Re:Sound v. Fitness Industry Council of Canada

Re:Sound v. Fitness Industry Council of Canada
Court (s) Database
Federal Court of Appeal Decisions
Date
2014-02-24
Neutral citation
2014 FCA 48
File numbers
A-353-12
Notes
Reported Decision
Decision Content
Date: 20140224
Docket: A-353-12
Citation: 2014 FCA 48
CORAM: EVANS J.A.
TRUDEL J.A.
WEBB J.A.
BETWEEN:
RE:SOUND
Applicant
and
FITNESS INDUSTRY COUNCIL OF CANADA and GOODLIFE FITNESS CENTRES INC.
Respondents
Heard at Toronto, Ontario, on November 19, 2013.
Judgment delivered at Toronto, Ontario, on February 24, 2014.
REASONS FOR JUDGMENT BY:
EVANS J.A.
CONCURRED IN BY
TRUDEL J.A.
WEBB J.A.
Date: 20140310
Docket:
A-353-12
Citation: 2014 FCA 48
CORAM: EVANS J.A.
TRUDEL J.A.
WEBB J.A.
BETWEEN:
RE:SOUND
Applicant
and
FITNESS INDUSTRY COUNCIL OF CANADA and GOODLIFE FITNESS CENTRES INC.
Respondents
REASONS FOR JUDGMENT
EVANS J.A.
Introduction
[1] Section 19 of the Copyright Act, R.S.C. 1985, c. C-42 (Act) entitles performers and makers of sound recordings to an equitable remuneration from those who use these recordings in a public performance.
[2] Re:Sound is a not-for-profit collective society authorized under the Act to administer the performance rights of performers and record labels in sound recordings. In particular, Re:Sound collects and distributes equitable remuneration on behalf of performers and makers of sound recordings of musical works in accordance with royalty tariffs certified by the Copyright Board (Board).
[3] In a decision dated July 6, 2012, the Board approved Re:Sound Tariff No. 6.B – Use of Recorded Music to Accompany Physical Activities, 2008-2012 (Tariff 6.B). Tariff 6.B prescribes the amount of equitable remuneration to be collected by Re:Sound from those using published sound recordings of musical works to accompany fitness classes, skating, dance instruction, and other physical activities.
[4] Tariff 6.B requires fitness centres to pay an annual flat fee to Re:Sound for each venue where recorded music in Re:Sound’s repertoire is used in conjunction with fitness classes. The Board based the royalty on the average of the payments made by fitness centres under agreements with the Society of Composers, Authors and Music Publishers of Canada (SOCAN) for the composers, lyricists, and music publishers of recorded music to accompany dance instruction and fitness activities, in lieu of the amounts set in SOCAN Tariff 19 – Use of Recorded Music to Accompany Dance Instruction and Fitness Activities, 2011-2012 (SOCAN Tariff 19).
[5] Re:Sound has brought an application for judicial review to set aside Tariff 6.B. The application is opposed by the respondents, the Fitness Industry Council of Canada (FIC), the industry’s trade association, and Goodlife Fitness Centres Inc. (Goodlife), a major player in the fitness industry. They had participated in the proceedings before the Board as objectors to Re:Sound’s proposed Tariff 6.B.
[6] Re:Sound alleges in its application for judicial review that the Board committed three errors in setting the royalty rates for the use of recorded music to accompany fitness classes: (i) it breached the duty of fairness by basing Tariff 6.B on a ground that was not considered during the hearing and on evidence that Re:Sound had no opportunity to address; (ii) it erred in law when it interpreted the Act as providing that royalties under section 19 should be based, not on the number of all recordings used in fitness classes that are eligible for equitable remuneration, but on the percentage of those for which the performers or makers had authorized Re:Sound to collect royalties on their behalf; and (iii) it set the royalty at an unreasonably low level.
[7] For the reasons that follow, I would allow the application for judicial review on the ground that the Board breached the duty of fairness. However, I am not persuaded that the Board committed a legal error when it reduced the section 19 royalties payable to Re:Sound to reflect the percentage of eligible recordings used in fitness classes that performers or makers had brought into Re:Sound’s repertoire by authorizing it to act on their behalf. Since I have concluded that the Board must redetermine the royalty after hearing additional submissions, it is unnecessary to opine on the reasonableness or otherwise of the royalty set by the Board in Tariff 6.B for the use of recordings to accompany fitness classes.
[8] As already noted, Tariff 6.B also includes royalties payable to the makers and performers of sound recordings of musical works that are used to accompany skating, dance instruction, and other physical activities. Re:Sound made relatively few submissions on these aspects of Tariff 6.B to either the Board or this Court. I shall deal with Re:Sound’s challenge to these royalties after my analysis of its application to review the royalties approved for the use of recorded music in fitness classes.
Factual background
[9] The Board has a statutory jurisdiction to set tariffs of royalties payable to the owners of copyright in sound recordings (composers, lyricists, and music publishers). It also approves royalty tariffs payable as “equitable remuneration” to the holders of “neighbouring rights” in published sound recordings (performers and makers) for the performance in public or the communication to the public by telecommunication in Canada of their recordings.
[10] The right of performers and makers to an equitable remuneration is not an exclusive right: unlike traditional copyright owners, holders of neighbouring rights in musical works cannot bring an action to recover equitable remuneration against a person who, without authorization, performs their recordings in public. The only legal recourse they may have is against a collective society that has failed either to file a proposed tariff with the Board as required by subsections 67.1(1) and (2) of the Act, or to distribute to the beneficiaries the royalties that have been approved by the Board and collected from the users by the collective society.
[11] Nor can a collective society bring an action against a user to recover equitable remuneration when no tariff has been proposed, unless the Minister of Industry has given written consent: subsection 67.1(4). However, if users default in making the royalty payments in an approved tariff, a collective society may recover them in a court of competent jurisdiction: subsection 68.2(1).
[12] The recognition of neighbouring rights in Canadian law is relatively recent. They were added to the Act in 1997 (S.C. 1997, c. 24) in order to implement obligations assumed by Canada on March 4, 1998 when it acceded to the International Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organizations, 26 October 1961, 496 U.N.T.S. 43 (Rome Convention). For the limited protection previously enjoyed by makers and performers of recorded music, see the first neighbouring rights decision of the Board in Tariff No. 1.A – Commercial Radio, 1998-2002, dated August 13, 1999, at 2-3 (Tariff 1.A).
[13] Tariff 6.B is the first neighbouring rights tariff that the Board has certified for the use of sound recordings to accompany fitness classes. However, it has certified two related tariffs.
[14] First, SOCAN Tariff 19 is the most recent SOCAN tariff of royalties approved by the Board to be paid to the composers and lyricists of recorded music used to accompany dance, aerobics, body building, and other similar activities.
[15] Second, in 2006 the Board certified NRCC Tariff No. 3 – Use and Supply of Background Music, 2003-2009 proposed by the Neighbouring Rights Collective of Canada (NRCC), Re:Sound’s predecessor, for the holders of neighbouring rights in published sound recordings used as background music in an establishment.
[16] Re:Sound is an umbrella organization for its five member societies, which are comprised of performers or makers, in Quebec and elsewhere in Canada. It distributes the royalties collected from users either to the member society to which the performer or maker belongs or directly to the individuals entitled to them. Re:Sound is currently the only collective society authorized by the Board to collect section 19 royalties from the users of sound recordings.
[17] The proceedings from which this application arises commenced on March 30, 2007 when Re:Sound filed a proposed tariff for the use of recorded music to accompany, among other things, fitness classes. If approved as filed, Re:Sound’s proposed Tariff 6.B would, the Board found, impose royalty payments of approximately $86 million annually on the Canadian fitness industry which, according to Re:Sound, has an annual revenue of around $2 billion. In objecting to Re:Sound’s proposed tariff, the FIC and Goodlife submitted that the Board should impose royalties totalling approximately $3 million.
[18] The Board certified Tariff 6.A on July 15, 2011 to deal with the tariff proposed by Re:Sound for sound recordings used in connection with dance. A year later, the Board certified Tariff 6.B for the use of recorded music to accompany other physical activities, including fitness classes. It is common ground between the parties to this application that under Tariff 6.B as approved by the Board, the annual amount that Re:Sound can collect from users is less than that proposed by the FIC and Goodlife.
[19] The Board’s five-year long decision-making process comprised formal and informal procedural steps, including interrogatories and responses, written submissions, and the filing of expert evidence. Only 11 days were spent on the oral hearing. I shall describe the aspect of the Board’s procedure relevant to Re:Sound’s allegation that it was denied procedural fairness in my analysis of that issue.
