A-1056-82
Okanagan Helicopters Ltd., Wescan Resource
Equipment Ltd., and The Resource Service Group
Ltd. (Appellants)
v.
Canadian Transport Commission (Respondent)
and
Sealand Helicopters Ltd. (Intervenant)
Court of Appeal, Urie, Ryan JJ. and Kelly D.J.—
Toronto, December 1; Ottawa, December 24,
1982.
Aeronautics — 65% of Okanagan shares transferred from
B.C. numbered corporation to parent, Wescan — After second
transaction, shares to be held 17% by Wescan, 34% by its
parent RSG and 49% by United, and English company —
CTC concluding change of control of Okanagan effected in
both transactions — First transaction effected change of "legal
control"; second would give plurality shareholder "at least
joint effective control" — Notice required under s. 22 of
Regulations — CTC having jurisdiction to examine transac
tions because Okanagan an "air carrier" as per s. 9(1) of
Aeronautics Act — Meaning of "control" in s. 14(1)(l) of Act
and in Regulations — Legal, de jure control by virtue of
ownership of majority of voting shares vs. effective, de facto
control notwithstanding ownership of less than majority
"Control" to be interpreted in light of statutory context —
Amendments contemporaneous to enactment of present s.
14(1)(1) attaching restrictive, de jure definition to ss. 15.1, 16,
by reference to Canada Business Corporations Act — Inference
that Parliament intended more comprehensive, de facto defini
tion for s. 14(1)(1), enabling CTC to exercise s. 10(1)(b) juris
diction — De facto encompasses legal control — Vote would
produce same result whether shares give de facto or de jure
control — Appeal dismissed — Aeronautics Act, R.S.C. 1970,
c. A-3, ss. 9(1), 10(1)(b),(2), 14(1)(l) (as am. by S.C. 1976-77,
e. 26, s. 2(2)), 15.1 (enacted by S.C. 1976-77, e. 26, s. 3); 16 (as
am. by S.C. 1976-77, c. 26, s. 4(1)) — Air Carrier Regulations,
C.R.C., c. 3, ss. - 21, 22 — Canada Business Corporations Act,
S.C. 1974-75-76, c. 33, s. 2(3) (as am. by S.C. 1978-79, c. 9, s.
2(5)) — Income Tax Act, R.S.C. 1952, c. 148, s. 39 (as am. by
S.C. 1960, c. 43, s. 11) — The Public Utilities Board Act,
R.S.A. 1970, c. 302, s. 2(i).
Judicial review — Statutory appeals — Aeronautics —
CTC deciding each of two transactions effected change of
control of air carrier — Meaning of "control" in s. 14(1)(l) of
Act and in Regulations question of law — Court lacking
jurisdiction on questions of fact, including: existence of "con-
trol"; occurrence of "change of control"; reasoning of CTC;
identity of "public interest" — Decision untouchable if CTC
gives reasonable interpretation and if supporting evidence
exists — CTC's decision consistent with Court's finding that
"control" has comprehensive, de facto meaning — Whether
CTC applied correct test in deciding first transaction effected
change of "legal control" — De facto encompasses legal
control — Vote would produce same result whether shares give
de facto or de jure control — Appeal dismissed — Aeronautics
Act, R.S.C. 1970, c. A-3, ss. 9(1), 10(1)(b), 14(1)(l) (as am. by
S.C. 1976-77, c. 26, s. 2(2)) — Air Carrier Regulations,
C.R.C., c. 3, ss. 21, 22 — National Transportation Act, R.S.C.
1970, c. N-17 (as am. by R.S.C. 1970 (2nd Supp.), c. 10, s. 65
(Item 32)).
RSG wholly owned Wescan, which in turn owned a B.C.
numbered company. Initially, the latter held 65% of the shares
of the air carrier Okanagan, with the balance being held by
RSG. The first transaction then occurred. In it, the 65% of
Okanagan held by the B.C. numbered company was transferred
to Wescan. Wescan, RSG, and Okanagan entered into an
agreement with United, a company having its registered office
in England. This agreement was with respect to a second
transaction, which would have resulted in the ownership of
Okanagan being distributed as follows: 49% to United; 34% to
RSG; 17% to Wescan. United was to have a financial interest
in Okanagan in addition to that represented by its sharehold-
ings, and was also to enjoy certain other rights pertaining to the
transfer of Okanagan's shares and the direction of Okanagan.
Sealand, a Canadian air carrier, filed a complaint with the
CTC, which prompted the Commission to conduct investiga
tions. These resulted in a decision by the CTC that each of the
two transactions had effected, or would effect, a "change of
control" of Okanagan, within the meaning of section 21 of the
Air Carrier Regulations, and that notice of each transaction
was therefore required to be given under section 22. According
to the reasons which the CTC subsequently provided, the first
transaction had produced a change in the "legal control" of
Okanagan, while the second would have given "at least joint
effective control" of that company to United. Leave to appeal
the CTC decision was granted.
Held, the appeal should be dismissed. It is uncontested that
Okanagan is an "air carrier" within the meaning of subsection
9(1) of the Aeronautics Act. Therefore, pursuant to subsection
10(2) and paragraph 14(1)(l) of the Act, the CTC had jurisdic
tion to examine the transactions. The key matter is the meaning
to be ascribed to the word "control", as used in paragraph
14(1)(1) and in the Regulations. The alternative definitions are:
(1) legal, de jure control, being control by virtue of the
ownership of a majority of the voting shares; and (2) effective,
de facto control, being control notwithstanding that less than a
majority of voting shares is owned. Since neither the Act nor
the Regulations define the word, its meaning must be deter
mined by reference to legal principles, the statutory context,
and the factual elements of actual control. Its meaning is thus a
question of law. By contrast, whether "control" exists, whether
there has been a "change of control", the reasoning upon which
the CTC decides these points, and the identity of the "public
interest" (referred to in paragraph 10(1)(b)), are all questions
of fact. Under subsection 64(2) of the National Transportation
Act, the Court has power to examine only questions of law and
questions of jurisdiction; therefore, if the CTC has given the
word "control" a reasonable definition, and if there was evi-..
dence to support the CTC's decision regarding the change and
existence of "control" (as defined by the CTC), the Court
cannot interfere with the decision. Now, the present form of
paragraph 14(1)(l) was enacted by the same amending legisla
tion which made other additions to the Aeronautics Act. By
these other additions, "control" was defined for the purposes of
sections 15.1 and 16, as control "determined pursuant to the
Canada Business Corporations Act". The latter statute
employs a restrictive, de jure definition, based on ownership of
shares which confer certain voting majorities. The amending
legislation did not attach the CBCA definition to paragraph
14(1)(l). Consequently, it must be inferred that Parliament
intended the term "control" to have a more comprehensive, de
facto meaning in that paragraph. This would leave the CTC
free to exercise its jurisdiction under paragraph 10(1)(b),
whereby the Commission is empowered to inquire into any
matter if the public interest appears so to require. The decision
of the CTC was consistent with such an interpretation. Hence it
cannot be set aside by the Court. True, the CTC's conclusion
regarding the first transaction was that there had been a
change of legal control, and one may thus ask whether the CTC
applied the correct test to that transaction. The concept of de
facto control may, however, be regarded as encompassing the
more limited idea of legal control. Whether the controlling
party's shares give it de facto control or de jure control, the
result of a vote on a given issue would be the same.
CASES JUDICIALLY CONSIDERED
DISTINGUISHED:
Her Majesty in right of the Province of Alberta v.
Canadian Transport Commission, [1978] 1 S.C.R. 61.
CONSIDERED:
Buckerfield's Ltd. et al. v. Minister of National Revenue,
[1965] 1 Ex.C.R. 299; 64 DTC 5301; Atco Ltd. et al. v.
Calgary Power Ltd., et al., [1982] 2 S.C.R. 557, affirm
ing (1980), 117 D.L.R. (3d) 332; 24 A.R. 300 (C.A.);
Alleghany Corporation et al. v. Breswick & Co. et al.,
353 U.S. 151 (1957).
REFERRED TO:
Minister of National Revenue v. Dworkin Furs (Pem-
broke) Limited, et al., [[1967] S.R.C. 223]; 67 DTC
5035; Rochester Telephone Corp. v. United States et al.,
307 U.S. 125 (1939).
COUNSEL:
J. C. Major, Q.C. and M. Feldman for
appellants.
D. J. E. Scott and S. Watt for respondent.
W. F. Clark for intervenant.
SOLICITORS:
Herridge, Tolmie, Ottawa, for appellants.
D. J. E. Scott (Legal Services, Canadian
Transport Commission), Ottawa, for respond
ent.
Hamilton, Torrance, Stinson, Campbell,
Nobbs & Woods, Toronto, for intervenant.
The following are the reasons for judgment
rendered in English by
URIE J.: This is an appeal from a decision of the
Air Transport Committee ("ATC") of the Canadi-
an Transport Commission ("CTC"), pursuant to
leave granted by this Court, that a change in
control in the appellant Okanagan Helicopters
Ltd. ("Okanagan") had occurred within the mean
ing of section 21 of the Air Carrier Regulations,
C.R.C., c. 3 ("the Regulations"), and that, accord
ingly, the provisions of section 22 of the Regula
tions requiring a determination by the ATC as to
whether or not the transaction would unduly
restrict competition or otherwise be prejudicial to
the public interest would have to be complied with.
Before referring to the factual background of
the case, it would be useful to set out the relevant
provisions of the statute, the Aeronautics Act,
R.S.C. 1970, c. A-3, and of the Regulations. The
jurisdiction of the Air Transport Committee arises
from subsection 10(2) of the Aeronautics Act
reading as follows:
10.
(2) The Commission may order and require any person to do,
forthwith, or within or at any specified time and in any manner
prescribed by the Commission so far as it is not inconsistent
with this Act, any act, matter or thing that such person is or
may be required to do under this Part, or any regulation,
licence, permit, order or direction made thereunder by the
Commission and may forbid the doing or continuing of any act,
matter or thing that is contrary to this Part or any such
regulation, licence, permit, order or direction and, for the
purposes of this section, has full jurisdiction to hear and
determine all matters, whether of law or fact.
The jurisdiction of the Canadian Transport
Commission to enact section 21 of the Regulations
stems from paragraph 14(1)(1) [as am. by S.C.
1976-77, c. 26, subs. 2(2)], which reads as follows:
14. (1) The Commission may make regulations
(1) prohibiting the change of control, transfer, consolidation,
merger or lease of commercial air services or of any air
carrier except subject to such conditions as may by such
regulations be prescribed;
The relevant portion of section 21 and subsec
tions 22(1) and (4) of the Regulations are the
pertinent statutory provisions, and they read as
follows:
21. No person shall enter into a transaction that is intended
to or would result in a change of control ... of any commercial
air service or of any air carrier unless he complies with
section 22.
22. (1) Any person who proposes to enter into a transaction
described in section 21 shall give notice of such proposed
transaction to the Committee.
(4) The Committee may, following receipt of notice of a
transaction described in section 21, require the person referred
to in subsection (1) to file with the Secretary such information
and documents as will enable the Committee to determine
whether the transaction will unduly restrict competition or
otherwise be prejudicial to the public interest.
The transactions which resulted in the making
of the order by the ATC which is here under
attack are somewhat complicated.
The appellant The Resource Service Group Ltd.
("RSG") is a public company, the shares of which
are listed on both the Toronto and Montreal Stock
Exchanges. The appellant Wescan Resource
Equipment Ltd. ("Wescan") is an Alberta com
pany which is a wholly-owned subsidiary of RSG.
246455 British Columbia Limited ("B.C. Com
pany") was incorporated in British Columbia as a
wholly-owned subsidiary of Wescan. The purpose
of incorporation was to enable the company to
hold approximately 65% of the issued and out
standing shares of the appellant Okanagan.
Okanagan is a British Columbia company. The
balance of the issued and outstanding shares of
Okanagan were held by RSG.
The first transaction, which was described by
the appellants as being an internal "housekeeping"
matter, resulted in the 65% of Okanagan held by
the B.C. Company being transferred to its parent,
Wescan.
The second transaction arose from an agreement
dated October 7, 1982, between United Heli
copters Limited ("United"), a company having its
registered office at Surrey, England, on the one
part, and RSG, Wescan and Okanagan on the
other part. Pursuant thereto, United subscribed for
661,053 ordinary shares of Okanagan for the
aggregate sum of $9,800,000 and for 11,000 12 1 / 2 %
cumulative, redeemable preference shares for an
aggregate consideration of $11,000,000. As a
result of these transactions, United is to become
the owner of 49% of Okanagan and the balance
thereof is to be owned, as to approximately 34%,
by RSG and, as to 17%, by Wescan.
Apparently, as the result of a complaint filed by
the intervenant Sealand Helicopters Ltd. ("Sea-
land"), a company incorporated pursuant to the
Canada Business Corporations Act [S.C. 1974-75-
76, c. 33] and a licensed air carrier, the Secretary
of the CTC on September 17, 1982, requested
certain information from Okanagan in regard to
the first transaction. As a result, Okanagan was
directed by the ATC to provide it with copies of all
agreements which might effect any changes in the
control or operations of Okanagan. It required
confirmation that control of Okanagan remained
in the B.C. Company.
As a result of its investigations, the CTC also,
apparently, learned of the second transaction and,
as a result, the order was made by the CTC on
October 7, 1982, which is the subject-matter of
this appeal. The relevant portions of the decision
conveyed by telex to the solicitors for Okanagan
read as follows:
THE AIR TRANSPORT COMMITTEE HAS EXAMINED ALL OF THE
DOCUMENTS AND AGREEMENTS AS THEY RELATE TO THE
PROPOSED UNITED HELICOPTERS LTD. PURCHASE.
THE PRESENT SHAREHOLDER OF RECORD OF OKANAGAN
HELICOPTERS LTD. IS 246455 BRITISH COLUMBIA LTD. THE
COMMITTEE NOTES THAT A CHANGE OF CONTROL OF OKANA-
GAN HELICOPTERS LTD. HAS BEEN EFFECTED FROM 246455
BRITISH COLUMBA LTD. TO WESCAN RESOURCE EQUIPMENT
LTD., ITS PARENT COMPANY. THE PARTIES CONCERNED ARE
REQUIRED TO GIVE NOTICE OF THIS TRANSACTION PURSUANT
TO SECTION [Sid] 21 AND 22 OF THE MR CARRIER
REGULATIONS.
THE COMMITTEE HAS CONCLUDED THAT THE PROPOSED
UNITED HELICOPTERS LTD. PURCHASE WILL ALSO RESULT IN
A CHANGE OF CONTROL OF OKANAGAN HELICOPTERS LTD.
FROM WESCAN RESOURCE EQUIPMENT LTD. TO UNITED HELI-
COPTERS LTD., THE RESOURCE SERVICE GROUP LTD. AND
WESCAN HELICOPTERS LTD.
ACCORDINGLY THE PARTIES CONCERNED ARE ALSO
REQUIRED TO GIVE NOTICE OF THIS TRANSACTION PURSUANT
TO SECTION 21 AND 22 OF THE AIR CARRIER REGULATIONS.
REFERENCE CAN BE MADE TO APPENDIX 9 OF THE GUIDE FOR
THE PREPARATION OF APPLICATIONS TO DETERMINE WHAT
FORMAT THE NOTICES SHOULD TAKE.
At the request of RSG, the CTC, by letter dated
October 22, 1982, gave reasons for its conclusion
that a change of control of Okanagan had been
effected in each of the two transactions. With
respect to the first transaction, the CTC found a
change of "legal control" of Okanagan had
occurred as a result of the transfer of the shares of
Okanagan from the B.C. Company to its parent
Wescan. With respect to the second transaction,
the respondent CTC found that United enjoyed
"at least joint effective control of Okanagan",
based on the following factors:
In arriving at its conclusion that, in the present case, United
Helicopters Ltd. enjoys at least joint effective control of
Okanagan Helicopters Ltd., the A.T.C. was influenced by the
following factors:
1. The fact that United has also subscribed to all of the
preferred shares of Okanagan, representing an additional
investment by United in the amount of $11,000,000. Thus, in
terms of the total equity in Okanagan United is by far the
largest shareholder in Okanagan, and by far the investor who is
assuming the greatest financial risk.
2. The fact that it is a condition of the share purchase agree
ment that
(a) Okanagan enter into (aircraft) lease agreements with
United and
(b) that a shareholders' agreement be executed by The
Resource Service Group Ltd., Wescan Resource Equipment
Ltd. and United Helicopters Limited.
3. The fact that the aforementioned shareholders' agreement
outlines seventeen basic matters which the Board of Directors
of Okanagan is incapable of accomplishing without the consent
and approval of both United and The Resource Group Ltd.
expressed by way of a shareholders' resolution.
4. The fact that the said shareholders' agreement also secures
in favour of United an option of first refusal should another
shareholder wish to transfer its shares, and in any event also
secures in favour of United the right to approve of any other
proposed transferee of shares.
5. The additional major financial interest to be held in Okana-
gan by United via the aircraft lease agreements referred to
previously. Okanagan has filed one lease agreement between it
as lessee and United as lessor relating to one Sikorsky Model
561N helicopter. Further information submitted by Okanagan
discloses that Okanagan and United intend to enter into two
additional and similar lease agreements for two more Sikorsky
Model 561N helicopters. The lease agreement that has been
filed with the Committee provides for a term of seven years and
a cost of $40,000 (U.S.) per month for the lease of the aircraft.
(The Committee notes that the lease agreement states that the
aircraft is to be used in Canada or to and from offshore
locations in proximity thereto. By letter dated September 30,
1982, Okanagan through its solicitors advised the Committee
that the lease agreement would be amended to also permit use
of the aircraft in foreign markets.)
6. The fact that United's expertise and facilities will play an
influential role in the conduct of Okanagan's business, as
evidenced by the following statements made by Okanagan in a
document entitled "Summary of Facts Relating to the
Transaction":
Okanagan is about to embark on a program of hangar
construction at St. John's, Newfoundland and Halifax, Nova
Scotia to service offshore oil and gas exploration activities.
United has considerable experience in servicing the oil and
gas exploration activities in the U.K. North Sea. United's
North Sea terminal, hangar and support facility experience
would be most helpful to Okanagan in its program in Atlan-
tic Canada.
United's expertise in the areas of foreign market operations,
technology and safety in offshore activity will be available to
Okanagan ( ....)
Okanagan will improve its purchasing power with foreign
manufacturers as a result of its interface with United.
Okanagan is currently negotiating with foreign aircraft sup
pliers for the trade of certain older model types against the
purchase of advanced model aircraft to maintain Okanagan's
competitive position in the years ahead. United's equipment
experience and purchasing power will considerably aid
Okanagan in this regard.
Okanagan currently employs aircraft in the Asian markets.
As a result of this transaction, Okanagan will have access to
United's facilities in Singapore.
It should first be observed that no serious ques
tion was raised by any of the parties as to the
jurisdiction of the CTC to make the order here
attacked. In fact, subsection 10(2) of the
Aeronautics Act, supra, provides the CTC with
the jurisdiction to "hear and determine all matters,
whether of law or fact". Moreover, paragraph
14(1)(1) of that Act, supra, provides the Commis
sion with power to make regulations prohibiting
the change of control of "commercial air services
or of any air carrier...." "Air carrier" and "com-
mercial air service" are both defined in [subsection
9(1) of] the Act. "Commercial air service" means
"any use of aircraft in or over Canada for hire or
reward". "Air carrier" means "any person who
operates a commercial air service". It is uncontest
ed that Okanagan is an air carrier, so that the
jurisdiction of the CTC to examine this transac
tion appears clear.
It was the contention of counsel for the appel
lants that since "control" is not defined in either
the Aeronautics Act or its Regulations, its mean
ing must be ascertained by reference to legal prin
ciples, the statutory scheme and the factual ele
ments of control in reality. I agree with this
submission, so that it seems to me that the mean
ing to be ascribed to "control" is a question of law,
while whether or not there has been "a change of
control" within the meaning of the Act and the
Regulations is a question of fact. Furthermore, it
is undisputed, as I understand it, that the word
"control" as used in the Act and Regulations
means either legal, de jure control—which means
control by virtue of the ownership of a majority of
the voting shares—or effective, de facto control—
which means control by virtue of something less
than a majority of such shares. It is the determina
tion of the meaning of "control" in the context in
which the word is used in the Act and the Regula
tions, here being examined, which must be made.
If the CTC has correctly interpreted the word in
the context in which it is used in the Regulations,
whether or not there has, in fact, been a change of
control is not a matter to be addressed by this
Court. That the Court has no jurisdiction on the
facts arises by virtue of subsection 64(2) of the
National Transportation Act, R.S.C. 1970, c.
N-17, and amendments thereto [R.S.C. 1970 (2nd
Supp.), c. 10, s. 65 (Item 32)], which limits an
appeal from the CTC to this Court to one upon a
question of law or a question of jurisdiction.
The meaning of "control" in corporate law has
been considered by the courts on many occasions,
usually in the context of a particular statute. In
Buckerfield's Ltd. et al v. Minister of National
Revenue,' Jackett P. (as he then was) had to
determine the meaning of the word as it was used
in the Income Tax Act, R.S.C. 1952, c. 148, and
amendments thereto [S.C. 1960, c. 43, s. 11],
which provided that one corporation was associat
ed with another corporation for the purposes of the
Act if "both of the corporations were controlled by
the same person or group of persons". At pages
302-303 of the report, President Jackett had this
to say:
1 [1965] 1 Ex.C.R. 299; 64 DTC 5301.
Many approaches might conceivably be adopted in applying
the word "control" in a statute such as the Income Tax Act to a
corporation. It might, for example, refer to control by "man-
agement", where management and the Board of Directors are
separate, or it might refer to control by the Board of Directors.
The kind of control exercised by management officials or the
Board of Directors is, however, clearly not intended by section
39 when it contemplates control of one corporation by another
as well as control of a corporation by individuals (see subsec
tion (6) of section 39). The word "control" might conceivably
refer to de facto control by one or more shareholders whether
or not they hold a majority of shares. I am of the view,
however, that, in section 39 of the Income Tax Act, the word
"controlled" contemplates the right of control that rests in
ownership of such a number of shares as carries with it the
right to a majority of the votes in the election of the Board of
Directors. See British American Tobacco Co. v. I.R.C. ([1943]
1 A.E.R. 13) where Viscount Simon L.C., at page 15, says:
The owners of the majority of the voting power in a
company are the persons who are in effective control of its
affairs and fortunes.
That definition was referred to with approval by
Hall J. speaking on behalf of the Supreme Court
of Canada in Minister of National Revenue v.
Dworkin Furs (Pembroke) Limited, et al. 2
The word as used in section 21 of the Regula
tions as they read in 1977 was said by Spence J. in
Her Majesty in right of the Province of Alberta v.
Canadian Transport Commission 3 to refer not to
the control of an "air carrier" as defined in the
Regulations, but only to control of a "commercial
air service" as defined therein. Since that decision,
subsection 14(1) of the Act and section 21 of the
Regulations have been amended to their present
forms, supra, so that the limitation in the meaning
of the word to the control of a commercial air
service has been removed, and the control
envisaged relates also to control of an air carrier.
Recently, the Supreme Court of Canada dealt
with the meaning of the word "controlling" as it
appears in the definition of "owner of a public
utility" in [paragraph 2(i) of] the Alberta Public
Utilities Board Act, R.S.A. 1970, c. 302, in the
case of Atco Ltd. et al. v. Calgary Power Ltd., et
al. 4 Estey J., speaking for the majority of the
Court, carefully reviewed the jurisprudence relat-
2 [[1967] S.R.C. 223]; 67 DTC 5035.
