University of Toronto Law School Faculty Blog

Copthorne Holdings and the Future of the GAAR: January 6, 2012

On December 16, 2011, the Supreme Court of Canada released its much-anticipated decision in Copthorne Holdings Ltd. v. Canada, in which the Court considered the General Anti-Avoidance Rule (GAAR) for the fourth time.

In contrast to its previous GAAR decision in Lipson, the Court arrived at a unanimous decision in Copthorne, applying the GAAR to a number of transactions designed to preserve paid-up capital and redeem shares on a tax-free basis. In order to review the decision and its implications, the University of British Columbia’s National Centre for Business Law and the University of Toronto Faculty of Law are co-sponsoring a symposium on Copthorne Holdings Ltd. and the Future of the GAAR, which will be held at the University of Toronto Faculty of Law on the afternoon of Friday, January 6, 2012. 

Confirmed speakers include Ben Alarie (U of T Law), Hon. Donald G.H. Bowman (FMC Law and former Chief Justice of the Tax Court of Canada), Mark Brender (Osler), Robert Couzin (Couzin Taylor), David Duff (UBC Law), Tim Edgar (Osgoode Hall Law School), Phil Jolie (Canada Revenue Agency), and Deen Olsen (Department of Justice). Space is quite limited. Please go to http://www.copthorne.ca for registration information.

Adjunct Prof. Kenneth Jull: "The Canadian Corruption of Foreign Public Officials Act: Mandatory Risk Assessment"

Kenneth Jull is an adjunct professor at the University of Toronto Faculty of Law, teaching the course "Financial Crimes and Corporate Compliance".

The Canadian Corruption of Foreign Public Officials Act ("CFPOA") has been in force since 1999.  In June of 2011 the CFPOA  streaked across the radar screens of compliance officers when Niko Resources Ltd. ("Niko"), a Canadian energy company, plead guilty and paid a fine of almost $10 million  as a result of bribes paid to a Bangladeshi official.  The bribes included a luxury SUV [Toyota Land Cruiser] and a trip to New York and Calgary. 

The large fine is only half of the story. Niko Canada and its subsidiaries were placed on probation requiring that the companies develop compliance procedures based on risk assessment.   The concepts in the prior sentence bear repeating as they are novel in Canada.  The Order pierces the corporate veil to include subsidiaries, places a corporation on probation (as now authorized by the Criminal Code sentencing provisions dealing with organizations) and requires a system of risk assessment. The following paragraph from the probation Order demonstrates the extent to which risk assessment is now a mandatory element of compliance in the anti-corruption arena:

The company will develop these compliance standards and procedures, including internal controls, ethics and compliance programs on the basis of a risk assessment addressing the individual circumstances of the company, in particular foreign bribery risks facing the company, including but not limited to, its geographical organization, interactions with various types and levels of government officials, industrial sectors of operation, involvement in joint venture agreements, importance of licences and permits in the company's operations, degree of governmental oversight and inspection, and volume and importance of goods and personnel clearing through customs and immigration.[emphasis added]

Prof. Jacob Ziegel: "Supreme Court appointments and wrong priorities"

This commentary by Prof. emeritus Jacob Ziegel was first published in The Hill Times on Dec. 12, 2011.

On Nov. 14, former chief justice Roy McMurtry of Ontario and several current members of the Ontario Court of Appeal attended the swearing-in at the Supreme Court of Canada of the two new appointees to the court, Justices Michael Moldaver and Andromache Karakatsanis, both from Ontario. While they were in Ottawa, a reporter for The Lawyers Weekly asked McMurtry and the Appeal Court judges for their reactions to the questioning of these candidates by the House of Commons Ad Hoc Committee before their appointments were confirmed by the Prime Minister.

McMurtry said he thought the questioning of Justice Moldaver was too aggressive and he expressed concern that Canada was gravitating to the type of hostile questioning of candidates for appointment to the U.S. Supreme Court by members of the U.S. Senate Judiciary Committee. McMurtry was apparently referring to NDP MP Joe Comartin’s criticism of Justice Moldaver’s lack of bilingualism and his skepticism that the justice would ever become adequately bilingual despite his assurances to the committee that he would give this objective a top priority.

