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Letter

Ottawa, 7 July 2008

SENT BY FACSIMILE

Mr. David Kovnats
Murray & Kovnats
100-1600 Ness Ave.
Winnipeg, Manitoba R3J 3W7

- and -

Mr. Mark L. Lewis
Lewis, Birnberg Hanet LLP
693, Queen St. W.
Toronto, Ontario M6J 1E6

Dear Sirs:

Re:    Ruling on the Request for Subpoenas

The Commission has received a request from Mr. David Kovnats, lawyer for Mr. and Mrs. Peter and Paula Bjorklund and Mrs. Manjit (Molly) Blake who are interveners in the present matter involving Harmony Broadcasting Corporation (Harmony).   The request is for subpoenas to be issued to compel the attendance, with documents, of Mr. Donald Douglas, lawyer at Thompson Dorfman Sweatman law firm, Mr. Shane Lasker of the Manitoba Corporations Branch, and Ms. Rita Tully, the former accountant employed by Harmony. This request is coupled with a request to examine each of these witnesses.

The request is based on section 31 of the CRTC Rules of Procedure (the "Rules"), which reads as follows:

"Where a public hearing is to be held under section 19 (now section 18) of the Act, the Secretary may, on behalf of and as authorized by the Commission, issue subpoenas in the form set out in Schedule II to compel the attendance of any person at the hearing as a witness. "

This request was presented formally on 4 June 2008, at the commencement of the appearance of Harmony at the Winnipeg public hearing initiated by Broadcasting Notice of Public Hearing CRTC 2008-4, dated 3 April 2008 (NPH 2008-4). Mr. Kovnats submitted that the testimony of the three proposed witnesses is crucial to his clients' intervention, in support of their position that Mr. and Mrs. Peter and Paula Bjorklund and Mrs. Blake are the proper owners of Harmony, and should be recognized as such.

In particular, Mr. Kovnats submitted that Mr. Douglas' testimony is necessary to show that documents were drawn up to reflect the fact that all meetings were properly held and that the appropriate board of directors of Harmony was confirmed. According to Mr. Kovnats, the testimony of Mr. Douglas and his complete file are necessary to show that Mr. and Mrs. Bjorklund and Mrs. Blake became directors of Harmony in early 2004 and as such, took control of the CJWV-FM radio broadcasting undertaking. Mr. Kovnats submitted that Mr. Douglas' evidence will show that there were improper attempts to change the directors of Harmony.

Mr. Kovnats further submitted that the testimony of Mr. Lasker is necessary to demonstrate the manner in which the Manitoba Corporations Branch operates, and how one has to look at the register in a different way in order to understand what it really means.

Mr. Kovnats stated that Ms. Tully would submit the same sort of information as the previous two witnesses, plus financial information, and additional information as to the ownership of Harmony. She would be required to bring relevant documents to the hearing. Her testimony would show that improper attempts were made to change the directors of Harmony.

Mr. Lewis, on behalf of Messrs. Asper and Wortley, submitted that the request for subpoena has come very late in the process and results in a hijacking of the process. Mr. Lewis submitted that the interveners ought to have filed a complaint as to the putative ownership of the undertaking in a timely manner, rather than asking for subpoenas at the last moment. He also suggested that the interveners should have exercised their remedies as against the Commission's Broadcasting Decision CRTC 2007-37, rather than wait for the present public hearing to air their grievances. Mr. Lewis submitted that the request for Mr. Kovnats to examine the proposed three witnesses is unusual, and one not contemplated by the CRTC Rules of Procedure (the Rules), and that the Rules do not contemplate cross-examination of witnesses.

In disposing of the present request, the Commission notes that it has discretion, under section 31 of the Rules, to grant or refuse the present requests, since that section speaks of the Commission authorizing a subpoena, and of course, the Commission is recognized as master of its procedures.

The Commission notes that the present public hearing was announced by NPH-2008-4, and that the intervention deadline was 8 May 2008. Certain interventions, including those of the Mr. and Mrs. Bjorklund and Mrs. Blake were filed within this deadline.

The Commission also notes that what is sought is not only the ability to ask questions of the persons subpoenaed, but also the ability to extract information from them by cross-examination. Cross-examination is rarely granted in broadcasting hearings, and if it were to be granted to one group, it could not logically be denied to another group adverse in interest.

In dealing with the requests, the Commission is cognizant that the persons sought to be subpoenaed have not had an opportunity to make their views known, including a chance to challenge these subpoenas. If the ability to subpoena witnesses is granted, an opportunity will have to be given to such persons, if so advised, to challenge the subpoenas.

In disposing of these requests, the Commission must carefully balance the probative value of the testimony sought to be compelled, against the potential prejudice to other parties (including the potential witnesses themselves), and against the disruptive impact of these requests to a public hearing that was announced three months ago.

As for the probative value of the testimony sought to be introduced, the interveners' position is that the evidence will show that Harmony is effectively owned and controlled by Mr. and Mrs. Bjorklund and Mrs. Blake, and therefore Mr. Capozzolo cannot purport to sell his interest in the station to Mr. David Asper, as sole member of the corporation. Thus, any transfer to Mr. Asper would be a nullity, and thus the Commission cannot approve such a transfer.

In this regard, the Commission notes that if an agreement was reached between private parties, it should be enforced as between such private parties, in the civil courts. The Commission has not been made aware of any civil litigation between these parties, and Mr. Kovnats confirmed at the hearing that no court case has been launched. It appears that such parties are attempting to use Commission processes to enforce private rights.

The Commission notes that licensees have a number of obligations towards the Commission, including the reporting obligations that are set out in the Radio Regulations, 1986 and those that formed the object of Mandatory Order #2, attached to Broadcasting Decision CRTC 2007-37. Additionally, licensees are expected to keep the Commission's records up-to-date with significant developments. The Commission's public examination file reflects the ownership information that has been submitted, and it does not reflect Mr. and Mrs. Bjorklund or Mrs. Blake as having been recorded as directors of Harmony.

Another obligation, even more fundamental, is to make applications to the Commission that may be necessitated by changes in circumstances. Here, the Commission has not received any such applications. In particular, for example, if the parties sought to have a certain Winnipeg Technical Centre Inc., a for-profit corporation established under the Canada Business Corporations Act, become the new owner of Harmony Broadcasting, an application for a new licence would have been required.   In addition, to operate the station as a commercial station, an application to this effect would have been required. Not only was one not filed, but when one such application was filed, it was denied by the Commission in Broadcasting Decision CRTC 2002-228.

Accordingly, the Commission concludes that the probative value of any evidence sought to be introduced relates only to the private law remedies that might be exercised as between private groups of individuals, and such evidence does not relate to an issue that the Commission can resolve.

Before dealing with the harm that may result from allowing the subpoenas and cross-examination, it is appropriate to make reference to the rationale and structure of the Rules. The Rules provide that CRTC public hearings are to proceed by way of pre-filed evidence, in order to avoid surprise to parties and resultant requests for adjournment. In particular, section 8 provides that an applicant should not, in general, amend an application after the Notice of Public Hearing has been published, and section 33 mirrors this rule for the hearing itself by providing that an applicant or intervener should not introduce new evidence at a hearing without Commission approval. In this context, it should be understood that requests to subpoena and cross-examine witnesses are exceptional, and should only be granted in exceptional circumstances.

In this case, Mr. Kovnats has not provided any reason for waiting so long in order to ask to subpoena witnesses on 4 June, despite the fact that the NPH 2008-4 had been published on 3 April.

Granting the requests for subpoenas and cross-examination would likely result in requests for adjournment by the witnesses, either for them to challenge the subpoenas, or to prepare themselves sufficiently to testify. Mr. Lewis made it clear that the request for subpoenas is unusual, and came as a surprise and would have prejudicial impact on the public hearing process. In this regard, given the surprise element of the proposed testimony, any request for adjournment by Mr. Lewis in order to prepare for the witnesses' testimony (or from the witnesses themselves) could not reasonably be refused in the circumstances of the case.

Moreover, it is not clear if any prejudice suffered by Messrs. Asper and Wortley, Mr. Lewis' clients, could be fully remedied by granting an adjournment. Had the evidence been introduced or sought in a timely manner, such as before the intervention deadline of 8 May 2008, Messrs. Asper and Wortley may have had an opportunity to file responding materials. That opportunity is no longer available unless, of course, the Commission further modifies its process to allow this. The Commission notes, of course, that Harmony has had to file materials after the hearing, the interveners have been given an opportunity to file comments on such materials, and Harmony has been given a chance to reply.

Under these circumstances, given the considerations already noted, the Commission is exercising its discretion to refuse the issuance of subpoenas in the case and the resulting cross-examination that would have ensued.

Yours sincerely,

Original signed by

Robert A. Morin
Secretary General

cc. Ms. Manjit Blake
Mr. Brian Wortley
Ms. Cheryl Grossi, CRTC

Date Modified: 2008-07-09

Date modified: