Date: 20050708
Docket: A-398-04
Citation: 2005 FCA 247
CORAM: DESJARDINS, J.A.
BETWEEN:
ALLSTREAM CORP.
Appellant
and
BELL CANADA, XIT TÉLÉCOM, TELUS COMMUNICATIONS (QUÉBEC) INC., FÉDÉRATION DES COMMISSIONS SCOLAIRES DU QUÉBEC, L'ASSOCIATION DES COMMISSIONS SCOLAIRES ANGLOPHONES DU QUÉBEC, LA SOCIÉTÉ GRICS, LE CRCD DU BAS ST-LAURENT, LA COMMISSION SCOLAIRE DU PAYS-DES-BLEUETS, LA COMMISSION SCOLAIRE DE LA RIVERAINE, COMMISSION SCOLAIRE DES PHARES, CENTRE DES TECHNOLOGIES DE L'INFORMATION ET DES COMMUNICATIONS - RÉGIONAL ABITIBI-TÉMISCAMINGUE, CONSEIL RÉGIONAL DE DÉVELOPPEMENT DE L'ABITIBI-TÉMISCAMINGUE ET LE CONSEIL TRIBAL DE LA NATION ALGONQUINE ANISHINABEG
Respondents
and
CANADIAN RADIO-TELEVISION AND
TELECOMMUNICATIONS COMMISSION
Intervener
Heard at Montréal, Quebec, on June 1, 2005.
Judgment delivered at Ottawa, Ontario, on July 8, 2005.
REASONS FOR JUDGMENT BY: DESJARDINS J.A.
CONCURRED IN BY: DÉCARY J.A.
PELLETIER J.A.
Date: 20050708
Docket: A-398-04
Citation: 2005 FCA 247
CORAM: DESJARDINS, J.A.
BETWEEN:
ALLSTREAM CORP.
Appellant
and
BELL CANADA, XIT TÉLÉCOM, TELUS COMMUNICATIONS (QUÉBEC) INC., FÉDÉRATION DES COMMISSIONS SCOLAIRES DU QUÉBEC, L'ASSOCIATION DES COMMISSIONS SCOLAIRES ANGLOPHONES DU QUÉBEC, LA SOCIÉTÉ GRICS, LE CRCD DU BAS ST-LAURENT, LA COMMISSION SCOLAIRE DU PAYS-DES-BLEUETS, LA COMMISSION SCOLAIRE DE LA RIVERAINE, COMMISSION SCOLAIRE DES PHARES, CENTRE DES TECHNOLOGIES DE L'INFORMATION ET DES COMMUNICATIONS - RÉGIONAL ABITIBI-TÉMISCAMINGUE, CONSEIL RÉGIONAL DE DÉVELOPPEMENT DE L'ABITIBI-TÉMISCAMINGUE ET LE CONSEIL TRIBAL DE LA NATION ALGONQUINE ANISHINABEG
Respondents
and
CANADIAN RADIO-TELEVISION
AND TELECOMMUNICATIONS COMMISSION
Intervener
REASONS FOR JUDGMENT
[1] This is an appeal pursuant to section 64 of the Telecommunications Act (the Act) S.C., 1993, c. 38 of the decision entitled Optical fibre service arrangements, Telecom Decision CRTC 2004-20, dated March 23, 2004, of the Canadian Radio-Television and Telecommunications Commission (the Commission). Such an appeal is brought "on a question of law or of jurisdiction" (section 64 of the Act), following leave of this Court.
[2] In Optical fibre service arrangements, the decision under appeal, the Commission approved special facilities tariffs (SFTs) submitted by Bell Canada in Bell Tariff Notice 6734 and Bell Tariff Notice 6757 for the provision of optical fibre services pursuant to certain customer-specific arrangements (CSAs). All except one of the CSAs sought by Bell Canada pertained to network arrangements associated with the "Villages branchés du Québec" program, a Quebec government initiative aimed at supporting the construction of broadband networks for rural municipalities, school boards and other public institutions. The other CSA pertained to an optical fibre network arrangement in Ontario.
[3] The CSAs proposed by Bell Canada consisted principally or exclusively of intra-exchange dark fibre. The optical fibre services at issue in this appeal are leading-edge telecommunications transmission facilities capable of carrying great volumes of traffic. The term "dark fibre" refers specifically to optical fibre facilities consisting of inert glass fibres. Once electronics are attached, the facilities can be "lit" to transmit data at a high speed.
[4] The regulatory framework applicable to the provision of intra-exchange optical fibre was established in Tariff filings related to the installation of optical fibres, Telecom Decision CRTC 97-7, 23 April 1997 (Decision 97-7). At para. 18 of the decision under appeal, the Commission explained its Decision 97-7 in the following terms:
18. In Tariff filings related to the installation of optical fibres, Telecom Decision CRTC 97-7, 23 April 1997 (Decision 97-7), the Commission established the regulatory framework applicable to intra-exchange optical fibre. The Commission stated that optical fibre should generally be provided under General Tariffs. However, the Commission was also of the view that SFTs for optical fibre would be appropriate where construction had to be undertaken to provide facilities to a particular customer and where facilities could have little economic reuse value. The Commission found that, where SFTs would be appropriate, the rates for optical fibre should not be less than General Tariff rates for the same facility distance. The Commission directed companies to justify in their SFT applications why such a tariff was necessary, provide facility distances and provide details for any extraordinary costs. The Commission was also of the view that in the case of customer-specific tariffs that include the use of optical fibre, the cost should reflect General Tariff rates for optical fibre and that if no General Tariff rates were available, such rates should be filed at the same time as the filing of the proposed customer-specific tariff.
[5] At paragraph 19 of the decision under appeal, the Commission summarized its earlier Decision 2002-76, Regulatory Safeguards with respect to incumbent affiliates, bundling by Bell Canada and related matters (the Nexxia decision), which it referred to later at paragraph 56 of its decision:
19. In Decision 2002-76, the Commission directed Bell Canada to file proposed tariffs and to provide the Commission with information regarding all contracts for single source and packaged arrangements involving Bell Canada tariffed service elements, whether offered directly by Bell Canada or through Bell Nexxia Inc. (Bell Nexxia) or any other Bell Canada affiliate under common control of Bell Canada.
[6] In the decision under appeal, the members of the Commission, both the majority and the dissenting members, eleven members in toto, found that the rates proposed by Bell failed to comply with the rating criteria set out by the Commission in its Decision 97-7, because the rates that Bell was charging fell below the applicable price floor established in Decision 97-7. That is, the SFT rates were lower than the General Tariff for the same facility distance. The Commission noted specifically, at para. 55 of the decision under appeal, that a strict application of its findings would have resulted in the denial of each and every referenced tariff notice proposed by Bell Canada.
[7] The majority of the members decided, notwithstanding these findings, that exceptional circumstances militated in favour of the approval of five CSAs arrangements described in Bell Tariff Notice 6734 and in two of the three CSAs described in Bell Tariff Notice 6757. The majority wrote:
55. The Commission notes that a strict application of the above findings would have resulted in the denial of each and every referenced tariff notice proposed by Bell Canada. However, the Commission considers that a number of the arrangements are characterized by exceptional circumstances that render such a blanket result inappropriate.
56. The Commission notes that Tariff Notice 6734 pertains to CSAs in respect of which the contract negotiations and nearly all of the service provisioning were completed prior to 12 December 2002, the date of issuance of Decision 2002-76, pursuant to which Bell Canada filed the arrangements in question for the Commission's approval. The Commission further notes la Fédération's statement that some of the arrangements were negotiated between the school boards and Bell Nexxia, that construction of certain networks covered under Tariff Notice 6734 has been completed and that the networks are operational. The Commission considers that denial of the CSAs subject to Tariff Notice 6734 would lead to significant disruption of existing service, dislocation of complex equipment and facility configurations, at a significant cost and to the detriment of school boards and municipalities in the relevant areas. In these circumstances, the Commission considers that it would not be appropriate to apply the findings set out in this decision to the arrangements proposed under cover of Tariff Notice 6734.
57. In addition, the Commission notes that for two of the three CSAs contained in Tariff Notice 6757, Bell Canada was the only qualified bidder. In those particular circumstances, the application of the findings set out above would very likely result in the communities concerned being left without the benefit of dark fibre network service. The Commission considers that such a consequence would be contrary to the public interest. Accordingly, the Commission finds that it would not be appropriate to apply the findings set out in this decision to the two CSAs subject to proposed SFT items N4(a)(1)a.1. and N4(a)(1)a.2.
58. The Commission underscores the exceptional nature of its treatment of the SFTs approved on an interim basis in the Orders.
