Supreme Court of Canada
Ingersoll Telephone Co. v. Bell Telephone Co. of Canada, (1916) 53 S.C.R. 583
Date: 1916-06-24
The Ingersoll Telephone Company and Others Appellants;
and
The Bell Telephone Company of Canada Respondents.
1916: June 14; 1916: June 24.
Present: Sir Charles Fitzpatrick C.J. and Davies, Idington, Anglin and Brodeur JJ.
ON APPEAL FROM THE BOARD OF RAILWAY COMMISSIONERS FOR CANADA.
Railway Board—Powers,—"Railway Act" and amendments—Bell Telephone Co.—Use of long distance lines—Compensation—Loss of local business—Competing companies—Special toll.
Under the provisions of the "Railway Act" and its amendment by 7 & 8 Edw. VII., ch. 61, the Railway Board has power to authorize a charge in addition to the established rates of the Bell Telephone Co. as compensation for the use of its long distance lines. Idington J. contra.
By said Acts the Board is authorized to provide compensation to the Bell Telephone Co. for loss in its local exchange business occasioned by giving independent companies long distance connection. Davies and Idington JJ. contra.
The Board has power also to authorize payment of a special rate by companies competing with the Bell Co. who obtain the long distance connection, though non-competing companies are not subjected thereto. Idington J. contra.
APPEAL from the Board of Railway Commissioners for Canada, by leave of the Board, on certain questions of law.
Said questions of law are the following:—
1. "Whether the Board had power, under the Railway Act' and amending Acts, to authorize the charging of any additional toll or charge outside the established rates of the Bell Telephone Company of
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Canada as a condition precedent to or compensation for the use of long distance lines of the said Bell Telephone Company of Canada.
2. " Whether the Board is authorized, under the 'Railway Act' and amending Acts, to give compensation in respect of the loss of business to the Bell Telephone Company's local exchange business, occasioned by giving independent companies long distance connection.
3. "Whether the Board has power to authorize the payment of a special toll as a condition precedent to companies competing with the Bell Telephone Company obtaining long distance connection with the Bell Telephone Company while not subjecting non-competing companies to a like toll in view of the provisions of the Act relating to discrimination."
Gamble K.C. for the appellants referred to the London Interswitching Case, Grand Trunk Railway Co. v. Canadian Pacific Railway Co. and the City of London[1].
Cowan K.C. and Hoyles for the respondents.
The Chief Justice.—The Bell Telephone Company, hereafter referred to as the Company, operating under a federal charter, carries on business throughout Canada. At its origin the company established a system of telephone lines to serve the local needs of cities, towns and villages, and, as the necessities of its customers increased, long distance lines were built to connect those localities with one another and with localities similarly situated in the United States. Finally, the system developed to such an extent that practically the whole Dominion east of Port Arthur
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was provided with a complete telephone service operated free from public control, and, consequently, without regard for the public convenience, except in so far as consistent with the interests of its shareholders. In the course of this development, the desire for telephone service spread so that, to satisfy the wants of rural municipalities, which were dissatisfied with the service rendered, small local companies were organized, sometimes in competition with the local exchanges of the Company, and, in some instances, in places to which the latter had not furnished a service; those companies so established are known in these proceedings as "independent companies."
In the course of time, the communities served by the independent companies desired closer connection, but presumably the capital and experience necessary to establish and profitably maintain the connecting links were not available. A convenient way to satisfy that desire was found in the Company's long distance system. Apparently, the latter company, not anxious to satisfy the wants of their local competitors, refused the relief asked for, hence the usual agitation, resulting in an application to Parliament for the appointment of a parliamentary commission of inquiry, and, on the report of that commission, an Act was passed the purpose of which, as disclosed by the title, was to bring telegraph and telephone companies under the jurisdiction of the Board of Railway Commissioners.
By that Act, ch. 61, 7 & 8 Edward VII., complete control was given to the Board for the regulation of the business of the Company.
By section 4, sub-section 5, of the Act, it is provided, in substance, that any company, province, municipality or corporation, having authority to construct and operate a telephone system, and which desires to be
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connected with and to use any long distance telephone system then in existence, and whether such company is under the control of Parliament or not, may apply to the Board, if no private agreement can be obtained, for relief, and the Board may, in the words of the section,
order the company (i.e., the company which owns, controls, or operates the long distance telephone system) to provide for such use, connection or communication upon such terms as to compensation as the Board deems just and expedient, and may order and direct, how, etc., when, where and by whom, etc. * * *
By sub-section 6 of section 4 it is provided that the Board shall, in addition to any other consideration affecting the case, take into consideration the standards of efficiency and otherwise of the apparatus and appliances of such telephone systems or lines, and shall only grant the leave applied for in case and in so far as, in view of such standards, the use, connection or communication applied for can, in the opinion of the Board, be made or exercised satisfactorily and without undue or unreasonable injury to, or interference with, the telephone business of the Company.
So that, in effect, the statute provides for the use by local companies of long distance lines on two conditions: (1) The Board must be satisfied, as a condition precedent, that the apparatus of the applicant company is of such a standard as to efficiency or otherwise as to permit the use or connection without undue or unreasonable injury to the long distance line; and (2) the Board may order the connection with and the use of the long distance line upon such terms as to compensation as it deems just and expedient.
It is quite obvious that the Act, whilst giving the Board absolute power of control over all companies for the purpose of regulating the interchange of business
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in the public interest, has been careful to require a proper standard of efficiency with respect to equipment and provides for the protection of the rights of the shareholders of the Company, whose property may be appropriated to the use of the independent companies. But the statute does not contemplate the regulation by the Board of competition between public service corporations, and I can find nothing in the reasons given by Commissioner McLean, speaking for the majority of the Board, to justify the assumption that the Board attempts to do anything in that direction.
I quite agree with the late Chief Commissioner Mabee, who said that in most public services competition is desirable in the public interest, but a duplicating of telephone systems is a nuisance. What is required and what the Act contemplates is efficient regulation of the conditions under which the telephone companies are to co-operate in the exchange of business facilities.
In 1911 an application was made to the Board, under the Act, by several independent companies, for permission to connect with and use the long distance line of the Company. At the time about 378 private contracts had been made for that purpose, and, as a result of that application, it was ordered that the Company should connect its long distance telephone system or line with the lines of the applicant companies, subject to certain conditions as to cost of building the connecting lines. The order also provides for the payment to the Company on outbound traffic of a connecting toll of fifteen cents for each long distance message originating upon the lines of the applicant companies and transmitted over the line of the Company, in addition to their long distance tariff.
It is to be noticed that what is called "inbound traffic"—that is to say, traffic originating upon the
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Company's system destined to local points upon the lines of the various applicants—is exempt from this toll.
So that, in substance, it was decided that, if the apparatus of the applicant companies was of the required standard of efficiency, the long distance line built and operated at the expense of the shareholders and subscribers of the Company should, with its staff of operators, be placed at the service of the applicant companies subject to the conditions above mentioned.
It was provided at the same time that this order was to remain in force for a period of at least twelve months, leave being reserved to move to rescind or vary the order at the expiration of that period should any of the parties so desire. Taking advantage of this reservation, the Company asked to have the order rescinded. The independent companies, in reply to that application, asked to have the order maintained, and, at the same time, said that the charges for long distance connection have been and are unfair to the shareholders of those independent systems inasmuch as the toll for long distance connection is altogether too large. There is apparently no complaint with respect to the charge for connecting the lines.
As the result of that application an order was made by the Board providing for, as regards non-competing companies, (1) payment of an annual charge by way of compensation for loss to the Company, as well as for the factor of convenience to the independent subscriber; (2), as regards competing companies, an annual charge is imposed and also a surchage of ten cents on each communication.
The Chief Commissioner dissented from the order, and, in those circumstauces, the following questions are put to us:—
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1. Whether the Board had power under the "Railway Act" and amending Acts to authorize the charging of any additional toll or charge outside the established rates of the Bell Telephone Company of Canada as a condition precedent to or as compensation for the use of long distance lines of the said Bell Telephone Company of Canada.
2. Whether the Board is authorized under the "Railway Act" and amending Acts to give compensation in respect of the loss of business to the Bell Telephone Company's local exchange business occasioned by giving independent companies long distance connection.
3. Whether the Board has power to authorize the payment of a special toll as a condition precedent to companies competing with the Bell obtaining long distance connection with the Bell, while not subjecting non-competing companies to a like toll in view of the provisions of the Act relating to discrimination.
I would answer them all in the affirmative.
I am of opinion, as I have already said, that the evident intention of Parliament was to give the Board, in the public interest, absolute power to regulate this public utility, which has grown to be almost an essential factor in the every-day life of the whole community, and for that purpose has conferred the widest discretion upon the Board. In that view I fail to see the practical use of this reference, but the questions are before us and must, therefore, be dealt with.
The statute authorizes the Board to oblige the Company to: (1) Give a connection with its long distance line to local companies; (2) to give those local companies the use of its long distance line for the benefit of the subscribers of such local companies.
In other words, the Board is authorized to expropriate the Company for the benefit of the independent companies, but the Act provides, as common sense and the general principles of law applicable in like cases require, that this may only be done
upon the condition that the equipment of the connecting company shall be such as not to impair the efficiency of the service and upon such terms as to compensation as the Board may deem "just and expedient."
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In other words, the statute requires that the Company should not, in the language of the Quebec Code, be compelled to give up its property
except for public utility and in consideration of a just indemnity previously paid.
I, therefore, construe the Act to mean that power is given the Board to expropriate the Company, to a limited extent, for the benefit of those independent companies, provided it can be done consistently with an efficient service and upon payment of compensation. And large discretionary powers are given with regard to the compensation to be paid by the use of the words, "just and expedient." That is to say, it is left to the commissioners to decide what compensation is, in all the circumstances, "just and expedient" for the use of the connection or communication. If an additional toll or charge, outside of the established rates of the Company, is, in the opinion of the commissioners, necessary to compensate that company for the use of its long distance line, then the statute authorizes the Board to make that charge.
I have no doubt also that the statute authorizes the Board to give compensation with respect to the loss of business of the Company occasioned by giving to local companies long distance connection, and also to make a distinction between the local companies which are called competing companies and those known as non-competing companies.
Speaking of the conditions under which the Company carries on its operations, Commissioner McLean, who delivered the opinion of the majority of the Board, says:—
In the annual payment made by each of the Bell Telephone Company's subscribers there is, in reality, included some contribution not only to the initial cost but also to the maintenance cost of the Bell
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long distance equipment. * * * In the Bell annual local service no particular part of the charge is ear-marked for the long distance service, although the long distance is part of the general service which all the earnings assist in maintaining. * * * There is aflat annual service charge. The contribution towards initial and maintenance cost which is contained in the annual payment of the Bell Telephone subscriber is a factor which is peculiar to the Bell Telephone Company subscriber, and is not properly allocatable to the user of the independent telephone who may for the time being be using the Bell long distance equipment. In the case of the Bell subscriber there is a question of joint costs, some contribution to long distance cost being made by an actual user of the local telephone service, who is also an actual or a potential user of the long distance service.
If, as found by the Board—and the fact is not disputed—the long distance line is a charge on the whole Bell system because it was built out of the general capital and is maintained at the expense of the profits made out of the operation of the local exchanges, then it would seem "just and expedient" that, in fixing the compensation to be paid for the use of that long distance connection by a company which has not contributed either to the initial cost or to the maintenance cost, the factor of competition as it is described in the question, with the local exchange should be considered.
In other words, if the long distance lines are, as we must assume, when built, a charge on the Company shareholders and subscribers, and if in their operation a loss is incurred which must be borne by the local Bell Telephone exchanges, then is it not just and equitable that the independent company operating in the same area as the local exchange should also contribute by the surcharge to that loss in the upkeep of the long distance line which is placed by the Board at their disposal ? The subscription of the Bell customers being, of course, fixed by the charges which the Company has to meet for the upkeep of its whole system, which includes the long distance and local service, then it is just and expedient that the share-
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holders of the independent companies who have the use of the same service should also contribute by the surcharge to the maintenance of the long distance service.
If the Commissioners deem it expedient to place those localities to which the Company has not given a local service on a more favourable footing, it is within their discretion so to do.
