Globalive Decision Feb 4 2011 T-26-10 Judgment

8/7/2019 Globalive Decision Feb 4 2011 T-26-10 Judgment

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Federal Court Cour fédérale

Date: 20110204

Doc

ke

t: T-26-10

Ci tation: 2011 F C 130

Ottawa, Ontario, Februa ry 04, 2011

PRESENT: The Honourable Mr. Justice Hughes

B E T W E E N :

PUBLIC MOBILE INC .

Applicant

and

AT TORNEY GENERA L OF CANADA , GLOB ALI V E WIREL ESS MANA GEM ENT

CORP., B E L L C A N A D A , ROGERSCO MMUNIC ATI ONS INC ., SHAW

CO MMUNIC ATI ONS INC ., AND TELUSCOM MUNI CAT I ONS COMPANY

Respondents and

ALL I ANCE OF CANADI AN C I NEMA , TE LE VISION AND RADIO AR TISTS, COMMUNI CAT I ONS, ENERGY AND

PAPERWOR K ERS UNION OF C ANADA , ANDFRIENDS OF C ANADIAN BROA DCASTING

Interveners

RE ASONS FO R JUDGM ENT AND JUDGM ENT

[1] This is an application for judicial review brought under the provisions of section 18.1 of the

F e d e ral Cour ts Ac t , R.S. 1985, c. F-7 of a Decision dated December 10, 2009, made by the



Page: 2

Governor in Council pursuant to section 12(1) of the T e l ec o mm uni c a t ion s Ac t , S.C. 1993, c. 38. By

that Decision, the Governor in Council varied a Decision of the Canadian Radio-television and

Telecommunications Commission (CRTC), Telecom Decision CRTC 2009-678. The Governor in

Council determined that the Respondent Globalive Wireless Management Corp. met the

requirements of section 16 of the T e l ec o mm uni c a t ion s Ac t and is currently eligible to operate as a

telecommunications common carrier in Canada.

[2] For the reasons that follow, I find that the Applicant Public Mobile Inc. has standing to bring

this Application, that the Decision of the Governor in Council is quashed, that the Judgment will be

stayed for forty-five days and that costs are to be spoken to.

I NDEX

For convenience, these Reasons are indexed as follows:

T H E PA RT IES paragraphs 3 to 7

BA C K GRO UND FA CTS paragraphs 8 to 13

CRT C D E C ISIO N 2009-678 paragraphs 14 to 37

TH E GOV ERNOR IN COUNCIL’S DECISION paragraphs 38 to 59

ISSUES paragraphs 60 to 61

COURT’S SUPERVISORY FUNCTION – SEC TIO N 18.1 paragraphs 62 to 65

ISSUE 1 a) Standing paragraphs 66 to 79

ISSUE 1 b) Alternative Remedy paragraphs 80 to 83

ISSUE 2 a) The Telecommunications Act paragraphs 84 to 95

ISSUE 2 b) Findings of Fact paragraphs 96 to 119



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CONCLUSIONS paragraphs 120 to 121

COSTS paragraphs 122 to 123

JUDGMENT

TH E PARTIES

[3] The Applicant Public Mobile Inc. successfully participated in 2008 in an auction of radio

frequency spectrum conducted by the Minister of Industry. As a result it proposed to commence

operation as a telecommunications common carrier and to introduce wireless services sometime in

2010. Public Mobile received a letter from the CRTC stating that Public Mobile was required to

satisfy the CRTC as to whether it complied with the Canadian ownership requirements of the

T e l ec o mm uni c a t ion s Ac t . The Record indicates that as of the date of filing of the Record, Public

Mobile was engaged in hearings before the CRTC in this respect.

[4] The Respondent Attorney General of Canada represents the Governor in Council in these

proceedings.

[5] The Respondent Globalive Wireless Managements Corp. also successfully participated in

the auction of radio frequency spectrum in securing the right to use radio frequencies that would

permit it to provide wireless telecommunications services to the public subject to compliance with

the provisions of the T e l ec o mm uni c a t ion s Ac t . The CRTC held a hearing as to whether Globalive

complied with the Canadian ownership requirements of that Ac t . The CRTC, in its Decision,

determined that Globalive did not meet the provisions of section 16(1) of that Ac t in that it was



Page: 4

controlled by a non-Canadian. The Decision of the Governor in Council reversed that

determination.

[6] The Respondents Bell Canada, Rogers Communications Inc., Shaw Communications and

Telus Communications, like Public Mobile and Globalive, also successfully participated in the

auction of radio frequency spectrum. They were not required to demonstrate to the CRTC that they

met the requirements of the T e l ec o mm uni c a t ion s Ac t , presumably since they had already been

offering and providing wireless communication services in Canada. Only Telus appeared in these

proceedings. It made submissions at the hearing supportive of the positions taken by the Applicant

Public Mobile.

[7] The Alliance of Canadian Cinema, Television and Radio Artists; the Communications,

Energy and Paperworkers Union of Canada and; Friends of Canadian Broadcasting were each

granted intervener status in these proceedings. They were commonly represented by the same

Counsel who provided written submissions and addressed the Court at the hearing. Those

submissions were supportive of the positions taken by the Applicant Public Mobile.

BACKGROUND FACTS

[8] Long-distance wireless telecommunication in Canada is governed by federal statues,

including the T e l ec o mm uni c a t ion s Ac t , s upra , and the Radio c o mm uni c a t ion Ac t , R.S. 1985, c R-2

and its R e gula t ion s SOR/96-484. The T e l ec o mm uni c a t ion s Ac t has an unusual history. It can be

traced back to the Railway Ac t 1903, 3 Edw. VII, c. 58, although it has undergone several revisions,

consolidations and new enactments since that time.



Page: 5

[9] Wireless telecommunication is enabled by electronic devices which make use of the

electromagnetic spectrum. This spectrum encompasses a broad range of radio frequencies which are

treated as a public resource owned and administered by the federal government. The government

determines what frequencies may be used by what persons and for what purposes. Certain portions

of the frequency spectrum may become available for commercial use, such as by those offering cell

phone services, and have been sold by auction conducted by the federal government. The auction

relevant to the issues here commenced in the latter part of 2007 when the federal government

publicly announced the licensing framework for the issuance of spectrum licences in the Advanced

Wireless Services (AWS) band. The auction was held in mid 2008 and several parties were

successful in acquiring AWS spectrum licences. Among them were Globalive, Public Mobile, Bell,

Rogers, Shaw and Telus. Sums ranging up to over $900 million dollars were paid by various of

these parties for such licences. Globalive paid over $440 million for its licences.

[10] The successful bidders then had to obtain a licence from the Minister of Industry under the

provision of the Radio c o mm uni c a t ion Ac t and R e gula t ion s , s upra . Among the matters upon which

the Minister had to be satisfied was that the party was “Canadian owned and controlled” within the

meaning of section 10 of those R e gula t ion s . This section uses wording identical to section 16(3) of

the T e l ec o mm uni c a t ion s Ac t , which will be discussed later. The Minister did not hold hearings or

deliver a reasoned decision under the Radio c o mm uni c a t ion R e gula t ion s . A licence was simply

issued. All parties, including Public Mobile, Globalive, Telus and the other corporate Respondents,

received such a licence.



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[11] The second hurdle was for Public Mobile and Globalive to demonstrate to the CRTC that

each of them met the eligibility requirements of the T e l ec o mm uni c a t ion s Ac t and, in particular,

Canadian ownership and control. For this purpose, these parties had to provide information and

make submissions to the CRTC. The CRTC also invited submissions from other interested persons.

It conducted separate hearings for each of Globalive and Public Mobile Inc. in public and in

c a m e ra . On October 29, 2009, the CRTC released its Decision CRTC 2009-678 respecting

Globalive. It determined that Globalive was in fact controlled by a non-Canadian and, therefore, it

did not meet the requirements of section 16 of the T e l ec o mm uni c a t ion s Ac t , and was not currently

eligible to operate as a telecommunications common carrier.

[12] Section 12 of the T e l ec o mm uni c a t ion s Ac t provides that, within a stipulated period, the

Governor in Council may, on petition presented to it, or on its own motion, by order, vary or rescind

a CRTC Decision or send all or a portion of it back for reconsideration. In this case, the Governor in

Council on its own motion undertook a review of the CRTC Decision. Section 13 of the Ac t

requires that each province be given the opportunity to make submissions. This was done. The

parties, including Globalive and Public Mobile, made further written submissions to the Governor

in Council. Other submissions may have also been received. The Attorney General’s Counsel was

asked by the Applicant’s Counsel to produce copies of the documents referred to by the Governor in

Council in coming to its Decision. The Attorney General’s Counsel refused to do so.

[13] On December 10, 2009, the Governor in Council released its Decision P.C. 2009-2008, the

effect of which was to vary the CRTC Decision aforesaid, and to determine that Globalive was not



Page: 7

controlled in fact by a non-Canadian, and thus was eligible to operate in Canada as a

telecommunications common carrier. This is the Decision that is the subject of this judicial review.

C RT C DE C ISIO N 2009-678

[14] The CRTC released its Decision, 2009-678, respecting whether Globalive fell within the

provisions of the T e l ec o mm uni c a t ion s Ac t , on 29 October 2009. The CRTC determined that

Globalive did not meet the requirements set out in section 16 of the Ac t and was currently not

eligible to operate as a telecommunications common carrier. It concluded at paragraph 119 of its

Decision:

119 . In ligh t o f t h e abov e , t h e Co mm i ss ion f ind s t ha t Globaliv e i s c on t roll e d in f a c t by Ora s c o m , a non-Canadian . Th e r e f or e , t h e Co mm i ss ion c on c lud e s t ha t Globaliv e do e s no t m ee t t h e r e quir e m e n ts s e t ou t in s ec t ion 16 o f t h e Ac t and i s no t c urr e n t ly e ligibl e t o op e ra t e a s a t e l ec o mm uni c a t ion s c o mm on c arri e r .

[15] The evidence before the CRTC constituted documents and submissions from Globalive. It

appears that during the course of the proceedings, Globalive made certain amendments to some of

the documents, particularly those related to financing arrangements between it and an entity known

as Orascom Telecom Holding (Canada) Limited.

[16] At paragraph 30 of its Decision, the CRTC determined that Orascom was a non-Canadian

entity within the meaning of the Regulations. This finding was not challenged by the Governor in

Council.



Page: 8

[17] The matter of principal concern for the CRTC was whether Globalive met the requirements

of subsection 16(3) of the T e l ec o mm uni c a t ion s Ac t , which states:

Canadian own e r s hip and c on t rol

16 . (3) For t h e purpo s e s o f s ub s ec t ion (1) , a c orpora t ion i s Canadian-own e d and c on t roll e d i f

( a ) no t l e ss t han e igh t y p e r ce n t o f t h e m e m b e r s o f t h e board o f dir ec t or s o f t h e c orpora t ion ar e individual Canadian s ;

( b ) Canadian s b e n e f i c ially own , dir ec t ly or indir ec t ly , in t h e aggr e ga t e and o t h e rwi s e t han by way o f s ec uri t y only , no t l e ss t han eighty per cent of the corporation’s voting shar e s i ss u e d and ou tst anding; and

( c ) t h e c orpora t ion i s no t o t h e rwi s e c on t roll e d by p e r s on s t ha t ar e no t Canadian s .

[18] The first two of these provisions (a) and (b) are what are referred to as “legal control”. The

CRTC found that Globalive met these requirements. The Governor in Council did not vary that

finding. That finding was not challenged at the hearing before me.

[19] The point of controversy as between the CRTC and the Governor in Council, and as argued

before me at the hearing, was whether Globalive met the provision of subsection 16(3)(c) of the

T e l ec o mm uni c a t ion s Ac t . This provision is referred to as “control in fact”. The CRTC began its

discussion as to this point at paragraphs 34 and 35 with reference to what has been called the

Canadian Airlin e s decision. The Governor in Council acknowledged that this decision was pertinent



Page: 9

and no challenge in that respect was raised at the hearing before me. The CRTC wrote at paragraphs

34 and 35 of its Decision:

Con t rol in fa c t

34 . As no t e d in Broad c a st ing D ec i s ion 2007-429 ( t h e CanW e st 3

d ec i s ion) and appli e d in Broad c a st ing D ec i s ion 2008-69 ( t h e BCE 4 d ec i s ion) , t h e Co mm i ss ion c on s id e r s t ha t t h e appropria t e t e st f or a ss e ss ing c on t rol in f a c t wa s s e t ou t in t h e Canadian Airlin e s d ec i s ion 5 o f t h e Na t ional Tran s por t a t ion Ag e n c y , now t h e Canadian Tran s por t a t ion Ag e n c y . In t ha t d ec i s ion , t h e Na t ional Tran s por t a t ion Ag e n c y f ound t ha t :

…There is no one standard definition of control in

f a c t bu t g e n e rally , i t c an b e vi e w e d a s t h e ongoing pow e r

or abili t y

,

wh e t

h e r e x e r c i s e

d or no t ,

t o d

e t e r m

in e

or d ec

id e t h e st ra t e gi c d ec i s ion- m a k ing a c t ivi t i e s o f an e n t e rpri s e . I t

c an al s o b e vi e w e d a s t h e abili t y t o m anag e and run t h e day- t o-day op e ra t ion s o f an e n t e rpri s e . Minori t y s har e hold e r s and t h e ir d e s igna t e d dir ec t or s nor m ally hav e t h e abili t y t o in f lu e n ce a c o m pany a s do o t h e r s s u c h a s ban ke r s and e m ploy ee s . Th e in f lu e n ce , whi c h c an b e e x e r c i s e d e i t h e r po s i t iv e ly or n e ga t iv e ly by way o f v e t o righ ts , n ee d s t o b e do m inan t or d e t e r m ining , how e v e r , f or i t t o t ran s la t e in t o c on t rol in f a c t .

35 . Th e Na t ional Tran s por t a t ion Ag e n c y w e n t on t o s ay t ha t t h e d e t e r m ina t ion o f c on t rol in f a c t t urn s on t h e c on s id e ra t ion o f individual f a c t or s whi c h , t a ke n t og e t h e r , m ay r e s ul t in a m inori t y s har e hold e r e x e r t ing c on t rol:

In all pr e viou s Canadian own e r s hip r e vi e w s and e nquiri e s , t h e Ag e n c y ha s no t only loo ke d a t individual arrang e m e n ts b e t w ee n t h e s har e hold e r s and t h e ai r c arri e r t o d e t e r m in e wh e r e c on t rol in f a c t li e s bu t ha s al s o e xa m in e d all arrang e m e n ts t a ke n t og e t h e r t o m a ke t h e d e t e r m ina t ion . Individual ar rang e m e n ts b e t w ee n t h e m inori t y s har e hold e r and t h e airlin e c an e a c h r e s ul t in t h e m inori t y s har e hold e r e x e r t ing a d e gr ee o f in f lu e n ce ov e r t h e c o m pany . Su c h influ e n ce , c on s id e r e d on an individual arrang e m e n t ba s i s , may no t b e d e t e rmining and may no t r e s ul t in t h e minori t y s har e hold e r b e ing abl e t o e x e r t c on t rol ov e r t h e airlin e . All s u c h influ e n ce t ak e n t og e t h e r , how e v e r , may r e s ul t in t h e minori t y s har e hold e r b e ing

http://www.crtc.gc.ca/eng/archive/2007/db2007-429.htm










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abl e t o e x e r t a d e gr ee of influ e n ce whi c h t ran s la t e s in t o c on t rol . [ e m pha s i s add e d]

[20] At paragraphs 36 and 37 of its Decision, the CRTC acknowledged that a careful

consideration of the facts in a particular case was required, and enumerated four major matters that

it would consider:

36 . A d e t e r m ina t ion o f c on t rol in f a c t n ece ss ari ly involv e s c ar e f ul c on s id e ra t ion o f t h e f a c ts in a par t i c ular c a s e . Acc ordingly , pa st Co mm i ss ion d ec i s ion s wi t h r e s p ec t t o own e r s hip and c on t rol ar e no t binding or d e t e r m ina t iv e . How e v e r , t h e y ar e u s e f ul in providing guidan ce f or t h e in t e rpr e t a t ion and appli c a t ion o f t h e t e st f or c on t rol in f a c t .

37 . Ba s e d on an analy s i s o f al l t h e in f or m a t ion s ub m i tt e d in t h e c our s e o f t hi s pro cee ding , t h e Co mm i ss ion c on s id e r s t ha t t h e f ollowing m a tt e r s rai s e c on ce rn s r e la t ing t o c on t rol in f a c t :

c orpora t e gov e rnan ce ; s har e hold e r righ ts ;

c o mm e r c ial arrang e m e n ts b e t w ee n Globaliv e and non- Canadian s ; and

ec ono m i c par t i c ipa t ion o f Globaliv e and non-Canadian s .