[8] The two dissenting members, Barbara Cram and Stuart Langford, were highly critical of the majority. They held that it was not appropriate to derogate from the rating policy set out in Decision 97-7 and that the proposed SFTs for optical fibre services should meet or exceed the General Tariff rates. They both wrote elaborate opinions on the matter.
[9] Commissioner Cram noted that, with the advent of competition, the Commission had undertaken twelve years in a continuing painstaking process of wringing out the cross subsidization between the various classes of ratepayers and that, to step back from cost based rates and reintroduce hidden cross subsidization was a retrograde and chilling step. She denounced the reasons given by the majority for making an exception to the Commission's policy. Commissioner Langford said the decision "disregarded a decade of Commission decisions intended to eradicate the sort of non-competitive behaviour allowed by the majority". Bell Canada, he said, had broken the rules and was permitted "to profit from its non-compliance with clear Commission rules".
The relevant provisions
[10] The relevant provisions of the Act are Section 7, 25, 27, 47 and 64. They provide as follows:
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Canadian Telecommunications Policy Objectives 7. It is hereby affirmed that telecommunications performs an essential role in the maintenance of Canada's identity and sovereignty and that the Canadian telecommunications policy has as its objectives
(a) to facilitate the orderly development throughout Canada of a telecommunications system that serves to safeguard, enrich and strengthen the social and economic fabric of Canada and its regions;
(b) to render reliable and affordable telecommunications services of high quality accessible to Canadians in both urban and rural areas in all regions of Canada;
(c) to enhance the efficiency and competitiveness, at the national and international levels, of Canadian telecommunications;
(d) to promote the ownership and control of Canadian carriers by Canadians;
(e) to promote the use of Canadian transmission facilities for telecommunications within Canada and between Canada and points outside Canada;
(f) to foster increased reliance on market forces for the provision of telecommunications services and to ensure that regulation, where required, is efficient and effective;
(g) to stimulate research and development in Canada in the field of telecommunications and to encourage innovation in the provision of telecommunications services;
(h) to respond to the economic and social requirements of users of telecommunications services; and
(i) to contribute to the protection of the privacy of persons.
Telecommunications rates to be approved 25. (1) No Canadian carrier shall provide a telecommunications service except in accordance with a tariff filed with and approved by the Commission that specifies the rate or the maximum or minimum rate, or both, to be charged for the service.
Filing of joint tariffs (2) A joint tariff agreed on by two or more Canadian carriers may be filed by any of the carriers with an attestation of the agreement of the other carriers.
Form of tariffs (3) A tariff shall be filed and published or otherwise made available for public inspection by a Canadian carrier in the form and manner specified by the Commission and shall include any information required by the Commission to be included.
Special circumstances (4) Notwithstanding subsection (1), the Commission may ratify the charging of a rate by a Canadian carrier otherwise than in accordance with a tariff approved by the Commission if the Commission is satisfied that the rate (a) was charged because of an error or other circumstance that warrants the ratification; or (b) was imposed in conformity with the laws of a province before the operations of the carrier were regulated under any Act of Parliament. 1993, c. 38, s. 25; 1999, c. 31, s. 199(F).
Just and reasonable rates 27. (1) Every rate charged by a Canadian carrier for a telecommunications service shall be just and reasonable.
Unjust discrimination(2) No Canadian carrier shall, in relation to the provision of a telecommunications service or the charging of a rate for it, unjustly discriminate or give an undue or unreasonable preference toward any person, including itself, or subject any person to an undue or unreasonable disadvantage.
Questions of fact (3) The Commission may determine in any case, as a question of fact, whether a Canadian carrier has complied with section 25, this section or section 29, or with any decision made under section 24, 25, 29, 34 or 40.
Burden of proof (4) The burden of establishing before the Commission that any discrimination is not unjust or that any preference or disadvantage is not undue or unreasonable is on the Canadian carrier that discriminates, gives the preference or subjects the person to the disadvantage.
Method (5) In determining whether a rate is just and reasonable, the Commission may adopt any method or technique that it considers appropriate, whether based on a carrier's return on its rate base or otherwise.
Exception (6) Notwithstanding subsections (1) and (2), a Canadian carrier may provide telecommunications services at no charge or at a reduced rate
(a) to the carrier's directors, officers, employees or former employees; or (b) with the approval of the Commission, to any charitable organization or disadvantaged person or other person PART IV ADMINISTRATION Exercise of Powers Commission subject to orders and standards
47. The Commission shall exercise its powers and perform its duties under this Act and any special Act
(a) with a view to implementing the Canadian telecommunications policy objectives and ensuring that Canadian carriers provide telecommunications services and charge rates in accordance with section 27; and (b) in accordance with any orders made by the Governor in Council under section 8 or any standards prescribed by the Minister under section 15.
Appeals Appeal to Federal Court of Appeal 64. (1) An appeal from a decision of the Commission on any question of law or of jurisdiction may be brought in the Federal Court of Appeal with the leave of that Court.
Application for leave (2) Leave to appeal shall be applied for within thirty days after the date of the decision appealed from or within such further time as a judge of the Court grants in exceptional circumstances, and the costs of the application are in the discretion of the Court.
Notice (3) Notice of an application for leave to appeal shall be served on the Commission and on each party to the proceedings appealed from.
Time limit for appeal (4) An appeal shall be brought within sixty days after the day on which leave to appeal is granted.
Findings of fact (5) On an appeal, the Court may draw any inference that is not inconsistent with the findings of fact made by the Commission and that is necessary for determining a question of law or jurisdiction.
Argument by Commission (6) The Commission is entitled to be heard on an application for leave to appeal and at any stage of an appeal, but costs may not be awarded against it or any of its members.
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Politique canadienne de télécommunication Politique 7. La présente loi affirme le caractère essentiel des télécommunications pour l'identité et la souveraineté canadiennes; la politique canadienne de télécommunication vise à :
a) favoriser le développement ordonné des télécommunications partout au Canada en un système qui contribue à sauvegarder, enrichir et renforcer la structure sociale et économique du Canada et de ses régions;
b) permettre l'accès aux Canadiens dans toutes les régions -- rurales ou urbaines -- du Canada à des services de télécommunication sûrs, abordables et de qualité;
c) accroître l'efficacité et la compétitivité, sur les plans national et international, des télécommunications canadiennes;
d) promouvoir l'accession à la propriété des entreprises canadiennes, et à leur contrôle, par des Canadiens;
e) promouvoir l'utilisation d'installations de transmission canadiennes pour les télécommunications à l'intérieur du Canada et à destination ou en provenance de l'étranger;
f) favoriser le libre jeu du marché en ce qui concerne la fourniture de services de télécommunication et assurer l'efficacité de la réglementation, dans le cas où celle-ci est nécessaire;
g) stimuler la recherche et le développement au Canada dans le domaine des télécommunications ainsi que l'innovation en ce qui touche la fourniture de services dans ce domaine;
h) satisfaire les exigences économiques et sociales des usagers des services de télécommunication;
i) contribuer à la protection de la vie privée des personnes. Autorisation nécessaire pour les tarifs 25. (1) L'entreprise canadienne doit fournir les services de télécommunication en conformité avec la tarification déposée auprès du Conseil et approuvée par celui-ci fixant -- notamment sous forme de maximum, de minimum ou des deux -- les tarifs à imposer ou à percevoir.
Dépôt des tarifications communes (2) Toute tarification commune entérinée par plusieurs entreprises canadiennes peut être déposée auprès du Conseil par une seule d'entre elles avec attestation de l'accord des autres.
Modalités (3) La tarification est déposée puis publiée ou autrement rendue accessible au public, selon les modalités de forme et autres fixées par le Conseil; celui-ci peut par ailleurs préciser les renseignements devant y figurer.
Tarifs non-approuvés (4) Le Conseil peut cependant entériner l'imposition ou la perception de tarifs qui ne figurent dans aucune tarification approuvée par lui s'il est convaincu soit qu'il s'agit là d'un cas particulier le justifiant, notamment d'erreur, soit qu'ils ont été imposés ou perçus par l'entreprise canadienne, en conformité avec le droit provincial, avant que les activités de celle-ci soient régies par une loi fédérale. 1993, ch. 38, art. 25; 1999, ch. 31, art. 199(F).
Tarifs justes et raisonnables 27. (1) Tous les tarifs doivent être justes et raisonnables.
Discrimination injuste (2) Il est interdit à l'entreprise canadienne, en ce qui concerne soit la fourniture de services de télécommunication, soit l'imposition ou la perception des tarifs y afférents, d'établir une discrimination injuste, ou d'accorder -- y compris envers elle-même -- une préférence indue ou déraisonnable, ou encore de faire subir un désavantage de même nature.
