Date: 20110407
Docket: T-845-10
Citation: 2011 FC 435
Ottawa, Ontario, April 7, 2011
PRESENT: The Honourable Mr. Justice Hughes
BETWEEN:
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TRICON TELEVISION29 INC.
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Applicant
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and
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MINISTER OF CANADIAN HERITAGE
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Respondent
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REASONS FOR JUDGMENT AND
JUDGMENT
[1]
This
is an application for judicial review of a decision of the Director General,
Cultural Industries, Canadian Heritage dated April 29, 2010, reference number
PCH13235, in which the application by Tricon Television29 Inc., the Applicant
in these proceedings, for a Canadian film or video production certificate for
the production “Beautiful People”, was denied. The Applicant Tricon seeks to
have that decision quashed and either returned for redetermination or an order that
the Director General be required to issue such a certificate.
[2]
For
the reasons that follow I am dismissing this application with costs to the
Respondent Minister of Canadian Heritage fixed in the sum of $2500.00.
[3]
The
Income Tax Act, RSC 1985, c 1 (5th supp) as periodically
amended (the Act), section 125.4, provides the scheme whereby a
Canadian corporation, which carries on the business through a permanent
establishment in Canada of producing a “Canadian” film or video production, is
entitled to a credit equal to 25% of its qualified labour expenditure for the
year of production. The Applicant Tricon is such a Canadian corporation, the
issue is whether the production “Beautiful People” is a “Canadian” film or
video production. The record suggests that the amount of the credit at issue is
in the order of $350,000.00.
[4]
There
is a group within the Ministry of Canadian Heritage called the Canadian
Audio-Visual Certification Office (CAVCO) which is charged with making a
recommendation to the Director General, Cultural Industries, as to whether a
particular film or video production is “Canadian” within the meaning of the Act.
The Director General acts as the delegate of the Minister of Canadian Heritage
for this purpose.
[5]
The
provisions of section 125.4 of the Income Tax Act relevant to the issues
here include subsection (3) which reads:
Tax credit
(3) Where
(a) a qualified corporation for a
taxation year files with its return of income for the year
(i) a Canadian film or
video production certificate issued in respect of a Canadian film or video
production of the corporation,
(ii) a prescribed form
containing prescribed information, and
(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.
[6]
The
provisions of the Income Tax Regulations, CRC, c 945, as amended,
pertinent to the issues here are found in section 1106. Subsections 1106(5)(a),
1106(8)(a) and 1106(9) provide:
(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,
(i) for the director,
two points,
(ii) for the
screenwriter, two points,
(iii) for the lead
performer for whose services the highest remuneration was payable, one point,
(iv) for the lead
performer for whose services the second highest remuneration was payable, one
point,
(v) for the art
director, one point,
(vi) for the director of
photography, one point,
(vii) for the music
composer, one point, and
(viii) for the picture
editor, one point;
…
(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;
…
(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.
[7]
CAVCO,
in February 2004, published Guidelines entitled “Canadian Film or Video
Production Tax Credit (CPTC) Guidelines” for the assistance of producers in
applying for tax credits. Pertinent to the issues here are the Guidelines
respecting Creative Services (live action) and Lead Performer, which provide:
6. Creative services
a) Non-animated
productions (live action)
To be recognized as a
Canadian production, a live action production must be allotted a total of at
least six (6) points according to the following scale:
(Points are allotted
if the individual(s) who rendered the service is/are Canadian).
Director 2
points
Screenwriter 2
points
Lead performer for
whose services the highest remuneration was payable 1
point
Lead performer for
whose services the second highest remuneration was payable 1
point
Director of
photography* 1 point
Art director** 1
point
Music composer*** 1
point
Picture editor* 1
point
* For video
productions, the equivalents to DOP are either "technical director"
or "lighting director" and the equivalent to picture editor is
"off-line editor".
** "Art
director" refers to the head of the art department. In some cases, this
individual may have the title of "production designer".
*** The point for
music composer is allotted only if the music created for the production is an
original work.
In addition, a
production must obtain two of the four points allotted for the director and the
screenwriter (one of the two positions must be filled by a Canadian). A
production must also obtain one of the two points allotted for lead performers
(one of these two positions must also be filled by a Canadian).
In the case of a
documentary production not involving performers or other functions such as art
director or music composer, a production may meet the creative services
criteria even if the production has not been allotted the minimum six points
required. However, all the filled creative positions must be occupied by
Canadians.
…
d) Lead performer and
screenwriter
i) Lead performer
CAVCO will use three
criteria to determine which individuals are in effect the lead performers in
non-animated productions:
(i) remuneration
(including all types of benefits, residuals, travel and living expenses, etc.),
(ii) billing and (iii) time on screen.
In the case of an
animation production, CAVCO will determine which individual is in effect the
lead voice on the basis of remuneration received (including benefits,
residuals, travel and living expenses, etc.) and length of time that the
individual's voice is heard in the production.
An actor or actress
is an individual engaged to speak lines of dialogue or mime a scene, or whose
performance consists in interpreting a character, even where there is no
dialogue. When there is no actor or actress, an individual who performs one of
the following functions may be considered equivalent to the lead performer:
dancer, singer, specialty act performer, host (a performer who introduces or
links segments of a program), narrator (a performer engaged to perform
narrative material), off-camera performer (a performer other than the narrator
engaged to perform a role in a dramatic work off-camera), or the actor who
performs or reads the voice of a character in a film or animated production.
Guests on a magazine
program, or the subjects of biographical documentaries, are not considered
performers for certification purposes.
[8]
The
2004 Guidelines were revised on March 31, 2010 and will be discussed later in
these reasons.
[9]
The
parties presented affidavit evidence with exhibits which reflect the
correspondence and discussions between Tricon and its representatives and
representatives of CAVCO. This evidence also shows some of the internal
memoranda and discussions within CAVCO. In particular the Applicant Tricon
filed the affidavit of Andrea Gorfolova, president of Tricon, with exhibits.
The Respondent Minister filed the affidavit of Robert Soucy, Director of CAVCO,
a position that he has held for twenty years, with exhibits. There was no
cross-examination upon either affidavit. It is from these affidavits and
exhibits that I have determined the following to be the relevant facts.
[10]
On
December 4, 2008 CAVCO received an application for certification as a Canadian
film or video production titled “Beautiful People” as a “Documentary”
comprising 13 episodes of 30 minutes each in length. The producer(s) and key
creative personnel were all described as Canadian. No mention was made in the
application of performers. There were no discussions between Tricon and CAVCO
prior to the submission of this application as to whether the production would
be likely ruled as “Canadian” or whether adjustments could be made to ensure
that it was “Canadian”. Apparently it is not unusual for producers to engage in
such discussions with CAVCO before expensive commitments as to production are
made, for this purpose. Tricon was an experienced producer having produced at
least two other television shows including “Restaurant Makeover”.
[11]
A
person viewing the “Beautiful People” episodes would see much on screen time
occupied by one or both of Greg Hodge (a British subject) and Robert Hintze (a
Danish citizen). The nature
of the
relationship between these two persons and Tricon and “Beautiful People” is set
out in an agreement between them dated April 24, 2008 which states, in part:
Re; “Beautiful People”
Further to our
recent discussion and agreements in respect of a television series entitled
“Beautiful People” this letter will serve to confirm the following understanding
between Tricon Television29 Inc. (“Tricon”) one [sic] the one hand; and
BeautifulPeople Network BP HQ Denmark, Greg Hodge (“Hodge”), Robert Hintze
(“Hintze”) and Kasper Hjorth (“Hjorth”) (sometimes collectively referred to as
the “Owners”) on the other hand, regarding the matters set forth below.
1. The Parties agree and
acknowledge that Tricon Television29 Inc. (“Tricon”) will commence production
of the first season comprising 13 episodes of docu-soap television serious
currently entitled “Beautiful People” (the “Show”) respecting the launch of
Canadian operations for the company BeautifulPeople Network owned by the Owners
(the “Business”). The Show will feature Owners as on-camera subjects and focus
on various aspects of the Business and the Owners’ activities during the launch
of Canadian operations of the Business.
2. Owners hereby warrant and
represent that the Owners are the exclusive owners of the Business and further
agree that they will establish Canadian operations of the Business in the Toronto area commencing on or about
April 2008. It is a material and essential term of this agreement that Hodge
and Hintze agree that they will make themselves available for and be featured
as on-camera subjects as required by Tricon for the Show according to the
production schedule during the term of shooting currently scheduled from April
24, through the end of October 2008 in and around Toronto. The Owners
acknowledge and agree that Hodge and Hintze will be in Toronto and make
themselves available for shooting by Tricon on a full time basis during the
four month period from April 23 through August 23, 2008 and on a part-time
basis (which for certainty comprises at least 15 shooting days per month) from
August 24 through October 24, 2008.
…
[12]
If
the “Beautiful People” production is not a documentary, then Hodge and
Hintze would be classified as “Lead Performers” and the production would not be
eligible to be certified as a “Canadian” production. Even if the production was
a “Documentary” if Hodge and Hintze were classified as “Lead
Performers” the production could not be certified as “Canadian”. The question
for determination as urged by the Applicant with CAVCO and with this Court, is
whether “Beautiful People” can fit within subsection 1106(9) of the Regulations
which provides that if the position of “Lead Performer” is “unoccupied”
then consideration must be given to all other individuals involved in the
production. Here all other such persons are Canadian. I repeat section 1106(9)
of the Regulations:
(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.
[13]
Reference
has been made in the dealings between Tricon and CAVCO to a ruling made by the
Canadian Radio-Television and Telecommunications Commission (CRTC) as to
whether “Beautiful People” was a “Canadian” program for broadcasting purposes.
The criteria to be applied are much the same as those applied by CAVCO with one
important exception. Unlike CAVCO, the CRTC can make exceptions which it did in
the case of “Beautiful People”. In its ruling set out in a letter from the CRTC
to Tricon dated 2009/01/13 the CRTC found Hodge and Hintze to be Lead
Performers but also found an exception was warranted. It wrote, in part:
Although the criteria require that at
least one lead performer in a production be Canadian, the Commission has
carefully considered your reasons why your production should receive
certification as an exception regarding the participation of Greg Hodge and
Robert Luciano Hintze. The Commission is satisfied that an exception is
warranted in this case, as the format of the production required that these
individuals were portrayed on-screen by themselves, rather than by actors.
Notwithstanding this application of the exception
permissible under PN CRTC 2000-42, you are reminded that the Commission looks
at each application seeking an exception on a case-by-case basis and this
approval should not be construed as a precedent for future applications. In
this regard, it must be clear that not only does the Commission consider it of
utmost importance to the Canadian program certification process that Canadians
be employed in key creative positions, but also that producers make every
effort to employ Canadians in these positions.
[14]
None
of the parties asserted that this determination acted as a binding precedent
for the issues before me.
[15]
Following
the submission of the application by Tricon for certification by CAVCO there were
exchanges by e-mail and otherwise as to information and documents required. The
main contact at CAVCO during this time was Hiba Hreiche who wrote an internal
memorandum dated June 2, 2009 to a superior, saying:
After the thorough review of the above
noted production, I have come to the conclusion that this production is not, in
fact a Documentary, but rather it leans towards a Reality Show hosted by 2
non-Canadians.
The production is claimed to be a
Documentary with the subject being a website called beautifulpeople.net. Also
considered to be the subject is the founders and directors of the website,
Robert Luciano Hintze and Greg Hodge. After viewing the DVD’s of this
production it has become apparent that, if this production is a Documentary,
that the subject is beautifulpeople.net and Robert Luciano Hintze and Greg
Hodge are the hosts. That being said, this production would be ineligible since
both men are not Canadian (they would lose both points for First and Second
Lead Performers).