Decision of the Board
[20] The Board’s reasons describe and analyze at length the expert evidence and submissions of the parties in support of their respective positions on the appropriate bases for determining the equitable remuneration payable to Re:Sound for the use of recorded music to accompany fitness classes: paras. 9-63, and 98-147.
[21] It suffices to say here that the Board found most of the expert evidence and submissions of Re:Sound and the respondents to be unsatisfactory. Consequently, it rejected the royalties that the parties proposed.
[22] One point is, however, worth noting. An expert witness for the respondents, Dr. David Reitman, suggested that since SOCAN Tariff 19 concerned royalties payable to composers and lyricists of recorded music played in conjunction with physical activities similar to those targeted in Tariff 6.B, it was an appropriate benchmark for Tariff 6.B. It was argued that SOCAN Tariff 19 had been in existence in various forms for 30 years and was “a reality in the marketplace”: at para. 136. It was thus a reliable indicator of the market value of recorded music when used in conjunction with physical activities.
[23] The Board, however, agreed with Re:Sound that SOCAN Tariff 19 was not an appropriate benchmark: at para. 147. It had never been the subject of even cursory examination, important terms of the Tariff were ambiguous, and its enforcement had proved problematic: at paras. 136, 140-144. As evidence of the difficulties with SOCAN Tariff 19, the Board noted (at para. 146) that, rather than attempting to enforce the rates certified in the Tariff, SOCAN collected nearly one third of its “Tariff 19 royalties” under confidential licensing agreements that it had made with individual users subject to SOCAN Tariff 19, including some of Canada’s largest fitness centres and dance instruction providers. After the hearing on Tariff 6.B was closed, the Board requested SOCAN to deposit copies of these agreements with it, which it did.
[24] The Board recognized that its rejection of both the expert evidence adduced by the parties, and the other suggested bases for setting the royalties, left it in a difficult position. Nonetheless, it decided (at paras. 161-164) not to exercise the option of declining to approve a tariff after considering SOCAN v. Bell Canada, 2010 FCA 139 at paras. 25-30. Since the Board had not rejected the factual information filed by the parties it had some evidence of the value of recorded music to fitness classes. Consequently, it held, Re:Sound was entitled to a tariff.
[25] The Board acknowledged (at para. 167) that flat fee royalties are generally an unsatisfactory reflection of the value of music to users, because they do not take account of the number of participants in a targeted activity or the amount of music used. Nonetheless, the Board decided that this was the best solution to its dilemma in this case. A flat fee for all users is easy to administer because minimal compliance monitoring is needed. In addition, Tariff 6.B was only transitional, in the sense that the period that it covered ended in 2012, the year of its approval, and the Board would likely be given better evidence on which to base a more permanent, multi-year tariff to start in 2013: see paras. 165-167.
[26] The Board calculated (at paras. 83-97, 168-169) the amount of the flat fee as follows. It computed the average “Tariff 19 royalties” paid to SOCAN under the agreements with fitness centres that it had supplied to the Board. The Board determined that 53% of the musical recordings played at fitness centres were eligible recordings under section 20. It then adjusted this percentage down to 36.6% to reflect the fact that Re:Sound’s repertoire consisted of only a portion of the eligible recordings played at fitness classes. This calculation produced an annual flat fee of $105.74 to be paid by each venue using sound recordings to accompany fitness classes that were in the repertoire of Re:Sound or one of its member collectives.
Statutory Framework
[27] The statutory provisions relevant to the disposition of this application are contained in the Copyright Act. Section 2 defines a collective society for the purpose of the Act.
2. “collective society” means a society, association or corporation that carries on the business of collective administration of copyright or of the remuneration right conferred by section 19 or 81 for the benefit of those who, by assignment, grant of licence, appointment of it as their agent or otherwise, authorize it to act on their behalf in relation to that collective administration, and
(a) operates a licensing scheme, applicable in relation to a repertoire of works, performer’s performances, sound recordings or communication signals of more than one author, performer, sound recording maker or broadcaster, pursuant to which the society, association or corporation sets out classes of uses that it agrees to authorize under this Act, and the royalties and terms and conditions on which it agrees to authorize those classes of uses, or
(b) carries on the business of collecting and distributing royalties or levies payable pursuant to this Act.
2. « société de gestion » Association, société ou personne morale autorisée — notamment par voie de cession, licence ou mandat — à se livrer à la gestion collective du droit d’auteur ou du droit à rémunération conféré par les articles 19 ou 81 pour l’exercice des activités suivantes :
a) l’administration d’un système d’octroi de licences portant sur un répertoire d’oeuvres, de prestations, d’enregistrements sonores ou de signaux de communication de plusieurs auteurs, artistes-interprètes, producteurs d’enregistrements sonores ou radiodiffuseurs et en vertu duquel elle établit les catégories d’utilisation qu’elle autorise au titre de la présente loi ainsi que les redevances et modalités afférentes;
b) la perception et la répartition des redevances payables aux termes de la présente loi.
[28] Subection 19(1) creates a right to an equitable remuneration for makers and performers of sound recordings when performed in public. In order to produce the funds required to provide an equitable remuneration, those who perform the recordings in public are liable to pay royalties to the collective society authorized to collect them. Subsection 20(1) sets out the eligibility criteria for equitable remuneration and the conditions under which the right applies: the maker of a sound recording must be a Canadian citizen or a permanent resident (or, in the case of a corporation, have its headquarters in Canada), or the fixations for the recording must have occurred in Canada.
[29] Other provisions in sections 19 and 20, not relevant to the present proceeding, apply the right to equitable remuneration and the eligibility criteria to parties to the Rome Convention. Recordings emanating from the United States will normally not be eligible for equitable remuneration because the United States is not party to the Rome Convention. They can therefore be performed in public in Canada without the user being liable to pay a royalty under section 19.
19. (1) If a sound recording has been published, the performer and maker are entitled, subject to subsection 20(1), to be paid equitable remuneration for its performance in public or its communication to the public by telecommunication, except for a communication in the circumstances referred to in paragraph 15(1.1)(d) or 18(1.1)(a) and any retransmission.
…
(2) For the purpose of providing the remuneration mentioned in this section, a person who performs a published sound recording in public or communicates it to the public by telecommunication is liable to pay royalties
(a) in the case of a sound recording of a musical work, to the collective society authorized under Part VII to collect them; or
(b) in the case of a sound recording of a literary work or dramatic work, to either the maker of the sound recording or the performer.
(3) The royalties, once paid pursuant to paragraph (2)(a) or (b), shall be divided so that
(a) the performer or performers receive in aggregate fifty per cent; and
(b) the maker or makers receive in aggregate fifty per cent.
20. (1) The right to remuneration conferred by subsection 19(1) applies only if
(a) the maker was, at the date of the first fixation, a Canadian citizen or permanent resident within the meaning of subsection 2(1) of the Immigration and Refugee Protection Act or, if a corporation, had its headquarters in Canada; or
(b) all the fixations done for the sound recording occurred in Canada.
…
19. (1) Sous réserve du paragraphe 20(1), l’artiste-interprète et le producteur ont chacun droit à une rémunération équitable pour l’exécution en public ou la communication au public par télécommunication — à l’exclusion de la communication visée aux alinéas 15(1.1)d) ou 18(1.1)a) et de toute retransmission — de l’enregistrement sonore publié.
[…]
(2) En vue de cette rémunération, quiconque exécute en public ou communique au public par télécommunication l’enregistrement sonore publié doit verser des redevances :
a) dans le cas de l’enregistrement sonore d’une oeuvre musicale, à la société de gestion chargée, en vertu de la partie VII, de les percevoir;
b) dans le cas de l’enregistrement sonore d’une oeuvre littéraire ou d’une oeuvre dramatique, soit au producteur, soit à l’artiste-interprète.
(3) Les redevances versées en application de l’alinéa (2)a) ou b), selon le cas, sont partagées par moitié entre le producteur et l’artiste-interprète.
20. (1) Le droit à rémunération conféré par le paragraphe 19(1) ne peut être exercé que si, selon le cas :
a) le producteur, à la date de la première fixation, soit est un citoyen canadien ou un résident permanent au sens du paragraphe 2(1) de la Loi sur l’immigration et la protection des réfugiés, soit, s’il s’agit d’une personne morale, a son siège social au Canada;
b) toutes les fixations réalisées en vue de la confection de l’enregistrement sonore ont eu lieu au Canada.