[21] As to the first of these four matters, corporate governance, the CRTC determined that

consideration of three points was required: composition of boards of directors, quorum provisions,

and the appointment of officers. At paragraph 38 of its Decision, it wrote:

Corpora t e gov e rnan ce

38 . As no t e d in t h e BC E and CanW e st d ec i s ion s , s p ec i f i c c orpora t e gov e rnan ce arrang e m e n ts m ay hav e s ub st an t ial i m pli c a t ion s f or c on

t rol in

f a c t

.

In t h e

pr e s e

n t c a s e

,

t h e

r e l e van

t arrang

e m e n ts

in c lud e t ho s e wi t h r e s p ec t t o t h e c o m po s i t ion o f t h e board s o f dir ec t or s , quoru m provi s ion s , and t h e appoin t m e n t o f o ff i ce r s .

[22] On the first point, composition of the boards of directors, the CRTC analyzed the facts and

determined, at paragraph 45, that certain amendments were required to satisfy it on this point:



Page: 11

45 . In t h e pr e s e n t c a s e , t h e Co mm i ss ion c on s id e r s t ha t t h e r e vi s e d board st ru c t ur e , in c luding t h e rol e and c o m po s i t ion o f t h e s e l ec t ion c o mm i tt ee , do e s no t e n s ur e t ha t t h e no m in ee s o f t h e Canadian s har e hold e r ar e s u ff i c i e n t in nu m b e r t o o ffs e t t h e in f lu e n ce o f Ora s c o m , a non-Canadian s har e hold e r . In ord e r t o addr e ss t hi s

poin t ,

Globaliv e

would hav e t o a

m e nd i

ts S har

e hold

e r s '

Agr ee m e

n t and c orpora t e do c u m e n ts s u c h t ha t on e a c h o f t h e t wo board s , AAL

no m ina t e s f iv e dir ec t or s , Ora s c o m no m ina t e s f our dir ec t or s , and AAL and Ora s c o m e a c h no m ina t e on e Ind e p e nd e n t Dir ec t or . Th e r e would b e no f ur t h e r n ee d f or a s e l ec t ion c o mm i tt ee .

[23] On the second point, quorum provisions, the CRTC concluded at paragraph 49 that provided

amendments were made as requested in paragraph 45, the quorum provisions could be satisfied:

Commission’s analysis and determination

49 . Provid e d t ha t t h e board s ar e r ec on st i t u t e d a cc ording t o paragraph 45 abov e , t h e Co mm i ss ion c on s id e r s t ha t t h e r e vi s e d quoru m provi s ion s e n s ur e t ha t t h e nu m b e r o f no m in ee s o f t h e Canadian s har e hold e r i s s u ff i c i e n t t o o ffs e t t h e in f lu e n ce o f Ora s c o m .

[24] On the third point, appointment of officers, the CRTC determined that it had no concern. At

paragraph 53 it wrote:

53 . Th e Co mm i ss ion ha s no c on ce rn wi t h r e gard t o t h e appoin t m e n t o f o ff i ce r s und e r t h e r e vi s e d st ru c t ur e .

[25] The second major matter addressed by the CRTC was shareholders’ rights. In this regard,

commencing at paragraph 54 of its Decision, the CRTC dealt with liquidity rights, eligible

purchasers and veto rights. It concluded as to the first, liquidity rights, at paragraph 59 of its

Decision that, even in their revised form, liquidity rights provided an indication of Orascom’s

influence over the venture:

Co mm i ss ion ' s analy s i s and d e t e r m ina t ion



Page: 12

59 . Th e Co mm i ss ion c on s id e r s t ha t t h e liquidi t y righ ts in t h e r e vi s e d do c u m e n ts ar e an i m prov e m e n t on t h e array o f righ ts originally gran t e d t o Ora s c o m a s m inori t y vo t ing s har e hold e r . N e v e r t h e l e ss , t h e liquidi t y righ ts , e v e n in t h e ir r e vi s e d f or m , provid e an indi c a t ion o f Ora s c o m ' s in f lu e n ce ov e r t h e v e n t ur e . Th e s p ec i f i c a t ion o f a f loor

pri ce

and t h e

i m

po s i t ion o

f a

c ap on

t h e

pro cee

d s

g e n e ra

t e d in

t h e e v e n t t ha t AAL s e ll s i ts s har e s ar e in c on s i st e n t wi t h t h e r e la t iv e

vo t ing in t e r e sts o f t h e s har e hold e r s .

[26] On the second point, eligible purchasers, the CRTC concluded at paragraph 64 of its

Decision that certain amendments were required:

64 . Acc ordingly , t h e Co mm i ss ion c on s id e r s t ha t Globaliv e s hould a m e nd t h e d e f ini t ion o f S t ra t e gi c Co m p e t i t or t o in c lud e only e n t i t i e s

whi c h

,

t a ke

n t og

e t h e r wi

t h

t h e ir a

ff ilia

t e s ,hold

m

or e t han a 10 p e r ce n t s har e o f t h e Canadian wir e l e ss m ar ke t on a p e r-

s ub s c rib e r ba s i s .

[27] On the third point, veto rights, the CRTC concluded at paragraphs 71 and 72 of its Decision

that further amendments were required:


71 . Th e Co mm i ss ion no t e s t ha t t h e m odi f i c a t ion s m ad e t o t h e v e t o righ ts ar e s ub st an t ia l . Th e addi t ion o f an ordinary c our s e o f bu s in e ss e x ce p t ion i s an i m por t an t st e p in allaying c on ce rn s t ha t t h e v e t o righ ts gran t Ora s c o m in f lu e n ce ov e r t h e op e ra t ion o f t h e wir e l e ss bu s in e ss . How e v e r , t h e Co mm i ss ion c on s id e r s t ha t t h e valu e o f t h e s p ec t ru m i s no t an appropria t e f ounda t ion on whi c h t o ba s e t h e f iv e p e r ce n t v e t o t hr e s hold . Th e Co mm i ss ion c on s id e r s t ha t Globaliv e ' s e n t e rpri s e valu e i s a m or e appropria t e m e a s ur e .

72 . Acc ordingly , t h e m on e t ary t hr e s hold f or v e t o e s s hould b e s e t a t f iv e p e r ce n t o f Globaliv e ' s e n t e rpri s e valu e a s d e t e r m in e d by i ts board e v e ry t wo y e ar s , ba s e d on a t hird-par t y valua t ion .

[28] The third major matter addressed by the CRTC was commercial arrangements between

Globalive and non-Canadians. In that respect, the CRTC considered a Technical Services

Agreement (TSA) and a Trademark Agreement.



Page: 13

[29] With respect to the Technical Services Agreement (TSA), the CRTC determined that such

an agreement resulted in continued influence by Orascom over operating and strategic decisions

related to Globalive’s network. It wrote at paragraphs 82 to 84 of its Decision:


82 . Th e Co mm i ss ion a cce p ts t ha t t h e T S A i s a dual-purpo s e agr ee m e n t in t ha t i t allow s Globaliv e a cce ss t o Ora s c o m ' s c on s id e rabl e wir e l e ss op e ra t ing e xp e r t i s e , in c luding a cce ss t o i ts global , pr e f e rr e d pur c ha s ing pow e r , and i t provid e s Ora s c o m wi t h ce r t ain f inan c ial b e n e f i ts . Th e Co mm i ss ion no t e s t ha t und e r t h e r e vi s e d T S A, Globaliv e m u st pay a f ix e d f ee t o Ora s c o m irr e s p ec t iv e

o f wh

e t h e r

s e rvi

ce s ar

e r e nd

e r e d

,

and i f

i t t e

r m

ina t e s

t h e

agr ee m e

n t , i t m u st pay Ora s c o m e i t h e r an a m oun t t o b e n e go t ia t e d or $100

m illion l e ss f ee s alr e ady paid , d e p e nding on t h e c ir c u m st an ce s .

83 . Mor e ov e r , t h e Co mm i ss ion no t e s t ha t t h e T S A provid e s Globaliv e wi t h b e n e f i ts t ha t op e ra t e a s ke y d e t e r m inan ts o f i ts s u cce ss . I t i s t hi s r e lian ce by Globaliv e on Ora s c o m t ha t d e f in e s t h e ir r e la t ion s hip and allow s Ora s c o m t h e oppor t uni t y t o in f lu e n ce a wid e rang e o f op e ra t ing and st ra t e gi c d ec i s ion s .

84 . Giv e n t h e s igni f i c an t b e n e f i ts Globaliv e d e riv e s f ro m t h e T S A, t h e Co mm i ss ion i s o f t h e vi e w t ha t Globaliv e will m ain t ain t h e T S A f or t h e f or e s ee abl e f u t ur e . Con s e qu e n t ly , t h e Co mm i ss ion c on s id e r s t ha t Ora s c o m will c on t inu e t o hav e in f lu e n ce ov e r op e ra t ing and st ra t e gi c d ec i s ion s r e la t e d t o Globaliv e ' s n e t wor k .

[30] With respect to the Trademark Agreement (WIND) the CRTC determined that it provided

Orascom with influence over Globalive. It wrote at paragraph 89:

89 . How e v e r , t h e Co mm i ss ion f ind s t ha t Globaliv e ' s adop t ion and u s e o f a t rad e m ar k b e longing t o an Ora s c o m a ff ilia t e do provid e Ora s c o m (or i ts c on t rolling s har e hold e r) wi t h in f lu e n ce ov e r Globaliv e b ec au s e Ora s c o m ha s t h e pow e r t o li m i t how t h e brand c an b e u s e d .



Page: 14

[31] The final major matter considered by the CRTC was economic participation of Globalive

and non-Canadians. On this matter, the CRTC considered both equity participation and financing

arrangements.

[32] As to equity participation, the CRTC determined that while there was an avenue of

influence, it was not sufficient to convert that influence to control. It wrote at paragraphs 90 and 94:

E c onomi c par t i c ipa t ion of Globaliv e and non-Canadian s

A . Equi t y par t i c ipa t ion

90 .

Th e

ov e rall

e qui

t y po

s i t ion

s o f t h e s har

e hold

e r s

ar e t h e s a m e

und e r bo t h t h e pr e -h e aring and t h e r e vi s e d st ru c t ur e s . Th e c o m bina t ion o f Ora s c o m ' s vo t ing and non-vo t ing s har e s in GIHC t ran s la t e s in t o 65 .1 p e r ce n t o f Globaliv e ' s t o t al e qui t y .

. . .

94 . Ora s c o m ' s e qui t y par t i c ipa t ion i s 65 .1 p e r ce n t , whi c h i s c on s i st e n t wi t h l e v e l s o f non-Canadian inv e st m e n t pr e viou s ly approv e d by t h e Co mm i ss ion .9 Th e Co mm i ss ion i s o f t h e vi e w t ha t , whil e in t h e c ir c u m st an ce s o f t hi s c a s e t h e l e v e l o f e qui t y par t i c ipa t ion provid e s an av e nu e f or in f lu e n ce , i t i s no t s u ff i c i e n t on i ts own t o c onv e r t t ha t in f lu e n ce in t o c on t rol .

[33] As to the financing arrangements, the CRTC devoted much attention to this matter in its

Decision and determined, at paragraph 112, that the high level of debt in the hands of a non-

Canadian was unacceptable. The CRTC began its discussion at paragraphs 95 and 96 of its

Decision:

B . Finan c ing arrang e m e n ts

95 . Ora s c o m i s t h e s our ce o f t h e va st m ajori t y o f Globaliv e ' s d e b t , having advan ce d $442 .4 m ill ion by way o f a S p ec t ru m Loan Agr ee m e n t da t e d 31 July 2008 and c o mm i tt e d a f ur t h e r $66 m illion und e r an Op e ra t ing Loan Agr ee m e n t da t e d 23 Mar c h 2008 , f or a t o t al c o mm i t m e n t o f $508 .4 m illion ( c oll ec t iv e ly , t h e Ora s c o m loan agr ee m e n ts ) . In addi t ion t o t h e Ora s c o m loan s , GCC , a wholly-



Page: 15

own e d s ub s idiary o f GIHC , c o mm i tt e d $400 ,000 t o Globaliv e by way o f a Loan Agr ee m e n t da t e d 14 April 2008 .

96 . Acc ording t o t h e pr e -h e aring loan do c u m e n ts , t h e loan s w e r e t o b e du e in f ull in Augu st 2011 , in c luding an ini t ial t e r m and e x t e

n s ion

s .

In t e

r e st

wa s s e t

a t

a ra t e

o f

LIBOR

10

plu s

12 p e r ce

n t f or t h e ini t ia l t e r m , LIBOR plu s 15 p e r ce n t f or t h e f ir st e x t e n s ion , and

LIBOR plu s 18 p e r ce n t f or t h e s ub s e qu e n t e x t e n s ion .

[34] The CRTC’s determination as to the financing arrangements led it to conclude that they

were unacceptable. It wrote at paragraphs 104 to 112:


104 .

Th e

Co mm

i ss

ion r ec

ogniz e s

t ha

t t h e r e

ar e

no st

a t u t ory r e st ri c t ion s on t h e a m oun t o f d e b t t ha t a non-Canadian c an provid e

t o a t e l ec o mm uni c a t ion s c o mm on c arri e r . How e v e r , d e b t l e v e l s and d e b t f inan c ing arrang e m e n ts c an b e i m por t an t indi c ia o f wh e r e in f lu e n ce li e s . As st a t e d in t h e CanW e st d ec i s ion , t h e c on ce n t ra t ion o f d e b t and e qui t y in t h e hand s o f a s ingl e f or e ign e n t i t y c an c r e a t e an oppor t uni t y f or undu e in f lu e n ce ov e r t h e v e n t ur e by t ha t non- Canadian e n t i t y:

Th e Co mm i ss ion wa s c on ce rn e d t ha t i f a Gold m an , S a c h s & Co . e n t i t y wa s t h e l e ad s yndi c a t or wi t h r e s p ec t t o t h e d e b t , or i f i t w e r e t h e m ajor d e b t hold e r und e r any o f t h e l e nding agr ee m e n ts , t hi s t og e t h e r wi t h G S CP ' s e qui t y in t e r e st c ould r e s ul t in undu e in f lu e n ce ov e r t h e v e n t ur e by a non-Canadian .12

105 . In t h e c a s e o f t h e CanW e st d ec i s ion , t h e non-Canadian s har e hold e r holding 65 p e r ce n t o f t h e e qui t y wa s al s o providing a s igni f i c an t a m oun t o f t h e d e b t . Prior t o t h e oral pha s e o f t ha t pro cee ding , t h e Co mm i ss ion e xpr e ss e d c on ce rn r e garding t h e propo s e d l e v e l o f d e b t , and during t h e oral pha s e , CanW e st c on f ir m e d t ha t t h e p e r ce n t ag e o f t h e d e b t h e ld by t h e non-Canadian inv e st or had b ee n r e du ce d t o l e ss t han 20 p e r ce n t and t ha t Gold m an , S a c h s & Co . would no t b e l e ad s yndi c a t or .

106 . In t h e pr e s e n t c a s e , Ora s c o m , t h e s igni f i c an t non-Canadian e qui t y hold e r , ha s provid e d approxi m a t e ly 99 p e r ce n t o f Globaliv e ' s c urr e n t d e b t , e x c luding s o m e t hird-par t y v e ndor f inan c ing , whi c h r e pr e s e n ts t h e va st m ajori t y o f Globaliv e ' s t o t al f inan c ing .



Page: 16

107 . Th e c on ce n t ra t ion o f d e b t and e qui t y in t h e hand s o f a s ingl e e n t i t y c an c r e a t e an oppor t uni t y f or in f lu e n ce . In c ir c u m st an ce s s u c h a s t h e pr e s e n t , wh e r e a c o m pany i s h e avily d e b t f inan ce d , t hi s oppor t uni t y c an t ran s la t e in t o s igni f i c an t in f lu e n ce ov e r t h e v e n t ur e by t h e d e b t hold e r .

108 . Th e m agni t ud e o f t h e d e b t provid e d by Ora s c o m , t h e r e la t iv e d e b t t o e qui t y f inan c ing , and t h e f a c t t ha t t h e d e b t i s c on ce n t ra t e d in t h e hand s o f a s ingl e e n t i t y c au s e t h e Co mm i ss ion c on ce rn wi t h t h e loan s a s a s our ce o f Ora s c o m in f lu e n ce . Th e m odi f i c a t ion s t o t h e c ov e nan ts and t e r m s o f t h e loan s do li tt l e t o r e du ce t hi s c on ce rn . Fur t h e r m or e , t h e Co mm i ss ion no t e s t ha t c ov e nan ts s i m ilar t o t ho s e d e l e t e d f ro m t h e Ora s c o m loan agr ee m e n ts ar e st il l c on t ain e d in S c h e dul e A t o t h e S har e hold e r s ' Agr ee m e n t .

109 . In addi t ion t o t h e abov e -no t e d c on ce rn s , t h e Co mm i ss ion c on

s id

e r s t ha

t a

c o m

pany ' s

inabili t y

t o ob

t ain

f inan

c ing

f ro m

t hird- par t y s our ce s m ay al s o b e r e l e van t t o t h e i ss u e o f c on t rol in f a c t . As

no t e d in t h e Uni t e l d ec i s ion , " In ce r t ain c ir c u m st an ce s i t m ay b e po ss ibl e t o c on c lud e t ha t a non-Canadian s har e hold e r or l e nd e r m ay hav e a c on s id e rabl e a m oun t o f l e v e rag e , and e v e n c on t rol , ov e r a c a s h- st rapp e d t e l ec o mm uni c a t ion s c o mm on c arri e r . " 13

110 . During t h e oral pha s e o f t h e publi c h e aring , Globaliv e no t e d t ha t Ora s c o m and AAL had plann e d t o r e ly h e avily on e x t e rnal f inan c ing t o c api t aliz e Globaliv e . How e v e r , f ollowing c o m pl e t ion o f t h e AW S au c t ion , Globaliv e ' s e ff or ts t o ob t ain e x t e rnal f inan c ing t o r e pla ce Ora s c o m ' s loan s c oin c id e d wi t h a m ajor down t urn in t h e c r e di t m ar ke ts . Ora s c o m indi c a t e d t ha t i t i s no t in t e r e st e d in r e m aining Globaliv e ' s m ajor l e nd e r and i s c o mm i tt e d t o t ran sf e rring i ts loan s t o an ou ts id e par t y . How e v e r , a t t hi s t i m e , Ora s c o m r e m ain s t h e m ajor s our ce o f f inan c ing f or Globaliv e in t h e n e ar t e r m .

111 . Globaliv e st a t e d during t h e oral pha s e o f t h e publi c h e aring t ha t t h e c api t al inv e st m e n t r e quir e d f or a na t ional wir e l e ss st ar t -up i s w e ll ov e r $1 billion . Having rai s e d approxi m a t e ly $600 m illion , Globaliv e will r e quir e s igni f i c an t f ur t h e r c api t al in ord e r t o c o m pl e t e i ts n e t wor k rollou t . Th e Co mm i ss ion c on s id e r s t ha t Globaliv e ' s d e p e nd e n ce upon Ora s c o m f or f inan c ing m ay w e ll in c r e a s e in t h e n e ar t e r m , giv e n i ts inabili t y t o da t e t o a tt ra c t s ub st an t ia l t hird-par t y f inan c ing .

112 . I t i s t h e Co mm i ss ion ' s vi e w t ha t s u c h a s igni f i c an t c on ce n t ra t ion o f d e b t in t h e hand s o f Ora s c o m , r e pr e s e n t ing t h e va st m ajori t y o f Globaliv e ' s e n t e rpri s e valu e , s e rv e s t o provid e Ora s c o m



Page: 17

wi t h l e v e rag e ov e r Globaliv e . Giv e n Ora s c o m ' s e qui t y in t e r e st in Globaliv e , s u c h a high l e v e l o f d e b t in t h e hand s o f a non-Canadian i s una cce p t abl e .

[35]

The conclusion reached by the CRTC was set out at paragraphs 113 to 119 of its Decision. It

determined that each of the factors considered may lead to an avenue for influence, when combined

they translated into the ability to control in fact (see section 16(3)(c) of the T e l ec o mm uni c a t ion s Ac t ,

s upra ). It wrote:

Con c lu s ion

113 . Th e Co mm i ss ion c on s id e r s t ha t e a c h o f t h e f a c t or s addr e ss e d

abov e

provid e s

Ora s c

o m ,

a non-Canadian ,

wi t h an av

e nu

e f or in f lu e n ce ov e r Globaliv e . Whil e di s para t e poin ts o f in f lu e n ce m ay no t

individually r e s ul t in c on t rol , wh e n c o m bin e d t h e y c an t ran s la t e in t o t h e abili t y t o c on t rol in f a c t .

114 . As no t e d abov e , c on t rol in f a c t i s only e st abli s h e d wh e r e in f lu e n ce i s do m inan t or d e t e r m ining . In par t i c ular , t h e i ss u e i s wh e t h e r or no t t h e r e i s an ongoing pow e r or abili t y , wh e t h e r e x e r c i s e d or no t , t o d e t e r m in e t h e st ra t e gi c d ec i s ion- m a k ing a c t ivi t i e s o f a c orpora t ion or t o do m ina t e t h e abili t y t o m anag e and run i ts day- t o-day op e ra t ion s .

115 . Globaliv e ha s m ad e nu m e rou s s igni f i c an t c hang e s t o i ts c orpora t e st ru c t ur e and do c u m e n ts in ord e r t o addr e ss m any o f t h e Co mm i ss ion ' s c on ce rn s . In t hi s d ec i s ion , t h e Co mm i ss ion ha s id e n t i f i e d addi t ional c hang e s t ha t ar e n ece ss ary t o addr e ss ce r t ain r e m aining c on ce rn s wi t h r e s p ec t t o Ora s c o m ' s in f lu e n ce ov e r Globaliv e . Th e s e c hang e s r e la t e t o t h e c o m po s i t ion o f t h e board s o f dir ec t or s , liquidi t y righ ts , and t h e t hr e s hold f or v e t o righ ts .

116 . No t wi t h st anding t h e s e addi t ional c hang e s , s igni f i c an t c on ce rn s r e m ain wi t h r e s p ec t t o t h e c on t rol in f a c t o f Globaliv e by Ora s c o m . In t h e pr e s e n t c a s e , t h e r ec ord s how s t ha t Ora s c o m , a non- Canadian

hold s t wo- t hird s o f Globaliv e ' s e qui t y; i s t h e prin c ipal s our ce o f t ec hni c al e xp e r t i s e ; and provid e s Globaliv e wi t h a cce ss t o an e st abli s h e d wir e l e ss t rad e m ar k .



Page: 18

117 . Giv e n t h e c hang e s t ha t w e r e m ad e during t h e publi c h e aring and pr e s u m ing t ha t t h e addi t ional c hang e s t ha t hav e b ee n id e n t i f i e d in t hi s d ec i s ion ar e m ad e , t h e s e e l e m e n ts t a ke n t og e t h e r , whil e s igni f i c an t , would no t c au s e t h e Co mm i ss ion , in t h e c ir c u m st an ce s o f t hi s c a s e , t o r e a c h a d ec i s ion t ha t Ora s c o m i s in a po s i t ion o f

in f lu

e n ce

t ha

t i s

bo t h do

m

inan t

and d e t e

r m

ining .

118 . How e v e r , wh e n t h e s e l e v e r s ar e c on s id e r e d in c on ce r t wi t h Ora s c o m ' s provi s ion o f t h e va st m ajori t y o f Globaliv e ' s d e b t f inan c ing , t h e Co mm i ss ion f ind s t ha t i t c anno t c on c lud e t ha t Globaliv e i s no t c on t roll e d in f a c t by a non-Canadian , t o wi t Ora s c o m . In o t h e r word s , t h e Co mm i ss ion f ind s t ha t Ora s c o m ha s t h e ongoing abil i t y t o d e t e r m in e Globaliv e ' s st ra t e gi c d ec i s ion- m a k ing a c t ivi t i e s .

119 . In ligh t o f al l t h e abov e , t h e Co mm i ss ion f ind s t ha t Globaliv e

i s c on

t roll

e d in

f a c t

by Ora s c

o m ,

a non-Canadian .

Th e r e f

or e ,

t h e Co mm i ss ion c on c lud e s t ha t Globaliv e do e s no t m ee t t h e

r e quir e m e n ts s e t ou t in s ec t ion 16 o f t h e Ac t and i s no t c urr e n t ly e ligibl e t o op e ra t e a s a t e l ec o mm uni c a t ion s c o mm on c arri e r .

[36] As to paragraph 115 above, the CRTC issued an erratum on 4 November 2009, in which the

words “liquidity rights” near the end of that paragraph, were replaced with the words “Eligible

Purchasers” so as to read:

115 . Globaliv e ha s m ad e nu m e rou s s igni f i c an t c hang e s t o i ts c orpora t e st ru c t ur e and do c u m e n ts in ord e r t o addr e ss m any o f t h e Co mm i ss ion ' s c on ce rn s . In t hi s d ec i s ion , t h e Co mm i ss ion ha s id e n t i f i e d addi t ional c hang e s t ha t ar e n ece ss ary t o addr e ss ce r t ain r e m aining c on ce rn s wi t h r e s p ec t t o Ora s c o m ' s in f lu e n ce ov e r Globaliv e . Th e s e c hang e s r e la t e t o t h e c o m po s i t ion o f t h e board s o f dir ec t or s , Eligibl e Pur c ha s e r s , and t h e t hr e s hold f or v e t o righ ts .

[37] It was this Decision that the Governor in Council, on its own motion, undertook to review.

TH E GOV ERNOR I N COUNCI L’S DECISION

[38] On December 10, 2009 the Privy Council released the Decision of the Governor in Council,

P.C. 2009-2008. This Decision comprised two parts. The first four pages set out a series of



Page: 19

“Whereases” with a concluding “Therefore”. Attached as a Schedule were twenty-four paragraphs

which amended several paragraphs of the CRTC Decision in various respects. The result was, as set

out in paragraph 23 of the Schedule, to vary the CRTC Decision and to determine that Globalive

was not controlled in fact by Orascom, a non-Canadian, and that Globalive was eligible to operate

as a telecommunications common carrier. Paragraph 23 states:

23 . In ligh t o f t h e abov e , Globaliv e i s no t c on t roll e d in f a c t by Ora s c o m , a non-Canadian . Th e r e f or e , Globaliv e m ee ts t h e r e quir e m e n ts s e t ou t in s ec t ion 16 o f t h e Ac t and i s c urr e n t ly e ligibl e t o op e ra t e a s a t e l ec o mm uni c a t ion s c o mm on c arri e r .

[39]

Section 12(8) of the T e l ec

o mm

uni c a t ion

s Ac t

stipulates that when the Governor in Council

makes an order such as this, reasons shall be set out. Mr. Heintzman, Counsel for Globalive,

described the structure of the Governor in Council’s document as being one in which the section 12

Order is set out in the “Whereas” pages and the decision under section 16 as to whether Globalive is

in fact not controlled by non-Canadians is set out in the Schedule. Mr. MacKinnon, for the Attorney

General, argued that both the “Whereas” portion and the Schedule can be said to constitute the

Order and the Reasons. Counsel for the Applicant and those supporting the Applicant were puzzled

as to what portion of these documents can be said to be the Reasons.

[40] I prefer to consider the first four “Whereas” pages as being akin to what is sometimes

referred to in this Court as a “speaking Order”, such that the “Whereas” paragraphs can be

considered to be “reasons”. These Reasons may be considered to be supplemented by the Schedule.



Page: 20

[41] On the first page of the “Whereas” portion, the Governor in Council acknowledged that the

CRTC had identified four areas of concern with respect to control in fact:

Wh e r e a s , in t h e D ec i s ion , t h e Co mm i ss ion id e n t i f i e d f our

ar e a s

o f c on

ce rn r

e la

t ing

t o

c on

t rol in

f a c t

,

na m e

ly ,

c orpora

t e gov e rnan ce , s har e hold e r righ ts , c o mm e r c ial arrang e m e n ts and

ec ono m i c par t i c ipa t ion o f non-Canadian s .

[42] The final paragraph of the first page stated that the debt financing was the main reason that

the CRTC found that Globalive did not meet the Canadian ownership and control requirements:

Wh e r e a s , in t h e D ec i s ion , t h e Co mm i ss ion c on c lud e d t ha t despite the changes made to Globalive’s corporate structure and

do c u m e

n ts

and provid e d

t h e

addi t ional r

e quir

e d

c hang

e s ar

e m

ad e ,

t h e l e v e r s o f in f lu e n ce by a non-Canadian , na m e ly , t h e f a c t t ha t i t hold s 65% o f t h e e qui t y f inan c ing , i s t h e prin c ipal s our ce o f t ec hni c al e xp e r t i s e and provid e s a cce ss t o an e st abli s h e d wir e l e ss t rad e m ar k , would no t hav e c au s e d i t t o c on c lud e t ha t Globaliv e did no t m ee t t h e Canadian own e r s hip and c on t rol r e quir e m e n ts i f i t wa s no t f or t h e f a c t t ha t t h e s a m e non-Canadian e n t i t y i s providing t h e va st m ajori t y of Globalive’ s d e b t f inan c ing;

[43] At the top of the second page, the Governor in Council stated what it considered to be a

number of Canadian telecommunications policy objectives:

Wh e r e a s Canadian t e l ec o mm uni c a t ion s poli c y obj ec t iv e s in c lud e r e nd e ring r e liabl e and a ff ordabl e t e l ec o mm uni c a t ion s s e rvi ce s o f high quali t y a cce ss ibl e t o Canadian s in bo t h urban and rural ar e a s in all r e gion s o f Canada , pro m o t ing t h e own e r s hip and c on t rol o f Canadian c arri e r s by Canadian s and e nhan c ing t h e e ff i c i e n c y and c o m p e t i t iv e n e ss , a t t h e na t ional and in t e rna t ional l e v e l s , o f Canadian t e l ec o mm uni c a t ion s ;



Page: 21

[44] This appears to reflect that which is set out in subsections 7(b), (c) and (d) of the

T e l ec o mm uni c a t ion s Ac t :

Obj ec t iv e s

7 . I t i s h e r e by a ff ir m e d t ha t t e l ec o mm uni c a t ion s p e r f or m s an essential role in the maintenance of Canada’s identity and

s ov e r e ign t y and t ha t t h e Canadian t e l ec o mm uni c a t ion s poli c y ha s a s i ts obj ec t iv e s

. . .

( b ) t o r e nd e r r e liabl e and a ff ordabl e t e l ec o mm uni c a t ion s s e rvi ce s o f high quali t y a cce ss ibl e t o Canadian s in bo t h urban and rural ar e a s in all r e gion s o f Canada;

( c ) t o e nhan ce t h e e ff i c i e n c y and c o m p e t i t iv e n e ss , a t t h e na t ional and in t e rna t ional l e v e l s , o f Canadian t e l ec o mm uni c a t ion s ;

( d ) t o pro m o t e t h e own e r s hip and c on t rol o f Canadian c arri e r s by Canadian s ;

[45] The Governor in Council then referred to the bidding process for spectrum, and that

Globalive was a successful bidder. In the fourth paragraph on the second page, the Governor in

Council acknowledged that Globalive must satisfy the Canadian ownership and control

requirements set out in the Ac t :

Wh e r e a s , in ord e r t o op e ra t e a s a t e l ec o mm uni c a t ion s c o mm on c arri e r in Canada , Globaliv e m u st s a t i sf y t h e Canadian own e r s hip and c on t rol r e quir e m e n ts s e t ou t in t h e Ac t ;

[46] These requirements are set out in subsection 16(3) of the Ac t previously referred to. They

are the “legal” and “control in fact” requirements.

[47] The next paragraph of the Governor in Council’s “Whereas” provisions contains a puzzling

use of the words “when possible”, suggesting that the policy objectives requiring Canadian



Page: 22

ownership and control as set out in section 7(d) of the T e l ec o mm uni c a t ion s Ac t is somehow to be

considered as flexible and possibly subordinate to other considerations, such as that set out in

section 7(c), the enhancement of efficiency and competitiveness. One policy objective cannot be

subordinate to another:

Wh e r e a s t h e Gov e rnor in Coun c il c on s id e r s t ha t , wh e n po ss ibl e , t h e Canadian own e r s hip and c on t rol r e quir e m e n ts s hould b e appli e d in s uppor t o f t h e Canadian t e l ec o mm uni c a t ion s poli c y obj ec t iv e s s e t ou t in t h e Ac t , in c luding e nhan c ing c o m p e t i t ion in t h e t e l ec o mm uni c a t ion s m ar ke t ( e m pha s i s add e d);

[48] The next “Whereas” is critical, as it appears to insert a policy objective not found in section

7 or anywhere else in the T e l ec o mm uni c a t ion s Ac t ; namely, that access to foreign capital technology

and expertise should be encouraged and ensured:

Wh e r e a s t h e Canadian own e r s hip and c on t rol r e quir e m e n ts o f t h e Ac t r e st ri c t t h e own e r s hip o f vo t ing s har e s by non-Canadian s , bu t t h e Ac t do e s no t i m po s e li m i ts on f or e ign inv e st m e n t in t e l ec o mm uni c a t ion c o mm on c arri e r s and s hould b e in t e rpr e t e d in a way t ha t e n s ur e s t ha t a cce ss t o f or e ign c api t al , t ec hnology and e xp e ri e n ce i s e n c ourag e d in a m ann e r t ha t s uppor ts all o f t h e Canadian t e l ec o mm uni c a t ion poli c y obj ec t iv e s ( e m pha s i s add e d);

[49] The Governor in Council’s Decision next acknowledged that the test respecting control was

both legal and factual and, as found by the CRTC, the legal requirements had been met. No party

challenged this finding.



Page: 23

[50] The Governor in Council next considered “control in fact” and noted that the test, as set out

in section 16(3)(c) of the T e l ec o mm uni c a t ion s Ac t , was expressed in the form of a double negative

(i.e.) not controlled by persons who are not Canadian:

Wh e r e a s t h e Gov e rnor in Coun c il c on s id e r s t ha t , a s a m a tt e r o f c on st ru c t ion , i t i s s igni f i c an t t ha t , wh e n a ss e ss ing c on t rol in f a c t , t h e Ac t do e s no t r e quir e t h e Co mm i ss ion t o d e t e r m in e t ha t a t e l ec o mm uni c a t ion s c o mm on c arri e r i s c on t roll e d by Canadian s bu t ra t h e r t ha t i t no t b e c on t roll e d by p e r s on s t ha t ar e no t Canadian;

[51] When asked whether this use of a double negative was purely a semantical exercise,

Counsel for Globalive said no. This position was supported by Counsel for the Attorney General.

They argued that this wording made room for a situation where a broadly held multi-national entity

may have control. In this respect, they argued, control could be in the hands of an entity that was

“not a non-Canadian”.

[52] At the fifth “Whereas” at page 3 of the Decision the Governor in Council stated that it did

not agree with the CRTC’s finding as to multiple levers of influence. The sixth paragraph refers to

“Reasons” (not otherwise described or indicated as to where they could be found) which are said to

show why Globalive is not considered to be owned and controlled by non-Canadians:

Wh e r e a s t h e Gov e rnor in Coun c il r ec ogniz e s t ha t m ul t ipl e l e v e r s o f in f lu e n ce c an , wh e n c o m bin e d , a m oun t t o c on t rol , bu t c on s id e r s t ha t t ha t i s no t t h e c a s e wi t h Globaliv e ;

Wh e r e a s t h e Gov e rnor in Coun c il c on s id e r s t ha t , on t h e ba s i s o f a c ar e f ul e xa m ina t ion o f t h e f a c ts and s ub m i ss ion s b e f or e t h e Co mm i ss ion , i t i s r e a s onabl e t o c on c lud e , f or t h e r e a s on s s e t ou t in t hi s Ord e r , t ha t Globaliv e i s no t in f a c t c on t roll e d by p e r s on s t ha t ar e no t Canadian and t h e r e f or e m ee ts t h e Canadian own e r s hip and c on t rol r e quir e m e n ts und e r t h e Ac t and i s e ligibl e t o op e ra t e a s a t e l ec o mm uni c a t ion s c o mm on c arri e r in Canada;



Page: 24

[53] The first two “Whereas” paragraphs on page 4 state that submissions have been sought from

provincial governments and that the submissions made by Globalive and others at the CRTC

hearing have been of benefit to the Governor in Council. Reference is also made to “additional

submissions” by others. The Applicant sought disclosure of these submissions and the Attorney

General refused. While the refusal was argued in the Applicant’s written material as affording a

basis for setting the Governor in Council’s Decision aside, or drawing adverse inferences, the point

was not pursued with any vigour by Applicant’s Counsel at the hearing.

[54]

The third paragraph of the fourth page sets out a criterion used by the Governor in Council

in coming to its Decision; namely, whether Canadians would be deprived of a more competitive

wireless telecommunication market. This criterion reflects the wording set out in section 7(c) of the

T e l ec o mm uni c a t ion s Ac t :

Wh e r e a s t h e Gov e rnor in Coun c il c on s id e r s t ha t t h e D ec i s ion d e priv e s Canadian s o f t h e po ss ibili t y f or a m or e c o m p e t i t iv e wir e l e ss t e l ec o mm uni c a t ion m ar ke t by pr e v e n t ing t h e roll-ou t o f s e rvi ce t o t h e publi c by a Canadian-own e d and c on t roll e d c o m pany .

[55] The penultimate paragraph of the Decision appears to open the door for Globalive to enter

the Canadian market, but shut it for others:

And wh e r e a s t h e Gov e rnor in Coun c il c on s id e r s t ha t t hi s Ord e r i s ba s e d on t h e f a c ts o f t hi s par t i c ular c a s e and ha s a s igni f i c an t dir ec t i m pa c t only on Globaliv e ;

[56] The final paragraph of the Governor in Council’s Decision is a “Therefore” paragraph that

leads the reader to the attached Schedule:

Th e r e f or e , H e r Ex ce ll e n c y t h e Gov e rnor G e n e ral in Coun c il , on t h e r ec o mm e nda t ion o f t h e Mini st e r o f Indu st ry , pur s uan t t o s ub s ec t ion 12(1) o f t h e T e l ec o mm uni c a t ion s Ac t , vari e s T e l ec o m



Page: 25

D ec i s ion CRTC 2009-678 , a m e nd e d by T e l ec o m D ec i s ion CRTC 2009-678-1 , a s s e t ou t in t h e ann e x e d s c h e dul e t o t hi s Ord e r .

[57] The Schedule in many respects tracks the language of the CRTC Decision, but makes

several changes which affect the resulting determination as it was made by the CRTC. These

include findings as to whether the structure of the board of directors ensured that non-Canadian

nominees could be elected, whether the debt financing structure could result in undue influence by a

non-Canadian, the effect of liquidity rights, the definition of eligible purchasers of shares, the effect

of the Technical Service Agreement and the Trademark Agreement; all of which led the CRTC to

conclude that Globalive was “controlled in fact” by non-Canadians. The changes made by the

Governor in Council led it to conclude the opposite.

[58] I accept the summary reflecting several of these differences between the CRTC Decision

and the Governor in Council’s Decision, as presented in the Applicant’s written submissions:

CRTC F inding s

(p e r D ec i s ion 2009-678) Gov e rnor in Coun

c il Finding

s

(p e r S c h e dul e t o Ord e r in Coun c il)

Co m po s i t ion o f t h e Board o f Dir ec t or s

45 . In t h e pr e s e n t c a s e , t h e Co mm i ss ion c on s id e r s t ha t t h e r e vi s e d board st ru c t ur e , in c luding t h e rol e and c o m po s i t ion o f t h e s e l ec t ion c o mm

i tt ee ,

do e s

no t

e n s

ur e t

ha t

t h e no m in ee s o f t h e Canadian s har e hold e r ar e s u ff i c i e n t in nu m b e r t o o ffs e t t h e in f lu e n ce o f Ora s c o m , a non-Canadian s har e hold e r .

1 . In t h e pr e s e n t c a s e , t h e r e vi s e d board st ru c t ur e , in c luding t h e rol e and c o m po s i t ion o f t h e s e l ec t ion c o mm i tt ee , e n s ur e s t ha t t h e

no m

in ee s

o f

Ora s c

o m

T e l ec

o m

Holding S.A.E. (“Orascom”), a

non-Canadian s har e hold e r , ar e in s u ff i c i e n t in nu m b e r t o c on t rol t h e st ra t e gi c or op e ra t ional d ec i s ion s o f Globaliv e . Ind ee d , t h e board m e m b e r s no m ina t e d by t h e Canadian s har e hold e r



Page: 26

[Th e CRTC r e quir e d t ha t t h e arrang e m e n ts b e a m e nd e d s o t ha t AAL would no m ina t e f iv e GIHC dir ec t or s , Ora s c o m would no m ina t e f our dir ec t or s ,

and t ha

t

t h e y would

t og

e t h e r no m ina t e on e Ind e p e nd e n t

Dir ec t or . ]

and t h e ind e p e nd e n t dir ec t or s , as defined in the shareholders’

agr ee m e n t and c orpora t e do c u m e n ts , (Ind e p e nd e n t

Directors”) are sufficient in

nu m

b e r

t o o

ffs e t t h e

in f lu

e n ce

o f Ora s c o m . As a r e s ul t , no

c hang e s ar e r e quir e d t o t h e c o m po s i t ion o f t h e board s o f dir ec t or s I t hi s c a s e .

AAL’s Liquidity Rights

59 . Th e Co mm i ss ion c on s id e r s t ha t t h e liquidi t y righ ts in t h e r e vi s e d do c u m e n ts

ar e an i m

prov e m

e n t

on t h e array o f righ ts originally

gran t e d t o Ora s c o m a s m inori t y vo t ing s har e hold e r . N e v e r t h e l e ss , t h e liquidi t y righ ts , e v e n in t h e ir r e vi s e d f or m , provid e an indi c a t ion o f Orascom’s influence over the

v e n t ur e . Th e s p ec i f i c a t ion o f a f loor pri ce and t h e i m po s i t ion o f a c ap on t h e pro cee d s

g e n e ra

t e d in

t h e e v e n t t ha

t AALs e ll s i ts s har e s ar e in c on s i st e n t

wi t h t h e r e la t iv e vo t ing in t e r e sts o f t h e s har e hold e r s .

5 . Th e liquidi t y righ ts in t h e r e vi s e d c orpora t e do c u m e n ts o f Globaliv e ar e an

i m

prov e m

e n t

on t h e array o

f righ ts originally gran t e d t o

Ora s c o m a s a m inori t y vo t ing s har e hold e r .

6 . In t hi s par t i c ular c a s e , t h e liquidi t y provi s ion s op e ra t e in a balan ce d way in r e gard s t o bo t h AAL and Ora s c o m , wi t h t h e e x ce p t ion o f t h e s p ec i f i e d f loor pri ce and t h e c ap on t h e

pro cee

d s

g e n e ra

t e d in

t h e e v e n t t ha t AAL s e ll s i ts s har e s . Th e

c ap on pro cee d s i s c on s i st e n t wi t h t h e r e la t iv e e qui t y inv e st m e n t o f t h e s har e hold e r s . Th e s p ec i f i e d f loor pri ce r e f l ec ts t h e inv e st m e n t o f an e st abli s h e d bu s in e ss in a high- ri s k v e n t ur e and ha s li tt l e b e aring on c on t rol .

D e f

ini t ion o

f Eligibl

e Pur

c ha

s e r s

63 . Th e Co mm i ss ion c on s id e r s t ha t a s igni f i c an t i ss u e wi t h r e gard t o liquidi t y i s t h e abili t y o f t h e e xi st ing inv e st or t o f ind a s ui t abl e pur c ha s e r . Th e Co mm i ss ion i s

8 . A s igni f i c an t i ss u e wi t h r e gard t o liquidi t y i s t h e abili t y o f t h e e xi st ing inv e st or t o f ind a s ui t abl e pur c ha s e r . Whil e t h e “Eligible Purchase” definition

in the shareholders’ agreement



Page: 27

c on ce rn e d t ha t t h e Eligibl e Pur c ha s e r d e f ini t ion li m i ts t h e pool o f po t e n t ial pur c ha s e r s t o f inan c ial inv e st or s and r e st ri c ts t h e abili t y o f t h e m ajori t y vo t ing s har

e hold

e r [AAL]

t o

s e ll all or s o m e o f i ts s har e s …

64 . Acc ordingly , t h e Co mm i ss ion c on s id e r s t ha t Globaliv e s hould a m e nd t h e d e f ini t ion o f S t ra t e gi c Co m p e t i t or t o in c lud e only e n t i t i e s whi c h , t a ke n t og e t h e r wi t h t h e ir a ff ilia t e s , hold m or e t han a 10 p e r ce n t s har e o f t h e Canadian wir e l e ss m ar ke t on a

p e r-

s ub

s c rib

e r ba

s i s .

r e st ri c ts t h e pool o f po t e n t ial pur c ha s e r s , t hi s r e st ri c t ion do e s no t provid e Ora s c o m wi t h an av e nu e f or in f lu e n ce ov e r t h e day- t o-day op e ra t ion s or st

ra t e

gi c

d ec

i s ion-

m

a k ing a c t ivi t i e s o f Globaliv e . Thi s i s

an a cce p t abl e m e an s o f pro t ec t ing t h e r e m aining s har e hold e r s f ro m b e ing f or ce d in t o a r e la t ion s hip wi t h a c o m p e t i t or . No t only do s har e hold e r s hav e t h e di s c r e t ion t o waiv e t hi s r e st ri c t ion , bu t t h e e ligibl e pur c ha s e r provi s ion s apply e qually

t o all

s har

e hold

e r s

and al l s al e provi s ion s ar e s ubj ec t t o e x t e n s iv e righ ts o f f ir st r e f u s al in f avour o f t h e non- s e lling s har e hold e r . No c hang e s t o t h e d e f ini t ion o f “Eligible Purchaser” in the

shareholders’ agree m e n t ar e r e quir e d .

T ec hni c al S e rvi ce s Agr ee m e n t

84 . Giv e n t h e s igni f i c an t b e n e f i ts Globaliv e d e riv e s f ro m t h e T S A, t h e Co mm i ss ion i s o f t h e vi e w t ha t Globaliv e will m ain t ain t h e T S A f or t h e f or e s ee abl e f u t ur e . Con s e qu e n t ly , t h e Co mm i ss ion c on s id e r s t ha t Ora s c o m will c on t inu e t o hav e in f lu e n ce ov e r op e ra t ing and st ra t e gi c

decisions related to Globalive’sn e t wor k .

13 . Giv e n t h e s igni f i c an t b e n e f i ts Globaliv e d e riv e s f ro m t h e T S A, valid c o mm e r c ial r e a s on s m ay e xi st f or Globaliv e t o m ain t ain t h e T S A f or t h e f or e s ee abl e f u t ur e . Con s e qu e n t ly , i t i s li ke ly t ha t t h e T S A will c on t inu e t o provid e Ora s c o m wi t h an av e nu e f or in f lu e n ce ov e r Globaliv e ,

how e v e r

s

u c h in

f

lu e n ce

i s

no t

do m inan t and d e t e r m ining in i ts e l f .



Page: 28

WIND brand

89 . How e v e r , t h e

Co mm i ss ion f ind s t ha t Globalive’s adoption and use of

a t rad e m ar k b e longing t o an Ora s c o m a ff ilia t e do provid e Ora s c o m (or i ts c on t rolling s har e hold e r) wi t h in f lu e n ce ov e r Globaliv e b ec au s e Ora s c o m ha s t h e pow e r t o l i m i t how t h e brand c an b e u s e d .

14 . Th e Trad e m ar k

Agr ee m e n t do e s no t provid e Ora s c o m wi t h a s igni f i c an t av e nu e f or in f lu e n ce ov e r Globaliv e . Th e t e r m o f and t h e t e r m ina t ion righ ts s e t ou t in t h e agr ee m e n t ar e no t o f c on ce rn . Fur t h e r m or e , t h e t e r m s and c ondi t ion s o f i t do no t allow Ora s c o m t o m a t e rially li m i t how t h e m ar k c an b e u s e d .

D e b t

Finan c ing

114 . Th e m agni t ud e o f t h e d e b t provid e d by Ora s c o m , t h e r e la t iv e d e b t t o e qui t y f inan c ing , and t h e f a c t t ha t t h e d e b t i s c on ce n t ra t e d in t h e hand s o f a s ingl e e n t i t y c au s e t h e Co mm i ss ion c on ce rn wi t h t h e loan s a s a s our ce o f Ora s c o m in f lu e n ce . Th e m

odi f i c a t ion

s t o

t h e c ov

e nan

ts and t e r m s o f t h e loan s do li tt l e

t o r e du ce t hi s c on ce rn .

18 . Whil e t h e m agni t ud e o f t h e d e b t f inan c ing provid e d by Ora s c o m , t h e r e la t iv e d e b t t o e qui t y f inan c ing and t h e f a c t t ha t t h e d e b t i s c on ce n t ra t e d in t h e hand s o f a s ingl e e n t i t y c au s e c on ce rn wi t h t h e loan s a s a s our ce o f Ora s c o m in f lu e n ce , t h e e li m ina t ion o f t h e po s i t iv e

and n e ga

t iv

e

c ov

e nan

ts ,

t h e la ck o f c onv e r s ion righ ts , t h e

l e ng t h e ning o f t h e t e r m o f t h e loan and r e n e wal righ ts ( t h e r e by providing st abili t y t o Globaliv e ) , t h e righ t o f Globaliv e t o r e t ir e or r e pla ce t h e d e b t wi t hou t p e nal t y and t h e m odi f i c a t ion s t o t h e d e f aul t provi s ion s o f t h e loan go a long way t oward m ini m izing t hi s c on

ce rn

.