Davies J.—The three questions of law which are submitted for our consideration and answer by the Board of Railway Commissioners do not call for or justify any consideration on our part of the desirability or undesirability of duplication and competition, which were referred to and discussed shorty at the argument. Those are matters entirely for the Board to consider and weigh in coming to their conclusions.
We are asked substantially:—
(1) Whether the Board had power to authorize the charge of an additional toll outside of its established rates by the Bell Company in part compensation for the use of its long distance line.
(2) Whether the Board can give compensation to the Bell Company in respect of its possible loss of local exchange business occasioned by giving independent companies long distance connection; and
3. Whether the Board has power to authorize the charge of a special toll to competing companies without subjecting non-competing companies to a like toll.
The answers we are to give to these three questions depend upon the construction we give to sub-sections 5 and 6 of section 4, 7 & 8 Edw. VII., ch. 61, and such parts ;of the "Railway Act" as may apply.
It seems to me, in construing these sections, that two things have to be decided by the Board:—First,
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whether the application for long distance use and connection should be granted at all; and, next, if so, upon what terms as to compensation.
Sub-section 6 expressly enacts that the Board shall, in addition to any other consideration affecting the case, take into consideration the standards as to efficiency and otherwise of the apparatus and appliances of the applicant's telephones, systems or lines, and shall only grant the leave when, in view of such standards, the connection asked can be
exercised satisfactorily and without undue or unreasonable injury to or interference with the telephone business of the company,
with which connection is sought.
I would construe this section as prohibiting the granting of the connecting order unless the Board, after considering everything affecting the matter of the application, including the applicants' standards of efficiency of its apparatus and appliances, was satisfied that the connection and use sought would not unduly injure or interfere with the telephone business of the company sought to be connected with.
The Board must, before granting the order, be satisfied that no such undue injury will result from granting the connection asked for.
If they cannot so satisfy themselves, they should not grant an order at all.
The language of the 5th sub-section is permissive—may order the connection sought. That of the 6th sub-section is conditional—they shall only grant when under certain conditions specified they find the granting of the order will not cause undue or unreasonable injury to the business of the long distance company.
When they have so decided, then and then only can they proceed to the question of compensation. It is not a question to be determined that there shall be
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no loss to the long distance company, but that there shall not be undue or unreasonable loss to the business of the company. Some lose evidently was contemplated as naturally arising from the granting of the connecting order. If that loss would constitute "undue or unreasonable interference with the telephone business of the company," the order should not be made.
The 6th sub-section provided for the conditions under which the order should or should not be made, and the 5th sub-section for the compensation which should be granted if and when made.
Commissioner McLean construed the 6th sub-section as confined to injury or interference with the company's business arising out of the use of improper appliances by the connecting company.
I cannot put such a narrow construction upon it, in view of the language used:—
Upon any such application the Board shall in addition to any other consideration affecting the case take into consideration the standards, etc.
These latter were, from being specially mentioned' no doubt very important factors for the Board to consider; but they constituted only one factor
in addition to any other consideration affecting the case.
The result of my construction would be that no order should be granted in any case where it was found that it would result in undue or unreasonable interference with the company's business, and that, where such a result was not found and the order was made, the compensation which the 5th sub-section authorized them to award as just and expedient was confined to compensation "for the use, connection or communication" granted, as expressed in the sub-section, and did not authorize compensation for losses which possibly
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or probably would or might be caused to the company with which the connection was ordered in its local exchange business. I am quite in accord with Sir Henry Drayton's statement, in his reasons for the dissenting opinion he delivered, that he was "unable to read the somewhat extended clause here applicable as creating a new and novel law of compensation covering the business losses suffered by one public service corporation as the result of competition with another public service corporation."
I agree with him that these possible business losses were not matters the Board was concerned with unless they were found so great as to justify the refusal of the order, as before explained, and that, as Sir Henry puts it,
compensation for the actual use, connection or communication for the actual facilities supplied and for its subsequent use
is all that the Board can consider and award.
I will not elaborate the matter further, but, in view of what I have said, would answer the questions as follows:—
In answer to the first question:—Yes.