Questions de fait (3) Le Conseil peut déterminer, comme question de fait, si l'entreprise canadienne s'est ou non conformée aux dispositions du présent article ou des articles 25 ou 29 ou à toute décision prise au titre des articles 24, 25, 29, 34 ou 40.
Fardeau de la preuve (4) Il incombe à l'entreprise canadienne qui a fait preuve de discrimination, accordé une préférence ou fait subir un désavantage d'établir, devant le Conseil, qu'ils ne sont pas injustes, indus ou déraisonnables, selon le cas.
Méthodes (5) Pour déterminer si les tarifs de l'entreprise canadienne sont justes et raisonnables, le Conseil peut utiliser la méthode ou la technique qu'il estime appropriée, qu'elle soit ou non fondée sur le taux de rendement par rapport à la base tarifaire de l'entreprise.
Précision (6) Le présent article n'a pas pour effet d'empêcher l'entreprise canadienne de fournir, gratuitement ou moyennant un tarif réduit, des services de télécommunication soit à ses administrateurs, dirigeants, employés et anciens employés soit, avec l'agrément du Conseil, à des organismes de bienfaisance, à des personnes défavorisées ou à toute personne.
PARTIE IV APPLICATIONExercice des pouvoirs et fonctions par le Conseil Conseil soumis aux normes et décrets 47. Le Conseil doit, en se conformant aux décrets que lui adresse le gouverneur en conseil au titre de l'article 8 ou aux normes prescrites par arrêté du ministre au titre de l'article 15, exercer les pouvoirs et fonctions que lui confèrent la présente loi et toute loi spéciale de manière à réaliser les objectifs de la politique canadienne de télécommunication et à assurer la conformité des services et tarifs des entreprises canadiennes avec les dispositions de l'article 27.
Appel Droit d'appel 64. (1) Avec son autorisation, il peut être interjeté appel devant la Cour d'appel fédérale, sur des questions de droit ou de compétence, des décisions du Conseil.
Demande d'autorisation de pourvoi (2) L'autorisation est à demander dans les trente jours qui suivent la décision ou dans le délai supérieur qu'un juge de la Cour peut exceptionnellement accorder; les frais relatifs à la demande sont laissés à l'appréciation de la Cour.
Avis (3) Avis de la demande d'autorisation est donné au Conseil et à toutes les parties à l'affaire.
Appel (4) L'appel doit être interjeté dans les soixante jours suivant la date de l'autorisation.
Décision (5) Lors de l'audition d'un appel, la Cour peut déduire toutes les conclusions qui ne sont pas incompatibles avec les faits établis devant le Conseil et qui sont nécessaires pour déterminer la question de compétence ou de droit.
Observations du Conseil (6) Le Conseil a le droit de présenter des observations pendant l'instruction de la demande d'autorisation et ensuite à toute étape de la procédure d'appel; les frais ne peuvent cependant être mis à sa charge ou à celle des conseillers. |
The issues
[11] The appellant raises two issues:
(a) whether it is within the Commission's jurisdiction under the Act to approve a rate that it has found to be not just and reasonable or which it has found to be unjustly discriminatory;
(b) alternatively, whether the decision under appeal is otherwise unreasonable or irrational.
a) Whether it is within the Commission's jurisdiction under the Act to approve a rate that it has found to be not just and reasonable or which it has found to be unjustly discriminatory:
[12] The appellant states that, except where a service is forborne, a Canadian carrier such as Bell cannot provide a telecommunications service without obtaining the Commission's approval of a tariff specifying the rate to be charged for the service (section 25 of the Act). In turn, section 27 requires that all rates be just and reasonable and rates may not be unjustly discriminatory, save for the limited circumstances set out in paragraph 27(6)(b) of the Act.
[13] The appellant submits that the Commission can only approve a rate under section 25 that is in compliance with section 27 of the Act, namely a rate that is both just and reasonable pursuant to subsection 27(1) and that is not injustly discriminatory pursuant to subsection 27(2). Parliament, it says, has very clearly specified the limited circumstances in which a carrier may charge a non-compliant rate. These circumstances, set out in paragraph 27(6)(b) of the Act, give a carrier the right to provide non-compliant rates to "any charitable organization or disadvantaged person or other person" only with the approval of the Commission.
