Issue No. 45, MONDAY, September 16, 2013, 13 Pgs.

Say It Ain’t So!

Federal trust-busters have interviewed executives of the nation’s largest hockey manufacturers in a probe of sporting goods retailing. The Competition Bureau’s secret investigation targets a bid by Canadian Tire to buy rival retailer Pro Hockey Life. Canadian Tire announced the completion of the deal Aug. 12. “At this point we can confirm the Competition Bureau is rev i e w i n g t h e p ro p o s e d acquisition,” an official said. The bureau has the power to block the sale under the Competition Act. Affidavits filed in Federal Court revealed that, as part of the inquiry, investigators interviewed executives of the three largest hockey equipment makers – all Canadian Tire suppliers – that hold an estimated 85 percent of the market. Canadian Tire declined comment. No other companies or executives

named would take Blacklock’s questions. “It’s pretty clear who the big equipment manufacturers are,” said Mike Maciaszek, managing director of the Hockey Dealers Association, a U.S.-based association. “Those people are a big presence; the brand-name product is what the kids want.” In separate applications, investigators asked that a federal judge compel executives to surrender any relevant documents at Bauer Performance Sports Ltd., the largest manufacturer of skates and equipment; stickmaker Easton Sports Canada Inc., a supplier to the NHL; and Sport Maska Inc., a subsidiary of Adidas Group and operator of Reebok CCM Hockey, the official outfitter of the NHL that “equips more professional hockey players than any other company, including superstars like Sidney Crosby,” according to its last annual report. Investigators in sworn statements revealed they began the probe last winter after Canadian Tire Corporation Ltd. announced its $85 million purchase of Pro Hockey Life Sporting Goods Inc., which operates 23 stores across five provinces. “Hockey is in our DNA,” Stephen Wetmore, president and CEO of Canadian Tire, said in announcing the purchase Nov. 29. “We are a Canadian company supporting Canada’s game.” However, investigators q u e st i o n e d w h e t h e r t h e

First, we do everything in our power to build bridges, and if that doesn’t work... we burn them down! Personal Injury Environmental Litigation Commercial Litigation Wrongful Dismissal

www.beament.com takeover violates Section 92 of the Competition Act on restriction of trade. “The proposed transaction may, or may be likely to, prevent or lessen competition substantially because among other things: a) Pro Hockey Life is a vigorous and effective competitor; b) remaining competition is highly ineffective; c) barriers to entry appear to be high,” bureau counsel said in affidavits filed in court. Pro Hockey Life reported $95 million a year in sales before it was bought by Canadian Tire.

The bureau sued to c o m p e l C a n a d i a n T i re ’s hockey suppliers to produce any records “relating to the evaluation or analysis of the impact of the proposed transaction on market shares, competition, competitors, markets, or on the potential for growth sales or expansion into new products.” Canadian Tire also owns Sports Check, Athlete’s World and Sports Experts stores. By Tom Korski [image Library & Archives Canada #1980-180 NPC]

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Hockey Anti-Trust Inquiry Cheered Independent manufacturers and an exhockey pro who served in Parliament say they welcome a federal anti-trust inquiry into retailing of hockey gear. It follows Blacklock’s disclosure that the Competition Bureau is seeking Federal Court orders to further its investigation of Canadian Tire Corp.’s purchase of Pro Hockey Life, a 23-store chain. “Is the investigation good? Yes; should they allow the acquisition? No,” said Gerry McSorley, president and CEO of Flite Hockey, a Mississauga, Ont. manufacturer of skates, sticks and equipment. “There is no question if the Canadian Tire purchase goes ahead the independents will continue to crumble,” said McSorley. “The wealth behind these companies is formidable.” McSorley, whose brother Marty played 15 seasons as an NHL defenceman, said consolidation in the hockey equipment sector has been unmistakable since he founded Flite in 1993. “It’s easier to get into stores in Europe and the United States than it is in Canada,” said McSorley.

In court affidavits, Competition Bureau counsel questioned whether the Canadian Tire takeover of Pro Hockey Life, “a vigorous and effective competitor,” would “prevent or lessen competition substantially” in violation of the Competition Act. “When we see consolidation, whether it’s banks or hockey, the government must have some ability to look at these issues,” said Gary Carr, former Liberal MP for Halton, Ont. and retired Speaker of the Ontario legislature. “The fear is that prices go up,” said Carr, now chair of the Regional Municipality of Halton; “I personally believe there is a role for government in regulating industry.” Carr is a former All-Star goalie for the 1975 Toronto Marlboros who played six years in the American Hockey League. “The great Canadian game is becoming so expensive a lot of families can’t afford it,” said Carr. “That’s a big, big concern.” Federal investigators are seeking a court order that would compel Canadian Tire suppliers to produce any records on the impact of market share, competition

and sales growth resulting from the corporate takeover of Pro Hockey Life, which had $95 million a year in sales. Management with Grit Inc., a Tottenham, Ont. manufacturer that pioneered the Hockey Tower equipment bag, said smaller independents have little voice in the industry. “We do need very stable, big retailers with money to step up to the plate; we can’t get financing anywhere else,” said Greg Collins, CEO. “It’s the big purchase order that gets you going; if it wasn’t for that we wouldn’t be in business.” However, Collins noted consolidation in retailing leave suppliers with few options. “They tell you what the price is going to be,” said Collins; “It’s pretty scary when you think about it; they could make a decision that could clean us out.” Grit Inc. has its own Federal Court application pending against Sport Maska Inc. in a patent infringement case. Hockey Canada, the governing body for the amateur sport, declined comment. By tom korski