At this point, I am referring this file
for your recommendation, and possibly the denial of the Part A certificate.
Please view the DVD’s and advise.
[16]
This
was an internal communication at CAVCO and not communicated to Tricon.
[17]
The
concern raised in this memorandum was apparently discussed internally at CAVCO
following which Hreiche sent out an e-mail to Tricon, Caminie Mahadeo, on July
24, 2009, saying:
Hi Caminie;
I would like to inform you, that after
discussions with my supervisor we found that there might be a problem with the
eligibility of this production due to the nationality of your First and Second
Lead Performers. After viewing the DVD’s, it appears like your Lead Performers
were Robert Luciano Hintze and Greg Hodge. The subject of the documentary seems
to be the website- Beautiful People- rather than the individuals who co-founded
the website. Thus, this file has been recommended to our internal compliance
committee for consultation at the senior management level. If it is decided
that the file is eligible, I will notify you, otherwise you will hear from our compliance
committee addressing our concerns.
Should you have any questions please do
not hesitate to contact me.
[18]
Mahadeo
responded on July 27, 2009 by e-mail offering to send the CRTC decision previously
referred to in these reasons. Mahadeo said:
Hello Hiba
Hope you had a great week-end
I am very concerned that there might be a
problem with the eligibility of this production- I do not know if it will help
you to have the CRTC certification? It was initially rejected by the CRTC but
the producer on the show explained the nature of the show in great detail which
led to a favourable ruling from the Commission.
Let me know if you think these documents
will assist.
[19]
A
further exchange of e-mails occurred in which the CRTC decision and copies of other
documents were requested and sent, on September 16, 2009. These documents
included a copy of the April 24, 2008 agreement between Tricon, Hodge, Hintze
and others previously referred to in which, in paragraph 1, uses the word “docu-soap”
to describe the production.
[20]
Debra
Wynter, a Senior Policy Advisor at CAVCO sent an e-mail to Mahadeo on October
14, 2009 indicating that CAVCO was of the view that the production did not
qualify as “Canadian”. In part, the e-mail said:
Hi Caminie,
Thank you for your response dated September
16th, 2009. I have had a chance to review it and consider its
contents.
We are of the view that the production
BEAUTIFUL PEOPLE does not qualify for the Canadian Film or Video production Tax
Credit (CPTC), as the two leading performers are not Canadian (i.e. there is no
Canadian lead performer who is highest or second-highest remunerated, which is
a requirement of the CPTC program when there are leading performers in a
production). In a “docu-soap” reality based television series, such as how this
production is identified, the individuals who appear on screen are typically
deemed to be performers in the production. Robert Hintze and Greg Hodge play
themselves and are remunerated for their participation in this series. Further,
we note that your company acknowledges that Hintze and Hodge are lead
performers in this production, as your company’s appeal to the CRTC to receive
an exemption from the CRTC’s requirement to have a Canadian lead simply
describes why these foreign lead performers were necessary for the production.
We understand that the CRTC granted this production an exemption in this
regard. However, CAVCO has no jurisdiction to grant a similar exemption from
the requirements of the Income Tax Regulations.
There are other elements in this
production that also concern CAVCO with respect to the eligibility of this
production for the CPTC:
[21]
Following
this e-mail CAVCO conducted internal discussions and prepared an internal
memorandum dated October 20, 2009. That memorandum reviewed some of the history
of the matter and the position of Tricon as expressed in discussions between
CAVCO and Tricon’s lawyer Ken Rosenthal. The memorandum concluded with a
recommendation that an Advance Notice of Denial letter be sent to Tricon so as
to afford it an opportunity to make further representations.
[22]
On
October 22, 2009 CAVCO sent an Advance Notice of Denial to Tricon saying:
ADVANCE NOTICE OF DENIAL
Dear Ms. Gorfolova:
I am writing to you concerning
your application for a Canadian film or video production certificate (the
“certificate”) for BEAUTIFUL PEOPLE.