[14] The appellant submits therefore that by holding that the SFTs in the decision under appeal did not meet the rating criteria set out in Decision 97-7 because they were lower than the General Tariff for the same facility distance, the Commission effectively found that the rates were not just and reasonable and/or were unjustly discriminatory. Despite this clear finding, the majority proceeded to nonetheless approve the non-compliant rates due to what it termed "exceptional circumstances". The decision under appeal, the appellant says, was thus essentially based on a finding that cannot be sustained having regard to the Commission's statutory mandate.
[15] The appellant's argument is based upon the premise that Decision 97-7 defines, for all purposes, the criteria for establishing just and reasonable rates so that any departure from those criteria is a departure from just and reasonable rates. But no general policy, such as Decision 97-7, can be expected to anticipate every possible circumstance. It is therefore inappropriate to argue that a rate is not just and reasonable because it does not comply with the criteria set out in Decision 97-7 without regard to the particular circumstances giving rise to the tariff submitted for approval. Ultimately, the issue is whether the rates approved are just and reasonable, and non-discriminatory, not whether they comply with Decision 97-7.
[16] In this case, the Commission exercised its discretion and identified that the circumstances were exceptional and justified a departure from Decision 97-7. Insofar as Allstream's primary argument is that any deviation from the rating criteria set out in Decision 97-7 necessarily results in rates that are unjust and unreasonable, it must fail for the reasons set out above. This then leads to a consideration of Allstream's alternate argument.
(b) Alternatively, whether the decision under appeal is otherwise unreasonable or irrational.
[17] In the alternative, the appellant submits that by basing its approval of the rates on "exceptional circumstances", the Commission relied on irrelevant considerations and rendered a decision which is irrational and unreasonable on its face.
[18] The appellant says that the exercise of discretion must be based on a weighing of considerations that are pertinent to the objects of the administration of the statute or to the "perspective within which the statute is intended to operate", (Canadian Union of Public Employees v. Ontario (Minister of Labour), [2003] 1 S.C.R. 539 at para. 93, 94, Binnie J., Canadian Union of Public Employees). It adds that the consideration of extraneous or irrelevant factors by a statutory decision-maker constitutes an error of law or an error of jurisdiction (Canadian Union of Public Employees, Maple Lodge Farms v. Government of Canada, [1982] 2 S.C.R. 2 at 7-8); Canadian Union of Public Employees, para. 172-176).
[19] The appellant accepts that the determination of whether a rate is just and reasonable, and is not unjustly discriminatory, falls into an area of economic regulation which lies within the Commission's expertise. The nature of the question considered by the Commission, it says, involves the application of a legal standard, i.e., whether the rates are just and reasonable and not unjustly or unduly discriminatory or preferential, to a set of facts. This type of question, it says, is one of mixed fact and law, and the nature of the question, taken together with the existence of a statutory right of appeal, suggests that the standard of review should be reasonableness simpliciter (Canada (Director of Investigation and Research) v. Southam Inc., [1997] 1 S.C.R. 748 at 770-771, para. 44-45).
[20] With respect to Tariff 6734, the Commission, says the appellant, departed from relevant considerations and went on to consider, as "exceptional circumstances", a number of irrelevant considerations:
(a) the Commission took into account the fact that Bell Canada had entered into untariffed agreements with customers prior to the issuance of the decision Regulatory safeguards with respect to incumbent affiliates, bundling by Bell Canada and related matters, Telecom Decision 2002-76 (the Nexxia decision), notwithstanding the fact that Bell Canada knew or ought to have known it was required to file tariffs for those services;
(b) the Commission took into account the fact that construction of certain of the networks had been completed and were operational, despite the fact that this was a direct consequence of Bell Canada's illegal behaviour in proceeding without prior CRTC approval of its tariffs; and
(c) the Commission took into account its belief that denial of the CSAs would result in disruption of service and dislocation of equipment, at significant costs to the customers, although as Commissioner Cram pointed out, the issue was one of money.
[21] With respect to Tariff Notice 6757, the Commission, says the appellant, considered that as Bell Canada was the sole bidder, certain customers would not have the benefit of dark fibre network service if the proposed arrangements were denied - notwithstanding the fact that, if Tariff Notice 6757 was denied because the rates were too low, Bell Canada itself or other competitors may have been ready and willing to offer the service at properly tariffed rates.
