by the Alberta Supreme Court, Appel
late Division, in Calgary (City) & Home Oil Co. v.
Madison Natural Gas Co. & Br. American Utili
ties Ltd. (1959), 19 D.L.R. (2d) 655, that a public
utility board such as the Commission could not
pretend to have such an authority. No wonder,
therefore, most of the intervenants relied primarily
on the second line of reasoning.
2. As explained above, this second line of rea
soning takes as its starting point the premise that
the decision must be given its substantive meaning
and the order to pay in the form of a credit seen
merely as a means to give effect to the establish
ment of tolls for a period already past. The credit
is "tantamount" or "equivalent to" a toll reduction
for the years 1985 and 1986. It is said that the true
nature of the decision is a "disallowance" of the
relevant tolls for those years and its true effect is
to bring about a substitution "of a tariff satisfacto
ry to the Commission", the whole as contemplated
by paragraph 321(4)(b), which for convenience I
quote again:
321. ...
(4) The Commission may
(b) disallow any tariff of tolls or any portion thereof that it
considers to be contrary to section 320 or this section and
require the company to substitute a tariff satisfactory to the
Commission in lieu thereof or prescribe other tolls in lieu of
any tolls so disallowed.
It seems to me that there is a confusion here
between, on the one hand, the goal, the purpose,
the aim or the intent of a decision and, on the
other, its true nature, and the distinction, I submit,
is basic when the issue is precisely whether there
was authority to make the decision as it was
actually made, whether there was power to order
what was in fact ordered. The true nature of an
order is determined by the command it contains
and a good way to identify the command is to
determine how the order can be enforced, a deter
mination which, be it said in passing, raises par
ticularly troubling questions here. But let us
assume that the premise is acceptable. The ques
tion which immediately arises is, of course, wheth
er the Commission had jurisdiction to order direct
ly or indirectly a retroactive decrease of the tolls.
It is suggested by some that the power, con
ferred on the Commission by section 63 of the
National Transportation Act, to "review, rescind,
change, alter or vary any order or decision made
by it" implies necessarily the power to do it
retroactively. Authority for that proposition is said
to be found in the decision of the Supreme Court
in Bakery and Confectionery Workers Interna
tional Union of America, Local No. 468 et al. v.
White Lunch Ltd. et al., [1966] S.C.R. 282; 56
D.L.R. (2d) 193, where it was held that the
Labour Relations Board of British Columbia, in
the exercise of its power to review could, by a new
order, change with retroactive effect the name of
the employer in a certification order which it had
previously made. The main argument, however,
advanced by all in support of the validity of the
decision, is drawn from the presence of the interim
order, and is based on subsection 57(2) of the
National Transportation Act which, it will be
remembered, read thus:
57. ...
(2) The Commission may, instead of making an order final
in the first instance, make an interim order, and reserve further
directions either for an adjourned hearing of the matter, or for
further application.
Such an express statutory power to make an
interim order and reserve for later a final determi
nation would include by necessity, it is argued, the
power to correct retroactively what was ordered in
the interval. And a great deal of reliance is placed
here on the judgment of the Alberta Court of
Appeal in Re Coseka Resources Ltd. and Sara-
toga Processing Co. Ltd. et al. (1981), 126 D.L.R.
(3d) 705, where it was found that the section of
The Public Utilities Board Act, R.S.A. 1970, c.
302, which authorizes the Public Utilities Board to
make interim orders allowed the Board, in setting
a "just and reasonable rate" for use of a gas
processing facility under section 27 of The Gas
Utilities Act, R.S.A. 1970, c. 158, to make such an
order and to replace it later with a final one
containing different rates having effect from any
time back to the date of the first order.
With respect, I am not convinced by either of
these two arguments.
The first one drawn from the power to vary has
satisfactorily been disposed of, I believe, by the
New Brunswick Supreme Court, Appeal Division,
in the case of R. v. Board of Commissioners of
Public Utilities (N.B.) Ex parte Moncton Utility
Gas Ltd. (1966), 60 D.L.R. (2d) 703 (N.B.S.C.).
It was argued there as here, with the same reliance
on the Supreme Court decision in the Bakery and
Confectionery Workers case, that the Board of
Commissioners of Public Utilities were entitled in
exercising a power to vary given to them by one of
the provisions of the Public Utilities Act, R.S.N.B.
