Date: 20111228
Dockets: T-1841-07
T-2060-07
T-2061-07
Citation:
2011 FC 1522
[UNREVISED ENGLISH
CERTIFIED TRANSLATION]
PRESENT: The Honourable
Mr. Justice Scott
Ottawa, Ontario,
December 28, 2011
Docket: T-1841-07
BETWEEN:
LES PRODUCTIONS
ESPACE VERT VIII INC
(MISSION GIBBONS À BORNÉO)
Applicant
and
THE MINISTER OF CANADIAN HERITAGE
Respondent
Docket: T-2060-07
BETWEEN:
LES PRODUCTIONS ESPACE VERT (XI) INC
(TERRE DES DRAGONS A.K.A. RETOUR À
KOMODO)
Applicant
and
THE MINISTER OF CANADIAN HERITAGE
Respondent
Docket: T-2061-07
BETWEEN:
LES PRODUCTIONS ESPACE VERT (XI) INC
(EN FAMILLE CHEZ L’OURS À LUNETTES)
Applicant
and
THE
MINISTER OF CANADIAN HERITAGE
Respondent
MOTIFS FOR
JUDGMENT AND JUDGMENT
I. Introduction
[1]
On
June 17, 2008, Prothonotary Morneau issued an order under rules 8, 105(a)
and 399 of the Federal Courts Rules (SOR/98-106), with the
direction that the applications for judicial review in dockets T-1840-07, T-1841-07,
T-2060-07 and T-2061-07 be consolidated and heard together at the same hearing
and that a copy of the judgment in the principal case T-1840-07 should be
placed in court dockets T-1841-07 and T-2060-07 and T-2061-07 to stand as
reasons in those cases.
[2]
Given
the Court’s decision in T-1840-07, the judgment in docket T-1841-07 becomes the
lead judgment and applies only to T-2060-07 and T-2061-07.
[3]
Les
Productions Espace Vert VII Inc. (Espace Vert) is asking the Court to review
the decision made by the Minister of Canadian Heritage (the Minister), dated
March 12, 2007, sent to Espace Vert on September 24, 2007, by which he revoked the
Canadian film or video production certificate, (Part A, Number A 105433) of Espace
Vert, for the Mission Gibbons à Bornéo production, pursuant to
subsection 125.4(6) of the Income Tax Act, R.S.C 1985, 5th Supp., as
amended (ITA) and paragraph 1106(1)(ii) of the Income Tax Regulations,
CRC c 945 (ITR). Espace Vert is also asking the Court to issue an order compelling
the Minister to issue the certificate of completion, part B, under the Film Tax
Credit Program for the Mission Gibbons à Bornéo production,
as well as any other orders deemed appropriate by the Court.
[4]
For
the following reasons, the application for judicial review by Espace Vert is
dismissed, with costs.
II. Facts
[5]
On
October 10, 2002, Espace Vert signed a coproduction agreement letter with the
French company Guilgamesh, for the production Mission Gibbons à Bornéo.
[6]
On
October 11, 2002, Espace Vert submitted an application for an advance ruling
for international coproduction status to Telefilms Canada (Telefilm) for the
production Mission Gibbons à
Bornéo
(affidavit of the Espace Vert representative, Exhibit P-8).
[7]
On
October 25, 2002, Telefilm acknowledged receipt of the application for an
advance ruling from Espace Vert. The application reads as follows: [translation] “since this is a Canadian
minority coproduction, it is important that we receive the decision of the
relevant foreign authorities regarding the project as soon as possible. I would
appreciate it if you would advise your coproducer of this”(affidavit of the
Espace Vert representative, Exhibit P-9).
[8]
On
July 24, 2003, Lyne Côté, from Telefilm, sent an e-mail to Amélie Blanchard, a
producer at Espace Vert. She wrote [translation]
“I have begun examining your file … I will also require confirmation that
the file has been accepted in France, given that it is a French majority
production. I cannot make my decision until I have received confirmation” (affidavit
of the Espace Vert representative, Exhibit P-10).
[9]
That
same day, Lyne Côté followed up with her counterpart. She e-mailed Claudine
Manzanares at the Centre National de la cinématographique (CNC), asking her if
she had received the file (affidavit of the Espace Vert representative, Exhibit
P-11).
[10]
On
July 28, 2003, Bérangère Térouanne, of the CNC, replied to Lyne Côté and
confirmed to her that Mission Gibbons à Bornéo had been approved by her,
as a French production, but without a Canada-France coproduction agreement (affidavit
of the Espace Vert representative, Exhibit P-12). That same day, Lyne Coté
asked her interlocutor, B. Térouanne: [translation]
“Would you be so kind as to forward me a copy of the prior authorization that
you sent to the French producer?” (affidavit of the Espace Vert representative,
Exhibit P-12)
[11]
On
August 4, 2003, Lyne Côté wrote to Espace Vert. She requested explanations
because Guilgamesh had not included a Canadian coproducer in its financing
forecast plan submitted in France. The project was therefore not recognized
as a coproduction in France. That same day, Espace Vert replied to
Lyne Côté, telling her it was probably an administrative error (affidavit of
the Espace Vert representative, Exhibits P-13 and P-14).
[12]
On
October 21, 2003, Lyne Côté once again wrote to Claudine Manzanares at the CNC,
requesting that she be sent the decision regarding Mission Gibbons à Bornéo
(affidavit of the Espace Vert representative, Exhibit P-15). The CNC did not
respond to Telefilm’s request.
[13]
On
December 10, 2003, Brigitte Monneau, coproduction director at Telefilm, sent an
e-mail to Espace Vert. She attached the e-mail from Laurent Cormier of the CNC
(affidavit of the Espace Vert representative, Exhibit P-16). Laurent Cormier
wrote: [translation] “Here are
our answers: some of the files have already been with us for quite a while and
were not submitted as France-Canada coproductions. Mission Gibbons: OK
July 2003, not a Canadian coproduction – Guilgamesh production”.
[14]
Subsequent
to this e-mail, Ms. Monneau from Telefilm decided to meet with the
representative of Espace Vert, Mr. Cadieux. He explained to her that Espace
Vert had no control over the actions of its coproducers or of the CNC.
[15]
The
representative of Espace Vert contacted the representative of Guilgamesh, who
told him that he had verbally informed Claudine Manzanares of the CNC that this
coproduction had been added and that she had not informed Laurent Cormier, who
was replacing her while she was on vacation, of this.
[16]
On
or about October 3, 2003, Guilgamesh filed its final application for
authorization with the CNC for the production Mission Gibbons à Bornéo.
The application was to include the final budget for the production. Guilgamesh
submitted its application, with the final accounting for France and the
original Canadian budget.
[17]
On
November 6, 2003, the French coproducer, Guilgamesh, went into receivership
(under the French equivalent of the Companies Creditors Arrangement Act,
R.S.C 1985, c C-36), without informing Espace Vert of this (affidavit of the
Espace Vert representative, Exhibit P-17).
[18]
On
March 1, 2004, Lyne Côté, analyst at Telefilm, signed the advance ruling
recommendation (affidavit of the Espace Vert representative, Exhibit P-20). She
wrote: [translation] “communication
with authorities: e-mail dated February 24, 2004: Mr. Harold Valentin of the
CNC confirms that the Mission Gibbons à Bornéo file received an advance ruling
from France”. In fact,
the CNC had not received anything from the French coproducer to amend the file
and the previous agreement, stating that it was a 100% French production,
remained in effect.
[19]
That
same day, Telefilm rendered its advance ruling of coproduction status for Mission Gibbons à
Bornéo
(affidavit of the Espace Vert representative, Exhibit P-21).
[20]
On
March 2, 2004, Brigitte Monneau, of Telefilm, wrote to Laurent Cormier,
requesting that he forward her the constitutive elements of the French file.
These elements were never forwarded (affidavit of the Espace Vert
representative, Exhibit P-22).
[21]
On
March 4, 2004, Claudine Manzanares, upon returning from her vacation, sent an
e-mail to Thomas Saigne of Telefilm (affidavit of the Espace Vert
representative, Exhibit P-23): [translation]
“I would like to confirm the approval of the CNC for the following programs for
which, due to a late submission by the French producer, provisional
authorizations were unable to be issued in 2003; the final authorizations will
therefore be issued when the final accounting reports for each program are
submitted by the French company (including) … Mission Gibbons à Bornéo,
152’ for France 3: coproduction with the Espace Vert company”.
[22]
On
July 8, 2004, the Tribunal de commerce of Nanterre, in France, accepted a
proposal, submitted to the court on June 25, 2004, to liquidate the assets of
the French company Guilgamesh for the benefit of Aller-Retour Films (affidavit
of the Espace Vert representative, Exhibit P-24). Le representative of Espace Vert
claims that this was an orchestrated manoeuvre by the owner of Guilgamesh,
Bernard Choquet, in conjunction with the receiver, because Espace Vert was
never informed of it.
[23]
On
July 16, 2004, Espace Vert received a notice of pre-emption from the receiver, Francis
Gay, for a number of coproductions, including Mission Gibbons à
Bornéo
(affidavit of the Espace Vert representative, Exhibit P-25). The notice was
issued pursuant to the French Code de propriété intellectuelle, which
requires a receiver to confer a pre-emptive right on all assigns, with priority
for coproducers.
[24]
Espace
Vert found it had no other choice but to exercise its pre-emptive right in
order to protect its investments (affidavit of the Espace Vert representative, Exhibit
P-26). Espace Vert obtained a decision from the French court and immediately
consulted the CNC.
[25]
On
July 30, 2004, the receiver once again wrote to Espace Vert, explaining that Mission
Gibbons à Bornéo was among the unfinished Guilgamesh productions. To
exercise its pre-emptive right, Espace Vert would have to pay 6,000 Euros.
[26]
On
July 28, 2004, Espace Vert exercised its pre-emptive right to the production Missions
Gibbons à Bornéo (affidavit of the Espace Vert representative, Exhibit P-29).
[27]
On
October 14, 2004, Espace Vert recovered the assets whose sale it had pre-empted
by signing an assignment in Paris (affidavit of the Espace Vert
representative Exhibit 30). According to Mr. Pascal, Espace Vert’s French
lawyer, the pre-emption section of the Code de Propriété intellectuelle
is public policy and the mandatory clauses in the coproduction contracts imposed
by both the CNC and Telefilm have no force of law in such a situation (affidavit
of the Espace Vert representative, Exhibit P-31). Therefore, these clauses
would not be binding on Espace Vert.
[28]
On
January 7, 2005, Espace Vert sent Telefilm a copy of the assignment signed on
October 14, 2004 (affidavit of the Espace Vert representative, Exhibit P-33).
[29]
That
same day, Brigitte Monneau, of Telefilm, wrote to Laurent Cormier, of the CNC,
to inquire, among other things, about the status of the production Missions
Gibbons à Bornéo in light of Espace Vert’s recovery of the assets (affidavit
of the Espace Vert representative, Exhibit P-34).
[30]
On
January 17, 2005, Brigitte Monneau once again wrote to Laurent Cormier. She wrote
as follows: [translation] “The
Canadian producer tells us that, if this means losing coproduction status, it
would re-assign the projects to another French company; would that be possible
for you?” (affidavit of the Espace Vert representative, Exhibit P-37)
[31]
On
January 20, 2005, Laurent Cormier replied to Brigitte Monneau. He stated that [translation] “[f]or us, the unclosed
files are: aventurière de mère en fille, Les Gibbons, Komodo, Les ours à
lunettes … For these unclosed files, if they were to be recovered by the
Canadian producer they would surely lose their official coproduction status and
therefore access to French assistance.” (affidavit of the Espace Vert
representative, Exhibit P-37)
[32]
On
January 25, 2005, in preparation for a meeting scheduled for the 31st with Espace
Vert’s representative, Brigitte Monneau, of Telefilm, once again contacted
Laurent Cormier, of the CNC, requesting an official letter and clarifications
regarding Espace Vert’s allegations that the CNC had been informed before it proceeded
with the pre-emption of Guilgamesh’s rights (affidavit of the Espace Vert
representative, Exhibit P-41).
[33]
On
January 26, 2005, Laurent Cormier replied to Brigitte Monneau. He stated that [translation] “a representative of the
Canadian producer did in fact telephone me several months ago to inquire about
the balance of CNC funding of films in production and I provided her with an
answer on this point; as for the rest, I considered it, perhaps a bit
perfidiously, to be their business. Of course I can do an official letter for
you” (affidavit of the Espace Vert representative, Exhibit P-41).
[34]
On
January 31, 2005, Espace Vert representatives Paul Cadieux and Anne Pages, met
with Brigitte Monneau and Kenny Duggan, of Telefilm. Brigitte Monneau wrote, in
a note to file, that she explained to Espace Vert’s representatives that the
CNC’s correspondence was clear with respect to the consequences of the assignment,
but that Telefilm was waiting for official correspondence. She added that Mr.
Cadieux wanted Telefilm to intervene politically if necessary because the
revocation of the decisions would bankrupt his company. She further
wrote: [translation] “I
clearly stated that we would have no choice but to revoke the advance rulings
if the CNC did so because coproduction decisions are necessarily bilateral
ones” (affidavit of the Espace Vert representative, Exhibit P-43).
[35]
The
CNC’s pre-authorization and Telefilm’s advance ruling bilaterally confirmed the
framework of the coproduction. Telefilm’s advance ruling (affidavit of the
Espace Vert representative, Exhibit P-21) states that the Canadian producer is
expected to comply with terms listed in the ruling. The ruling also states that
Telefilm will be in a position to submit a final recommendation after having
viewed the program.
[36]
Brigitte
Monneau replied to the e-mail from Laurent Cormier. She wrote the
following: [translation] “I
informed the producer when I met with him that he was at fault with respect to
us, as there was a clause in the coproduction contract requiring him to inform
the authorities in the case of any assignment or transfer of the project. Given
that he did not inform Telefilm prior to the transaction, it was not possible
for us, in contrast to what we had done for the file, to warn him of the consequences
of the transaction”. She further added [translation]
“perhaps you could, in your letter, make reference to the fact that
there are always clauses in coproduction contracts which are there to avoid
this kind of situation… and that they should have been applied. Indeed, once
the transaction has been completed, there is very little we can do… it is clear
that if coproduction status is dropped on the French side, it is dropped here
as well”.
[37]
According
to the Espace Vert representative, Ms. Monneau dismissed the arguments
presented at their meeting on January 31, 2005, that the CNC had clearly
indicated, since the summer of 2004, that assignments that occur after
production is completed do not require any French authorization.
[38]
On
February 3, 2005, Laurent Cormier sent the official letter to Brigitte Monneau
(affidavit of the Espace Vert representative, Exhibit P-42), stating his
official view of the films coproduced by Espace Vert with Guilgamesh. According
to the Espace Vert representative, the letter did not answer the question raised
by Brigitte Monneau in her e-mail on January 7, 2005.
[39]
On
February 23, 2005, Laurent Cormier replied to Espace Vert by e-mail, forwarding
a copy to Brigitte Monneau (affidavit of the Espace Vert representative, Exhibit
P-44). Among other things, he wrote, that the remaining grants could only be
given to a French company. According the Espace Vert representative, Espace
Vert’s pre-emptive right included the requirement to finalize 3 films and in
return, the receiver undertook to remit to Espace Vert the grants owed to it on
behalf of Guilgamesh.
[40]
The
Espace Vert representative alleged that Mr. Cormier, of the CNC, adopted a
legal position that contradicts sections XII and XIII of the coproduction
treaty, which grant the production all of the benefits of the laws in force in France.
[41]
The
Espace Vert representative also argued that Mr. Cormier refused to answer the
question of whether reassignment was possible. In fact, he reiterated the
position of the CNC and Telefilm to the effect that from the moment one
producer holds all of the rights to a film, it is no longer possible to qualify
the production as a France-Canada coproduction.
[42]
Lastly,
he mentioned that an assignment to a third party is impossible without
obtaining written consent from the competent authorities of the country of each
group for the purpose of the treaty.
[43]
On
July 28, 2005, Brigitte Monneau sent an e-mail to Jean-Daniel Eigenmann, of Telefilm.
She wrote: [translation] “the CNC
(…) on a project with Films de la Perrine for which an amendment to the coproduction
contract was required for pre-authorization from the authorities apparently
said that, acceding to them, it is unnecessary to give such an authorization
once the project is delivered. As this contradicts their position in the Guilgamesh
files, counsel for P. Cadieux intends to defend this point”. Ms. Monneau also
noted that he alleged that Telefilm did nothing to clarify this point to the
CNC (affidavit of the Espace Vert representative, Exhibit P-48).
[44]
On
November 23, 2006, Espace Vert had the final accounts signed by the Guilgamesh
representative (affidavit of the Espace Vert representative, Exhibit P-49).
[45]
After
November 23, 2006, Espace Vert’s representative called Jean-Daniel Eigenmann in
order to inform him that he wanted to proceed with a reassignment of his rights
to the production to the French company les Films de la Perrine. However, the
CNC reiterated that the 3 films could not be France-Canada coproductions.
[46]
Mr.
Boischot, of Films de la Perrine, subsequently asked Espace Vert to submit to
him proof of coproduction obtained by the CNC. Espace Vert then contacted Mr.
Eigenmann of Telefilm in this regard. Mr. Eigenmann then sent them a confirmation
e-mail from the CNC (affidavit of the Applicant’s representative, Exhibit P-50).
[47]
Espace
Vert had a reassignment drawn up, which it presented to Mr. Boischot of Films
de la Perrine. However, Mr. Boischot wanted to consult Mr. Cormier, of the CNC,
before proceeding with the reassignment.
[48]
One
June 18, 2007, Espace Vert received a draft notice of assessment from auditor
René Pétrin of the Canada Revenue Agency (Agency) (affidavit of the Espace Vert
representative, Exhibit P-51).
[49]
The
applicant’s representative contacted Mr. Pétrin to inform him that there was an
error regarding the due date because the end of the first fiscal year of the
company Productions Espace Vert VIII Inc. fell on December 15, 2003.
[50]
After
having received the Agency’s draft notice of assessment, Espace Vert once again
tried to open the file with Canadian Audio-Visual Certification Office (CAVCO).
[51]
On
June 28, 2007, Christophe Pascal, Espace Vert French lawyer, sent Laurent
Cormier the final accounting sought by the judicial administrator, as had been
requested in the e-mail on June 9, 2005, as well as a request for delivery of
the final authorizations. That e-mail remains unanswered to this day (affidavit
of the Espace Vert representative, Exhibit P-54).
[52]
On
August 1, 2007, Jocelyn Casimir, of the CAVCO, confirmed that CAVCO had
reopened the file. Furthermore, according to Espace Vert’s representative, Mr.
Casimir mentioned that the file was no longer revoked and that he was awaiting
a response from Telefilm.
[53]
On
September 20, 2007, the applicant received a notice of assessment from Mr.
Pétrin of the Agency. The Espace Vert representative claimed that it was
unusual for an auditor to send a notice of assessment without first consulting
the taxpayer in order to provide him or her with a timeline for submitting the
relevant documents.
[54]
On
September 24, 2007, CAVCO sent copy of the revocation of the production Mission Gibbons à
Bornéo.
[55]
Espace
Vert asked Telefilm to set up a joint commission to raise the seriousness of
the problems regarding Article XVI of the Agreement between the Government
of Canada and the Government of the French Republic on Television Relations
(Canada-France Agreement) (affidavit of the Espace Vert representative, Exhibit
P-59).
[56]
The
Espace Vert representative claimed that Telefilm failed to meet this obligation
contained in its mandate (affidavit of the Espace Vert representative, Exhibit P-60).
Telefilm responded that its mandate is limited to receiving and assessing
applications for certification of projects as official coproductions and, based
on the treaties and applicable guidelines, to decide whether or not to
recommend the government to grant domestic status (affidavit of the Espace Vert
representative, Exhibit P-61).
[57]
On
October 3, 2007, Telefilm sent a draft of the rules of procedure to Espace Vert,
following access to information request filed by the latter.
[58]
On
August 2, 2007, Telefilm confirmed the revocation, by letter (affidavit of the
Espace Vert representative, Exhibit P-69).
[59]
To
date, the Espace Vert representative claims that the 48-month time limit to
revoke coproduction status had not passed because the Agency’s notice of
assessment was dated from the end of the first fiscal after the first day of
filming, namely, December 15, which meant that the time limit ran until
December 15, 2007, while the revocation decision was made on March 12, 2007.
[60]
Furthermore,
according to Espace Vert, Telefilm had all of the necessary documents on hand
to grant the completion certificate.
IV. Legislation
[61]
The
relevant sections of the Income Tax Act [ITA] and the Income Tax
Regulations [ITR] are reproduced en annex to these reasons.
V. Issues
and standards of review
A. Issues
[62]
This
application for judicial review raises the following issues:
1. Did
the respondent respect the rules of procedural fairness?
2. Is
the respondent’s decision to revoke the certificate, part A, for the productions
Mission Gibbons à Bornéo, Terre des Dragons A.K.A. Retour à Komodo and l’Ours à
lunettes reasonable?