(2) In answer to the second question:—No.
(3) In answer to the third question:—Yes.
I answer the third question in the affirmative because of the special reasons for its insertion in the order as explained by the Assistant Chief Commissioner in his written reasons, concurred in by the other commissioners, except the Chief Commissioner. It seems to have been a clause expressly desired by the appellants and agreed to by respondents, and was not a clause inserted in the order by the Board of its own volition, but simply because it was agreed to by the parties themselves.
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Idington J.—This appeal suggests we should once more turn to the rules in Heydon's Case[2], to be found in Craies' Hardcastle at page 104 (2 ed.), and have regard especially to the holding following them expressed as follows:—
And then the office of all the judges is always to make such construction as shall suppress the mischief and advance the remedy, and to suppress subtle inventions and evasions for the continuance of the mischief and pro privato commodo, and to add force and life to the cure and remedy according to the true intent of the makers of the Act pro bono.publico.
What was the mischief intended to be remedied by the enactment in 1906, 6 Edw. VII., ch. 42, sec. 31, and substituted by 7 & 8 Edw. VII., ch. 61, sec. 4, sub-sec. 5?
That suggests another question:—What was the mischief intended to be remedied by the "Railway Act's" provisions constituting a Board of Railway Commissioners?
Was it not that the railway companies had forgotten that they owed a duty to the public to furnish facilities for traffic, interchange of traffic, and equality of treatment, both as to rates and otherwise, of everyone offering them business?
It was, no doubt, shocking to the minds of those railway managers, who acted in the single pursuit of what they imagined was their only interest and duty, to be told that they must serve the public, and each member of the public, upon the same basis of compensation and accommodation, and give every facility for accomplishing that service, no matter if it should turn into a rival's lines part of the haulage they had previously deemed their own preserve.
To enforce these obligations the Board of Railway Commissioners was created.
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And when the principles in question had been thus by law established and thus enforced, it seemed to open to Parliament the way for applying similar treatment to the respondent and other like companies dealing not in haulage, but means of communication.
Their rivals in business insisted that it was the public that was to be served and facilitated in business, and, in order that the public might be properly served, connections must be made.
The cases were so much alike; the remedies to be applied so much alike; and the interference with vested rights, bringing liabilities to losses of business to be reaped by upstart rivals, so much alike, that it would seem as if Parliament had only to recognize these facts and then place the telephone companies under the jurisdiction of the Board.
Of course, all that was very shocking to those who had, by the gracious wisdom of Parliament, acquired valuable rights over public highways without giving any compensation or even asking leave of those concerned.
It would seem, however, after having been so favoured, that the public in many cases was not adequately served or charged too much for the service, and hence I gather there sprang up local rivals, more willing to serve or more moderate in charges, or possibly both.
It is suggested even municipalities and provinces were possibly willing to supply the needed want of rural telephone service especially.
Parliament deemed it proper that the respondent and others should not refuse those rivals proper and efficient service, and ordered accordingly, by amending the "Railway Act," and by making the provisions of that Act applicable as follows:—
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The several provisions of the "Railway Act" with respect to the jurisdiction of the Board, practice and procedure, upon applications to the Board, appeal to the Supreme Court or the Governor-in-Council, offences and penalties, and the other provisions of the said Act (except sections 9, 79 to 243, both inclusive, 250 to 289, both inclusive, 294 to 314, both inclusive, 348 to 354, both inclusive, 361 to 396, both inclusive, 405 to 431, both inclusive), in so far as reasonably applicable and not inconsistent with this part or the special Act, shall apply to the jurisdiction of the Board and the exercise thereof, created and authorized by this Act, and for the purpose of carrying into effect the provisions of this part according to their true intent and meaning and shall apply generally to companies within the purview of this part.
Of those enactments thus made applicable in principle, there appear, under the caption of "Equality," a number of sections which the order appealed against seems to me to clearly transgress.
And let it be observed that in the first two lines of section 5 I have just quoted, it is "with respect to the jurisdiction of the Board," these parts of the "Railway Act" stand effectual.
Why did Parliament so enact if it intended in truth to help respondent to squeeze rivals out of existence by means of gross inequalities of tolls and impositions?