[…]
[30] The first part of Part VII of the Act establishes the Copyright Board and confers its powers. Only a few provisions are sufficiently relevant to this application to warrant inclusion here.
66. (3) The chairman must be a judge, either sitting or retired, of a superior, county or district court.
…
66.52 A decision of the Board respecting royalties or their related terms and conditions that is made under subsection 68(3), sections 68.1 or 70.15 or subsections 70.2(2), 70.6(1), 73(1) or 83(8) may, on application, be varied by the Board if, in its opinion, there has been a material change in circumstances since the decision was made.
…
66.6 (1) The Board may, with the approval of the Governor in Council, make regulations governing
(a) the practice and procedure in respect of the Board’s hearings, including the number of members of the Board that constitutes a quorum;
…
66.7 (1) The Board has, with respect to the attendance, swearing and examination of witnesses, the production and inspection of documents, the enforcement of its decisions and other matters necessary or proper for the due exercise of its jurisdiction, all such powers, rights and privileges as are vested in a superior court of record.
…
66. (3) Le gouverneur en conseil choisit le président parmi les juges, en fonction ou à la retraite, de cour supérieure, de cour de comté ou de cour de district.
[…]
66.52 La Commission peut, sur demande, modifier toute décision concernant les redevances visées au paragraphe 68(3), aux articles 68.1 ou 70.15 ou aux paragraphes 70.2(2), 70.6(1), 73(1) ou 83(8), ainsi que les modalités y afférentes, en cas d’évolution importante, selon son appréciation, des circonstances depuis ces décisions.
[…]
66.6 (1) La Commission peut, avec l’approbation du gouverneur en conseil, prendre des règlements régissant :
a) la pratique et la procédure des audiences, ainsi que le quorum;
[…]
66.7 (1) La Commission a, pour la comparution, la prestation de serments, l’assignation et l’interrogatoire des témoins, ainsi que pour la production d’éléments de preuve, l’exécution de ses décisions et toutes autres questions relevant de sa compétence, les attributions d’une cour supérieure d’archives.
[…]
[31] The second part of Part VII is headed “Collective Administration of Performing Rights and of Communication Rights”. The following provisions are relevant to the present application.
67. Each collective society that carries on
(a) the business of granting licences or collecting royalties for the performance in public of musical works, dramatico-musical works, performer’s performances of such works, or sound recordings embodying such works, or
…
must answer within a reasonable time all reasonable requests from the public for information about its repertoire of works, performer’s performances or sound recordings, that are in current use.
67.1 (1) Each collective society referred to in section 67 shall, on or before the March 31 immediately before the date when its last tariff approved pursuant to subsection 68(3) expires, file with the Board a proposed tariff, in both official languages, of all royalties to be collected by the collective society.
(2) A collective society referred to in subsection (1) in respect of which no tariff has been approved pursuant to subsection 68(3) shall file with the Board its proposed tariff, in both official languages, of all royalties to be collected by it, on or before the March 31 immediately before its proposed effective date.
(3) A proposed tariff must provide that the royalties are to be effective for periods of one or more calendar years.
(4) If a proposed tariff is not filed with respect to the work, performer’s performance or sound recording in question, no action may be commenced, without the written consent of the Minister, for
…
(c) the recovery of royalties referred to in section 19.
(5) As soon as practicable after the receipt of a proposed tariff filed pursuant to subsection (1), the Board shall publish it in the Canada Gazette and shall give notice that, within sixty days after the publication of the tariff, prospective users or their representatives may file written objections to the tariff with the Board.
68. (1) The Board shall, as soon as practicable, consider a proposed tariff and any objections thereto referred to in subsection 67.1(5) or raised by the Board, and
(a) send to the collective society concerned a copy of the objections so as to permit it to reply; and
(b) send to the persons who filed the objections a copy of any reply thereto.
(2) In examining a proposed tariff for the performance in public or the communication to the public by telecommunication of performer’s performances of musical works, or of sound recordings embodying such performer’s performances, the Board
(a) shall ensure that
(i) the tariff applies in respect of performer’s performances and sound recordings only in the situations referred to in the provisions of section 20 other than subsections 20(3) and (4),
(ii) the tariff does not, because of linguistic and content requirements of Canada’s broadcasting policy set out in section 3 of the Broadcasting Act, place some users that are subject to that Act at a greater financial disadvantage than others, and
(iii) the payment of royalties by users pursuant to section 19 will be made in a single payment; and
(b) may take into account any factor that it considers appropriate.