1952, c. 186, to change rates retroactively. Here is
how Chief Justice Bridges, writing for a unani
mous court, dealt with the contention (at page
710):
In the Bakery & Confectionery Workers case, Hall, J., in
referring to what Bull, J.A., stated in the Court below [51
D.L.R. (2d) 72], said at p. 204:
However, he limited the effect of s. 65(3) by holding that
the word "vary" in the section "cannot be used as an excuse
for bringing retroactively into being a new unit of employees
for which the Union stands certified ..." I cannot read the
section as narrowing the plain meaning of the word "vary".
It is defined in the Shorter Oxford English Dictionary as:
"To cause to change or alter; to adapt to certain circum
stances or requirements by appropriate modifications" nor do
I accept the view that the word "vary" cannot apply retroac
tively. It has not such a limited meaning and circumstances
will frequently arise where it must have a retroactive effect.
The present case is a classical example.
It is to be noted that Hall, J., does not say that the word
"alter", which means the same as "vary" and includes "reduce"
in respect to a rate should in all cases have the meaning he gave
it. I do not think, to use his language, that circumstances have
arisen for the words "reduce" or "alter" to be given the
interpretation sought by the distributor. If the Board has power
to make retroactive rates in the present case, it has, because of
the wording of the section, likewise authority to do so when
ordering an increase in rates to consumers upon application of a
distributor. In such a case there would be hundreds of users
called upon to pay the difference between the old and new
rates. This would be most unreasonable. I cannot give such an
interpretation to the section. It is my opinion that neither the
word "reduce" or "alter" in s. 6(1) of our Public Utilities Act
should be interpreted as giving the Board the authority when
fixing a rate to direct that it be retroactive.
With respect I share the views of Bridges C.J. and
the New Brunswick Court of Appeal as to the
content of the Bakery decision. Hall J. states the
proposition central to his reasoning in the follow
ing words: "I cannot read the section as narrowing
the plain meaning of the word "vary" ... nor do I
accept the view that the word "vary" cannot apply
retroactively. It has not such a limited meaning
...." This proposition cannot be transformed into
one which would suggest that the power to vary
implies in itself the power to do it with retroactive
effect. It seems obvious to me that the word
"vary" is neutral with respect to the power to act
retroactively and I am simply unable to accept
that by enacting section 63 of the National Trans
portation Act as it did Parliament intended to give
to the Commission the authority, not to protect
rights as did the labour relations board in the
Bakery case, but to destroy rights created by its
original order.
The other argument based on the existence of
the interim order does not, in my view, have any
more conclusive value. The point was made that,
to give subsection 57(2) of the National Transpor
tation Act a real purpose, the interim order therein
contemplated had to be given a meaning other
than that of a mere temporary order, since the
power to make an order having effect for only a
limited time is already provided for by subsection
57(1) and section 63 of the same Act. I am not
impressed. There is an essential distinction be
tween an order made under subsection 57(1) or
section 63 and one made under subsection 57(2), it
being that one is meant to dispose finally of an
application or of a matter otherwise raised while
the other is not, and it is that fundamental distinc
tion, in my view, which the drafters had in mind as
indicated by the very first words of subsection
57(2): "instead of making an order final". It must
not be forgotten that this section 57 of the Nation
al Transportation Act is a provision of a general
nature meant to apply not specifically to orders
establishing tariffs and tolls but to all of the
myriad of orders and decisions that the Canadian
Transport Commission and (by virtue of subsec
tions 14(2) and (3) of the Canadian Radio-televi
sion and Telecommunications Commission Act,
S.C. 1974-75-76, c. 49) the Canadian Radio-
television and Telecommunications Commission
may be called upon to make in their respective'
fields of regulation. And in any event, the fact
remains that the word "interim" does not in itself,
if one relies on the dictionary definitions, suggest
anything other than "in the meantime", "in the
interim", "for the time being" (see: The Shorter
Oxford English Dictionary, (3rd ed.); see also:
Stroud's Judicial Dictionary (5`h ed.), at the word
"interim" and the case referred to therein Algar v.
Middlesex County Council. In the matter of the
Local Government Superannuation Act, 1937, and
1939, [1945] 2 All E. R. 243 (K.B.D.)). In my
view, the power to make an interim order says
nothing whatever of a power to come back and
make a final order regulating differently the
period covered by the initial order.
Does that mean that I disagree with the Coseka
decision? No, I do not disagree with the judgment
although I express, with the greatest respect, some
reservations as to some incidental statements
found in the reasons given in support of the
conclusion.
In Re Eurocan Pulp & Paper Co. Ltd. and
British Columbia Energy Commission et al.
(1978), 87 D.L.R. (3d) 727, the Court of Appeal
of British Columbia found that the B.C. Energy
Commission was empowered to make some rate
changes retroactive to the date of the application
to which it was giving effect despite the absence of
specific language in the governing statute, the
Energy Act, S.B.C. 1973, c. 29. The main part of
the reasons of Chief Justice Farris, writing for a
unanimous Court, needs reproduction (at pages
731-732):
Reading the Act as a whole, it is my opinion that the Commis
sion has been empowered to make rates effective to the date of
application, even though there is no specific language in the
Act to that effect. Support for this conclusion is to be found in
the decision of the Supreme Court of the United States in
United States v. New York Central R. Co. (1929), 73 L. ed.
619. In that case the railroads filed applications on February
25, 1921 and June 30, 1921, for increases in their mail tariffs.
The relief sought was for dates prior to the applications and for
the future. The Interstate Commerce Commission made orders
establishing rates as fair and reasonable for the period subse
quent to the filing of the applications. The orders were upheld
by the Supreme Court of the United States. Mr. Justice
Holmes in delivering the opinion of the Court said this at pp.
620-1:
But the filing of an application expresses a present dissatis
faction and a demand for more. A further protest would be a
superfluous formality. If the claim of the railroads is just
they should be paid from the moment when the application is
filed. In the often quoted words of Chief Justice Shaw: "If a
piepowder court could be called on the instant, and on the
spot, the true rule of justice for the public would be to pay
the compensation with one hand whilst they apply the ax
with the other." Parks v. Boston, 15 Pick. 198, 208. In fact
the necessary investigation takes a long time, in these
cases,—years,--but reasonable compensation for the years
thus occupied is a constitutional right of the companies no
less than it is for the future. Oklahoma Natural Gas Co. v.
Russell, 261 U.S. 290, 293, 67 L. ed. 659, 662, 43 Sup. Ct.
Rep. 353. This being so, and the Interstate Commerce
Commission being the tribunal to which the railroads are
referred, it is a natural incident of the jurisdiction that it
should be free to treat its decision as made at once. Obvious
ly Congress intended the Commission to settle the whole
business, not to leave a straggling residuum to look out for
itself, with possible danger to the validity of the act. No
reason can have existed for leaving the additional annoyance
and expense of a suit for compensation during the time of the
proceedings before the Commission, when the Commission
has had that very question before it and has answered it at
least from the date of its orders. We are quite aware that
minutiae of expression may be found that show Congress to
have been thinking of the future. We put our decision not on
any specific phrase but on the reasonable implication of an
authority to change the rates of pay which existed from the
day when the application was filed, the manifest intent to
refer all the rights of the railroads to the Interstate Com
merce Commission, and the fact that unless the Commission
has the power assumed a part of the railroads' constitutional
rights will be left in the air.
Judgment affirmed.
There is no question of constitutional rights involved in the
present case; nonetheless, if the Commission does not have the
power contended for, a utility would be deprived of a proper
return on its investment capital for the period between the date
of an application to have the rates reviewed and the date of a
consequential Commission order. As in the present case this
period could be lengthy. It is unreasonable to assume that the
Legislature intended such a result.
In Nova, An Alberta Corporation v. Amoco
Canada Petroleum Co. Ltd. et al., [1981] 2 S.C.R.
437, Estey J., delivering the judgment of the
Court, confirmed in the course of his reasons the
conclusion of the British Columbia Court of
Appeal in the Re Eurocan case and approved
without restrictions the reasons of Chief Justice
Farris.
In my respectful opinion, here lies the basis for
the Coseka decision. In the Nova case, as in the Re
Eurocan case, as in the United States v. New York
Central R. Co. case referred to by Farris C.J., and
likewise, I suggest with respect, as in the Coseka
case, the power to act retroactively was accepted in
order to prevent prejudice to an applicant arising
from the time required to approve his application.
I have no difficulty with an implied power in the
Commission to make a retroactive order to sur
mount, without affecting the legitimate expecta
tions of anybody, a practical difficulty as in the
Bakery and Confectionery Workers case, or to
protect an applicant or a complainant from being
prejudiced by the fact that his well-founded
application or complaint has required time to be
dealt with. But I do not accept that the Commis
sion may otherwise have the power to disallow
retroactively rates it has already approved, be it by
interim or final order, or, said otherwise, to render
illegal what was not only unforbidden but formally
authorized. I am, of course, influenced in my
attitude by the strength of the presumption against
retrospective operation of any legal enactment. As
stated by Lord Watson in Young v. Adams, [1898]
A.C. 469 (P.C.), at page 476 "it manifestly shocks
one's sense of justice that an act legal at the time
of doing it should be made unlawful by some new
enactment". And should be borne in mind what
Pierre-André Côté reminds us in his treatise The
Interpretation of Legislation in Canada when
speaking of the presumption, at page 125, "What
for Parliament is only a presumption becomes for
the administration a formal jurisdictional con
straint." But I am also and more specifically
influenced by my understanding of the scheme of
the statute.
I mentioned, before dealing with the various
arguments advanced in reply to the appellant's
general submission, that, as presented, they were
not going to the heart of the problem. Indeed, the
real and only question raised, as I see it, is wheth
er, in order to assure that the telephone tariffs and
tolls chargeable by the utility would be just and
reasonable, Parliament intended to confer upon
the Commission a regulatory role that would be
retrospective as well as prospective. And I do not
see how, looking at the legislation, the question
may be answered otherwise than in the negative.
The control of the Commission is over the tolls to
be charged (subsection 320(2) of the Railway
Act); it is these tolls which are subject to approval
and the only obligation imposed on the Company
is to limit its charges to the tolls approved. It
should be observed that subsection 321(1) does not
define as an obligation to be assumed by the
Company that the tolls be just and reasonable, an
observation which is all the more telling when the
paragraph is read in conjunction with subsection
321(2) where clear obligations are imposed and I
reproduce the text again for convenience:
321. (1) All tolls shall be just and reasonable and shall
always, under substantially similar circumstances and condi
tions with respect to all traffic of the same description carried
over the same route, be charged equally to all persons at the
same rate.
(2) A company shall not, in respect of tolls or any services or
facilities provided by the company as a telegraph or telephone
company,
(a) make any unjust discrimination against any person or
company;
(b) make or give any undue or unreasonable preference or
advantage to or in favour of any particular person or com
pany or any particular description or traffic, in any respect
whatever; or
(c) subject any particular person or company or any particu
lar description of traffic to any undue or unreasonable preju
dice or disadvantage, in any respect whatever;
and where it is shown that the company makes any discrimina
tion or gives any preference or advantage, the burden of
proving that the discrimination is not unjust or that the prefer
ence is not undue or unreasonable lies upon the company.
Besides, in the implementation of the legislation, if
the Commission with respect to tariffs and tolls
could act both ways, forward and backward in
time, all the care put into the process of approving
the rates on the basis of complex and extensive
forecasts would be pretty close to useless and to no
real avail. Parliament could have adopted another
scheme. There are many legislative schemes where
the utility establishes its own tolls but a public
authority, acting upon complaint or proprio motu,
is entitled to intervene and to impose changes
(which incidentally may very well be meant to be
retroactive at least to the time of the complaint).
Eastey J. has interesting comments on the two
different patterns in the course of his reasons in
the Nova case at pages 450 and 451. But, in its
wisdom, and in the name, I suppose, of consisten
cy, stability and easier managerial planning, Par
liament has chosen not to follow that route.
It is said that the finding of excess profit is in
effect a finding that the rates were too high,
therefore unjust and unreasonable, and that such a
situation cannot be left unremedied without
betraying the will of Parliament that all tolls be
just and reasonable. I see the will of Parliament as
being more complex than what the proposition
suggests. Of course, Parliament could not express
more clearly its desire that the tolls be just and
reasonable, but, in my understanding, to realize its
goal, it has set up a particular scheme which, in its
view, was capable of achieving the desired result
without disregarding some other interests protect
ed by our economic system. All that can be said is
that, this time, the scheme failed to the benefit of
the Company and its shareholders as it can fail
again next time to the benefit of the customers.
And the possibility of failures of that type, which,
fortunately, have apparently been extremely rare,
no doubt because of the competence and effective
ness of the Commission and the relative stability of
the economy, were certainly not wholly unforeseen
by Parliament.
It is said also that the Commission may be led to
refuse systematically to exercise its power to make
an interim order increasing rates if the effect of
the order cannot later, in case of error, be erased.
My answer to that is simple. Parliament has con
ferred duties on the Commission, amongst which is
the duty to consider a request for an interim order
and grant it if found justified. No doubt the
performance of such a duty is particularly difficult
and must be subjected to very special consider
ations. But the mere possibility that an error may
be committed is no excuse to refuse to perform it.
It remains for me to apply those views to the
case at bar and express the straightforward conclu
sion they lead to. I think that the appeal is well
founded. The Commission had no jurisdiction to
direct Bell to give to its subscribers of record a
credit of 206 million dollars representing alleged
excess revenue earned in 1985 and 1986. Telecom
Decision CRTC 86-17 should be set aside in so far
as that direction is concerned.
* * *
The following are the reasons for judgment
rendered in English by
HUGESSEN J. (dissenting): I have had the ben
efit of reading the reasons for judgment prepared
by my brother Marceau J. I regret that I am
unable to agree with him. However, because of the
very full and complete treatment that he has given
the questions raised by this appeal, it is possible
for me to express my reasons very shortly.
I start with five observations which seem to me
to form the very essence of the background to this
appeal:
1. By its application of September 4, 1984, Bell
put its entire rate structure in issue before the
Commission as of January 1, 1985. Quite apart
from its power to intervene on its own motion to
adjust rates which it finds to be no longer just and
reasonable, the Commission could, on the basis of
this application, have adjusted Bell's rates as of the
beginning of 1985 to what it found to be just and
reasonable.
2. By its decision CRTC 84-28, dated Decem-
ber 19, 1984, the Commission decreed interim
rates for Bell with effect from January 1, 1985. All
Bell's tariffs in force from that time forward were
interim tariffs.
3. By its decision CRTC 86-17, of October 14,
1986, the decision presently under appeal, the
Commission found that the rates charged by Bell
under the tariffs in force since January 1, 1985,
had generated revenues in excess of the fair return
on equity to the tune of $206 million. This finding
is not contested by Bell, nor the implication that
flows from it that the rates charged in 1985 and
1986 were not just and reasonable.
4. The delay of over two years between the
initial application and the decision under appeal is
in considerable measure due to Bell itself. In par
ticular, in March and again in October 1985, Bell
sought first to postpone and then to withdraw
altogether its rate increase application.
5. In all its orders and notices relating to the
present matter, the Commission made it clear that
it was keeping open the question of the 1985 and
1986 years and the return on equity and revenue
requirements for those years; this is so even with
regard to orders made after all or a substantial
portion of those years had passed into history.
It is not necessary, for the purposes of the
present appeal, to determine whether the Commis
sion had the power to make an order fixing rates
retroactive to the date of Bell's application
although this is clearly the practical effect of what
it has in fact done. I would simply note that the
British Columbia Court of Appeal, interpreting a
different regulatory scheme in Re Eurocan Pulp &
Paper Co. Ltd. and British Columbia Energy
Commission et al. (1978), 87 D.L.R. (3d) 727,
found such powers to exist. That decision was
quoted with no indication of disapproval by Estey
J., speaking for a unanimous court, in Nova, An
Alberta Corporation v. Amoco Canada Petroleum
Co. Ltd. et al., [1981] 2 S.C.R. 437. I would add
that I am quite unable to see any reason why such
a power, if it exists, should be held to operate only
to the advantage of an applicant utility. I have
always understood that sauce for the goose is good
for the gander as well.