Clearly, each of these companies had gathered together, by local influence and energy and low rates, a business that the respondent might have had, but, for want of energy or timidity or excessive charges, had failed to acquire and hold. And that business must be paying its way, but possibly doing no more. And this inequality (expressed in the order now complained of), in defiance of what the provisions of the "Railway Act," by being left applicable thereto, surely intended to be the measure of the Board's jurisdiction, may enable the respondent to reap where it had not sown.
Such a clear purpose cannot be swept away by the interpretation of the words,
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and the Board may order the company to provide for such use, connection or communication upon such terms as to compensation as the Board deems just and expedient, etc.
If Parliament really intended to compensate by the destruction of other companies, it should and, no doubt, would have said so.
Moreover, I repeat, it was the public that was to be served and that upon an equal basis of service was what Parliament had in view.
It never could have intended that rural subscribers to the only 'phone company they could get in communication with, were to be penalized for so subscribing.
It is not a question of the rate compensating, for admittedly the ordinary rate would be ample for the service, and needs no surcharge, unless when people have been wicked enough to ignore the respondent.
Substantially such things as set up by respondent happened many times to rival railway companies in the administration of the "Railway Act" in the new departure made, and intended to make the companies realize that it was the public service that must be the key note of their conduct towards each other.
The London Inter switching Case[3], when before this court, seemed to me a pretty strong application of the principles invoked therein, and on the basis adopted below for doing justice herein seemed possibly to work an injustice, but I never doubted the correctness of the law as laid down by the late Mr. Justice Killam, acting as Chief Commissioner of the Board, and maintained by this court.
That kind of thing resulting from this sort of legislation never can have been conceived as an injustice by the legislature enacting it. They recognize it may
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today work apparent injustice in one place and give a compensating advantage in another. And, if not, the march of events can take no account of such gains or losses as injustice.
And when Parliament imposed upon the Board the duty in question of fixing a just compensation, it never could have intended the Board to do more than the words mean, a just compensation for a service which cannot be measured in one town or township by one method or measure and an entirely different method or measure resulting in lower charges for the service in the next town or township, perhaps further away.
The limited power or jurisdiction of the Board to try and do justice, in making its orders, by importing into the business in hand a something not provided in the Act, but yet a smoothing out of the crudities of the legislature and avoiding injustice, was well illustrated in the case of. The Grand Trunk Pacific Railway Co. v. City of Fort William[4], where the Board, on an application to run over a public street, imposed the condition that the adjoining owners on the street should be compensated.
The majority of this court held that, by virtue of the power in section 47 to make conditional orders, the order of the Board might be upheld. But this was reversed by the Judicial Committee of the Privy Council, holding such an order null.
It strikes me this attempt to do justice as an incident to fixing a just compensation stands on similar legal footing.
The only difference I see is that there the Board attempted to grapple with a hoary-headed species of injustice, and here the quality of the justice is not by any means so clear.
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All the Board has power to deal with is to fix a just compensation for the service if the thing be expedient. We must try and reach the common-sense meaning rather than, by cutting sentences into slices, try to extract a meaning from a legislator's language which would startle him.
Expedient compensation can mean nothing. The draftsman evidently had reference to the occasion and expense relevant to the connection, if expedient, and not the measure of compensation for the service itself once that connection made or ordered to be made.
I think the Board had no power to import into their consideration the question of competition, for a competitor serving the public is entitled, in performing such service, to get the accommodation and service and be treated as if not a rival.
The appeal should be allowed with costs and the questions answered accordingly.
I respectfully submit the first question is ambiguous and can hardly be answered by a simple yes or no. My opinion is that there can be no discrimination in favour of respondent or any one else, or as against anyone. But it may be necessary to alter the established rates from time to time to award proper compensation, and that is within the jurisdiction of the Board.
The other two questions I answer in the negative.
Anglin J.—Three questions are submitted by the Board of Railway Commissioners for the opinion of the court. While these questions, as framed, are rather questions of jurisdiction than of law, and as such more properly the subject of an appeal by leave of a judge of this court, they may perhaps be regarded as substantially asking the opinion of the court upon the question whether, in determining the amount of compensation
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which should be paid, under sub-section 5 of section 4 of 7 & 8 Edw. VII. ch. 61, to the Bell Telephone Company by independent telephone companies given the advantage of connection with the trunk lines of the former company, the effect upon its local business should be taken into consideration.
