[1]        Sharlow J.A.: In Broadcasting Order CRTC 2010-168 [Reference to the Federal Court of Appeal – Commission’s jurisdiction under the Broadcasting Act to implement a negotiated solution for the compensation for the fair value of private local conventional television signals], the Canadian Radio-television and Telecommunications Commission referred the following question to this Court pursuant to subsections 18.3(1) [as enacted by S.C. 1990, c. 8, s. 5; 2002, c. 8, s. 28] and 28(2) [as am. idem, s. 35] of the Federal Courts Act [R.S.C., 1985, c. F-7, s. 1 (as am. idem, s. 14)]:

[2]        The regime to which this question refers is sometimes called the “value for signal” regime. In general terms, a value for signal regime would permit a private local television station to negotiate with cable television service providers (referred to as “broadcast distribution undertakings” or “BDUs”) for an arrangement under which the BDUs provide consideration to the television station for the right to retransmit its signals.

[3]        The operators of private local television stations generally favour the proposed value for signal regime. A number of them, namely CTVglobemedia Inc., V Interactions Inc., Newfoundland Broadcasting Company Limited and Canwest Television Limited Partnership, submitted at the hearing of this reference that the Commission has the statutory authority to implement such a regime.

[4]        BDUs generally do not favour the proposed value for signal regime. A number of BDUs, namely Bell Canada, Bell Aliant Regional Communications, LP, Cogeco Cable Inc., Rogers Communications Inc., Shaw Communications Inc. and TELUS Communications Co., submitted at the hearing of this reference that the Commission does not have the statutory authority to implement a value for signal regime.

[5]        Under the current regime, BDUs pick up the over-the-air signals of private local television stations and retransmit them to their subscribers for a fee. The Commission requires BDUs to provide the following benefits to private local television stations for those signals:

[6]        The Commission has concluded that the existing regulatory model does not adequately deal with recent changes to the broadcasting business environment. Among the changes noted by the Commission are the development of direct-to-home satellite television services, the development of speciality television channels that are permitted to receive fees directly from BDUs that carry them, and the widespread adoption of alternative media platforms. These changes have caused advertising revenues for private local television stations to fall while the revenues of BDUs have increased, resulting in a significant shift in their relative market positions and a financial crisis for the private local television stations. The Commission has concluded that this financial crisis may be averted by adopting a value for signal regime that invokes market forces.

[7]        The proposed value for signal regime is fully described in Broadcasting Regulatory Policy CRTC 2010-167 entitled A Group-Based Approach to the Licensing of Private Television Services, issued on March 22, 2010 (which I refer to for convenience as the “2010 Policy” or la “politique de 2010” [in the French reasons]).

[8]        The relevant portions of the 2010 Policy are quoted below, but at this point it is useful to summarize the main features of the proposed value for signal regime:

[9]        Simply stated, the BDUs’ legal objection to the proposed value for signal regime is based on the following reasoning. The Copyright Act [R.S.C., 1985, c. C-42] is the only statute that can govern the right of a broadcaster to control the retransmission of its signals. The Copyright Act precludes a private local television station from demanding that a BDU pay a royalty for the right to retransmit the station’s signals. Therefore, BDUs have a statutory user right to retransmit the signals of a private local television station without paying a royalty. It necessarily follows that the statutory authority of the Commission under the Broadcasting Act [S.C. 1991, c. 11] should not be interpreted in a manner that would permit a private local television station to block retransmission by a BDU that refuses to pay compensation for a retransmission right.

[10]      The private local television stations argue that this legal argument has no merit and that the Copyright Act does not preclude the Commission from implementing a value for signal regime.

[11]      The legal debate now before this Court arose in the context of proceedings before the Commission that resulted in its adoption of the 2010 Policy. In the 2010 Policy, the Commission makes a number of policy decisions relating to the licensing of private local television services.