Health Canada Urged To Review Cookware Health Canada is being urged to examine the safety of a line glass cookware following a $1.15 million jury award to a man left permanently injured by a Dutch oven. The incident followed numerous complaints to the department from consumers who used glass cookware. “We urge Health Canada to take another look at this,” said Michael Smitiuch of Smitiuch Injury Law PC, who won the jury award in Superior Court in London, Ont.; “This is real.” Health Canada did not comment. The department earlier told Blackock’s that, while “incidents representing a higher risk will receive priority attention,” regulators saw no cause to recall Visions cookware. Lanny Stilwell, 56, of Beachville, Ont., lost permanent use of his right hand from ruptured arteries and tendons following a Sept. 11, 2000 kitchen incident. “I was rinsing the pot out with lukewarm water,” Stilwell recalled, “and the next thing I know there was a ‘pop’ – and then there was nothing but blood.” Stilwell said the injury cost his livelihood as a lift truck operator. “He has been deemed unemployable,”

Smitiuch said. The jury award came against Corning Inc., the original manufacturer, and World Kitchen LLC which purchased the production line in 1998. “World Kitchen is appealing the decision,” Ed Flowers, senior vice president, said in a statement. “It is company policy not to comment on pending litigation.” Health Canada documented at least 21 complaints over a ten-year period from consumers who reported they were injured by flying glass from glass cookware. Most complaints involved Visions-brand products. The incidents were detailed in Health Canada Product Safety Complaint Reports over the 1987-98 period, and only recently released under the Access to Information Act. “We know in the 1980s this cookware was very, very popular,” Smitiuch said. “Millions were out there.” The lawyer added, “The pattern we saw based on evidence was there were very similar incidents that occurred.” Complaints to Health Canada were documented by staff in six provinces, including: • Dec. 4, 1987, Toronto: “Water boiled in

pot; as noodles added, heard a crack and pot exploded, spraying boiling water on consumer; glass in hands, on element, in next room; burns/cuts”; • May 11, 1989, Ft. Saskatchewan, Alta: “Tip of lid broke when rice being cooked; served rice to husband who bit into glass and cut tongue; 20 minutes to stop bleeding”; • Feb. 17, 1990, Pembroke, Ont.: “Saucepan used and put on cutting board to cool when wife grasped handle to pick up pan; it exploded; glass pieces cut wrist”; • Feb. 15, 1990, St. Catharines, Ont.: “Preparing macaroni in saucepan when it exploded; fragments of glass hit chest causing numerous cuts”; • May 21, 1991, Halifax: “Just took pot from cupboard and put it on counter when it exploded causing a piece of glass to lodge between fingers; cut finger: stitches”; • Sept. 7, 1993, St. John’s:  “Cleaning 1.5 litre saucepan when it broke for no apparent reason; deep cut to hand, required 12 stitches to close wound.” The London, Ont. jury award was the first successful verdict of its kind in North America, Smitiuch said. By staff

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BLACKLOCK’S REPORTER

No. 45 Sept. 16, 2013

Supporting health and financial security for almost 27 million Canadians

Canada’s life and health insurance industry pays out more than $1.2 billion weekly. From dental care to physiotherapy to annuities, Canadians rely on our industry to help them lead healthy and balanced lives. Visit clhia.ca

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Guest Commentary

Lee Morrison

T

Tom Hyland Blacklock A pioneer publisher and war correspondent, confidante of three prime ministers and 1922 president of the Ottawa Press Gallery, Tom Blacklock was mourned at his passing in 1934 as “a keen observer blessed with a sense of proportion.” Born in Halton County, Ont. in 1870, he became a frontier editor and first mayor of Weyburn, Sask. in 1903. Assigned to Parliament Hill by the Winnipeg Telegram in 1912 he remained a gallery man for life with columns published from Victoria to Halifax: “As Tom Blacklock used to say, ‘That ain’t the way I heard it.’”

BLACKLOCK’S REPORTER PUBLISHES DAILY ONLINE AT BLACKLOCKS.CA WITH A WEEKLY DIGEST OF NEWS AND SHARP-EYED FEATURES PUBLISHED EACH MONDAY, 50 WEEKS A YEAR. Copyright 1395804 Ontario Limited Head Office: 409 Third Avenue, Ottawa, Ontario K1S 2K6 Editorial: 350-N Centre Block, House of Commons, Ottawa, Ontario, K1A 0A6 HST no. 87055 5372 Holly Doan, Publisher 613-422-6823 [email protected] Tom Korski, Managing Editor 613-992-4511 [email protected] EDITORIAL BOARD: Kaven Baker-Voakes, Economics Editor 613-992-4511 [email protected] Alex Binkley, Resources Editor 613-992-4511 [email protected]

Still A Reformer

w e n t y- f i v e y e a r s a g o, m y friends and I set out to kill the Conservative Party – and we damn near did it! To d ay Re f o r m p r i n c i p l e s h ave been erased in Ottawa; there is really nothing of the original values that remain. There’s a proverb that reform movements are like bees: they sting and then they die. Reform advocated change that excited Canadians. We accomplished something unheard of, galloping in six years from a dead start to 135,000 paid-up members and 52 MPs in Ottawa. It was quite a feat. In 1988 I first heard Preston Manning speak at a small meeting in Swift Current. He talked of civic duty and accountability and grassroots politics. I thought to myself, “This man is singing my song,” and I joined on the spot. The Reform Party drew a tiny fraction of the vote that year and was widely ridiculed by media and the Tories. Brian Mulroney was considered Satan in those years. He was tired and patronage-ridden; his caucus marched in lock-step and his cabinet couldn’t balance a budget. Mulroney befriended separatist double-crossers and treated the West with a maddening arrogance. In time his approval rating hit 16 percent in the Gallup poll. We had good ideas for concrete improvements: less spending, less pork barreling, more citizen participation, more accountability.  We felt there was too much centralized power in Ottawa.

