File No.: 32607 SUPREME COURT of CANADA (ON APPEAL FROM
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File No.: 32607 SUPREME COURT OF CANADA (ON APPEAL FROM THE FEDERAL COURT OF APPEAL) BETWEEN: BELL CANADA APPELLANT - and- BELL ALiANT REGIONAL COMMUNICATIONS, LIMITED PARTNERSHIP, CONSUMERS' ASSOCIATION OF CANADA, NATIONAL ANTI-POVERTY ORGANIZATION and PUBLIC INTEREST ADVOCACY CENTRE, MTS ALLSTREAM INC., SOCIETE EN COMMANDITE TELEBEC and TELUS COMMUNICATIONS INC. RESPONDENTS - and- CANADIAN RADIO-TELEVISION AND TELECOMMUNICATIONS COMMISSION INTERVENER (Respondent) AND BETWEEN: TELUS COMMUNICATIONS INC. APPELLANT - and- BELL CANADA, ARCH DISABILITY LAW CENTRE, BELL ALiANT REGIONAL COMMUNICATIONS, LIMITED PARTNERSHIP, CANADIAN RADIO-TELEVISION AND TELECOMMUNICATIONS COMMISSION, CONSUMERS' ASSOCIATION OF CANADA, NATIONAL ANTI-POVERTY ORGANIZATION and PUBLIC INTEREST ADVOCACY CENTRE, MTS ALLSTREAM INC., SASKATCHEWAN TELECOMMUNICATIONS and SOCIETE EN COMMANDITE TELEBEC RESPONDENTS MEMORANDUM OF ARGUMENT OF THE RESPONDENTS, CONSUMERS' ASSOCIATON OF CANADA, NATIONAL ANTI-POVERTY ASSOCIATION and PUBLIC INTEREST ADVOCACY CENTRE on both Appeals Date: February 12, 2009 Paliare Roland Rosenberg Rothstein Burke - Robertson LLP LLP Barristers & Solicitors Barristers & Solicitors 70 Gloucester Street 250 University Avenue, Suite 501 Ottawa, ON Toronto, Ontario K2P OA2 M5H 3E5 Richard P. Stephenson LSUC #286750 Robert E. Houston, Q.C. Ph.: (416) 646-4325 Ph.: (613) 566-2058 Fax: (416) 646-4335 Fax: (613) 235-4430 Email: [email protected] Email: [email protected] Ottawa Agents for Counsel for the Solicitors for the Respondents, the Respondents, Consumers' Association of Consumers' Association of Canada and Canada, National Anti-Poverty the National Anti-Poverty Organization Organization and Public Interest Advocacy Centre ORIGINAL TO: THE REGISTRAR COPIES TO: Blake Cassels & Graydon LLP Gowling Lafleur Henderson LLP Barristers and Solicitors Barristers & Solicitors Box 25 Commerce Court West 2600 - 160 Elgin Street 199 Bay Street Ottawa, ON Toronto ON M5L 1A9 K1P 1C3 Neil Finkelstein LSUC# 21640K Brian A. Crane, Q.C. Tel: 416-863-2266 Fax: 416-863-2653 Ph.: (613) 233-1781 n.t;lilJinf<~I~tGjn@Rlgk~§,~Qm Fax: (613) 563-9869 Email: [email protected][ David Kidd LSUC #18185R Tel: 613-788-2203 Ottawa Agents for Counsel for Bell David Kidd@l;>lakes.com Canada Catherine Beagan Flood LSUC #43013U Tel: 416-863-2269 Fax: 416-863-2653 c;;bt;l@Ql?kej).C::;.Qm Solicitors for Bell Canada Burnet, Duckworth & Palmer LLP Gowling Lafleur Henderson LLP Barristers and Solicitors Barristers & Solicitors 350 yth Ave. S.W., Suite 1400 2600 - 160 Elgin Street Calgary AB T2P 3N9 Ottawa, ON K1P 1C3 John E. Lowe Tel: 403-260-0257 Fax: 403-260-0332 Henry S. Brown, Q.C. [email protected] Ph.: (613) 233-1781 Fax: (613) 788-3433 Solicitors TEL US Communications Inc. Email: lJt;lNy.brQ\f\.In@gQwling~.~9n} Ottawa Agents for Counsel for Telus Communications Inc. AND TO: Torys LLP Anthony Mcintyre Barristers and Solicitors Canadian Radio-Television and Suite 3000, 79 Wellington St. W. Telecommunications Commission Toronto-Dominion Centre 1 Promenade du Portage P.O. Box 270, Stn. Toronto Dom. Gatineau, Quebec Toronto ON M5K 1 N2 K1A 4B1 Telephone: (819) 994-7572 Jo h n Laski n 119§_~h@tQ[Y~,.QQm FAX: (819) 953-0589 Afshan Ali aali@tory§~com E-mail: [email protected] Tel: 416-865-0040 Fax: 416-865-7380 Ottawa Agent for the Intevener, Canadian Solicitors for the Respondent, Canadian Radio-Television and Telecommunications Radio-Television and Telecommunications Commission Commission Cox & Palmer Barristers and Solicitors 1100 Purdy's Wharf Tower One 1959 Upper Water Street, P.O. Box 2380 Central Halifax NS B3J 3E5 Daniel M. Campbell, Q.C. Tel: 902-421-6262 Fax: 902-421-3130 dC_cJ[DQQ~Q2<fl9n§On .ca Solicitors for the Respondent, Bell Aliant Regional Communications, Limited Partnership Goodmans LLP Nelligan O'Brien Payne, LLP Barristers and Solicitors 1900 - 66 Slater Street 250 Yonge Street, Suite 2500 Ottawa ON K1 P 5H1 Toronto ON M5B 2M6 Dougald E. Brown Michael Koch Tel: 613-231-8210 Fax: 613-788-3661 Tel: 416-587-5156 Fax: 416-979-1234 [email protected] mKQQb@gQQcJfl19!l§.QQ Ottawa Agents for Counsel for the Solicitors for the Respondent, MTS Respondent, MTS Allstream Inc. Allstream Inc. Arch Disability Law Centre South Ottawa Community Legal 425 Bloor Street East Services Suite 110 406 - 1355 Bank Street Toronto ON M4W 3R5 Ottawa ON K1YH 8K7 Ivana Petricone, Executive Director Chantal Tie Tel: 416-482-8255 ext 226 Fax: 416- Tel: 613-733-0140 Fax: 613-733-0401 482-2981 Ottawa Agents for the Respondent, ARCH [email protected],Qg Disability Law Centre [email protected] Solicitor for the Respondent, ARCH Disability Law Centre Saskatchewan Telecommunications 2121 Saskatchewan Drive 1ih Floor Regina, Saskatchewan S4P 3Y2 Robert Hearsche RottGrt hearsche@§gsktel. S~~E Brian Armstrong Tel: 306-777-4509 Fax: 306-359-7475 Respondent Societe En Commandite Telebec 7151 Jean Talon Street East yth Floor Anjou, Quebec H1 M 3N8 Allen Mercier Tel: 514-493-5340 Fax: 514-493-5379 [email protected] Respondent TABLE OF CONTENTS PART 1- STATEMENT OF FACTS •••••.•..........•..••••.•.••...•..••..•••..••...••••..•.••••.•....•....•••••••.••......•.....•..........•....•.•...........•...•.....•..•. 1 A. OVERVIEW .................................................................................................................................................................. 1 B. BACKGROUND FACTS .................................................................................................................................................. 4 (i) The Creation of the Deferral Accounts .. , ......................................................................................................................4 (ii) Application of the Price Caps Decision to Locol Telephony Tariffs ............................................................................... 6 (iii) Disposition of the Deferral Accounts ............................................................................................................................ 7 (iv)Judicial History .............................................................................................................................................................8 PART 11- QUESTIONS IN ISSUE ..••.••••.•••.•......•...••.•..•..•...•..•.•••••.••...••....•••••••.•............••..•.•....•..•.•.......•.....••••..•••......•..•.•.•..••.. 9 PART 111- STATEMENT OF ARGUMENT •.•....•••••.•••.....•••.••••••••..•....•••••••.•...•.•.•.•.•..•.••....•.•.••••••••.•.•.•..•.•••.••...•.•.......••.•••..•.•.. 10 A. STANDARD OF REVIEW ............................................................................................................................................. 10 (i) The Question in Issue ................................................................................................................................................. 10 (ii) Applicoble Standard of Review .................................................................................................................................. 10 B. THE OPERATION AND RECONCILIATION OF DEFERRAL ACCOUNTS DOES NOT CONSTITUTE RETROACTIVE RATEMAKING ....................................................................................................................................................................... 11 (i) Purpose and Effect of Deferral Accounts ...................................................................................................................11 (ii) Deferral Accounts Consistent with the Achievement ofJust and Reasonable Rates .................................................. 15 (iii) None of the Appellants' Authorities Deal with the Issue in Question ......................................................................... 16 (iv) Deferred Taxes as an Example of the Operation of Deferral Accounts ...................................................................... 16 (v) U.S. Authorities ..........................................................................................................................................................18 C. THE PRICE CAP DEFERRAL ACCOUNTS WERE AN INTRINSIC ELEMENT OF THE PRICE CAPS SCHEME ......................... 20 (i) Purpose and Effect of Deferral Accounts within the Price Cops Scheme ................................................................... .20 (ii) The Possibility of Consumer Rebates in the Event of Positive Deferral Account Bolances was Always Understood... 2l (iii) Bell's Over-Collection of Taxes was Included in its Deferral Account ......................................................................... 23 D. THE APPELLANTS' CONDUCT THROUGHOUT THE PRICE CAP PERIOD IS INCONSISTENT WITH THE JURISDICTIONAL LIMITATION NOW ALLEGED ................................................................................................................................................. 25 (i) The Appellants Never Challenged the CRTC's Jurisdiction to Order Customer Rebates ............................................. 25 (ii) The /LECs Continued to Apply to the CRTC to Approve Disposition of Funds in the Deferral Accounts, Long After the Rates were made Final ....................................................................................................................................................27 E. SPECIFIC RESPONSES TO THE APPELLANTS' SUBMISSIONS REGARDING THE CRTC'S JURiSDICTION .......................... 28 (i) The Distinction between Interim and Final Rates has no Impact on the Disposition