[12]      In the 2010 Policy, the Commission determined among other things that a value for signal regime is necessary to ensure the fulfilment of the policy objectives set out in subsection 3(1) of the Broadcasting Act. The 2010 Policy also states the main elements of the value for signal regime that the Commission proposes to implement if it is found to have the statutory authority to do so.

[13]      Paragraphs 151 to 168 of the 2010 Policy contain the analysis and conclusions of the Commission that are relevant to the value for signal issue. Those paragraphs read as follows (footnotes omitted):

[14]      Broadcasting Order CRTC 2010-168, referred to in paragraph 168 of the 2010 Policy, provides the following additional information [at paragraphs 1–6, 8]:

[15]      Parliament has given the Commission the mandate to regulate and supervise all aspects of the Canadian broadcasting system. That mandate is set out in subsection 5(1) of the Broadcasting Act, which reads as follows:

[16]      The phrase “Canadian broadcasting system” is not defined in the Broadcasting Act, but its meaning can be inferred from terms that are given a statutory definition. “Broadcasting” and “program” are defined in subsection 2(1) of the Broadcasting Act as follows:

[17]      “Radio waves” and “other means of telecommunication” are defined in subsections 2(1) and (2) [as am. by S.C. 1993, c. 38, s. 81] of the Broadcasting Act as follows:

[18]      Programs are broadcast in Canada by “broadcasting undertakings”. According to subsection 2(1) of the Broadcasting Act, a broadcasting undertaking may be a “distribution undertaking”, a “programming undertaking”, or a “network”. Those terms are defined in subsection 2(1) of the Broadcasting Act as follows:

[19]      Reading these statutory definitions together, I infer that any broadcasting activity in Canada by a distribution undertaking, a programming undertaking, or a network is part of the Canadian broadcasting system and therefore is subject to the regulation and supervision of the Commission pursuant to subsection 5(1) of the Broadcasting Act. There is no doubt that this would include the broadcasting activities in Canada of any private local television station (programming undertaking) and any BDU (distribution undertaking) that would be subject to the proposed value for signal regime if it is adopted.

[20]      Although the statutory mandate of the Commission as stated in subsection 5(1) of the Broadcasting Act is broad and comprehensive, it is expressly limited in a number of respects. First, subsection 5(1) requires the Commission to act in accordance with the Broadcasting Act, the Radiocommunication Act [R.S.C., 1985, c. R-2, s. 1 (as am. by S.C. 1989, c. 17, s. 1)], and any directions to the Commission issued by the Governor in Council under the Broadcasting Act. (There are no provisions of the Radiocommunication Act and no Governor in Council directions that are relevant to this reference.)

[21]      Second, subsection 5(1) requires the Commission to act with a view to implementing the broadcasting policy set out in subsection 3(1) of the Broadcasting Act, which reads as follows:

[22]      The statement of Canadian broadcasting policy set out in subsection 3(1) of the Broadcasting Act must be read with subsection 3(2) which reads as follows:

[23]      Subsection 5(1) of the Broadcasting Act also requires the Commission to have regard to the regulatory policy set out in subsection 5(2) of the Broadcasting Act, which reads as follows:

[24]      In the event of a conflict between the broadcasting policy in subsection 3(1) of the Broadcasting Act and the regulatory policy in subsection 5(2), the broadcasting policy prevails. That is the result of subsection 5(3) which reads as follows:

[25]      Generally, the Commission exercises its statutory authority by enacting regulations pursuant to section 10 of the Broadcasting Act, and by imposing conditions on broadcasting licences it issues pursuant to section 9 [s. 9(4) (as am. by S.C. 1994, c. 26, s. 10(F))] of the Broadcasting Act. According to paragraph 9(1)(b) of the Broadcasting Act, a condition imposed on a licence must be one that is deemed by the Commission to be appropriate for the implementation of the broadcasting policy stated in subsection 3(1) of the Broadcasting Act.