[22] The appellant highlights the fact that the courts have historically deferred to utilities commissions in deciding which factors are relevant in determining a just and reasonable rate. However, such factors have typically been economic considerations of the rates themselves. Examples from the jurisprudence sanction reliance on a utility's costs, investments, reserves, and allowances for necessary working capital; a rate of return on the utility's investment; the recovery of fair and reasonable expenses; costs of debt and equity; and general economic conditions. The factors relied on in this case are not economic considerations relative to the rates themselves and therefore, the appellant argues, the Court should not defer to the Commission.
[23] In short, the appellant argues that the reason the proposed arrangements were put in place at rates which, it says, violated section 27 of the Act was precisely due to Bell Canada's failure to seek prior approval of these rates - which in itself was a direct contravention of section 25 of the Act. It submits that the consequences of Bell Canada's failure to observe the law with respect to the requirement for prior approval therefore cannot be a relevant consideration in these circumstances.
[24] Before I embark on an analysis of the appellant's contentions, some considerations should be given on the applicable standard of review with respect to this issue.
[25] The standard of review on an appeal from a decision of an administrative tribunal is determined by the pragmatic and functional analysis. The proper approach was established in the case of Dr. Q v. College of Physicians and Surgeons of British Columbia, [2003] 1 S.C.R. 226 at para. 26 (Dr. Q):
(3) A Review of the Pragmatic and Functional Factors
¶ 26 In the pragmatic and functional approach, the standard of review is determined by considering four contextual factors -- the presence or absence of a privative clause or statutory right of appeal; the expertise of the tribunal relative to that of the reviewing court on the issue in question; the purposes of the legislation and the provision in particular; and, the nature of the question -- law, fact, or mixed law and fact. The factors may overlap. The overall aim is to discern legislative intent, keeping in mind the constitutional role of the courts in maintaining the rule of law.
[26] Under the first factor, while the presence of a statutory right of appeal under section 64 is not determinative of a correctness standard, it is a factor suggesting a more searching standard of review (Barrie Public Utilities v. Canadian Cable Television Associations, [2003] 1 S.C.R. 476, para. 11). However, according to subsection 64(5) of the Act, the Court may not draw any inferences on appeal that are inconsistent with the factual determinations of the Commission. While it is not a privative clause, it does serve to insulate the Commission's decisions on questions of fact.
[27] Under the second factor, while the Commission's expertise in carrying on its statutory duties has been recognized by the courts in numerous cases (Bell Canada v. Canada (Canadian Radio-Television and Telecommunications Commission, [1989] 1 S.C.R. 1722 at 1746; Federation of Canadian Municipalities v. AT & T, [2003] 3 F.C. 379 at 407 para. 30 (F.C.A.) (right of access), the expertise we are concerned with is not the expertise of the decision maker in general but its expertise relative to that of the Court itself on the issue in question. As will become clearer under the third factor, rate-setting is part of the Commission's expertise.
[28] Under the third factor, the provisions at stake in the present appeal, namely subsections 27(1) and 27(2) of the Act refer to a rate to be "just and reasonable" and non-discriminatory. Although these subsections set out legal standards, they entail wide discretion given to the decision-maker as to what is "just", what is "reasonable", what "unjustly" discriminates or gives an "undue" or "unreasonable" preference or subjects any person to an "undue" or "unreasonable" disadvantage. Moreover, in order to determine whether a rate is just and reasonable, the Commission, pursuant to subsection 27(5) of the Act, is given the discretion "to adopt any method or technique that it considers appropriate, whether based on a carrier's return on its rate base or otherwise". The determination of rates under sections 25 and 27 of the Act falls into an area which lies at the very core of the Commission's expertise.
[29] In addition to this, section 47 of the Act provides that the Commission shall exercise its powers and perform its statutory duty with a view to implementing the Canadian telecommunications policy objectives and ensuring that Canadian carriers provide telecommunications services and charge rates in accordance with section 27. An analysis of these nine policy objectives found in section 7 of the Act raises policy issues, which are polycentric in nature in that they involve the weighing of a large number of interlocking and interacting interests and considerations. In such cases, courts are called upon to exercise restraint (Dr. Q, at 240, para. 30; Pushpanathan v. Canada (Minister of Citizenship and Immigration), [1998] 1 S.C.R. 982 at 1008 para. 36; Monsanto Canada Inc. v. Ontario (Superintendent of Financial Services), [2004] 3 S.C.R. 152 at para. 15).