[1978] 1 S.C.R. 61, at p. 82.
4 [1982] 2 S.C.R. 557.
ing to the use of the word in various statutes and
concluded that, in the context of the statute which
was being examined, the appellant was the "owner
of a public utility". Excerpts from judgments of
the Supreme Court of the United States in
Rochester Telephone Corp. v. United States et al.'
and from the Court of Appeal of Alberta in the
judgment under appeal [(1980), 117 D.L.R. (3d)
332; 24 A.R. 300] were, in particular, relied on by
him. At pages 580 and 581 of Mr. Justice Estey's
reasons, the following appears:
Without proliferating unduly the study of peripheral aids to
the interpretation of these sections of the Alberta statute,
reference may be made to two United States decisions. In
Alleghany Corp. v. Breswick & Co. (1957), 353 U.S. 151, the
United States Supreme Court was concerned with the interpre
tation of railway regulations which required administrative
approval where "control" of a carrier is sought by a non-carrier
"through ownership of their stock or otherwise". Frankfurter
J., writing for the Court, stated at p. 163:
In 1939 ... this Court rejected artificial tests for "control",
and left its determination in a particular case as a practical
concept to the agency charged with enforcement. [Emphasis
added.]
In its earlier decision referred to above, the Court stated:
Investing the (Federal Communications) Commission with
the duty of ascertaining "control" of one company by
another (as the basis for the Commission's jurisdiction),
Congress did not imply artificial tests of control. This is an
issue of fact to be determined by the special circumstances of
each case. So long as there is warrant in the record for the
judgment of the expert body it must stand. (Rochester
Telephone Corp. v. United States, 307 U.S. 125 at pp.
145-6.)
Remarkably similar are the comments of Clement J.A. writ
ing on behalf of the Court in this appeal:
Having all these matters in mind, I am of opinion that
control is not to be confined in its meaning to immediate
ostensible control of the operation and management of a
public utility. In its context the word "controlling" must be
accorded a more comprehensive meaning extending to the
operational realities of control for public utilities purposes.
With respect I agree.
From all of the foregoing, it is quite apparent
that determination of the meaning of "control" in
a particular enactment depends upon the context
in which it appears. The next step, then, is to look
at the word as it is found in the context of para
graph 14(1)(l) of the Act and section 21 of the
Regulations.
5 307 U.S. 125 (1939), at pp. 145-146.
It should first be observed that, by An Act to
amend the Aeronautics Act and the National
Transportation Act, S.C. 1976-77, c. 26, para
graph 14(1) (/) was amended to its present form
[by subs. 2(2)], and section 15.1 was added to the
Act [by s. 3], as were subsections 16(2.1), (2.2)
and (2.3) [by subs. 4(1)]. The word "controlled"
appears in subsections 15.1(1), 16(2), and 16(2.1).
Subsections 15.1(2) and 16(2.3) each read as
follows:
15.1 (1) From April 4, 1977, an air carrier, operating
interprovincially or internationally, shall refuse to allow a
transfer of a share of the capital stock of the air carrier to Her
Majesty in right of a province, any agent thereof or any
corporation controlled directly or indirectly by Her Majesty in
right of a province or such an agent to be made in a register of
transfer of shares of the capital stock of the air carrier unless
the Governor in Council has approved such transfer.
(2) For the purposes of this section, "control" shall be as
determined pursuant to the Canada Business Corporations Act.
16. ...
(2.1) No such licence shall be issued to any air carrier,
operating interprovincially or internationally, in which Her
Majesty in right of a province, any agent thereof or any
corporation controlled directly or indirectly by Her Majesty in
right of a province or such an agent has or is in the process of
acquiring, directly or indirectly, a debt or equity interest with
out approval of the Governor in Council, but any existing
licence shall not be affected by this subsection.
(2.2) The Governor in Council may, on application by an air
carrier referred to in subsection (2.1), prior to consideration by
the Commission of an application by the air carrier for a
licence, by order, approve, subject to the decision of the Com
mission, the granting of a licence to the air carrier.