B. Standards of
review
[63]
In
Tricon Television29 Inc v Canada (Minister of
Canadian Heritage), 2011 FC 435, [2011] FCJ No 547, Mr. Justice
Hughes wrote the following at paragraph 31 of his decision :
In
general the applicable principles of law as enunciated by the Supreme Court of
Canada in cases including Dunsmuir v New Brunswick, [2008] 1 S.C.R. 190; Canada
(Minister of Citizenship and Immigration) v Khosa, [2009] 1 S.C.R. 339; and Baker
v Canada (Minister of Citizenship and Immigration), [1999] 2 S.C.R. 817 are
not in dispute:
1.
On a judicial review of a decision of a federal board, the standard of review
of correctness is applied in considering questions of law;
2.
On a judicial review of a decision of a federal board which has acted within
its legal mandate, the matter is to be determined on a standard of
reasonableness, with a deference being afforded to the board particularly where
the decision is within the scope of its unique experience;
3.
Where issues of natural justice, fairness and bias arise, the standard is one
of proper adherence to those principles; and
4.
Reasons given by the board must be intelligible and transparent, sufficient so
as to inform the intended recipient of the result and how it was achieved.
[64]
The
standard of review applicable to questions involving the doctrine of legitimate
expectations and rules of procedural fairness is correctness.
[65]
The
standard of review applicable to the respondent’s decision to revoke Espace
Vert’s coproduction certificate is reasonableness.
VI. Position of
the parties
A. Espace Vert’s
position
[66]
Espace
Vert alleges that the respondent’s decision to revoke the coproduction
certificate, part A, and to refuse to issue the completion certificate, part B,
is patently unreasonable, perverse and capricious because it is contrary to the
Act and administrative practices.
[67]
Espace
Vert emphasizes that it made no incorrect statements or omissions with a view
to obtaining the certificate, part A. It further claims to have honoured all of
its commitments because all of the production elements were completed and the
elements of financial contributions were complied with.
[68]
Certification
of a coproduction by a national authority is not necessarily bilateral,
according to Espace Vert.
[69]
Espace
Vert submits that it was a victim of manoeuvring by its coproducer. Guilgamesh
unilaterally put its company into receivership without even informing it, the
said coproducer trying to buy back its own productions to resolve its financial
problems.
[70]
The
actions by the coproducer Guilgamesh gave Espace Vert no choice, and it had to exercise
the pre-emptive right conferred upon it by French law and become assignees of
the rights to the above-mentioned productions.
[71]
According
to Espace Vert, the pre-emption of the coproducer’s rights does not change the
fact that this was a true coproduction between Canada and France because the
producers from the two countries had completed all of the coproduction elements
before the assignment of rights.
[72]
Espace
Vert argues that the respondent acted unreasonably by refusing to issue the
final coproduction certificates (part B) and by erroneously indicating that the
coproductions were not covered by an agreement.
[73]
Espace
Vert also noted that CAVCO, or its agent, Telefilm, possessed all of the
elements allowing it to make a positive recommendation positive and issue the
completion certificates. The respondent therefore acted unreasonably by finding
in error that the CAVCO had not received all of the required documents.
[74]
Espace
Vert alleges that the issuance of the final coproduction certificate cannot
depend on the opinion of the French authority because, if that were the case,
the respondent would therefore be at risk of breaching his duty of exercising
his discretionary authority in an independent manner. Provided that the
Canadian producer completed the essential coproduction elements and complied
with the spirit of the treaty with France, the respondent must
grant final certification, part B.
[75]
The
respondent’s advance ruling on certification specified the conditions Espace
Vert had to meet. Because Espace Vert satisfied all of those requirements, the
respondent had a duty to issue the final production certificate (part B).
[76]
According
to Espace Vert, the representatives of the respondent’s agent acted in bad
faith and ignored their obligations to assist Espace Vert, preferring instead
to focus on an unreasonable interpretation of the criteria for issuing
coproduction certificates. Telefilm was accommodating towards the French
authorities and clearly wanted to avoid contradicting them despite the fact
that they were in the wrong.
[77]
Espace
Vert also notes that there are no rules of procedure concerning the treaty
between France and Canada.
[78]
The
reason for the revocation, which was indicated in the respondent’s decision,
has no merit according to Espace Vert because all of the information required
to issue the completion certificate, part B, was in the possession of the
respondent or its agent, Telefilm.
[79]
Espace
Vert also contends that the respondent’s decision fails to indicate which
documents were missing.
[80]
According
to Espace Vert, the respondent’s actions seem to show that the certification
process does not follow strict rules but is instead a flexible and informal
process.
[81]
Alleging
that the respondent issued completion certificates in the past in comparable
circumstances, Espace Vert claims that it must therefore do so in this case
because it must act consistently and avoid arbitrariness in its decision making.
[82]
Alternatively,
Espace Vert claims that the deadline for issuing a completion certificate, part
B, is not mandatory and that no harm can result in an analysis that is carried
out subsequent to the deadline set out in the ITR.
B. Position
of the respondent
[83]
First,
the respondent maintains that Espace Vert was not treated in a discriminatory
manner because the rules of procedural fairness were respected at all times in
the processing of the three files: Ours à lunettes, Mission Gibbons à
Bornéo
and Retour à Komodo.
[84]
According
to the respondent, Espace Vert is aware of the conditions for a Canadian film
or video production to benefit from the tax credit.
[85]
According
to the respondent, despite the exchanges between Espace Vert and its agent, Telefilm,
Espace Vert cannot benefit from the tax credit because the documents necessary
to establish that the three above-mentioned productions qualified as Canadian
film or video productions were not submitted within the required time.
[86]
The
respondent notes that the wording of the ITA and the IRA creates no obligation
for the Minister of Heritage to issue a certificate, or absolute right for
Espace Vert to obtain this certificate in the absence of compliance with the
requirements set out in the legislative provisions. He alleges that the Federal
Court decision in Polchies v Canada, 2007 FC 493
at paragraphs 61 and 62, supports this proposal.
[87]
In
the case of the three above-mentioned productions, the certificate was revoked
because the productions did not qualify as coproductions, Espace Vert having
proceded with the buyback of the French portion. By doing so, Espace vert
became the sole producer. The respondent’s decision to revoke a completion certificate
arises from the formal requirements of the Act and not from a discretionary
authority, contrary to what Espace Vert claims.
[88]
Finally,
the respondent notes that Espace Vert cannot expect to be entitled to
substantive rights outside of the certification process set out in the Act.
VII. Analysis
[89]
In
this case, there are two issues before the Court. Did the respondent respect
the rules of procedural fairness? And is the respondent’s decision to revoke
the certificate, part A, for the productions Mission Gibbons à Bornéo, Terre
des Dragons A.K.A. Retour à Komodo and l’Ours à lunettes reasonable?
We will deal with both issues together, since they are intrinsincally linked in
this matter.
Procedural
fairness and reasonableness of the decision
[90]
The
sequence of events is of particular importance in this matter as it allows the
Court to determine whether the parties fulfilled their respective obligations
and respected the rules of procedural fairness.
[91]
Article
XII of the Canada-France Agreement provides that [translation] “the competent authorities of both countries
jointly set the procedural rules of the coproduction taking into consideration
the existing legislation and regulations in Canada and France.”
