Sadly, this sort of bulllshit is common with border authorities all over the place. My wife's Greek passport was once rejected by a British official who claimed that it must be fake because "there's no such thing as a Hellenic Republic".
That's the official name for Greece.
I'm not sure that I would attribute this sort of thing to malice though. I think CBSA might just be perpetually hiring from the shallow end of the gene pool.