Preliminary Determinations Restricted to Pure Questions of Law – Federal Court of Appeal

In Rogers Communication Partnership et al v. Society of Composers, Authors and Music Publishers of Canada, 2016 FCA 28, the Federal Court of Appeal allowed the corporations’ appeal and SOCAN’s cross-appeal in part. The parties appealed the decision of Justice O’Reilly relating to preliminary determination of a question of law.

Underlying Action

Tariff 24 authorizes SOCAN to collect royalties on ringtones that are downloaded onto mobile devices that contain substantial portions of musical works in SOCAN’s repertoire. Rogers, Bell, and Quebecor Media brought the underlying action against SOCAN seeking to recover certain amounts they paid SOCAN pursuant to Tariff 24. SOCAN filed a defence and counterclaim against the corporations seeking payment of certain ringtone royalties they had refused to pay.

Prior Ligation

Tariff 24 has been the subject of extensive prior litigation. The Copyright Board’s decision to certify Tariff 24 was the subject of judicial review, which was upheld with the Supreme Court of Canada’s decision to deny leave to appeal. After the expiry of the tariff, the Board certified another tariff but this decision was not judicially reviewed.

SCC’s Recent Decisions

In light of the Supreme Court of Canada’s decisions in Rogers and ESA, relating to tariffs dealing with the downloading of video games containing musical works, the SCC ruled “musical works are not ‘communicated’ by telecommunication when they are downloaded.” Based on these decisions, corporations’ decided that Tariff 24 was without legal foundation and therefore stopped making payments to SOCAN pursuant to Tariff 24.

The corporations also brought an application to vary the Board’s Tariff 24 certifications pursuant to section 66.52 of the Copyright Act. The Board denied the corporations’ application concluding that it did not have the power to rescind. The Board’s decision to reject the 66.52 Application was not judicially reviewed. Instead, the corporations commenced the current action against SOCAN in the Federal Court.

Rule 220(1)(a) Order

Upon receipt of a consent motion in the present action, Justice Mactavish issued an order pursuant to Rule 220(1)(a) of the Federal Court Rules directing the preliminary determinations of six questions of law. Justice O’Reilly reformulated the six questions and answered them as follows:

1. The plaintiffs’ claim has not been finally decided against them.
2. The 2010 agreement between the plaintiffs and SOCAN does not prevent them from claiming the relief they seek.
3. The Internet transmission of a ringtone file does not constitute the communication of a musical work to the public.
4. The Board had jurisdiction to certify Tariff 24.
5. SOCAN has not been unjustly enriched by its receipt of Tariff 24 royalties.
6. The plaintiffs are not entitled to a tracing order.

Both SOCAN and the corporations appealed portions of Justice O’Reilly’s decision.

The FCA’s Findings

The FCA held that since Rule 220(1)(a) only authorizes the determination of questions of law, the standard of review is correctness. The Court emphasized that the questions to be answered under a Rule 220(1)(a) determination must be pure questions of law, “that is to say questions that may be answered without having to make any findings of fact”. The FCA further held that it is not required to answer any question that is not purely a question of law:

[56]  In conclusion, in my view, the Court need not consider the correctness of any of the Judge’s answers to questions that did not raise pure questions of law.

In considering question 1, the Court found that even though the FCA’s previous judicial review of Tariff 24 is final, and issue estoppel applies, the determination of whether it ought to apply was wrongly answered by Justice O’Reilly. Instead, the Court ruled that the discretion of whether to apply issue estoppel as a bar to the corporations’ claims ought to be decided by the trial judge.

At the hearing, SOCAN withdrew its appeal of question 3. The Court refused to determine questions 2, 5 and 6 holding that the Judge ought to have declined to answer these questions because they do not raise pure questions of law.

With respect to question 4, the Court found that Justice O’Reilly was correct in his determination that the Board had the jurisdiction to certify Tariff 24, which was a pure question of law.

The FCA’s decision is available here.