[92]
On
March 1, 2004, Telefilm issued a favourable recommendation to the production Mission
Gibbons à Bornéo. The productions Ours à lunettes and Terre des
Dragons received similar recommendations. For the last two files, the
favourable recommendation or advance ruling was dated October18, 2004.
[93]
On
December 20, 2004, the CAVCO issued the certificate (part A), for the
production Mission Gibbons à
Bornéo.
The certificates, part A, for the productions Terre des Dragons and Ours
à lunettes were issued on May 25, 2005.
[94]
When
Telefilm issues a favourable recommendation, certain conditions are imposed on
the recipient, i.e. the producer, conditions which must be met in order to
receive the certificate, part B.
[95]
In
fact, in its letter to Espace Vert dated March 1, 2004, Telefilm clearly indicated
that the production (Mission Gibbons à Bornéo) must be recognized as an
official coproduction by the competent authorities in France (affidavit
of the Espace Vert representative, Exhibit P-21).
[96]
Moreover,
the letter contains another disprovision specifying that:
[translation]
“any changes to a project that has
received an advance ruling is likely to result in the loss of official coproduction
status. If changes to the project are needed, prior authorization from the
competent authorities must be obtained.”
[97]
The
evidence in the record leads the Court to conclude that Telefilm learned that Espace
Vert had exercised its pre-emptive right on January 7, 2005, or after the
advance ruling letter was issued. It is clear the Espace Vert failed to notify Telefilm
before exercising its pre-emptive right. In fact, Espace Vert finished
exercising its pre-emptive right on October 14, 2004 (affidavit of the Espace
Vert representative, Exhibit P-30).
[98]
Furthermore,
the exercise of the pre-emptive right carried with it irreversible consequences
as Espace Vert the became the sole producer. In these circumstances, the
respondent cannot be faulted for his decision or the reasons provided in
support.
[99]
On
August 2, 2007, Telefilm sent Espace Vert a letter revoking coproduction status
for Mission Gibbons à Bornéo, Les dragons de Komodo and Les
ours à lunettes. The letter states: [translation]
“you sent us a copy of an agreement signed on October 14, 2004, between you and
Mr. Gay, Judicial Administrator of the Guilgamesh company, in receivership
since November 6, 2003. Under this agreement, all of the rights to the
documentaries have been assigned to your company. Furthermore, at section 2 of
this agreement you acknowledge that you are the sole producer of these
documentaries” (affidavit of the Espace Vert representative, Exhibit P-69, see
also the agreement in Exhibit P-30). Thus, Telefilm could not maintin
coproduction status for the above-mentioned documentaries under the
Canada-France Agreement.
[100] In addition,
contribution to funding was changed along the way. In the coproduction
agreement concluded between Productions Espace Vert VIII and Guilgamesh, on
November 19, 2002, section 20.01 states: [translation]
“the agreement entered into is subject to the approval of the competent authorities
of Canada and France for the purpose of the treaty and their agreement that the
production complies with the requirements of the Treaty and that the Canadian
Group or French Group are thus eleigible for the benefits under the Treaty (Certificate
in accordance with Rule 317, affidavit of the Espace Vert representative, Exhibit
P-14). Section 20.02 of the Agreement also states: [translation] “ each group shall submit this agreement and
any later amemndment to the competent authorities of their country and shall
provide the competent authorities with all relevant documents with a minimum of
delay”, which Espace Vert failed to do when it exercised its pre-emptive right,
in order to obtain the right to Mission Gibbons à Bornéo. As Laurent
Cormier of the CNC pointed out in his e-mail on January 20, 2005, [translation] “for non-completed files,
when a production reverts back to the Canadian producer it obviously loses its
status as an official coproduction and therefore any access to French funding”.
And since France no longer
recognized the production as a coproduction, Telefilm had to revoke
coproduction status.
[101] Moreover,
Espace Vert cannot claim that the respondent failed to respect the rules of
procedural fairness since Telefilm responded, on several occasions, to the many
submissions, questions and applications made by Espace Vert (affidavit of the
Espace Vert representative, Exhibits P-41, 42, 43, 45,49,56,57 and 59). Brigitte
Monneau, from Telefilm, met with Espace Vert’s representatives on January 31,
2005, in order to clarify Telefilm’s position following the singing of the
agreement with the judicial administrator on October 14 which resulted in the
projects losing their official coproduction status. Ms. Monneau was of the same
view as the CNC. She noted in Espace Vert’s file that [translation] “P. Cadieux does not understand why the CNC did
not warn him of this risk when they met in August 2004”. She wrote that she
mentioned to Mr. Cadieux that he was required [translation]
“according to the coproduction contracts, to notify us of any assignment
of projects, which he did not do (we told him that had he done so we would
have been able to warn him that there was a problem)”. She further wrote that
she told Mr. Cadieux that “the correspondence from CNC was clear with respect
to the consequences of the assignment, but that we were waiting for official
correspondence”. She further added that she indicated to Mr. Cadieux that Telefilm
would “have no choice bu to revoke the advance rulings if the CNC did so
because coproduction decisions are necessarily bilateral ones”.
[102] Espace Vert
further argues that the CNC acted in a manner which contradited some of the
positions jointly adopted by Telefilm and the CNC, with regard to the
possibility of proceeding with reassignments. the Court cannot accept this argument
for the following reasons. First, there is no obligation under the Agreement,
for either Telefilm or the CNC, to modify their respective policies and processes,
to accommodate a producer who proceeded to conduct transactions without first
notifying the key stakeholders, namely, the CNC and Telefilm. Second, the fact
that the CNC amended parts of their coproduction clauses subsequent to these
files does not in itself constitute an admission of error. It strikes the Court
as being perfectly normal to want to avoid repeating the same situation in the
future by adding more specific provisions to the contract.
[103] Espace Vert
also claims that the legal opinion it received from its French lawyer, Mr.
Pascal, stated that since the provisions of the French Code de la propriété intellectuelle
were public policy, the pre-emption of Guilgamesh’s rights became binding on
the CNC and on Telefilm, notwithsatnding the contractual rules they cited in
their defence. Espace Vert ought to have undertaken the necessary procedures
before the French courts to express this point of view in opposition to the
CNC. That provision of the French Code is certainly not binding on Telefilm and
cannot relieve Espace Vert of its obligations under the ITA and its regulations,
which grant no discretion to the Minister. The time limits found in the
ITR, particularly the provisions in subsection 1106 (1) are mandatory. Moreover,
the Minister cannot be bound by an approbval given when the conditions
prescribed by the Act were not met (see Canada
(Minister of Mational Revenue) v Inland Industries Ltd [1974] SCR
514 p 523).
[104] Lastly,
Espace Vert also criticizes Telefilm’s refusal to convene a meeting of the
Joint Commission discuss these files. Telefilm is under no obligation to do so
under the terms termes of the Agreement, and its duty of procedural fairness
does not extend that far, as this is a very specific case.
[105] The
coproduction agreement between France and Canada is clear, as
are the procedure to be followed.
[106] The
respondent did not breach his duty of procedural fairness and his decision to
revoke his advance rulings is reasonable and justified. Under these circumstances,
the Court’s intervention is not warranted, and the Minister’s decision is reasonable
and consistent with the Act.