[26]      As stated above, the Commission determined in the 2010 Policy that a value for signal regime is necessary to fulfil the objectives of the broadcasting policy stated in subsection 3(1) of the Broadcasting Act. According to paragraph 152 of the 2010 Policy, that determination relies specifically on paragraphs 3(1)(e) and 3(1)(f) of the Broadcasting Act. Those paragraphs are reproduced here for ease of reference, with the specific portions quoted by the Commission italicized:

[27]      The BDUs have not challenged the soundness of the Commission’s policy analysis, its understanding of the relevant facts, its conclusion that a value for signal regime is justified on the basis of the policy objectives set out in subsection 3(1) of the Broadcasting Act, or the reasonableness of the proposed value for signal regime (assuming the Commission has the statutory authority to implement it).

[28]      Based on the Commission’s analysis in the 2010 Policy and the statutory provisions referred to above, I conclude that the implementation of the proposed value for signal regime is within the statutory authority of the Commission, subject only to the legal objections raised by the BDUs in this reference based on the Copyright Act and its legislative history. I turn now to those arguments.

[29]      Both the Copyright Act and the Broadcasting Act are components of Canadian cultural policy. They may be viewed as sharing some territory, in the sense that both deal to some extent with the interest of the originators of television signals in benefiting economically from their work, and the interest of the public in having television signals made available to them. Both statutes are intended to ensure these competing interests are properly balanced. The two statutes now operate together harmoniously, but I am prepared to assume without deciding that there may be a theoretical possibility of a conflict in their operation.

[30]      The question raised in this reference is whether, as the BDUs argue, the proposed value for signal regime necessarily conflicts with the Copyright Act in such a way that this Court should conclude that even if the Broadcasting Act on its face authorizes the Commission to adopt the proposed value for signal regime, it should be interpreted in a way that precludes that possibility.

[31]      Part of the BDUs’ legal argument is not controversial. I agree with them that the principles of statutory interpretation require a harmonious, coherent and consistent interpretation of all statutes dealing with the legal rights and obligations relating to the retransmission of television signals.

[32]      The question, however, is whether there is merit to the argument of the BDUs that the implementation of the proposed value for signal regime necessarily conflicts with the rights of the BDUs under the Copyright Act, in so far as it would give each private local television station the right to block a BDU from retransmitting that station’s signals in the absence of a concluded contract for compensation flowing from the BDU to the station.

[33]      The BDUs rely principally on subsection 21(1) [as enacted by S.C. 1997, c. 24, s. 14] and section 31 [formerly s. 28.01 which was enacted by S.C. 1988, c. 65, s. 63; renumbered as s. 31 by S.C. 1997, c. 24, ss. 16, 52(F); 2002, c. 26, s. 2] of the Copyright Act. It is common ground that subsection 21(1), and in particular paragraph 21(1)(c), gives a private local television station a copyright in the signals it broadcasts, and that this copyright includes the sole right to authorize a BDU to retransmit those signals to the public simultaneously with its broadcast. Subsection 21(1) reads as follows:

[34]      The section 21 rights of broadcasters are significantly affected by section 31 of the Copyright Act, which reads in relevant part as follows:

[35]      Regulations have been made under paragraph 31(3)(a) of the Copyright Act to define “local signal” and “distant signal” (see Definition of Local Signal and Distant Signal Regulations, SOR/89-254 [as am. by SOR/2004-33, s. 2]), but no conditions have been prescribed under paragraph 31(3)(b). Generally, the signals of a private local television station are “local signal[s]” [s. 3(a) (as am. idem)] and not “distant signal[s]” [s. 3(b) (as am. idem)] under the Definition of Local Signal and Distant Signal Regulations.

[36]      The BDUs that would be affected by the proposed value for signal regime are “retransmitters” and thus entitled to the benefit of subsection 31(2) of the Copyright Act. The effect of subsection 31(2) is that a BDU does not infringe the section 21 copyright of a private local television station when it retransmits the station’s local signals, if the retransmission is lawful under the Broadcasting Act and complies with any regulations made pursuant to paragraph 31(3)(b) of the Copyright Act, and the signal is retransmitted simultaneously and without alteration except as required or permitted by law.