The Commission's power in the present case, as
it seems to me however, flows directly from the
fact that its order of December 19, 1984, was an
interim order given pursuant to subsection 57(2) of
the National Transportation Act.' Section 57 in
its entirety reads as follows:
57. (1) The Commission may direct in any order that such
order or any portion or provision thereof, shall come into force
at a future time or upon the happening of any contingency,
event or condition in such order specified, or upon the perform
ance to the satisfaction of the Commission, or a person named
by it, of any terms which the Commission may impose upon
5 R.S.C. 1970, c. N-17.
any party interested, and the Commission may direct that the
whole, or any portion of such order, shall have force for a
limited time, or until the happening of a specified event.
(2) The Commission may, instead of making an order final
in the first instance, make an interim order, and reserve further
directions either for an adjourned hearing of the matter, or for
further application.
In subsection (1), the Commission is empowered
to give orders which I would describe, in the
language of the civil law, as being orders with a
term or orders subject to suspensive or resolutory
conditions. Clearly subsection (2), when it talks of
"an interim order", is dealing with something else
and is adding to the powers which the Commission
already has. But an interim order cannot simply be
one which is subject to later, prospective revision
by the Commission, because all orders fixing
tariffs and tolls may be so revised, even on the
Commission's own motion. Thus, when the subsec
tion contrasts an interim order with one which is
"final", the latter can only mean an order which
disposes of the question before the Commission for
the time being; a rate-fixing order which is "final"
in the sense of speaking for all time is simply not
possible in the scheme of the statute. That being
so, it seems to me that an interim order can only
be one which, like all rate orders, has prospective
effect but on which the Commission reserves "fur-
ther directions" which may be retroactive to the
date the order was made.
In this respect I am in complete agreement with
the unanimous decision of the Alberta Court of
Appeal in Re Coseka Resources Ltd. and Sarato-
ga Processing Co. Ltd. et al. (1981), 126 D.L.R.
(3d) 705. There the Court had to interpret section
52 of the Public Utilities Board Act, 6 which is in
language substantially identical to section 57 of
the National Transportation Act. I adopt, with
respect, the following words of the judgment of
Laycraft J.A., as he then was, speaking for the
Court [at pages 717 and 718]:
6 R.S.A. 1970, c. 302.
In my view, s. 52(2), empowering the Board to "make an
interim order and reserve further direction, either for an
adjourned hearing of the matter or for further application"
(emphasis added) contemplates the very situation which arose
in this case. It was virtually impossible to fix just and reason
able rates for the processing of Coseka's gas and even an
approximation of them would have been speculative. So instead
of making a final order, the Board made an interim order and
reserved the matter for a "further direction" which it has now
made.
In my view, to say that an interim order may not be replaced
by a final order is to attribute virtually no additional powers to
the Board from s. 52 beyond those already contained in either
the Gas Utilities Act or the Public Utilities Board Act to make
final orders. The Board is by other provisions of the statute
empowered by order to fix rates either on application or on its
own motion. An interim order would be the same, and have the
same effect, as a final order unless the "further direction"
which the statute contemplates includes the power to change
the interim order. On that construction of the section the
"interim" order would be a "final" order in all but name. The
Board would need no further legislative authority to issue a
further "final" order since it may fix rates under s. 27 on its
own motion without a further application. The provision for an
interim order was intended to permit rates to be fixed subject to
correction to be made when the hearing is subsequently
completed.
It was urged during argument that s. 52(2) was merely
intended to enable the Board to achieve "rough justice" during
the period of its operation until a final order is issued. However,
the Board is required to fix "just and reasonable rates" not
"roughly just and reasonable rates". The words "reserve for
further direction", in my view, contemplate changes as soon as
the Board is able to determine those just and reasonable rates.
It was also urged on behalf of Coseka that great injustice will
result if interim rates once paid may subsequently be varied.
There is no doubt that the Board must take careful account of
this factor in its determination of what is just and reasonable
and the problem becomes the more serious the longer is the
delay. Some purchasers of the utility service for whom it is a
cost of doing business may be unable to incorporate a changed
rate in the price of the goods or services they themselves sell.
Other purchasers who made economic decisions on the premise
that the utility service had a given cost, may find those
decisions invalidated. Nevertheless all consumers of a utility
service must be aware that the rates in an interim order are
subject to change and determine their course of action upon the
basis of that knowledge. The time involved will usually be
relatively short and the Board will do its best to minimize the
impact of the change. In this case, through no fault of the
Board, a very long time elapsed before the interim order could
be finalized. When the parties to a hearing realize that the
rates set in an interim order are subject to variation, they will
perceive that there is no advantage to be gained by delay.