Th e

abili t y o

f Ora s c o m t o u s e t h e e xi st ing

loan s , or t h e t e r m s a tt a c h e d t o t ho s e loan s , a s l e v e r s o f in f lu e n ce i s s u ff i c i e n t ly di m ini s h e d .



Page: 29

Con c lu s ion

118 . …In other words, the

Co mm i ss ion f ind s t ha t Ora s c o m ha s t h e ongoing abili t y t o determine Globalive’s strategicd ec i s ion- m a k ing a c t ivi t i e s .

22 . …In other words,

Ora s c o m do e s no t hav e t h e ongoing abili t y t o d e t e r m in e Globalive’s strategic decision- m a k ing a c t ivi t i e s .

[59] Those two documents, the “Whereases” and Schedule, comprise the Decision of the

Governor in Council which is now under judicial review.

ISSUES

[60] I accept the succinct statement of issues as set out in the Attorney General’s Memorandum:

1. Whether Public Mobile has standing, and whether it has an effective remedy under

the T e l ec o mm uni c a t ion s Ac t , which it has not exhausted;

2.

Whether the Governor in Council acted within the statutory mandate in varying the

CRTC Decision concerning Globalive.

[61] There will be sub-issues considered as well. I will begin with general comments as to

judicial review and section 18.1 of the F e d e ral Cour ts Ac t .

COURT’S SUPERVISORY FUNCTION – SEC TIO N 18.1

[62] The general supervisory function of the Courts over administrative powers exercised by

government decision-makers was considered by the Supreme Court of Canada in Dun s m uir v . N e w

Brun s wi ck , [2008] 1 S.C.R. 190. All public authority exercises of decision-making powers must



Page: 30

find their source in law, whether derived from the enabling statute or the pertinent common law, or

civil law. This principle recognizes that even the Governor in Council must adhere to the rule of law

and to the statutory enactments of Parliament. Bastarache and LeBel JJ wrote at paragraphs 27 to 29

of Dun s m uir :

III . I ss u e 1: R e vi e w o f t h e Adjudi c a t or ' s S t a t u t ory In t e rpr e t a t ion D e t e r m ina t ion

A. Judi c ial R e vi e w

27 As a m a tt e r o f c on st i t u t ional law , judi c ial r e vi e w i s in t i m a t e ly c onn ec t e d wi t h t h e pr e s e rva t ion o f t h e rul e o f law . I t i s e ss e n t ially t ha t c on st i t u t ional f ounda t ion whi c h e xplain s t h e purpo s e o f judi c ia l

r e vi

e w and guid

e s i ts

f un

c t ion and op

e ra

t ion

.

Judi c ial r

e vi

e w

s eek s t o addr e ss an und e rlying t e n s ion b e t w ee n t h e rul e o f law and t h e

f ounda t ional d e m o c ra t i c prin c ipl e , whi c h f ind s an e xpr e ss ion in t h e ini t ia t iv e s o f Parlia m e n t and l e gi s la t ur e s t o c r e a t e variou s ad m ini st ra t iv e bodi e s and e ndow t h e m wi t h broad pow e r s . Cour ts , whil e e x e r c i s ing t h e ir c on st i t u t ional f un c t ion s o f judi c ial r e vi e w , m u st b e s e n s i t iv e no t only t o t h e n ee d t o uphold t h e rul e o f law , bu t al s o t o t h e n ece ss i t y o f avoiding undu e in t e r f e r e n ce wi t h t h e di s c harg e o f ad m ini st ra t iv e f un c t ion s in r e s p ec t o f t h e m a tt e r s d e l e ga t e d t o ad m ini st ra t iv e bodi e s by Parlia m e n t and l e gi s la t ur e s .

28 By vir t u e o f t h e rul e o f law prin c ipl e , al l e x e r c i s e s o f publi c au t hori t y m u st f ind t h e ir s our ce in law . All d ec i s ion- m a k ing pow e r s hav e l e gal li m i ts , d e riv e d f ro m t h e e nabling st a t u t e i ts e l f , t h e c o mm on or c ivil law or t h e Con st i t u t ion . Judi c ial r e vi e w i s t h e m e an s by whi c h t h e c our ts s up e rvi s e t ho s e who e x e r c i s e st a t u t ory pow e r s , t o e n s ur e t ha t t h e y do no t ov e r st e p t h e ir l e gal au t hori t y . Th e f un c t ion o f judi c ial r e vi e w i s t h e r e f or e t o e n s ur e t h e l e gali t y , t h e r e a s onabl e n e ss and t h e f airn e ss o f t h e ad m ini st ra t iv e pro ce ss and i ts ou t c o m e s .

29 Ad m ini st ra t iv e pow e r s ar e e x e r c i s e d by d ec i s ion m a ke r s a cc ording t o st a t u t ory r e gi m e s t ha t ar e t h e m s e lv e s c on f in e d . Ad ec i s ion m a ke r m ay no t e x e r c i s e au t hori t y no t s p ec i f i c ally a ss ign e d t o hi m or h e r . By a c t ing in t h e ab s e n ce o f l e gal au t hori t y , [pag e 212] t h e d ec i s ion m a ke r t ran s gr e ss e s t h e prin c ipl e o f t h e rul e o f law . Thu s , wh e n a r e vi e wing c our t c on s id e r s t h e s c op e o f a d ec i s ion- m a k ing pow e r or t h e juri s di c t ion c on f e rr e d by a st a t u t e , t h e st andard o f r e vi e w analy s i s st riv e s t o d e t e r m in e wha t au t hori t y wa s in t e nd e d t o b e giv e n t o t h e body in r e la t ion t o t h e s ubj ec t m a tt e r . Thi s i s don e



Page: 31

wi t hin t h e c on t e x t o f t h e c our ts ' c on st i t u t ional du t y t o e n s ur e t ha t publi c au t hori t i e s do no t ov e rr e a c h t h e ir law f ul pow e r s : Cr e vi e r v . Att orn e y G e n e ral o f Qu e b ec , [1981] 2 S .C .R . 220 , a t p . 234; al s o Dr . Q v . Coll e g e o f Phy s i c ian s and S urg e on s o f Bri t i s h Colu m bia , [2003] 1 S .C .R . 226 , 2003 S CC 19 , a t para . 21 .

[63] Section 18.1 of the F e d e ral Cour ts Ac t gives to the Federal Court the power of judicial

review in respect of a decision of a federal board, commission or other tribunal, and the power to

grant relief where it has been determined that any one of a number of grounds as set out in

subsection 18.1(4) have been established:

Appli c a t ion f or judi c ial r e vi e w

18 .1

(1) An appli c a t ion f or judi c ial r e vi e w m ay b e m ad e by t h e Att orn e y G e n e ral o f Canada or by anyon e dir ec t ly a ff ec t e d by t h e m a tt e r in r e s p ec t o f whi c h r e li e f i s s ough t .

. . .

Pow e r s o f F e d e ral Cour t

(3) On an appli c a t ion f or judi c ial r e vi e w , t h e F e d e ral Cour t m ay

( a ) ord e r a f e d e ral board , c o mm i ss ion or o t h e r t ribunal t o do any a c t or t hing i t ha s unlaw f ully f ai l e d or r e f u s e d t o do or ha s unr e a s onably d e lay e d in doing; or

( b ) d ec lar e invalid or unlaw f ul , or qua s h , s e t a s id e or s e t a s id e and r e f e r ba ck f or d e t e r m ina t ion in a cc ordan ce wi t h s u c h dir ec t ion s a s i t c on s id e r s t o b e appropria t e , prohibi t or r e st rain , a d ec i s ion , ord e r , a c t or pro cee ding o f a f e d e ral board , c o mm i ss ion or o t h e r t ribunal . Ground s o f r e vi e w

(4) Th e F e d e ral Cour t m ay gran t r e li e f und e r s ub s ec t ion (3) i f i t i s s a t i sf i e d t ha t t h e f e d e ral board , c o mm i ss ion or o t h e r t ribunal

( a ) a c t e d wi t hou t juri s di c t ion , a c t e d b e yond i ts juri s di c t ion or r e f u s e d t o e x e r c i s e i ts juri s di c t ion;

( b ) f ai l e d t o ob s e rv e a prin c ipl e o f na t ural ju st i ce , pro ce dural f airn e ss or o t h e r pro ce dur e t ha t i t wa s r e quir e d by law t o ob s e rv e ;

http://www.lexisnexis.com/ca/legal/search/runRemoteLink.do?langcountry=CA&linkInfo=F%23CA%23SCC%23onum%2519%25decisiondate%252003%25year%252003%25sel1%252003%25&risb=21_T11094130450&bct=A&service=citation&A=0.9051893425076093







Page: 32

( c ) e rr e d in law in m a k ing a d ec i s ion or an ord e r , wh e t h e r or no t t h e e rror app e ar s on t h e f a ce o f t h e r ec ord;

( d ) ba s e d i ts d ec i s ion or ord e r on an e rron e ou s f inding o f f a c t t ha t i t m

ad e

in a p e rv

e r s e

or c apri

c iou

s m

ann e r or wi

t hou

t r e gard

f or

t h e

m a t e rial b e f or e i t ;

( e ) a c t e d , or f ai l e d t o a c t , by r e a s on o f f raud or p e rjur e d e vid e n ce ; or

( f ) a c t e d in any o t h e r way t ha t wa s c on t rary t o law .

[64] The Supreme Court of Canada has recently considered the nature of judicial review under

the provisions of section 18.1 in its unanimous decision in Canada (Att orn e y G e n e ral) v . T e l e Zon e

In c ., 2010 SCC 62. It wrote that judicial review is directed at the legality, reasonableness and

fairness of the procedures employed and actions taken by government decision-makers; it is

designed to enforce the rule of law and adherence to the Constitution (paragraph 24). It also wrote

that the enactment of the F e d e ral Cour ts Ac t , as amended, was designed to enhance government

accountability as well as to promote access to justice (paragraph 32).

[65] In the present case, this judicial review is to be undertaken with a view of determining

accountability of government decision-makers including the Governor in Council. The function of

the Courts is to enforce the rule of law, to determine whether there has been adherence to the

Constitution with respect to the procedures employed and actions taken and to determine the

legality, reasonableness and fairness of the decision made.



Page: 33

ISSUE 1: Whether Public Mobile has standing, and whether it has an effective

remedy under the T e l ec ommuni c a t ion s Ac t which it has not exhausted.

a) Standing

[66] Public Mobile, just as Globalive, was a successful bidder in the auction of radio frequency

spectrum. It has received a licence from the Minister of Industry to offer wireless communication

services in Canada using that spectrum. It was required by the CRTC to demonstrate that it was

Canadian owned and controlled.

[67]

The remaining Respondents, other than the Attorney General, have also been successful

bidders and received licences. They were not required to demonstrate to the CRTC that they were

Canadian owned and controlled, presumably since they were already active in the Canadian

marketplace.

[68] Only Globalive had experienced a change in its position. It was a successful bidder at the

auction; it received a licence from the Minister of Industry. The CRTC determined that it could not

operate in Canada, as it was not Canadian owned and controlled. That decision was reversed by the

Governor in Council.

[69] Much has been written as to who has standing to challenge a decision of a federal board or

tribunal. I reviewed some of this jurisprudence recently in Air Canada v . Toron t o Por t Au t hori t y ,

2010 FC 774, particularly at paragraphs 58 to 66, paying attention, among other cases, to the recent

decision of the Federal Court of Appeal in Irving S hipbuilding In c . v . Canada (Att orn e y G e n e ral) ,

2009 FCA 116, 314 DLR (4th) 430 and to F e rring In c . v . Canada (Mini st e r o f H e al t h) , 2007 FCA



Page: 34

276, 370 N.R. 263. I concluded at paragraph 65 of Air Canada that there was no simple formula

whereby a person having a commercial interest can be said to have or to lack standing. The context

of the situation and the basis for judicial review must be considered.

[70] I drew the attention of the parties at this hearing to the very recent decision of the Federal

Court of Appeal in League for Human Rights of B’Nai Brith Canada v. Canada, 2010 FCA 307

where Stratas JA for the Court considered both direct standing and public interest standing at

paragraphs 57 to 59:

C .

Analy s

i s

(1) Did t h e app e llan t hav e st anding t o bring t h e appli c a t ion s for judi c ial r e vi e w?

(a) Dir ec t st anding

57 Th e app e llan t s ub m i ts t ha t i t ha s dir ec t st anding t o bring t h e appli c a t ion f or judi c ial r e vi e w again st t h e d ec i s ion s o f t h e Gov e rnor in Coun c il b ec au s e i t i s "dir ec t ly a ff ec t e d" wi t hin t h e m e aning o f s ub s ec t ion 18 .1(1) o f t h e F e d e ral Cour ts Ac t , R .S .C . 1985 , c . F-7 . Tha t s ub s ec t ion provid e s t ha t t ho s e who ar e "dir ec t ly a ff ec t e d" m ay bring an appli c a t ion f or judi c ial r e vi e w .

58 Th e app e llan t i s no t "dir ec t ly a ff ec t e d . " In ord e r f or i t t o b e "dir ec t ly a ff ec t e d" by t h e d ec i s ion s o f t h e Gov e rnor in Coun c il , t h e d ec i s ion s m u st hav e a ff ec t e d i ts l e gal righ ts , i m po s e d l e gal obliga t ion s upon i t , or pr e judi c ially a ff ec t e d i t in s o m e way: Ro t h m an s o f Pall Mall Canada Lt d . v . Canada (M .N .R . ) , [1976] 2 F .C . 500 (C .A. ); Irving S hipbuilding In c . v . Canada (A.G . ) , 2009 F CA 116 . Th e r e i s no e vid e n ce b e f or e t hi s Cour t s ugg e st ing t ha t t h e app e llan t i s a ff ec t e d in t hi s way . I adop t t h e word s o f t h e m o t ion s judg e (2008 FC 732 a t paragraph 26): Wi t hou t doub t , t h e [app e llan t ] and t h e f a m ily m e m b e r s i t s ay s i t r e pr e s e n ts d ee ply c ar e , and ar e g e nuin e ly c on ce rn e d , abou t Mr . Odyn s k y ' s c i t iz e n s hip r e vo c a t ion pro ce ss and hi s pa st s e rvi ce a s a p e ri m e t e r guard o f t h e S e idlung a t t h e Ponia t owa labour c a m p in G e r m an-o cc upi e d Poland . How e v e r , t ha t in t e r e st do e s no t m e an t ha t t h e l e gal righ ts o f t h e appli c an t , or t ho s e i t r e pr e s e n ts , ar e l e gally i m pa c t e d or pr e judi ce d by t h e d ec i s ion no t t o r e vo ke Mr . Odyn s k y ' s



Page: 35

c i t iz e n s hip . Ra t h e r , t h e ir in t e r e st e xi sts in t h e s e n s e o f s eek ing t o righ t a p e r ce iv e d wrong ari s ing f ro m , or t o uphold a pr in c ipl e in r e s p ec t o f , t h e non-r e vo c a t ion o f Mr . Odyn s k y ' s c i t iz e n s hip .

(b) Publi c in t e r e st st anding

59 In t h e al t e rna t iv e , t h e app e llan t s ub m i ts t ha t i t ha s st anding a s a publi c in t e r e st li t igan t t o c hall e ng e t h e d ec i s ion s o f t h e Gov e rnor in Coun c il . I t s ay s t ha t i t m ee ts t h e t hr ee f old t e st f or publi c in t e r e st st anding s e t ou t in t h e S upr e m e Cour t o f Canada ' s r e a s on s f or judg m e n t in Canadian Coun c il o f Chur c h e s v . Canada (Mini st e r o f E m ploy m e n t and I mm igra t ion) , [1992] 1 S .C .R . 236 , na m e ly , t ha t :

(a) a s e riou s i ss u e ha s b ee n rai s e d;

(b) t h e

par t y

s eek ing publi

c in

t e r e st

st

anding ha s

a g e nuin

e or dir

ec t in t e r e st in t h e ou t c o m e o f t h e li t iga t ion; and

( c ) t h e r e i s no o t h e r r e a s onabl e and e ff ec t iv e way t o bring t h e i ss u e b e f or e t h e Cour t .

[71] This discussion in B’Nai Brith should not be taken to mean that the only persons who have

standing to challenge a decision are those whose own interests were immediately affected or those

who find themselves representing a public interest within certain enumerated criteria. As Evans JA

wrote in Irving S hipbuilding , s upra , the question of standing cannot be answered in the abstract.

Standing must be considered in the context in which the review arises. He wrote at paragraphs 28,

32 and 33:

28 In m y vi e w , t h e qu e st ion o f t h e app e llan ts ' st anding s hould b e an s w e r e d , no t in t h e ab st ra c t , bu t in t h e c on t e x t o f t h e ground o f r e vi e w on whi c h t h e y r e ly , na m e ly , br e a c h o f t h e du t y o f pro ce dural f airn e ss . Thu s , i f t h e app e llan ts hav e a righ t t o pro ce dural f airn e ss , t h e y m u st al s o hav e t h e righ t t o bring t h e m a tt e r t o t h e Cour t in ord e r t o a tt e m p t t o e st abli s h t ha t t h e pro ce ss by whi c h t h e s ub m arin e c on t ra c t wa s award e d t o C S MG viola t e d t h e ir pro ce dural righ ts . I f PWG S C ow e d t h e app e llan ts a du t y o f f airn e ss and award e d t h e c on t ra c t t o C S MG in br e a c h o f t ha t du t y , t h e y would b e "dir ec t ly a ff ec t e d" by t h e i m pugn e d d ec i s ion . I f t h e y



Page: 36

do no t hav e a righ t t o pro ce dural f airn e ss , t ha t s hould nor m ally c on c lud e t h e m a tt e r . Whil e I do no t f ind i t n ece ss ary t o c ondu c t an ind e p e nd e n t st anding analy s i s , I s hall bri e f ly addr e ss t wo i ss u e s t ha t aro s e f ro m t h e par t i e s ' s ub m i ss ion s .

. . .

32 To a tt a c h t h e s igni f i c an ce urg e d by t h e r e s pond e n ts t o Parlia m e n t ' s c hoi ce o f t h e word s "dir ec t ly a ff ec t e d" , ra t h e r t han any o f t h e c o mm on law st anding r e quir e m e n ts ("p e r s on aggri e v e d" or " s p ec ially a ff ec t e d" , f or e xa m pl e ) would , in m y vi e w , ignor e t h e c on t e x t and purpo s e o f t h e st a t u t ory languag e o f s ub s ec t ion 18 .1(1) . As t h e S upr e m e Cour t o f Canada s aid r ece n t ly in Kho s a (a t para . 19 ):

... m o st i f no t all judi c ial r e vi e w st a t u t e s ar e dra ft e d again st t h e ba ck ground o f t h e c o mm on law o f judi c ial r e vi e w . Ev e n t h e m

or e c o m

pr e h e n s iv

e a m

ong t h e m

...

c an only

s e n s ibly b

e in t e rpr e t e d in t h e c o mm on law c on t e x t ...

. . .

33 Mor e ov e r , s in ce al l t h e s e t e r m s ar e s o m e wha t ind e t e r m ina t e , Parlia m e n t ' s c hoi ce o f on e ra t h e r t han ano t h e r s hould b e r e gard e d a s o f r e la t iv e ly li tt l e i m por t an ce . S ee al s o Tho m a s A Cro m w e ll , Lo c u s S t andi: A Co mm e n t ary on t h e Law o f S t anding in Canada (Toron t o: Car s w e ll , 1986) a t 163-64 ("Lo c u s S t andi "), e s p ec ially hi s ap t d e s c rip t ion (a t 163) o f t h e " s e m an t i c wa st e land" t o b e t rav e r s e d by a c our t in a tt e m p t ing t o apply t h e variou s " t e sts " f or st anding , bo t h st a t u t ory and c o mm on law . Al t hough dir ec t e d a t di ff e r e n ce s b e t w ee n t h e Fr e n c h and Engli s h t e x ts o f s ub s ec t ion 18 .1(4) o f t h e F e d e ral Cour ts Ac t , t h e f ollowing st a t e m e n t in Kho s a (a t para . 39) s ee m s e qually ap t in t h e in t e rpr e t a t ion o f t h e word s "dir ec t ly a ff ec t e d" in s ub s ec t ion 18 .1(1):

A blin ke r e d f o c u s on t h e t e x t ual varia t ion s m igh t l e ad t o an in t e rpr e t a t ion a t odd s wi t h t h e m od e rn rul e [o f st a t u t ory in t e rpr e t a t ion] b ec au s e , st anding alon e , lingui st i c c on s id e ra t ion s ough t no t t o e l e va t e an argu m e n t abou t t e x t abov e t h e r e l e van t c on t e x t , purpo s e and obj ec t iv e s o f t h e l e gi s la t iv e s c h e m e .

[72] The approach of the Courts as to the standing of those seeking judicial review should tend to

be inclusive rather than exclusory. By way of analogy, the Supreme Court of Canada, recently wrote



Page: 37

a unanimous decision in Canada (Att orn e y G e n e ral) v . M c Ar t hur , 2010 SCC 63, saying at

paragraphs 11 and 12, that one should not exaggerate the exclusive nature of section 18 of the

F e d e ral Cour ts Ac t ; a person should not be put through unnecessary and unproductive procedural

hoops.

[73] Referring, for instance, to Thor s on v . Canada (Att orn e y G e n e ral) , [1975] 1 S.C.R. 138, one

can understand the attitude of the Courts in exercising judicial discretion, particularly the majority

decision at pages 161 and 162 where it allowed a member of the Canadian public (albeit a former

President of the Exchequer Court) with no particular or unique interest, to challenge the

constitutionality of certain federal legislation.

[74] One can even go much further back in history in referring to the Roman/Jewish historian

Flavius Josephus in Book II of his dissertation “Against Apion” written toward the end of the first

century of the Common Era, where he considered the writings of the Phonecians, Chaldeans and

Egyptians in respect of the laws of the Jewish nation and wrote at verse 28 (I refer to the latter

portion):

“If any judge takes bribes, his punishment is death; he that overlooks

on e t ha t o ff e r s hi m a p e t i t ion , and t hi s wh e n h e i s abl e t o r e li e v e hi m , i s a guil t y p e r s on.”

[75] It all comes to the same thing. If there is merit to the issue raised, the Court should be lenient

in permitting standing.

[76] In the present case, Public Mobile, Globalive and the other corporate Respondents, were all

in the same commercial situation. They all bid at the spectrum auction. All were successful. All got



Page: 38

licences. The CRTC said that one of them, Globalive, was not eligible, particularly on the CRTC’s

view of foreign control and the debt structure of Globalive. The Governor in Council reversed that

decision saying that the reversal was applicable only in this instance.

[77] Public Mobile was involved in the whole process. It made submissions to the Governor in

Council. The impact was clearly stated by Mr. Alex Krstajic, chief executive officer of Public

Mobile in his cross-examination in these proceedings conducted April 6, 2010, where he said in

answer to questions 181 and 182, notwithstanding the objection of his own Counsel:

BY MR .

HUBBARD:

181 . Q . S ir , you would agr ee wi t h m e t ha t Publi c Mobil e ha s no dir ec t in t e r e st in t hi s Gov e rnor in Coun c il d ec i s ion?

MR . LAS KIN: That’s…

MR. HUBBARD: What’s the basis for the refusal, Counsel?

MR . LAS KIN: He started answering, so I’ll let it go.

THE DEPONENT: Le t m e an s w e r t hi s . Y e s , w e do hav e a dir ec t interest in this. If the order in council had said we’ve

c hang e d t h e law s and anybody who i s a n e w e n t ran t li ke Globaliv e , c an hav e t h e s a m e k ind o f st ru c t ur e a s Globaliv e and c an g e t f or e ign c api t al , I c an t e ll you righ t now , t hi s appli c a t ion would no t hav e b ee n brough t f orward , f ull st op .

But the fact that they tried to say…this isn’t in a change in

the law, so look the other way, this thing isn’t really a changein t h e law , and i t only appli e s t o Globaliv e , m ad e i t a dir ec t i m pa c t on m e b ec au s e i t dir ec t ly i m pa c ts m y abili t y t o g e t more money and grow. And they’re not having a level

playing field, they’re allowing Globalive to have access to

foreign capital that I don’t have. So, is that a direct i m pa c t on m e ? Let’s go back to your economics lesson on wha t allows a company to grow. It’s not just something as simple

a s m ar ke t s har e . How do you g e t m or e m ar ke ts ? You g e t m or e c api t al t ha t allow s you t o build v e ry e xp e n s iv e n e t wor k s and op e n m or e m ar ke ts and t h e r e f or e g e t m or e r e v e nu e . S o , do e s i t dir ec t ly i m pa c t m e wh e n on e c o m p e t i t or c an hav e



Page: 39

foreign capital and another can’t? Yes, yes, it directly

i m pa c ts m e .

[78] Counsel for the Attorney General argued that the Applicant did not “plead” the nature of the

standing which it claimed in order to secure judicial relief. This is an application, not an action. The

requirements under the F e d e ral Cour ts Rul e s for “pleading” are vague or even non-existent. I

reviewed this situation in my decision in Air Canada , s upra , at paragraphs 77 to 85. Even if there

were requirements for pleadings, to “plead” standing in the Notice of Application would be to

anticipate a defence. There is no requirement to plead in anticipation of a defence. In the present

application, the Respondents provided no “pleading” of any kind. At the hear ing, the parties were

well aware of the arguments raised as to standing. Nobody was taken by surprise. Each party argued

the matter fully. I reject any argument as to lack of “pleading”.

[79] I find that Public Mobile has sufficient interest in the matters at issue so as to be a person

entitled to seek judicial review in these proceedings.

b) Alternative Remedy

[80] The Attorney General’s Counsel argued that Public Mobile should not be allowed standing

because it has an effective alternate remedy. This point was not vigorously pursued at the hearing.

The argument is not based on any provision in the T e l ec o mm uni c a t ion s Ac t or other relevant statute;

rather, it relies on a suggestion that certain legal tactics may be pursued by Public Mobile that may

result in providing it with some relief that it may see as favourable. I repeat those tactics as

suggested in the factum of the Attorney General at paragraph 66:

66 . Th e only m e an s by whi c h Publi c Mobil e c an a c hi e v e l e gal ce r t ain t y f or i ts e xpr e ss e d c on ce rn i s f or t h e c o m pany t o r e qu e st a



Page: 40

Canadian own e r s hip and c on t rol r e vi e w by t h e CRTC on t h e f a c ts o f i ts s i t ua t ion . I f Publi c Mobil e rai s e s m or e f or e ign c api t al , and , a s a r e s ul t , t h e CRTC c an no long e r c on c lud e t ha t Publi c Mobil e i s no t c on t roll e d in f a c t by a non-Canadian , Publi c Mobil e c an e i t h e r a s k t h e CRTC t o r ec on s id e r i ts d ec i s ion und e r s ec t ion 62 o f t h e Ac t ,

p e t

i t ion

t h e

Gov e rnor in Coun

c il

t o vary

t h e

d ec

i s ion und

e r

s ec t ion 12 , or app e al t o t h e F e d e ral Cour t o f App e al .

[81] The Attorney General cited the decision of the Federal Court of Appeal in Canada (Bord e r

S e rvi ce s Ag e n c y) v . C .B . Pow e ll Lt d ., 2010 FCA 61 for the proposition that a party can proceed to

the court system only after all adequate remedial resources in the administrative process have been

exhausted.

[82] I agree that where the applicable statute or regulations provide for appeals, reviews and

other such remedies in respect of decisions, it is appropriate that such avenues be exhausted before

recourse to the courts. This does not mean that an opposing party who can offer legal strategies that

may or may not work can, by suggesting such strategies, frustrate access to the courts. That is all

that the Attorney General in paragraph 66, above, is suggesting.

[83] In the present situation, access to the court system is appropriate.



Page: 41

ISSUE 2: Whether the Governor in Council acted within its statutory mandate in

varying the CRTC Decision concerning G lobalive

a) The Telecommunications Act

[84] It is common ground that the T e l ec o mm uni c a t ion s Ac t , S.C. 1993, c. 38 is the relevant

statute under which both the CRTC and the Governor in Council made their decisions. Sections 4

and 5 of that Ac t provide any person, other than a broadcasting undertaking, who operates any

transmission facility of a Canadian carrier, is subject to the Ac t . Each of these terms is a defined

term and, for purposes of these Reasons, it can be accepted that each of Public Mobile, Globalive

and the corporate Respondents is a person who is subject to the Ac t

.

[85] Section 7 of the Ac t sets out the objectives of Canadian telecommunications policy. It says:

Obj ec t iv e s

7 . I t i s h e r e by a ff ir m e d t ha t t e l ec o mm uni c a t ion s p e r f or m s an essential role in the maintenance of Canada’s identity and s ov e r e ign t y and t ha t t h e Canadian t e l ec o mm uni c a t ion s poli c y ha s a s i ts obj ec t iv e s

(a) t o f a c il i t a t e t h e ord e rly d e v e lop m e n t t hroughou t Canada o f a t e l ec o mm uni c a t ion s s y st e m t ha t s e rv e s t o s a f e guard , e nri c h and st r e ng t h e n t h e s o c ial and ec ono m i c f abri c o f Canada and i ts r e gion s ;

(b) t o r e nd e r r e liabl e and a ff ordabl e t e l ec o mm uni c a t ion s s e rvi ce s o f high quali t y a cce ss ibl e t o Canadian s in bo t h urban and rural ar e a s in all r e gion s o f Canada;

( c ) t o e nhan ce t h e e ff i c i e n c y and c o m p e t i t iv e n e ss , a t t h e na t ional and in t e rna t ional l e v e l s , o f Canadian t e l ec o mm uni c a t ion s ;

(d) t o pro m o t e t h e own e r s hip and c on t rol o f Canadian c arri e r s by Canadian s ;

( e ) t o pro m o t e t h e u s e o f Canadian t ran s m i ss ion f a c il i t i e s f or t e l ec o mm uni c a t ion s wi t hin Canada and b e t w ee n Canada and poin ts ou ts id e Canada;



Page: 42

( f ) t o f o st e r in c r e a s e d r e lian ce on m ar ke t f or ce s f or t h e provi s ion o f t e l ec o mm uni c a t ion s s e rvi ce s and t o e n s ur e t ha t r e gula t ion , wh e r e r e quir e d , i s e ff i c i e n t and e ff ec t iv e ;

(g) t o

st i m

ula t e

r e s e

ar c h and d

e v e lop

m e n t

in Canada in t h e f i e ld o

f t e l ec o mm uni c a t ion s and t o e n c ourag e innova t ion in t h e provi s ion o f

t e l ec o mm uni c a t ion s s e rvi ce s ;

(h) t o r e s pond t o t h e ec ono m i c and s o c ial r e quir e m e n ts o f u s e r s o f t e l ec o mm uni c a t ion s s e rvi ce s ; and

(i) t o c on t ribu t e t o t h e pro t ec t ion o f t h e priva c y o f p e r s on s .

[86] Sections 8, 10 and 11 of the Ac t permit the Governor in Council, by order, to issue directions

to the CRTC on broad policy matters with respect to Canadian telecommunications policy

objectives. No such order has been issued in this case.

[87] Section 12(1) of the Ac t permits the Governor in Council, on its own motion or on petition

from another, by order, to vary or rescind or send back to the CRTC any CRTC decision. Section

12(8) requires reasons to be given. Section 13 requires consultation with the provincial government.

Varia t ion , r e s c i ss ion or r e f e rral

12 . (1) Wi t hin on e y e ar a ft e r a d ec i s ion by t h e Co mm i ss ion , t h e Gov e rnor in Coun c il m ay , on p e t i t ion in wri t ing pr e s e n t e d t o t h e Gov e rnor in Coun c il wi t hin nin e t y day s a ft e r t h e d ec i s ion , or on t h e Governor in Council’s own motion, by order, vary or rescind thed ec i s ion or r e f e r i t ba ck t o t h e Co mm i ss ion f or r ec on s id e ra t ion o f al l or a por t ion o f i t .

… R e a s on s

(8) In an ord e r m ad e und e r s ub s ec t ion (1) or (7) , t h e Gov e rnor in Coun c il s hall s e t ou t t h e r e a s on s f or m a k ing t h e ord e r .

…



Page: 43

Provin c ia l c on s ul t a t ion

13 . Th e Mini st e r , b e f or e m a k ing a r ec o mm e nda t ion t o t h e Gov e rnor in Coun c il f or t h e purpo s e s o f any ord e r und e r s ec t ion 8 or 12 , or b e f or e m a k ing any ord e r und e r s ec t ion 15 , s hall no t i f y a m ini st e r

designated by the government of each province of the Minister’sin t e n t ion t o m a ke t h e r ec o mm e nda t ion or t h e ord e r and s hall provid e an oppor t uni t y f or e a c h o f t h e m t o c on s ul t wi t h t h e Mini st e r .

[88] Section 72(15) exempts from a review by the Governor in Council decisions of the CRTC as

to violation of its orders and imposition of a penalty. This is not relevant here.

[89]

Section 16(1) of the Ac t

provides that a Canadian carrier is eligible to operate as a

telecommunications common carrier if it is a Canadian owned and controlled corporation

incorporated under Canadian or provincial laws.

