MTS Allstream Inc. v. Toronto (City)

MTS Allstream Inc. v. Toronto (City) Court (s) Database Federal Court of Appeal Decisions Date 2006-11-27 Neutral citation 2006 FCA 385 File numbers A-653-05, A-654-05 Notes Digest Decision Content Date: 20061127 Docket: A-653-05 Citation: 2006 FCA 385 CORAM: LINDEN J.A. EVANS J.A. MALONE J.A. BETWEEN: MTS ALLSTREAM INC. Appellant and THE CITY OF TORONTO Respondent Heard at Toronto, Ontario, on November 27, 2006. Judgment delivered from the Bench at Toronto, Ontario, on November 27, 2006. REASONS FOR JUDGMENT OF THE COURT BY: EVANS J.A. Date: 20061127 Docket: A-653-05 Citation: 2006 FCA 385 CORAM: LINDEN J.A. EVANS J.A. MALONE J.A. BETWEEN: MTS ALLSTREAM INC. Appellant and THE CITY OF TORONTO Respondent REASONS FOR JUDGMENT OF THE COURT (Delivered from the Bench at Toronto, Ontario, on November 27, 2006) EVANS J.A. [1] This is an appeal by MTS Allstream Inc. (“Allstream”) pursuant to section 64 of the Telecommunications Act, S.C. 1993, c. 38, from a decision of the Canadian Radio-television Telecommunications Commission (“CRTC”), dated September 25, 2005, and issued as Telecom Decision CRTC 2005-46. [2] In the decision under appeal, the CRTC denied Allstream’s application, made in 2001, to set aside a Municipal Access Agreement (“MAA”) which a corporate predecessor, MetroNet Communications Group Inc., had originally made with the City of Toronto in 1997, and to impose terms and conditions more favourable to Allstream, pursuant to subsection 43(4) of the Telecommunications Act. The MAA contained the terms and conditions on which the City consented to give Allstream access to public highways, and other municipal property, to enable it to construct a telecommunications transmission line below ground. [3] Allstream’s underlying complaint is that its MAA with the City of Toronto subjects it to more onerous terms than the MAAs which the City made with the incumbent carrier and, later, with other new market entrants. This places Allstream at a competitive disadvantage. In particular, Allstream says that, in order to promote competition in telecommunications, the CRTC has exercised its power under subsection 43(4) in other cases to impose terms which have been more favourable to the carrier than the terms in Allstream’s MAA. More favourable terms have made it possible for subsequent market entrants to compete on a more equal basis with established carriers. Allstream points especially to the fact that the fees payable to Toronto under the MAA exceed the costs to the municipality caused by granting access to its highways and other public places. [4] The basis of Allstream’s appeal is that, in dismissing its application to impose new terms, the CRTC has allowed an agreement to stand which is contrary to subsection 43(2) of the Act when interpreted in light of the statutory policy of, inter alia, encouraging competition in telecommunications. Section 47 sets out the CRTC’s duty in regard to the implementation of statutory policies. 47. The Commission shall exercise its powers and perform its duties under this Act and any special Act (a) with a view to implementing the Canadian telecommunications policy objectives and ensuring that Canadian carriers provide telecommunications services and charge rates in accordance with section 27; 47. Le Conseil doit, en se conformant aux décrets que lui adresse le gouverneur en conseil au titre de l’article 8 ou aux normes prescrites par arrêté du ministre au titre de l’article 15, exercer les pouvoirs et fonctions que lui confèrent la présente loi et toute loi spéciale de manière à réaliser les objectifs de la politique canadienne de télécommunication et à assurer la conformité des services et tarifs des entreprises canadiennes avec les dispositions de l’article 27. [5] The Canadian telecommunications policy objectives referred to in section 47 are set out in section 7. 