Our solution was to return power to the people. I will never forget the 1993 campaign. It was electric. There was a cry for change and tempers ran high. I got into a fight with one voter on his own front porch. And I learned never to campaign in bars; alcohol brings out cynicism in the electorate. Mulroney predicted his Conservatives would win re-election with 175 seats in Parliament that year; instead they nearly vanished. Half of the Conservative candidates lost their deposits; only two were elected.  I’ll never forget the euphoria. Most of us in that original 1993 caucus were not politicians, and were proud of the fact. In retrospect, what did we change? Preston Manning became a politician like all others. An inner circle of functionaries took control of caucus, as they do in all parties. We lost our fire and fell into factional feuding. I think of Reform as a comet that made a flaming entrance – and then vanished. When we almost killed the Conservative Party, the hunger for change was genuine. We won 2,559,245 votes from Canadians who sought to reform forever the way Ottawa worked. It’s a shame we failed to do it. ( Ed i t o r ’s n o t e : t h e a u t h o r i s a geologist, early Reform Party organizer and retired two-term MP for Cypress Hills-Grasslands, Sask.)

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A “Frightening” Growth Industry A secretive agency has become the fastest-growing federal bureaucracy in Canada, though few Parliamentarians can find out what it does. The surveillance group Communications Security Establishment Canada has increased its hiring more than 30 percent since 2006, far outstripping the rate of growth in the RCMP according to payroll records. The Establishment monitors electronic communications, but does not release any detailed accounts of its activities. “I think this whole issue is becoming more and more frightening,” said Liberal MP Judy Sgro, who requested the payroll records; “Constituents I talk to are more and more

concerned with what the government is doing in our daily lives.” No Establishment officer would agree to an interview. The agency told Blacklock’s in a statement its hiring boom reflected the “constantly evolving” and “more complex” nature of its work. Documents indicate the number of full-time staff at the Establishment totaled 2,020 last year compared to 1,536 in 2006 – a 32 percent increase. RCMP staffing over the same period grew 12 percent, to 23,965 staff including civilian employees. “That is a significant increase especially when there are job cuts elsewhere,” said Sgro, MP for York West, Ont. The Establishment is

All Railways To Pay?

The Lac-Mégantic rail disaster will prompt a review of all train operators’ insurance requirements to account for “catastrophic events”, says the Canadian Transportation Agency. The federal regulator yesterday shut down the Montreal, Maine & Atlantic Railway Ltd. for inadequate insurance coverage of ongoing operations following the July 5 wreck. “This was not a decision made lightly,” Geoff Hare, chair and CEO of the agency, wrote in a statement. The agency did not take Blacklock’s questions. The Montreal, Maine & Atlantic carried $25 million in third-party liability coverage at the time of the Lac-Mégantic disaster – a sum typical of railways its size, the Transportation Agency noted. However, costs of recovery are estimated at more than ten times the insurance payout. “The tragic derailment at Lac-Mégantic has

raised important questions regarding the adequacy of third-party liability insurance coverage to deal with catastrophic events, especially for smaller railways,” the agency reported. “Increased shipments of crude oil and other hazardous materials by rail highlight the need to determine how best to ensure that railways, large and small, have appropriate levels of third-party liability coverage.” The Railway Association of Canada did not comment. An unattended MM&A freight parked near Nantes, Q u e. w i t h 7 2 t a n k c a r s of petroleum crude oil mysteriously rolled on a 1.2% grade descending into LacMégantic at 11 pm on July 5. The resulting derailment ignited a fireball that killed 47 townspeople, razed several buildings, and resulted in the leak of more than six million litres of oil. Recovery expenses and liability claims are estimated at more than a quarter-billion

subject to limited oversight by any Parliamentary committee or the Intelligence Review Committee, which monitors espionage and anti-terrorism activities at the Canadian Security Intelligence Service. “ T h e re i s a l o n g- t e r m culture of confidentiality there,” said Ray Speaker, a retired Lethbridge MP who served a decade on the review committee. Speaker said, even as a cabinet-appointed committee delegate, he was refused access to the Establishment’s Ottawa headquarters. “I felt we should be more familiar with what was going on and asked for a tour and a visit,” said Speaker, former Reform Party House Leader. “The response that came back

dollars. The Transportation Agency noted railways the size of MMA, a local carrier that operated in Québec and New Brunswick, typically carry third-party liability policies of $5 million to $50 million. In reviewing ten years’ worth of records, the agency reported the Lac-Mégantic wreck was the first in Canada in which a federally-regulated railway faced liability claims that exceeded its insurance. The agency revoked M M & A’s “c e r t i f i c a t e o f fitness” effective October 1. The railway has filed for bankruptcy in Québec and Maine, listing some $100 million in assets. Under current Railway Third Party Liability Insurance Coverage Regulations, operators must carry sufficient insurance to compensate for any injuries, deaths, or property and environmental damage. By alex binkley

was that visitors were accepted on a ‘need to know’ basis; I was a little upset about it.” Speaker added, “My thinking is it should come under the same scrutiny as CSIS.” Robert Décary, a former f e d e ra l j u d g e a p p o i n t e d by cabinet to ensure the Establishment complies with federal law, noted in his last Report on Plans and Priorities that the agency “continues to grow and evolve in response to evolving threats to our free and democratic society.” The scope of the Establishment’s work is not known. It shares data with security agencies in the U.S., U. K . , Au st ra l i a a n d Ne w Zealand. By tom korski

