Federal Court’s Globalive decision erred on 18 points, company says

OTTAWA—The Federal Court’s Feb. 4 ruling that said cabinet should not have allowed Globalive Wireless Management Corp. to enter the wireless market erred on 18 points of law and fact, Globalive says in its appeal of the decision. “The judge erred on fact and law in failing to recognize that the Governor in Council, as it was entitled to do, considered ‘access to foreign capital, technology and experience’ to be a means to achieving Canadian telecommunications policy objectives rather than as a policy objective in and of itself,” Globalive wrote in a notice of appeal, filed with the court Feb. 17. On Feb. 4, the Federal Court said the Conservative government had erred when, in December 2009, it approved Globalive as a Canadian telecommunications carrier. The federal cabinet decision had overturned a previous decision by the CRTC, which said Globalive was not eligible to operate as a wireless carrier because it was controlled “in fact” by non-Canadians. In its notice of appeal, Globalive has asked that the Federal Court order be set aside and that the original application for judicial review be dismissed with costs. In the alternative, Globalive has asked that the Federal Court of Appeal refer the 2009 cabinet decision back to the government for reconsideration. Globalive is appealing the decision on the grounds that the Federal Court erred in fact and law on 18 points, including a failure to refer back to cabinet, misinterpretation of cabinet’s decision, and failing to apply legal tests. The government’s decision to allow Globalive to enter the Canadian market led to the launch of its Canadian wireless operations under the Wind Mobile brand. But fellow new wireless entrant Public Mobile Inc. took issue with the government’s decision and filed a judicial review with the Federal Court, which ultimately sided with Public Mobile by quashing the cabinet decision. In the Feb. 4 decision, Justice Roger T. Hughes said the government based its decision on errors of law by stating that it only impacted Globalive. The court also said the government acted outside its jurisdiction. On Feb. 15, Industry Minister Tony Clement announced that the government stands by its decision that Globalive is a Canadian company and that it would appeal the decision to the Federal Court of Appeal. On Feb. 17, Globalive also announced it would appeal the decision. In its appeal, Globalive said the judge erred in concluding that cabinet’s reference to “access to foreign capital, technology and experience” related to a policy objective not permitted by the Telecommunications Act. “The judge erred in law to the extent that he concluded that the Governor in Council was not permitted to take into account broad policy matters with respect to the Canadian telecommunications policy objectives in exercise of its jurisdiction,” the company wrote. Globalive also took issue with the judge’s conclusion that cabinet’s decision applied only to Globalive. The company noted that the cabinet decision said it had a “significant direct impact only on Globalive.” The appeal added that Public Mobile should not have been entitled to seek judicial review as a party with “sufficient interest.” Globalive’s appeal has been consolidated with the appeal from the attorney general, which was filed Feb. 18. The government said in its appeal that Justice Hughes erred in fact and law on 13 points, including his “finding that access to foreign capital could not be a proper consideration or means to support policy objectives of the Telecommunications Act.” The government is arguing that the judge also erred in his interpretation of the control-in-fact test under the Telecommunications Act. According to a court document filed Monday, the stay granted by the Feb. 4 court decision will be extended until an appeal is heard on May 18. In an affidavit filed on Feb. 21, Globalive CEO Ken Campbell said that if an extension was not awarded, the company would suffer “irreparable harm.” “If the stay expires and Globalive Wireless is forced to shut down its operations because of the 2009 CRTC decision ruling that it is ineligible to operate, Globalive Wireless will suffer a permanent market loss, irrevocable damage to its business reputation as a reliable telecommunications service supplier, loss of capital and expenses, loss of employees, loss of customers and … other permanent damage,” Campbell wrote. He said that, as of Feb. 8, Globalive had 690 full-time and 501 part-time employees as well as more than 250,000 subscribers and 477 retail locations. Campbell said Globalive would “almost certainly” be ineligible to operate in the eyes of the CRTC inside a 45-day stay period—the length of the stay originally granted by the Federal Court. “The key measures related to new debt financing, and the associated financing costs, would be impossible to reverse,” he wrote. If forced to shut down and unable to re-launch, Campbell said Globalive would lose much or all of the $442 million paid to Industry Canada for its spectrum licences as well as additional capital outlays and expenses representing several hundreds of millions of dollars. The Communications, Energy and Paperworks Union of Canada (CEP), the Alliance of Canadian Cinema, Television and Radio Artists (ACTRA) and the Friends of Canadian Broadcasting have filed a motion to present their position in the appeal. Steven Shrybman, a partner at Sack Goldblatt Mitchell LLP, who is representing the groups, said by phone that the Feb. 4 decision was correct. "We think that cabinet got it wrong and overstepped its authority, that Globalive is clearly foreign owned, and that the court below got it right, and that the appeal should be dismissed," he said, speaking on behalf of his clients. Shrybman said he is not concerned about Globalive’s situation should it lose the appeal, noting that it's not necessary that company would have to go out of business. He said the company could restructure to meet the foreign ownership rules. “They would have to bring themselves into compliance with the requirements of the Telecommunications Act by finding Canadian investors,” he said. The government will serve its memoranda of fact by April 1. Public Mobile and Telus Corp. will serve theirs by May 2, after which Globalive and the government have until May 13 to reply. kfournier@thewirereport.ca -- CLARIFICATION: Due to an editing error, an earlier version of this story cited Shrybman as saying Globalive would have to restructure as Canadian or give up its Canadian operations if it loses the appeal. Shrybman said Globalive would not necessarily have to go out of business and could restructure as Canadian.

Federal Court’s Globalive decision erred on 18 points, company says

News | March 2, 2011

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