7. It is hereby affirmed that telecommunications performs an essential role in the maintenance of Canada’s identity and sovereignty and that the Canadian telecommunications policy has as its objectives (a) to facilitate the orderly development throughout Canada of a telecommunications system that serves to safeguard, enrich and strengthen the social and economic fabric of Canada and its regions; (b) to render reliable and affordable telecommunications services of high quality accessible to Canadians in both urban and rural areas in all regions of Canada; (c) to enhance the efficiency and competitiveness, at the national and international levels, of Canadian telecommunications; (d) to promote the ownership and control of Canadian carriers by Canadians; (e) to promote the use of Canadian transmission facilities for telecommunications within Canada and between Canada and points outside Canada; (f) to foster increased reliance on market forces for the provision of telecommunications services and to ensure that regulation, where required, is efficient and effective; (g) to stimulate research and development in Canada in the field of telecommunications and to encourage innovation in the provision of telecommunications services; (h) to respond to the economic and social requirements of users of telecommunications services; and (i) to contribute to the protection of the privacy of persons. 7. La présente loi affirme le caractère essentiel des télécommunications pour l’identité et la souveraineté canadiennes; la politique canadienne de télécommunication vise à : a) favoriser le développement ordonné des télécommunications partout au Canada en un système qui contribue à sauvegarder, enrichir et renforcer la structure sociale et économique du Canada et de ses régions; b) permettre l’accès aux Canadiens dans toutes les régions — rurales ou urbaines — du Canada à des services de télécommunication sûrs, abordables et de qualité; c) accroître l’efficacité et la compétitivité, sur les plans national et international, des télécommunications canadiennes; d) promouvoir l’accession à la propriété des entreprises canadiennes, et à leur contrôle, par des Canadiens; e) promouvoir l’utilisation d’installations de transmission canadiennes pour les télécommunications à l’intérieur du Canada et à destination ou en provenance de l’étranger; f) favoriser le libre jeu du marché en ce qui concerne la fourniture de services de télécommunication et assurer l’efficacité de la réglementation, dans le cas où celle-ci est nécessaire; g) stimuler la recherche et le développement au Canada dans le domaine des télécommunications ainsi que l’innovation en ce qui touche la fourniture de services dans ce domaine; h) satisfaire les exigences économiques et sociales des usagers des services de télécommunication; i) contribuer à la protection de la vie privée des personnes. [6] This appeal was heard at the same time as another appeal by Allstream in the materially identical case involving an MAA with the City of Calgary in File No. A-654-05. The reasons for judgment given in the present appeal are equally applicable to the Calgary appeal, and a copy will be inserted into both files. [7] Subsections 43(2) and (3) of the Telecommunications Act provide that Canadian carriers have a right of access to public streets and other public property in order to construct, maintain and operate transmission lines, but shall not break up a highway to construct a transmission line without the consent of the municipality or other relevant public authority. 43(2) Subject to subsections (3) and (4) and section 44, a Canadian carrier or distribution undertaking may enter on and break up any highway or other public place for the purpose of constructing, maintaining or operating its transmission lines and may remain there for as long as is necessary for that purpose, but shall not unduly interfere with the public use and enjoyment of the highway or other public place. (3) No Canadian carrier or distribution undertaking shall construct a transmission line on, over, under or along a highway or other public place without the consent of the municipality or other public authority having jurisdiction over the highway or other public place. 43(2) Sous réserve des paragraphes (3) et (4) et de l’article 44, l’entreprise canadienne et l’entreprise de distribution ont accès à toute voie publique ou tout autre lieu public pour la construction, l’exploitation ou l’entretien de leurs lignes de transmission, et peuvent y procéder à des travaux, notamment de creusage, et y demeurer pour la durée nécessaire à ces fins; elles doivent cependant dans tous les cas veiller à éviter toute entrave abusive à la jouissance des lieux par le public. 3) Il est interdit à l’entreprise canadienne et à l’entreprise de distribution de construire des lignes de transmission sur une voie publique ou dans tout autre lieu public — ou au-dessus, au-dessous ou aux abords de ceux-ci — sans l’agrément de l’administration municipale ou autre administration publique compétente. [8] The provision of the Act most immediately relevant to this appeal is subsection 43(4). 43(4) Where a Canadian carrier or distribution undertaking cannot, on terms acceptable to it, obtain the consent of the municipality or other public authority to construct a transmission line, the carrier or distribution undertaking may apply to the Commission for permission to construct it and the Commission may, having due regard to the use and enjoyment of the highway or other public place by others, grant the permission subject to any conditions that the Commission determines. 43(4) Dans le cas où l’administration leur refuse l’agrément ou leur impose des conditions qui leur sont inacceptables, l’entreprise canadienne ou l’entreprise de distribution peuvent demander au Conseil l’autorisation de construire les lignes projetées; celui-ci peut, compte tenu de la jouissance que d’autres ont des lieux, assortir l’autorisation des conditions qu’il juge indiquées. [9] In a decision made earlier in the course of Allstream’s application (Telecom Decision CRTC 2003-82), the CRTC took the view that it may exercise its power under subsection 43(4) in two situations. First, the CRTC can impose terms on the parties when they have been unable to conclude an MAA. Second, although a signed MAA will normally be taken as proof that the municipality’s consent was obtained on terms “acceptable” to the carrier, the CRTC may impose terms under subsection 43(4) if a party can show that it did not truly consent to the terms of the MAA, as a result of, for example, a mistake, duress, or the abuse of unequal bargaining power. [10] Like other municipalities, the City of Toronto maintains that an MAA is conclusive proof that the consent of the municipality was obtained on “acceptable” terms and that, consequently, subsection 43(4) does not empower the CRTC to impose terms different from those in an existing MAA. However, it is not necessary to decide this issue in order to dispose of this appeal and we express no view on it. [11] The CRTC concluded in its reasons for the decision under appeal in this case that Allstream had not proved on the balance of probabilities that it entered into the MAA with the City of Toronto as a result of a mistake, duress, or the abuse of unequal bargaining power. When leave to appeal is granted, an appeal under section 64 is limited to questions of law and jurisdiction. The above questions are questions of mixed fact and law. In the absence of an extricable question of law from the CRTC’s application of subsection 43(4) to the facts found, a question of law can only arise if the CRTC’s conclusion was unreasonable. [12] In our opinion, there was ample evidence before the CRTC to support its conclusion that, even after taking into consideration the state of competition when Allstream entered into the MAA relatively soon after the opening of the telecommunications market to competition, Allstream had not established that the MAA was vitiated by duress or abuse of unequal bargaining power. We did not understand counsel for Allstream to seriously contend to the contrary. [13] Allsteam’s principal argument was that the CRTC failed to consider whether the terms of the MAA were compatible with the policy of the Act to promote facilities-based competition. In particular, the CRTC held Allstream to the MAA with the City of Toronto, even though its terms were onerous and, in their effect, restrictive of competition, when compared with those imposed by the CRTC in the Ledcor/Vancouver case (“Ledcor”) (Decision CRTC 2001-23). [14] The answer is that, unlike the present case, no MAA had been concluded in Ledcor, and it was clear that the parties were unable to agree the terms on which Ledcor would be granted access to municipal property. Hence, the CRTC in Ledcor did not have to consider the validity of a prior agreement, but only to exercise its discretion to design appropriate terms when a carrier could not obtain municipal consent on terms acceptable to it. The CRTC’s reasons in Ledcor must be understood as applicable to the facts before it. [15] In dismissing an appeal by the municipality in Ledcor, this Court emphasized that the principles enunciated by the CRTC in that decision were “not binding on anyone” and that the decision did not purport to adopt any model or agreement that could be the starting point for discussions between municipalities and carriers: Federation of Canadian