BLACKLOCK’S REPORTER

That’s One Big Red Flag

A First Nation that’s suing cabinet over an investment agreement with China says it fears “future generations” of Canadians will be tied to the far-reaching deal. Members of British C o l u m b i a ’s H u p a c a s a t h F i r s t Na t i o n r a l l i e d o n Parliament Hill in a five-city tour to protest the ChinaCanada Foreign Investment Promotion and Protection Agreement. Brenda Sayers, a Hupacasath councillor, said the band has asked a federal judge to scrutinize the agreement since “aboriginal rights and titles were not included in any sections to recognise our rights to the land and our resources.” Trade Minister Ed Fast signed the agreement last Sept. 9. However cabinet has yet to ratify it – the terms and conditions do not require the consent of Parliament – and Fast has declined Blacklock’s interview request on the pact. T h e Hu p a c a s a t h F i r s t Nation filed an application Federal Court for judicial review of the deal, arguing it weakens environmental regulations and aboriginals’ constitutional right to input on its terms, and that it would bind Canada to investment rules for decades. The pact is binding for a minimum fifteen years, with cancellation requiring an additional 16 years’ notice. “Looking 31 years down

t h e ro a d , we f e l t i t wa s our fiduciary duty to the Hupacasath, for people now and future generations, that they are left with resources to sustain themselves and their families,” said Sayers. The agreement forbids exclusionary treatment of foreign investors, including state-owned enterprises like China National Offshore Oil Corp. that completed a $15.1 billion takeover of Calgary-based Nexen Inc. last Feb. 11. MPs have expressed concerns the pact, if ratified, will also restrict future municipal, provincial and federal governments in considering new environmental or regulatory measures. Sayers said the Hupacasath are concerned that rules governing investor state arbitration would permit state-owned enterprises in the People’s Republic to sue Canada for lost profits over any domestic policy deemed exclusionary. The Canada-China agreement follows similar pacts signed with Bahrain, Bénin, Cameroon, Kuwait, Madagascar, Mali, Nigeria, S e n e g a l , Ta n z a n i a a n d Zambia. The Hupacasath protests include rallies in Montréal, To r o n t o, H a m i l t o n a n d Peterborough, Ont. By Dale smith

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Our $200,000 Investment The Department of Foreign Affairs spent $200,000 on a turn-out-the-vote campaign in Zimbabwe’s fraud-ridden parliamentary elections. A department official, asked if the money was well spent, replied: “The project was vital.” The foreign ministry paid the grant through its Global Peace & Security Fund to a Harare-based group, the Zimbabwe Election Support Ne t w o r k . T h e f u n d i n g was aimed at “increasing the number of youth and women” among registered voters, according to ministry documents. More than 850,000 votes we n t u n re c o rd e d i n t h e country’s July 31 elections that saw President Robert Mugabe claim a seventh term, according to election o b s e r v e r s . T h e Su p p o r t Ne t w o r k r e p o r t e d t h a t balloting for Zimbabwe’s 210seat House of Assembly was “seriously compromised” by

fraud and vote-rigging. The Canadian Taxpayers Federation said that “people like to see value for the money” in grants awarded in the name of international assistance. “There is skepticism,” said Gregory Thomas, federal director. “It’s obviously a corrupt regime and this was a crooked election; I’m not sure this is a good reason to spend a couple of hundred thousand dollars.” Mugabe, who has held office since 1987, would remain in power to age 94 under the country’s current constitution. Foreign Affairs Minister John Baird issued a statement expressing concern over vote fraud and human rights abuses, but added: “Canada does congratulate the people of Zimbabwe for participating peacefully in the first elections under their new constitution.” By staff

Haste Does Not Make Waste New research is disputing a long-held claim that speedier drug approvals inevitably lead to increased health and safety warnings by regulators. A study concludes there is no proof that haste makes waste in drug regulation. “There is no evidence,” said Dr. Nigel Rawson, president of Eastlake Research Group, a consultancy firms. “Safety warnings are safety warnings; they may be introduced for a number of reasons.” The study reviewed twenty years of data in concluding the likelihood that new drugs would be discontinued or acquire a serious safety warning was 42 percent in Canada, compared to 31 percent in the United States, despite a speedier regulatory regime in America.

“Canada has been slow at approving drugs for many years compared to the U.S.” said Rawson. “One particular group that was a standout is the oncology drugs; they take longer in Canada than in the United States.” Health Canada’s system of approvals has been a matter of debate among policymakers since changes were made to regulatory measures in 2011. “There is a risk for all drugs but Health Canada looks and balances off the risks,” said Rawson. The research entitled Does The Increase In Safety Warnings From Regulators Actually Mean That More Dangerous Drugs Are Being Approved?, examined 454 therapeutic drug over two decades. It was published in the periodical Canadian Health Policy. By Kaven Baker-Voakes [photo Louise Imbeault]

BLACKLOCK’S REPORTER

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Game, Set, Audit: Tennis Pro Named In Tax Court A Canada Revenue audit of a fund used to support Canada’s top-ranked women’s tennis player gave Tax Court a glimpse into money and sport. Michel Bouchard, father of tennis pro Eugénie Bouchard, has been ordered to pay $81,143 in disallowed tax claims generated through an “in and out scheme”, according to a federal judge. Blacklock’s could not contact Bouchard through Eugénie’s agent. The former Wimbledon junior single’s champion turned pro last year and is now ranked 62nd worldwide. “A l l o f t h i s i s v e r y expensive,” Tax Court Judge Rommel Masse wrote in upholding a federal audit against Bouchard. Court heard testimony that in 2003 Bouchard, a former Wo o d G u n d y e m p l o y e e, c r e a t e d Te n n i s M a n i a Ltd. Partnership. Investors

in Tennis Mania were to subsidize Eugénie expenses for training, tournaments and equipment as an amateur on the promise of 10% annual return once she turned pro. B o u c h a r d ’s d a u g h t e r, then 9, was not a party to the agreement, and Tennis Mania did not have any other clients. “I’m not going to find investors for everyone else’s kids,” Bouchard testified. Under the Income Tax Act section 18.1, no business deductions are permitted for “personal or living expenses of the taxpayer.” However, documents showed Bouchard in one instance deposited a $25,000 cheque into the partnership bank account, then immediately took $25,000 from the fund as reimbursement for Eugénie’s expenses and claimed the transaction as a business loss. Reported losses by Tennis

Mania totaled $25,047 in the 2005 tax year, then $20,085 in 2006 and $36,011 the year after that – all disallowed after auditors examined the partnership’s books in 2009. “It was only operated in such a way as to create tax deductions,” wrote Judge Masse; “This resulted in significant tax savings for the appellant and thus made it easier for him to finance Eugénie’s burgeoning career.” Masse continued, “He was not looking at the partnership as a source of profit but was instead looking for a means to finance Eugénie’s

“Scared To Death” Of Canada Revenue

He had signed a piece of paper saying that he was waiving his right to appeal,

A Nova Scotia accountant has lost a bid for a Supreme Court pleading he was “scared to death” by the Canada Revenue Agency in a dispute over unpaid taxes. The Supreme Court declined to hear further testimony in the case of Terry Taylor, who claimed he was intimidated by revenue agents at a 2009 meeting – a claim that “defies common sense,” according to a lower Tax Court judge who heard Taylor’s initial claim. The certified general accountant from Lower Sackville, N.S. had his home raided by Canada Revenue investigators and the RCMP in 2005. The agency claimed Taylor owed some $261,000 in

unpaid HST and income tax. The warrant for the raid was subsequently found in error, and Taylor was targeted with a reassessment of his taxes. At a 2009 meeting with revenue agents, Taylor agreed not to appeal if the agency waived penalties – a deal he later claimed was the result of extreme duress. Taylor said he “felt lost” at the meeting, and was “scared to death” when confronted with the $261,000 tax bill. “He had signed a piece of paper saying that he was waiving his right to appeal,” said David Davies, a partner with Thorsteinssons LLP. “The Federal Court of Appeal says that even with a different test, there’s sufficient finding

development as a tennis player, while at the same time creating a tax advantage in the form of a tax loss for himself.” Court documents showed Eugénie earned enough to meet her expenses by 2009, but to date had not paid any profits to Tennis Mania investors. Commercial sponsorships of the tennis pro, including a $75,000 contract with Adidas Group, were paid to Eugénie personally, court heard. By TOM KORSKI

of fact at the trial level that you can’t overcome it anyway.” “He stated he felt lost when he found out there was $261,000 at issue but that should have been apparent from the assessments t h e m s e l v e s ,” D a v i e s continued; “I’m not surprised the Supreme Court wasn’t particularly interested in this.” In an earlier Tax Court hearing on the case, Justice Judith Woods noted: “Mr. Taylor was an experienced businessman with a financial background. He was also very knowledgeable about the tax issues under dispute and he had been aware of the amounts at issue, including the penalties, for some time. The spreadsheet that was presented at the meeting had previously been provided to Mr. Taylor at his request. It was not difficult to understand.” By DALE SMITH

BLACKLOCK’S REPORTER

From Commons To Court

An omnibus budget bill that amended dozens of federal laws may end in the Supreme Court amid its latest legal challenge, says a constitutional lawyer. The Department of Justice faces multiple lawsuits over far-reaching provisions of Bill C-38, the Jobs, Growth & Long-Term Prosperity Act that provided for a wide range of amendments, from eligibility f o r O l d Ag e Se c u r i t y t o payment of union wages on public works. “This is the kind of case that can go to the Supreme Court; that’s all I can say at this

point,” said attorney Clayton Ruby, representing applicants in the latest Federal Court challenge of C-38. Ruby filed a lawsuit on behalf of Forest Ethics Advocacy Association, a Vancouverbased group challenging restrictions on witnesses permitted at National Energy Board licensing hearings. “The National Energy Board has been turned from a decision-making body into an advisory body, with cabinet m a k i n g t h e d e c i s i o n s ,” said Ruby. “This has had a chilling effect; we say this is unconstitutional.”

Two Alberta First Nations, Mikisew Cree and Frog Lake, filed a separate application in Federal Court last Jan. 8 challenging provisions of Bill C-38 that amended the Fisheries Act and Navigable Waters Protection Act. The omnibus bill, which ran to 452 pages, passed the House of Commons under closure to restrict debate, and sped through the Senate in eleven days before it was signed into law on June 29, 2012. The bill in addition to routine amendments to the Income Tax Act contained significant amendments to

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sixty-eight other major Acts of Parliament, including changes to the Canadian Environmental Assessment Act to restrict hearings on the ecological impact of industrial projects; the Canadian Environmental P r o t e c t i o n Ac t t o g r a n t cabinet new powers to grant disposal at sea permits; the Canada Oil & Gas Operations Act to place pipelines and electrical transmission lines that cross navigable waters under federal jurisdiction; the Fisheries Act to redefine “serious harm” to species; the Department of Human Resources & Skills Development Act to raise the eligibility age for Old Age Security pensioners from 65 to 67; and repeal of the Fair Wages & Hours Of Labour Act, a federal law dating from 1930 that mandated payment of union wages by federal contractors. By STAFF

“The world is afloat with cod” The Department of Fisheries is allowing reallocation of unclaimed cod quotas in southern Ne w f o u n d l a n d i n a t e s t project welcomed by local fishing communities. Authorities confirmed a pilot project impacting some 900 fishermen has been undertaken in the fishing area known as 3Ps following years of unclaimed quota. The change means individual fishermen will be permitted to catch more without affecting the harvesting cap. “We don’t bump the overall quota, but we bumped the individual quota,” said Bill Broderick, director for inshore sector harvesting at the Fish, Food and Allied Workers Union. “For the people that are active and have a market and want to

fish, then let them fish a little harder.” Last year 60 percent of the quota was unclaimed largely due to depressed prices for cod. “There is no value in cod fish at the moment,” said Broderick. “The world is afloat with cod; Iceland, Norway, Russia and Greenland have an abundance of cod, more than they have had for years, and are filling the market.” Fisherman in Newfoundland & Labrador are receiving 50¢ cents a pound, typically less than cost. The fisheries department confirmed only 222 fisherman have received the quota reallocation. “Cod are managed as different populations, as different units, and this particular one is arguably in the best shape of any of them,” said biologist Prof.

Jeff Hutchings biologist of Dalhousie University. Biologists identify what is called the “limited reference point”, the number of fish needed for sustainability that determines whether a re s o u rc e i s e n d a n g e re d . Hu t c h i n g s s a i d C a n a d a is “a bit inconsistent” in its application of the policy across the region. Federal regulators said they have not decided whether to

continue the project next year. “The years when the allocated quota was not being taken happens to coincide with a striking increase in the reproductive population,” said Hutchings. “Is the increase in the spawning population truly because fewer fish were caught? It’s difficult to say.” By Kaven Baker-Voakes [image Library & Archives Canada #1971-271 NPC]

BLACKLOCK’S REPORTER

“This Is A Last Resort”

T h e D e p a r t m e n t o f Na t u r a l Resources faces a federal lawsuit over the constitutionality of limits on environmental hearings. T h e Fo r e s t Et h i c s Ad v o c a c y Association, a Vancouver-based group, has asked a federal judge to quash amendments to the National Energy Board Act that restrict testimony of environmentalists and other public witnesses at licensing hearings. “This is a last resort,” said Tseporah B e r m a n , a n a s s o c i a t i o n d i re c t o r. “Lawsuits are difficult and expensive.” The lawsuit targets Energy Board hearings on Enbridge Pipelines Inc.’s Trailbreaker project, a proposal to transport Alberta oilsands bitumen along an existing line from Sarnia, Ont. to Montréal. The line currently carries lighter crude oil westward. Opponents who requested to testify at hearings were required to complete a nine-page government questionnaire that asked them to identify their “specific and detailed interest in the project”;

explain what “likelihood and severity of harm you may be exposed to”; and identify their “sources of knowledge” for vetting by the board. Under Section 55.2 amendments to the National Energy Board Act enacted June 29, 2012, interveners at licensing hearings must have “relevant information or expertise” and prove to the board’s satisfaction they are “directly affected” by a proposed development, without right of appeal. “The bottom line is whether or not the public has access to a public process,” said Berman; “This is not a question of whether you support pipelines or not; it’s a question of whether you support freedom of speech and a democratic process.” Natural Resources Minister Joe Oliver did not take Blacklock’s questions. The Federal Court application asks that a judge rule the vetting process is unconstitutional, and instruct the Energy Board to hear from all witnesses on the Trailbreaker project. “Oilsands expansion is an issue of national importance,” Forest Ethics wrote in its court application. “Its impact on the future of our economy and the environment cannot be overstated.” The case will be heard in Toronto court. By STAFF

No Fishing Allowed The Department of Fisheries has expanded its ban on the wild Pacific salmon catch in two famed British Columbia waterways amid alarmingly low fish populations. Regulators expanded a commercial and sport fishing ban on the Skeena River to First Nations’ fishermen, and imposed a temporary closure on the Fraser River. “The low populations are obviously a concern for the First Nations on the Skeena,” said Stu Barnes, chair of the Skeena Fisheries Commission. “The restrictions have affected the ability to access food fish for the season.” A federal facility, the Skeena Tyee Test Fishery, reported the salmon population on the waterway was as little as a tenth of the normal count, which typically runs to millions of salmon. “We confirmed those numbers and they are real,” said Barnes; “We don’t know what numbers will be coming next year.” The fisheries department has also expressed concern over lower salmon

runs and water levels in the Fraser River, prompting the “orderly” closure of the sockeye catch by First Nations fishermen. “The low return of summer-run sockeye thus far has severely constrained harvest opportunities that were expected during pre-season planning,” the department reported. By Kaven Baker-Voakes [photo BC Heritage]

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Feds Settle Billing Dispute

Telecom regulators have dismissed an appeal by Bell Canada over a ruling on wholesale internet charges. Bell claimed “errors in law” in seeking a review of the decision by the Canadian Radio-Television & Telecom Commission. The CRTC ruled last February that wholesale high speed services provided to independent internet service providers must use a single billing rate; and that companies had to offer the same rate to business and residential customers. The commission denied Bell’s request to reconsider its decision. “We are really pleased that they’ve stuck to their guns,” said Tom Copeland, chair of the Canadian Association of Internet Providers. Copeland said that, without regulation of wholesale billing, “we would have seen the continued eroding of competition in the marketplace, especially in the area of competitive business services.” Under old fee schedules, larger companies charged different rates under different billing models for wholesale and residential business services. The original ruling impacted more than 300 independent internet service providers. CRTC chair Jean-Pierre Blais said at the time of the commission’s original ruling that “large and small independent s e r v i c e p rov i d e r s n ow h ave t h e certainty they need to continue offering Canadians a choice of innovative and competitive services.” Internet wholesalers subject to the commission’s ruling include Bell in Ontario and Québec, Rogers clients and Telus customers in Alberta and British Columbia. By Kaven Baker-Voakes

BLACKLOCK’S REPORTER

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A “Precedent” On TV News Coverage

Broadcasters face stringent requirements on correcting even casual errors in news coverage under a “precedent” by a national regulator. The Canada Broadcast Standards Council said TV networks must issue on-air corrections for mistaken or garbled references in telecast reports. The ruling follows a complaint against CTV News Channel over a minor, inaccurate reference in a news story on Mideast troubles. “It’s not a big mistake, it was an inadvertent mistake,” said Andrée Noël, council chair; “It does not have to be an issue of liability or harm, the issue is adherence to the regulations; if you make a mistake, you have to correct it.” Previous council judgments t y p i c a l l y i n vo l ve d g ro s s

misstatements of fact, hate speech, libel and abusive language. However, regulators ruled CTV went too far with a passing mention in a news report on West Bank protests over the death of a Palestinian man in Israeli custody: “The prisoner died while taking part in a hunger strike.” Arafat Jaradat, 30, a gas station attendant, died in detention last February. Media accounts noted Jaradat’s death was “mysterious” (Associated Press); that his death “raises new questions about Israel’s Shin Bet security service, which has been accused by rights groups of mistreating Palestinians during interrogation” (National Post); and that “his family says he was tortured while Israel claims it was a heart attack” (NBC News). New York Daily News headlined its coverage, “‘Torture’ Led To Palestinian Death In Israeli Custody”. CTV News Channel did not cite torture allegations, but admitted it was mistaken in its Feb. 25 report that described

Jaradat as a hunger striker. Four other Palestinians in custody were waging a hunger strike at the same time; Jaradat was not among them. “It was not a typographical error, it was a big error, it was an error in fact,” said Noël, a former federal telecom commissioner; “It’s very clear in the regulations.” The Standards Council ordered network anchors to read an on-air statement that CTV “breached the codes of ethics” with “inaccurate information.” The network complied with the order; CTV News president Wendy Freeman did not take Blacklock’s questions. “This creates a precedent,” said Mike Fegelman, who filed the complaint that trigged the council’s ruling. “Any news organization makes mistakes all the time,” said Fegelman, executive director of the group Honest Reporting Canada. “I don’t believe the error was a matter of malice on the part of CTV, it was human error; I’m under no impression CTV intended

to malign Israel.” Fegelman said the effect of the garbled reference was to “tarnish Israel”, and that CTV was obliged to broadcast its admission of error: “The issue is CTV had not done a very fulsome correction; they amended their website but there was no public atonement.” The network was cited for violating the Canadian Association of Broadcasters’ Code of Ethics, clause five, that news “shall be represented with accuracy and without bias”; and Article 7 of the Radio Television Digital News Association Code that “errors will be quickly acknowledged and publicly corrected on all platforms.” “If a serious mistake is stated on-air it must be corrected on-air,” said Fegelman; “I don’t think this encourages frivolous complaints.” The Standards Council is mandated by federal telecom regulators to investigate public complaints over coverage by TV and radio broadcasters. By TOM KORSKI

Watson, A Privacy Policy! Canada’s privacy commissioner is expressing unease over the findings of an internet privacy check, the first of its kind, that identified large gaps in consumer protection measures. The joint audit was conducted by the Office of Privacy Commissioner Jennifer Stoddart in conjunction with ten other countries. The Global Privacy Enforcement Network Internet Privacy Sweep examined policies of some 2,000 websites and apps, evaluating function, relevance and readers’ ability to contact publishers. “We are concerned, and particularly concerned about the mobile world,” said Stoddart. Of 300 websites and apps

audited in Canada, 2 in 10 either had no privacy policy, or made the terms virtually inaccessible to users. Overall 2 0 p e rc e n t p rov i d e d n o contact information for privacy officers to handle complaints or questions, while others provided boilerplate policies with no useful information, Stoddart said. Of mobile apps that were examined, 54 percent had no privacy policy whatsoever, according to the study. “Outreach would be an o bv i o u s n ex t st e p,” s a i d St o d d a r t . “St re s s i n g t h e importance of a privacy policy in an organization that is fully accountable for handling personal information is going to be ongoing.”

Advocates cited a lack of federal regulation as a cause of the uneven results in the survey. “There really are no p e n a l t i e s ,” s a i d   S h a r o n Po l s k y   p re s i d e n t o f t h e Privacy and Access Council of Canada. “There has never been proper education provided to consumers or organizations as to what they are supposed to do, and how to do it.” I n f o r m a t i c a C o r p. , a To r o n t o - b a s e d s e c u r i t y consultant, said Canadian organizations must develop a culture of privacy protection. “It’s not just the privacy policies, it’s the degree to which which organizations a d h e re t o t h e s e p r i va c y

policies; anyone can wordsmith a privacy policy,” said Claudiu Popa, CEO. “It’s lame that you can still go on the internet and find badlywritten policies.” Po p a c o n t i n u e d , “ T h e sad part is very few actually bother to create linkage between the internal privacy practices and what it says in the privacy policies.” Other jurisdictions that joined the Office of the Privacy Commissioner in the audit were the U.S., U.K., Germany, Ireland, Finland, Norway, Estonia, Australia, New Zealand and the Chinese protectorate of Macau. By Kaven Baker-Voakes

