Alberta Government Telephones v. Canada (Canadian Radio-television andTelecommunications Commission), [1989] 2 S.C.R. 225
Alberta Government Telephones Appellant
and
Canadian Radio‑television and
Telecommunications Commission
and CNCPTelecommunications Respondents
and
The Attorney General of Canada,
the Attorney General of Quebec,
the Attorney General of Nova Scotia,
the Attorney General for NewBrunswick,
the Attorney General of Manitoba,
the Attorney General of BritishColumbia,
the Attorney General of Prince EdwardIsland,
the Attorney General for Saskatchewan,
the Attorney General for Alberta and
the Attorney Generalof Newfoundland Interveners
indexed as: alberta government telephones v.(canada) canadian radio‑television and telecommunications commission
FileNo.: 19731.
1987:November 12, 13; 1989: August 14.
Present: Dickson C.J. and Beetz*, Estey*, McIntyre, Lamer, Wilson, LeDain*,La Forest and L'Heureux‑Dubé JJ.
onappeal from the federal court of appeal
Constitutionallaw -- Division of powers -- Interprovincial work or undertaking -- Provincialtelecommunications system -- Physical equipment and subscribers located withinprovince -- Member of unincorporated group providing national and internationalservice -- Agreements subject to federal regulation -- Whether or not work orundertaking within federal jurisdiction -- If so, whether or not agent ofprovincial Crown bound by federal regulatory provisions -- Constitution Act,1867, ss.91(29), 92(10)(a) -- Alberta Government Telephones Act, R.S.A.1980, c.A‑23, ss.1(c), (d), 4, 42(1) ‑‑PublicUtilities Board Act, R.S.A. 1980, c.P‑37, ss.1(j), 70(1)(c)-- Railway Act, R.S.C.1970, c.R‑2, ss.5, 320(1), (11),(12).
Crown-- Immunity -- Agent of provincial Crown operating provincialtelecommunications system -- If system otherwise subject to federal regulation,whether or not provincial Crown bound by federal regulatory provisions ‑‑InterpretationAct, R.S.C.1970, c.I‑23, ss.16, 28.
AlbertaGovernment Telephones (AGT) was created by statute by the province of Albertato provide telephone and telecommunications services within the province. Itsactivities were subject to regulation by a provincial commission. AGT'sphysical equipment connected with the cable and microwave equipment of othercompanies at the Alberta border. AGT was also a member of Telecom Canada, anunincorporated group composed of telecommunications companies providing anetwork for telecommunications services throughout Canada. The agreements towhich AGT was a party were subject to federal regulation by the Canadian Radio‑televisionand Telecommunications Commission (CRTC) but the applications for approval ofthese agreements had been made by Telecom Canada and never by AGT. CNCP wasnot a member of Telecom Canada and was not a party to the agreements to whichAGT was a party.
OnSeptember 17, 1982, CNCP brought an application to the CRTC seeking variousorders under the Railway Act requiring AGT toprovide facilities for the interchange of telecommunications traffic betweenthe system operated by CNCP and the system operated by AGT. AGT, however,sought and was granted a writ of prohibition in the Federal Court, TrialDivision on the ground that, although AGT was a federal undertaking within s.92(10)(a), it was entitled to assert Crown immunity as an agentof the provincial Crown. The Federal Court of Appeal agreed that AGT was afederal undertaking, but held that AGt had exceeded its statutory mandate andwas therefore not entitled to assert Crown immunity. The order of prohibitionwas set aside.
Theconstitutional questions before this Court queried (1) if AGT was a work orundertaking within federal legislative authority by virtue of s.92(10)(a) orotherwise of the Constitution Act, 1867, and (2) if so,was AGT bound by the relevant provisions of the Railway Act.
Held (WilsonJ. dissenting): The appeal should be allowed. The first constitutionalquestion should be answered in the affirmative, the second in the negative.
Per DicksonC.J. and McIntyre, Lamer, La Forest and L'Heureux‑DubéJJ.: AGT isan interprovincial undertaking within the meaning of s.92(10)(a) of theConstitution Act, 1867 and accordingly lies exclusively within federaljurisdiction. However, as a provincial Crown agent, AGT is entitled to claimCrown immunity with the effect that AGT does not fall within the regulatoryauthority of the CRTC pursuant to the terms of ss.5 and 320 of the RailwayAct. Had the Railway Act been expresslymade to bind the Crown, however, AGT would have been be subject to itsprovisions as a constitutional matter.
Thequestion of whether an undertaking, service or business is a federal onedepends on the nature of its operation, and in determining that, the normal orhabitual activities of the business as "a going concern" must beconsidered without regard for exceptional or casual factors. A singlecomprehensive test for all cases cannot be formulated in the abstract; thecourt must be guided by the particular facts in each situation.
Thelocation of the physical apparatus in one province and the fact that all therecipients of a service are within a single province do not preclude anundertaking's being interprovincial in scope. The primary concern is not thephysical structures or their geographical location, but the service provided bythe undertaking through the use of its physical equipment.
AGT'sinvolvement in the transmission and reception of electronic signals at theborders of Alberta was sufficient to mark AGT as an interprovincial, as opposedto a local, undertaking. While the mere interconnection of physical facilitiesin one province with those in a neighbouring province may not of itself besufficient to warrant an undertaking's being characterized as interprovincial,much more than mere physical interconnection of AGT's system at provincialborders is involved here. AGT's various bilateral and multilateral commercialarrangements enable it to play a crucial role in the nationaltelecommunications system and so provide to its local subscribers services ofan interprovincial and international nature.
Aconstitutional issue is to be determined by the reality of the situation, andnot the choice of a particular corporate form. AGT's role and relationshipwith Telecom Canada is therefore relevant to AGT's own constitutionalcharacter. AGT is the mechanism through which the residents of Alberta sendand receive interprovincial and international telecommunicationsservices. The services are provided through both corporate and physicalarrangements which are marked by a high degree of cooperation. Telecom Canadais one essential vehicle employed by AGT to interprovincialize andinternationalize its services. No label need be attached to the legalrelationship that exists among the members of Telecom Canada. It is a form ofa joint venture and is a necessary feature of AGT's overall undertaking. AGTcould not separate itself from Telecom Canada without significantly alteringthe fundamental nature of AGT's enterprise.
Thefact that the members of Telecom Canada own their respective "works"is not significant. The separate ownership of works does not, in this case,take away from the degree of integration which exists between the member systemand the level of cooperation and coordination which exists in the nationaltelephone system. It does not make AGT's system less interprovincial and itdoes not make the Telecom Canada enterprise a mere loose association ofinterested parties. Ownership itself is not conclusive.
Anindividual organization does not necessarily retain its local character becauseit lacks the ability to effect an interprovincial connection on its own. Thecriterion of a single promoter is not essential to a finding of aninterprovincial operation. Even if it were, AGT and the other members ofTelecom Canada would be considered "single promoters" in that theyact together, as one unit, through a form of joint venture to effect the variousinterprovincial connections which form the backbone of the Canadiantelecommunications network. To ignore the interdependence of the variousmembers of Telecom Canada because of the separate corporate structures involvedwould be a sacrifice of substance to form and would advance no constitutionalvalue.
AGT'sinvolvement in the interprovincial flow of signals does not begin and end atAlberta's border. It, in conjunction with the other members of Telecom,provides a physical framework for the provision of interprovincial andinternational telecommunications services. AGT itself provides thecritical interconnection at Alberta's borders.
Thereference to "Her Majesty" in s.16 of the federalInterpretation Act refers not only to the Crown in right of Canada butalso to the Crown in right of a province. The scope of the words"mentioned or referred to" in that section must be given aninterpretation independent of the supplanted common law with respect to Crownimmunity. These words are capable of encompassing: (1) expressly bindingwords; (2) an intention revealed when provisions are read in the context ofother textual provisions; and, (3) an intention to bind where an absurdity, asopposed to an undesirable result, were to occur if the government were notbound. Any exception to the normal Crown immunity rule based on a necessaryimplication should be narrowly confined.
The RailwayAct cannot bind AGT except to the extent the provincial Crown is"mentioned or referred to" in the enactment. Sections 320 and 5 ofthe Railway Act do not contain words that expressly bind the Crown andnothing in the context of these provisions indicates a clear Parliamentaryintention to do so. The fact that granting immunity will produce a regulatoryvacuum with respect to AGT does not amount to a frustration of the RailwayAct as a whole. While granting immunity unless and until Parliamentchooses to amend the legislation will produce a gap in potential coverage ofthe Railway Act, the Act can continue to function just as it did priorto this Court's finding that AGT is a federal undertaking.
AGTdid not waive its immunity when it took advantage of the benefits of federalregulation of telecommunications under the Railway Act. Towaive immunity, a nexus must be established indicating the benefit received bythe Crown to be conditional upon compliance with the restriction. Requiring afairly close nexus between benefit and burden is in keeping with precedent,with the very nature of the Crown immunity doctrine and with the strict testfor finding a legislative intention to bind the Crown. A broad benefit/burdentest would be overly legislative in the face of the current formulation ofs.16 of the Interpretation Act.
The AlbertaGovernment Telephones Act (AGT Act) provides the corporation with the capacityand powers to participate in the advantages of an integrated and federallyregulated telecommunications network in the course of performing itstelecommunications service to local subscribers. None of AGT's actionsthrough TransCanada Telephone Systems (TCTS), however,could be seen as an implied general submission to the entire statutory regimeof benefits and burdens. AGT does not now rely, nor has it relied, onparticular benefits of the Railway Act or of CRTCregulation to which interconnection with CNCP is an attendant burden. CNCP isneither a member of the TCTS agreement, nor is it requesting an interconnectionpursuant to an existing agreement between it and AGT. The advantages obtainedby AGT under the Railway Act are insufficientto link it to CRTC jurisdiction under the theory of waiver of Crown immunity.AGT cannot therefore be taken to have waived immunity with respect to burdensrelated to the operation of TCTS and other agreements. If CNCP were amember of TCTS, it would be a different matter; or, if the requestedinterconnection related to an existing AGT/CNCP agreement, a sufficient nexuswould exist. The waiver doctrine would be stretched too far to hold that AGT,by its participation in the benefit of the TCTS agreements, has submitteditself to the general jurisdiction of the CRTC.
Aprovincial Crown agent does not lose the immunity it would otherwise have byentering into a federally‑regulated area and becoming an interprovincialwork or undertaking. If activity in an area of federal jurisdiction alonesufficed to prevent the agent from invoking its immunity, s.16 of theInterpretation Act would become a dead letter vis‑à‑vis theCrown in right of a province. Entrance into one or another head of federaljurisdiction, simpliciter, does notautomatically strip AGT of its Crown agency status and immunity.
Thedoctrine that Crown immunity is lost when a Crown agent exceeds its statutorymandate makes particular sense in a unitary state where the regulatingauthority and the Crown agent fall under the same jurisdiction. Parliament orthe legislature can be assumed to have granted the immunity from its ownregulation for specific purposes only; where the Crown acts for an extraneous purposeany reason for the grant of immunity is lost. The doctrine may also be appliedwhere one level of government seeks to invoke Crown immunity from a statute ofthe other. The distinction between an agent acting for Crown purposes andacting personally applies.
However,AGT has not exceeded its statutory mandate or Crown purposes. Rather, asa provincial Crown agent, its statutory purposes and ever‑evolvingtechnological advances eventually required it to operate as a federalundertaking in order to service its customers, thus attracting federalregulation.
Per WilsonJ. (dissenting): AGT waived its entitlement to Crown immunity when it electedto garner the benefits of participating in a national telecommunicationsnetwork under the regulatory supervision of the CRTC for, in doing so, it alsohad to accept the burdens accompanying that participation. The benefit‑burdendoctrine requires a close nexus between the benefit obtained and the burdensought to be imposed but does not require that nexus to be a specificlimitation on a specific benefit. The burden‑benefit doctrine thereforeapplies when the Crown agent has engaged in a deliberate and sustained courseof conduct through which it has benefited from a particular provision orprovisions of a statute. The Crown agent cannot pick and choose the situationsin which it wishes the legislation to apply.
Section320(7) of the Railway Act gives the CRTCjurisdiction to regulate the interconnection of telephone systems when oneparty refuses to agree to terms with another party which desires theinterconnection. This provision clearly confers a benefit on the party seekingthe interconnection and imposes a burden on the party resisting it since itremoves the matter from the parties in default of agreement and puts it in thehands of the CRTC. AGT accordingly will be bound by s. 320(7) if it hasundertaken a deliberate and sustained course of conduct supporting theapplication of the benefit‑burden doctrine.
Theapplications made to the CRTC under s. 320(11) should be treated as if they hadbeen made by the participating parties. As an unincorporated association,Telecom Canada was nothing more than the sum of its constituent parts and,accordingly, the formal applications to the CRTC by Telecom Canada were made onbehalf of all its members. AGT, therefore, engaged in a sustained course ofconduct through which it enjoyed the benefits derived from the agreementsapproved by the CRTC under s. 320(11) of the Railway Act. Thenexus between the broadly‑based benefits which AGT received and thebroadly‑based burdens which CNCP seeks to impose upon it is sufficientlyclose to warrant the application of the benefit‑burden doctrine. Thefact that CNCP was never a party to any of the consensual interconnectionagreements to which AGT was a party did not affect that nexus and prevent theimposition of the benefit‑burden doctrine on AGT.
CasesCited
ByDickson C.J.
Considered: City ofMontreal v. Montreal Street Railway, 1912 CanLII 352 (UK JCPC), [1912]A.C.333; Northern Telecom Ltd. v. Communications Workers ofCanada, [1980] S.C.R. 115; The Queen in theRight of the Province of Ontario v. Board of Transport Commissioners, 1967 CanLII 93 (SCC), [1968]S.C.R. 118; Kootenay & Elk Railway Co. v. Canadian PacificRailway Co., 1972 CanLII 182 (SCC), [1974] S.C.R. 955; Luscar CollieriesLtd. v. McDonald, 1925 CanLII 67 (SCC), [1925] S.C.R. 460; British ColumbiaElectric Railway Co. v. Canadian National Railway Co., 1931 CanLII 72 (SCC), [1932]S.C.R. 161; Her Majesty in right of the Province of Alberta v.Canadian Transport Commission, 1977 CanLII 150 (SCC), [1978] 1 S.C.R. 61; Sparlingv. Quebec (Caisse de dépôt et placement du Québec), 1988 CanLII 26 (SCC), [1988] 2 S.C.R.1015; Province of Bombay v. City of Bombay, [1947]A.C.58; R. v. Ouellette, 1980 CanLII 9 (SCC), [1980] 1 S.C.R.568; Toronto Transportation Commission v. The King, 1949 CanLII 35 (SCC), [1949]S.C.R. 510; R. v. Murray, 1967 CanLII 49 (SCC), [1967] S.C.R.262; distinguished: Attorney‑General for Ontario v. Winner, 1954 CanLII 289 (UK JCPC), [1954]A.C.541; City of Toronto v. Bell Telephone Co. of Canada, [1905]A.C.52; Fulton v. Energy Resources Conservation Board, 1981 CanLII 169 (SCC), [1981]1 S.C.R. 153; R. v. Eldorado Nuclear Ltd., 1983 CanLII 34 (SCC), [1983] 2 S.C.R.551; Canadian Broadcasting Corporation v. The Queen, 1983 CanLII 50 (SCC), [1983]1 S.C.R. 339; referred to: IBEW v. Alberta Government Telephones, [1989]2 S.C.R. 000; Construction Montcalm Inc.v. Minimum WageCommission, 1978 CanLII 18 (SCC), [1979] 1 S.C.R. 754; Saskatchewan PowerCorp. v. TransCanada Pipelines Ltd., 1978 CanLII 163 (SCC), [1979] 1 S.C.R.297; Capital Cities Communications Inc.v. Canadian Radio‑TelevisionCommission, 1977 CanLII 12 (SCC), [1978] 2 S.C.R. 141; Public Service Boardv. Dionne, 1977 CanLII 207 (SCC), [1978] 2 S.C.R. 191; R. v. TorontoMagistrates, Ex Parte Tank Truck Transport Ltd., 1960 CanLII 120 (ON SC), [1960] O.R. 497; R. v.Cooksville Magistrate's Court, Ex parte Liquid Cargo Lines Ltd., 1964 CanLII 162 (ON SC), [1965]1 O.R. 84; Canadian Pacific Ltd.v. Telesat Canada (1982),1982 CanLII 1789 (ON CA), 36 O.R. (2d) 229; Arrow Transfer Co., [1974] 1 Can.L.R.B.R. 29; In re Silver Bros.,Ld., 1932 CanLII 353 (UK JCPC), [1932]A.C.514; Crooke's Case (1691), 1 Show.K.B. 208, 89 E.R. 540; Gartland Steamship Co. v. The Queen, 1960 CanLII 55 (SCC), [1960]S.C.R. 315; Bonanza Creek Gold Mining Co. v. The King, 1916 CanLII 423 (UK JCPC), [1916]1 A.C.566; Gouvernement de la République démocratique du Congo v.Venne, 1971 CanLII 145 (SCC), [1971] S.C.R. 997.
ByWilson J. (dissenting)
Sparlingv. Quebec (Caisse de dépôt et placement du Québec), 1988 CanLII 26 (SCC), [1988] 2 S.C.R.1015; Attorney‑General for British Columbia v. Royal Bank of Canadaand Island Amusem*nt Co., 1936 CanLII 245 (BC CA), [1937] 1 W.W.R. 273, aff'd on other grounds by 1937 CanLII 23 (SCC), [1937]S.C.R. 459; Reid v. Canadian Farm Loan Board, 1937 CanLII 370 (MB KB), [1937]4 D.L.R. 248; The Queen in the Right of the Province of Ontario v.Board of Transport Commissioners, 1967 CanLII 93 (SCC), [1968] S.C.R. 118; Bank ofMontreal v. Bay Bus Terminal (North Bay) Ltd. (1971), 1971 CanLII 481 (ON SC), 24 D.L.R.(3d) 13 (Ont. H.C.), aff'd as to the broad application of the benefit‑burdendoctrine by (1972), 1972 CanLII 1184 (ON CA), 30 D.L.R. (3d) 24 (Ont. C.A.)
Statutesand Regulations Cited
Act respecting Government Telephone and TelegraphSystems, S.A. 1908, c.14, ss.1, 5.
Act respecting the Statutes of Canada,S.C.1867, c.1, s.7.
Act to Amend The Telephone and Telegraph Act, S.A.1956, c.53, ss.2, 4.
Aeronautics Act, R.S.C.1970,c.A‑3.
Alberta Government Telephones Act, R.S.A.1980, c.A‑23, ss.1(c), (d), 2(2), 4(1), (2), (3), 9(1)(c),(d), (e), 10, 24, 42(1).
Alberta Government Telephones Act, S.A.1958, c.85, ss.3, 34.
Bills of Exchange Act, R.S.C. 1952, c.15.
Broadcasting Act, R.S.C. 1970, c. B‑11.
Canada Business Corporations Act,S.C.1974‑75‑76, c.33, ss. 121, 122.
Canadian Radio‑television and TelecommunicationsCommission Act, S.C.1974‑75‑76, c.49.
Combines Investigation Act, R.S.C. 1970, c. C‑23,s.32(1)(c).
Companies Act, 1929, S.A. 1929, c. 14.
Constitution Act, 1867, ss. 91(29),92(10)(a), (b), (c).
Criminal Code, R.S.C. 1970, c. C‑34,ss.2, 758, 771(3).
Crown Proceedings Act, 1947 (U.K.), 10 &11 Geo. 6, c.44, s.31(1).
Debt Adjustment Act, 1932, S.M. 1932, c. 8.
Federal Court Act, R.S.C.1970(2nd supp.), c.10, s.18.
Government Railways Act, R.S.C.1886,c.38 (R.S.C. 1970, c. G-11).
Interpretation Act,R.S.B.C.1979, c. 206, s.14.
Interpretation Act, R.S.C.1952,c.158, ss.3(1), 16, 27(2).
Interpretation Act, R.S.C.1970,c. I‑23, ss.3(2), 16, 28.
Interpretation Act, S.C.1967‑68,c.7.
Interpretation Act, S.P.E.I 1981, c.18, s.14.