(2.3) For the purposes of this section, "control" shall be as
determined pursuant to the Canada Business Corporations Act.
Subsection 2(3) of the Canada Business Corpo
rations Act (as amended by S.C. 1978-79, c. 9
[subs. 2(5)]) reads:
2....
(3) For the purposes of this Act, a body corporate is con
trolled by a person if
(a) securities of the body corporate to which are attached
more than fifty per cent of the votes that may be cast to elect
directors of the body corporate are held, other than by way of
security only, by or for the benefit of that person; and
(b) the votes attached to those securities are sufficient, if
exercised, to elect a majority of the directors of the body
corporate.
Clearly this subsection describes what is com
monly referred to as "legal" or de jure control.
Since paragraph 14(1)(l) was amended at the
same time as section 15.1 and subsections 16(2.1),
(2.2) and (2.3) were added, it must be presumed
that Parliament intended "control" in paragraph
14(1)(l) to be accorded a different interpretation
than that given to the word by virtue of subsec
tions 15.1(2) and 16(2.3). Since these subsections
are restrictive in the meaning to be accorded the
word, I am of the opinion that the word "control"
in paragraph 14(1)(l) must be given a more com
prehensive meaning. That must be a kind of con
trol different from the absolute, legal control aris
ing from the ownership of a majority of the voting
shares of a company.
Parliament, in differentiating between the con
cepts of control envisaged by those sections, appar
ently did so to enable the CTC to exercise the
jurisdiction available to it by virtue of paragraph
10(1)(b) of the Act, which reads:
10. (1) The Commission has full jurisdiction to inquire into,
hear and determine any matter
(b) where it appears to the Commission that the circum
stances may require the Commission, in the public interest,
to make any order or give any direction, leave, sanction or
approval that by law it is authorized to make or give, or with
respect to any matter, act, or thing that by this Part or any
such regulation, licence, permit, order or direction is prohib
ited, sanctioned or required to be done. [Emphasis added.]
When the purpose in creating the differentiation
is thus understood (i.e., to enable the CTC to
inquire into any matter where it appears to be in
the public interest), the meaning to be accorded to
the word to enable the CTC to exercise its review
jurisdiction is understandable and sustainable.
That being so, it did not commit, in my view, any
error in law or jurisdiction which would entitle this
Court to set aside the order here attacked.
Before leaving that aspect of the matter, it
should be recalled that, with respect to the first
transaction, the CTC found a change in the "legal
control" of Okanagan had occurred as a result of
the transfer of the shares of Okanagan from the
B.C. Company to its parent, Wescan. That finding
raises a question as to whether or not the CTC
applied the correct test, in view of my conclusion
with respect to the meaning to be given to "con-
trol". The short answer to that problem is as
follows. The more comprehensive meaning to be
given the word is "effective" or de facto control.
That arises by virtue of a degree of control which
is achieved by the holding of something less than a
majority of the voting shares of the company. A
fortiori, then, it must embrace control through the
ownership of an outright majority of the voting
shares. That being so, the result of a vote would be
the same in either case, assuming that the holder,
whether of a number of shares sufficient to effec
tively control or to absolutely control, would vote
the same way on a given issue.
The existence or non-existence of "control",
whether de jure or de facto, according to the
meaning ascribed to the word by the CTC in an
interpretation which was reasonably open to it, is a
question of fact for the Commission to decide, as is
the question of "public interest" a matter of opin
ion for it to determine. So long, therefore, as there
was evidence upon which it could conclude as it
did, then there cannot have been an error of law
justifying this Court's interference with the order.
The appellants, through their counsel, have
raised a number of questions relating to the cor
rectness of the reasoning of the CTC in concluding
that United enjoys "at least joint effective control
of Okanagan ...." The reasoning and the conclu
sions are questions of fact which are not amenable
to appeal pursuant to subsection 64(2) of the
National Transportation Act, and should not,
therefore, be the subject of any comment or scruti
ny by this Court.
Accordingly, for all of the foregoing reasons, I
would dismiss the appeal.
RYAN J.: I concur.
KELLY D.J.: I concur.
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.