[37]      Because subsection 31(2) contemplates a royalty only for the retransmission of distant signals (which by definition would not include the signal of a private local television station), a private local television station has no right under the Copyright Act to demand a royalty from a BDU for retransmitting its signals. On that basis, the BDUs argue that subsection 31(2) gives them a statutory right, akin to the user right under the fair dealing provision of the Copyright Act (see CCH Canadian Ltd. v. Law Society of Upper Canada, 2004 SCC 13, [2004] 1 S.C.R. 339, at paragraph 48), to retransmit the local signal of a private local television station without paying a royalty. I agree, provided the retransmission meets the conditions stated in subsection 31(2).

[38]      However, the subsection 31(2) conditions are significant. In particular, paragraph 31(2)(b) requires any retransmission of a local signal to be lawful under the Broadcasting Act. That necessarily means that a BDU wishing to take advantage of the user right in subsection 31(2) of the Copyright Act must do so in compliance with the Broadcasting Act, any regulations made under the Broadcasting Act, and any conditions the Commission has attached to the retransmitter’s broadcasting licence.

[39]      Paragraph 31(2)(b) of the Copyright Act marks an intersection of the two statutory schemes—one implementing Canada’s broadcasting policy and the other implementing Canada’s copyright policy. In paragraph 31(2)(b) of the Copyright Act, Parliament has permitted the Commission to limit the transmission rights under subsection 31(2) by imposing any regulatory or licensing condition consistent with the Commission’s statutory mandate as stated in the Broadcasting Act.

[40]      Put another way, by making the BDUs’ statutory retransmission rights in subsection 31(2) of the Copyright Act subject to paragraph 31(2)(b), Parliament has ranked the objectives of Canada’s broadcasting policy ahead of those statutory retransmission rights. I see nothing in the Copyright Act that would justify a reversal of that ranking if the Commission determines that the objectives of Canada’s broadcasting policy require the imposition of a regulation or licensing condition that would permit a private local television station to demand cash or other consideration from a BDU for the right to retransmit its signals.

[41]      For substantially the same reasons, I conclude that it is open to the Commission to adopt a regulation or a licensing condition that would oblige a BDU to pay money to a private local television station for the right to retransmit its signals, provided the Commission determines that the imposition of such an obligation is required to meet the objectives of Canada’s broadcasting policy as stated in subsection 3(1) of the Broadcasting Act.

[42]      In my view, it is irrelevant that such an obligation might be characterized as an obligation to pay a royalty. Even now, the Commission requires BDUs to compensate private local television stations in respect of the retransmission of their signals, and it is not suggested that those requirements are not properly imposed. Some of the required compensation is not monetary (mandatory carriage, preferential channel placement, and simultaneous distribution), but it nevertheless represents something of value passing from a BDU to a television station. Some of the required compensation is monetary (the contribution of 1.5 percent of gross revenues to the local programming improvement fund and potentially (starting in August of 2011), contractual consideration for any retransmission of a local television signal outside of that station’s local market). It seems to me that the proposed value for signal regime is different only in degree, not in kind, substance or function.

[43]      The BDUs present a further argument based on the lengthy and complex history of various proposals made and rejected to amend the Copyright Act to grant television stations a statutory right to a royalty or similar retransmission fee. The argument is that this history should be understood to have resulted in a deliberate legislative policy adopted by Parliament that would be defeated by the proposed value for signal regime. I do not accept this argument.

[44]      It may well be that Parliament has determined for any number of reasons relating to Canada’s copyright policy that the Copyright Act should not be amended to provide private local television stations with a right to a royalty for the retransmission of local signals. However, it does not follow that the same determination necessarily indicates any intention on the part of Parliament to preclude the Commission from adopting the proposed value for signal regime in the interests of Canada’s broadcasting policy. Indeed, the possibility that the Commission might adopt a value for signal regime has been under consideration for some time, but the record discloses no hint that Parliament or the Government of Canada would consider such a regime to be an improper or undesirable intrusion into copyright policy.