The other members of the Ontario Court of Appeal, who were interviewed in Ottawa by the journalist, had no problems with the questions addressed to Justice Moldaver, but thought they should have been directed to the Harper government because it was the government that had selected these candidates for prospective appointment to the Supreme Court.

Prof. Katz on Fair Dealing, Copyright, and the Haggadah

This post is cross posted on Prof. Katz's blog. 

The Supreme Court of Canada heard five copyright cases over dense two-day hearings on Dec. 6-7.  One of the cases involved the application of the concept of fair dealing with copyrighted works in education.  At the heart of this appeal was a key distinction made by Copyright Board between copies of works made by students or at their initiative, which could be fair dealing, and copies made by a teacher for students with instructions to read them, which could not.  The distinction is summarized in para. 118 of the Board’s decision:

a copy made by a teacher with instructions to read the material, whether or not it was made at a student’s request, and a copy made for a group of students are simply not fair dealing.  Their main purpose is instruction or non-private study.

In the submission filed by the Centre for Innovation Law and Policy, we argued that not only the categorical exclusion of the teacher-initiated copies lacks any basis in the language of the Act, its purpose and its legislative history, it leads to absurd results that Parliament could not have intended to create. For example, the categorical exclusion of any copying prescribed by a teacher would mean that a motivated and assertive student who knows what to request would receive better education than one who is not so informed and fortunate, because the teacher could help the former but not the latter.

Prof. Lisa Austin: "Stop hiding behind the phone book, Mr. Toews"

This commentary was first published in The Globe and Mail  on Dec. 6, 2011.

Canada’s federal Privacy Commissioner, along with her provincial and territorial counterparts, has serious concerns regarding the federal government’s proposed lawful access legislation. These include the fact that the government has provided no evidence for the necessity of this expansion of state surveillance powers or why it requires departures from the standards of judicial oversight we usually apply when the police want access to private information. Public Safety Minister Vic Toews has responded by throwing the phone book at them, including in a recent letter to The Globe.

Usually, if the state wants access to private information, our Constitution requires prior judicial authorization (a warrant) on a standard of reasonable and probable grounds. The point is not to prevent state access but to ensure that such access occurs within a framework of accountability and oversight. Some departures from this are tolerated, such as when the state interest goes beyond routine law enforcement or where there is a diminished expectation of privacy in the information.

Prof. Kent Roach: Abdullah Khadr and the Consequences of Detainee Abuse

This commentary by Prof. Kent Roach is cross-posted from the JURIST website.

According to the Canadian courts, what happens in Pakistan does not stay in Pakistan. The Supreme Court of Canada recently refused to review a permanent stay of extradition proceedings against Abdullah Khadr. Lower courts had previously ruled that "gross misconduct" by the US in arranging and prolonging Khadr's detention in Pakistan justified the extraordinary remedy of a stay of proceedings. The Supreme Court's refusal to consider this case means that Khadr will not be extradited to the US, where he has been indicted on charges of material support of terrorism for allegedly supplying arms and explosives to be used against US forces in Afghanistan. It is possible, but not probable, that Canadian authorities will prosecute Khadr, who was released in August 2010 after four-and-a-half years of pre-extradition custody and has still not been charged in Canada.

Abdullah Khadr is part of Canada's infamous Khadr family, self-professed supporters of al Qaeda. His father was a close associate of Osama Bin Laden and one of his younger brothers, Omar Khadr, remains in Guantanamo where he pleaded guilty to various charges, including the murder of an American soldier. Abdullah Khadr was captured by the Inter-Services Intelligence Directorate in Pakistan in October 2004 after the US posted a $500,000 bounty for his capture. The fact that the US paid such a bounty was secret until it was revealed in a decision by a Canadian judge in related state secrets proceedings and only after a Canadian newspaper was initially enjoined from publishing the information. The judge stressed that while the US had not agreed to the release of information about the bounty, "[i]t is now more than three years since the information was received by Canadian officials, the general practice is in the public domain, no human source would appear to be at risk and the circumstances in Pakistan have changed since these events took place."