A review of your application
reveals that BEAUTIFUL PEOPLE is not a Canadian film or video production
within the meaning of section 125.4 of the Income Tax Act (the “Act”) and
section 1106 of the Income Tax Regulations (the “Regulations”) because neither
the first nor the second lead performer is Canadian. This is contrary to the
requirement at subsection 1106(6) of the Regulations which states: “A
production ... is a Canadian film or video production only if there is allotted
in respect of the production.. .one point under subparagraph (5)(a)(iii) or
(iv).”
No certificate can be issued
to a production that does not meet one or more requirements of the Act and
Regulations.
You are welcome to submit a
written response to the attention of the undersigned, within thirty (30) days
following the date of this advance notice, accompanied by any new information and/or
documentation that could impact on the evaluation of this matter. Upon expiry
of this period, CAVCO will recommend that the certificate be denied by the
Minister of Canadian Heritage in respect of BEAUTIFUL PEOPLE unless
additional information is provided in support of the production’s eligibility
for the Canadian Film or Video Production Tax Credit.
[23]
Tricon’s
lawyer, Rosenthal, wrote a lengthy letter in response to CAVCO dated November
18, 2009. In addressing whether Hodge and Hintze were “Lead Performers” that
letter said, in part:
Under CAVCO’s definition of Lead
Performer in the CAVCO Guidelines, a Lead Performer is: “an actor or actress
engaged to speak lines of dialogue or mime a scene or whose performance
consists of interpreting a character... When there is no actor or actress
an individual who performs one of the following functions may be considered
equivalent to the lead performer: dancer, singer, specialty act performer,
host (a performer who introduces or links segments of a program), narrator, off
camera performer.. .or the actor who performs or reads the voice of a character
in a film. tab 4
Again, Hintze and Hodge could not be
considered Lead Performers by any reading of CAVCO’s own published Guidelines.
Ms. Wynter either ignored or failed to
apply the relevant Regulations and Guidelines. No interpretation of the
relevant Guidelines and Regulations could lead to the conclusion that Hintze
and Hodge are Lead Performers.
Rather than relying on the very
Regulations and Guidelines provided to the public, Ms. Wynter apparently relied
upon internal CAVCO policy -- unknown and not communicated to the public and
not supported by any relevant legislation, rule or guideline -- that is, Ms.
Wynter concludes Hintze and Hodge are Lead Performers because the Production
“is deemed to be a “docu-soap” (the term “docu-soap” is not defined anywhere in
the regulations or guidelines or public announcements) and because “individuals
who appear on screen in docu-soaps are typically deemed to be
performers.”
Typically? Does this mean frequently?
mainly? often?
This begs the question: -- How can a
determination be said to have been properly made if it is not supported by the
Regulations CAVCO is mandated to follow, but instead is based on an opinion and
internal policy, unknown to the public, applied only frequently (i.e. not
always) to a term (‘docu-soap’) that is not defined anywhere in any statute,
rule, Regulation or Guideline?
[24]
Apparently
due to the pressure of other work and the Christmas holidays this matter did
not receive immediate attention at CAVCO. On January 13, 2010, Karyn Wichers,
Manager, Delivery and Strategic Planning at CAVCO, circulated a memorandum for
internal use which reviewed the situation and concluded that “Beautiful People”
was not a Documentary by genre but that was immaterial since Hodge and Hintze
were Lead Performers and not Canadian. The memorandum concluded with the
recommendation that the production not be certified. The memorandum also
pointed out that certain genres and other definitions were unclear in the 2004
guidelines and should be clarified in the forthcoming 2010 guidelines. Examples
of such definitions were given. The Conclusions and Recommendations portion of
the memorandum stated:
Conclusions and Recommendations
For the case of Beautiful People in
particular, it is recommended that CAVCO not certify the production as a
Canadian film or video production. The production is not a documentary series
for the reasons stated above. Therefore, a lead performer point is necessary,
however, the two leads are non-Canadian.
In regards to the larger policy questions
that this production has raised, the following is recommended:
• CAVCO issue its genre definitions soon,
perhaps prior [to] the official launch of CAVCO Online. This will give more
precision for CAVCO and producers when trying to understand genre issues.
• CAVCO needs to add a definition of
reality-based television to its list of eligible genres since one does not
exist in the CAVCO Online definitions which were created by the System Council.
It will be important to make a distinction between reality-surveillance programming
which is ineligible and reality-based television such as Beautiful People and
the many other examples of similar programming that is eligible. CAVCO will
need to examine the few industry definitions that already exist such as the
CRTC and SODEC (as explained above).
• CAVCO should re-examine its definition
of lead performer which was written prior to the emergence of the explosion of
reality television in the industry. This will also be part of the list of
definitions in the new guidelines.
[25]
Counsel
for Tricon at the hearing made reference to this memorandum in support of an
argument that CAVCO was applying criteria established only in the subsequent
March 31, 2010 guidelines and that those criteria had not been communicated to
Tricon so as to allow Tricon to give a meaningful response. I do not view this
memorandum in this way. I view the memorandum as being directed to two issues,
one being the certification of “Beautiful People” under the existing guidelines
and recommending against certification. The other issue is directed to the
necessity of ensuring that clarification is made in the new guidelines.
[26]
On
January 19, 2010, Rosenthal sent an e-mail to CAVCO saying that “very relevant
information has come to light” and asking for 10 days to submit that
information. That extension was given. The information, as submitted was a
summary written by the director of “Beautiful People”. In part, it says:
BEAUTIFUL PEOPLE- the series is the only
complete documentation of the site and its off colour creators that exists. It
chronicles from the moment they arrive in Canada to the moment they launched the Canadian
site. Greg and Rob are not actors. They are the founders of Beautiful People.
The Series also profiles real members of
Beautiful People. All individuals featured as members in the Series are real
members. They don’t play one on television. We made a creative decision from
the Show’s inception to focus not only on the founders but on actual Canadians
who joined, wanted to join or who were rejected by the Web site. Each and every
episode profiles regular Canadians and/or the Canadian media reaction to the BP
business and/or Canadian businesses seeking alliances with the business.
BEAUTIFUL PEOPLE is a documentary series.
It documents the first months of birthing the Canadian site and all the related
press coverage and strong reactions to its Canadian launch.
[27]
On
April 23, 2010 Debra Wynter at CAVCO prepared an internal memorandum which was approved
by her manager and sent by the Director, Robert Soucy, to the Director General,
Jean-Francois Bernier. The memorandum concluded by saying that a Notice of
Denial for Mr. Bernier’s signature would follow. The memorandum said, in part:
BEAUTIFUL PEOPLE is a 13-episode television
series (30 minutes) which highlights the Canadian launch of the controversial
website BeautifulPeople.net. It follows the exploits of European playboys
founder Robert Hintze (“Hintze”) and website managing director Greg Hodge
(“Hodge”) as they interact with Canadian members of the website and the
Canadian media. The CRTC categorized this production as General entertainment
and human interest (category 11) and refused the production company’s claim
that the production is a documentary. It also deemed Hintze and Hodge to be the
sole lead performers in the production. CAVCO’s analysis of the application for
a Canadian film or video production certificate concurs with the CRTC’s
determination. Because neither lead performer is Canadian the production is
ineligible for the Canadian Film or Video Production Tax Credit because the
requirement at subsection 1106(6) of the Income Tax Regulations has not been
met.
[28]
The
Notice of Denial sent to Tricon on April 29, 2010, is the subject of this
judicial review. It said in part:
After careful consideration of
your November 18th, 2009 response and the supplemental documentation
submitted electronically on January 28th, 2010, CAVCO remains of the
view that the production BEAUTIFUL PEOPLE does not meet the aforementioned
requirement of the Regulations and has recommended to the Minister of Canadian
Heritage that your application for a Canadian film or video production be
denied.