National Transportation Act, R.S.C.1970,c.N‑17, s.64(1).
Public Utilities Board Act, R.S.A. 1980,c.P‑37, ss.1(j), 70(1)(c).
Radio Act, R.S.C.1970, c.R‑1.
Railway Act, R.S.C.1970, c.R‑2,ss. 5, 320(1), (7), (11), (12).
Real Property Act, S.M. 1934, c. 38.
Rural Mutual Telephone Companies Act, S.A.1935, c.48.
State Immunity Act, 1978 (U.K.), 1978,c.33, s.3.
State Immunity Act,R.S.C.,1985, c.S‑18, s.5.
Telephone and Telegraph Act, R.S.A. 1922,c.49.
Telephone and Telegraph Act, R.S.A. 1942,c.198.
Telephoneand Telegraph Act, R.S.A. 1955, c.332.
AuthorsCited
Brownlie, Ian. Principles of PublicInternational Law, 3rd ed. Oxford: Clarendon Press, 1979.
Halsbury's Laws of England, vol. 44, 4th ed.London: Butterworths, 1983.
Hogg, Peter W. Constitutional Lawof Canada, 2nd ed. Toronto: Carswells, 1985.
Hogg, Peter W. Liability of theCrown. Sydney: Law Book Co., 1971.
Lederman, W. R. "Telecommunications and the FederalConstitution of Canada", in H. Edward English, ed.,Telecommunications for Canada: An Interface of Business and Government.Toronto: Methuen, 1973.
McLeod, J. G. The Conflict of Laws.Calgary: Carswells, 1983.
McNairn, Colin H. H. "Comment" (1978), 56 Can. BarRev. 145.
McNairn, Colin H. H. Governmental andIntergovernmental Immunity in Australia and Canada. Toronto:University of Toronto Press, 1977.
Swinton,Katherine. "Federalism and Provincial Government Immunity" (1979),29 U.ofT. Law Journal 1.
APPEALfrom a judgment of the Federal Court of Appeal, 1985 CanLII 5521 (FCA), [1986] 2 F.C.179,allowing an appeal from a judgment of Reed J., 1984 CanLII 5297 (FC), [1985] 2 F.C.472 (1984),15 D.L.R. (4th) 515. Appeal allowed (Wilson J. dissenting); the firstconstitutional question should be answered in the affirmative, the second inthe negative.
ColinK. Irving, John D. Rooke, Peter Hogg, Q.C., and FranklinS.Gertler, for the appellant and the intervener the AttorneyGeneral for Alberta.
Eric A.Bowie, Q.C., and Donald J. Rennie, forthe intervener the Attorney General of Canada.
Jean‑YvesBernard and Alain Gingras, for theintervener the Attorney General of Quebec.
ReinholdM. Endres, for the intervener the Attorney General of NovaScotia.
BruceJudah, for the intervener the Attorney General for NewBrunswick.
GlennMcFetridge and Dianne Paskewitz, for theintervener the Attorney General of Manitoba.
E. R.A. Edwards, Q.C., for the intervener the AttorneyGeneral of British Columbia.
RogerB. Langille and Charles P.Thompson, for theintervener the Attorney General of Prince Edward Island.
RobertG. Richards, for the intervener the Attorney General forSaskatchewan.
RonaldStevenson, for the intervener the Attorney General ofNewfoundland.
C.R.O.Munro, Q.C., and M. H. Ryan, forthe respondent CNCP Telecommunications.
GregVan Koughnett, for the respondent Canadian Radio‑television andTelecommunications Commission.
//The ChiefJustice//
Thejudgment of Dickson C.J. and McIntyre, Lamer, La Forest and L'Heureux-Dubé JJ.was delivered by
THE CHIEF JUSTICE --
I. Introduction
Inthis case, the Court is asked to determine whether the appellant AlbertaGovernment Telephones ("AGT") is subject to the regulatory authorityof the respondent Canadian Radio-television and Telecommunications Commission("CRTC"). Respondent CNCP Telecommunications ("CNCP")contends that AGT is under the jurisdiction of the CRTC. AGT submits it isnot, for two reasons: first, it is not a federal work or undertaking withinthe meaning of s. 92(10)(a) of the Constitution Act, 1867; andsecond, even if it were, AGT is a provincial Crown agent and as such isentitled to claim immunity from the relevant federal statutes.
a)Procedural History
OnSeptember 17, 1982, CNCP brought an application to the CRTC pursuant to theprovisions of the Railway Act, R.S.C. 1970, c.R-2, as amended, the Canadian Radio-television and TelecommunicationsCommission Act, S.C. 1974-75-76, c. 49, and the NationalTransportation Act, R.S.C. 1970, c. N-17. CNCP sought various ordersunder the Railway Act requiring AGT toprovide facilities for the interchange of telecommunications traffic betweenthe system operated by CNCP and the system operated by AGT. On October 18,1982, AGT brought an originating notice of motion under s. 18 of the FederalCourt Act, R.S.C. 1970 (2nd Supp.), c. 10, as amended, for a writof prohibition, or relief in the nature thereof.
OnOctober 26, 1984, Reed J. of the Federal Court, Trial Division granted AGT'sapplication for a writ of prohibition in carefully written reasons, nowreported at (1984), 1984 CanLII 5297 (FC), 15 D.L.R. (4th) 515; [1985] 2 F.C. 472. Reed J. held thatAGT was an interprovincial work or undertaking within the meaning of s. 92(10)(a) andthus that AGT fell within the legislative authority of the Parliament ofCanada. However, Reed J. also held that the CRTC could not grant the ordersapplied for by CNCP because AGT was an agent of the provincial Crown andtherefore was entitled to claim immunity from the provisions of the RailwayAct.
Theorder of Reed J. was set aside by the Federal Court of Appeal (Pratte J., Healdand Urie JJ. concurring) in reasons now reported at 1985 CanLII 5521 (FCA), [1986] 2 F.C. 179. TheFederal Court of Appeal affirmed Reed J.'s conclusion that AGT was a federalundertaking within s. 92(10)(a) but reversed herruling on the Crown immunity issue.
Leaveto appeal was granted by this Court. The Court ordered that this case be heardtogether with the appeal in IBEW v. Alberta Government Telephones, [1989]2 S.C.R. 000, the decision in which is being delivered concurrently with thepresent case. The following Attorneys General intervened in support of theappellants in both cases: Quebec, Nova Scotia, New Brunswick, Manitoba, BritishColumbia, Prince Edward Island, Saskatchewan and Newfoundland. The AttorneyGeneral of Canada intervened in support of the respondents in both appeals.
(b)Constitutional Provisions and Questions
ConstitutionAct, 1867
Theapplicable constitutional provisions are as follows:
91. It shall be lawful for the Queen, byand with the Advice and Consent of the Senate and House of Commons, to makeLaws for the Peace, Order, and good Government of Canada, in relation to allMatters not coming within the Classes of Subjects by this Act assignedexclusively to the Legislatures of the Provinces; and for greater Certainty,but not so as to restrict the Generality of the foregoing Terms of thisSection, it is hereby declared that (notwithstanding anything in this Act) theexclusive Legislative Authority of the Parliament of Canada extends to allMatters coming within the Classes of Subjects next hereinafter enumerated;that is to say,--
.. .
29.Such Classes of Subjects as are expressly excepted inthe Enumeration of the Classes of Subjects by this Act assigned exclusively tothe Legislatures of the Provinces.
.. .
92. In each Province the Legislature mayexclusively make Laws in relation to Matters coming within the Classes ofSubject next hereinafter enumerated; that is to say,--
.. .
10.Local Works and Undertakings other than such as areof the following Classes:--
(a) Lines of Steam or other Ships, Railways, Canals,Telegraphs, and other Works and Undertakings connecting the Province with anyother or others of the Provinces, or extending beyond the Limits of theProvince;
(b) Lines of Steam Ships between the Province and anyBritish or Foreign Country;
(c) SuchWorks as, although wholly situate within the Province, are before or aftertheir Execution declared by the Parliament of Canada to be for the generalAdvantage of Canada or for the Advantage of Two or more of the Provinces.
Thefollowing constitutional questions were set by order of the Court:
1.Is Alberta Government Telephones a work or undertakingwithin the legislative authority of the Parliament of Canada by virtue of s.92(10)(a) or otherwise of the Constitution Act,1987?
2.If theanswer to question 1 is in the affirmative, is Alberta Government Telephonesbound by the relevant provisions of the Railway Act?
II. TheFacts
Thefactual analysis of AGT's enterprises provided by Reed J. is most helpful andwas acknowledged by counsel to be both accurate and complete (see the judgmentof the Federal Court of Appeal, supra, at p. 195). Itis necessary, however, to review the facts in some detail as they are criticalto the determination of both constitutional questions, in particular the first.
(a)TheStatutory History of AGT and the Role of the Alberta Public Utilities Board
AGTbegan operations in 1906. By section 1 of its inaugural statute, An Actrespecting Government Telephone and Telegraph Systems, S.A.1908, c. 14, the Government of Alberta was granted authority to purchase,construct and operate "in the province a telephone or telegraph system orsystems ...." In section 5, the Government of Alberta is defined as"His Majesty in the right of the Province of Alberta". This statuteappears as The Telephone and Telegraph Act inR.S.A. 1922, c. 49, R.S.A. 1942, c. 198, and R.S.A. 1955, c. 332. In An Act toAmend the Telephone and Telegraph Act, S.A. 1956, c. 53,an amending statute, there are several references to the "AlbertaGovernment Telephone System" -- see ss. 2 and 4. (An earlier referenceto "Alberta Government Telephones" may be found in The RuralMutual Telephone Companies Act, S.A. 1935, c. 48.)
TheTelephone and Telegraph Act, R.S.A. 1955, c. 332, was repealed by s. 34 of TheAlberta Government Telephones Act, S.A. 1958, c.85. Section 3 ofthis statute established a Commission under the name of "The AlbertaGovernment Telephones Commission". By section 3(3) this Commission couldalso be known as the "Alberta Government Telephones".
Thepresent statute under which AGT operates is the Alberta GovernmentTelephones Act, R.S.A. 1980, c. A-23, as amended (hereinafter referredto as the "AGT Act").
TheMinister of Technology, Research and Telecommunications is charged with theadministration of the AGT Act and by s. 2(2) "may control alltelecommunications services subject to the jurisdiction of the Legislature andmay provide or direct provision of all such services". The AGT Commissionis a corporation having capacity to acquire, hold and alienate real property.The main powers of the Commission are set out in s. 4 which provides:
4(1) The commission may purchase, construct, extend,maintain, manufacture, operate and lease to and from other persons, a system orsystems in Alberta, including private communication systems.
(2) The commission may carry out research in and consultin telecommunications.
(3) The Lieutenant Governor in Council may refer orassign to the commission
(a) the administration of any other Act, and
(b) the performance of any duty or task, including theperformance of any contract entered into by the Government for theestablishment, maintenance or operation of a system in any other province orterritory of Canada,
andnotwithstanding anything in this Act, the commission has all the powers,authorities and functions expressed or provided in the Act referred to it foradministration, or necessary to the proper carrying out of a duty or taskassigned to it under this subsection.
Theterms "system" and "telecommunication" are defined in s.1(c) and (d) as follows:
1 . . .
(c) "system" means a telecommunication systemand includes all land, plants, supplies, buildings, works, rights, franchises,easem*nts, assets and property of every kind owned, held, required or used forthe purpose of, or in connection with, or for the operation of the telecommunicationsystem;
(d)"telecommunication" means telecommunication as defined in the PublicUtilities Board Act.
Withrespect to "telecommunication", the current definition of that termin s. 1(j) of the Public Utilities Board Act, R.S.A. 1980, c.P-37, as amended by S.A. 1981, c. 35, s. 2(b) is:
"telecommunication"means any transmission, emission or reception of signs, signals, writings,images, sounds, data, message or intelligence of any nature by wire,radiocommunication, cable, waves or any electronic, electromagnetic or opticalmeans but does not include the transmission, emission or reception ofbroadcasting that is a radio communication in which the transmissions areintended for direct reception by the general public;
Iwould note that the definition of telecommunication as it appeared in the 1980versions of both the AGT Act (s.1(d)) and the Public UtilitiesBoard Act (s. 1(j)) was slightly different as there was noreference to "broadcasting". It read as follows:
(j)"telecommunication" means a transmission, emission or reception of signs,signals, writings, images, sounds or intelligence of any nature by wire, radio,visual or other electromagnetic system;
Undersection 9(1) the duties of the Commission are set out and they include theobligation to "regulate the installation and maintenance of services tosubscribers, classify subscribers and fix standards of service to befurnished" (subs. (c)); to "prepare from time to time schedules ofrates for filing with or approval by the Public Utilities Board" (subs.(d)); and to "keep the accounts of the system and collect the revenuesthereof" (subs. (e)). Further, by s. 10, the Commission is required toestablish the terms and conditions under which its service is furnished andthese must be published in AGT's general tariff.
Thepower to enter into agreements is set out in s. 24 which states:
24 Thecommission may enter into an agreement with any person providing for theconnection, intercommunication, joint operation, reciprocal use or transmissionof business between any systems owned or operated by the parties thereto andfor any consequent division of receipts, expenditures or profits or anyfinancial or other adjustments that may be advisable or necessary for thepurposes of the agreement.
Finally,and with particular reference to the second issue in this appeal, s. 42(1) ofthe AGT Act provides:
42(1) Thecommission is an agent of the Crown in right of Alberta and its powers may beexercised only as an agent of the Crown.
Withrespect to the role of the Alberta Public Utilities Board, s. 70(1)(c) of the PublicUtilities Board Act, gives the Board regulatory authority over:
(c) allpublic utilities owned or operated by or under the control of the Crown, or anagent of the Crown, in right of Alberta.
ReedJ. found ((1984), 1984 CanLII 5297 (FC), 15 D.L.R. (4th) 515, at p. 519) that "The Board has, infact, regulated AGT and its predecessors since 1908 ...." However, shedoubted the "effectiveness" of the Board as a regulator of AGT andcommented, at p. 526:
One canspeculate that the board's approval of AGT's activities is likely to be no morethan pro forma in many instances. I would underline that there is noevidence respecting such lack of control, it is merely a conclusion one seemsinescapably driven to make.
Inan affidavit filed by AGT in support of the application for prohibition, it isstated that the Board has exercised jurisdiction over AGT in relation to itssystem, equipment, rates and interconnection with other telecommunicationssystems and other matters, all under various sections of the PublicUtilities Board Act. The clearest piece of evidence with respect to therole of the Board emerged in the IBEW v. Alberta Government Telephonesproceedings. In a response to a question put forward by the Canada LabourRelations Board, AGT stated that the Board approves AGT's rates for basic ornon-competitive services but specific individual rate approval is not soughtfor non-basic or competitive services (subject to AGT meeting certain testsprescribed by the Board). Rates for interprovincial services are establishedby AGT based on negotiation with telephone companies in other provinces. Asimilar process of consultation occurs with the appropriate parties regardingrates for international telephone services although the final decision is madeby AGT subject to approval of the Public Utilities Board.
Finally,with respect to international agreements entered into by AGT (and othertelephone companies), it appears that the Alberta Public Utilities Board doesnot exercise any jurisdiction, as there was evidence that such agreements werenot normally submitted to the Board for approval.
(b)The Nature of AGT's Enterprise
ReedJ.'s findings of fact on the nature of AGT's enterprise fall under three headings:the physical structure and facilities of AGT; the telecommunications servicesprovided by AGT; and the contractual and organizational mechanisms throughwhich AGT offers its services. I will review each of these by reference toReed J.'s description and to the record.
(i)AGT's Structure and Facilities
Thelocal exchange system was described in full by Reed J. at p. 519, supra, andneed not be repeated. A local central office switches both local andlong-distance or "toll" calls. The exchanges are connected bytrunks to the toll centres which are connected by buried cable or microwave toprovide an intercity, long-distance service.
Themicrowave system of AGT consists of a number of towers, 20 to 30 miles apart.Each tower supports one or more antennae connected to transmitters withreceivers found at the base of the tower. The towers transmit and receiveHertzian waves and are licensed under the federal Radio Act, R.S.C.1970, c. R-1. One tower sends a radio signal beamed in a straight line to areceiver in an adjacent tower and that tower retransmits it to the next one.This process is also described as "point to point" transmission.
Thephysical interconnection between AGT's system and that of companies operatingoutside Alberta was outlined by Reed J. as follows (supra, at pp.519-20):
The AGT microwave network is linked to that of theBritish Columbia Telephone Company by the sending and receiving of signalsbetween towers, one located in Bay Tree, Alberta, and the other located at BearMountain, British Columbia (the northerly route), and by the sending andreceiving of signals between towers, one located at Crowsnest Ridge, Albertaand the other located at Fernie, British Columbia (the southerly route). AGTis linked to the Saskatchewan Telecommunications network by the sending and receivingof signals between towers, one located at Blackfoot, Alberta and the otherlocated at Lashburn, Saskatchewan (the northerly route) and between towers, onelocated at Pashley, Alberta and the other at Cummings, Saskatachewan (thesoutherly route). There may also be cable links between the Alberta-BritishColumbia and the Alberta-Saskatchewan systems but the main method oftransmission is the microwave network.
The AGT telecommunications system is connected tothe Northwest Territories system (operated by Canadian National) by the sendingand receiving of signals between towers, one located at Indian Cabins, Albertaand the other at Grumbler Rapids in the Northwest Territories: and it isconnected to the system operated by the American Telephone and TelegraphCompany (AT&T) in Montana by the sending and receiving of signals betweenMilk River, Alberta and Santa Rita, Montana. There is also a coaxial cablelinkage between Alberta and Montana but the majority of the traffic is carriedon the microwave system.
Inaddition, the physical facilities of AGT are connected by cable to three earthstations (two in the Edmonton area, one in Calgary). Two of the earth stationsare partly owned by AGT and partly by Telesat Canada (AGT owns the building andthe Antenna foundation; Telesat owns the antenna and the electronic equipmentrequired to make up the receivers and transmitters associated with thatantenna). The third earth station is entirely owned by Telesat. This linkageallows AGT access to a satellite transmission system for the provision oftelecommunication services.
ReedJ. then described AGT's system of mobile and base transmitters which allow forcommunications to and from moving vehicles, such as a motor car, or stationarystructures, such as an oil rig. The telephone calls to and from mobileequipment are integrated into the AGT network allowing for local,interprovincial and international communications. The base station for thisservice is a fixed structure which has an antenna with a transmitter andreceiver. AGT, in 1980-81 operated 200 to 300 such stations, each with anoperating range of a 20 to 30 mile radius. Unlike the point-to-pointtransmission involved in the microwave tower system, the base stations and themobile transmitters send the signals in all directions, horizontally, at thesame time. As a result, therefore, base stations and motor vehicles locatedclose to the borders of Alberta do not limit their field of operation to withinthe confines of the province. This system of mobile and base transmitters isalso licensed under the Radio Act.
Inconcluding her description of AGT's physical system, Reed J. pointed out thatAGT provides telecommunication facilities and services to the residents ofLloydminster, Saskatchewan. Lloydminster is a community which straddles theborder of Alberta and Saskatchewan and AGT services all the residents ofLloydminster regardless of which province they are located in.
Laterin her reasons Reed J. provided a summary of the salient facts. With respectto the physical system of AGT she stated, in part, at p. 530:
AGT takes signals emanating from its subscribers'telephone sets and transmits them to points outside Alberta; it takes signalsemanating from outside Alberta and transmits them to the intended receiver inAlberta; and in some cases it may transmit signals through Alberta (refer TCTS-- Teleglobe agreement, para. 6).
AGT'sphysical telecommunications facilities not only connect at the borders, thereis also a more pervasive integration. The same telephone sets, line,exchanges and microwave networks are used for the provision of local andinterprovincial services as well as international ones. It is clear that manyAGT employees are involved in the provision of both intraprovincial andextraprovincial services without distinction.
(ii)AGT's Telecommunications Services
AGTprovides its customers with intraprovincial, interprovincial and internationalvoice (local and long-distance) and data telecommunications services. Thevoice service is termed "basic" while the data transmission servicesare referred to as "non-basic". AGT has separate tariff manuals foreach. Reed J. relied on the tariff manuals as evidence of the interprovincialand international aspects of the telecommunications services. With respect to"basic" services, AGT has rate schedules for long distance callsbetween rate centres in Alberta, and between Alberta and British Columbia,Saskatchewan, and the Canadian northwest region as well as a further schedulefor calls to the rest of Canada as well as St.Pierre/Miquelon. AGT providesinternational service and the rate schedules are reflective of this fact asthere are rates for calls between Alberta and Alaska, Hawaii, the continentalUnited States, the Caribbean, Mexico and overseas.
Withregard to the "non-basic" services, Reed J. referred to the tariffmanuals again for descriptions of the various services (Envoy 100, Teletypeservice, Teletypewriter Exchange Service, Datacom Services), and as a source ofinformation on the places to which these telecommunications services areprovided. Reed J. stated, at p. 523:
Thesetariff schedules also demonstrate that the services provided involve thetransmission of data and messages from centres within Alberta to centreswithout.
Therate charged depends on mileage between the originating and receiving datastations or by reference to the specific exchange area to which the service isprovided. In both instances the rate schedule contemplates service beingprovided to locations outside Alberta.
(iii)Contractualand Organisational Mechanisms Through Which AGT Provides its TelecommunicationsServices
AGTis a member of an unincorporated organization which is called "TelecomCanada", formerly known as "TransCanada Telephone System"(TCTS). Telecom Canada was originally created in 1931 by seven of the presentten members. The present membership is: AGT, British Columbia TelephoneCompany, Saskatchewan Telecommunications, Manitoba Telephone System, BellCanada, The New Brunswick Telephone Company Limited, Maritime Telegraph andTelephone Company Limited, the Island Telephone Company Limited, NewfoundlandTelephone Company and Telesat Canada. The CRTC exercises regulatory authorityover Bell Canada, British Columbia Telephone Company and Telesat Canada. Theremaining members of Telecom Canada are regulated by the province in which themember is situated.
Agreements
Thereare two agreements in the record between the members of Telecom Canada: a"Connecting Agreement", dated December 31, 1976, and an "AgencyAgreement" dated December 1, 1978. I will return to the ConnectingAgreement shortly. There are six agreements in the record signed by theindividual members of Telecom Canada with various international telecommunicationscarriers. One agreement is with Teleglobe Canada, an overseastelecommunications carrier. Five of the agreements are with the followingAmerican companies: American Telephone and Telegraph Company, TelenetCommunications Corporation, Tymnet Inc., American Satellite Company, and MCITelecommunications Corporation.
Inoted earlier that three of the members of Telecom Canada are regulated by theCRTC. Certain agreements entered into by those bodies must be approved by theCRTC by virtue of s. 320(11) of the Railway Act. Telesat Canada,for example, brought an application under this section seeking CRTC approval ofTelesat Canada's membership in Telecom Canada pursuant to the ConnectingAgreement. The CRTC decision was reversed by the Governor General in Councilpursuant to s. 64(1) of the National Transportation Act. (See Telecomdecision CRTC No. 77-10, rev'd by Order in Council P.C. 1977-3152). The AgencyAgreement between the members of Telecom Canada was approved, however, by theCRTC on the application of Telesat Canada: see Telecom Order CRTC No. 79-60.The six agreements with international carriers referred to above were alsoapproved by the CRTC on the application of Bell Canada (see the followingTelecom Orders: CTC/CRTC Nos. 79-25 (Teleglobe), T-97 (AT&T), 79-194(Telenet), 79-195 (Tymnet Inc.), 83-446 (American Satellite), and 83-201(MCI)).
Thefinal group of agreements involve AGT and particular Canadiantelecommunications carriers. In Reed J.'s explanation of the physical facilitiesof AGT, she noted that AGT's system is linked to the networks operated by theBritish Columbia Telephone Company, Saskatchewan Telecommunications andCanadian National Railways. There are three agreements on the record whichprovide for these physical interconnections. Two connecting agreements arewith members of Telecom Canada. One is between AGT and the British ColumbiaTelephone Company and the other is between AGT and SaskatchewanTelecommunications.
Thesetwo agreements are not dissimilar and an illustration of their nature may beafforded by the following excerpts of the agreement between AGT and BritishColumbia Telephone Company (BC TEL):
WHEREAS BC TEL operates a telecommunications system inthe Province of British Columbia
AND WHEREAS AGT operates a telecommunications system inthe Province of Alberta
AND WHEREAS the system of BC TEL and the system of AGTare connected for the purpose of interchanging telecommunications services andaccordingly it is mutually desired to set forth terms and conditions underwhich such connections shall be made.
NOW, THEREFORE, in consideration of the mutual promisesand agreements hereinafter contained, each party hereby agrees as follows:
...
3. Eachparty shall connect its telecommunications facilities with the facilities ofthe other party and shall use these facilities so established for the purposeof an interchange of telecommunications services between its customers andpatrons and the customers and patrons of the other party and for such otherpurposes as may be agreed upon between the parties.
Thelast agreement I wish to refer to is between AGT and Canadian NationalRailways. Canadian National Railways operates the telecommunications system inNorthwestern Canada and is under the regulatory authority of the CRTC in thisrespect. Approval of this agreement and various amendments has been given bythe CRTC on application by Canadian National Railway (see Telecom OrdersCTC/CRTC Nos. T-180, T-309, 76-3 and 77-258.)
Itis as a result of all of the above agreements that AGT is able to provideinterprovincial and international competitive (non-basic) and non-competitive(basic) services. It remains to consider the nature of the most important ofthese agreements and the organizational infrastructure which has developed tofacilitate the provision of AGT's telecommunications.
AGT andTelecom Canada
Earlier,I mentioned the Telecom Canada Connecting Agreement. In a petition dated July23, 1981, brought to the Governor General in Council, this agreement wasdescribed by the various members of Telecom Canada as being (supra, at p.523):
Theprincipal agreement under which all members of TCTS, including Telesat, agreeto connect their respective telecommunications networks, and to share in theexpenditures and revenues relative to the construction, operation andmaintenance of a national network.
In thepreamble to the Connecting Agreement it is stated:
WHEREAS the parties hereto are the principal providersof telecommunications services in their respective operating areas, and
WHEREAS the parties hereto desire to fulfil thetelecommunications requirements of users of their respective systems byproviding access to users in territories beyond their respective operatingareas, including users and areas served either by the parties hereto, or byother systems operating outside Canada, and
WHEREASto provide to users within their respective operating areas the required rangeand scope of telecommunications services, the parties hereto desire to continueto connect their respective systems and jointly furnish telecommunicationsservices in accordance with the terms and conditions herein contained.
Inher reasons, Reed J. reproduced certain passages from the above- mentionedpetition wherein the members describe the nature and primary function ofTelecom Canada in the following terms (supra, at p.524):
3. The Trans-Canada Telephone System is a looseconsortium of independent fully integrated telecommunications undertakingswhich work together to establish methods of planning, building plant for, andoperating long distance telecommunication services within Canada in Canadianfacilities. The TCTs [sic] network provides a full range of coast-to-coasttelecommunications services and a wide variety of transmission facilities,including among others, coast-to-coast microwave radio relay systems and satellitechannels. TCTS was originally formed in 1931 in response to the desire to havean all-Canadian long-distance integrated telephone network on a coast to coastbasis.
.. .
5. TCTSserves three main purposes. First, it provides a mechanism through which eachmember offers national telecommunications services to its customers. Second,it establishes a process of planning, standard setting and cooperation whichpermits the constructions [sic] and operation by the ten members, working together, ofa national telecommunications network. Third, it provides a mechanism wheremembers can cooperate in areas where savings or efficiences [sic] can beachieved through joint action, e.g. certain technical or market researchprojects.
Two ofthe recitals to the Connecting Agreement read as follows:
WHEREAS the parties hereto desire to fulfil thetelecommunications requirements of users of their respective systems byproviding access to users in territories beyond their respective operatingareas, including users and areas served either by the parties hereto, or byother systems operating outside Canada,
...
WHEREASto provide to users within their respective operating areas the required rangeand scope of telecommunications services, the parties hereto desire to continueto connect their respective systems and jointly furnish telecommunicationsservices in accordance with the terms and conditions herein contained.
Severalsections in this agreement are reproduced in Reed J.'s judgment at pp. 524-26.In section 2 of this agreement, the parties "agree to connect togethertheir respective telecommunications systems" and by s. 3 a Board ofManagement is established. The Board consists of one representative appointedby each of the parties and further, "Any matter coming before the Boardshall require unanimous agreement before adoption." The powers of theBoard are set out in s. 4 and they include the authority to establish the terms,conditions and rates for "Trans-Canada services" (s. 4(d)); todetermine the basis of settlement and the apportionment of revenues derivedfrom "services provided by TCTS" (s. 4(e)); and to establish andmaintain a "Clearing House" for the purpose of carrying out necessaryfinancial transactions (s. 4(i)). The "Clearing House" is to beoperated by the administrative staff which the Board may set up under s. 4(f).
Theparties are required to adopt and observe rules, regulations and practicesestablished by the Board from time to time for the provision and administrationof telecommunications services (s. 6). With respect to telecommunicationsfacilities and system interconnection, ss. 7, 9 and 10 provide:
7. That facilities provided by each party for theprovision of TCTS services will be designed and operated in the most economicalmanner to achieve such standards of service and transmission quality as may befrom time to time established by the Board.
.. .
9. That the system of each of the parties hereto shallbe deemed to include all telecommunications systems, other than those of theparties hereto maintaining connecting arrangements with the system of each suchparty.
10. Thateach party shall connect its respective telecommunications facilities with thefacilities of the other parties hereto at such point or points as may from timeto time be mutually agreed upon.
Inaddition, the use of Telesat Canada's communications satellite system is setout in s. 11 and in a Memorandum of Agreement attached to the ConnectingAgreement as Schedule A. As was explained, at p. 525:
ScheduleA sets out the terms and conditions under which the satellite facilities ofTelesat Canada will be integrated with the terrestial facilities of the others[sic] members of TCTS to form a combined terrestial and satellite Trans-Canadatelecommunications network.
Finally,by s. 19 each of the parties is obligated to maintain and operate its system toenable the provision of effective service and "to provide sufficientfacilities to handle adequately all telecommunications services" furnishedunder the agreement.
Anumber of the provisions of the Connecting Agreement pertain to the mechanismby which rates for telecommunications are determined, charged, collected andthen divided. Section 12 states:
12.That the telecommunications services provided hereunder shall be charged for atrates and charges such as the parties hereto may from time to time agree upon.
Bysection 13 each party must collect from its customers for "alltelecommunications services provided hereunder" and each party remainsaccountable for the portion of this revenue due to the other parties inaccordance with the basis for settlement determined by the Board.
ReedJ. provided a useful summary of the organizational structure of TelecomCanada. The President of AGT is automatically the company's representative onthe Telecom Board of Directors. Also, one or more of AGT's senior executivesare members of each of Telecom's eleven committees; Business Development,Marketing, Personnel, Public Relations and Advertising, Rates, Settlement,Engineering (Network Development), Engineering (Planning), Engineering(Technical), Plant Network, and Computer Communications. The central staff ofTelecom Canada has offices in Ottawa and Toronto and almost thirty AGTemployees work on that staff.
Afterreviewing the above-noted evidence, Reed J. concluded, at p.526:
Thenames and nature of the committees, the role played by AGT employees and theterms of the "Connecting Agreement" demonstrate that TCTS is theco-ordinating, planning and organizational heart of the integrated telecommunicationssystem of which each member's facilities form a part.
She alsopointed out that Telecom Canada does not have any independent physical networkfacilities (at p. 527).
TelecomCanada acts as a fiscal clearing house for the distribution of revenue derivedfrom the provision of Telecom services. This is done in compliance with aRevenue Settlement Plan. These services include long distance calls betweenthe members (but excluding calls between adjacent members -- such as Albertaand Saskatchewan), all international calls, and all of the"non-basic" or competitive data transmission services -- regardlessof whether the service is provided by use of only one member's facilities.
Therationale behind the inclusion of all the non-basic services in Telecom Canadarevenues may be found in the petition dated July 23, 1981, referred to earlier,where, in respect of such services, it is stated:
Theseservices are marketed and provided by TCTS as national services. The needs ofmany customers for such services are national in scope, rather than limited tothe territory of any one member of TCTS, and such customers expect the samequality, terms, and conditions of service throughout the country. In order toprovide such services on a nation-wide basis, it is of prime importance thatthere be an incentive for each TCTS member to introduce and participate in suchservices. Such services require that substantial investment be made by eachTCTS member in its own operating territory in order to provide the technologyand facilities necessary to furnish the service on a nation-wide basis. Theclassification as TCTS services of services such as those in question and alsofuture competitive services provides such an incentive to all member companiesand ensures that services are introduced in a manner which optimisesengineering and traffic efficiency.
Theseresulting revenues are not divided in proportion to the use of any particularmember's facilities but rather, as noted by Reed J., at p. 528: "so as tosupport the development of telecommunications services throughout thecountry".
Revenueswhich are excluded from the Telecom Canada distribution scheme are the alreadymentioned long distance telephone calls between adjacent members, and local andlong distance telephone service within a member's province.
Withrespect to the role of Telecom Canada in the arrangements made between itsmembers and various international telecommunications carriers, Reed J. stated,at pp. 528-29:
Another function which TCTS performs is to act asthe central co-ordinating body for dealing with United States carriers and withTeleglobe respecting the provision of overseas services. AGT does not dealdirectly with such non-TCTS members, dealings are carried on through therelevant TCTS committee . . . .
.. .
I havereferred above and elsewhere in these reasons to these agreements as TCTSagreements. TCTS is, of course, an unincorporated organization and therefore,while the agreements will be titled as being with TCTS, the members thereof arealways specifically named as being the parties to the agreement. At the sametime there is frequently a clause in the agreement which provides that thenon-TCTS contracting party may deal with the president of TCTS and through itsclearing house and need not deal individually with the member parties.
Finally,in her summary of the facts Reed J., at pp. 530-31, described AGT as playing anintegral part in the Telecom Canada organization, both at the managerial and,apparently, at the staff level.
Thisconcludes my review of the facts and I turn now to the two constitutionalquestions, which will be dealt with in turn.
III. TheFirst Constitutional Question -- The Jurisdiction Issue
a)The Federal Court Judgments
(i) FederalCourt, Trial Division -- Reed J.
ReedJ. held that AGT was engaged in a federal work or undertaking within themeaning of s. 92(10)(a). In her view the appropriate method of inquiry was todetermine whether the undertaking engaged in "a significant amountof continuous and regular interprovincial activity". She concluded, at pp.532-33:
The dispute is whether it should be characterized as alocal undertaking, or as one "connecting the Province with any other orothers of the Provinces, or extending beyond the Limits of the Province."
Theevidence seems to leave little scope for anything but a conclusion that AGTengages in a significant degree of continuous and regular interprovincialactivity, and therefore must be classified as the latter.
ReedJ. rejected AGT's argument that it does not fall within s. 92(10)(a)because it does not have any physical facilities outside Alberta. She pointedout that the text of s.92(10)(a) merelyrequires that an undertaking "connect" provinces. In her view, thesection does not require there to be physical facilities existing outside theprovince. Further, the term "undertaking" had been given an extensivemeaning by the courts and AGT's argument placed unwarranted emphasis on thelocation and nature of AGT's physical facilities.
ReedJ. stated, at p. 535, that "The crucial feature then is the nature of theenterprise itself, not the physical equipment it uses". Applying thistest to the facts, Reed J. continued:
AGToffers to its customers local, interprovincial and international telecommunicationsservices. Its physical facilities are used to provide all three withoutdiscrimination -- the services are totally integrated. Indeed, one could notseparate the local from the non-local without emasculating AGT's enterprise asit presently exists.
Thelearned judge did agree with AGT, however, that physical interconnection itselfmay not be enough to trigger federal regulation of an enterprise:"Something more is needed and this has been described as how the system isoperated" (p. 536).
Inorder to find "sufficient organization interconnection", Reed J.turned to AGT's role in Telecom Canada and thus confronted the argument thatTelecom Canada is not a legal entity and that each of the parties controls itsown system and provides services to its own customers only. Reed J. rejectedthe validity of this line of argument because it "gives too muchimportance to the niceties of legal structure rather than focusing on therealities of the situation" (p. 537). She concluded that Telecom Canada,and AGT's role in it, demonstrates the common and joint telecommunicationsenterprise which exists and showed that AGT did not operate a merely localundertaking.
Thefact that AGT legally retained control over its facilities was notdeterminative because, in Reed J.'s words, at p. 537:
. . . asa practical reality it [AGT] could not separate itself from the joint TCTSenterprise without destroying its telecommunications system in its presentform. The fact that unanimous agreement is required by TCTS members should notdisguise the constraints, the existence of the integrated system and theinterdependence of the members will impose.
Inclosing, Reed J. pointed out that the lack of any prior assertion of regulatoryauthority by the federal government during the 80 years or so during whichtelephone systems have grown up has no bearing on the issue of constitutionaljurisdiction and does not give rise to some "sort of constitutionalsquatters rights" (p. 538).
(ii)Federal Court of Appeal -- Pratte J. (Heald and Urie JJ.)
PratteJ. (Heald and Urie JJ. concurring) agreed with Reed J.'s reasoning and resulton the constitutional issue. He rejected counsels' argument that Reed J.confused the nature of the undertaking of AGT with that of the servicesprovided to its customers which were admittedly extra-provincial in scope, andthat she further erred in considering the role played by other companies.Pratte J. responded to this submission and added an additional basis upon whichto uphold Reed J.'s conclusion (supra, at pp. 186-87):
Reed J.,as I read her reasons, did not base her conclusion on the nature of theservices provided by TCTS but on the fact that AGT's undertaking was operatedas an integral part of a national telecommunication system. That fact was notseriously challenged before us and, in my opinion, supported her conclusion.But even if it did not, her conclusion could, in my view, be sustained onanother ground. In operating its undertaking, AGT regularly makes use of itsmicrowave towers to send messages to points located outside of Alberta. Thatshows clearly, in my view, that AGT's undertaking is not purely local but is anundertaking which connects Alberta with other provinces.
(b)Analysis: Is AGT a s. 92(10)(a) Work or Undertaking?
Letme say at the outset that none of the parties or interveners in this appealadvocated a divided jurisdiction, with the province regulating theintraprovincial or local aspects of the operations of AGT and Parliamentregulating the interprovincial and international aspects. It is an all ornothing affair.
Thecase law clearly establishes that if a work or undertaking falls within s.92(10)(a) it is removed from the jurisdiction of the provincesand exclusive jurisdiction lies with the federal Parliament (City ofMontreal v. Montreal Street Railway, 1912 CanLII 352 (UK JCPC), [1912] A.C. 333(P.C.) (hereinafter Montreal Street Railway), at p. 342; AttorneyGeneral for Ontario v. Winner, 1954 CanLII 289 (UK JCPC), [1954] A.C. 541 (P.C.) (hereinafter Winner), at p.568).
In NorthernTelecom Ltd. v. Communications Workers of Canada, [1980] S.C.R. 115(hereinafter Northern Telecom, 1980), this Courtoutlined the appropriate constitutional principles for determining whetherlegislative authority over the labour relations of employees lies in thefederal or provincial sphere. The issue was whether the supervisors ofinstallers of telecommunications equipment fell under the federal government'sjurisdiction. The Court declined to answer the question because of a nearlytotal absence of necessary constitutional facts. The Court did, however, statethe appropriate framework of analysis in cases involving a similar issue. TheCourt adopted and summarized an earlier discussion on this point by Beetz J. inConstruction Montcalm Inc. v. Minimum Wage Commission, 1978 CanLII 18 (SCC), [1979]1 S.C.R. 754. Two of the six principles outlined in Northern Telecom,1980 at p. 132 are relevant here:
(5) The question whether an undertaking, service orbusiness is a federal one depends on the nature of its operation.
(6) Inorder to determine the nature of the operation, one must look at the normal orhabitual activities of the business as those of "a going concern",without regard for exceptional or casual factors; otherwise, the Constitutioncould not be applied with any degree of continuity and regularity.