BLACKLOCK’S REPORTER

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“The Hand that Holds the Camera”

Review: Don’t Mention The War On Feb. 6, 1940, Governor General John Buchan collapsed in his bathroom at Rideau Hall. Buchan had suffered a paralytic stroke and fractured his skull in the fall; he lay on the tiled floor for an hour before they found him. He was dead in a week. Buchan had been a celebrity novelist. The same year he came to Ottawa in 1935, Alfred Hitchcock released a film adaptation of Buchan’s thriller The Thirty-Nine Steps. It was like appointing John Grisham governor general. Despite his international fame and sudden death, Buchan today is forgotten – almost as if his service in Canada was expunged from the record. The reason is revealed in J. William Galbraith’s biography. Buchan was a Nazi appeaser. He failed the greatest moral test of his era and was capable of “dangerous rationalization”, writes Galbraith. In a Nov. 11, 1938 speech to a Canadian Legion banquet, the Governor General suggested Hitler might use British veterans as peacekeepers in Nazi-occupied territories, and told veterans: “The defense of a country is always a difficult question. You dare not neglect it or you may be taken at a sudden disadvantage. But it is possible to overdo it and thereby increase the very risk which it was intended to prevent.” Buchan’s speech came two days after Kristallnacht, the 1938 pogrom that saw German synagogues burned and Jews murdered in the streets. The Governor General did not mention it. “All defence carries a face of war,” he said. John Buchan: Model Governor General is no gotcha biography. Galbraith is a member of the John Buchan Society. He does not mention the Kristallnacht speech. Instead he celebrates Buchan as the man who adapted his ceremonial office into a kind of national greeter who toured the Arctic, patting cattle at livestock shows and giving speeches on the CBC. Readers will note how little the job has changed.

No. 45 Sept. 16, 2013

a poem by Shai Ben-Shalom The Canadian Space Agency presents pictures from above in celebration of Canada Day.   I look closely.   They resemble views of Earth offered for free by satellite-imaging services.   Taken by the commander of the International Space Station is what makes them special, I presume. Galbraith is an honest biographer who provides a first glimpse into Buchan’s enthusiastic appeasement of the pre-war Nazi regime. Germany’s occupation of Austria was “very largely our own blame,” said Buchan; press critics of Neville Chamberlain were “donkeys”; Winston Churchill “exasperated everybody”. Ap p e a s e r s f a s c i n a t e h i st o r i a n s. How could they have been so wrong? Buchan and his crowd feared Nazis; they appeared crippled by post-traumatic memories of the First World War; and were unmoved by the German’s early victims: communists, trade unionists, Slavs, Jews – though Buchan was hardly anti-Semitic, his biographer notes; the Governor General’s wife was a supporter of Montreal’s Hadassah. “No man is so strong as he who is not afraid to be called weak,” Buchan wrote in 1938. When war came Buchan sent his own two sons into the Canadian Army, but his stroke saved him the agony of witnessing the full tragedy of 1930s politics. Buchan did not live to see the fall of Hong Kong and Singapore, or the Blitz, the Holocaust or loss of empire that left Britain so broke it kept rationing food till 1955. “My work here is over,” Buchan wrote at war’s outbreak. It was, in more ways than one. By holly doan

John Buchan: Model Governor General by J. William Galbraith; Dundurn; 544 pages; ISBN 9781-4597-09379; $40 hardcover

(Editor’s note: the author is an Israeliborn biologist; he recently published his first collection of poems, Martians Among Us, with In/Words Press)

Best of Sheree

BLACKLOCK’S REPORTER

APPOINTMENTS Agostinho, Luis – of Toronto, reappointed a member, Immigration & Refugee Board, Toronto Office, effective Nov. 15 Cunningham, Lynne – of Calgary, reappointed a member, Immigration & Refugee Board, Calgary Office, Sept. 1 Ellis, Karen – of Ottawa, appointed president, Federal Economic Development Agency for Southern Ontario, with a salary in the range of $188,600 to $221,800, August 12 Gagnon, Yves – of Ottawa, appointed Ambassador to Cuba, with a salary in the range of $131,200 to $154,300, August 12 George, Roland – of Calgary, reappointed a member, National Energy Board, August 8 Hall, James – of Toronto, appointed a director, Atomic Energy of Canada Ltd., August 1 Kowal, Harry – of Ottawa, appointed Principal, Royal Military College, with a salary in the range of $167,700 to $197,200, August. 1 Lafleur, Annie – of Montreal, reappointed a member, Immigration & Refugee Board, Montreal office, effective Nov. 15

Natynczyk, Gen. (Ret’d.) Walter – of Ottawa, appointed president, Canadian Space Agency, with a salary in the range of $216,900 to $255,100, August 6 O’Sullivan, Susan – of Ottawa, reappointed Federal Ombudsman for Victims of Crime, with a salary in the range of $121,700 to $143,100, August 16 Paradiso, David – of Ottawa, appointed interim chair, RCMP External Review Committee, with a salary in the range of $139,900 to $164,500, August 1 Paul, David – of Perth Andover, N.B., appointed Deputy Chief Commissioner, First Nations Tax Commission, August 6 Saccomani, Bruno – of Ottawa, appointed Ambassador to Jordan, with a salary in the range of $131,200 to $154,300, August 30 Vreeswijk, Wilma – of Ottawa, appointed Associate Deputy Minister of Citizenship & Immigration, with a salary in the range of $188,600 to $221,800, Sept. 17 Zicherman, Doris – of Montreal, reappointed a member, Immigration & Refugee Board, Montreal Office, effective Oct. 18

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