Prof. Jacob Ziegel: "Unacceptable delays in Supreme Court appointments"

This commentary was first published in The Lawyers Weekly on Sept. 23, 2011.

It is now four months since Justices Ian Binnie and Louise Charron announced their intention to retire from the Supreme Court of Canada at the end of July. Nevertheless, and disturbingly so, their successors have still not been appointed and the court remains two short of its full complement of nine judges.

When addressing the annual meeting of the Canadian Bar Association in Halifax last month Chief Justice Beverley McLachlin urged the federal government to ensure that the new justices would be appointed in sufficient time for them to take their places on the court when the court begins its 2011-12 term hearing of appeals in early October.

Her wish is unlikely to be granted. Rob Nicolson, the minister of justice, only announced on August 5 the procedure the federal government intended to follow in filling the two vacancies. The procedure involves the establishment of a five member selection panel of the House of Commons to review a list of names submitted to them by the minister and the committee's  submission of a short list of six unranked candidates to the prime minister and the minister of justice.

Prof. Ed Morgan: "The surprise factor of Palestinian sovereignty"

This commentary was first published in the Globe and Mail on Sept. 21, 2011.

Palestinian Authority president Mahmoud Abbas is asking the United Nations to declare his country a state. If it comes, UN recognition will do little to improve lives on the ground. It won’t end the conflict with Israel any more than all the other UN pronouncements have done, and it won’t bring good governance to those who live under the Palestinian Authority. As events in Tunisia, Egypt, Libya and Syria have demonstrated, sovereign statehood is no guarantee of that.

If a statehood declaration is likely to have little impact beyond giving Mr. Abbas a rhetorical victory, why are the Palestinians and their supporters (the Arab League states, Turkey, Iran) making such a point of endorsing it, and why are the Israelis and their supporters (the U.S., Canada, Germany) opposing it so vigorously?

Well, there’s no telling which direction the political spin will take. The Palestinians calculate that Israel will feel increased heat if they’re successful, while the Israelis assume that Palestinian militancy will be harder to chill if their opposition to the move fails. But, in Middle East politics, predictions are dire and reversals the norm.

Prof. Ed Morgan: "Who decides on land use in Port Lands and Mississauga?"

This commentary was first published in thestar.com on Sept. 18, 2011.

Toronto’s city council is about to weigh in on Mayor Rob Ford’s intervention into the Port Lands development, and the Mississauga inquiry is about to report on Mayor Hazel McCallion’s intervention in the city centre development. Already one can see a shared question mark linking the two GTA controversies: when it comes to a city’s prominent lands, what checks and balances does the rule of law impose on mayoral power?

To be sure, there are important political and legal differences between the two episodes. The Mississauga proceedings are focused on allegations of conflict of interest and the relationship between the mayor’s office and plans endorsed by her developer son. The Toronto debate is focused on contentions about circumvention of the consultation/approval process and the relationship between the mayor’s office and plans endorsed by his councillor brother.

But while the differences are clear on the surface of the two controversies, similar policy issues lurk just underneath.

Prof. Kent Roach: The UN’s Failed Response to 9/11

A decade ago, the world rightly stood in solidarity with the United States in the face of the 9/11 terrorist attacks.  The story of how the Bush Administration squandered that solidarity through Guantanamo, torture and the invasion Iraq is well known. Less well known is how the United Nations also lost its opportunity to unite world in principled counter-terrorism.

The 9/11 attacks provided the U.N. with an unparalleled opportunity to forge international agreement on a definition of terrorism. Whatever previous disagreements there were about freedom fighting and state terrorism, it was clear that the 9/11 attacks constituted terrorism. The killing of innocent people not engaged in hostilities in an armed conflict was terrorism; it did not matter whether they were in the planes, the World Trade Centre or the Pentagon.

On September 28, 2001, the Security Council demanded that all states enact tough counter-terrorism measures under its mandatory powers to enforce international peace and security. The Security Council offered no guidance on the definition of terrorism. It failed to so, even though a 1999 Convention on the Suppression of Terrorism Financing previously included a restrained but principled definition:  the intentional killing or injuring of those not engaged in armed conflict in order to intimidate a population or compel governments to act.