[45]      Nor am I persuaded that there is merit to the suggestion of the BDUs that the proposed value for signal regime would undermine Canada’s stated position in relation to recent proceedings of the 2001 World Intellectual Property Organization (WIPO) Standing Committee on Copyright and Related Rights. Certainly Canada has taken no such position before the Commission or in this reference. Indeed, Canada has chosen not to participate in this reference at all.

[46]      Finally, I note that the BDUs rely on past statements of the Commission (in 1993, 1999, 2001 and 2003) to the effect that the matter of compensation for local retransmission rights should be a matter of copyright policy, not broadcasting policy. I place no weight on those statements, particularly since the Commission has brought this reference to have the scope of its statutory authority determined as a matter of law.

[47]      I conclude that nothing in the Copyright Act or its legislative history precludes the Commission from adopting the proposed value for signal regime.

[48]      I would answer the reference question as follows:

[49]      Nadon J.A. (dissenting): I have had the benefit of reading the reasons of my colleague Sharlow J.A., but I must respectfully disagree with her disposition of this matter. In my opinion, the value for signal regime (the VFS regime) proposed in Broadcasting Order CRTC 2010-168 (the order) is ultra vires the powers of the Canadian Radio-television and Telecommunications Commission (the CRTC). I so conclude because the VFS regime conflicts with Parliament’s clear statement in paragraph 31(2)(d) of the Copyright Act that royalties must be paid only for the retransmission of distant signals and not for the retransmission of local signals.

[50]      I need not repeat the facts or submissions of the parties which Sharlow J.A. has thoroughly reviewed in her reasons.

[51]      It is first necessary to note, as Sharlow J.A. does at paragraph 35 of her reasons, that the signals at issue in this reference are “local signal[s]” as defined in paragraph 2(1)(a) of the Regulations Amending the Local and Distant Signal Regulations, SOR/2004-33 (the Regulations). Local broadcasters, such as CTVglobemedia Inc. and Canwest Television Limited Partnership, want broadcasting distribution undertakings (BDUs), such as Bell Canada and Rogers Communications Inc., to pay them a fee for the right to collect and retransmit their local broadcast signals to BDUs subscribers.

[52]      The BDUs’ main claim is that subsection 31(2) of the Act prevents the CRTC from enacting the VFS regime. Under subsection 31(2), a retransmitter does not infringe copyright if it meets five conditions. The BDUs need this protection because the local signals they retransmit contain copyrighted material. It is likely that the local broadcasters have copyright in or a license to use the works they broadcast, due to agreements they have with the original creators of the works. Such agreements are typical in the industry (Bell ExpressVu Limited Partnership v. Rex, 2002 SCC 42, [2002] 2 S.C.R. 559 (Bell ExpressVu), at paragraph 51).

[53]      The conditions set out at subsection 31(2) of the Copyright Act are as follows:

[54]      The BDUs do not, in their memorandum of fact and law, directly address the meaning of the word “lawful” found in paragraph 31(2)(b) of the Copyright Act. However, the local broadcasters provide a cogent analysis of the BDUs’ regulatory situation at paragraph 69 of their joint memorandum. Therein, the local broadcasters describe how BDUs operate subject to two different statutory schemes that apply to two different aspects of the same activity.

[55]      First, there is the copyright regime wherein compulsory licenses are granted under subsection 31(2) of the Copyright Act, allowing the BDUs to use the copyrighted works carried in the local broadcasters’ signals without the permission of the copyright holders.

[56]      Second, there is the broadcasting licensing and regulation regime wherein the CRTC determines the conditions the BDUs must satisfy before they have lawful access to the local broadcasters’ signals which contain the copyrighted works.

[57]      In short, to have lawful access to retransmit the local broadcasters’ programming, the BDUs must have both a license to access the airwaves that carry that programming and a license to access the copyrighted works contained in that programming.