Thereis ample authority for the proposition that the crucial issue in any particularcase is the nature or character of the undertaking that is in fact beingcarried on: City of Toronto v. Bell Telephone Co. of Canada, [1905]A.C. 52 (P.C.) (hereinafter Toronto v. Bell), at p. 59; Winner, supra, at pp.581-82; The Queen in the Right of the Province of Ontario v. Boardof Transport Commissioners, 1967 CanLII 93 (SCC), [1968] S.C.R. 118, at p. 127 (hereinafter the"Go-Train" case); Kootenay & Elk Railway Co. v.Canadian Pacific Railway Co., 1972 CanLII 182 (SCC), [1974] S.C.R. 955, at pp. 979-80(hereinafter Kootenay & Elk Railway Co.);Saskatchewan Power Corp. v. TransCanada Pipelines Ltd., 1978 CanLII 163 (SCC), [1979]1 S.C.R. 297, at p. 308; Luscar Collieries Ltd. v. McDonald, 1925 CanLII 67 (SCC), [1925]S.C.R. 460, at p. 475 (hereinafter Luscar Collieries).
Itis impossible, in my view, to formulate in the abstract a single comprehensivetest which will be useful in all of the cases involving s. 92(10)(a). Thecommon theme in the cases is simply that the court must be guided by theparticular facts in each situation, an approach mandated by this Court'sdecision in Northern Telecom, 1980, supra. Usefulanalogies may be found in the decided cases, but in each case the determinationof this constitutional issue will depend on the facts which must be carefullyreviewed as was done by the trial judge in the present appeal.
Itwas conceded that AGT is an "undertaking" within the meaning of s.92(10)(a) (see ReedJ. supra, at p.532), and the issue is whether it is a "local" undertaking andtherefore within provincial jurisdiction, or an undertaking "connectingthe Province with any other or others of the Provinces, or extending beyond theLimits of the Province", and therefore within federal jurisdiction.
Theappellant AGT argues that it is a local undertaking and particular significanceis placed on the fact that with the exception of Lloydminster, Saskatchewan,all of the physical facilities of AGT and all of its subscribers are locatedsolely in the province of Alberta. I would agree that the situation inLloydminster is not constitutionally significant (see NorthernTelecom, 1980, supra, at p. 132) but I do not accept AGT'sargument.
ThisCourt has clearly stated that the location of the physical apparatus in oneprovince and the fact that all the recipients of a service are within a singleprovince will not preclude a finding that an undertaking is interprovincial inscope. In Capital Cities Communications Inc. v. CanadianRadio-Television Commission, 1977 CanLII 12 (SCC), [1978] 2 S.C.R. 141, (hereinafter CapitalCities) Laskin C.J. on behalf of the majority, rejected asimilar argument made with respect to cable television companies (at p. 159):
Thesystems are clearly undertakings which reach out beyond the Province in whichtheir physical apparatus is located; and, even morethan in the Winner case, they each constitute a singleundertaking which deals with the very signals which come to each of them fromacross the border and transmit those signals, albeit through a conversionprocess, through its cable system to subscribers. [Emphasis added.]
Thepoint was made in Public Service Board v. Dionne, 1977 CanLII 207 (SCC), [1978]2 S.C.R. 191 (hereinafter Dionne), that to focus the analysis on thelocation of the subscribers or the separate entity of the operating company ofthe service was to confuse the question. Laskin C.J. stated on behalf of themajority at p. 197:
Thefundamental question is not whether the service involved in cable distributionis limited to intraprovincial subscribers or that it is operated by a localconcern but rather what the service consists of . . . . In all these cases,the inquiry must be as to the service that is provided and not simply as to themeans through which it is carried on.
I amin agreement with Reed J. that AGT's argument places too much emphasis on thephysical facilities employed by it to provide the interprovincial andinternational services it offers. The primary concern is not the physicalstructures or their geographical location, but rather the service which isprovided by the undertaking through the use of its physical equipment. Thefact that a company does not own or operate physical facilities outside aparticular province does not mean that the company's undertaking is necessarilylocal in nature (see: R. v. Toronto Magistrates, Ex Parte Tank TruckTransport Ltd., 1960 CanLII 120 (ON SC), [1960] O.R. 497, and R. v. CooksvilleMagistrate's Court, Ex parte Liquid Cargo Lines Ltd., 1964 CanLII 162 (ON SC), [1965]1 O.R. 84, at p. 89, per Haines, J.)
Theinvolvement of AGT in the transmission and reception of electronic signals atthe borders of Alberta indicate that AGT is operating an interprovincialundertaking. I find the comment of Laskin C.J. in Capital Cities, citedearlier, to be fully applicable here. In that case, with reference to thecable television systems the Chief Justice stated that the systems were"clearly undertakings which reach out beyond the Province in which theirphysical apparatus is located" (supra, at p.159). The analogy is apt as AGT's telecommunications system, taken as a whole,connects Alberta with the rest of Canada and with the United States, and otherparts of the world. It undoubtedly extends beyond the province of Alberta.
AGTdoes not dispute that many of its services are interprovincial andinternational and it acknowledges the fact that its system is physically interconnectedto the systems operated by carriers in British Columbia, Saskatchewan, theNorthwest Territories and the United States. As Reed J. noted, AGT's physicaltelecommunications facilities not only connect at the borders, there is also amore pervasive integration; the same telephone sets, line, exchanges andmicrowave networks are used for the provision of local and interprovincialservices as well as international ones. AGT takes the position, however, thatthe physical connections at the borders of Alberta are insufficient to mark AGTas an interprovincial, as opposed to a local, undertaking.
Thissubmission requires consideration of some early cases involving railways. In MontrealStreet Railway, supra, the Privy Council held that a purelylocal line connected to a railway which was under federal jurisdiction byvirtue of a declaration under s. 92(10)(c) wasnot, by reason of that interconnection alone, also subject to federaljurisdiction. It must be noted, however, that neither of the railway linesinvolved actually extended beyond the province or connected it to any otherprovince.
MontrealStreet Railway was not cited by the Privy Council in LuscarCollieries, supra. In that case a small coal branch line interconnectedto the lines of Canadian National Railways and operated by Canadian Nationalwas found to be within federal jurisdiction. The contractual arrangementsbetween the parties involved allowed for unimpeded traffic flow between the twolines and, thus, the branch line, notwithstanding the fact that it was locatedentirely within the limits of the province, was found to be an interprovincialundertaking (see also the Go-Train case, supra.)
LuscarCollieries, supra, was distinguished and MontrealStreet Railway, supra, applied by this Court in BritishColumbia Electric Railway Co. v. Canadian National Railway Co., 1931 CanLII 72 (SCC), [1932]S.C.R. 161. In this case one mile of the appellant's railway track connectedto two other lines both of which were under federal control, one because of adeclaration, and the other because it extended beyond the limits of theprovince. It was held that the mere interconnection of a local line with afederal system will not, in the absence of some functional integration of thetwo lines, be sufficient to ground federal jurisdiction over the local line.
In Kootenay& Elk Railway Co., supra, a majority of this Court held thatthe province of British Columbia had the power to incorporate a company whoseproposed railway lines were to stop at one-quarter of an inch from the UnitedStates border. The company was to deliver coal over its lines to a point northof the border where the coal would be taken over and carried by an Americancompany for ultimate delivery in western British Columbia. The Courtindicated, however, that subsequent interconnection and operation might renderthe proposed line subject to federal regulation. Martland J. (Abbott andRitchie JJ. concurring) stated, at p.980:
It maybe ... that when the two lines are joined an overall undertaking of aninternational character will emerge. But in my opinion that possibilitydid not preclude the British Columbia Legislature from authorizing theincorporation of a company to construct a railway line wholly situate withinthe borders of the province. [Emphasis added.]
MartlandJ. added, at p. 982:
Insummary, my opinion is that a provincial legislature can authorize theconstruction of a railway line wholly situate within its provincialboundaries. The fact that such a railway may subsequently, by reason of itsinterconnection with another railway and its operation, become subject tofederal regulation does not affect the power of the provincial legislatureto create it. [Emphasis added.]
Thisbrief review of the jurisprudence shows therefore that mere interconnection ofphysical facilities in one province with those in a neighbouring province,territory or state may not be sufficient to attract the characterization of theundertaking involved as interprovincial in nature.
Itis clear, however, that in the instant case the facts demonstrate much morethan mere physical interconnection of AGT's system at provincial borders. Ithas been demonstrated that AGT is, through various commercial arrangements of abilateral and multilateral nature, organized in a manner which enables it toplay a crucial role in the national telecommunications system. It is throughthe organizational mechanisms described earlier that AGT is able to provide toits local subscribers services of an interprovincial and international nature.
Theappellants argue that Reed J.'s analysis is flawed in that she first found thatTelecom Canada is an interprovincial undertaking, then decided that AGT playedan integral role in that organization and concluded from that fact that AGT wastherefore also an interprovincial undertaking. The appellants urge the Courtnot to lose sight of the fact that the issue is not whether Telecom Canada issubject to the regulatory authority of the CRTC, but rather whether AGT is. Itis asserted that the Court should not consider AGT's relationship with TelecomCanada which, AGT points out, is not a juridical person having its ownbusiness, citing the decision of the Ontario Court of Appeal in CanadianPacific Ltd. v. Telesat Canada (1982), 1982 CanLII 1789 (ON CA), 36 O.R. (2d) 229, where itwas held that the Telecom Canada Connecting Agreement was not a partnership.Finally, the appellants submit that Telecom Canada is merely an amalgamation ofits members, each of whom acts independently of the others and each of whom*owns and operates its own system.
I amof the view that AGT's submissions with respect to its relationship withTelecom Canada must fail.
Firstof all, I do not agree that Reed J.'s result is predicated on the conclusionthat AGT is interprovincial solely because of the integral role it plays in theTelecom Canada organization which is also interprovincial. In my view, Reed J.found that AGT itself is operating an interprovincial undertaking andthat it does so primarily through bilateral contracts, its role in TelecomCanada, and the physical interconnection of its system at the borders ofAlberta. I agree with that conclusion. The fact that the Court is not herecalled upon to assess the constitutional character of Telecom Canada does notrender the existence of Telecom Canada irrelevant to the analysis of AGT'senterprise. The appellants would have the Court, in effect, ignore TelecomCanada and AGT's relationship to it.
Underlyingmany of the arguments is an unjustified assumption that by choosing aparticular corporate form the various players can control the determination ofthe constitutional issue. This Court has made it clear in this area ofconstitutional law that the reality of the situation is determinative, not thecommercial costume worn by the entities involved. In NorthernTelecom, 1980, supra, the following observation of theChair of the British Columbia Labour Relations Board in ArrowTransfer Co., [1974] 1 Can. L.R.B.R. 29, at pp. 34-35, was approvedat p. 133:
In eachcase the judgment is a functional, practical one about the factual character ofthe ongoing undertaking and does not turn on technical, legal niceties of thecorporate structure or the employment relationship.
Afternoting the variety of academic writing on the general issue of constitutionaljurisdiction over telecommunications, the Court in Northern Telecom,1980, made the following apposite statement, at p. 134:
In the field of transportation and communication, itis evident that the niceties of corporate organization are not determinative.As McNairn observes in his article, supra, at pp. 380-1:
Atransportation or communication undertaking is a possible corporate activitybut it may or may not be segregated from the total corporate enterprise or itmay even be larger in scope than a single corporate enterprise. To determinequestions of this nature corporate objects have a certain relevance. But ofprimary concern is the integration of the various corporate activities inpractice (including the corporate organizations themselves if more than one isinvolved) and their inherent interdependence. [Emphasis added.]
Whilethe above comments were made in a case where the issue was whether a particularsubsidiary formed an essential part of an interprovincial telecommunicationsenterprise (Bell Canada), the underlying theory is fully applicable here.Constitutional jurisdiction should not vary according to the corporate forminvolved.
Ihave reached the conclusion that AGT's role and relationship with TelecomCanada is relevant to the decision on AGT's own constitutional character. Thefacts are unequivocal that AGT is the mechanism through which the residents ofAlberta send and receive interprovincial and international telecommunicationsservices. The services are provided through both corporate and physicalarrangements which are marked by a high degree of cooperation.
Oneessential vehicle employed by AGT to interprovincialize and internationalizeits services is the Telecom Canada organization. It is not necessary to attacha particular label to the legal relationship that exists between the members ofTelecom Canada. It is a form of a joint venture and is a necessary feature ofa*gT's overall undertaking. I agree with Reed J. that AGT could not separateitself from Telecom Canada without significantly altering the fundamentalnature of AGT's enterprise.
AGT'srelationship with Telecom also illustrates the role AGT plays in the provisionof telecommunications services to Canadians as a whole. The national telephonesystem exists in its present form largely as a result of the Telecom Canadaarrangements. AGT is a cooperative partner in this national system and thisreinforces the conclusion that AGT is not operating a wholly local enterprise.
I donot find the fact that the members of Telecom Canada own their respective"works" to be significant. The separate ownership of works does not,in this case, take away from the degree of integration which exists between themember system and the level of cooperation and coordination which exists in thenational telephone system; it does not make AGT's system less interprovincialand it does not make the Telecom Canada enterprise a mere loose association ofinterested parties. Ownership itself is not conclusive (see: NorthernTelecom, 1980, supra, at pp. 133-34; Dionne, supra, at p.197; Hogg, at p. 490).
Arelated argument was made by several of the interveners with reference to thisCourt's decision in Fulton v. Energy Resources Conservation Board, 1981 CanLII 169 (SCC), [1981]1 S.C.R. 153 (hereinafter Fulton). It was pointed out that AGT couldnot, on its own, provide the extraprovincial services and it was necessary toenter into cooperative agreements for that purpose. It is asserted that, wherean individual organization lacks the ability to effect, on its own, aninterprovincial connection, that undertaking retains its local character. Thisproposition stems from a particular passage in Fulton, supra.
Theissue in Fulton was whether the Alberta EnergyResources Conservation Board had jurisdiction to entertain an application byCalgary Power Ltd. for Board approval of the construction and operation of anelectrical transmission line to a point near the British Columbia - Albertaborder where the line would then connect with one to be built in BritishColumbia pursuant to an agreement between Calgary Power Ltd. and the B.C. Hydroand Power Authority. The Court held that Calgary Power Ltd. was a localundertaking. In the course of giving reasons on behalf of the Court, LaskinC.J. made the following statement, at p. 166:
Thereare observations in the Privy Council's reasons in the Winner case,as at pp. 574-5 of 1954 CanLII 289 (UK JCPC), [1954] A.C. 541, that suggest that an intention to operateinterprovincially may be sufficient to take a work or undertaking outside ofprovincial regulatory authority or, if not intention alone, then by the takingof all necessary steps to interprovincial operation. That may be so where theinterprovincial operation is in the hands of one promoter, as was the case in Winner andalso in Toronto v. Bell Telephone Co., supra, cited in the Winner case,and which, however, turned on the presence of federal legislation. Here,however, there is no single promoter who is in a position to effect on his ownan interprovincial connection and, in my view, the proposed works in Albertamay properly be regarded as local works for the purposes of the applicationthat was before the Energy Resources Conservation Board.
Theargument is that since AGT is not a single promoter, it is not aninterprovincial undertaking.
Itappears to me that those comments have been taken out of their context. In myview they have no application to the present case. The argument raised in Toronto v.Bell, supra, and Winner, supra,relates to the situation when the undertaking remains at the stage of aproposal. The Privy Council in both cases rejected the submission that anundertaking has no existence until it is carried into effect (see: Winner, supra, at p.575.)
Itwill be recalled that in Fulton, supra, theconstruction had also not yet occurred. This is manifestly not the situationin the present appeal. We are not dealing with a proposal by a telephonecompany in one province for interconnection with the facilities of a telephonecompany in another province.
I amalso of the view that the decision in Fulton must beunderstood in relation to its particular facts and procedural history. Therewere a number of factors in that appeal which distance that case from thepresent one. First, there was no existing federal regulatory authority whichcovered the application. Second, Calgary Power did not contest an exercise offederal authority, at least at the point of interconnection, if Parliament hadchosen to act. Third, the Alberta Board did not purport to exercise anyregulatory authority over the relationship between the two companies involvedunder the agreement.
Throughoutthe judgment, there is a sense that had the federal government wished to assertjurisdiction over the interconnection of electrical transmission lines at theBritish Columbia-Alberta border, it could have done so. Laskin C.J., on behalfof the Court, stated, at p. 162:
Unexercisedfederal authority may give leeway to the exercise of provincial authority inrelation to local works and undertakings, and that is how I assess thesituation here.
Inany event, were I of the opinion that the criterion of a single promoter wasessential, I would have no hesitation in viewing AGT and the other members ofTelecom Canada as "single promoters" in that they act together, asone unit, through a form of joint venture to effect the various interprovincialconnections which form the backbone of the Canadian telecommunications network.To ignore the interdependence of the various members of Telecom Canada becauseof the separate corporate structures involved would be a sacrifice of substanceto form and would advance no constitutional value. I find no merit in theargument that AGT's involvement in the interprovincial flow of signals beginsand ends at Alberta's border. This is unrealistic in the same way that it wasunrealistic to see cable television stations as distinct entities once thebroadcast signal was received at their antennae. AGT, in conjunction with theother members of Telecom, provides a physical framework for the provision ofinterprovincial and international telecommunications services. It is AGtit*elf that provides the critical interconnection at Alberta's borders.
(c)Disposition of the Jurisdiction Issue
Iwould accordingly affirm the conclusion of Reed J. that, on the basis of thefacts as found by her, AGT is an interprovincial undertaking within the meaningof s. 92(10)(a) of the Constitution Act, 1867.
Asthe issue of jurisdiction may be disposed of on the basis of s. 92(10)(a), it isunnecessary to deal with the submissions regarding Peace, Order and goodGovernment.
IV. TheSecond Constitutional Question -- The Crown Immunity Issue
(a)The Federal Court Judgments
(i)Federal Court, Trial Division--ReedJ.
Despitefinding that AGT fell within federal jurisdiction under s. 92(10)(a), ReedJ. concluded that, by virtue of its status as an agent of the Crown in right ofAlberta, AGT was not bound by the relevant provisions of the RailwayAct, or subject to CRTC jurisdiction. Reed J. relied upon the leadingcase of Her Majesty in right of the Province of Alberta v. Canadian TransportCommission, 1977 CanLII 150 (SCC), [1978] 1 S.C.R. 61, (hereinafter the PWA case)for the proposition that the provincial Crown is immune from federallegislation either by s. 16 of the Interpretation Act, R.S.C.1970, c. I-23, or under the common law. Reed J. found no express statement inthe Railway Act binding a provincial Crown agent, and found nothing inthe relevant statutory provisions to suggest that the provincial Crown agentshould be bound by "necessary implication".
ReedJ. also rejected a submission that AGT had waived its right to immunity. WhileAGT may have benefited from CRTC approval of TCTS agreements, it could not besaid that AGT had submitted itself to the Railway Act in allits aspects. AGT had never taken the initiative in seeking CRTC approval, norhad it been previously required to do so by the CRTC. Therefore Reed J.concluded at p. 547, supra, that there was "no nexusbetween the waiver of immunity with respect to the TCTS agreements and theclaim being made by CNCP (that AGT be ordered to provide it withinterconnection)".
Finally,Reed J. held that AGT did not lose its status as agent of the provincial Crownby engaging in interprovincial activities. She found that since a provinciallegislature can incorporate entities which operate in federally regulatedfields, AGT did not lose its status as agent of the provincial Crown once itsactivities extended beyond the provision of local telecommunications services.As a result, Reed J. held that the CRTC should be prohibited from proceedingwith the application made to it by CNCP.
(ii)FederalCourt of Appeal -- Pratte J. (Heald and Urie JJ. concurring)
PratteJ. came to the opposite conclusion on the Crown immunity issue. He acceptedCNCP's principal argument that AGT cannot claim the benefit of Crown immunitywhen operating an interprovincial work or undertaking under s. 92(10)(a) of theConstitution Act, 1867, because by doing so it went outside the scope of thepublic purposes which it was statutorily empowered to pursue. Pratte J.reviewed the relevant provisions of the Alberta GovernmentTelephones Act and the Public Utilities Board Act andstated his conclusion as follows at p. 194, supra:
Itis apparent from those provisions that the legislature of Alberta, in creatingAGT, intended that corporation to establish and maintain in the province atelecommunication system that would be regulated under the PublicUtilities Board Act of the province. As the only undertakings that may beregulated under that Act are those that are not described in paragraphs 92(10)(a),(b) and (c) of theConstitution Act, 1867, it follows, in my view, that the legislature intendedAGT to operate a local undertaking and that AGT, in operating a federalundertaking, stepped outside of the authority of the purposes for which it wascreated. It cannot, therefore, invoke its status of a Crown agent so as tododge the laws that are applicable to federal undertakings.
Theorder of Reed J. was, therefore, set aside and AGT's application for a writ ofprohibition dismissed.
(b)TheApplicability of s. 16 of the Interpretation Act, R.S.C. 1970, c.I-23, tothe Provincial Crown
Itis apparent that, as a legal person within federal jurisdiction under s.92(10)(a) of the Constitution Act, 1867, AGTwould fall within the regulatory authority of the CRTC, pursuant to the termsof ss. 5 and 320 of the Railway Act, if special rulesrelating to Crown immunity are not applicable in the present appeal. However,AGT is an agent of the Crown in right of Alberta, by virtue of s. 42(1) of the AlbertaGovernment Telephones Act which, as I have earlier noted, provides:
42(1) Thecommission is an agent of the Crown in right of Alberta and its powers may beexercised only as an agent of the Crown.
Crownimmunity, as developed in the United Kingdom under a unitary constitutionencompassing only one Crown, raises new considerations when applied to a federalstate. Where legislative and executive roles are divided and confined toassigned jurisdictions, the following question must be answered: does thepresumption that the Crown ought not be bound by general words in legislationoperate solely in favour of the Crown in right of the legislating government,or does it benefit the Crown in all its emanations, both federal andprovincial?
Inthe first session of the first Parliament of Canada, provision was made forCrown immunity from federal enactments (see An Act respecting theStatutes of Canada, S.C. 1867, c. 1, s. 7). The original provision forimmunity remained unaltered, in all material respects, until an amendment inthe Interpretation Act, S.C. 1967-68, c. 7, and provided as follows: (InterpretationAct, R.S.C. 1952, c. 158, s. 16):
16. Noprovision or enactment in any Act affects, in any manner whatsoever, the rightsof Her Majesty, her heirs or successors, unless it is expressly stated thereinthat Her Majesty is bound thereby.
As aresult of the 1967-68 amendment, s. 16 of the Interpretation Act tookon its present form:
16. Noenactment is binding on Her Majesty or affects Her Majesty or Her Majesty'srights or prerogatives in any manner, except only as therein mentioned or referredto.
Theissue, therefore, is whether the reference to "Her Majesty" in astatute enacted by Parliament to aid in the interpretation of other federalstatutes is to be taken as referring only to the Crown in right of Canada or,as referring as well to the Crown in right of a province. The definition of"Her Majesty" contained in s. 28 of the Interpretation Act, andmade applicable to the interpretation of s. 16 by virtue of s. 3(2) of the sameAct, adds little insight into whether it should encompass the Crown in right ofa province. Section 28 provides, in part:
28.In every enactment
.. .
"Her Majesty", "His Majesty","the Queen", "the King" or "the Crown" means theSovereign of the United Kingdom, Canada and Her other Realms and Territories,and Head of the Commonwealth;
"HerMajesty's Realms and Territories" means all realms and territories underthe sovereignty of Her Majesty;
In PWA, LaskinC.J. made the following observation regarding the definition of "HerMajesty" in s. 28, at pp. 70-71:
Althoughthe definition above-quoted refers to "Canada", the reference is inthe context of a recital, substantially, of the Royal Style and Titles, asprescribed by the Royal Style and Titles Act, R.S.C. 1970, c.R-12. I do not think that the definition itself establishes a limitation of thereference to "Her Majesty" as being a reference only to the Crown inright of Canada. If it is so, it would be by reason of the constitutionalorganization of our federal system. [Emphasis added.]
LaskinC.J. concluded as follows, at pp. 75-76:
Inthe present case, I find it unnecessary to come to any conclusion on whetherthe definition of "Her Majesty" in s. 28 of the federalInterpretation Act should be limited, for constitutional reasons,to the Crown in right of Canada. I am content to proceed on the traditionalview that it covers the Crown in whatever aspect its subjection to federallegislation arises. [Emphasis added.]
WhileLaskin, C.J. chose not to decide the precise nature of the scope of s. 16, theCourt did hold that the provincial Crown agent, in that case PWA, was not boundby the federal legislation at issue. Although the precise basis for theimmunity of the provincial Crown agent is less than clear in PWA, thecase does clearly hold that immunity exists (at p. 76):
In myview, the Alberta Government, if not entitled to the shelter provided by s. 16of the federal Interpretation Act, is entitled torely on the common law . . . .
TheAnglo-Canadian authorities which have considered this issue appear to haveproceeded on the assumption that immunity is not limited to the Crown in rightCanada: apart from PWA, supra, see, for example, In reSilver Bros., Ld., 1932 CanLII 353 (UK JCPC), [1932] A.C. 514, and the Go-Train case.More recently, this Court handed down judgment in Sparling v. Quebec(Caisse de dépôt et placement du Québec), [1988] 2 S.C.R.1015 (hereinafter Sparling v. Quebec), in which theapplicability of s. 16 to a provincial Crown agent was taken for granted butnot explicitly discussed.
Whilenone of these cases has considered in any depth the rationale for theassumption that statutory immunity from federal laws extends to the Crown inright of a province, it remains that this view has the support of a consistentand considerable body of case-law. I am not persuaded that it would beappropriate to depart from that line of authority in this case. Indeed, thereis much to be said in favour of this interpretation.
Commentingon PWA, supra, Colin McNairn in "Comment"(1978), 56 Can. Bar Rev. 145, at p. 150,succinctly describes the reasons which justify each level of governmentpossessing some measure of freedom of action even if within the other level'slegislative sphere:
In afederal system it makes some sense to put the onus on a legislature tospecially include the other level of government within its enactments if theyare to so extend in a restrictive way. This preserves a degree of freedom tothe various political units within the federation that is consistent with theirmutual independence. This last consideration leads to a very differentconclusion as to the appropriate meaning of the expressions "Crown"and "Her Majesty" as they may appear in statutory provisionsestablishing a general immunity or a particular exemption for that entity.These terms, in that context, may properly be taken to include the other levelof government having in mind that the federal arrangement pre-supposes asubstantial degree of independence between the provinces and the centralauthority.
Notwithstandingthe concern expressed by Laskin C.J. in PWA, supra, thatapplying s. 16 to the provincial Crown might be inconsistent with the conceptof divisibility, Laskin C.J. relied in part on a very similar rationale to thatset out by McNairn for finding that the common law accorded immunity to theprovincial Crowns from federal legislation (at p. 76):
Why, itmay be asked, should that rule, developed in unitary England, apply at all in afederal state? There are, in my opinion, two answers. First, if the Crown inright of a Province was unable to rely on its immunity, unless bound expresslyor by necessary implication, automatic subordination of a provincial Governmentto federal legislation would result, and this would offend the mutuallyindependent positions of the Crown in right of Canada and in right of aProvince which obtain under our constitutional arrangements in the absence of validlegislation to the contrary. Second, the common law rule as part of what I maycall Crown law is an historic principle that was part of the law of thiscountry from its beginning; and it remained part of our law under the federalstructure brought into force in 1867, both for the advantage of the Crown inright of Canada and of the Crown in right of a Province.
The verysame reasoning may be called on in support of the interpretation consistentlygiven by the courts that s.16, no less than the common law, covers bothlevels of government. In my view, a case has not been made for departing fromthe view previously taken by this Court and by the Privy Council that thegeneral reference to "Her Majesty" in s. 16 of theInterpretation Act embraces the Crown in right of a province as well asthe Crown in right of Canada.
In"Federalism and Provincial Government Immunity" (1979), 29U.ofT. Law Journal 1, Professor Katherine Swinton hastaken the argument that there are compelling reasons for shielding provincialCrown agents from the application of federal statutes even further. ProfessorSwinton advocates the use of a balancing test that goes beyond standarddivision of powers analysis: see especially at p. 19. She contended that thecourts should weigh provincial interests against national interests in order todetermine when provincial immunity should be accorded from federal laws. Inher view, even if Parliament has legitimately acted within its legislativecompetence, provincial interests in the public policy role of its Crown agentmay be strong enough to justify the courts in according immunity from otherwiseapplicable laws. Accordingly, Professor Swinton argues for a form ofconstitutional immunity, and suggests that s.16 should be interpreted sothat the provincial Crown is neither totally included nor totally excluded. Inher view, s. 16 should be interpreted differently according to whether, ingiven circ*mstances, Parliament could subject a provincial agent to itslaws after the relevant interests are balanced; see p.35, supra.
Inmy view, it would be wrong to accept a theory of constitutionalinter-governmental immunity. If Parliament has the legislative power tolegislate or regulate in an area, emanations of the provincial Crown should bebound if Parliament so chooses. I agree with the observation of Laskin C.J. in PWA, supra, at p.72:
It is,of course, open to the federal Parliament to embrace the provincial Crown inits competent legislation if it chooses to do so . . . .
Itshould be remembered that one aspect of the pith and substance doctrine is thata law in relation to a matter within the competence of one level of governmentmay validly affect a matter within the competence of the other. Canadianfederalism has evolved in a way which tolerates overlapping federal andprovincial legislation in many respects, and in my view a constitutionalimmunity doctrine is neither desirable nor necessary to accommodate validprovincial objectives.
(c)Is the Railway Act Binding on the Crown?
The RailwayAct cannot bind AGT except to the extent the provincial Crown is"mentioned or referred to" in the enactment. Can it be said that theprovincial Crown has been "mentioned or referred to" in the relevantprovisions of the Railway Act? The respondentsargued before this Court that ss. 320 and 5 of the Railway Actindicate a Parliamentary intention to bind the Crown. Section 320(12) gives theCRTC jurisdiction over
320. ...
(12)... all companies as in this section defined, and to all telegraph andtelephone systems, lines and business of such companies within the legislativeauthority of the Parliament of Canada; ...
"Company"is defined in s. 320(1):
320.(1) In this section
"company"means a railway company or person authorized to construct or operate arailway, having authority to construct or operate a telegraph or telephonesystem or line, and to charge telegraph or telephone tolls, and includesalso telegraph and telephone companies and every company and person withinthe legislative authority of the Parliament of Canada having power to constructor operate a telegraph or telephone system or line and to charge telegraphor telephone tolls; [Emphasis added.]
Finallys. 5 provides as follows:
5.Subject as herein provided, this Act applies to all persons, railwaycompanies and railways, within the legislative authority of the Parliamentof Canada, whether heretofore or hereafter, and howsoever, incorporated orauthorized, except Government railways, to which however it applies tosuch extent as is specified in any Act referring or relating thereto. [Emphasisadded.]
Therespondent submitted that the exception of "Government railways" ins. 5 would have been unnecessary if the word "persons" did notinclude the Crown. I am in agreement with Reed J. and with the Federal Courtof Appeal that these provisions do not purport to bind AGT expressly as agentof the Crown in right of Alberta.
Asnoted earlier, s. 16 of the Interpretation Act was amended in1967-68. The earlier version required that it be "expressly stated"that the Crown is to be bound. The newly substituted version provides that aCrown will not be bound by statute "except only as therein mentioned orreferred to". At issue here is the explicitness required by the newwording of s. 16 to bind the Crown.
Thecommon law rule was set out by Lord du Parcq for the Privy Council in Provinceof Bombay v. City of Bombay, [1947] A.C. 58 (P.C.), at p. 61 (hereinafter Bombay):
Thegeneral principle to be applied in considering whether or not the Crown isbound by general words in a statute is not in doubt. The maxim of the law inearly times was that no statute bound the Crown unless the Crown was expresslynamed therein .... But the rule so laid down is subject to at least oneexception. The Crown may be bound, as has often been said, "by necessaryimplication". If, that is to say, it is manifest from the very termsof the statute, that it was the intention of the legislature that the Crownshould be bound, then the result is the same as if the Crown had beenexpressly named. It must then be inferred that the Crown, by assenting to thelaw, agreed to be bound by its provisions. [Emphasis added.]
Lord duParcq then sets out the "wholly frustrated" test as follows, at p.63:
TheirLordships prefer to say that the apparent purpose of the statute is oneelement, and may be an important element, to be considered when an intention tobind the Crown is alleged. If it can be affirmed that, at the time when thestatute was passed and received the royal sanction, it was apparent from itsterms that its beneficent purpose must be wholly frustrated unless the Crownwere bound, then it may be inferred that the Crown has agreed to be bound.Their Lordships will add that when the court is asked to draw this inference,it must always be remembered that, if it be the intention of the legislaturethat the Crown shall be bound, nothing is easier than to say so in plainwords. [Emphasis added.]
ThePrivy Council made clear that any exception to the normal Crown immunity rulebased on a necessary implication should be narrowly confined. As a result, anintention to bind the Crown is not to be inferred merely from the fact that theprovisions of a statute will not operate smoothly or efficiently if the Crownis not bound, nor from the fact that if the Crown is not bound the statute willhave only a limited application. To what extent is a "necessaryimplication" exception part of the current s. 16?
ThisCourt has addressed the meaning of s. 16 in three recent cases: PWA, supra, R. v.Ouellette, 1980 CanLII 9 (SCC), [1980] 1 S.C.R. 568 (hereinafter Ouellette), and R. v.Eldorado Nuclear Ltd., 1983 CanLII 34 (SCC), [1983] 2 S.C.R. 551 (hereinafter Eldorado). In PWA and in Eldorado, theCourt took the view that the necessary implication exception is not part of s.16, while in Ouellette, the Court seems to have applied aform of necessary implication test.
In PWA, supra, therelevant provisions of the Aeronautics Act, R.S.C. 1970, c.A-3, did not specifically purport to bind the Crown. The issue thus raised waswhether the Alberta government (Pacific Western Airlines being a Crown agent)was a "person" embraced by the general wording and application of thelegislation. Writing for a majority of the Court, Laskin C.J. held that theAlberta government was immune from the Air CarrierRegulations. Laskin C.J. rejected the argument that s. 16 shouldbe interpreted consistently with the Bombay commonlaw doctrine of necessary implication, at p. 75:
I amunable to agree with the conclusion of the Federal Court of Appeal that thesubstitution of the words "except only as therein mentioned or referredto" for the words "unless it is expressly stated therein that HerMajesty shall be bound" restores "necessary implication". Itseems to me, on the contrary, that "necessary implication" isexcluded if it is necessary that the Crown be mentioned or referred to inlegislation before it becomes binding on the Crown.
LaskinC.J. stated that, in his view, the new s. 16 offered the Crown more protectionthan did the old:
. . .the present s. 16...goes farther than the supersededprovision to protect the Crown from subjection to legislation in which it isnot clearly mentioned. Whereas the [old s. 16]...spokeonly of affecting the rights of the Crown.... thepresent s. 16 goes beyond "rights" alone and is express that, inaddition, "no enactment is binding on Her Majesty or affects HerMajesty...except only as therein mentioned or referredto."
Becauseof the expansion of the scope of protection of the Crown, it would seem thatLaskin C.J. felt that it would be inconsistent to water down that protection byreading in the "necessary implication" exception.
In Eldorado, supra, theCourt stated, at pp. 558-62, that s. 16 of the Interpretation Actrequires an express provision to make a federal statute binding on the Crown:
Parliament has followed the lead of the common law,and taken the development one step further. Section 16 of theInterpretation Act removes even the necessary implication exception . . ..
...
The Court must give effect to the statutory directionthat the Crown is not bound unless it is "mentioned or referred to"in the enactment.
...
Section 16 of the Interpretation Actrequires an express provision to make an act binding on the Crown.
...
Byproviding that "no enactment is binding on Her Majesty ... except only astherein mentioned or referred to", Parliament has put the state, commonlyreferred to as the Crown, beyond the reach of Acts of Parliament that are not expresslymade applicable to the Crown. [Emphasis added.]
It is tobe noted that this Court did not consider the decision of Ouellette, supra, in itswritten reasons in Eldorado, but, in my view, the correctness ofthe interpretation and application of s. 16 to the facts of Ouellette is notin doubt. At issue in Ouellette was whether a Superior Court sittingin appeal from a judgment of a summary conviction court and a Court of Appealsitting in appeal from the Superior Court could order the Crown to pay costs.This Court considered that the Crown could be bound as a matter of statutoryinterpretation. Beetz J. considered the effect of the 1967 amendment on s. 16in the following terms, at pp. 574-75:
Inany case, the question can be resolved solely on the basis of the relevantprovisions of the Criminal Code. However, itshould first be noted that s. 16 of the Interpretation Act, citedabove, no longer includes the word "expressly" as it did formerly.This section does not exclude the rule by which the various provisions of astatute are each interpreted in light of the others, and it is possible thatHer Majesty be implicitly bound by legislation if that is the interpretationwhich the legislation must be given when it is placed in its context. Inmy view, this is the interpretation that must be given to ss. 758 and 771(3) ofthe Criminal Code, when they are read not in isolation but in the contextof Part XXIV on summary convictions. [Emphasis added.]
The twosections at issue, ss. 758 and 771(3), each provided in general terms for therespective courts to make an order for costs. Beetz J. read the two sectionsin the context of all of Part XXIV on summary convictions, including the factthat it was clear that the term "appellant" (against whom costs couldbe ordered) included the Attorney General. However, Beetz J. also plainly feltthat each section would be virtually meaningless if only the accused, and notthe Crown, could be ordered to pay costs. In addition, Parliament's intentionto include the Attorney General was highlighted by the fact that the AttorneyGeneral was expressly excluded in at least one kind of situation. Therefore,despite the lack of an express statement binding the Crown, the Court in Ouelletteunanimously found that in that particular statutory context, there was mentionof or reference to "Her Majesty".
Section16 requires a clear Parliamentary expression of an intention to bind theCrown. This does not necessarily require that a federal enactment requires asection stating "This Act shall bind Her Majesty" (although such aprovision, as a matter of legislative drafting, would put the issue beyonddoubt).
Indeed,the passage quoted above from Eldorado must be read inlight of the arguments presented in that case. The Court explicitly noted thatthe Attorney General was not arguing the necessary implication doctrine: see p.558, supra. In Eldorado, two different arguments were madethat the definition of "every one" in s. 2 of the CriminalCode (which includes "Her Majesty") had beenincorporated into the Combines Investigation Act, R.S.C. 1970, c.C-23. The Court found that one argument for inferential incorporation reliedon "far too vague and oblique a reference to have the effect for which theAttorney General contends" (p. 560) and that the other argument relied ona provision of the Interpretation Act, s. 27(2), whichwould produce a "directly contrary" result to s. 16 of the same Act.However, despite the failure of the particular arguments in that case, theCourt was willing to accept that one Act could be read in the context ofwording in another Act--if the language of the former Act wassufficiently clear to justify this.
Similarly,a statute the primary purpose of which is to protect citizens from governmentalactions, though not expressly made binding upon the Crown, would normally be takento have "mentioned or referred to" Her Majesty as being bound on thebasis of a contextual interpretation: see Hogg, Constitutional Law ofCanada, 2nd ed., at p. 234. As an interpretative provision,s. 16 ought not to be construed as an overbroad extension of state immunity,particularly in light of s. 3(1) of the Interpretation Act whichstates:
3. (1)Every provision of this Act extends and applies, unless a contrary intentionappears, to every enactment, whether enacted before or after the commencementof this Act.
Inmy view, in light of PWA and Eldorado, the scope of the words"mentioned or referred to" must be given an interpretationindependent of the supplanted common law. However, the qualifications in Bombay, supra, arebased on sound principles of interpretation which have not entirely disappearedover time. It seems to me that the words "mentioned or referred to"in s. 16 are capable of encompassing (1) expressly binding words ("HerMajesty is bound"), (2) a clear intention to bind which, in Bombayterminology, "is manifest from the very terms of the statute", inother words, an intention revealed when provisions are read in the context ofother textual provisions, as in Ouellette, supra, and,(3) an intention to bind where the purpose of the statute would be "whollyfrustrated" if the government were not bound, or, in other words, if anabsurdity (as opposed to simply an undesirable result) were produced. Thesethree points should provide a guideline for when a statute has clearly conveyedan intention to bind the Crown.
Applyingthis standard to the present case, it is my view that the federal legislationat issue here does not "mention or refer to" the Crown as being boundthereto. Sections 320 and 5 of the Railway Act do not containexpressly binding words. There is nothing in the context of these provisionsto indicate a clear Parliamentary intention to bind the Crown. The grant ofjurisdiction to the CRTC in s. 320 of the Railway Act has aself-contained definition of "company", referring only in a generalway to a "person authorized to ... operate a ... telephone system".It is precisely such general provisions against which s. 16 protects theCrown. In both ss. 320 and 5, the words "within the legislative authorityof the Parliament of Canada" add no specificity and are in factsuperfluous as nothing but a constitutional precondition for application of the RailwayAct.
Furthermore,whether the exemption of "Government railways" from s. 5 exists outof an abundance of caution as Pratte J. held for the Federal Court of Appeal,as a matter of historical antecedent as held by Reed J. at trial, or otherwise,it does not provide a sufficiently clear reference to any Parliamentaryintention to bind the Crown within the meaning of the general word"person" in s. 5. The fact that both of the explanations offered byPratte J. and Reed J. are equally plausible is evidence enough of a failure toconvey an intention to bind the Crown. As for the ex abundanti cautela view, Iwould simply note that it has support in the reasons of Laskin C.J. in PWA, supra, at p.68, in which he discounted the significance of an exemption of militaryaircraft in determining whether Crown-owned civilian airlines were bound by the AeronauticsAct. With regard to Reed J.'s view of the matter, she stated at p. 544, supra, thatit was reasonable to assume that "Government railways" wereoriginally excluded because they were already regulated by the TheGovernment Railways Act, R.S.C. 1886, c. 38, and then noted that that Act wasstill in force as R.S.C. 1970, c. G-11 (now R.S.C., 1985, c. G-7). Assumingthe correctness of this supposition, I, like Reed J., fail to see how specificexemption of Government railways from the Act, either at a time whenCrown-owned telecommunications carriers did not exist or at present, can yieldthe necessary clear intention that Government telecommunications carriers arebound by the Railway Act, especially as itis s. 320(1), not s. 5, that explicitly addresses the applicability of the Actto telecommunications carriers, as opposed to railways. The exemption ofGovernment railways is as consistent with a complete absence of contemplationof whether Government telecommunications carriers are bound as it is with anintention that they be bound. To hold that this exception is sufficient tobind the Crown would be to do so in the face of a considerable doubt,inconsistent with a clear expression of intention.
Thefact that granting immunity will produce a regulatory vacuum with respect toAGT is insufficient and does not amount to a frustration of the RailwayAct as a whole. While granting immunity unless and until Parliamentchooses to amend the legislation will produce a gap in potential coverage ofthe Railway Act, the Act can continue to function just as it did priorto this Court's finding that AGT is a federal undertaking.
(d)Has AGTLost its Entitlement to Crown Immunity by Virtue of its Conduct?
Itwas submitted before this Court that even if AGT is prima facieentitled to Crown immunity under s. 16 of the Interpretation Act, it hasby its conduct waived that immunity. Two aspects of this submission must beconsidered. First, it was contended that AGT waives its immunity from theburdens of the Railway Act where it seeks torely upon the benefits derived therefrom. Second, it was submitted that AGTloses its immunity when it acted for purposes outside its statutory mandate byoperating a federal work or undertaking. A third possibility, a commercialoperations exception, will also be considered.
(i)DidAGT Lose Its Immunity by Virtue of the Doctrine of Waiver?
Atcommon law it is well-established that, although not bound by a statute, theCrown may take advantage of its provisions unless there is an express orimplied prohibition from doing so (Halsbury's Laws of England, 4thed., vol. 44, para. 931 and see the Crown Proceedings Act, 1947 (U.K.),10 & 11 Geo. 6, c. 44, s. 31(1)). The presumption of immunity only applieswhen the statutory provisions, if applied to the Crown, would operate to itsprejudice: Hogg, Liability of the Crown, at p. 181.However there is also authority for the view that the Crown is not entitled totake the benefit of statutory rights free from any restrictions imposed by thestatute. In Crooke's Case (1691), 1 Show.K.B. 208, 89 E.R. 540, the Court appears to have adopted for its judgment thefollowing argument of counsel, at pp. 210-11 Show. K.B., p. 542 E.R.:
TheKing takes a benefit by this clause; it is plain that he is bound, forotherwise he could not have any presentment to this church aforesaid at all;and if he take he must take it under the modes and qualifications that the Actgives it him . . . . it seems very hard to say, that the King is not bound,because not included, because not named, and yet he shall be included as tobenefit. If they have any right, the King can only have it by this Act ofParliament, and then they must have it as this Act of Parliament gives it.
Thewaiver doctrine has been applied by this Court at least twice, without explicitdiscussion of the doctrine (Toronto Transportation Commission v. The King, 1949 CanLII 35 (SCC), [1949]S.C.R. 510, (hereinafter Toronto Transportation Commission), and R. v.Murray, 1967 CanLII 49 (SCC), [1967] S.C.R. 262 (hereinafter Murray)) andendorsed in obiter in one case (PWA, supra). Mostrecently, the doctrine has been expressly approved and elaborated in Sparlingv. Quebec, at pp. 1021 et seq.
In TorontoTransportation Commission, the federal Crown, having no actionable claim atcommon law, relied on a provincial statute in order to claim third partydamages arising from an accident in which it was involved. This Court heldthat the Crown's claim was limited to the proportion of the damage which thestatute authorized it to claim. The Crown "could claim only on the basisof the law applicable as between subject and subject unless something differentin the general law relating to the matter is made applicable to the Crown"(at p. 515). Murray, supra, heldthat the federal Crown was bound by a contributory negligence provision in oneAct by virtue of bringing an action in negligence (for loss of services of anarmed forces member), an action which the Crown only had by virtue of aprovision in a second Act; thus, in that case, taking a benefit under onestatute entailed assuming a burden under another. There is some ambiguity in Murray, andindeed in Toronto Transportation Commission, as towhether the Court was saying that the Crown was not immune because inherent orprerogative rights of the Crown were not affected (and therefore that Crownimmunity was not engaged in the first place according to the version of s. 16in force at the time) or, rather, saying that the Crown must take the burden ofstatutes if it wishes to take the benefit. Like La Forest J. in Sparlingv. Quebec, supra, especially at p. 1027, I take thesecases, along with Gartland Steamship Co. v. The Queen, [1960]S.C.R. 315 (hereinafter Gartland Steamship), at p. 345, whichis relied upon in Murray, supra, at p.267, as examples of waiver by the Crown of any immunity by virtue of the factthat it has brought an action in damages to which certain limitations attach.To the extent that the Court in Murray and GartlandSteamship used language to suggest that the legislation had notsought to impose a liability on the Crown nor had the legislation derogatedfrom prerogative rights, I read those statements as being premised on, notinconsistent with, the very fact that a benefit (e.g., the right to bring anaction) could not be taken without accepting concomitant burdens: in effect,rights were not affected because the Crown was bringing the claim. Ifthe legislation had sought to impose liability independent of the benefit, theimplication is that the Crown's rights might well have been affected andimmunity would have attached. I should also note that the Go-Train case, supra, veryclearly based its finding of no Crown immunity on the basis of aninterpretation of the old s. 16 of the Interpretation Actaccording to which accrued rights of Her Majesty could not be affected, unlessexpressly provided for. However, even in that case, it is arguable that thedetermination that no protected rights were affected is implicitly grounded ina benefits/burden rationale as revealed by the statement at p. 124 that"Such rights as Ontario has are derived either from such agreement or fromthe Railway Act and therefore are subject to the conditions prescribedin that Act, one of these being that tolls are within the jurisdiction of theBoard of Transport Commissioners". Finally, the waiver doctrine was alsoheld to exist by Laskin C.J. in PWA, supra, at pp.72-73 in the following terms:
... aProvincial Legislature cannot in the valid exercise of its legislative power,embrace the Crown in right of Canada in any compulsory regulation. This doesnot mean that the federal Crown may not find itself subject to provinciallegislation where it seeks to take the benefit thereof; see TorontoTransportation Commission v. The King; The Queenv. Murray.
I wouldnote that it is not necessary in this appeal to discuss the merits of aputative doctrine of constitutional immunity of the federal Crown.
Sparlingv. Quebec, supra, is the first case to apply thewaiver doctrine in the context of the new s. 16 and to elaborate unambiguouslyand authoritatively the availability of the doctrine. La Forest J. found thatthe Caisse de dépot et placement du Québec (an agent of the Quebec Crown) couldnot invoke s. 16 in order to fend off the application to it of the insidertrader reporting obligations of the Canada Business Corporations Act, S.C.1974-75-76, c. 33 (hereinafter CBCA). The Caisse hadpurchased over 10 per cent of the shares in a federal company which made it aninsider within the terms of ss. 121 and 122 of the CBCA. TheCaisse did not affirmatively seek to take advantage of a provision of the CBCA or anyother federal statute, but La Forest J. found that the very act of purchasing ashare constituted an implicit acceptance of the benefits of the CBCAregime. A share in a federal corporation has no meaning absent the CBCA and thecomprehensive bundle of rights and liabilities created by the CBCA. Allof the benefits of share ownership being indissolubly linked to the concomitantrestrictions, the Caisse was bound by the burden of submitting an insider'sreport.
PeterHogg in Liability of the Crown, supra,summarizes the waiver doctrine this way, at p. 183:
Therestrictions [on a statutory right] are regarded as restrictions on the rightit*elf, and if the Crown could disregard them it would receive a larger rightthan the statute actually conferred. In other words all of thestatutory provisions affecting a right to which the Crown claims title areinterpreted as if they were advantageous to the Crown on the ground that thenet result is (by hypothesis, since the Crown chooses to rely on the statutoryright) advantageous to the Crown: there is no room for the rule requiringexpress words or necessary implication. [Emphasis in original.]
ColinMcNairn, in Governmental and Intergovernmental Immunity inAustralia and Canada (1977), reaches the same conclusion at p. 10:
Bytaking advantage of legislation the crown will be treated as having assumed theattendant burdens, though the legislation has not been made to bind the crownexpressly or by necessary implication. The force of the rule of immunity isavoided by the particular conduct of the crown and the integrity of therelevant statutory provisions, beneficial and prejudicial.
Canit be said that AGT has sought to take advantage of the benefits of federalregulation of telecommunications under the Railway Actindependent of and divorced from the attendant burdens in such a way that ithas waived its immunity and submitted to CRTC jurisdiction? Reed J. concludedthat the nexus was insufficient in this case to find that AGT had waived itsCrown immunity. ReedJ. was correct to apply a nexus test. As La ForestJ. stated in Sparling v. Quebec, supra, at p.1025:
It is quite correct to conclude that whenever thequestion of the application of the benefit/burden exception arises, the issueis not whether the benefit and burden arise under the same statute, but whetherthere exists a sufficient nexus between the benefit and burden. As McNairn,op. cit., at p. 11, puts it:
Itis not essential...that the benefit and the restrictionupon it occur in one and the same statute for the notion of Crown submission tooperate. Rather, the crucial question is whether the two elements aresufficiently related so that the benefit must have been intended to beconditional upon compliance with the restriction. [Emphasis added.]
TheAGT Act provides the corporation with the capacity and powers to participate inthe advantages of an integrated and federally regulated telecommunicationsnetwork in the course of performing its telecommunications service to localsubscribers. Section 24 of the AGT Act, repeated here for ease of reference,provides:
24 Thecommission may enter into an agreement with any person providing for theconnection, intercommunication, joint operation, reciprocal use or transmissionof business between any systems owned or operated by the parties thereto andfor any consequent division of receipts, expenditures or profits or anyfinancial or other adjustments that may be advisable or necessary for thepurposes of the agreement.
As aresult of such powers, AGT entered into the TCTS (Telecom) agreement, somemembers of which are federally regulated. Many of the agreements entered intoby TCTS are subject to federal approval but AGT has never, on its own, soughtapproval of any of the TCTS agreements. AGT in effect submits that it isentitled to all the advantages of an integrated interprovincial andinternational telecommunications network free of any binding federalregulation. Is there a sufficient nexus between the advantages AGT gains froma federally regulated system and the requirement to submit to CRTCjurisdiction? One example of a link between AGT and federal administrationoccurred when the CRTC approved a series of agreements between CanadianNational Railways (which is clearly subject to the federal regulation), asoperator of telecommunications in the Northwest Territories and the Yukon, andAGT. Although the CNR, and not AGT, applied for federal approval, without suchapproval the agreement was not legally possible. In another situation, AGT petitionedthe Governor in Council directly, seeking to overturn a CRTC refusal to approveTCTS rate changes.
Thebenefits derived under the Railway Act by AGT are of ageneral nature resulting from its participation in the TCTS agreements. Thisis not a case where AGT relies or has relied on the Railway Act forcertain advantages and then argues that limitations placed upon thoseadvantages by the legislation do not apply to the Crown. As stated above, atcommon law the Crown can gain advantages from a statute without necessarilywaiving its immunity therefrom. Waiver only occurs where the Crown takes thebenefit of a statute divorced from its enumerated restrictions. Sparlingv. Quebec, supra, makes clear that the Crown need notspecifically rely on benefit-conferring legislation to be bound by relatedburdens, but none of AGT's actions through TCTS can be seen as an impliedgeneral submission to the entire statutory regime of benefits and burdens. Sparlingv. Quebec, supra, at p. 1027 stressed that"Application of the benefit/burden exception does not result in subsumingthe Crown under any and every regulatory scheme that happens to govern aparticular state of affairs." AGT has done nothing to attract the broadsweep of the Railway Act analogous to thepurchase of a share which has a specific nexus to the CBCAregime. There is no evidence that AGT relies now, or has relied in the past,on particular benefits of the Railway Act or of CRTC regulationto which interconnection with CNCP is an attendant burden.
CNCPis neither a member of the TCTS agreement, nor is it requesting aninterconnection pursuant to an existing agreement between it and AGT.Therefore, I agree with the view of Reed J. at trial, that the advantagesobtained by AGT under the Railway Act are insufficientto link it to CRTC jurisdiction under the theory of waiver of Crown immunity.I would adopt the following conclusion by Reed J., at p. 547:
There isno nexus between the waiver of immunity with respect to the TCTS agreements andthe claim being made by CNCP (that AGT be ordered to provide it withinterconnection). AGT can be taken to have waived immunity with respect toburdens related to the operation of TCTS and other agreements. Thus, if CNCPwere a member of TCTS, it would be a different matter; or, if the requestedinterconnection related to an existing AGT/CNCP agreement, one could see asufficient nexus. But I think it stretches the waiver doctrine too far to holdthat AGT by its participation in the benefit of the TCTS agreements, hassubmitted itself to the general jurisdiction of the CRTC.
Thisconclusion regarding the applicability of the benefit-burden exception mightclash with our sense of basic fairness. It may seem, at first blush,inappropriate that AGT can so arrange its affairs as to take certain benefitsof the CRTC-regulated system, but avoid other burdens of CRTC regulation.However, this concern is in effect simply a way of questioning the Crownimmunity doctrine itself. As I said in Eldorado, supra, at p.558:
It [thedoctrine of Crown immunity] seems to conflict with basic notions of equalitybefore the law. The more active government becomes in activities that had oncebeen considered the preserve of private persons, the less easy it is tounderstand why the Crown need be, or ought to be, in a position different fromthe subject. This Court is not, however, entitled to question the basicconcept of Crown immunity, for Parliament has unequivocally adopted the premisethat the Crown is prima facie immune. The Courtmust give effect to the statutory direction that the Crown is not bound unlessit is "mentioned or referred to" in the enactment.
Sparlingv. Quebec, supra, set out a test requiring a fairlyclose nexus between benefit and burden. Quite apart from its precedentialweight, this is in keeping with the very nature of the Crown immunitydoctrine. In my view, the scope of the benefit/burden exception must be fashionedusing the underlying docrine as a reference point. Because of the necessarilydeferential approach the courts must take on questions of Crown immunity, givens. 16 and the test laid out earlier in this judgment for what it takes tomention or refer to the Crown, it would be inconsistent with the presumption ofimmunity to carve out a wide-ranging exception to the presumption. Anexception cannot swallow a rule, which is, it seems to me, what must happen ifthe benefit/burden doctrine were broadened such that the Crown would be boundby all of the burdens of a regulatory statute no matter how unrelated to thebenefits gained by the Crown from that statute. In other words, a fairly tight(sufficient nexus) test for the benefit/burden exception follows from thestrict test for finding a legislative intention to bind the Crown. A broadbenefit/burden test would be overly legislative in the face of the currentformulation of s. 16. Regretfully perhaps, but indeniably, the statutory Crownimmunity doctrine does not lend itself to imaginative exceptions to thedoctrine, however much such exceptions may conform to our intuitive sense offairness.
(ii)DidAGT Lose Its Immunity By Exceeding Its Statutory Mandate or Crown Purposes?
Thesecond aspect of the respondents' submissions on loss of immunity is that theAlberta legislature, by establishing the statutory mandate of AGT as an agentof the Crown, intended that AGT would engage only in an undertaking which wouldbe subject to provincial regulatory authority. Once it became aninterprovincial work or undertaking under s. 92(10)(a) of theConstitution Act, 1867, it was argued, AGT went beyond that mandate and nolonger acted as agent of the Crown. As I understand it, it is not claimed thatoperating a federal undertaking automatically deprives the provincial Crown ofimmunity but that, as a matter of statutory interpretation, AGT exceeded itsstatutory purposes and therefore lost its immunity.
Therespondents and the Attorney General of Canada did not take the position thatthe Alberta Legislature lacked constitutional jurisdiction to create acorporation with powers the exercise of which might ultimately render thecorporation subject to federal legislation. Nor was the constitutionality ofthe provisions in the AGT Act granting the corporation the powers to enter intointerconnecting agreements questioned. A provincial Crown corporation, oncevalidly established, can attract rights, including immunity status, from otherlegislatures, whether they be federal or provincial: Bonanza Creek GoldMining Co. v. The King, 1916 CanLII 423 (UK JCPC), [1916] 1 A.C. 566 (P.C.) Therefore, AGT canlegitimately attract additional extra-provincial powers and rights (forinstance by entering into interprovincial agreements, as in this case) withoutnecessarily stepping outside its legislative mandate. (See W. R. Lederman,"Telecommunications and the Federal Constitution of Canada", in H.Edward English, ed., Telecommunications for Canada: An Interface ofBusiness and Government, at p. 348, and Hogg, Constitutional Law ofCanada, 2nd ed., at pp.511-19).
Byentering into a federally-regulated area by becoming an interprovincial work orundertaking, a provincial Crown agent does not lose the immunity it wouldotherwise have. If activity in an area of federal jurisdiction alone sufficedto prevent the agent from invoking its immunity, s. 16 of theInterpretation Act would become a dead letter vis-à-vis theCrown in right of a province. Parliament could embrace the provincial Crownagent through general legislative wording without any need to bind the provinceby a mention or reference thereto.
Itis unnecessary, for the purpose of this appeal, to consider whether there arelimits on provincial authority to create Crown corporations operating from theoutset within the federal regulatory sphere. The question raised here iswhether AGT, by exercising its powers so as to operate an interprovincial workor undertaking, exceeded the statutory authority granted to it by the province.
TheFederal Court of Appeal concluded that AGT stepped outside of the purposes forwhich it was created. Pratte J. held, at p. 194, that because it exceeded thepurposes for which it was created a Crown agent, AGT was not immune from theapplicable federal regulation:
Itis apparent from those provisions that the legislature of Alberta, in creatingAGT, intended that corporation to establish and maintain in the province atelecommunication system that would be regulated under the PublicUtilities Board Act of the province. As the only undertakings that may beregulated under that Act are those that are not described in paragraphs 92(10)(a),(b) and (c) of theConstitution Act, 1867, it follows, in my view, that the legislature intendedAGT to operate a local undertaking and that AGT, in operating a federalundertaking, stepped outside of the authority of the purposes for which it wascreated. It cannot, therefore, invoke its status of a Crown agent so as tododge the laws that are applicable to federal undertakings.
The ideathat Crown immunity is lost when a Crown agent exceeds its statutory mandatemakes particular sense in a unitary state where the regulating authority andthe Crown agent fall under the same jurisdiction. Parliament or thelegislature, as the case may be, can be assumed to have granted the immunityfrom its own regulation for specific purposes only; where the Crown acts for anextraneous purpose any reason for the grant of immunity is lost. The doctrinefits less comfortably in a federal system where the Crown in right of onejurisdiction seeks immunity from legislation enacted by the Crown in right of asecond jurisdiction. Decisions of this Court in which this exception fromimmunity has been accepted generally involve the Crown seeking immunity fromlegislation enacted by the same jurisdiction that the Crown's agent represents.
Thetwo recent cases relied on by the Federal Court of Appeal have applied thisdoctrine with respect to federal Crown agents. In Canadian BroadcastingCorporation v. The Queen, 1983 CanLII 50 (SCC), [1983] 1 S.C.R. 339, (hereinafter C.B.C.), afederal Crown corporation established under the Broadcasting Act, R.S.C.1979, c. B-11, was charged under the Criminal Code withthe unlawful broadcasting of an obscene film. A regulation under theBroadcasting Act specifically prohibited the showing of an obscenefilm. This Court (per Estey J.) held that the CBC could not be attributedCrown immunity when it exercised its powers in a manner inconsistent with thepurposes of the Broadcasting Act.
In Eldorado, supra, theissue was whether federal Crown agents were immune from criminal liabilityunder s.32(1)(c) of the Combines Investigation Act byvirtue of s.16 of the Interpretation Act. A majority of theCourt held, at pp. 565-66:
Statutorybodies such as Uranium Canada and Eldorado are created for limited purposes.When a Crown agent acts within the scope of the public purposes it isstatutorily empowered to pursue, it is entitled to Crown immunity from theoperation of statutes, because it is acting on behalf of the Crown. When theagent steps outside the ambit of Crown purposes, however, it acts personally,and not on behalf of the state, and cannot claim to be immune as an agent ofthe Crown. This follows from the fact that s.16 of theInterpretation Act works for the benefit of the state, not for the benefitof the agent personally. Only the Crown, through its agents, and for itspurposes, is immune from the Combines Investigation Act.
(at p.568):
That being so, the 1983 CBC casemakes the same point as the present one: a Crown agent is entitled to thebenefit of the immunity afforded by s. 16 of the Interpretation Act onlywhen it acts within the scope of the Crown purposes it is authorized to serve.
Ithink it is also important to draw a distinction between (i) acts committed inthe course of fulfilling Crown purposes but in no way undertaken in order toeffect Crown purposes; and (ii) those acts committed which are designed toeffect Crown purposes. Whereas the latter situation does invoke Crownimmunity, the former does not.
In Eldorado, themajority held that Eldorado had in fact acted within its Crown purposes.
Inmy view, this doctrine may be applied where one level of government seeks toinvoke Crown immunity from a statute of the other. The distinction drawn in Eldorado betweenan agent acting for Crown purposes and acting personally is applicable in thecurrent context. It follows that if AGT is acting "within the scope ofthe public purposes it is statutorily empowered to pursue [by enteringinterconnection agreements], it is entitled to Crown immunity from theoperation of statutes, because it is acting on behalf of the Crown" (Eldorado, supra, at pp.565-66).
Inmy view, an analysis of the relevant provisions of the AGT Act indicate thatAGT, by developing into an enterprise beyond the constitutional reach of thePublic Utilities Board of Alberta (which, it was submitted, was intended toregulate AGT as a local work or undertaking), did not act outside the purposesfor which it was created. The statutory powers of AGT clearly authorize it toenter into interprovincial arrangements for the provision of an integratedtelecommunications service for its customers. Section4(1) of the AlbertaGovernment Telephones Act expressly authorizes AGT to purchase, construct oroperate a telecommunications system or systems in Alberta. The statute goeson, however, to authorize the Commission to perform any contract or obligationassigned to it by the Government of Alberta for the establishment or operationof any such system in any other province or territory of Canada (s. 4(3)(b)).These provisions, and I repeat, read as follows:
4(1) The commission may purchase, construct, extend,maintain, manufacture, operate and lease to and from other persons, a system orsystems in Alberta, including private communication systems.
...
(3) The Lieutenant Governor in Council may refer orassign to the commission
...
(b) the performance of any duty or task, includingthe performance of any contract entered into by the Government for theestablishment, maintenance or operation of a system in any other province or territoryof Canada,
and notwithstandinganything in this Act, the commission has all the powers, authorities andfunctions expressed or provided in the Act referred to it for administration,or necessary to the proper carrying out of a duty or task assigned to it underthis subsection. [Emphasis added.]
Furtherpowers are granted to AGT in s. 24 of its statute, to which I have earlierreferred, wherein it is authorized to enter into agreements with any personswho own telecommunications systems "for the connection,intercommunication, joint operation, reciprocal use or transmission of businessbetween any systems owned and operated by the parties thereto ...." Underthis power, AGT entered into agreements such as the Telecom Canada agreementwhich of necessity takes it outside the province of Alberta to fulfill itsstatutory objective of serving the people of Alberta. In my view, this type ofa*greement is precisely of the nature contemplated under ss. 4 and 24 of the AGTAct.
Thereforethis case is entirely different from the situations contemplated in Eldorado, supra, and CBC, supra, whereimmunity may be lost. AGT appears to be lawfully executing its powersconsistently with the purposes of the AGT Act and is fulfilling its Crownpurposes thereby. As stated above, AGT cannot lose its Crown immunity solelybecause the exercise of its powers results in a change of legislativejurisdiction. Unlike the situation in CBC, supra, AGTdid no wrongful or unlawful act in operating an interprovincial work or undertaking.It was formed to create an integrated telecommunications system, not solely anintraprovincial system.
Withrespect for the contrary view of the Federal Court of Appeal, I do notinterpret the AGT Act as intended to be coterminous with the regulatory scopeof the Public Utilities Board Act. There is adistinction between the provincial power to incorporate a company with capacityto act in a federally-regulated sphere and the provincial power to regulatethat company. The present appeal is not a challenge to any reliance by AGT onthe provisions in the AGT Act referring to the Public Utilities Board nor tothe exercise by that Board of any powers it purports to have with respect toAGT. The sole issue is whether the CRTC can make an order binding on AGT.Simply because the provincial Board has exercised regulatory jurisdiction inthe past over what is now found to be a federal undertaking does not mean thatAGT is not immune from federal regulation.
WhereAGT has not exceeded its legislative mandate or the Crown purposes for which itwas created, but, rather, merely entered into a federally regulated field byvirtue of its daily operations of providing telecommunication services, itcannot be said to lose its Crown immunity. Entrance into one or another headof federal jurisdiction, simpliciter, does notautomatically strip AGT of its Crown agency status and immunity.
Inmy view AGT has not exceeded its statutory mandate or Crown purposes in thesense of CBC, supra, or Eldorado, supra. Rather,as a provincial Crown agent its statutory purposes and ever-evolvingtechnological advances eventually required it to operate as a federalundertaking in order to service its customers, thus attracting federalregulation.
(iii)DidAGT Lose Its Immunity By Virtue of Being a Commercial Enterprise?
Althoughnot extensively addressed, the question of whether or not immunity should beavailable to the Crown when operating a commercial entity arose in oralargument. Why AGT or other Crown agencies undertaking business ventures in anordinary commercial capacity ought to be immune from otherwise valid federallegislation is a question which only Parliament can explain.
Thenotion of a "commercial activities" exception to s. 16 of theInterpretation Act has, however, never been accepted by this Court, andwas expressly rejected by Laskin C.J. in PWA, supra, at p.69, as follows:
Themain support for the contention that the Crown in right of the Province wasbound, although there is nothing express in that respect, lay in the assertionthat the Aeronautics Act and the AirCarrier Regulations were embracive of all entrants or would be entrantsinto the business of commercial air carriers or in the control, orparticipation in the control, of corporations engaged in such business. This,however, is an argument that is applicable to any piece of general regulatorylegislation and proves too much, unless it be taken that where the Crownengages in ordinary commercial activities it is equally subject to the regimeof control of those activities. This has not hitherto been the rule followedby the Courts, nor is it supported by the expression of principle as to Crownsubjection to legislation found in s. 16 of the Interpretation Act, R.S.C.1970, c. I-23.
See alsothe quotation from Eldorado, reproduced above at p. 000.
Arguably,an analogy might be drawn between sovereign immunity in public internationallaw and Crown immunity. It seems that the general trend in the internationalsphere is toward a restrictive immunity doctrine which accords immunity for`governmental' activity, but not for commercial activity: see McLeod, TheConflict of Laws, at pp. 72-74; Swinton, supra, at p.28; but see Brownlie, Principles of Public International Law, 3rded., (cautious about the claim that the restrictive immunity doctrine ismandated by public international law).
Priorto Parliamentary intervention, this Court had never adopted a commercialactivities distinction: see Gouvernement de la République democratique du Congo v.Venne, 1971 CanLII 145 (SCC), [1971] S.C.R. 997 (hereinafter Venne). Butthe State Immunity Act, R.S.C., 1985, c. S-18, s. 5, now provides that foreignstates do not enjoy sovereign immunity in respect of commercial activity. TheUnited Kingdom Parliament had similarly found it desirable four years earlierto distinguish between acts iure imperii and acts iuregestionis: State Immunity Act, 1978 (U.K.), 1978, c.33, s. 3.
Itis far from clear that any analogy with sovereign immunity in international lawis a direct one. Laskin J. (as he then was) advocated in dissent in Venne, supra, a ruleof restrictive sovereign immunity which would allow courts to be seized ofdisputes involving, inter alia, commercial activities of foreignstates. Yet, seven years later, Laskin C.J. in PWA, supra, wasfirmly of the view that there is no commercial exception to Crown immunity.This perhaps is not surprising. The same considerations which call for mutualrespect of activities of both levels of government within the confines of asingle federal state, discussed above, do not necessarily arise in theinternational sphere. If a foreign state seeks to carry out commercialactivities abroad as an element of state or public policy, it cannot expectimmunity from foreign laws and judicial processes. (Other policyconsiderations may admittedly be at stake when a public sector corporation isimpleaded abroad with respect to activities conducted within the territory ofthe corporation's home state.) But, as Professor Swinton makes clear in"Federalism and Provincial Government Immunity", supra, at pp.28-29, the public policy dimension of governmental commercial activities withinCanada's borders is entitled to presumptive respect:
There is no doubt that when a provincial governmentacts, whether through a government agency, a crown corporation, or a commercialcorporation, it does so in the provincial public interest and it engages inactivity of government. This is clearest when the activity is carried out in agovernment department or through a crown agent, but equally so when a provincebuys into a commercial corporation. The primary purpose in doing so may be togenerate revenue for the public purse, and although the corporation'sactivities seem remotely connected with the public interest, there isestablished a governmental link between the firm and the government. Morecommonly, a provincial government will have reasons additional to profit-makingwhich lead to involvement in corporate activity. The reason for governmentinvolvement in many of these activities, such as transportation or resourcedevelopment, is to meet specific public policy objectives, with profit-makingat most a secondary motivation.
Intrying to draw a line between what is governmental and what is proprietary, onefast becomes fixed in a quagmire of political and economic distinctions with nohope of reasoned separation.
Inany event, assessment of the desirability of a commercial exception is forParliament to make, if so inclined, as was the case with the StateImmunity Act, supra, in respect of sovereign immunity.
(e)Disposition of Immunity Issue
Forall the above reasons, I find that, on the basis of the legislation aspresently drafted, AGT is immune from CRTC jurisdiction exercised under s. 320of the Railway Act.
Thereis no question, however, that had the Railway Act beenexpressly made to bind the Crown, AGT would be subject to its provisions as aconstitutional matter. Equally it is apparent that Parliament and theprovinces have the constitutional competence to reverse the common law andcurrent statutory presumption of immunity in favour of a statutory rule ofinterpretation binding the Crown to enactments except where otherwise thereinprovided (see Interpretation Act, R.S.B.C. 1979, c.206, s. 14; and Interpretation Act, S.P.E.I 1981, c.18, s. 14).
V. Conclusion
Theappeal is allowed and the judgment of the Federal Court of Appeal is setaside. The two constitutional questions are answered as follows:
1.IsAlberta Government Telephones a work or undertaking within the legislativeauthority of the Parliament of Canada by virtue of s. 92(10)(a) orotherwise of the Constitution Act, 1867?
Answer: Yes.
2.If theanswer to the question 1 is in the affirmative, is Alberta GovernmentTelephones bound by the relevant provisions of the Railway Act?
Answer: No.
Therewill be no order as to costs.
//Wilson J.//
Thefollowing are the reasons delivered by
WILSON J.(dissenting) -- I have had the benefit of the very extensive reasons of theChief Justice and I concur with much of what he has said. My sole point ofdeparture is that I do not believe that, given the facts of this case and thenature of the application before the Canadian Radio-television andTelecommunications Commission ("CRTC"), Alberta Government Telephones("AGT") is entitled to rely on s. 16 of theInterpretation Act, R.S.C. 1970, c. I-23. Simply put, it is my view thatsince AGT has elected to garner the benefits of participating in a nationalnetwork of telecommunications under the regulatory supervision of the CRTC, itmust also accept the burdens which accompany such participation. In otherwords, AGT has waived its entitlement to the protection of s. 16 of theInterpretation Act by its conduct. Section 16 of theInterpretation Act provides:
16. Noenactment is binding on Her Majesty or affects Her Majesty or Her Majesty'srights or prerogatives in any manner, except only as therein mentioned orreferred to.
Recognitionand approval of the so-called "benefit-burden" doctrine was recentlygiven by this Court in Sparling v. Quebec (Caisse dedépôt et placement du Québec), [1988] 2 S.C.R. 1015 (hereinafter Sparlingv. Quebec). In that case, the Caisse de dépôt et placement duQuébec, a provincial Crown agent, owned sufficient shares in a publicly tradedcompany to be considered an insider within the terms of the CanadaBusiness Corporations Act, S.C. 1974-75-76, c. 33. However, the Caisse refusedto submit an insider report to the Director of the Act contending that it wasimmune from the legislation by virtue of s. 16 of theInterpretation Act. The Director argued before this Court that, since theCaisse had taken advantage of the Canada Business Corporations Act bypurchasing the shares, it was obliged to accept the attendant burdens of theAct notwithstanding the existence of s. 16 of the Interpretation Act.
TheDirector's argument was accepted by this Court. La Forest J., speaking for theentire Court, held that the benefit-burden doctrine was a recognized exceptionto Crown immunity. He stated at p. 1021:
I am in agreement with Tyndale J.A. that the benefit/burdenexception to Crown immunity exists and that it applies in this case to renderthe insider reporting provisions of the Canada BusinessCorporations Act applicable to the Caisse.
There can be no disputing the existence of thebenefit/burden exception (sometimes referred to as the "waiver"exception) to Crown immunity. It is of ancient vintage; see Crooke'sCase (1691), 1 Show. K.B. 208, at pp. 210-11, 89 E.R. 540,at p. 542, where it is said:
If they have any right, the King can only have it bythis Act of Parliament, and then they must have it as this Act of Parliamentgives it.
Theexception has been applied by this Court as recently as The Queenv. Board of Transport Commissioners, 1967 CanLII 93 (SCC), [1968] S.C.R.118, and The Queen v. Murray, [1967 CanLII 66 (SCC), [1967] S.C.R.309]; see also Toronto Transportation Commission v. The King, 1949 CanLII 35 (SCC), [1949]S.C.R. 510.
Havingfound support for the existence of the doctrine, La Forest J. set forth thegeneral principles which should guide its application. He stated at p. 1025:
It is quite correct to conclude that whenever thequestion of the application of the benefit/burden exception arises, the issueis not whether the benefit and burden arise under the same statute, but whetherthere exists a sufficient nexus between the benefit and burden. As McNairn,op. cit., at p. 11 puts it:
It isnot essential . . . that the benefit and the restriction upon it occur in oneand the same statute for the notion of crown submission to operate. Rather,the crucial question is whether the two elements are sufficiently related sothat the benefit must have been intended to be conditional upon compliance withthe restriction.
LaForest J. felt that a sufficient nexus existed between the holding of theshares and the reporting scheme of the Canada BusinessCorporations Act. He came to this conclusion despite the fact that theCaisse was not seeking affirmatively to take advantage of the statute. It hadsimply purchased shares in a company governed by the Act. This, he found, wasa sufficient nexus. LaForest J. did, however, stop short of concludingthat whenever a Crown agent operates in a field that is regulated it is deemedto accede to that regulatory jurisdiction. He stated at p. 1027:
Application of the benefit/burden exception does notresult in subsuming the Crown under any and every regulatory scheme thathappens to govern a particular state of affairs. Although some earlierauthorities (see, e.g., Bank of Montreal v. Bay Bus Terminal (North Bay), Ltd. (1971),1971 CanLII 481 (ON SC), 24 D.L.R. (3d) 13 (Ont. H.C.), at p. 20, aff'd (1972), 1972 CanLII 1184 (ON CA), 30 D.L.R. (3d) 24 (Ont.C.A.)) had been thought by some to support the view that the Crown was bound byany regulatory scheme of sufficient scope, this approach was rejected by LaskinC.J. in the P.W.A. case (p. 69). The exception is notof such broad reach. Its application depends not upon the existence or breadthof a statutory scheme regulating an area of commerce or other activity, but, asnoted earlier, upon the relationship or nexus between the benefit sought to betaken from a statutory or regulatory provision and the burdens attendant uponthat benefit. The focus is not on the source of the rights and obligations buton their content, their interrelationship. As McNairn, op. cit., puts it atpp. 11-12:
Relianceupon a statute may...be for such a limited purpose that the crown ought not, asa result, to be taken to have assumed the attendant burdens. Such is the casewhen a statute is resorted to for a purely defensive reason, for example togive notice under a registration scheme of the existence of a crown claim. Theuse of a statute in this way may be distinguished from active reliance tosecure positive rights, the assumption of the burdens of a statute being apossible consequence only of the latter circ*mstance.
Inhis reasons in the case at bar, the Chief Justice has interpreted Sparlingv. Quebec as requiring a strict nexus between the benefitobtained and the burden sought to be imposed before the benefit-burden doctrinewill be applicable. In light of this interpretation, he has found that thebenefit-burden doctrine cannot be applied against AGT. I agree that the nexusmust be close but I would not go so far as to hold, as the Chief Justice seems todo, that for the benefit-burden doctrine to apply the burdens must constitutespecific limitations on a specific benefit as, for example, where a specificlimitation period is prescribed for the assertion of a particular right ofaction granted by the statute. Rather, it is my view that the burden-benefitdoctrine can also apply when the Crown agent has engaged in a deliberate andsustained course of conduct through which it has benefited from a particularprovision or provisions of a statute. In such circ*mstances the Crown agentcannot pick and choose the situations in which it wishes the legislation toapply. Rather, having made a conscious decision to take the benefits of thelegislation, the Crown agent must also assume the related burdens.
I donot believe there is anything in La Forest J.'s reasons in Sparlingv. Quebec to foreclose this broader approach to thebenefit-burden doctrine. On the contrary, La Forest J. expressly rejected asubmission made by the Caisse that it would have to have taken the benefit of aspecific provision in the Act before any particular burden could be imposedupon it; see p. 1024. Nor do I feel constrained by La Forest J.'s admonitionthat the benefit-burden exception "does not result in subsuming the Crownunder any and every regulatory scheme that happens to govern a particular stateof affairs". Clearly, the fact that the Crown has taken advantage of aparticular provision in a complex regulatory statute does not mean that itbecomes bound by the entire statute, particularly if many of the otherprovisions of the statute are totally irrelevant to the benefit the Crown hastaken. As La Forest J. emphasizes, the key is not the breadth of the statutoryscheme but the "nexus between the benefit sought to be taken from astatutory or regulatory provision and the burdens attendant upon thatbenefit". This is what I understand to be the thrust of La Forest J.'sreasons in Sparling v. Quebec and that thrustis, in my view, quite consistent with my approach in the present appeal.
Ibelieve, moreover, that the position I have articulated finds support in thecase law which preceded Sparling v. Quebec although I mustadmit that the burden-benefit doctrine was not precisely articulated anddefined prior to Sparling v. Quebec.
InAttorney-General for British Columbia v. Royal Bank of Canada and IslandAmusem*nt Co., 1936 CanLII 245 (BC CA), [1937] 1 W.W.R. 273, aff'd on other grounds by 1937 CanLII 23 (SCC), [1937]S.C.R. 459, the British Columbia Court of Appeal considered circ*mstances inwhich a company had been stricken off and later restored to the register of theprovincial Companies Act, 1929, S.A. 1929, c.14. The effect of this under the legislation was that the company was deemednever to have been struck off. However, during the actual time period within whichthe company had been struck off, the Crown had laid claim under the doctrine of bonavacantia to a fund which the company had deposited in a bankaccount. The Crown argued that the restorative provisions of TheCompanies Act, 1929 could not bind it and as a result it was entitled tothe fund. The court rejected this submission, holding that the Crown onlybecame entitled to the fund because of the operation of the Act. This beingthe case, the Crown was bound by the provisions of the Act which allowed forthe restoration of the company and specified the consequences of suchrestoration. Macdonald J.A., speaking for the majority, stated at p. 294:
It wassolely because of a step taken under sec. 167 of the Companies Act thatthe fund reverted to the Crown. If on the proper construction of secs. 199 and200 of the same Act it provides, either expressly or by implication, that uponrevival of a company the fund must be restored to its coffers no rights areinvaded at all. The Crown must invoke the Act (i.e., a step must be takenunder it) to obtain any colour of right to the fund. It cannot rely on thatpart of the Act by which the right is acquired and ignore that part which (ifits true construction warrants it) puts an end to a right temporarily enjoyed.The nature and extent of the right depends upon the wording of all relevantsections of the Act. [Emphasis added.]
In Reid v.Canadian Farm Loan Board, 1937 CanLII 370 (MB KB), [1937] 4 D.L.R. 248 (Man. K.B.), Reid had executedtwo mortgages in favour of the federal Crown agent. He defaulted. The Crownagent sought to foreclose the mortgages, one pursuant to The RealProperty Act, S.M. 1934, c. 38, and the other through the courtssince it was executed prior to the enactment of the legislation. The federalCrown agent did not comply with The Debt Adjustment Act, 1932, S.M.1932, c. 8, which required the mortgagee to obtain a certificate to continueforeclosure proceedings. The court ruled that the Crown agent was obliged tocomply with The Debt Adjustment Act, 1932. Inthe course of his reasons Dysart J. stated at pp. 252-53:
If the Board is above provincial mortgage laws, whydoes it recognize them on any point for any purpose? If it has power to choosethe kind of security it may take for its loans, why does it not use those samepowers to enforce those securities without resorting to provincial laws? Theanswer is obvious. And if the Board has to resort to provincial laws toenforce its securities, what is to justify it in attempting to reject part ofthose laws while claiming the benefit of other parts? None that I can see.
The argument that the Crown (Dominion) is notaffected by the restrictions of the Manitoba Debt Adjustment Act,because not expressly made subject to that Act, is not available to the Board.The canon of construction here relied upon applies only to the Crown in itsright of the jurisdiction which enacts the statutes - in this case in its rightof Manitoba. In this field of legislative action, in its right of the Dominionof Canada it [sic] has no more right in Manitoba than it has in the rightof any sister Province - all are "foreign" authorities in Manitoba'slegislative field.
Inpoint of actual practice, the Board has always complied with provincial mortgagelaw. In this case it took as security mortgages which complied with allessential requirements imposed by Manitoba statutes and regulations andpractice respecting the form and registration of the mortgages. When it soughtto enforce these mortgages, it complied with all the provincial requirements asto practice and procedure up to a certain point, and then, when pressing forfurther remedies, it continued to comply with the requirements of the LandTitles Office and of the Court until it was met with this one requirement of acertificate from the Debt Adjustment Commission. Then, while refusing tocomply on this single point with our laws, it demanded the benefit of them inall other respects for the enforcement of its securities. In my opinion, theBoard was unjustified in such a course. It cannot blow hot and cold in thesame breath; it should not be allowed to demand the agreeable and reject thedisagreeable portions of our law in its specific dealings, but must take themas they are, as a whole.
While Iquestion the soundness of the second paragraph of the above quotation, thisdoes not detract from Dysart J.'s other basis for holding the Crown bound bythe Act. It appears very similar to the basis on which I approach the presentappeal namely, that the Crown cannot "blow hot and cold in the samebreath". Once the Crown undertakes a conscious and sustained course ofconduct in order to derive a benefit from a piece of legislation it must alsoaccept the burdens that pertain to the enjoyment of that benefit.
In The Queenin the Right of the Province of Ontario v. Board of Transport Commissioners, 1967 CanLII 93 (SCC), [1968]S.C.R. 118, the Ontario government had decided to run a government commutertrain service near Toronto over a portion of the CNR's trackage. The CNRapplied to the Commissioners to discontinue four of its trains in anticipationof an agreement with the government. The Commissioners approved thediscontinuance but ruled that they had jurisdiction with respect to the tollsto be charged by the government on the commuter train service. The Crownsubmitted to this Court that it could not be bound by the terms of the RailwayAct, R.S.C. 1970, c. R-2, under which the Commissioners had assertedjurisdiction because of the wording of the former s. 16 of theInterpretation Act, R.S.C. 1952, c. 158. It read as follows:
16. Noprovision or enactment in any Act affects, in any manner whatsoever, the rightsof Her Majesty, her heirs or successors, unless it is expressly stated thereinthat Her Majesty is bound thereby.
TheCourt held that the specific terms of the Railway Act whichgranted the Commissioners jurisdiction did not affect the rights of Her Majestyand therefore s. 16 did not apply. However, in coming to this conclusion theCourt expressed itself in words akin to those used in relation to thesubsequently articulated benefit-burden doctrine. The Court stated at p. 124:
HerMajesty in right of Ontario has, apart from an agreement in principle with theCanadian National Railways, no right to operate the Commuter Service andtherefore no right to levy tolls for the carriage of passengers over part ofthe Canadian National Railways lines. Such rights as Ontario has are derivedeither from such agreement or from the Railway Act andtherefore are subject to the conditions prescribed in that Act, one of thesebeing that tolls are within the jurisdiction of the Board of TransportCommissioners.
In otherwords, since the Crown had obtained benefits or rights from the CNR pursuant tothe legislation, it had to accept the burdens which accompanied them, includingthe supervisory jurisdiction of the Commissioners.
Aninstance in which it may be said that the court went too far in seeking toapply the benefit-burden doctrine is Bank of Montreal v.Bay Bus Terminal (North Bay) Ltd. (1971), 1971 CanLII 481 (ON SC), 24 D.L.R. (3d) 13 (Ont.H.C.), aff'd on this point by (1972), 1972 CanLII 1184 (ON CA), 30 D.L.R. (3d) 24 (Ont. C.A.) (Thedecision in the case was later disapproved in Sparling v. Quebec, at p.1027). In that case the Bank of Montreal suffered a loss when a number of Bankof Canada notes were destroyed in a fire while they were being transported byanother defendant. The Bank of Montreal sued the Bank of Canada on the basisof certain provisions of the Bills of Exchange Act, R.S.C. 1952, c.15. The Bank of Canada relied upon s. 16 of the Interpretation Act. TheChambers Judge ruled that the Bank of Canada was not a Crown agent on the factsof the case. However, he also made the following comments at p. 20:
A further and probably more cogent reason why s. 16of the Interpretation Act cannot be held to prevent the Bills ofExchange Act from applying to the Bank of Canada, lies in theprovisions of the Bank of Canada Act itself as well asin the very nature of the daily operations of the Bank.
Subject to certain limitations as to amounts, kindsand maturities, s. 18 (rep. & sub. 1953-54, c. 33, s. 7; 1966-67, c. 88, s.9), among many other things, specifically authorizes the Bank to buy and sellsecurities, promissory notes and bills of exchange, to make loans to variousbanks and banking institutions and to provincial Governments, as well as thefederal Government, to buy and sell on the open market either inside or outsideCanada, from or to any person: securities, bankers' acceptances, bills ofexchange and other documents of commerce, with or without endorsem*nts ofchartered banks.
Itwould be completely incongruous to find that an institution, which many timeseach day, must necessarily rely on the provisions of the Bills ofExchange Act and with which institution members of the public, aswell as banking institutions, are involved commercially, would not be subjectto the provisions of that Act. Chaos and confusion would result and the Bankof Canada would be unable to properly carry out its functions. The provisionsof s. 18 of the Bank of Canada Act do, in my view,render the Bank subject to the Bills of Exchange Act and, ifs. 16 of the Interpretation Act did apply, theseprovisions would override its application.
In myview, the Chambers Judge in that case did not err in undertaking a form ofbenefit-burden analysis. He did, however, err in casting his net far toowide. It was improper for him to look at the unconnected day-to-day operationsof the Bank of Canada and conclude that the Bank should be bound by the entire Bills ofExchange Act. Rather, he ought to have looked at those provisionsof the Act from which the Bank of Canada made a conscious and sustained attemptto benefit and determine whether any of the Act's burdens were relevant to orattached to such benefits.
Thissomewhat cursory review of case law predating Sparling v. Quebec is notintended to be exhaustive of the case law dealing with the burden-benefitdoctrine. It does, however, illustrate that courts were in appropriatecirc*mstances pre-Sparling v. Quebec willing to imposelegislative burdens upon Crown agents when those burdens were relevant tobenefits which the Crown had derived from legislation through a deliberatecourse of conduct. With the exception of the Bank of Montreal case,all of the cases referred to are completely consistent with the judgment ofthis Court in Sparling v. Quebec. It remains toapply the principles identified to the circ*mstances of this case.
CNCPfounded its application to the CRTC in part on s. 320(7) of the RailwayAct. The subsection provides:
320. ...
(7)Whenever any company or any province, municipality or corporation,having authority to construct and operate, or to operate, a telephone system orline and to charge telephone tolls, whether such authority is derived from theParliament of Canada or otherwise, is desirous of using any telephone systemor line owned, controlled or operated by the company, in order to connectsuch telephone system or line with the telephone system or line operated or tobe operated by such first mentioned company, or by such province,municipality or corporation for the purpose of obtaining direct communication,whenever required, between any telephone or telephone exchange on the onetelephone system or line and any telephone or telephone exchange on the othertelephone system or line, and cannot agree with the company with respect toobtaining such use, connection or communication, such first mentioned companyor province, municipality or corporation may apply to the Commission forrelief, and the Commission may order the company to provide for such use,connection or communication, upon such terms, including compensation if any, asthe Commission deems just and expedient, and may order and direct how, when,where, by whom, and upon what terms and conditions such use, connection, orcommunication shall be had, constructed, installed, operated and maintained.[Emphasis added.]
Thesubsection essentially gives the CRTC jurisdiction to regulate theinterconnection of telephone systems when one party refuses to agree to termswith another party which desires the interconnection. This provision clearlyconfers a benefit on the party seeking the interconnection and imposes a burdenon the party resisting it since it removes the matter from the parties indefault of agreement and puts it in the hands of the CRTC. Given the existenceof s. 16 of the Interpretation Act, the only way inwhich AGT, a provincial Crown agent, can be bound by this provision is if ithas undertaken a deliberate and sustained course of conduct through which ithas obtained a benefit from the operation of the legislation, a benefit whichis related to the burden sought to be imposed.
Whatbenefit, if any, has AGT received from the Railway Act? AGThas elected, of its own volition, to participate with several public andprivate sector entities in a national telecommunications network which alsooperates in the sphere of international telecommunications. The network firstoperated under the name "TransCanada Telephone System" and presentlyoperates under the name "Telecom Canada". It must be kept in mind,however, that the network, as an unincorporated association, is nothing morethan the sum of its constituent parts. Thus, although Telecom enters intoagreements with other parties and in effect carries on business operations, itdoes so as agent for its constituent parts, one of them being AGT. As a resultof the operation of s. 320(11) of the Railway Act Telecomwas required to get CRTC approval for several agreements. Section 320(11)reads as follows:
320. ...
(11)All contracts, agreements and arrangements between the company and anyother company, or any province, municipality or corporation having authority toconstruct or operate a telegraph or telephone system or line, whether suchauthority is derived from the Parliament of Canada or otherwise, for the regulationand interchange of telegraph or telephone messages or service passing to andfrom their respective telegraph or telephone systems and lines, or for thedivision or apportionment of telegraph or telephone tolls, or generally inrelation to the management, working or operation of their respective telegraphor telephone systems or lines, or any of them, or any part thereof, or of anyother systems or lines operated in connection with them or either of them, aresubject to the approval of the Commission, and shall be submitted to andapproved by the Commission before such contract, agreement or arrangement hasany force or effect. [Emphasis added.]
ReedJ. listed the agreements of which AGT was a part by virtue of its associationwith TransCanada Telephone Systems or Telecom Canada (1984), 1984 CanLII 5297 (FC), 15 D.L.R. (4th)515, at pp. 545-46. She stated:
The agreements involving AGT which the CRTC hasapproved are: the 1971 TCTS interconnection and service agreement with theAmerican Telephone and Telegraph Company (AT&T); the 1972 interconnectionagreement between AGT and CNR and amendments thereto in 1973, 1976 and 1977;the TCTS interconnection and operating agreement of 1975 with Teleglobe; a 1979agency agreement between all members of TCTS; the 1978 TCTS agreement withTelenet; the 1979 TCTS agreement with Tymnet; interim approval in 1983 of theTCTS agreement with the American Satellite Company; interim approval in 1983 ofthe TCTS agreement with MCI Telecommunications Corporation.
The1976 TCTS "Connecting Agreement" itself did not initially receiveapproval. In 1977, the CRTC turned down Telesat's application for approval forthat agreement (Telecom Decision CRTC 77-10). The CRTC's decision was based ona conclusion that approval would significantly prejudice regulatory controlover Telesat's autonomy and create a non-competitive situation not in thepublic interest. The Governor-in-Council varied the CRTC decision by P.C.1977-3152, essentially approving the "Connecting Agreement" asoriginally proposed by the members of TCTS. Again in 1981 the CRTC refused toapprove certain aspects of an application dealing with increases and decreasesin TCTS rates (Telecom decision CRTC 81-13). It was this non-approval whichgave rise to the petition to the Governor-in-Council referred to several timesabove. This petition was signed by all members of TCTS. TheGovernor-in-Council varied the original CRTC decision by P.C. 1981-3456.
AlthoughAGT was not the entity which made the formal applications, save in the case ofthe petition to the Governor-in-Council regarding rates, they were made byTelecom on its behalf as well as on behalf of the other participants. I do notsee how in these circ*mstances AGT can take the position that it has notbenefited along with the others from the CRTC's approval of these agreements.The applications made under s. 320(11) should, in my view, be treated as ifthey had been made by the participating parties through their agent Telecom.
Moreover,the agreement between AGT and Canadian National Railways for theinterconnection of systems between Alberta and the Northwest Territories alsorequired and received CRTC approval pursuant to s. 320(11). Once more,although AGT was not the party which brought the application, the samereasoning seems to me to apply.
AGTundoubtedly received many benefits from CRTC's approval of the above-mentionedagreements. AGT was obviously anxious to maintain its membership in thenetwork and be part of the business relationships which resulted. An exampleof the benefits AGT obtained from participation in the network is that AGT candeliver a complete national and international telecommunications service to itscustomers. This has undoubtedly resulted in increased revenue to AGT. Revenuehas also been created through the distribution scheme adopted by the members ofTelecom. Moreover, AGT has been able to share in the development of newtechnology and new marketing strategies with other Telecom members. These arebut a few of the benefits which AGT has derived from the CRTC's approval of theagreements reached by the participants.
Thus,AGT has, in my view, engaged in a sustained course of conduct through which ithas enjoyed the benefits and continues to enjoy the benefits derived from thesubmission of the agreements for CRTC approval under s. 320(11) of the RailwayAct and the receipt of such approval. Chief among those benefits is thatAGT has interconnected its system with several others to form a national andinternational telecommunications network. Are this and the other benefitswhich AGT has received sufficiently linked to the burdens which CNCP seeks toimpose upon it? In my view they are. In my view, it would be quite improperto allow AGT and other Crown agents to pick and choose the circ*mstances inwhich they will allow the CRTC to regulate interconnections between themselvesand other entities engaged in telecommunications particularly when those otherentities cannot so choose. To do so would be to let AGT "blow hot andcold in the same breath". Having acceded to CRTC jurisdiction overinterconnections in order to obtain the benefits of such interconnections, AGT mustaccede to CRTC jurisdiction for the attendant burdens associated with suchinterconnections.
ReedJ. in the Federal Court Trial Division appeared reluctant to impose thebenefit-burden doctrine upon AGT because CNCP was never a party to any of theconsensual interconnection agreements into which AGT entered. I do not sharethis concern. AGT's willingness to receive the benefits of s. 320(11) was notconfined to an isolated incident involving a specific transaction. Rather, AGThas deliberately engaged in a sustained course of conduct through which it hasendeavoured to take advantage of the benefits of interconnection agreementswhich under the legislation required the approval of the CRTC. The nexus isnot confined to an isolated and unrelated invocation of the statute. Byseeking to obtain broadly based benefits AGT has, in my view, subjected itselfto the statute's broadly based burdens. It is subject to the supervisoryjurisdiction of the CRTC in the same way as the other participants in Telecom.
Ihave not dealt with the fact that if AGT is not subject to the regulatorycontrol of the CRTC because of its status as an agent of the provincial Crown,then it is in a position to frustrate the operation of the network since inlight of my finding it is not necessary for me to do so. I must say, however,that this provides in my mind substantial re-inforcement for the position Ihave taken. Nor have I discussed the fact that if AGT is not subject to theregulatory control of the CRTC with respect to its participation in thenetwork, then it is not subject to any regulatory control since the network hasbeen found to be an interprovincial undertaking. This is obviously a practicalrather than a legal consideration as far as the issue of AGT's being subject tothe regulatory control of the CRTC is concerned.
Ihave not addressed either the desirability of a "commercial activity"exception to the doctrine of Crown immunity. It seems to me, however, that therationale for such an exception in the international sphere obtains equally inthe domestic sphere. I have serious doubts that the doctrine of Crownimmunity, developed at a time when the role of government was perceived as avery narrow one, was ever intended to protect the Crown when it acted, not inits special role qua Crown, but in competition with other commercialentities in the market place. I leave this for another day.
Iconclude that in the circ*mstances of this case AGT is precluded by its conductfrom relying on s. 16 of the Interpretation Act. It follows thatReed J. erred in granting AGT a writ of prohibition. I would remit the matterback to the CRTC to deal with the s. 320(7) application on its merits. I wouldmake no order as to costs.
Appealallowed, WILSON J. dissenting; the first constitutional question should beanswered in the affirmative, the second in the negative.
Solicitorsfor the appellant and for the intervener the Attorney General for Alberta:Burnet, Duckworth & Palmer, Calgary.
Solicitorfor the intervener the Attorney General of Canada: The Deputy AttorneyGeneral, Ottawa.
Solicitorfor the intervener the Attorney General of Quebec: The Attorney General ofQuebec, Ste‑Foy.
Solicitorfor the intervener the Attorney General of Nova Scotia: The Attorney Generalof Nova Scotia, Halifax.
Solicitorfor the intervener the Attorney General for New Brunswick: The Deputy AttorneyGeneral, Fredericton.
Solicitorfor the intervener the Attorney General of Manitoba: Tanner Elton, Winnipeg.
Solicitorfor the intervener the Attorney General of British Columbia: The AttorneyGeneral of British Columbia, Victoria.
Solicitorfor the intervener the Attorney General of Prince Edward Island: The AttorneyGeneral of Prince Edward Island, Charlottetown.
Solicitorfor the intervener the Attorney General for Saskatchewan: Brian Barrington‑Foote,Regina.
Solicitorfor the intervener the Attorney General of Newfoundland: The Attorney Generalof Newfoundland, St. John's.
Solicitorfor the respondent CNCP Telecommunications: Canadian Pacific Law Department,Montreal.
Solicitorfor the respondent Canadian Radio‑television and TelecommunicationsCommission: Canadian Radio‑television and Telecommunications Commission,Hull.