By sub-section 5 the Board is empowered
To order and direct how, when, where and by whom and upon what terms and conditions (the) use, connection or communication (of, with or through long distance lines) shall be had, constructed, installed, operated and maintained.
And
To order the company (i.e., the company owning the long distance lines) to provide for such use, connection or communication upon such terms as to compensation as the Board deems just and expedient.
The clause of the sub-section first quoted covers all "terms" other than those as to compensation. The only "terms" dealt with in the clause last quoted are those "as to compensation." While the Board is authorized to direct the company
to provide for such use, connection or communication,
it is not for this service that it is empowered to order compensation, which, in that case, might mean merely "remuneration," but, as a condition of directing that such use, etc., shall be provided, the Board is authorized to impose "compensation," i.e., indemnification to the company directed to provide it. Murray defines "compensate" as meaning "to counterbalance, make up for, make amends for," and "compensation" as "amends or recompense for loss or damage." We are perhaps most familiar with the use of the term "compensation," both in legislation and jurisprudence, in regard to the expropriation of property for public uses. Mr. Cripps, in his work on Compensation (5 ed.), p. 102, dealing with land expropriated, says:—
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The principle of compensation is indemnity to the owner. * * * The question is not what the persons who take * * * will gain by taking it, but what the person from whom it is taken will lose by having it taken from him.
See, too, Brown and Allen on Compensation (2 ed.), p. 97, and authorities cited by both authors.
If mere payment or remuneration for the service to be rendered were what Parliament intended should be allowed, that idea would have found expression in some phrase very different from, and much more restricted in its scope, than
upon such terms as to compensation as the Board deems just and expedient.
I also agree with the view expressed by Mr. Commissioner McLean that the addition of the word "expedient" after the word "just" affords a strong indication that it was the purpose of Parliament to entrust to the Board the widest discretion, not merely as to the amount of the compensation to be directed, but also as to the elements which should be taken into account in fixing it.
There can be little doubt that, in determining the prices to be charged for telephones to local subscribers, the Bell Telephone Company takes two elements into account, the value and cost of the local service and the value and cost of the long distance service. A company which does not maintain or provide a long distance service cannot reasonably exact as high a price for telephones from its subscribers and it can well afford to furnish local service at a lower rate. I confess that I fail to appreciate the justice of a demand that the Bell Telephone Company, which owns and maintains long distance lines, shall place them at the disposal of other and rival companies on any terms other than indemnification against loss or damage which it may sustain in consequence. Should it be
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obliged to so so, the probable result in places where the Bell Telephone Company operates a local exchange in competition with an independent company would be either an actual discrimination against Bell subscribers or a compulsory reduction by the Bell Company of its charge for local telephones to the level of the charge made by the company without long distance lines. As is well known, the existence of competition is treated in the "Railway Act" as affording justification for a difference, in railway rates which would otherwise be obnoxious to the anti-discrimination provisions of that statute.
These latter considerations do not apply to independent companies within whose territory the Bell Company does not operate local exchanges. They afford reasonable ground for differentiation in the compensation to be made by companies of the two classes.
I would, for these reasons, answer the questions submitted in the affirmative.
Brodeur J.—This is a reference by the Board of Railway Commissioners under the provisions of the "Railway Act." The questions which are submitted are the following:—
1. Whether the Board has power, under the "Railway Act" and amending Acts, to authorize the charging of an additional toll or charge outside the established rates of the Bell Telephone Company of Canada as a condition precedent to or as compensation for the use of long distance lines of the said Bell Telephone Company of Canada.
2. Whether the Board is authorized, under the "Railway Act" and amending Acts, to give compensation in respect of the loss of business to the Bell Company's local exchange business, occasioned by giving independent companies long distance connection.
3. Whether the Board has power to authorize the payment of a special toll as a condition precedent to companies competing with the Bell Telephone Company obtaining long distance connection with the Bell Telephone Company, while not subjecting non-competing companies to a like toll in view of the provisions of the Act relating to discrimination.
