Productions Espace vert VIII inc. (Mission Gibbons à Bornéo) v. Canada (Canadian Heritage)

Productions Espace vert VIII inc. (Mission Gibbons à Bornéo) v. Canada (Canadian Heritage)
Court (s) Database
Federal Court Decisions
Date
2011-12-28
Neutral citation
2011 FC 1522
File numbers
T-1841-07, T-2060-07, T-2061-07
Decision Content
Federal Court
Cour fédérale
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 SCR 190; Canada (Minister of Citizenship and Immigration) v Khosa, [2009] 1 SCR 339; and Baker v Canada (Minister of Citizenship and Immigration), [1999] 2 SCR 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”
Judge
Certified true translation
Seabsatian Desbarats, T