[30] The fourth factor to be considered in the pragmatic and functional approach is the nature of the question before the Commission. Whether a rate is just and reasonable is a question of mixed fact and law. However, as I mentioned above, the Commission is given a great amount of latitude in determining which method or technique it will use in determining the appropriateness of the rate. This will largely be a discretionary exercise and as such the nature of the question in this case suggests that greater deference should be accorded.
[31] I find that the Commission's decision with respect to the approval of the CSAs in this case must be reviewed on a basis of patent unreasonableness. The determination of just and reasonable rates falls squarely within the Commission's expertise and involves the Commission's policy-making role. Where a specialized tribunal such as the Commission is asked to make a decision which is in accordance with the purpose of the Act and its expertise, the Court will show a great amount of deference.
[32] The Commission's decision will therefore not be disturbed unless the Commission made a patently unreasonable error which would amount to an error of law or of jurisdiction (section 64). A patently unreasonable decision will be one which is clearly irrational or not in accordance with reason (Law Society of New Brunswick v. Ryan, [2003] 1 S.C.R. 247).
[33] With respect to Tariff 6734, the Commission took into account the fact that the contract negotiations and nearly all of the service provisioning were completed before the issuance of Decision 2002-76, pursuant to which Bell Canada filed the arrangements in question for the Commission's approval. The Commission also noted a statement by one of the interveners, la Fédération des Commissions scolaires du Québec, that some of the arrangements were negotiated between the school boards and Bell Nexxia, that the construction of certain networks had been completed, that the networks were operational, and that a denial of the approval of the CSAs would be greatly disruptive to these communities and would cause dislocation of complex equipment and facility configurations at significant costs to the school board and municipalities concerned . With respect to Tariff Notice 6757, the Commission considered that as Bell was the sole bidder, certain customers would not have the benefit of dark fibre network service if the CSAs were denied.
[34] The Commission as a whole has experience in rate setting. The variety of opinions and concerns expressed in the decision under appeal is an indication that different members held different views on the industry, the market, the services to be provided, the policy objectives and their application in these circumstances. It is apparent that the Commission was greatly concerned about the effect of a denial of services on the communities concerned and the dislocation of complex equipment and facility configurations at a significant cost and to the detriment of school boards and municipalities in the relevant areas and that such concerns outweighed, in its view, Bell's failure to seek prior approval of these rates. These are considerations that a specialized board can entertain and weigh relative to other considerations. It is true that these considerations are not purely economic in the sense referred to by the appellant such as costs, investment, allowance for necessary working capital, rate of return, etc. These considerations, however, are part of the Commission's wide mandate under section 7, a mandate it alone possesses and are quite distinct from the grant of a rebate under paragraph 27(6)(b) of the Act, a power the Commission did not invoke.
[35] The Commission's choice of "exceptional circumstances" was not patently unreasonable. I therefore cannot find that they were irrelevant considerations which would amount to an error of law or jurisdiction.
[36] I would dismiss this appeal with costs.
(s) "Alice Desjardins"
J.A.
"I agree.
Robert Décary J.A."
"I agree.
J.D. Denis Pelletier J.A."
FEDERAL COURT OF APPEAL
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: A-398-04
Appeal from certain orders ofthe Canadian Radio-Television and Telecommunications Commission (the "Commission" or CRTC) in Telecom Decision CRTC 2004-20, Optical Fibre Service Arrangements, dated March 23, 2004 (the "Decision") by which the CRTC approved rates for optical fibre tariffs submitted by Bell Canada under Tariff Notices 6734 and 6757 (the "Tariffs").
STYLE OF CAUSE: Allstream Corp. V. Bell Canada et al
PLACE OF HEARING: Montreal
DATE OF HEARING: June 1st, 2005
REASONS FOR JUDGMENT: DESJARDINS J.A.
CONCURRED IN BY: DÉCARY J.A.
PELLETIER J.A.
DATED: July 8, 2005
APPEARANCES:
|
Michael Koch and Dina Graser |
FOR THE APPELLANT |
|
Neil Finkelstein and David Kidd
C. Christopher Johnston and Leslie Milton |
FOR THE RESPONDENTS
FOR THE INTERVENER |
SOLICITORS OF RECORD:
|
Blake, Cassels & Graydon LLP Toronto, Ontario
Blake, Cassels & Graydon LLP Ottawa, Ontario
Johnston & Bruchan LLP Ottawa, Ontario
|
FOR THE APPELLANT
FOR THE RESPONDENTS
FOR THE INTERVENER |