CAVCO considers that the
production has, for the purpose of the Regulations, two lead performers and
that these positions are not occupied by individuals who are Canadian. The two
lead performers and protagonists in the production are Robert Luciano Hintze
(“Hintze”), a Danish citizen, who is founder of the BeautifulPeople.net
website, and Greg Hodge (“Hodge”), a British citizen, who is managing director
of the website. Hintze and Hodge are lead performers because, while they play
themselves, they perform particular personas of themselves. A large portion of
the dialogue between Hintze and Hodge, and their statements on screen, are
staged and edited for dramatic effect. Hintze and Hodge also act as hosts of
the production, as their performances regularly link or introduce segments of
the production to enable the storyline to progress. Examples of the
performances of Hintze and Hodge, as seen in the episodes submitted to CAVCO,
are provided in Annex A (attached hereto).
The three criteria that are
used to determine who the leading performers are in a production for purposes
of the Canadian Film or Video Production Tax Credit, i.e. remuneration,
billing, and time on screen, are applicable to Hintze’s and Hodge’s roles in
the production as illustrated below:
o Remuneration
Although no direct remuneration was paid
to Hintze and Hodge, they are effectively secured and remunerated by the
producer for their participation in the production through the payment of
$60,000 (to be used exclusively toward activities relating to the Canadian
website launch) and by the coverage of the costs of Hintze’s and Hodge’s
airfare and accommodation and the provision of the use of a furnished office in
Toronto while shooting.
o Billing
The production’s stylized generic opening
showcases Hintze and Hodge as the “stars” of the production, as do the graphic
transitions to the commercial breaks. The end credits commence rolling with the
industry-standard term “Featuring” before the name of Hintze and Hodge, who are
the only performers credited.
o Time on screen
The production follows the exploits of
Hintze and Hodge. Accordingly, their time on screen is predominant in the
production, which is reflective of lead performers.
In view of the foregoing, please be
informed that, on behalf of the Minister of Canadian Heritage, I have accepted
CAVCO’s recommendation in this matter. Your application for a Canadian film or
video production certificate for the production BEAUTIFUL PEOPLE is
denied. Please note that this decision is final.
[29]
An
attachment to that Notice provided several examples of scenes from the series
used to support the position that Hodge and Hintze were lead performers.
ISSUES
[30]
The
Applicant Tricon raised a number of issues in its memorandum which, as a result
of submissions by its Counsel at the hearing, can be reduced to the following:
1. Did CAVCO owe a duty of fairness to
Tricon and was that duty breached? In particular did CAVCO use guidelines which
were not available to the public at the time that its decision was reached.
2. Were
CAVCO’s reasons reasonable and transparent?
3. Did
CAVCO err in law in its interpretations of the Act, Regulations
or Guidelines?
4. Was
CAVCO’s decision reasonable?
5. Was
CAVCO biased in respect of its determination as to the genre and lead
performer?
GENERAL
DISCUSSION
[31]
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.
[32]
In
the present case I am struck by the patience and courtesy extended by the
members of CAVCO to Tricon and its representatives. Tricon was provided with
several opportunities to know the preliminary views that CAVCO had formed in
respect of the matters in issue and was given not only formal advance notice of
a determination, but informal advance notice with ample opportunity to make
submissions. Those submissions were received and considered.
[33]
The
fact that the Applicant has now become aware of several of the internal
memoranda, correspondence and exchanges within CAVCO does not make the decision
making process suspect or any less valid. In a quote attributed to Chancellor
Otto von Bismarck:
“Laws are like sausages, it is better not
to see them made.”
[34]
It
is entirely normal and a good thing that there was an internal debate in CAVCO
as to whether Hodge and Hintze were “actors” and “Lead Performers”. Tricon was
given full opportunity to make submissions in respect of the issue. Those
submissions were fully considered.