(Emphasis added.)
I conclude, for the reasons stated, that the Com
mission had the power, in October of 1986, to fix
just and reasonable rates for Bell with effect from
January 1, 1985, the effective date of its interim
order.
Two subsidiary but nonetheless important ques
tions remain.
In the first place, it is suggested that, even if the
Commission had, as I have found, the power to
revise its interim order with effect from January 1,
1985, it could only do so to the extent of the two
per cent increase which that interim order had
decreed over the rates in effect on December 31,
1984. Put another way, the Commission having
decreed a two per cent increase in rates as of
January 1, 1985, its revision of that interim order
could not do more than put matters back to where
they were at the time the interim order was made.
With respect, it seems to me that this submis
sion misapprehends the nature of the interim order
and attaches the interim characteristic only to the
increase. This is clearly wrong. When a rate is
increased on an interim basis, the whole of the rate
so increased becomes an interim rate and subject
to revision accordingly. The new tariff filed by Bell
to give effect to the increase was not in two parts,
having a pre-January 1, 1985, basis and a post-
January 1, 1985, increase; rather it was an entire
tariff setting forth the whole rate as increased. All
rates charged by Bell, from January 1, 1985, to the
date of the decision under appeal, flowed from and
were authorized by interim orders made by the
Commission. Accordingly when the Commission
undertook to revise those orders and to make a
final order, it was not limited to the amount of the
increase it had granted in January 1985 and
rescinded in September of the same year.
In the second place, it is argued that the Com
mission's power is strictly limited to that of setting
rates and approving tariffs to give effect thereto.
Therefore even if the Commission had the power
to effect a rate revision as at January 1, 1985, it
had no authority to order Bell to make a refund to
its customers of the amounts which it found to
have been overcharged. In particular is this so, it is
argued, because the customers who will benefit
from the ordered refund, the subscribers as of the
date of the decision under appeal, are not precisely
the same group as those who have paid the exces
sive amounts and the refund to each will not in
every case be in the precise amount of the overpay-
ment. This argument provokes several observations
on my part.
First, to give effect to the argument would be
but cold comfort to Bell: in the place of an order to
pay a fixed amount to a determined and readily
identifiable group of customers, it would be faced
with a vast number of individual claims each of
which would require to be assessed and quite
possibly litigated.
My second observation flows from the first. The
Commission having decided that the rates charged
in 1985 and 1986 were not just and reasonable and
having determined the amount of Bell's excess
revenues resulting therefrom as being $206 million
was faced with the strictly practical question of
finding a fair and equitable manner of putting
matters to rights. The situation was analogous to
that faced by the Public Utilities Board of Alberta
in the Edmonton, City of, et al. v. Northwestern
Utilities Limited, [1961] S.C.R. 392. There Locke
J., in dealing with an innovative scheme by which
the Board proposed to deal with variations in the
utility's costs which were impossible to estimate
with accuracy, said [at page 406]:
... the proposed order would be made in an attempt to ensure
that the utility should from year to year be enabled to realize,
as nearly as may be, the fair return mentioned in that subsec
tion and to comply with the Board's duty to permit this to be
done. How this should be accomplished, when the prospective
outlay for gas purchases was impossible to determine in
advance with reasonable certainty, was an administrative
matter for the Board to determine, in my opinion. This, it
would appear, it proposed to do in a practical manner which
would, in its judgment, be fair alike to the utility and the
consumer.
So too, I think, with the Commission's order in the
present case. The fact that Bell has realized excess
revenues is not contested. The power of the Com
mission to revise the rates as of January 1, 1985,
has been established. The way of doing so is an
"administrative matter" properly left for the Com
mission's determination.
Finally on this point, I would observe that in
substance though admittedly not in form the Com
mission's order is one with respect to a matter
relating to tolls and tariffs. As such it falls within
the powers granted the Commission by subsection
321(5) of the Railway Act: 7
321. ...
(5) In all other matters not expressly provided for in this
section the Commission may make orders with respect to all
matters relating to traffic, tolls and tariffs or any of them.
For all the foregoing reasons, I would dismiss
the appeal.
7 R.S.C. 1970, c. R-2.
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.