[58]      What does it mean to have “lawful” access to local signals under the Broadcasting Act? The term “lawful” is not defined in either the Copyright Act or the Broadcasting Act. The Supreme Court of Canada’s decision in Bell ExpressVu helps to define this term. There, the Court considered the term “lawful right” in the context of section 2 [of the definition of the term “lawful distribution” (as enacted by S.C. 1991, c. 11, s. 81)] of the Radiocommunication Act which reads as follows:

[59]      The Court was asked to determine whether a company which sold decoding systems that read encrypted satellite signals was a “lawful distributor”. To make this determination, the Court had to interpret the words “lawful right”. At paragraph 42, the Court affirmed the interpretation of Létourneau J.A. of this Court [in ExpressVu Inc. v. Nii Norsat International Inc., 1997 CanLII 5676, 81 C.P.R. (3d) 345, at paragraph 4], who wrote as follows:

[60]      That is, to have a “lawful right” in a particular piece of broadcast property, a person must have four things: proper licensing under the relevant Act, proper authorization by the relevant agency, a contractual right of some kind to use the property and sufficient copyright to use the property.

[61]      In my view, the language and the context in the two cases are sufficiently analogous to allow an application of the Supreme Court’s interpretation of the word “lawful” in Bell ExpressVu to paragraph 31(2)(b) of the Copyright Act.

[62]      Applying Bell ExpressVu’s interpretation of the word “lawful” to paragraph 31(2)(b) of the Copyright Act suggests that the BDUs must comply with CRTC regulations or conditions imposed under the Broadcasting Act to be able to assert a subsection 31(2) exception to copyright infringement.

[63]      At this point, I believe it helpful to note several features of the Copyright Act. Parliament expressly says in paragraph 31(2)(a) that an exception to copyright infringement can apply to a “local or distant signal”. Paragraph 31(3)(a) gives Cabinet the power of “defining ‘local signal’ and ‘distant signal’ for the purposes of subsection (2)”. The two types of signals are, as noted above, given different definitions in the Regulations.

[64]      Moreover, in paragraph 31(2)(d), Parliament has specified that “in the case of the retransmission of a distant signal”, the retransmitter must pay the royalties fixed under the Copyright Act and must comply with any terms and conditions fixed under the Copyright Act. The Act does not impose any such obligations on persons retransmitting local signals.

[65]      From these features I infer two things. First, Parliament intended that local signals and distant signals be treated differently. Second, one aspect of this different treatment is that royalties can be imposed on persons retransmitting distant signals but cannot be imposed on persons retransmitting local signals.

[66]      In my view, this is a correct interpretation of the Act for four reasons. First, the Supreme Court said in Bell ExpressVu, at paragraph 52, that subsection 31(2) comprises two different regimes. There, the Court said that section 21 of the Copyright Act gives local broadcasters copyright in their signals “subject to the exceptions in s. 31(2)” (emphasis added). The French version of the judgment also uses the plural: “des exceptions” [underlining added].

[67]      All elements in subsection 31(2) of the Copyright Act must be met before an exception to copyright infringement is available because a conjunctive “and” is used to link the paragraphs. Thus, the only way the Supreme Court could have concluded that there was more than one exception in subsection 31(2) was if it thought local and distant signals were to be treated differently.

[68]      Second, failing to interpret paragraph (d) as applying to distant signals only would render the disjunctive “or” used in paragraph (a) redundant. Paragraphs (a), (b), (c), and (e) do not distinguish between local and distant signals. The only difference between the two types of signals in subsection 31(2) is expressed in paragraph (d). Thus, it must be that Parliament distinguished between the types of signals in paragraph (a) because the signals receive different treatment in paragraph (d).

[69]      Third, the statutory interpretation maxim expressio unius est exclusio alterius suggests that since Parliament expressly said that royalties had to be paid for distant signals, it also meant that royalties did not have to be paid for local signals.

[70]      Fourth, the Copyright Act uses the term “royalty” (or “royalties”) liberally—more than 60 times. If Parliament had intended that royalties be paid for the retransmission of local signals, it could easily have said so. It did not.