(3) The Board shall certify the tariffs as approved, with such alterations to the royalties and to the terms and conditions related thereto as the Board considers necessary, having regard to
(a) any objections to the tariffs under subsection 67.1(5); and
(b) the matters referred to in subsection (2).
(4) The Board shall
(a) publish the approved tariffs in the Canada Gazette as soon as practicable; and
(b) send a copy of each approved tariff, together with the reasons for the Board’s decision, to each collective society that filed a proposed tariff and to any person who filed an objection.
68.2 (1) Without prejudice to any other remedies available to it, a collective society may, for the period specified in its approved tariff, collect the royalties specified in the tariff and, in default of their payment, recover them in a court of competent jurisdiction.
(2) No proceedings may be brought against a person who has paid or offered to pay the royalties specified in an approved tariff for
…
(c) the recovery of royalties referred to in section 19.
(3) Where a collective society files a proposed tariff in accordance with subsection 67.1(1),
(a) any person entitled to perform in public or communicate to the public by telecommunication those works, performer’s performances or sound recordings pursuant to the previous tariff may do so, even though the royalties set out therein have ceased to be in effect, and
(b) the collective society may collect the royalties in accordance with the previous tariff, until the proposed tariff is approved.
67. Les sociétés de gestion chargées d’octroyer des licences ou de percevoir des redevances pour l’exécution en public ou la communication au public par télécommunication — à l’exclusion de la communication visée au paragraphe 31(2) — d’oeuvres musicales ou dramatico-musicales, de leurs prestations ou d’enregistrements sonores constitués de ces oeuvres ou prestations, selon le cas, sont tenues de répondre aux demandes de renseignements raisonnables du public concernant le répertoire de telles oeuvres ou prestations ou de tels enregistrements d’exécution courante dans un délai raisonnable.
67.1 (1) Les sociétés visées à l’article 67 sont tenues de déposer auprès de la Commission, au plus tard le 31 mars précédant la cessation d’effet d’un tarif homologué au titre du paragraphe 68(3), un projet de tarif, dans les deux langues officielles, des redevances à percevoir.
(2) Lorsque les sociétés de gestion ne sont pas régies par un tarif homologué au titre du paragraphe 68(3), le dépôt du projet de tarif auprès de la Commission doit s’effectuer au plus tard le 31 mars précédant la date prévue pour sa prise d’effet.
(3) Le projet de tarif prévoit des périodes d’effet d’une ou de plusieurs années civiles.
(4) Le non-dépôt du projet empêche, sauf autorisation écrite du ministre, l’exercice de quelque recours que ce soit… ou pour recouvrement des redevances visées à l’article 19.
(5) Dès que possible, la Commission publie dans la Gazette du Canada les projets de tarif et donne un avis indiquant que tout utilisateur éventuel intéressé, ou son représentant, peut y faire opposition en déposant auprès d’elle une déclaration en ce sens dans les soixante jours suivant la publication.
68. (1) La Commission procède dans les meilleurs délais à l’examen des projets de tarif et, le cas échéant, des oppositions; elle peut également faire opposition aux projets. Elle communique à la société de gestion en cause copie des oppositions et aux opposants les réponses éventuelles de celle-ci.
(2) Aux fins d’examen des projets de tarif déposés pour l’exécution en public ou la communication au public par télécommunication de prestations d’oeuvres musicales ou d’enregistrements sonores constitués de ces prestations, la Commission :
a) doit veiller à ce que :
(i) les tarifs ne s’appliquent aux prestations et enregistrements sonores que dans les cas visés à l’article 20, à l’exception des paragraphes 20(3) et (4),
(ii) les tarifs n’aient pas pour effet, en raison d’exigences différentes concernant la langue et le contenu imposées par le cadre de la politique canadienne de radiodiffusion établi à l’article 3 de la Loi sur la radiodiffusion, de désavantager sur le plan financier certains utilisateurs assujettis à cette loi,
(iii) le paiement des redevances visées à l’article 19 par les utilisateurs soit fait en un versement unique;
b) peut tenir compte de tout facteur qu’elle estime indiqué.