[107] The
application for judicial review must be dismissed, with costs. This decision
applies mutatis mutandis to dockets T-2060-07 and T-2061-07 and shall be
placed in each of the dockets.
JUDGMENT
THE COURT
ORDERS AND ADJUDGES that the application for judicial review is
dismissed, with costs. This decision applies mutatis mutandis to dockets
T-2060-07 and T-2061-07 and shall be placed in each of the dockets.
“André
F. J. Scott”
Certified
true translation
Seabsatian
Desbarats, Translator
Annex
·
Section
125.4 of the Income Tax Act, R.S.C 1985, 5th Supp, as amended:
Canadian Film or Video Production Tax Credit
Definitions
125.4 (1) The definitions in this
subsection apply in this section.
·
“assistance”
«
montant d’aide »
“assistance”
means an amount, other than a prescribed amount or an amount deemed under
subsection 125.4(3) to have been paid, that would be included under paragraph
12(1)(x) in computing a taxpayer’s income for any taxation year if that
paragraph were read without reference to subparagraphs 12(1)(x)(v) to 12(1)(x)(vii).
·
“Canadian film or video production”
« production
cinématographique ou magnétoscopique canadienne »
“Canadian
film or video production” has the meaning assigned by regulation.
·
“Canadian film or video production
certificate”
« certificat
de production cinématographique ou magnétoscopique canadienne »
“Canadian
film or video production certificate” means a certificate issued in respect of
a production by the Minister of Canadian Heritage
o
(a) certifying that the production
is a Canadian film or video production, and
o
(b) estimating amounts relevant for
the purpose of determining the amount deemed under subsection 125.4(3) to have
been paid in respect of the production.
·
“investor”
« investisseur »
“investor”
means a person, other than a prescribed person, who is not actively engaged on
a regular, continuous and substantial basis in a business carried on through a
permanent establishment (as defined by regulation) in Canada that is a Canadian film
or video production business.
·
“labour expenditure”
« dépense de
main-d’oeuvre »
“labour
expenditure” of a corporation for a taxation year in respect of a property of
the corporation that is a Canadian film or video production means, in the case
of a corporation that is not a qualified corporation for the year, nil, and in
the case of a corporation that is a qualified corporation for the year, subject
to subsection 125.4(2), the total of the following amounts to the extent that
they are reasonable in the circumstances and included in the cost or, in the
case of depreciable property, the capital cost to the corporation of the
property:
o
(a) the salary or wages directly
attributable to the production that are incurred after 1994 and in the year, or
the preceding taxation year, by the corporation for the stages of production of
the property, from the final script stage to the end of the post-production
stage, and paid by it in the year or within 60 days after the end of the year
(other than amounts incurred in that preceding year that were paid within 60
days after the end of that preceding year),
o
(b) that portion of the
remuneration (other than salary or wages and other than remuneration that
relates to services rendered in the preceding taxation year and that was paid
within 60 days after the end of that preceding year) that is directly
attributable to the production of property, that relates to services rendered
after 1994 and in the year, or that preceding year, to the corporation for the
stages of production, from the final script stage to the end of the
post-production stage, and that is paid by it in the year or within 60 days
after the end of the year to
§
(i) an individual who is not an employee of
the corporation, to the extent that the amount paid
§
(A) attributable to services personally
rendered by the individual for the production of the property, or
§
(B) is attributable to and does not exceed
the salary or wages of the individual’s employees for personally rendering
services for the production of the property,
§
(ii) another taxable Canadian corporation,
to the extent that the amount paid is attributable to and does not exceed the
salary or wages of the other corporation’s employees for personally rendering
services for the production of the property,
§
(iii) another taxable Canadian corporation
all the issued and outstanding shares of the capital stock of which (except
directors’ qualifying shares) belong to an individual and the activities of
which consist principally of the provision of the individual’s services, to the
extent that the amount paid is attributable to services rendered personally by
the individual for the production of the property, or
§
(iv) a partnership that is carrying on
business in Canada, to the
extent that the amount paid
§
(A) is attributable to services personally
rendered by an individual who is a member of the partnership for the production
of the property, or
§
(B) is attributable to and does not exceed
the salary or wages of the partnership’s employees for personally rendering
services for the production of the property, and
o
(c) where
§
(i) the corporation is a subsidiary
wholly-owned corporation of another taxable Canadian corporation (in this
section referred to as the “parent”), and
§
(ii) the corporation and the parent have
agreed that this paragraph apply in respect of the production,
the reimbursement made
by the corporation in the year, or within 60 days after the end of the year, of
an expenditure that was incurred by the parent in a particular taxation year of
the parent in respect of that production and that would be included in the
labour expenditure of the corporation in respect of the property for the
particular taxation year because of paragraph (a) or (b) if
§
(iii) the corporation had had such a
particular taxation year, and
§
(iv) the expenditure were incurred by the
corporation for the same purpose as it was by the parent and were paid at the
same time and to the same person or partnership as it was by the parent.
·
“qualified corporation”
«
société admissible »
“qualified
corporation” for a taxation year means a corporation that is throughout the
year a prescribed taxable Canadian corporation the activities of which in the
year are primarily the carrying on through a permanent establishment (as
defined by regulation) in Canada of a business that is a Canadian film or video
production business.
·
“qualified labour expenditure”
« dépense de
main-d’oeuvre admissible »
“qualified
labour expenditure” of a corporation for a taxation year in respect of a
property of the corporation that is a Canadian film or video production means
the lesser of
o
(a) the amount, if any, by which
§
(i) the total of
§
(A) the labour expenditure of the
corporation for the year in respect of the production, and
§
(B) the amount by which the total of all
amounts each of which is the labour expenditure of the corporation for a
preceding taxation year in respect of the production exceeds the total of all
amounts each of which is a qualified labour expenditure of the corporation in
respect of the production for a preceding taxation year before the end of which
the principal filming or taping of the production began
exceeds
§
(ii) where the corporation is a parent, the
total of all amounts each of which is an amount that is the subject of an
agreement in respect of the production referred to in paragraph (c) of
the definition “labour expenditure” between the corporation and its
wholly-owned corporation, and
o
(b) the amount determined by the
formula
A - B
where
is 48% of the amount by which
§
(i) the cost or, in the case of depreciable
property, the capital cost to the corporation of the production at the end of
the year,
exceeds
§
(ii) the total of all amounts each of which
is an amount of assistance in respect of that cost that, at the time of the
filing of its return of income for the year, the corporation or any other
person or partnership has received, is entitled to receive or can reasonably be
expected to receive, that has not been repaid before that time pursuant to a
legal obligation to do so (and that does not otherwise reduce that cost), and
is the total of all amounts each of which
is the qualified labour expenditure of the corporation in respect of the
production for a preceding taxation year before the end of which the principal
filming or taping of the production began.
·
“salary or wages”
« traitement ou
salaire »
“salary or
wages” does not include an amount described in section 7 or any amount
determined by reference to profits or revenues.
Rules governing labour expenditure of a corporation
(2) For the purpose of the definition
“labour expenditure” in subsection 125.4(1),
·
(a) remuneration does not include
remuneration determined by reference to profits or revenues;
·
(b) services referred to in
paragraph (b) of that definition that relate to the post-production
stage of the production include only the services that are rendered at that
stage by a person who performs the duties of animation cameraman, assistant
colourist, assistant mixer, assistant sound-effects technician, boom operator,
colourist, computer graphics designer, cutter, developing technician, director
of post production, dubbing technician, encoding technician, inspection
technician — clean up, mixer, optical effects technician, picture editor,
printing technician, projectionist, recording technician, senior editor, sound
editor, sound-effects technician, special effects editor, subtitle technician,
timer, video-film recorder operator, videotape operator or by a person who
performs a prescribed duty; and
·
(c) that definition does not apply
to an amount to which section 37 applies.
Tax credit
(3) Where
·
(a) a qualified corporation for a
taxation year files with its return of income for the year
o
(i) a Canadian film or video production
certificate issued in respect of a Canadian film or video production of the
corporation,
o
(ii) a prescribed form containing
prescribed information, and
o
(iii) each other document prescribed in
respect of the production, and
·
(b) the principal filming or taping
of the production began before the end of the year,
the corporation is deemed to have paid on
its balance-due day for the year an amount on account of its tax payable under
this Part for the year equal to 25% of its qualified labour expenditure for the
year in respect of the production.
Exception
(4) This section does not apply to a
Canadian film or video production where an investor, or a partnership in which
an investor has an interest, directly or indirectly, may deduct an amount in
respect of the production in computing its income for any taxation year.
When assistance received
(5) For the purposes of this Act
other than this section, and for greater certainty, the amount that a
corporation is deemed under subsection 125.4(3) to have paid for a taxation
year is assistance received by the corporation from a government immediately
before the end of the year.
Revocation of a certificate
(6) A Canadian film or video
production certificate in respect of a production may be revoked by the
Minister of Canadian Heritage where
·
(a) an omission or incorrect
statement was made for the purpose of obtaining the certificate, or
·
(b) the production is not a
Canadian film or video production,
and, for the purpose of
subparagraph 125.4(3)(a)(i), a certificate that has been revoked is
deemed never to have been issued.
·
Section
1106 of the Income Tax Regulations, CRC c 945 (ITR):
Division VII
Certificates Issued by the Minister of
Canadian Heritage
Interpretation
1106. (1) The following definitions
apply in this Division and in paragraph (x) of Class 10 in Schedule II.
·
“application for a certificate of completion”
« demande de
certificat d’achèvement »
“application
for a certificate of completion”, in respect of a film or video production,
means an application by a prescribed taxable Canadian corporation in respect of
the production, filed with the Minister of Canadian Heritage before the day (in
this Division referred to as “the production’s application deadline”) that is
the later of
o
(a) the day that is 24 months after
the end of the corporation’s taxation year in which the production’s principal
photography began, or
o
(b) the day that is 18 months after
the day referred to in paragraph (a), if the corporation has filed, with
the Canada Revenue Agency, and provided to the Minister of Canadian Heritage a
copy of, a waiver described in subparagraph 152(4)(a)(ii) of the Act,
within the normal reassessment period for the corporation in respect of the
first and second taxation years ending after the production’s principal
photography began.
·
“Canadian”
« Canadien »
“Canadian”
means a person that is
o
(a) an individual who is
§
(i) a citizen, as defined in subsection
2(1) of the Citizenship Act, of Canada, or
§
(ii) a permanent resident, as defined in
subsection 2(1) of the Immigration and Refugee Protection Act, or
o
(b) a corporation that is a Canadian-controlled
entity, as determined under sections 26 to 28 of the Investment Canada Act.
·
“Canadian
government film agency”
« agence
cinématographique d’État »
“Canadian
government film agency” means a federal or provincial government agency whose
mandate is related to the provision of assistance to film productions in Canada.
·
“certificate of completion”
« certificat
d’achèvement »
“certificate
of completion”, in respect of a film or video production of a corporation,
means a certificate certifying that the production has been completed, issued
by the Minister of Canadian Heritage before the day (in this Division referred
to as “the production’s certification deadline”) that is six months after the
production’s application deadline.
·
“excluded production”
« production
exclue »
“excluded
production” means a film or video production, of a particular corporation that
is a prescribed taxable Canadian corporation,
o
(a) in respect of which
§
(i) the particular corporation has not
filed an application for a certificate of completion before the production’s
application deadline,
§
(ii) a certificate of completion has not
been issued before the production’s certification deadline,
§
(iii) where the production is not a treaty
co-production, neither the particular corporation nor another prescribed
taxable Canadian corporation related to the particular corporation
§
(A) is, except to the extent of an interest
in the production held by a prescribed taxable Canadian corporation as a
co-producer of the production or by a prescribed person, the exclusive
worldwide copyright owner in the production for all commercial exploitation
purposes for the 25-year period that begins at the earliest time after the
production was completed that it is commercially exploitable, and
§
(B) controls the initial licensing of
commercial exploitation,
§
(iv) there is not an agreement in writing,
for consideration at fair market value, to have the production shown in Canada
within the 2-year period that begins at the earliest time after the production
was completed that it is commercially exploitable,
§
(A) with a corporation that is a Canadian
and is a distributor of film or video productions, or
§
(B) with a corporation that holds a
broadcasting license issued by the Canadian Radio-television and Telecommunications
Commission for television markets, or
§
(v) distribution is made in Canada within
the 2-year period that begins at the earliest time after the production was
completed that it is commercially exploitable by a person that is not a
Canadian, or
o
(b) that is
§
(i) news, current events or public affairs
programming, or a programme that includes weather or market reports,
§
(ii) a talk show,
§
(iii) a production in respect of a game,
questionnaire or contest (other than a production directed primarily at
minors),
§
(iv) a sports event or activity,
§
(v) a gala presentation or an awards show,
§
(vi) a production that solicits funds,
§
(vii) reality television,
§
(viii) pornography,
§
(ix) advertising,
§
(x) a production produced primarily for
industrial, corporate or institutional purposes, or
§
(xi) a production, other than a
documentary, all or substantially all of which consists of stock footage.
·
“producer”
« producteur »
“producer”
means a producer of a film or video production, except that it does not include
a person unless the person is the individual who
o
(a) controls and is the central
decision maker in respect of the production;
o
(b) is directly responsible for the
acquisition of the production story or screenplay and the development, creative
and financial control and exploitation of the production; and
o
(c) is identified in the production
as being the producer of the production.
·
“remuneration”
« rémunération
»
“remuneration”
means remuneration other than an amount determined by reference to profits or
revenues.
·
“twinning arrangement”
«
convention de jumelage »
“twinning
arrangement” means the pairing of two distinct film or video productions, one
of which is a Canadian film or video production and the other of which is a
foreign film or video production.
Prescribed Taxable Canadian Corporation
(2) For the purposes of section 125.4
of the Act and this Division, “prescribed taxable Canadian corporation” means a
taxable Canadian corporation that is a Canadian, other than a corporation that
is
·
(a) controlled directly or
indirectly in any manner whatever by one or more persons all or part of whose
taxable income is exempt from tax under Part I of the Act; or
·
(b) a prescribed labour-sponsored
venture capital corporation, as defined in section 6701.
Treaty Co-production
(3) For the purpose of this Division,
“treaty co-production” means a film or video production whose production is
contemplated under any of the following instruments, and to which the
instrument applies:
·
(a) a co-production treaty entered
into between Canada and another
State;
·
(b) the Memorandum of Understanding
between the Government of Canada and the Government of the Hong Kong Special
Administrative Region of the People’s Republic of China on Film and Television
Co-Production;
·
(c) the Common Statement of Policy
on Film, Television and Video Co-Productions between Japan and Canada;
·
(d) the Memorandum of Understanding
between the Government of Canada and the Government of the Republic of Korea on Television Co-Production; and
·
(e) the Memorandum of Understanding
between the Government of Canada and the Government of the Republic of Malta on Audio-Visual Relations.
Canadian Film or Video Production
(4) Subject to subsections (6) to
(9), for the purposes of section 125.4 of the Act, this Part and Schedule II,
“Canadian film or video production” means a film or video production, other
than an excluded production, of a prescribed taxable Canadian corporation in
respect of which the Minister of Canadian Heritage has issued a certificate
(other than a certificate that has been revoked under subsection 125.4(6) of
the Act) and that is
·
(a) a treaty co-production; or
·
(b) a film or video production
o
(i) whose producer is a Canadian at all
times during its production,
o
(ii) in respect of which the Minister of
Canadian Heritage has allotted not less than six points in accordance with
subsection (5),
o
(iii) in respect of which not less than 75%
of the total of all costs for services provided in respect of producing the
production (other than excluded costs) was payable in respect of services provided
to or by individuals who are Canadians, and for the purpose of this
subparagraph, excluded costs are
§
(A) costs determined by reference to the
amount of income from the production,
§
(B) remuneration payable to, or in respect
of, the producer or individuals described in any of subparagraphs (5)(a)(i)
to (viii) and (b)(i) to (vi) and paragraph (5)(c) (including any
individuals that would be described in paragraph (5)(c) if they were
Canadians),
§
(C) amounts payable in respect of
insurance, financing, brokerage, legal and accounting fees, and similar
amounts, and
§
(D) costs described in subparagraph (iv),
and
o
(iv) in respect of which not less than 75%
of the total of all costs incurred for the post-production of the production,
including laboratory work, sound re-recording, sound editing and picture
editing, (other than costs that are determined by reference to the amount of
income from the production and remuneration that is payable to, or in respect
of, the producer or individuals described in any of subparagraphs (5)(a)(i)
to (viii) and (b)(i) to (vi) and paragraph (5)(c), including any
individuals that would be described in paragraph (5)(c) if they were
Canadians) was incurred in respect of services provided in Canada.
(5) For the purposes of this Division,
the Minister of Canadian Heritage shall allot, in respect of a film or video
production
·
(a) that is not an animation
production, in respect of each of the following persons if that person is an
individual who is a Canadian,
o
(i) for the director, two points,
o
(ii) for the screenwriter, two points,
o
(iii) for the lead performer for whose
services the highest remuneration was payable, one point,
o
(iv) for the lead performer for whose
services the second highest remuneration was payable, one point,
o
(v) for the art director, one point,
o
(vi) for the director of photography, one
point,
o
(vii) for the music composer, one point,
and
o
(viii) for the picture editor, one point;
·
(b) that is an animation
production, in respect of each of the following persons if that person is an
individual who is a Canadian,
o
(i) for the director, one point,
o
(ii) for the lead voice for which the
highest or second highest remuneration was payable, one point,
o
(iii) for the design supervisor, one point,
o
(iv) for the camera operator where the camera
operation is done in Canada,
one point,
o
(v) for the music composer, one point, and
o
(vi) for the picture editor, one point;
·
(c) that is an animation
production, one point if both the principal screenwriter and the storyboard
supervisor are individuals who are Canadians; and
·
(d) that is an animation
production, in respect of each of the following places if that place is in Canada,
o
(i) for the place where the layout and
background work is done, one point,
o
(ii) for the place where the key animation
is done, one point, and
o
(iii) for the place where the assistant
animation and in-betweening is done, one point.
(6) A production (other than a
production that is an animation production or a treaty co-production) is a
Canadian film or video production only if there is allotted in respect of the
production two points under subparagraph (5)(a)(i) or (ii) and one point
under subparagraph (5)(a)(iii) or (iv).
(7) An animation production (other
than a production that is a treaty co-production) is a Canadian film or video
production only if there is allotted, in respect of the production,
·
(a) one point under subparagraph
(5)(b)(i) or paragraph (5)(c);
·
(b) one point under subparagraph
(5)(b)(ii); and
·
(c) one point under subparagraph
(5)(d)(ii).
Lead performer/screenwriter
(8) For the purposes of this
Division,
·
(a) a lead performer in respect of
a production is an actor or actress who has a leading role in the production
having regard to the performer’s remuneration, billing and time on screen;
·
(b) a lead voice in respect of an
animation production is the voice of the individual who has a leading role in
the production having regard to the length of time that the individual’s voice
is heard in the production and the individual’s remuneration; and
·
(c) where a person who is not a
Canadian participates in the writing and preparation of the screenplay for a
production, the screenwriter is not a Canadian unless the principal
screenwriter is an individual who is otherwise a Canadian, the screenplay for
the production is based upon a work authored by a Canadian, and the work is
published in Canada.
Documentary Production
(9) A documentary production that is
not an excluded production, and that is allotted less than six points because
one or more of the positions referred to in paragraph (5)(a) is
unoccupied, is a Canadian film or video production if all of the positions
described in that paragraph that are occupied in respect of the production are
occupied by individuals who are Canadians.
Prescribed Person
(10) For the purpose of section 125.4
of the Act and this Division, “prescribed person” means any of the following:
·
(a) a corporation that holds a
television, specialty or pay-television broadcasting licence issued by the
Canadian Radio-television and Telecommunications Commission;
·
(b) a corporation that holds a
broadcast undertaking licence and that provides production funding as a result
of a “significant benefits” commitment given to the Canadian Radio-television
and Telecommunications Commission;
·
(c) a person to which paragraph 149(1)(l)
of the Act applies and that has a fund that is used to finance Canadian film or
video productions;
·
(d) a Canadian government film
agency;
·
(e) in respect of a film or video
production, a non-resident person that does not carry on a business in Canada
through a permanent establishment in Canada where the person’s interest in the
production is acquired to comply with the certification requirements of a
treaty co-production twinning arrangement; and
·
(f) a person
o
(i) to which paragraph 149(1)(f) of
the Act applies,
o
(ii) that has a fund that is used to
finance Canadian film or video productions, all or substantially all of which
financing is provided by way of a direct ownership interest in those
productions, and
o
(iii) that, after 1996, has received donations
only from persons described in paragraphs (a) to (e).
Prescribed Amount
(11) For the purpose of the
definition “assistance” in subsection 125.4(1) of the Act, “prescribed amount”
means an amount paid or payable to a taxpayer under the License Fee Program of
the Canada Television and Cable Production Fund or the Canada Television
Fund/Fonds canadien de télévision.
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