Eligibili t y

16 . (1) A Canadian c arri e r i s e ligibl e t o op e ra t e a s a t e l ec o mm uni c a t ion s c o mm on c arri e r i f

(a) i t i s a Canadian-own e d and c on t roll e d c orpora t ion in c orpora t e d or c on t inu e d und e r t h e law s o f Canada or a provin ce ; or

(b) i t own s or op e ra t e s only a t ran s m i ss ion f a c il i t y t ha t i s r e f e rr e d t o in s ub s ec t ion (5) .

[90] Subsection 16(3) of the Ac t which is pertinent here, defines what is Canadian-owned and

controlled for the purposes of subsection 16(1):

Canadian own e r s hip and c on t rol

(3) For t h e purpo s e s o f s ub s ec t ion (1) , a c orpora t ion i s Canadian- own e d and c on t roll e d i f

(a) no t l e ss t han e igh t y p e r ce n t o f t h e m e m b e r s o f t h e board o f dir ec t or s o f t h e c orpora t ion ar e individual Canadian s ;



Page: 44

(b) Canadian s b e n e f i c ially own , dir ec t ly or indir ec t ly , in t h e aggr e ga t e and o t h e rwi s e t han by way o f s ec uri t y only , no t l e ss t han eighty per cent of the corporation’s voting shares issued and

ou tst anding; and

( c )

t h e c orpora

t ion i

s no

t o t h e rwi

s e c on

t roll

e d by p

e r s on

s t ha

t ar

e no t Canadian s .

[91] It is agreed that the ‘legal control” requirements of subsections 16(3) (a) and (b) have been

met by Globalive. The CRTC and Governor in Council decisions differed as to whether the “control

in fact” provision of subsection 16(3)(c) had been met.

[92] Section 47 of the Ac t provides that the CRTC shall exercise its powers with a view to

implementing Canadian telecommunications policy objectives.

Co mm i ss ion s ubj ec t t o ord e r s and st andard s

47 . Th e Co mm i ss ion s hall e x e r c i s e i ts pow e r s and p e r f or m i ts du t i e s und e r t hi s Ac t and any s p ec ial Ac t

(a) wi t h a vi e w t o i m pl e m e n t ing t h e Canadian t e l ec o mm uni c a t ion s poli c y obj ec t iv e s and e n s uring t ha t Canadian c arri e r s provid e t e l ec o mm uni c a t ion s s e rvi ce s and c harg e ra t e s in a cc ordan ce wi t h s ec t ion 27; and

(b) in a cc ordan ce wi t h any ord e r s m ad e by t h e Gov e rnor in Coun c il und e r s ec t ion 8 or any st andard s pr e s c rib e d by t h e Mini st e r und e r s ec t ion 15 .

[93] Section 52 of the Ac t is directed at findings of fact by the CRTC. Subsection 52(1) provides

that the CRTC’s determination on a question of fact is binding and conclusive:

Qu e st ion s o f law and f a c t

52 . (1) Th e Co mm i ss ion m ay , in e x e r c i s ing i ts pow e r s and p e r f or m ing i ts du t i e s und e r t hi s Ac t or any s p ec ial Ac t , d e t e r m in e any qu e st ion o f law or o f f a c t , and i ts d e t e r m ina t ion on a qu e st ion o f f a c t i s binding and c on c lu s iv e .



Page: 45

Fa c t ual f inding s o f c our t

(2) In d e t e r m ining a qu e st ion o f f a c t , t h e Co mm i ss ion i s no t bound by t h e f inding or judg m e n t o f any c our t , bu t t h e f inding or

judg m e

n t

o f

a c our

t i s

ad m

i ss

ibl e

in pro cee

ding s

o f t h e Co mm i ss ion .

P e nding pro cee ding s

(3) Th e pow e r o f t h e Co mm i ss ion t o h e ar and d e t e r m in e a qu e st ion o f f a c t i s no t a ff ec t e d by pro cee ding s p e nding b e f or e any c our t in whi c h t h e qu e st ion i s in i ss u e .

[94] Sections 60 through 63 of the Ac t deal with decisions of the CRTC. Section 64(1) provides

for an appeal to the Federal Court of Appeal on any question of law or of jurisdiction:

App e al t o F e d e ral Cour t o f App e al

64 . (1) An app e al f ro m a d ec i s ion o f t h e Co mm i ss ion on any qu e st ion o f law or o f juri s di c t ion m ay b e brough t in t h e F e d e ral Cour t o f App e al wi t h t h e l e av e o f t ha t Cour t .

[95] The constant theme of the Ac t is adherence to Canadian telecommunications policy

objectives. Those objectives are set out in section 7 of the Ac t . The opening paragraph of section 7

emphasizes that telecommunications plays an e ss e n t ial role in the maintenance of Canada’s identity

and s ov e r e ign t y .

b) Findings of Fact

[96] Subsection 52(1) of the T e l ec o mm uni c a t ion s Ac t as reproduced above, provides that a

determination by the CRTC on a question of fact is binding and conclusive.



Page: 46

[97] Counsel for Globalive traced this provision back to section 59 of the Na t ional

Tran s por t a t ion Ac t , R.S. 1985, c. N-20 and right back to the Railway Ac t , 3 Edw. VII, c. 58, section

42, which provided that findings of fact were binding “on all courts”. Thus, Globalive argued,

subsection 52(1) must be read contextually so that the CRTC’s findings of fact are binding on courts

but not on the Governor in Council.

[98] On the other hand, Public Mobile’s Counsel argues that subsection 52(1) is to be read

without restriction and applies equally to any body dealing with the CRTC’s decisions, including

the Governor in Council. They argue that the Railway Ac t

of 1903 should not reach “beyond the

grave” so as to constrain the modern T e l ec o mm uni c a t ion s Ac t .

[99] To determine whether the question as to the reach of subsection 52(1) of the Ac t applies to

the Governor in Council’s Decision, the Court must first consider whether the Governor in Council

disturbed a “finding of fact” by the CRTC.

[100] The Supreme Court of Canada provided useful guidance on this issue in Hou s e n v .

Ni k olai s e n [2002] 2 S.C.R. 235. The majority decision written by Iacobucci and Major JJ noted the

important distinction between findings of fact and conclusions drawn from those findings, which

conclusions are sometimes, somewhat carelessly, also called findings of fact. If a Court finds that a

person committed acts A and B and failed to commit act C, these are findings of fact. If the Court

then concludes that as a result, the person was negligent, that is a conclusion drawn from the

findings of fact. The result is termed a question of mixed fact and law. The majority wrote at

paragraph 26:



Page: 47

D . S t andard o f R e vi e w f or Qu e st ion s o f Mix e d F a c t and Law

26 At t h e ou ts e t , i t i s i m por t an t t o di st ingui s h qu e st ion s o f m ix e d f a c t and law f ro m f a c t ual f inding s (wh e t h e r dir ec t f inding s or in f e r e n ce s ) . Qu e st ion s o f m ix e d f a c t and law involv e applying a

l e gal

st andard

t o a

s e t o

f f a c ts

: Canada (Dir ec t

or o f

Inv e st

iga t ion and R e s e ar c h) v . S ou t ha m In c ., [1997] 1 S .C .R . 748 , a t para . 35 .

On t h e o t h e r hand , f a c t ual f inding s or in f e r e n ce s r e quir e m a k ing a c on c lu s ion o f f a c t ba s e d on a s e t o f f a c ts . Bo t h m ix e d f a c t and law and f a c t f inding s o ft e n involv e drawing in f e r e n ce s ; t h e di ff e r e n ce li e s in wh e t h e r t h e in f e r e n ce drawn i s l e gal [pag e 257] or f a c t ual . B ec au s e o f t hi s s i m ilari t y , t h e t wo t yp e s o f qu e st ion s ar e s o m e t i m e s c on f ound e d . Thi s c on f u s ion wa s poin t e d ou t by A . L. Goodhar t in "App e al s on Qu e st ion s o f Fa c t " (1955) , 71 L .Q .R . 402 , a t p . 405:

Th e di st in c t ion b e t w ee n [ t h e p e r ce p t ion o f f a c ts and t h e e valua

t ion o

f f a c ts

] t e

nd s t o b

e ob

f u s c

a t e

d b ec

au s e

w e

u s e

s u c h a phra s e a s " t h e judg e f ound a s a f a c t t ha t t h e d e f e ndan t had b ee n n e glig e n t , " wh e n wha t w e m e an t o s ay i s t ha t " t h e judg e f ound a s a f a c t t ha t t h e d e f e ndan t had don e a c ts A and B , and a s a m a tt e r o f opinion h e r e a c h e d t h e c on c lu s ion t ha t i t wa s no t r e a s onabl e f or t h e d e f e ndan t t o hav e a c t e d in t ha t way . "

In t h e c a s e a t bar , t h e r e ar e e xa m pl e s o f bo t h t yp e s o f qu e st ion s . Th e i ss u e o f wh e t h e r t h e m uni c ipali t y ough t t o hav e k nown o f t h e hazard in t h e road involv e s w e ighing t h e und e rlying f a c ts and m a k ing f a c t ual f inding s a s t o t h e k nowl e dg e o f t h e m uni c ipali t y . I t al s o involv e s applying a l e gal st andard , whi c h in t hi s c a s e i s provid e d by s . 192(3) o f t h e Rural Muni c ipali t y Ac t , 1989 , S .S . 1989-90 , c . R-26 .1 , t o t h e s e f a c t ual f inding s . S i m ilarly , t h e f inding o f n e glig e n ce involv e s w e ighing t h e und e rlying f a c ts , m a k ing f a c t ual c on c lu s ion s t h e r e f ro m , and drawing an in f e r e n ce a s t o wh e t h e r or no t t h e m uni c ipali t y f ai l e d t o e x e r c i s e t h e l e gal st andard o f r e a s onabl e c ar e and t h e r e f or e wa s n e glig e n t .

[101] Once it is determined that a finding is one of mixed fact and law, the Court must consider

whether the alleged error is purely one of law that is subject to review on the correctness standard.

The majority in Hou s e n wrote at paragraph 27:

27 On ce i t ha s b ee n d e t e r m in e d t ha t a m a tt e r b e ing r e vi e w e d involv e s t h e appli c a t ion o f a l e gal st andard t o a s e t o f f a c ts , and i s t hu s a qu e st ion o f m ix e d f a c t and law , t h e n t h e appropria t e



Page: 48

st andard o f r e vi e w m u st b e d e t e r m in e d and appli e d . Giv e n t h e di ff e r e n t st andard s o f r e vi e w appli c abl e t o qu e st ion s o f law and qu e st ion s o f f a c t , i t i s o ft e n di ff i c ul t t o d e t e r m in e wha t t h e appli c abl e st andard o f r e vi e w i s . In S ou t ha m , s upra , a t para . 39 , t hi s Cour t illu st ra t e d how an e rror on a qu e st ion o f m ix e d f a c t and

law c an a

m

oun t t o a pur

e e rror o

f law

s ubj

ec t t o

t h e c orr

ec t n e ss

st andard:

... i f a d ec i s ion- m a ke r s ay s t ha t t h e c orr ec t t e st r e quir e s hi m or h e r t o c on s id e r A , B , C , and D , bu t in f a c t t h e [pag e 258] d ec i s ion- m a ke r c on s id e r s only A, B , and C , t h e n t h e ou t c o m e i s a s i f h e or s h e had appli e d a law t ha t r e quir e d c on s id e ra t ion o f only A, B , and C . I f t h e c orr ec t t e st r e quir e s hi m or h e r t o c on s id e r D a s w e ll , t h e n t h e d ec i s ion- m a ke r ha s in e ff ec t appli e d t h e wrong law , and s o ha s m ad e an e rror o f law .

Th e r e f or e , wha t app e ar s t o b e a qu e st ion o f m ix e d f a c t and law , upon f ur t h e r r e f l ec t ion , c an a c t ually b e an e rror o f pur e law .

[102] The Decision of the Governor in Council did not disagree with the CRTC on its factual

determinations. It disagreed with the CRTC as to the conclusions to be drawn from those facts. This

is quite apparent, for instance, with reference to the following “Whereas” clauses at page 3:

Wh e r e a s t h e Gov e rnor in Coun c il r ec ogniz e s t ha t t h e Commission came to its conclusion on Globalive’s non- c o m plian ce wi t h t h e own e r s hip and c on t rol r e quir e m e n ts ba s e d on an a ss e ss m e n t o f variou s f a c t or s t ha t provid e in f lu e n ce t o t h e non-Canadian s har e hold e r whi c h in i ts vi e w , wh e n t a ke n t og e t h e r , a m oun t t o c on t rol;

Wh e r e a s t h e Gov e rnor in Coun c il r ec ogniz e s t ha t m ul t ipl e l e v e r s o f in f lu e n ce c an , wh e n c o m bin e d , a m oun t t o c on t rol , bu t c on s id e r s t ha t t ha t i s no t t h e c a s e wi t h Globaliv e ;

Wh e r e a s t h e Gov e rnor in Coun c il c on s id e r s t ha t , on t h e ba s i s o f a c ar e f ul e xa m ina t ion o f t h e f a c ts and s ub m i ss ion s b e f or e t h e Co mm i ss ion , i t i s r e a s onabl e t o c on c lud e , f or t h e r e a s on s s e t ou t in t hi s Ord e r , t ha t Globaliv e i s no t in f a c t c on t roll e d by p e r s on s t ha t ar e no t Canadian and t h e r e f or e m ee ts t h e Canadian own e r s hip and c on t rol r e quir e m e n ts und e r t h e Ac t and i s e ligibl e t o op e ra t e a s a t e l ec o mm uni c a t ion s c o mm on c arri e r in Canada;



Page: 49

[103] This is also apparent in reading the Schedule, much of which has been set out earlier in these

Reasons. I repeat paragraph 20:

20 .

In s u mm

ary ,

s u c h a

s igni

f i c an

t c on

ce n t ra

t ion o

f d e b t

in t h e hand s o f Ora s c o m provid e s Ora s c o m wi t h in f lu e n ce ov e r Globaliv e .

How e v e r , giv e n t h e e x ce p t ional t e r m s and c ondi t ion s o f t h e l e nding in st ru m e n ts whi c h s e v e r e ly r e st ri c t t h e pro t ec t ion a ff ord e d t o t h e l e nd e r and t h e righ ts o f Globaliv e t o r e n e w t h e d e b t f or up t o s ix

y e ar s or t o r e t ir e i t a s i ts e n t ir e di s c r e t ion wi t hou t p e nal t y ( s o t ha t t h e e xi st e n ce o f t ho s e loan s i s no t pr ec ariou s ) , t h e d e b t f inan c ing provid e d by Ora s c o m do e s no t e nabl e i t t o c on t rol in f a c t e i t h e r t h e st ra t e gi c or op e ra t ional d ec i s ion s o f Globaliv e .

[104]

I conclude, therefore, that the Governor in Council has not made any different findings of

fact than those found by the CRTC. However, the Governor in Council has drawn different

conclusions from those findings. It has made a legal determination drawn from those facts. As such,

the findings of the Governor in Council based on a legal determination are to be judicially reviewed

on a standard of correctness. (Dun s m uir , s upra . at paragraph 50.)

c) Legal Findings

[105] As determined above, the Decision of the Governor in Council involves legal findings and is

to be determined on a standard of correctness. The governing legal provisions are those of the

T e l ec o mm uni c a t ion s Ac t .

[106] The legal basis upon which the Governor in Council has stated that its Decision was made

has been set out at page 2 of the “Whereas” recitals:

Wh e r e a s Canadian t e l ec o mm uni c a t ion s poli c y obj ec t iv e s in c lud e r e nd e ring r e liabl e and a ff ordabl e t e l ec o mm uni c a t ion s s e rvi ce s o f high quali t y a cce ss ibl e t o Canadian s in bo t h urban and rural ar e a s in all r e gion s o f Canada , pro m o t ing t h e own e r s hip and



Page: 50

c on t rol o f Canadian c arri e r s by Canadian s and e nhan c ing t h e e ff i c i e n c y and c o m p e t i t iv e n e ss , a t t h e na t ional and in t e rna t ional l e v e l s , o f Canadian t e l ec o mm uni c a t ion s ;

Wh e r e a s t h e Mini st e r o f Indu st ry t oo k m e a s ur e s in t h e c on

t e x t o f t h e

Advan ce

d Wir e l e ss

S p ec t

ru m

au c t

ion in 2007-2008 t o e n c ourag e t h e e m e rg e n ce and par t i c ipa t ion o f n e w e n t ran ts in ord e r

t o f o st e r gr e a t e r c o m p e t i t ion in t h e Canadian wir e l e ss t e l ec o mm uni c a t ion m ar ke t and f ur t h e r innova t ion in t h e indu st ry and t o r e s pond t o t h e r e quir e m e n ts o f Canadian u s e r s o f t e l ec o mm uni c a t ion s e rvi ce s wi t h a goal o f low e r pri ce s , b e tt e r s e rvi ce and m or e c hoi ce f or c on s u m e r s and bu s in e ss ;

Wh e r e a s Globaliv e , a s a n e w e n t ran t , wa s a s u cce ssf ul bidd e r in t h e Advan ce s Wir e l e ss S p ec t ru m li ce n s ing pro ce ss and wa s i ss u e d s p ec t ru m li ce n ce s by t h e Mini st e r o f Indu st ry;

Wh e r e a s , in ord e r t o op e ra t e a s a t e l ec o mm uni c a t ion s c o mm on c arri e r in Canada , Globaliv e m u st s a t i sf y t h e Canadian own e r s hip and c on t rol r e quir e m e n ts s e t ou t in t h e Ac t ;

Wh e r e a s t h e Gov e rnor in Coun c il c on s id e r s t ha t , wh e n po ss ibl e , t h e Canadian own e r s hip and c on t rol r e quir e m e n ts s hould b e appli e d in s uppor t o f t h e Canadian t e l ec o mm uni c a t ion s poli c y obj ec t iv e s s e t ou t in t h e Ac t , in c luding e nhan c ing c o m p e t i t ion in t h e t e l ec o mm uni c a t ion s m ar ke t ;

Wh e r e a s t h e Canadian own e r s hip and c on t rol r e quir e m e n ts o f t h e Ac t r e st ri c t t h e own e r s hip o f vo t ing s har e s by non-Canadian s , bu t t h e Ac t do e s no t i m po s e li m i ts on f or e ign inv e st m e n t in t e l ec o mm uni c a t ion c o mm on c arri e r s and s hould b e in t e rpr e t e d in a way t ha t e n s ur e s t ha t a cce ss t o f or e ign c api t al , t ec hnology and e xp e ri e n ce i s e n c ourag e d in a m ann e r t ha t s uppor ts all o f t h e Canadian t e l ec o mm uni c a t ion poli c y obj ec t iv e s ;

[107] The Governor in Council has in many respects adhered to and acknowledged the Canadian

telecommunication policy objectives as set out in section 7 of the Ac t . However, the Governor in

Council has stepped outside those provisions by inserting a previously unknown policy objective

into section 7; namely, that of ensuring access to foreign capital, technology and experience.

Secondly it erred by limiting its Decision to Globalive only. What is the effect of so doing?



Page: 51

[108] There is no doubt that the Governor in Council is bound by the Ac t and that the Courts may,

by way of judicial review, determine whether the Governor in Council has acted within or outside

the provisions of the Ac t . The Supreme Court of Canada has recently followed such a practice in

Mon t r e al ( c i t y) v . Mon t r e al Por t Au t hori t y , 2010 SCC 14. LeBel J for the Court wrote at paragraphs

33 and 47:

33 How e v e r , in a c oun t ry f ound e d on t h e rul e o f law and in a s o c i e t y gov e rn e d by prin c ipl e s o f l e gali t y , di s c r e t ion c anno t b e e qua t e d wi t h arbi t rarin e ss . Whil e t hi s di s c r e t ion do e s o f c our s e e xi st , i t m u st b e e x e r c i s e d wi t hin a s p ec i f i c l e gal f ra m e wor k .

Di s c

r e t

ionary a c ts

f all wi

t hin a nor

m

a t iv

e hi

e rar

c hy

.

In t h e

in st

an t c a s e s , an ad m ini st ra t iv e au t hori t y appli e s r e gula t ion s t ha t hav e

b ee n m ad e und e r an e nabling st a t u t e . Th e st a t u t e and r e gula t ion s d e f in e t h e s c op e o f t h e di s c r e t ion and t h e prin c ipl e s gov e rning t h e e x e r c i s e o f t h e di s c r e t ion , and t h e y m a ke i t po ss ibl e t o d e t e r m in e wh e t h e r i t ha s in f a c t b ee n e x e r c i s e d r e a s onably .

…

47 Th e r e s pond e n ts ' d ec i s ion s w e r e c on s i st e n t n e i t h e r wi t h t h e prin c ipl e s gov e rning t h e appli c a t ion o f t h e PILT Ac t and t h e Regulations nor wi t h Parlia m e n t ' s in t e n t ion . Th e way t h e y e x e r c i s e d t h e ir di s c r e t ion l e d t o an unr e a s onabl e ou t c o m e t ha t ju st i f i e d t h e e x e r c i s e o f t h e F e d e ral Cour t ' s pow e r o f judi c ia l r e vi e w .

[109] The Supreme Court of Canada in dealing with a decision of the Governor in Council in

reviewing a decision of the CRTC in Canada (Att orn e y G e n e ral) v . Inui t Tapiri s a t o f Canada ,

[1980] 2 S.C.R. 735 stated the same principles. Estey J for the Court wrote at page 748:

Le t i t b e s aid a t t h e ou ts e t t ha t t h e m e r e f a c t t ha t a st a t u t ory pow e r i s v e st e d in t h e Gov e rnor in Coun c il do e s no t m e an t ha t i t i s b e yond r e vi e w . I f t ha t body ha s f ai l e d t o ob s e rv e a c ondi t ion pr ece d e n t t o t h e e x e r c i s e o f t ha t pow e r , t h e c our t c an d ec lar e t ha t s u c h purpor t e d e x e r c i s e i s a nulli t y .



Page: 52

[110] He wrote further at page 752:

How e v e r , in m y vi e w t h e e ss e n ce o f t h e prin c ipl e o f law h e r e op e ra t ing i s s i m ply t ha t in t h e e x e r c i s e o f a st a t u t ory pow e r t h e Gov e rnor in Coun c il , li ke any o t h e r p e r s on or group o f p e r s on s , m

u st

kee

p wi t hin

t h e

law a s

laid down by Parlia m e

n t or

t h e Le gi s la t ur e . Failur e t o do s o will c all in t o a c t ion t h e s up e rvi s ing

f un c t ion o f t h e s up e rior c our t who s e r e s pon s ibili t y i s t o e n f or ce t h e law , t ha t i s t o e n s ur e t ha t s u c h a c t ion s a s m ay b e au t horiz e d by st a t u t e s hall b e c arri e d ou t in a cc ordan ce wi t h i ts t e r m s , or t ha t a publi c au t hori t y s hall no t f ai l t o r e s pond t o a du t y a ss ign e d t o i t by st a t u t e .

[111] The issues in the Inui t Tapiri s a t case are different from the issues in the present case in that

Inui t

Tapiri s a t was dealing with the procedural aspects concerning a decision of the Governor in

Council. In the present case, we are dealing with the legal basis for such a decision.

[112] The Federal Court of Appeal in Canada (Canadian Wh e a t Board) v . Canada (Att orn e y

G e n e ral) , 2009 FCA 214, 392 N.R. 149 had stated that it is settled law that the Governor in Council

must stay within its boundaries of the enabling statute. Noël JA for the Court wrote at paragraph 37:

37 I t i s w e ll s e tt l e d law t ha t wh e n e x e r c i s ing a l e gi s la t iv e pow e r giv e n t o i t by st a t u t e , t h e Gov e rnor in Coun c il m u st st ay wi t hin t h e boundary o f t h e e nabling st a t u t e , bo t h a s t o e m pow e r m e n t and purpo s e . Th e Gov e rnor in Coun c il i s o t h e rwi s e f r ee t o e x e r c i s e i ts st a t u t ory pow e r wi t hou t in t e r f e r e n ce by t h e Cour t , e x ce p t in an e gr e giou s c a s e or wh e r e t h e r e i s proo f o f an ab s e n ce o f good f ai t h (Thorn e ' s Hardwar e Lt d . v . Th e Qu ee n , [1983] 1 S .C .R . 106 , p . 111; Att orn e y G e n e ral o f Canada v. Inui t Tapiri s a t e t al ., [1980] 2 S .C .R . 735

[113] A decision-maker such as the Governor in Council is not only required to take into

consideration the relevant statutory criteria, but also to exclude irrelevant criteria. Binnie J for the



Page: 53

majority of the Supreme Court of Canada in Canadian Union o f Publi c E m ploy ee s (C .U .P .E . ) v .

On t ario (Mini st e r o f Labour) , [2003] 1 S.C.R. 539 wrote at paragraph 172:

Th e prin c ipl e t ha t a st a t u t ory d ec i s ion- m a ke r i s r e quir e d t o t a ke in t o c on

s id

e ra

t ion r

e l e van

t c ri

t e ria

,

a s

w e ll a

s t o

e x c lud

e f ro m

c on s id e ra t ion irr e l e van t c ri t e ria , ha s b ee n r e a ff ir m e d on nu m e rou s o cc a s ion s .

[114] The same proposition was stated by Cory J (as he then was) in delivering the judgment of

the Ontario Divisional Court in D octors’ Hospital and Minister of Health, (1976), 12 O.R. (2d) 164

at page 174:

I t ha

s b ee

n h e ld

t ha

t e v e n i

f m

ad e

in good f ai

t h and wi

t h

t h e

b e st

o f in t e n t ion s , a d e par t ur e by a d ec i s ion- m a k ing body f ro m t h e obj ec ts

and purpo s e s o f a st a t u t e pur s uan t t o whi c h i t a c ts i s obj ec t ionabl e and s ubj ec t t o r e vi e w by t h e Cour ts .

[115] The Governor in Council in this case misdirected itself in law, particularly as expressed in

the “reasons” as set out in the following “Whereas” clauses:

Wh e r e a s t h e Canadian own e r s hip and c on t rol r e quir e m e n ts o f t h e Ac t r e st ri c t t h e own e r s hip o f vo t ing s har e s by non-Canadian s , bu t t h e Ac t do e s no t i m po s e li m i ts on f or e ign inv e st m e n t in t e l ec o mm uni c a t ion c o mm on c arri e r s and s hould b e in t e rpr e t e d in a way t ha t e n s ur e s t ha t a cce ss t o f or e ign c api t al , t ec hnology and e xp e ri e n ce i s e n c ourag e d in a m ann e r t ha t s uppor ts all o f t h e Canadian t e l ec o mm uni c a t ion poli c y obj ec t iv e s ; ( e m pha s i s add e d)

…

And wh e r e a s t h e Gov e rnor in Coun c il c on s id e r s t ha t t hi s Ord e r i s ba s e d on t h e f a c ts o f t hi s par t i c ular c a s e and ha s a s igni f i c an t dir ec t i m pa c t only on Globaliv e ; ( e m pha s i s add e d)

[116] In the present case, the T e l ec o mm uni c a t ion s Ac t makes it clear in the opening portion of

section 7 that telecommunications has an e ss e n t ial role in the maintenance of Canada’s identity and



Page: 54

sovereignty. Subsection 7(d) states as a policy objective the pro m o t ion of ownership and control of

Canadian carriers by Canadians. Section 16 of the Ac t requires legal control and control in fact to

be Canadian.

[117] In the first of the above “Whereas” clauses, the Governor in Council misdirected itself in

law by interpreting the Canadian ownership and control requirements of the T e l ec o mm uni c a t ion s

Ac t ,to use its words, “in a way that ensures a cce ss t o f or e ign c api t al , t ec hnology and e xp e ri e n ce i s

encouraged”. While the Governor in Council is correct in saying in the same clause that “the Act

does not impose limits on foreign investment” it must be kept in mind that the Ac t

does not refer

anywhere to “foreign investment” or to “foreign capital, technology and experience”. What the Ac t

does say is that telecommunications has an essential role in the maintenance of Canada’s identity

and sovereignty and provides a policy objective which requires Canadian ownership and control to

be promoted. There is no policy objective in the Act that encourages foreign investment. The Ac t

provides tests as to Canadian ownership and control including in subsection 16(3)(c) that a

corporation not be o t h e rwi s e c on t roll e d by a non-Canadian. The intent of the Ac t is clear that a

situation such as this is to be determined in a manner so as to ensure that there is Canadian control.

Where there is a concern that foreign investment and other factors may put Canadian control at risk

then it is the promotion of Canadian control that is to be the essential criterion upon which the

matter is to be determined. It is for Parliament not the Governor in Council to rewrite the Ac t .

[118] In the second of the above “Whereas” clauses, the Governor in Council acted outside the

legal parameters of the Ac t in stating that its Decision impacts only on Globalive. The



Page: 55

Governor in Council cannot restrict its interpretation to one individual and not to others who may

find themselves in a similar circumstance.

[119] These improper considerations were fundamental to the determination of the Governor in

Council to reverse the Decision of the CRTC. Therefore, the Decision of the Governor in Council

must be quashed.

CONCLUSIONS

[120]

For the reasons provided, I have determined that the Applicant Public Mobile has standing

to seek judicial review of the Decision of the Governor in Council dated 10 December 2009. That

Decision was based on errors of law and must be quashed.

[121] Counsel for Globalive submitted that, in the event that I made such a determination, it would

be reasonable to stay the determination for a period of time so as to permit Globalive and any other

relevant person to pursue such appeals and other remedies as may be available. I will stay my

Judgment for a period of forty-five (45) days.

COSTS

[122] I invited Counsel for the parties to make submissions as to costs of the hearing. After

discussion, it was determined that those submissions could be made after the release of these

Reasons. I invite Counsel, therefore, to provide written submissions as to costs, both allocation and

quantum, not to exceed three (3) pages, within thirty (30) days of the date of release of these

Reasons.



Page: 56

[123] No costs will be awarded for or against any of the Interveners.



Page: 57

JUDGMENT

FO R TH E RE ASONS PROV IDED , TH IS C OUR T A DJUDG ES that:

1. The application is allowed;

2. It is declared that the Decision of the Governor in Council P.C. 2009-2008

dated December 10, 2009 is null and void in that it was determined on a

basis in law not provided for in the T e l ec o mm uni c a t ion s Ac t ,

S.C. 1993, c. 38;

3. The Decision of the Governor in Council aforesaid is quashed;

4. The provisions of paragraphs 2 and 3 of this Judgment are stayed for a

period of forty-five (45) days from the date of the release of the Reasons and

Judgment herein;

5. No costs shall be awarded for or against any of the Interveners;

6. Counsel for the remaining parties shall provide written submissions as to

costs, both as to the allocation and quantum, not to exceed (3) pages in

length, within thirty (30) days from the date of the release of the Reasons and

Judgment herein.

"Roger T. Hughes"

Judge



FEDERA L COURT

SOLICIT ORS OF REC ORD

D O C K E T : T-26-10

STYL E OF CA USE: PUBLIC MOBIL E INC ., (Applicant) v. A T T O R N E YGENERA L OF CANADA , G L O V A L I V EWIREL ESS MAN AG EM ENT CORP., B E L LC A N A D A , ROG ERS CO MMUNIC ATI ONS INCL , SHAW CO MMUNIC ATIO NS INCL AND TEL USCOM MUNI CAT I ONS COMPANY, (Respondents) v. AL L I ANCE OF CANADI AN C I NEMA , TE LE VISION AND RADI O ARTISTS,

COMMUNI CAT I NS,

ENERGY ANDPAPERWOR KS UNION OF CANA DA , ANDFRIENDS OF C ANADIAN BROA DCASTING(Interveners)

PLAC E OF HE ARI NG: Ottawa, Ontario

DAT ES OF HE ARING: January 19 & 20, 2011

RE ASONS FO R JUDGM ENT: HUGHES J.

D A T E D : February X X, 2011

APPEARANCES:

John B. LaskinTorys LLP, Toronto, ON

Michael H. RyanArnold & Porter LLP, London,England

FOR THE APPLICANT

Alexander GayRobert MacKinnon

FOR THE RESPONDENT Attorney General of Canada

Thomas G. Heintzman QCMalcolm M. Mercer Anna Matas

FOR THE RESPONDENT Globalive WirelessManagement Corp.



Page: 2

Kenneth JullStephen Schmidt

FOR THE RESPONDENT, Telus CommunicationsCompany

Steven Shrybman FOR THE INTERVENERS

SOLICIT ORS OF RE CORD:

Dougald E. Brown Nelligan O’Brien Payne LLP Barristers & SolicitorsOttawa, Ontario

FOR THE APPLICANT

Myles J. KirvanDeputy Attorney General of CanadaOttawa, Ontario

FOR THE RESPONDENT, Attorney General of Canada

McCarthy Tetrault LLPBarristers & SolicitorsToronto, Ontario

FOR THE RESPONDENT, Globalive WirelessManagement Corp.

Stephen SchmidtChief Regulatory Legal CounselTelus Communications CompanyOttawa, Ontario

FOR THE RESPONDENT, Telus CommunicationsCompany

Sack Goldblatt Mitchell LLPBarristers & SolicitorsOttawa, Ontario

FOR THE INTERVENERS

Globalive Decision Feb 4 2011 T-26-10 Judgment

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