T-8340-82
Alberta Government Telephones (Applicant)
v.
Canadian Radio-television and Telecommunica
tions Commission and CNCP Telecommunica
tions (Respondents)
and
Attorney General of Canada (Intervenor)
Trial Division, Reed J. — Edmonton, May 28, 29,
30, 31; Ottawa, October 26, 1984.
Telecommunications — Jurisdiction — CRTC — Applicant
provincial Crown agent operating telecommunications system
— Seeking to prohibit CRTC from hearing application requir
ing it to provide interconnection services — Regulatory au
thority of CRTC over applicant — Applicant non-local under
taking — Crown immunity — Provincial Crown not bound by
federal legislation unless by express statement or necessary
implication — No waiver of immunity — Prohibition allowed
— Railway Act, R.S.C. 1970, c. R-2, ss. 5, 102(1)(c),(d),
130(1), 265(1),(7), 320(1),(7),(12) (as am. by S.C. 1974-75-76,
c. 41, s. 1) — The Railway Act, 51 Vict., c. 259, s. 3 — The
Government Railways Act, R.S.C. 1886, c. 38 — Government
Railways Act, R.S.C. 1970, c. G-11 — National Transporta
tion Act, R.S.C. 1970, c. N-17 (as am. by S.C. 1976-77, c. 26)
— Aeronautics Act, R.S.C. 1970, c. A-3 (as am. by S.C.
1976-77, c. 26) — Public Utilities Board Act, R.S.A. 1980, c.
P-37.
Constitutional law — Distribution of powers — Provincial
Crown agent operating telecommunications system — Whether
undertaking local or interprovincial — Test: significant
amount of continuous and regular interprovincial activity —
Nature of enterprise, not physical equipment, crucial feature
— Physical and sufficient organizational interconnection plac
ing enterprise within federal jurisdiction — Factual determi
nation — Undertaking interprovincial, not merely local in
nature — Constitution Act, 1867, 30 & 31 Vict., c. 3 (U.K.)
IR.S.C. 1970, Appendix II, No. 5] (as am. by Canada Act
1982, 1982, c. 11 (U.K.), Schedule to the Constitution Act,
1982, Item 1), s. 92(10)(a),(c).
Crown — Immunity — Whether applicant, provincial Crown
agent operating telecommunications services, bound by federal
legislation — Description of "Her Majesty" in s. 28 Interpre
tation Act not imparting into s. 16 of Act immunity for Crown
in all its emanations — Provincial Crown not bound by federal
legislation unless by express statement or necessary implica
tion or waiver of immunity — No express statement in Rail
way Act — Necessary implication arising out of text of statute
— Legi.lative provisions relied upon no assistance — No
waiver of immunity — Benefit-burdens doctrine — Applicant
not submitting to regulatory authority of CRTC by participat
ing in benefits — Interpretation Act, R.S.C. 1970, c. I-23, ss.
3(1),(2), 14(2)(a), 16, 28 — Railway Act, R.S.C. 1970, c. R-2
— An Act respecting the Royal Style and Titles, R.S.C. 1970,
c. R-12.
This is an application for a writ of prohibition to prevent the
CRTC from proceeding with an application made to it by
CNCP. CNCP seeks an order from the CRTC requiring
Alberta Government Telephones (AGT) to provide intercon
nection services to CNCP. It is argued that the CRTC lacks
jurisdiction on the grounds that (1) AGT is a local work or
undertaking therefore subject to exclusive provincial jurisdic
tion pursuant to subsection 92(10) of the Constitution Act,
1867 (the constitutional issue) and (2) as a provincial Crown
agent AGT is not bound by federal legislation (the Crown
immunity issue).
The facts indicate that the telecommunications facilities of
AGT are physically connected to the systems of other telecom
munications carriers outside Alberta by microwave and buried
cable. AGT takes signals emanating from its subscribers (or
from outside Alberta) and transmits them to points outside
Alberta (or within Alberta). On the organizational level, there
exists an unincorporated entity, TransCanada Telephone
System (TCTS), of which AGT is an integral part, composed
of the various member telecommunications carriers. Each
member retains ultimate control over its own telecommunica
tions system.
Held, the application should be allowed.
(1) Constitutional issue
The applicable test for deciding whether the undertaking is
local or interprovincial is to determine whether it engages in a
significant amount of continuous and regular interprovincial
activity. The "pith and substance" test, argued by AGT as
being the proper test, is used to determine the validity of the
legislation, a matter not at issue in the instant case. The issue is
whether AGT, once created, can be validly regulated by federal
legislation because of the nature of its undertaking.
AGT contends that since its physical facilities do not extend
outside the boundaries of the province of Alberta, it does not
engage in interprovincial activity. Paragraph 92(10)(a) of the
Constitution Act, 1867 applies not only to undertakings
"extending beyond the limits of the Province", but also to
undertakings "connecting the Province with any other or others
of the Provinces". The paragraph does not require that physical
facilities exist outside the province in order for the enterprise to
be classified as an interprovincial undertaking. Furthermore,
AGT's argument places emphasis on the location and nature of
the physical facilities of the enterprise, which emphasis is not
supported by the authorities.
The crucial feature, then, is the nature of the enterprise
itself, not the physical equipment it uses. AGT's physical
facilities are used to provide its customers local, interprovincial
and international telecommunications services without discrimi
nation. Its services are totally integrated. One could not sepa
rate the local from the non-local without emasculating AGT's
enterprise as it presently exists.
The decision of the Supreme Court of Canada in Kootenay
& Elk Railway Co. v. Canadian Pacific Railway Co., [19741
S.C.R. 955 is of no assistance to the applicant. In that case, the
Court was concerned only with the railway company before any
interconnection had in fact taken place. There was given a clear
indication that, once the interconnection with the American
railway was made, the character of the whole enterprise might
be changed and become subject to federal legislation.
Physical interconnection, however, is not enough to sweep an
enterprise under federal jurisdiction. Regard must be had to the
organizational structure of the enterprise. There must be,
according to the applicant, a sufficient organizational intercon
nection. The applicant submits that this element is not present
in the case at bar: TCTS is not a legal entity and thus cannot
be said to provide services to anyone; the contracting parties
provide services to their own customers and retain ultimate
control over their own telecommunications systems.
That argument was not convincing. It was too fine a legal
distinction on which to base what is really a factual determina
tion. The existence of TCTS, and AGT's participation in it,
demonstrate the common and joint telecommunications enter
prise which exists. It demonstrates that AGT operates its
telecommunications undertaking as an interprovincial under
taking not merely local in nature. Although AGT may, from a
legal standpoint, retain control over its own facilities, it could
not, as a practical reality, separate itself from the joint TCTS
enterprise without destroying its telecommunications system in
its present form.
Finally, the fact that neither Parliament nor the federal
government have attempted during the past 80 years to regu
late AGT does not mean that there is thereby created some sort
of constitutional squatters rights. AGT is a non-local undertak
ing as described in paragraph 92(10)(a) of the Constitution
Act, 1867.
(2) Crown immunity issue
Section 16 of the Interpretation Act provides that no enact
ment is binding on Her Majesty "except only as therein men
tioned or referred to". Section 28 of the Act defines "Her
Majesty" as the Sovereign of all Her Realms and Territories.
The contention that the section 28 description imported to
section 16 an immunity for the Crown in all its emanations
(including the Crown in right of the province of Alberta) could
not be accepted. Section 28 is merely a description of Her
Majesty's title as it appears in An Act respecting the Royal
Style and Titles.