Municipalities v. AT &T Canada Corp., [2003] 3 F.C. 379, 2002 FCA 500, at para. 21. Moreover, the fact that the Court did not regard the principles enunciated by the CRTC in Ledcor as a basis for the negotiation of other MAAs suggests that it would not have treated a divergence between the terms of an existing MAA and the Ledcor principles as invalidating the MAA. [16] Although put in different ways, counsel’s argument ultimately is that the MAA contains terms that are inconsistent with the qualified right of access afforded to carriers by subsection 43(2). In particular, counsel says, this right requires that fees payable by carriers must be based on the causal costs to the municipality of permitting access, and the Act implicitly renders void the terms of an MAA which are inconsistent with this and other “Ledcor principles”. [17] Even if the CRTC may review an MAA to ensure that its terms are not inconsistent with the Act (a question that we need not decide), counsel’s argument requires far too much to be read into subsection 43(2), which expressly makes a carrier’s qualified right of access subject to the consent of the municipality. If the municipality withholds its consent, for whatever reason, the carrier’s remedy is to be found in the other provision to which subsection 43(2) is expressly made subject, namely the power in the CRTC under subsection 43(4) to impose terms on the application of a party. In exercising that power, the CRTC has a broad discretion to design terms that will best advance the public policies identified in the Act. [18] In our view, the CRTC was correct to take a relatively narrow view of the scope of the inquiry under subsection 43(4) once an MAA is in place. It does not call for a broad examination of the various policy objectives set out in the Act, nor a balancing of the competing interests of the kind to be undertaken when the parties have not signed an MAA. The public interest in accessing telecommunications is also served when the parties to a freely and expeditiously negotiated agreement are normally able to rely upon it as governing their commercial relationship. [19] Finally, it is our view that section 32 of the Telecommunications Act, including paragraph 32(d), does not confer independent powers on the CRTC with respect to MAAs. These particular agreements are governed by the special provisions in section 43, subject to the general provisions of the Act respecting the factors to be considered by the CRTC in the exercise of its statutory functions. [20] If Parliament had intended to give the CRTC a broad power to “suspend or disallow” terms on which municipalities consented to carriers’ access to public highways, it surely would have said so in section 43. In any event, counsel conceded that the CRTC could only reopen an MAA when its terms were inconsistent with the Act or had been negotiated in circumstances that rendered it invalid. [21] For these reasons, the appeal will be dismissed with costs. “John M. Evans” J.A. FEDERAL COURT OF APPEAL NAMES OF COUNSEL AND SOLICITORS OF RECORD DOCKETS: A-653-05 and A-654-05 APPEAL FROM THE TELECOM DECISION CRTC 2005-46 DATED AUGUST 25, 2005. (ORDER GRANTING LEAVE TO APPEAL IN DOCKET NO. 05-A-32.) STYLE OF CAUSE: MTS Allstream Inc. v. The City of Toronto MTS Allstream Inc. v. The City of Calgary PLACE OF HEARING: Toronto, Ontario DATE OF HEARING: November 27, 2006 REASONS FOR JUDGMENT OF THE COURT BY: Linden, Evans & Malone JJ.A. DELIVERED FROM THE BENCH BY: Evans J.A. APPEARANCES: Michael Koch Lauren Cappell FOR THE APPELLANT Andrew Weretelnyk Kirsten Franz FOR THE RSPONDENT (The City of Toronto) Brand Inlow Q.C. Shawn Swinn FOR THE RESPONDENT (The City of Calgary) SOLICITORS OF RECORD: Goodmans LLP Toronto, Ontario FOR THE APPELLANT City Solicitor’s Office, City of Toronto Toronto, Ontario FOR THE RESPONDENT (The City of Toronto) The City of Calgary Law Department Calgary, Alberta FOR THE RESPONDENT (The City of Calgary) Date: 20061127 Docket: A-653-05 Toronto, Ontario, November 27, 2006 CORAM: LINDEN J.A. EVANS J.A. MALONE J.A. BETWEEN: MTS ALLSTREAM INC. Appellant and THE CITY OF TORONTO Respondent JUDGMENT The appeal is dismissed with costs. “A.M. Linden” J.A. Date: 20061127 Docket: A-654-05 Toronto, Ontario, November 27, 2006 CORAM: LINDEN J.A. EVANS J.A. MALONE J.A. BETWEEN: MTS ALLSTREAM INC. Appellant and THE CITY OF CALGARY Respondent JUDGMENT The appeal is dismissed with costs. “A.M. Linden” J.A.