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There is no doubt with regard to the answer to be given to the first question. It should be in the affirmative. The Board of Railway Commissioners, by section 4 of chapter 61, 1908, has the power to determine the tolls that are to be charged by any telephone company. That power is as wide and general as possible, and the tolls can be increased or reduced according to circumstances.
That question, however, does not cover the main issues in this reference, for that reference has been made with the purpose of ascertaining whether the Bell Telephone Company was entitled to compensation for the loss of its local exchange business occasioned by giving the appellant companies long distance connections and whether there should be discriminating rates or tolls between competing and non-competing companies.
It was found by Parliament, after careful investigation and inquiry, that the Bell Telephone Company had first built its service lines in cities and towns and then in villages. Connecting trunk lines had been made and long distance connections had been established between those various towns, cities and villages as the public required.
In some rural municipalities the local people interested, finding themselves without telephone service, had local companies formed for the purpose of serving their locality. The service which those companies were giving was not very dear, because they had no long distance lines to keep and maintain. Sometimes, too, those local companies were established because they thought that the service given by the Bell Telephone Company was too expensive.
It was found, however, at one time that those local companies, being deprived of long distance connections, were not giving to their customers as good service
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as the Bell Telephone Company. The Parliament was then seized of the request that the Bell Telephone Company should be bound to give the use of the connection or communication of their long distance lines to the subscribers of those local companies. But Parliament, in granting that power of expropriation to the local companies over the lines of the Bell Telephone Company, decided by sub-section 5 of section 4 of the Act of 19.08, ch. 61, that the Board of Railway Commissioners could order the Bell Telephone Company
upon such terms as to compensation as the Board deems just and expedient
to provide for such use, connection or communication.
The Board dealt with the question in 1911, after having heard all parties interested, and determined the compensation which was to be paid, and, according to the views expressed by the then Chief Commissioner, Mr. Mabee, they determined that the compensation should cover all the damages which could be suffered by the Bell Telephone Company, including damages arising out of the loss to the Bell Telephone Company of its local exchange business.
In 1913 a new application was made by the appellants in this case, asking connections with the Bell Telephone Company on their long distance line.
All these appellant companies are in their locality competing lines with the Bell Telephone Company. The majority of the Board of Railway Commissioners were of the opinion that permission should be given to use the long distance lines of the Bell Telephone Company on the condition, amongst others, that they should compensate the Bell Telephone Company for the loss of its local exchange business.
I am of opinion that this order has been rightly issued. Parliament was very willing to give to those
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local companies the right to use long distance lines, but on the condition that they should compensate the Bell Company for all damages arising out of that use.
It has been found as a question of fact by the Board that the Bell Company's subscribers contributed not only to the initial cost, but also to the maintenance of the Bell long distance equipment. If the Bell Company, then, wants to maintain its long distance lines, it has to levy upon its subscribers a certain rate which is necessarily higher than the rate charged by the local companies, those companies having no long distance lines to maintain.
It is pretty evident that if the subscribers of the local companies have the same advantage as the Bell subscribers for long distance connections, all the business done locally by the Bell Company will necessarily disappear, because no subscriber, for example, will pay twenty dollars per year to the Bell Company, if they can get for a smaller price the same local and long distance connections in subscribing to the local companies.
That matter had to be considered by the Board, and I think that, under the powers which are given by the statute, the Board had the right to take into consideration the compensation for the losses which the Bell Telephone Company was going to incur as a result of giving long distance connections.
The compensation contemplated by the statute covered the interference with any private right appurtenant to the property expropriated. The value of the property of the Bell Telephone Company is reduced by the long distance connections which are granted to those local companies, and should then be made the subject of compensation. Halsbury, vol. 6, p. 47.
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I would be, then, of opinion that the second question should be answered in the affirmative.
These same reasons would apply to the third question, which should also be answered in the affirmative.
The appellant should pay the costs of this reference.
Appeal dismissed with costs.
Solicitors for the appellants: C. & H. D. Gamble.
Solicitor for the respondents: Hugh L. Hoyles.