The question remains whether section 16 should be interpret
ed as referring to the federal Crown as well as the provincial
Crown. Whether Crown immunity be considered as a canon of
statutory construction or as an aspect of prerogative rights,
there would be today persuasive reasons for the view that such
immunity in federal legislation related only to the federal and
not to the provincial Crown. This flows from the division
between legislative functions and prerogative rights in our
federation. In any event, whether the Crown immunity rule be
an historical inheritance from the days when governments were
less active in non-traditional government areas, or when the
unity of the Crown was a factual reality, it still remains part of
our law. Accordingly, it is clear that AGT will not be governed
by the Railway Act nor by the regulatory authority of the
CRTC unless the relevant provisions of the statute either by
express statement or by necessary implication bind the provin
cial Crown or unless it can be said that AGT has waived its
Crown immunity.
Express statement or necessary implication
There is no express statement in the Railway Act binding the
provincial Crown. CNCP argues that AGT is bound as a
matter of necessary implication, and that a finding of necessary
implication arises out of the text of the statute itself. AGT's
argument, that the Supreme Court of Canada in Her Majesty
in right of the Province of Alberta v. Canadian Transport
Commission, [1978] 1 S.C.R. 61 and in R. v. Eldorado
Nuclear Ltd., [1983] 2 S.C.R. 551, intended to rule out the
necessary implication doctrine, was not convincing. Such an
assertion might have been justified had the Supreme Court
considered the interaction of sections 3 and 14 of the Interpre
tation Act with section 16 of the said Act.
CNCP's first argument, based on sections 102(1)(c) and (d)
and 130(1) of the Railway Act, was to be rejected on the
ground that those sections were irrelevant.
CNCP's second argument, based on subsection 320(1) and
section 5 of the Railway Act (in its present form and as it
appeared in the Railway Act of 1888), should also be rejected.
It was unreasonable to interpret the present provisions with
respect to telecommunications carriers by reference to a provi
sion dating from 1888 respecting railways, given the disorderly
growth of the Railway Act.
Waiver of immunity
CNCP argues that AGT by its actions has waived its right to
immunity and is therefore bound by the Railway Act. It relies
on the Supreme Court of Canada decision in The Queen in the
Right of the Province of Ontario v. Board of Transport Com
missioners, [1968] S.C.R. 118. In that case, the Supreme
Court applied the benefit-burdens doctrine: where a govern
ment waives its immunity by taking advantage of legislative
provisions, it will be taken to have assumed both the benefits
and the burdens thereunder; it cannot choose merely the advan
tageous provisions. But it would be stretching that doctrine too
far to hold that AGT, by its participation in the benefit of the
TCTS agreements, had submitted itself to the general jurisdic
tion of the CRTC. There is no nexus between the waiver of
immunity with respect to the TCTS agreements and the claim
being made by CNCP that AGT be ordered to provide it with
interconnection. The conclusion might be different if CNCP
were a member of TCTS or if the requested interconnection
related to an existing AGT/CNCP agreement.
Finally, CNCP's argument that AGT is an agent of the
provincial Crown in so far as it provides local telecommunica
tions services but once it moved beyond that realm of activity it
lost that status, must be rejected. The incorporating power of a
federal or provincial government is quite distinct from its
legislative jurisdiction. The Supreme Court decisions in Fulton
et al. v. Energy Resources Conservation Board et al., [1981] 1
S.C.R. 153 and in Kootenay & Elk (supra) seem to indicate
that a provincial legislature can incorporate entities to operate
in federally-regulated fields.
CASES JUDICIALLY CONSIDERED
DISTINGUISHED:
The Queen in the Right of the Province of Ontario v.
Board of Transport Commissioners, [1968] S.C.R. 118;
Toronto Transportation Commission v. The King, [1949]
S.C.R. 510; Schwella, John F. v. The Queen and Hydro
Electric Power Commission of Ontario et al., [1957]
Ex.C.R. 226.
CONSIDERED:
Capital Cities Communications Inc. et al. v. Canadian�
Radio-Television Commn., [1978] 2 S.C.R. 141; In de
Regulation and Control of Radio Communication in
Canada, [1932] A.C. 304 (P.C.); Toronto Corporation v.
Bell Telephone Company of Canada, [1905] A.C. 52
(P.C.); Public Service Board et al. v. Dionne et al.,
[1978] 2 S.C.R. 191; Kootenay & Elk Railway Co. v.
Canadian Pacific Railway Co., [1974] S.C.R. 955;
Luscar Collieries v. McDonald, [1927] A.C. 925 (P.C.);
Her Majesty in right of the Province of Alberta v.
Canadian Transport Commission, [1978] 1 S.C.R. 61; R.
v. Eldorado Nuclear Ltd., [1983] 2 S.C.R. 551; 50 N.R.
120.
REFERRED TO:
Attorney-General for Ontario v. Israel Winner, [1954]
A.C. 541 (P.C.); Fulton et al. v. Energy Resources
Conservation Board et al., [1981] 1 S.C.R. 153; [1981] 4
W.W.R. 236; R. v. Borisko Brothers Quebec Ltd. (1969),
9 C.C.C. (2d) 227 (Que. S.P.); Re Windsor Airline
Limousine Services Ltd. and Ontario Taxi Association
1688 et al. (1980), 30 O.R. (2d) 732 (H.C.); Construc
tion Montcalm Inc. v. Minimum Wage Commission,
[1979] 1 S.C.R. 754; Northern Telecom Ltd. v. Com
munications Workers of Canada, [1980] 1 S.C.R. 115;
Re Ottawa-Carleton Regional Transit Commission and
Amalgamated Transit Union, Local 219 [sic] et al.
(1983), 144 D.L.R. (3d) 581 (Ont. H.C.), affirmed
(1984), 1 O.A.C. 177 (C.A.); Arrow Transfer Co. Ltd.
and Canadian Assoc. of Industrial, Mechanical and
Allied Workers, Local I (B.C.) and General Truckdrivers
and Helpers Union, Local 31 (Intervener), [1974] 1
Canadian LRBR 29 (B.C.); Attorney General of
Manitoba v. Forest, [1979] 2 S.C.R. 1032; Maritime
Bank of Canada (Liquidators of) v. Receiver-General of
New Brunswick, [1892] A.C. 437 (P.C.); Bonanza Creek
Gold Mining Company v. Rex, [1916] 1 A.C. 566 (P.C.);
Attorney-General for the Dominion of Canada v. Attor-
ney-General for the Province of Ontario, [1898] A.C.
247 (P.C.); Regina v. Secretary of State for Foreign and
Commonwealth Affairs, Ex parte Indian Association of
Alberta, [1982] Q.B. 892 (C.A.); Province of Bombay v.
Municipal Corporation of the City of Bombay and
Another, [1947] A.C. 58 (P.C.); In re Silver Brothers
Ld., [1932] A.C. 514 (P.C.); Conseil des Ports
Nationaux v. Langelier et al., [1969] S.C.R. 60; Canadi-
an Broadcasting Corporation, Television Station
C.B.O.F.T. et al. v. The Queen, [1983] 1 S.C.R. 339.
COUNSEL:
John D. Rooke, W. Henkel and D. W Kin-
loch for applicant.
C. R. O. Munro, Q.C. and Michael Ryan for
respondent CNCP Telecommunications.
Eric A. Bowie, Q.C. and D. J. Rennie for
intervenor Attorney General of Canada.
Gregory van Koughnett for respondent
Canadian Radio-television and Telecommuni
cations Commission.
SOLICITORS:
Burnet, Duckworth & Palmer, Calgary, for
applicant.
Law Department, Canadian Pacific Limited,
Montreal, for respondent CNCP Telecom
munications.
Deputy Attorney General of Canada for
respondent Canadian Radio-television and
Telecommunications Commission and inter-
venor Attorney General of Canada.
The following are the reasons for order ren
dered in English by
REED J.: This is an application for a writ of
prohibition to prevent the Canadian Radio-televi
sion and Telecommunications Commission (the
CRTC) from proceeding with an application made
to it by CNCP Telecommunications. The CNCP
application seeks an order from the CRTC requir
ing Alberta Government Telephones (AGT) to
provide facilities for the interchange of telecom
munication traffic between the telegraph and tele
phone systems and lines operated by CNCP and
those operated by AGT. The application also asks,
among other things, that the CRTC set the com
pensation therefor.
AGT argues that the CRTC has no jurisdiction
to deal with this application. Two reasons for this
contention are given: (1) AGT is a local work or
undertaking and consequently not within the con
stitutional jurisdiction of the federal Parliament
(the constitutional issue); (2) AGT is a provincial
Crown agent and therefore not within the jurisdic
tion of the CRTC because it is not bound by the
relevant federal legislation (the Crown immunity
issue).
CNCP's application to the CRTC is made pur
suant to subsections 320(7) and (12), and subsec
tions 265(1) and (7) of the Railway Act, R.S.C.
1970, c. R-2 as amended [by S.C. 1974-75-76, c.
41, s. 1]. Despite its name, this Act contains within
it the regulatory provisions governing telecom
munication enterprises falling within its scope. The
Act accords the authority to exercise the regulato
ry power so established to the CRTC.
The relevant sections, noted above, are some
what tortuous in their construction and therefore I
do not propose to set them out here. Suffice it to
say that if either of the two contentions raised by
AGT are valid, the CRTC has no jurisdiction to
deal with the application before it. If both are
invalid, the CRTC has jurisdiction.
EDITOR'S NOTE
The Editor has chosen to omit some 15 pages
of these reasons for judgment. The deleted ma
terial, entirely factual in nature, consists in a
review of:• the physical facilities of both Alberta
Government Telephones and the Canadian tele
communications system; the range of services
offered; rates charged and the contractual
arrangements, organization, management and
functions of the TransCanada Telephone System.
Summarizing some of the salient facts: the tele
communications facilities of AGT are physically
connected to the systems of other telecommunica
tions carriers outside the province of Alberta: by
microwave at two places on the Saskatchewan
border, at two places on the British Columbia
border, at one location on the United States border
and at one location on the border with the North
west Territories, and by buried cable across the
borders at various points. In describing this
microwave linkage as physical I am using that
word in its broadest sense. I am not unmindful of
Lord Porter's comments in Attorney-General for
Ontario v. Israel Winner, [1954] A.C. 541 (P.C.)
at page 574, that to characterize the flow of an
electric discharge across the frontier of a province
as a physical connection is a fanciful suggestion.
However, it is clear from the Supreme Court
decision in Capital Cities Communications Inc. et
al. v. Canadian Radio-Television Commn., [1978]
2 S.C.R. 141 at page 159, that the technology of
transmission is not the legislatively significant
factor.
AGT takes signals emanating from its subscri
bers' telephone sets and transmits them to points
outside Alberta; it takes signals emanating from
outside Alberta and transmits them to the intend
ed receiver in Alberta; and in some cases it may
transmit signals through Alberta.
AGT's physical telecommunications facilities
not only connect at the borders, there is also a
more pervasive integration. The same telephone
sets, line, exchanges and microwave networks are
used for the provision of local and interprovincial
services as well as international ones. It is clear
that many AGT employees are involved in the
provision of both intraprovincial and extraprovin-
cial services without distinction.
On the organizational level there exists an unin-
corporated entity, TCTS [TransCanada Telephone
System]; composed of the various member tele
communications carriers, each having an equal
voice. This organization, of which AGT is an
integral part, both at the managerial level and
seemingly at the staff level, engages in planning
for the construction and operation of the overall
network which is comprised of each members'
facilities; sets technical standards; establishes
terms and conditions under which telecommunica
tions services will be provided by the members;
performs a joint marketing function; determines
rates; acts as the pivotal entity for negotiating and
implementing agreements for the provision of
international services; operates a system of revenue
sharing through the TCTS Clearing House.
Constitutional Issue
AGT contends that the CRTC does not have
constitutional jurisdiction to order it to provide
interconnection services to CNCP because AGT is
a local work or undertaking and therefore subject
to exclusive provincial jurisdiction pursuant to sub
section 92(10) of the Constitution Act, 1867 [30
& 31 Vict., c. 3 (U.K.) [R.S.C. 1970, Appendix II,
No. 5] (as am. by Canada Act 1982, 1982, c. 11
(U.K.), Schedule to the Constitution Act, 1982,
Item 1)]:
92. In each Province the Legislature may exclusively make
Laws in relation to Matters coming with the Classes of Sub
jects next herein-after enumerated; that is to say,-
10. Local Works and Undertakings other than such as are of
the following Classes:—
a. Lines of Steam or other Ships, Railways, Canals, Tele
graphs, and other Works and Undertakings connecting the
Province with any other or others of the Provinces, or
extending beyond the Limits of the Province:
The first point to consider is the applicant's
contention that the proper test for deciding wheth
er an undertaking is local or interprovincial under
subsection 92(10) is to determine whether the pith
and substance of its activity is local or interprovin-
cial. It is contended that it is not enough to
determine whether the undertaking engages a sig
nificant amount of continuous and regular inter-
provincial activity. In support of this proposition
were cited: Attorney-General for Ontario v. Israel
Winner, [1954] A.C. 541 (P.C.) at page 582;
Fulton et al. v. Energy Resources Conservation
Board et al., [1981] 1 S.C.R. 153; [1981] 4
W.W.R. 236; R. v. Borisko Brothers Quebec Ltd.
(1969), 9 C.C.C. (2d) 227 (Que. S.P.); and Re
Windsor Airline Limousine Services Ltd. and
Ontario Taxi Association 1688 et al. (1980), 30
O.R. (2d) 732 (H.C.) at pages 736-737.
There may in fact be little difference between
the two tests cited above but, in my view, it is the
latter which has been developed in the jurispru
dence. The pith and substance concept is one used
in determining the vires of legislation; I think it
confuses matters to also employ it for the purpose
of determining the nature (interprovincial or local)
of an undertaking. The pith and substance test
will, of course, be applicable if the validity of
legislation is challenged, for example, as invalid
for being designed to regulate intraprovincial or
extraprovincial undertakings, as the case may be,
but often this will not be the issue. The legislation
will often, on its face, be neutral, the issue will be
whether it applies to govern certain enterprises
given the nature (local or interprovincial) of those
enterprises. In this case there is no need to deter
mine the vires of the legislation at all. I did not
understand counsel for CNCP to be arguing that
the Alberta legislation creating AGT is invalid nor
that the Public Utilities Board Act of Alberta
[R.S.A. 1980, c. P-37] is invalid. The issue, rather
is whether AGT, once created, can be validly
regulated by federal legislation because of the
nature of its undertaking.