(3) Elle homologue les projets de tarif après avoir apporté aux redevances et aux modalités afférentes les modifications qu’elle estime nécessaires compte tenu, le cas échéant, des oppositions visées au paragraphe 67.1(5) et du paragraphe (2).
(4) Elle publie dès que possible dans la Gazette du Canada les tarifs homologués; elle en envoie copie, accompagnée des motifs de sa décision, à chaque société de gestion ayant déposé un projet de tarif et aux opposants.
68.2 (1) La société de gestion peut, pour la période mentionnée au tarif homologué, percevoir les redevances qui y figurent et, indépendamment de tout autre recours, le cas échéant, en poursuivre le recouvrement en justice.
(2) Il ne peut être intenté aucun recours … pour recouvrement des redevances visées à l’article 19, contre quiconque a payé ou offert de payer les redevances figurant au tarif homologué.
(3) Toute personne visée par un tarif concernant les oeuvres, les prestations ou les enregistrements sonores visés à l’article 67 peut, malgré la cessation d’effet du tarif, les exécuter en public ou les communiquer au public par télécommunication dès lors qu’un projet de tarif a été déposé conformément au paragraphe 67.1(1), et ce jusqu’à l’homologation d’un nouveau tarif. Par ailleurs, la société de gestion intéressée peut percevoir les redevances prévues par le tarif antérieur jusqu’à cette homologation.
Issues and analysis
[32] The Court must determine two primary issues in order to dispose of this application for judicial review of Tariff 6.B in respect of the use of sound recordings to accompany fitness classes.
(1) Did the Board deprive Re:Sound of a fair opportunity to participate in the decision-making process in breach of the duty of fairness when it set the royalty on a basis not addressed by the parties, and on material that Re:Sound had neither seen nor had an opportunity to comment on?
(2) Did the Board err in law when it interpreted the Act as entitling Re:Sound to collect royalties under section 19 in respect only of those eligible sound recordings played at fitness centres the performers or makers of which had authorized it or one of its member collectives to act for them in the administraion of their right to equitable remuneration?
[33] First, though, it is necessary to determine the standard of review applicable to each question.
ISSUE 1: What is the applicable standard of review?
(i) Breach of the duty of procedural fairness
[34] The black-letter rule is that courts review allegations of procedural unfairness by administrative decision-makers on a standard of correctness: Canada (Citizenship and Immigration) v. Khosa, 2009 SCC 12, [2009] 1 S.C.R. 339 at para. 43.
[35] Courts give no deference to decision-makers when the issue is whether the duty of fairness applies in given administrative and legal contexts. This is evident from the discussion in Dunsmuir v. New Brunswick, 2008 SCC 9; [2008] 1 S.C.R. 190 at paras. 77 et seq. (Dunsmuir) of whether David Dunsmuir was entitled to procedural fairness before his employment in the provincial public service was terminated.
[36] However, the standard of review applicable to an allegation of procedural unfairness concerning the content of the duty in a particular context, and whether it has been breached, is more nuanced. The content of the duty of fairness is variable because it applies to a wide range of administrative action, actors, statutory regimes, and public programs, with differing impacts on individuals. Flexibility is necessary to ensure that individuals can participate in a meaningful way in the administrative process and that public bodies are not subject to procedural obligations that would prejudice the public interest in effective and efficient public decision-making.
[37] In the absence of statutory provisions to the contrary, administrative decision-makers enjoy considerable discretion in determining their own procedure, including aspects that fall within the scope of procedural fairness: Prassad v. Canada (Minister of Employment and Immigration), [1989] 1 S.C.R. 560 at 568-569 (Prassad). These procedural aspects include: whether the “hearing” will be oral or in writing, a request for an adjournment is granted, or representation by a lawyer is permitted; and the extent to which cross-examination will be allowed or information in the possession of the decision-maker must be disclosed. Context and circumstances will dictate the breadth of the decision-maker’s discretion on any of these procedural issues, and whether a breach of the duty of fairness occurred.
[38] Dunsmuir does not address the standard of review applicable to tribunals’ procedural choices when they are challenged for breach of the duty of fairness. However, the Court held (at para. 53) that the exercise of administrative discretion is normally reviewable on a standard of reasonableness. This proposition would seem applicable to procedural and remedial discretion, as well as to discretion of a more substantive nature. It is therefore not for a reviewing court to second-guess an administrative agency’s every procedural choice, whether embodied in its general rules of procedure or in an individual determination.