[71]      I conclude, then, that Parliament intended paragraph 31(2)(d) of the Copyright Act to mean that royalties be paid only for distant signals and not for local signals.

[72]      Given this conclusion, it follows, in my view, that the CRTC’s order is ultra vires. Parliament delegated power to the CRTC when it passed the Broadcasting Act. However, this delegation of power is not absolute: “The delegate is, of course, always subordinate in that the delegation can be circumscribed and withdrawn” (R. v. Furtney, 1991 CanLII 30 (SCC), [1991] 3 S.C.R. 89, at page 104; see also Sam Lévy & Associés Inc. v. Azco Mining Inc., 2001 SCC 92, [2001] 3 S.C.R. 978, at paragraph 17).

[73]      Parliament’s intention, as expressly stated in paragraph 31(2)(d) of the Copyright Act, that royalties be paid for the retransmission of distant signals and implicitly that no royalties be paid for the retransmission of local signals is a clear limit on the CRTC’s power to impose conditions under the Broadcasting Act. Thus, since the order conflicts with Parliament’s intention, it is ultra vires the CRTC.

[74]      I will now address two of my colleague’s statements. First, she finds that in paragraph 31(2)(b) of the Copyright Act, Parliament gave the CRTC the power to limit transmission rights under subsection 31(2) by stating that such transmissions must be “lawful under the Broadcasting Act”. If the BDUs fail to comply with any conditions imposed by the CRTC, including the VFS regime, then they cease to have lawful access to the airwaves. The section also suggests, in her view, that Parliament has ranked the objectives of Canada’s broadcasting policy ahead of the retransmission rights created under the Copyright Act.

[75]      I respectfully disagree. Paragraphs (b) and (d) of subsection 31(2) are linked by the conjunctive “and”. This language and structure suggests, in my view, they are co-equal conditions that must both be met before an exception to copyright infringement is recognized. It does not suggest, however, that paragraph (b) can be read to rank ahead of and to overwhelm paragraph (d). Both provisions apply with equal force.

[76]      To put it another way, the CRTC could not assert its power to regulate the lawfulness of a retransmission under the Broadcasting Act to grant an exception to copyright infringement for non-simultaneous retransmissions, contrary to paragraph (c). Similarly, the CRTC could not assert its power over broadcasting to say that no royalty need be paid for the retransmission of distant signals, contrary to paragraph (d). In my view, this approach is sound because it would be contrary to the principle of parliamentary supremacy if a regulatory body with delegated power could use its power to override Parliament’s clear legislative statement.

[77]      The effect of Sharlow J.A.’s interpretation of paragraph 31(2)(b) is that paragraph 31(2)(d) comes to mean that royalties may only be charged for the retransmission of distant signals and may not be charged for the retransmission of local signals, unless the CRTC decides otherwise. Such an interpretation is, in my respectful view, erroneous.

[78]      Further, the VFS regime is similar to the distant signal royalty payment regime in several ways. In both regimes, a royalty is paid—that is, value is exchanged for the use of property: see Mobil Oil Canada, Ltd. v. Canada, 2001 FCA 333, [2002] 1 C.T.C. 55, at paragraphs 17–18. Under the VFS regime, this value is determined by negotiations between each individual local broadcaster and each individual BDU: order, at paragraph 7. Under the distant signal regime, the royalties are determined either by tariffs filed by the collective society representing broadcasters or by negotiations between the collective society and individual retransmitters: Copyright Act, paragraph 70.1(c) [as enacted by R.S.C., 1985 (4th Supp.), c. 10, s. 16; 1997, c. 24, s. 46], sections 70.13 [as enacted idem], 70.191 [as enacted idem].

[79]      In both regimes, the payee and the payor are the same. Under the VFS regime, the local broadcasters are paid for their signals by the BDUs, or receive other forms of value from the BDUs: order, at paragraph 7. Under the distant signal regime, a “broadcaster” is paid the tariff fixed pursuant to paragraph 31(2)(d), or the other compensation separately agreed to, because the broadcaster has the sole right to authorize another person to reproduce his signal: Copyright Act, subsection 21(1), paragraph 31(2)(d). The payor is the retransmitter.