I note also that the pith and substance concept
has been used (e.g. Winner case (supra)) by the
courts to indicate that they will not be prepared to
classify as either local or extraprovincial enter
prises which attempt to masquerade as one or the
other but are not genuinely so. This is referred to
in Hogg, Constitutional Law of Canada, at page
327 as an instance of "the familiar colourability
doctrine applied to interprovincial undertakings".
Even this usage of the concept "pith and sub
stance" in relation to the nature of an undertaking
has been overtaken, it seems to me, by the develop
ment of a test requiring a "significant amount of
continuous and regular extraprovincial activity".
This test does not demand that the extraprovin-
cial portion of an undertaking's enterprise must
dominate but it does mean that occasional and
irregular extraprovincial activity will not lead to a
characterization of the enterprise as falling within
federal jurisdiction. See generally: Construction
Montcalm Inc. v. Minimum Wage Commission,
[1979] 1 S.C.R. 754; Northern Telecom Ltd. v.
Communications Workers of Canada, [1980] 1
S.C.R. 115 at pages 131-133; Re Ottawa-Carleton
Regional Transit Commission and Amalgamated
Transit Union, Local 219 [sic] et al. (1983), 144
D.L.R. (3d) 581 (Ont. H.C.), affirmed (1984), 1
O.A.C. 177 (C.A.), especially pages 183-186.
The second point to note is that there is agree
ment that AGT's enterprise constitutes an under
taking as that term has been used in subsection
92(10). The dispute is whether it should be charac
terized as a local undertaking, or as one "connect-
ing the Province with any other or others of the
Provinces, or extending beyond the Limits of the
Province".
The evidence seems to leave little scope for
anything but a conclusion that AGT engages in a
significant degree of continuous and regular inter-
provincial activity, and therefore must be classified
as the latter.
AGT's argument that this is not the case
focusses on two aspects of its undertaking: (1) its
physical facilities do not extend outside the bound
aries of the province of Alberta (if one ignores the
Lloydminster situation and the spill-over along the
border which occurs in the case of the mobile
service), and (2) TCTS is not a legal entity—the
organizational structure of TCTS is such that each
member retains ultimate control over its own tele
communications system, thus the proper charac
terization of the enterprise is an aggregation of
local systems, not an integrated national system.
I would paraphrase AGT's first argument as
follows: the evidence that the TCTS microwave
network in Alberta is identical with that of AGT's
does not prove that AGT is an integral part of a
federal undertaking; rather it is suggestive of the
fact that there is no such undertaking at all, but
rather that the so called "national network" is
merely an aggregate of local and regional systems.
AGT does not provide services of any kind outside
the borders of Alberta; it merely provides the
means by which its customers can access the users
of other telecommunications systems in other juris-
dictions, it does not provide the service itself.
The first hurdle this argument has to face is the
text of paragraph 92(10)(a) itself. That text does
not merely bring within the scope of paragraph
92(10)(a) undertakings "extending beyond the
Limits of the Province", it also applies to "Under-
takings connecting the Province with any other or
others". The words of the paragraph do not seem
to require that in order to be classified as an
interprovincial undertaking there must be physical
facilities of that undertaking existing outside the
province.
In addition, it seems to me that AGT's argu
ment places undue emphasis on the location and
nature of the physical facilities of the enterprise,
which emphasis the jurisprudence does not bear
out. An "undertaking" was defined in In re Regu
lation and Control of Radio Communication in
Canada, [1932] A.C. 304 (P.C.) at pages 314-315.
In that case it was argued that a broadcasting
enterprise was not an undertaking because the
"Works and Undertakings" in paragraph
92(10)(a) referred to physical things, not services,
and also because the transmitter and receivers
were property operating wholly within their
respective provinces. The Judicial Committee of
the Privy Council said:
The argument of the Province really depends on making, as
already said, a sharp distinction between the transmitting and
the receiving instrument. In their Lordships' opinion this
cannot be done.... Broadcasting as a system cannot exist
without both a transmitter and a receiver. The receiver is
indeed useless without a transmitter and can be reduced to a
nonentity if the transmitter closes. The system cannot be
divided into two parts, each independent of the other.
"Undertaking" is not a physical thing, but is an arrangement
under which of course physical things are used.
Their Lordships have therefore no doubt that the undertak
ing of broadcasting is an undertaking "connecting the Province
with other Provinces and extending beyond the limits of the
Province." But further, as already said, they think broadcasting
falls within the description of "telegraphs." No doubt in every
day speech telegraph is almost exclusively used to denote the
electrical instrument which by means of a wire connecting that
instrument with another instrument makes it possible to com
municate signals or words of any kind. But the original mean
ing of the word "telegraph," as given in the Oxford Dictionary,
is: "An apparatus for transmitting messages to a distance,
usually by signs of some kind." Now a message to be transmit
ted must have a recipient as well as a transmitter. The message
may fall on deaf ears, but at least it falls on ears. Further, the
strict reading of the word "telegraph," making it identical with
the ordinary use of it, has already been given up in Toronto
Corporation v. Bell Telephone Co. of Canada. [Underlining
added.]
The decision in Toronto Corporation v. Bell
Telephone Company of Canada, [ 1905] A.C. 52
(P.C.), of course, dealt with a company which has
and had facilities in two provinces (Ontario and
Quebec) and whose incorporating statute gave it
authority so to operate. In that context the Judicial
Committee of the Privy Council, at page 59,
described the company's activities as follows:
The undertaking of the Bell Telephone Company was no more
a collection of separate and distinct businesses than the under
taking of a telegraph company which has a long-distance line
combined with local business, or the undertaking of a railway
company which may have a large suburban traffic and miles of
railway communicating with distant places.
In addition I note that in the Capital Cities case
(supra) at page 159 the Supreme Court referred to
interprovincial undertakings as ones "which reach
out beyond the Province in which their physical
apparatus is located"; and in Public Service Board
et al. v. Dionne et al., [1978] 2 S.C.R. 191 at page
197:
In all these cases, the inquiry must be as to the service that is
provided and not simply as to the means through which it is
carried on.
The crucial feature then is the nature of the
enterprise itself, not the physical equipment it
uses. AGT offers to its customers, local, interpro-
vincial and international telecommunications ser
vices. Its physical facilities are used to provide all
three without discrimination—the services are
totally integrated. Indeed, one could not separate
the local from the non-local without emasculating
AGT's enterprise as it presently exists.
The applicant relies heavily on the recent
Supreme Court decision in Kootenay & Elk Rail
way Co. v. Canadian Pacific Railway Co., [1974]
S.C.R. 955. In that case the Supreme Court held
that the Kootenay and Elk Railway Company was
not part of an extraprovincial undertaking and
therefore its incorporation by the British Columbia
government was valid. The company had been
incorporated to build and operate a railway to
within one-quarter inch of the United States
border. It was proposed that the railway would be
operated by Kootenay's crews up to the border,
then the crews of the Burlington company would
take over and operate the trains south of the
border.
I do not think this case is much comfort for the
applicant. While the Supreme Court held that the
Kootenay company was not part of an extraprovin-
cial undertaking, the Court was concerned only
with the company before any interconnection had
in fact taken place. The issue the Court dealt with
was whether or not a provincial legislature could
incorporate a company to construct a line to within
one-quarter inch of the border as Kootenay con
templated. At the same time that an affirmative
response was given to that question, there was also
given clear indication that, once the interconnec
tion with the Burlington railway was made, the
character of the whole enterprise might be
changed. At page 982:
In summary, my opinion is that a provincial legislature can
authorize the construction of a railway line wholly situate [sic]
within its provincial boundaries. The fact that such a railway
may subsequently, by reason of its interconnection with another
railway and its operation, become subject to federal regulation
does not affect the power of the provincial legislature to create
it.
In addition to focussing on the construction of
the railway, Mr. Justice Martland, who wrote for
the majority of the Court in the Kootenay & Elk
case, at page 980 referred to the decision in Luscar
Collieries v. McDonald, [1927] A.C. 925 (P.C.).
In that case a railway branch line operating entire
ly within one province and owned by the respond
ents for their own industrial purposes was held to
be an interprovincial undertaking. At page 932,
the Judicial Committee of the Privy Council said:
It is, in their view, impossible to hold as to any section of that
system which does not reach the boundary of a Province that it
does not connect that Province with another. If it connects with
a line which itself connects with one in another Province, then it
would be a link in the chain of connection, and would properly
be said to connect the Province in which it is situated with other
Provinces.
In the present case, having regard to the way in which the
railway is operated, their Lordships are of opinion that it is in
fact a railway connecting the Province of Alberta with others of
the Provinces .... There is a continuous connection by railway
between the point of the Luscar Branch farthest from its
junction with the Mountain Park Branch and parts of Canada
outside the Province of Alberta. [Underlining added.]
In the Luscar case, the branch line was not
operated by the owner but was operated by
Canadian National pursuant to an agreement with
the owner. This inter-related operation was signifi
cant, both in the eyes of the Judicial Committee
and for Mr. Justice Martland in the Kootenay &
Elk case. He wrote at pages 980-981:
In Luscar Collieries, Limited v. McDonald, the question was
as to the power of the federal Railway Board to make an order
for running rights over the appellant's line .... The ground of
decision in that case was, however, the fact that the Luscar line
was operated by C.N.R.
It is of interest to note, in that case, that the statute which
authorized the construction of the Luscar line was enacted by
the Alberta Legislature, and that it also provided for the
Luscar company entering into an agreement with C.N.R. for
the operation of its railway. It is clear that the purpose of the
Luscar line was to assist in marketing its coal beyond the
province. There was no suggestion in that case that the Alberta
Legislature could not enact such a provision. The point of the
case was that once the line, by reason of its operation, had
become a part of an inter-provincial railway system it became
subject to federal regulation. [Underlining added.]
It is clear, then, as AGT contends, physical
interconnection may not be enough to sweep an
enterprise under federal jurisdiction. Something
more is needed and this has been described as how
the system is operated.
This then brings us to AGT's second argument.
It argues that the second requisite element for the
finding of an interprovincial undertaking (what I
will call sufficient organization interconnection) is
not present. To paraphrase the argument: TCTS is
not a legal entity and thus cannot be said to
provide services to anyone; the contracting parties
provide services to their own customers in their
own systems and interchange traffic with other
carriers; that is so even though, for commercial or
public relations reasons, AGT has chosen to repre
sent itself (in conjunction with other telecommuni
cations undertakings) as jointly operating a na
tional telecommunications network; and while the
parties have agreed to unanimously agree, they
retain ultimate control over their own telecom
munications systems.
I do not find this argument convincing. It seems
to me it gives too much importance to the niceties
of legal structure rather than focussing on the
realities of the situation. Implicit in the argument
is an admission that if TCTS were an incorporated
organization it would clearly be an interprovincial
undertaking. This is too fine a legal distinction on
which to base what is really a factual determina-
tion. I note that in Northern Telecom Ltd. v.
Communications Workers of Canada, [ 1980] 1
S.C.R. 115, at pages 132-133 the Supreme Court
quoted from the British Columbia Labour Rela
tions Board decision in Arrow Transfer Co. Ltd.
and Canadian Assoc. of Industrial, Mechanical
and Allied Workers, Local 1 (B.C.) and General
Truckdrivers and Helpers Union, Local 31
(Intervener), [ 1974] 1 Canadian LRBR 29 [at
pages 34 and 35]:
In each case the judgment is a functional, practical one about
the factual character of the ongoing undertaking and does not
turn on technical, legal niceties of the corporate structure or the
employment relationship.
The issue in those cases was, of course, whether
the respective enterprises were extraprovincial so
as to fall within federal labour relations jurisdic
tion.
In my view, the existence of TCTS, and AGT's
participation in it, demonstrates the common and
joint telecommunications enterprise which exists.
It demonstrates that AGT operates its telecom
munications undertaking as an interprovincial
undertaking and not as one merely local in nature.
Also, as a legal proposition AGT may retain con
trol over its own facilities; but as a practical reality
it could not separate itself from the joint TCTS
enterprise without destroying its telecommunica
tions system in its present form. The fact that
unanimous agreement is required by TCTS mem
bers should not disguise the constraints, the exist
ence of the integrated system and the interdepend
ence of the members will impose.
Repeated reference was made to the fact that
the federal Parliament and government have never
attempted, during the 80 years or so during which
telephone systems have grown up, to regulate
AGT. Bell Canada, which operates in Ontario and
Quebec and which has been declared pursuant to
paragraph 92(10)(c) to be a work for the general
advantage of Canada, has been federally regulat
ed; so has the British Columbia Telephone Com
pany (also the subject of a paragraph 92(10)(c)
declaration) and CN with respect to its "North-
west Telephone system". Telesat Canada is, of
course, federally regulated. The fact that constitu
tional jurisdiction remains unexercised for long
periods of time or is improperly exercised for a
long period of time, however, does not mean that
there is thereby created some sort of constitutional
squatters rights. (Refer: Attorney General of
Manitoba v. Forest, [1979] 2 S.C.R. 1032 for a
case in which unconstitutional action had
remained unchallenged for ninety years.)
I conclude, therefore, that AGT is a non-local
undertaking as described in paragraph 92(10)(a)
of the Constitution Act, 1867.
Crown Immunity Issue
Prima facie the Crown (both federal and provin
cial) is a legal person and without special rules
respecting Crown immunity would fall under the
clear wording of the relevant sections of the Rail
way Act.
The applicant's argument, however, is that as an
agent of the provincial government, it is not bound
by federal legislation unless that legislation
expressly states that it is intended to bind the
Crown provincial. The argument relies on section
16 of the federal Interpretation Act, R.S.C. 1970,
c. 1-23 and the definition of "Her Majesty" set out
in section 28 of that Act.
Section 16 provides:
16. No enactment is binding on Her Majesty or affects Her
Majesty or Her Majesty's rights or prerogatives in any manner,
except only as therein mentioned or referred to.
The definition of "Her Majesty" in section 28 of
the Interpretation Act (applicable to all federal
enactments) provides:
28....
"Her Majesty", "His Majesty", "the Queen", "the King" or
"the Crown" means the Sovereign of the United Kingdom,
Canada and Her other Realms and Territories, and Head of
the Commonwealth;
This definition is read back into section 16 of the
Act by virtue of subsection 3(2):
3....
(2) The provisions of this Act apply to the interpretation of
this Act.
The argument made is that since "Her Majesty"
is described in section 28 as the Sovereign of all
Her Realms and Territories, this imparts into fed
eral statutes the concept of the indivisibility of the
Crown and particularly into section 16 an immuni
ty for the Crown in all its emanations (one of
which is the Crown in right of the province of
Alberta).
I have some difficulty with this reliance on the
definition in section 28. It is merely a description
of Her Majesty's title as it appears in An Act
respecting the Royal Style and Titles, R.S.C.
1970, c. R-12. More importantly, if the section 28
description of Her Majesty carries with it a con
cept of the indivisibility of the Crown, then it
seems to me it would impart into federal legisla
tion immunity for all the governments and sub-
units thereof around the world for which Her
Majesty is Sovereign. I am not unmindful of the
fact that foreign governments (Commonwealth or
otherwise) are accorded immunity from much
domestic law by operation of other legal rules or
presumptions. Nevertheless, I find it difficult to
accept, conceptually, that the operation of section
16 of the Interpretation Act, as fed by the defini
tion of Her Majesty in section 28 accords to all
agencies of government for which Her Majesty is
Sovereign immunity from federal legislation.
In addition, it seems to me that this kind of
literal reading of section 16 together with section
28 would mean that the enacting clauses of all
federal legislation would have to be interpreted as
referring not only to Her Majesty in right of the
federal government of Canada, but also to Her
Majesty in all her other emanations.
What then of section 16, if it is not interpreted
as being fed by the definition of "Her Majesty" set
out in section 28? Should it be interpreted as
referring only to the Crown federal or should it
also be interpreted as granting immunity to the
Crown provincial as well?
Crown immunity is sometimes considered a
canon of statutory construction, sometimes an
aspect of prerogative rights. (See McNairn, Gov-
emmental and Intergovernmental Immunity in
Australia and Canada (1977) at page 1; Hogg,
Constitutional Law of Canada (1977) at pages
163 and 172; Hogg, Liability of the Crown (1971)
at page 166.) Under either interpretation there
would be, today, persuasive reasons for thinking
that such immunity in federal legislation related
only to the Crown federal and not to the Crown
provincial. This flows from the fact that both the
legislative functions and prerogative rights in our
federation are divided.
As a canon of statutory interpretation, there is
really no reason to suppose that the omission in a
federal statute of a section expressly binding the
Crown provincial is always the product of a con
scious decision by Parliament that the provincial
Crown should not be bound. More likely it is the
failure of anybody to consider the question (this
immunity can have serious consequences when a
commercial activity, for example, such as invest
ment in securities and other financial instruments,
is carried on by a provincial government agency).
If the immunity were only applicable to what
might be called governmental activities, its
rationale would become clear—to prevent one level
of government effectively subordinating the other.
But when the immunity is carried also by a gov
ernment business or commercial agency, especially
one in which competing private enterprises are
subject to government regulation, the rationale is a
bit more difficult to understand.
In so far as the Crown immunity rule is said to
emanate from the Crown's prerogative it is hard to
understand how, in Canada, this can be the source
of provincial immunity from federal legislation.
The prerogative does not have a unified existence
in our federation. Constitutional jurisprudence
clearly indicates that the prerogative rights of the
Crown are divided in accordance with the federal
and provincial division of legislative jurisdiction.
See generally: Maritime Bank of Canada
(Liquidators of) v. Receiver-General of New
Brunswick, [1892] A.C. 437 (P.C.); Bonanza
Creek Gold Mining Company v. Rex, [1916] 1
A.C. 566 (P.C.); Attorney-General for the
Dominion of Canada v. Attorney-General for the
Province of Ontario, [1898] A.C. 247 (P.C.). And
for a recent British case discussing the concept of
the unity of the Crown see: Regina v. Secretary of
State for Foreign and Commonwealth Affairs, Ex
parte Indian Association of Alberta, [1982] Q.B.
892 (C.A.).
In any event, whether the rule be an historical
inheritance from the days when governments were
less active in what are often called non-traditional
government areas, or whether it is an historical
inheritance from the days when the unity of the
Crown was a factual reality (i.e. prior to the
development of responsible government and prior
to the development of independent nations under
the same Crown) it is with us still. Chief Justice
Laskin in Her Majesty in right of the Province of
Alberta v. Canadian Transport Commission
(P.W.A. case), [1978] 1 S.C.R. 61, at page 71,
wrote:
There may be something to be said for the view that, having
regard to the nature of Canada's federal system, the notion of
the indivisibility of the Crown should be abandoned. The
Constitution of Canada distributes legislative power between a
central Parliament and provincial Legislatures and prerogative
or executive power (which is formally vested in the Queen) is
similarly distributed to accord with the distribution of legisla
tive power, thus pointing to different executive authorities.
Decisions of the Courts, including decisions of the Privy Coun
cil, have, however, treated a general reference to the Crown in
provincial legislation and in federal legislation as referring to
the Crown indivisible. It is enough to refer in this respect to the
judgment of the Judicial Committee in Dominion Building
Corporation v. The King ... .
And at page 76:
... the common law rule as part of what I may call Crown law
is an historic principle that was part of the law of this country
from its beginning; and it remained part of our law under the
federal structure brought into force in 1867, both for the
advantage of the Crown in right of Canada and of the Crown in
right of a Province. In my view, the Alberta Government, if not
entitled to the shelter provided by s. 16 of the federal Interpre
tation Act, is entitled to rely on the common law expressed in
the Bombay case. In either case, I hold it not to be bound by ss.
19 and 20 of the Air Carrier Regulations.
Accordingly, it is clear that unless the relevant
provisions of the Railway Act, either expressly or
implied, bind the Crown provincial, or unless one
can say that AGT has waived its Crown immunity,
AGT will not be governed by that statute, nor by
the regulatory authority of the CRTC.
(a) Express Statement—Necessary Implication
At common law, the rule clearly was that the
Crown was not bound unless it was expressly
stated to be so in the statute, or unless such
conclusion arose as a matter of necessary implica
tion. (Hogg, Constitutional Law of Canada (1977)
at page 172; McNairn, Governmental and Inter-
governmental Immunity in Australia and Canada
(1977) page 1; Maxwell on The Interpretation of
Statutes (12th ed. 1969) page 161.) There is no
express statement in the Railway Act binding the
Crown provincial but the respondent argues that
AGT is bound as a matter of necessary
implication.
Counsel for the respondent CNCP argues that
there are two branches to the doctrine of necessary
implication: (1) necessary implication which arises
because it is said the purpose of the statute would
be frustrated if the Crown was not bound (refer:
Province of Bombay v. Municipal Corporation of
the City of Bombay and Another, [1947] A.C. 58
(P.C.)); and (2) necessary implication which arises
out of the text of the statute itself. He concedes
that he is not arguing that a finding of necessary
implication arises in this case out of the first.
Rather, he is arguing that a finding of necessary
implication arises out of the text of the statute
itself.
Counsel for the applicant argues that whatever
the position at common law had once been, the
necessary implication doctrine should be con
sidered, now, in either formulation, to be dead. He
based his argument on the comments of Chief
Justice Laskin in the P.W.A. case, respecting the
Privy Council decision in In re Silver Brothers Ld.,
[1932] A.C. 514. At pages 74-75 of the P.W.A.
case, Chief Justice Laskin wrote:
The Privy Council rejected the argument of "necessary
implication" advanced on behalf of the federal Crown's posi
tion, holding it to be ruled out by s. 16 of the Interpretation
Act. It said this on the point (at p. 523):
Next it was said that inasmuch as the Bank Act and
Bankruptcy Act not only dealt with preferences, but (inter
alia) with Crown preferences, there is an "irresistible
implication" that the Act was meant to deal with all Crown
preferences. The simple answer to this is to fix one's eyes on
s. 16, and it becomes apparent that it is a contradiction in
terms to hold that an express statement can be found in an
"irresistible implication."
Whether it would have accepted an argument of "necessary
implication" apart from s. 16 aforesaid is another matter. As I
already indicated, I am unable to accept it in the present case
under the common law rule, nor do I think it arises here under
the present s. 16 of the Interpretation Act.
Counsel also relies on R. v. Eldorado Nuclear
Ltd., [1983] 2 S.C.R. 551 at page 560; 50 N.R.
120 at page 126:
Section 16 of the Interpretation Act requires an express provi
sion to make an act binding on the Crown.
And at page 562 S.C.R.; 127 N.R.:
In Canada, the head of state is Her Majesty the Queen, the
reigning monarch of the United Kingdom. By providing that
"no enactment is binding on Her Majesty ... except only as
therein mentioned or refered to", Parliament has put the state,
commonly referred to as the Crown, beyond the reach of Acts
of Parliament that are not expressly made applicable to the
Crown. [Underlining added.]
While the facts in the two cases mentioned may
not have been such as to substantiate a finding of
necessary implication, I am not entirely convinced
that the Supreme Court intended to rule out the
necessary implication doctrine as completely as
counsel for the applicant AGT contends.
I would feel more comfortable with the assertion
that the Supreme Court had ruled out both
branches of the necessary implication doctrine if it
were clear that it had considered the second
branch of this doctrine and the interaction of
sections 3 and 14 with section16 of the Interpreta
tion Act.
Subsection 3(1) provides:
3. (1) Every provision of this Act extends and applies, unless
a contrary intention appears, to every enactment .... [Under-
lining added.]
Paragraph 14(2)(a)
14....
(2) Where an enactment contains an interpretation section or
provision, it shall be read and construed
(a) as being applicable only if the contrary intention does not
appear...
In any event, it will not be necessary to decide
whether the Supreme Court has in fact gone as far
as counsel for the applicant contends unless there
is a convincing argument based on the text of the
relevant legislation that the Crown provincial is
bound as a matter of necessary implication.
Counsel argues that two aspects of the Railway
Act lead to this conclusion. The first argument is
based on sections 130(1) and 102(1)(c) and (d).
Subsection 102(1) accords to companies regulated
thereby the authority to purchase lands necessary
for the undertaking and to carry the undertaking
upon the lands of any person "located in the line of
the railway". Subsection 130(1) prohibits the com
pany taking possession of, using or occupying "any
lands vested in the Crown, without the consent of
the Governor in Council". The argument is that if
the Crown was not expressly bound by the Act and
did not fall within the term person as that word is
used in the Act, the exclusion clause in subsection
130(1) would not be necessary.
I find this argument unconvincing. The question
is whether telecommunication carriers which are
agents of the provincial Crown fall under the
regulatory provisions which govern those kinds of
enterprises. The sections in question relate to land
owners whose land might be taken by the construc
tion of a railway undertaking. If the argument
were whether a railway could enter on provincial
Crown lands as on the lands of any other person,
then the exclusion clause might be relevant as an
aid to interpretation. But I do not find it assists
Counsel for the respondent CNCP in his argument
that provincial Crown telecommunication carriers
are bound by the Act.
The second argument is based on subsection
320(1) and section 5:
320. (1) .. .
"company" means a railway company or person authorized to
construct or operate a railway, having authority to construct
or operate a telegraph or telephone system or line, and to
charge telegraph or telephone tolls, and includes also tele
graph and telephone companies and every company and
person within the legislative authority of the Parliament of
Canada having power to construct or operate a telegraph or
telephone system or line and to charge telegraph or telephone
tolls;
5. Subject as herein provided, this Act applies to all persons,
railway companies and railways, within the legislative authority
of the Parliament of Canada, whether heretofore or hereafter,
and howsoever, incorporated or authorized, except Government
railways, to which however it applies to such extent as is
specified in any Act referring or relating thereto.
It is argued that it would not have been necessary
to exclude "Government railways" if subsection
320(1) had not been intended to include Crown-
owned or-operated undertakings. The historical
antecedents to section 5 make it clear that "Gov-
ernment railways" refers to railways vested in Her
Majesty in right of Canada. The original version
of what is now section 5 appeared in The Railway
Act of 1888, 51 Vict., c. 259, s. 3. As in the case of
the present Railway Act, the 1888 statute con
tained no definition of "Government railways".
But chapter 38 of the Revised Statutes of 1886
was entitled The Government Railways Act. It is
reasonable to assume that Government railways
were excluded from regulation by the 1888 Act
because they were already otherwise regulated.
The Government Railways Act is still in force and
is now R.S.C. 1970, c. G-11.
Again, this argument is not convincing. If tele
communication carriers had been expressly cov
ered by the Act in 1888, as they are now, the
argument would have had more force. But given
the topsy-like growth of the Railway Act, I do not
think it reasonable to interpret the present provi
sions respecting telecommunication carriers by a
reference to a provision dating from 1888 respect
ing railways.
Accordingly, I have not found that a convincing
argument that the provincial Crown is bound by
necessary implication arises out of the textual
provisions of the statute.
I find equally unconvincing the argument that
when Parliament amended the National Trans
portation Act [R.S.C. 1970, c. N-17] and the
Aeronautics Act [R.S.C. 1970, c. A-3] in 1977,
(S.C. 1976-77, c. 26) following the P.W.A. deci
sion, to make them expressly binding on the
Crown, the Railway Act was not amended at the
same time because it already bound the Crown. It
seems more likely that the scope of operation of
the Railway Act was simply not considered.
(b) Waiver of Immunity
CNCP argues, however, that even if AGT is not
bound by the Railway Act as a matter of necessary
implication, it is so bound because by its actions
AGT has waived its right to immunity. This rea
soning relies on decisions such as The Queen in the
Right of the Province of Ontario v. Board of
Transport Commissioners, [1968] S.C.R. 118;
Toronto Transportation Commission v. The King,
[1949] S.C.R. 510; and Schwella, John F. v. The
Queen and Hydro-Electric Power Commission of
Ontario et al., [1957] Ex.C.R. 226.
CNCP's argument is that AGT is only part of
the TCTS organization and network by virtue of
the CRTC's approval of the TCTS Connecting
Agreement and various other agreements. There
fore, it is argued AGT wants the advantages of
being part of an integrated national network
approved under the Railway Act without what it
perceives to be the disadvantages of being subject
to the entire regulatory scheme.
The agreements involving AGT which the
CRTC has approved* are: the 1971 TCTS inter
connection and service agreement with the Ameri-
can Telephone and Telegraph Company (AT&T);
the 1972 interconnection agreement between AGT
and CNR and amendments thereto in 1973, 1976
and 1977; the TCTS interconnection and operat
ing agreement of 1975 with Teleglobe; a 1979
agency agreement between all members of TCTS;
the 1978 TCTS agreement with Telenet; the 1979
TCTS agreement with Tymnet; interim approval
in 1983 of the TCTS agreement with the Ameri-
can Satellite Company; interim approval in 1983
of the TCTS agreement with MCI Telecommuni
cations Corporation.
* The CRTC approval being sought is that required pursuant
to subsection 320(11) of the Railway Act:
320... .
(11) All contracts, agreements and arrangements between
the company and any other company, or any province, munici
pality or corporation having authority to construct or operate a
telegraph or telephone system or line, whether such authority is
derived from the Parliament of Canada or otherwise, for the
regulation and interchange of telegraph or telephone messages
or service passing to and from their respective telegraph or
telephone systems and lines, or for the division or apportion
ment of telegraph or telephone tolls, or generally in relation to
the management, working or operation of their respective tele-
(Continued on next page)
The 1976 TCTS Connecting Agreement itself
did not initially receive approval. In 1977, the
CRTC turned down Telesat's application for
approval of that agreement (Telecom Decision
CRTC 77-10). The CRTC's decision was based on
a conclusion that approval would significantly
prejudice regulatory control over Telesat's autono
my and create a non-competitive situation not in
the public interest. The Governor in Council varied
the CRTC decision by P.C. 1977-3152, essentially
approving the Connecting Agreement as originally
proposed by the members of TCTS. Again in 1981
the CRTC refused to approve certain aspects of an
application dealing with increases and decreases in
TCTS rates. (Telecom Decision CRTC 81-13.) It
was this non-approval which gave rise to the peti
tion to the Governor in Council [submitted on July
23, 1981]. This petition was signed by all members
of TCTS. The Governor in Council varied the
original CRTC decision by P.C. 1981-3456.
Apart from the petition to the Governor in
Council, however, AGT has never been the peti
tioner seeking CRTC approval for any of the
agreements. The applications have always been
brought by either Bell Canada, British Columbia
Telephone, Telesat or Canadian National Rail
ways. This reflects the fact that these companies
have always clearly been seen as required to obtain
CRTC approval before becoming a party to any of
the agreements in question. While AGT has bene
fited from the agreements, it has not taken the
initiative in seeking CRTC approval, nor does it
seem to have been treated by CRTC as required to
do so. To what extent then can AGT be said to
have waived its Crown immunity?
Counsel for CNCP relied heavily on the
Supreme Court decision in The Queen in the Right
(Continued from previous page)
graph or telephone systems or lines, or any of them, or any part
thereof, or of any other systems or lines operated in connection
with them or either of them, are subject to the approval of the
Commission, and shall be submitted to and approved by the
Commission before such contract, agreement or arrangement
has any force or effect.
of the Province of Ontario v. Board of Transport
Commissioners (the Go -Train case), [1968]
S.C.R. 118. In that case the government of
Ontario wanted to operate a commuter service
between Pickering-Toronto-Hamilton. It had
reached a provisional agreement with CN to use
its trackage; the rolling stock would belong to
Ontario; the crews would be CN's but would per
form the work for Ontario on an agency basis. The
agreement, of course, had to be approved by the
CTC. The implementation of the agreement also
involved the discontinuance by CN of four trains.
The CTC approved the agreement and the discon
tinuance of the trains but asserted jurisdiction over
the tolls to be charged by Ontario for the commut
er service.
In response to the argument that Ontario was
not subject to CTC jurisdiction on the grounds of
Crown immunity, the Supreme Court stated at
page 124:
Her Majesty in right of Ontario has, apart from an agreement
in principle with the Canadian National Railways, no right to
operate the Commuter Service and therefore no right to levy
tolls for the carriage of passengers over part of the Canadian
National Railways lines. Such rights as Ontario has are derived
either from such agreement or from the Railway Act and
therefore are subject to the conditions prescribed in that Act,
one of these being that tolls are within the jurisdiction of the
Board of Transport Commissioners.
It appears to us that Ontario can no more claim to be exempt
in the operation of the Commuter Service from the application
of the general provisions of the Railway Act respecting tolls
than British Columbia could claim to be exempt from the
general provisions of the Customs and Excise Acts in the
operation of its Liquor Control Board, as was held in Attorney-
General of British Columbia v. Attorney-General of Canada.
Thus, the Court applied what is sometimes called
the benefit-burdens doctrine. If a government
waives its immunity by taking advantage of legis
lative provisions, it will be taken to have assumed
both the benefits and the burdens thereunder; it
cannot choose merely the advantageous provisions.
In the present case, however, while AGT may
receive many benefits from the CRTC, approval of
the TCTS Connecting Agreement and various
other agreements, I do not think one can say that
AGT has thereby submitted itself to the Railway
Act in all its aspects. There is no nexus between
the waiver of immunity with respect to the TCTS
agreements and the claim being made by CNCP
(that AGT be ordered to provide it with intercon
nection). AGT can be taken to have waived
immunity with respect to burdens related to the
operation of TCTS and other agreements. Thus, if
CNCP were a member of TCTS, it would be a
different matter; or, if the requested interconnec
tion related to an existing AGT/CNCP agreement,
one could see a sufficient nexus. But I think it
stretches the waiver doctrine too far to hold that
AGT by its participation in the benefit of the
TCTS agreements, has submitted itself to the gen
eral jurisdiction of the CRTC.
The other two cases (Schwella, John F. v. The
Queen and Hydro-Electric Power Commission of
Ontario et al. and Toronto Transportation Com
mission v. The King, (supra)) are distinguishable
from the facts in this case in the same way as is
the Go -Train case. Both deal with the application
of the Ontario Contributory Negligence Act to the
Crown. In both cases the Crown specifically relied
on that Act to obtain a benefit and there was a
direct nexus between the benefit being claimed
and the application of the other sections of the Act
to the Crown.
One last argument needs to be addressed. It was
argued by CNCP that AGT is an agent of the
Crown only for the purpose of exercising the au
thority conferred on it by its incorporating statute,
and that that authority did not extend to engaging
in interprovincial and international activities.
Thus, while AGT might be an agent of the provin
cial Crown in so far as it provides local telecom
munications services, once it moved beyond that
realm of activity it lost its status as agent of the
provincial Crown. (Conseil des Ports Nationaux v.
Langelier et al., [ 1969] S.C.R. 60; Canadian
Broadcasting Corporation, Television Station
C.B.O.F.T. et al. v. The Queen, [1983] 1 S.C.R.
339; R. v. Eldorado Nuclear Ltd., [1983] 2 S.C.R.
551; 50 N.R. 120.)
Frankly, I do not entirely understand this argu
ment. It seems to me the incorporating power of a
federal or provincial government is quite distinct
from its legislative jurisdiction. I do not under
stand the jurisprudence to say that a provincial
legislature can not incorporate entities to operate
in federally-regulated fields. Indeed, the Supreme
Court decisions in the Fulton and in the Kootenai
& Elk cases (supra) both seem to indicate the
exact opposite.
Before concluding, I will make one comment or
the evidence. Counsel for AGT resisted ever)
attempt to have introduced in evidence any infor
mation dealing with TCTS. Indeed, he refused tc
allow Mr. Fyles, the AGT officer, whose affidavit
had been filed in support of AGT's application, tc
answer, on cross-examination, any questions deal
ing with TCTS. It was only after a court order hac
been obtained that Mr. Fyles was eventually com
pelled to answer some of those questions. It is
necessary to keep this in mind when reading the
responses of Mr. Fyles on his second examination
The responses were not the product of spontaneous
cross-examination but were given after there hac
been time to study the questions and prepare
carefully framed replies.
For the reasons given above, an order will issue
prohibiting the CRTC from proceeding with the
application of September 17, 1982, made to it b)
the CNCP.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.