[35]
To
address the issues in particular.
ISSUE #1. Did
CAVCO owe a duty of fairness to Tricon and was that duty breached? In
particular did CAVCO use guidelines which were not available to the public at
the time that its decision was reached?
[36]
As
previously discussed, the internal memorandum distributed January 13, 2010
addresses two issues. One is whether “Beautiful People” was a documentary and
whether Hodge and Hintze were lead performers. The other issue was to address
the forthcoming new guidelines and emphasis that certain descriptions required
great precision.
[37]
Under
the 2004 Guidelines it was determined that Hodge and Hintze were lead
performers. Nothing in the 2010 Guidelines would have changed that
determination. There was no denial of fairness. The final determination was
made under the old guidelines.
ISSUE #2. Were CAVCO’s reasons reasonable
and transparent?
[38]
The
Notice of Denial dated April 29, 2010 is clear as to the denial and reasons for
it. It particularly addresses the issue of the roles of Hodge and Hintze in the
production using the criteria set out in section 1106(8)(a) of the Income
Tax Regulations - remuneration billing and time on screen:
(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;
[39]
The
reasons are quite adequate and even exemplary.
ISSUE #3. Did CAVCO
err in law in its interpretations of the Act, Regulations or Guidelines?
[40]
No
error of law has been established. The decision of CAVCO is within the criteria
and boundaries of the Income Tax Act, the Regulations and the Guidelines.
ISSUE #4. Was
CAVCO’s decision reasonable?
[41]
The
decision at issue is one that is to be reviewed on the standard of
reasonableness. In this regard the well known statements of the Supreme Court
of Canada in Dunsmuir, supra at paragraph 47 and Khosa, supra at
paragraph 46 are pertinent:
Dunsmuir:
[47] Reasonableness is a deferential standard
animated by the principle that underlies the development of the two previous
standards of reasonableness: certain questions that come before administrative
tribunals do not lend themselves to one specific, particular result.
Instead, they may give rise to a number of possible, reasonable conclusions.
Tribunals have a margin of appreciation within the range of acceptable and
rational solutions. A court conducting a review for reasonableness
inquires into the qualities that make a decision reasonable, referring both to
the process of articulating the reasons and to outcomes. In judicial
review, reasonableness is concerned mostly with the existence of justification,
transparency and intelligibility within the decision-making process. But
it is also concerned with whether the decision falls within a range of
possible, acceptable outcomes which are defensible in respect of the facts and
law.
Khosa:
[46] More generally,
it is clear from s. 18.1(4)(d) that Parliament intended administrative fact
finding to command a high degree of deference. This is quite consistent with Dunsmuir.
It provides legislative precision to the reasonableness standard of review of
factual issues in cases falling under the Federal Courts Act.
[42]
The
decision at issue here, whether Hodge and Hintze are “lead performers” is
clearly well within the administrative mandate and expertise of CAVCO. While
the decision was not an easy one, it was one that CAVCO was entitled to make.
It made that decision fully aware of Tricon’s representations. It was
reasonable.
ISSUE #5 Was CAVCO
biased in respect of its determination as to the genre and lead performer?
[43]
Simply
because CAVCO made a determination against the interests of Tricon does not
mean that it is biased. The fact that internal memoranda discussing the issue
were generated does not mean that the authors or recipients were biased. I find
nothing on the record that would suggest bias.
CONCLUSION AND COSTS
[44]
In
conclusion I find that there is no basis upon which to set aside the decision
denying Tricon’s application for certification of “Beautiful People” as
“Canadian”. There is no basis for quashing that decision or for the Court to
direct that CAVCO determine that certification should be granted.
[45]
Counsel
for the Minister suggested that costs be fixed in the sum of $2500.00 and I
will do so.
JUDGMENT
FOR THE REASONS provided:
THIS COURT’S
JUDGMENT is:
1. The
application is dismissed;
2. The
Respondent is entitled to costs fixed in the sum of $2500.00.
"Roger T. Hughes"
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