[39] That said, administrative discretion ends where procedural unfairness begins: Prassad at 569. A reviewing court must determine for itself on the correctness standard whether that line has been crossed. There is a degree of tension implicit in the ideas that the fairness of an agency’s procedure is for the courts to determine on a standard of correctness, and that decision-makers have discretion over their procedure.
[40] Thus, writing for the majority in Baker v. Canada (Minister of Citizenship and Immigration), [1999] 2 S.C.R. 817 at para. 27, Justice L’Heureux-Dubé included the decision-maker’s procedural choice and agency practice as factors that courts must take into account when determining the contents of the duty of fairness in any given context. She stated that considerable weight should be given to this choice when the legislature had conferred broad procedural discretion on the agency or its expertise extended to procedural issues.
[41] Justice Abella endorsed these observations when writing for the majority in Council of Canadians with Disabilities v. VIA Rail Canada Inc., 2007 SCC 15, [2007] 1 S.C.R. 650 at paras. 230-231. She said (at para. 231):
Considerable deference is owed to procedural rulings made by a tribunal with the authority to control its own process. The determination of the scope and content of a duty to act fairly is circumstance-specific, and may well depend on factors within the expertise and knowledge of the tribunal, including the nature of the statutory scheme and the expectations and practices of the Agency’s constituencies.
[42] In short, whether an agency’s procedural arrangements, general or specific, comply with the duty of fairness is for a reviewing court to decide on the correctness standard, but in making that determination it must be respectful of the agency’s choices. It is thus appropriate for a reviewing court to give weight to the manner in which an agency has sought to balance maximum participation on the one hand, and efficient and effective decision-making on the other. In recognition of the agency’s expertise, a degree of deference to an administrator’s procedural choice may be particularly important when the procedural model of the agency under review differs significantly from the judicial model with which courts are most familiar.
(ii) Interpreting the Copyright Act
[43] Statutory decision-makers constituting a “discrete and special administrative regime” (Dunsmuir at para. 55), such as the Board in this case, are presumptively owed curial deference in the interpretation and application of their enabling statute: Alberta (Information and Privacy Commissioner) v. Alberta Teachers’ Association, 2011 SCC 61, [2011] 3 S.C.R. 654 at para. 39. Administrative tribunals’ interpretation of their enabling legislation is thus normally subject to judicial review on a standard of reasonableness: McLean v. British Columbia (Securities Commission), 2013 SCC 67 at paras. 21-22.
[44] The substantive legal question in dispute in the present application is whether the Copyright Act entitles a collective society to a tariff calculated on the basis of all the sound recordings eligible for equitable remuneration that are used to accompany particular activities, or only those in respect of which makers or performers have authorized the society to act on their behalf. This is a question of statutory interpretation because it is not limited to the facts of this case.
[45] Re:Sound contends that the presumption that reasonableness is the standard for reviewing an administrative tribunal’s interpretation of its enabling legislation is rebutted when the Board is interpreting the Act: Rogers Communications Inc. v. Society of Composers, Authors and Music Publishers of Canada, 2012 SCC 35, [2012] 2 S.C.R. 283 (Rogers).Writing for the majority in that case, Justice Rothstein stated (at para. 14):
It would be inconsistent for the court to review a legal question on judicial review of a decision of the Board on a deferential standard and decide exactly the same legal question de novo if it arose in an infringement action in the court at first instance. It would be equally inconsistent if on appeal from a judicial review, the appeal court were to approach a legal question decided by the Board on a deferential standard, but adopt a correctness standard on an appeal from a decision of a court at first instance on the same legal question.
[46] In my view, Rogers is distinguishable because the question of statutory interpretation in dispute in the present case arises from the Board’s approval of a proposed royalty under subsection 68(3) of the Copyright Act. Determining whether a collective society represents eligible recordings not in its repertoire when proposing a tariff under section 67.1 is not within a statutorily created “shared primary jurisdiction between the administrative tribunal and the courts”: Rogers at para. 18.
[47] This conclusion does not rest on a finding that there are no circumstances under which a court could be required to determine at first instance whether a collective society represented all eligible reco