[80]      In both regimes, the obligation to pay attaches to the same activity. Under the VFS regime, the BDU is obliged to pay because it retransmits the local broadcasters’ signal: order, at paragraph 7. Under the distant signal regime, the retransmitter is obliged to pay because it retransmits the broadcaster’s signal: Copyright Act, subsections 21(1), 31(2).

[81]      In both regimes, the protected property is the same. Under the VFS regime, the local broadcasters’ signals are what is being paid for: order, at paragraph 7. Under the distant signal regime, the broadcaster’s signal is what the retransmitter is paying for: Copyright Act, subsections 21(1), 31(2).

[82]      There are also some differences between the two regimes. Under the VFS regime, the royalty is established as a result of direct negotiation between each local broadcaster and each BDU: order, at paragraph 7. Thus, the type of compensation can, theoretically, be different in each individual agreement. Under the distant signal regime, the collective society may either file a tariff that is applicable to all users or it may enter into agreements with individual users: Copyright Act, sections 70.12 [as enacted idem], 70.191 [as enacted idem]. As a result, the type of compensation may be the same, if a tariff is applicable, or it may differ, if individual agreements are reached. This difference is primarily a difference in form and thus is unimportant, considering the numerous substantive similarities between the two regimes.

[83]      A second (potential) difference is the distinction Sharlow J.A. draws between Canada’s broadcasting policy and its copyright policy. In her view, paragraph 31(2)(b) is an articulation of broadcasting policy while paragraph 31(2)(d) is an articulation of copyright policy: reasons, at paragraphs 38–40, 43–44. Thus, in her view, even if the VFS regime essentially establishes royalties for local signals, these royalties constitute an expression of broadcasting policy and so cannot be said to conflict with Parliament’s expression of copyright policy.

[84]      With the greatest of respect, I cannot agree. The analysis above shows, in my view, that the VFS regime is far more similar to, than different from, the distant signal regime in the Copyright Act. Both regimes involve a royalty passing between the same parties for the same activity relating to the same protected property. They are functionally equivalent, despite slight differences in form.

[85]      This functional equivalence results in the VFS regime being ultra vires the CRTC’s powers. In Théberge v. Galerie d’Art du Petit Champlain inc., 2002 SCC 34, [2002] 2 S.C.R. 336, the Supreme Court said at paragraph 5 that “[c]opyright in this country is a creature of statute and the rights and remedies it provides are exhaustive”: see also Copyright Act, section 89 [as enacted idem, s. 50]. Contrary to the exhaustiveness of statutory copyright law, the CRTC, through the order, is attempting to create a royalty that is essentially the same as the royalty Parliament has, in effect, forbidden in paragraph 31(2)(d) of the Copyright Act. Given this conflict between the Copyright Act and the CRTC’s order, the CRTC’s enactment must give way.

[86]      I would also like to address my colleague’s remarks found at paragraph 42 of her reasons where she says that “it is irrelevant that [the VFS regime] might be characterized as an obligation to pay a royalty.” In support of that proposition, Sharlow J.A. says that the BDUs have not contested the CRTC’s power to impose the current bundle of regulatory burdens on them, which includes both non-monetary and monetary compensation. In her view, since these regulations are presumably valid, and since the burdens imposed by the VFS regime differ from these regulations only in kind, not substance, the VFS regime must be valid.

[87]      I cannot agree. The validity of the current CRTC regulations is not before us. This reference was submitted by the CRTC directly to this Court and asks solely whether the VFS regime is a valid enactment by the CRTC. Thus, the current regulations are beyond the scope of the reference. In other words, whether the current regulations are valid is an irrelevant consideration in answering the question posed by the CRTC.

[88]      I would therefore answer the question posed by the CRTC as follows: